LOA Not Added Yet Flashcards
Benefit of using a market map
1)Market maps help businesses identify gaps in the market
2)Once identified business can conduct R+D
3)And design a product that matches characteristics of
4)product is likely to be unique
5)Lack of direct competition
6)Business can increase selling price without a significant fall in demand
7)increase sales revenue and gross profit
Drawback of using a market map
1)Market maps are based on consumer opinions
2)To ensure decisions based on opinions are valid
3)Business needs to collect dat from a large sample
4)This may require a large number of researchers
5)To collect and analyse data and display in a market map
6)If business recruits researchers it will significantly increase cash outflows
7)If cash outflows is greater than cash inflows
8)It may lead to a negative cash flow
Importance of cash
1)a business does not have enough cash
2)they will be unable to pay their day to day bills
3)such as payments to suppliers
4)They will then be forced to sell non current assets
5)this will disrupt their daily operations
6)and increases their chances of failure
Limited liability benefits
1) Limited liability means that the owners are not responsible for any debt that cannot be paid by the business
2) This therefore attracts more investment as there is reduced risk of investment
3) Leading to an increase in capital invested in the business
4) The business can build capacity (say how from case study)
5) Improved accessibility (service) or output (factory)
6) Increased opportunity to sell more goods
7)increase sales revenue
8)increase gross profit
9)increase operating profit
Limited liability drawback
1)The owners are not risking their personal possessions
2)So if the business is unable to pay (through sale of assets)
3)Then the supplier or bank lose the amount owed
4)This increases the risk of lending cash to the business
5) Or increases the risk of offering trade credit
6) Making banks and suppliers less likely to lend
7)struggle to get trade credit or loan
8)limited expansion
High liquity
1)High liquidity ( current ratio between 1.5-2 or acid test above one)
2)High amounts of cash reserves/Working capital
3)Therefore can keep up with day to day payment with suppliers and banks
4)unlikely to be forced to sell NCA in order to pay day to day bills
5)Therefore, likely to have uninterrupted business operation
6)leading to reduced risk of failure and higher chance of success
Autocratic leadership benefit
1)autocratic leadership means all decision making are made by the leader
2)no delegation or consultation
3)ensuring quick decision making
4)the business is able to adapt quickly to changing tend
5)identify trend from case study
6)increased differentiation/low cost - explain benefit to business
Autocratic leadership drawback
1)autocratic leadership means all decision making are made by the leader
2)no delegation or consultation
3)employees don’t feel valued by organisation
4)as they are no included in the decision making process
5)esteem needs are not met (Maslow)
6)may become demotivated
7)explain drawback of demotivated work force
Low liquidity
1)Low liquidity (current ratio below 1and acid test ratio below 0.75)
2)low level if cash reserves
3)business will struggle to suppliers and banks
4)may be forced to sell NCA to pay day to day bills
5)This may lead to a disruption in business operations
6)leading to a high risk of failure
Paternalistic leadership benefit
1) Paternalistic leadership means leaders will consider employee welfare when making decisions
2) Whilst still maintaining full control of decision-making process
3) This means that employees esteem needs are met (Maslow)
4) their welfare is important to leader, employees will feel valued by organisation
5) Increasing employee motivation
6) Explain importance of motivated workforce
7) Link to relevant benefit to business.
Paternalistic leadership drawback
1) Paternalistic leadership means leaders will consider employee welfare when making decisions
2) Employee input may be listened to but decision making still controlled by leader
3) This may mean that ideas (be specific to business suggested by subordinates ignored by leader
4) Reduction in innovation by business
5) Products less differentiated
6)loss of competitive advantage
7)explain drawback of this specific to the business
Stronger pound benefit.
1)less pounds buys more foreign currency
2)less pounds required to buy foreign currency
3)less pounds required to buy foreign goods
4)cheaper to import raw material
5)lower cost of sales
6)can reduces selling price
7)increase gross profit
Stronger pound drawback 1
1) foreign currency buys lesspounds
2)more foreign currency required to buy pounds
3)Therefore price of Uk goods increases for foreigners
