paper 1 Flashcards
what is a mass market ?
targets all consumers
- more generalised products
what is a niche market?
- appeals to much smaller segment
- focus on specialist want/need
pros and cons of mass markets
- economies of scale
- more consumers to target
-high levels of competition
pros and cons of niche markets
- higher profit margins
- less competition
- loyalty from customers
- smaller target market
- no EOS
- may be risky as doesn’t appeal to large amounts of people
what is a dynamic market?
constantly changing eg. fashion
what is risk?
the chance of failure
what can risk lead to?
lack of security
- financial loss
- failure
what is uncertainty?
when a business doesn’t know the outcome of a situation
what does market research usually focus on?
- demand
- competition
- target market
what is qualitative research
- not numerical
- opinions/ views of consumers
- higher detail levels
what is quantitative research
figures/ facts
-can easily be recorded and grouped
what is sampling?
when a business selects a sample of population to collect data from (choose a cross- section)
pros and cons of sampling
- reduces costs
- less time consuming
-may not be representative of full TM
segmentation groups
demographic
behavioural
geographical
income
what is market mapping used for?
to identify a gap in market that could be exploited
-looks at price and quality
what is the design mix
- functionality (how it works / reliability)
- economic manufacture (does it allow profit to be made)
- aesthetics (how something looks/feels)
what is PR (public relations)
- business reputation
- good public image
what is sales promotion
aim to boost sales by introducing temporary promotion (eg. buy 1 get 1 free)
what is price skimming
when a business initially sets a high price and gradually lowers it over time
(aim= to maximise revenue/ cover costs)
4 factors that influence pricing
- degree of competition
- nature of product
- costs
- product life cycle
what is price penetration?
when a business initially sets a low price and gradually increases it over time
(aim= to increase market share)
what is cost-plus pricing?
add a mark-up onto of cost to produce (percentage added)
what is competitive pricing?
pricing set depending on what other businesses in market are charging
what are the 2 influences that social trends have on pricing?
- price-comparison websites
- technology
3 types of distribution channels
- traditional (manufacturer- wholesaler-retailer-consumer)
- modern (manufacturer- retailer- consumer)
- direct (manufacturer- consumer)
what are the stages of product life cycle?
- research and development
- introduction
- growth
- maturity/ saturation
- decline
what is a extension strategy?
methods used to delay or stop decline
4 features in boston matrix
- problem child
- cash cow
- rising star
- dog
dog in boston matrix
low market share, low market growth
rising star in boston matrix
high market share, high market growth
cash cow in boston matrix
high market share, low market growth
problem child/ question mark in boston matrix
low market share, high market growth
what is an enterprise
come up with new ideas/ making improvements
what is a franchise
when a business sells another business the right to use name/ sell products
franchising advantages
- cheaper that opening new stores
- aids growth
- increases brand awarenesss
- paid royalties
franchising disadvantages
- looses control
- could lead to bad reputation if ran badly
indicators of economic growth
- HDI (human development index)
- GDP (gross domestic product)
- GDP per capita (total divided by population )
what is capacity utilisation?
measures existing output relative to maximum output
what is quality assurance
- staff checking at each stage
- aims to prevent mistakes and self checking
- ‘zero-defects’
what is quality control
- checking product at the end
- checks that standards have been met
quality assurance advantages
- motivates staff as more ownership of work
- prevents mistakes
- less waste
quality control disadvantages
- time consuming as gone through all stages already
- wasteful of faults are found
quality control advantages
- accurate as dome by specialists
- ensures standards are met
quality assurance disadvantages
- time consuming for staff
- employees standards may vary
- less productivity
what is quality circles
small groups of employees from different levels in firm come together and discuss quality
quality circles advantages
- employees feel more valued by business
- adding higher chance of improvement as people may spot different things.
quality benchmarking
general approach to business improvement
- can provide useful quality improvements
- assess position business is in
what is kaizen?
-constantly introducing small changes to improve quality/ efficiency
what is total quality management?
focus is mainly on quality
-everyone contributes towards the quality
-
how can managers implement TQM?
incentives to increase motivation
- gradually introduce to avoid sudden change
- provide training to ensure employees feel supported
what is sales forecasting?
prediction of future sales for a business
3 techniques of sales forecasting
- moving average
- extrapolation
- correlation
what is a moving average?
used to identify trends by ‘smoothing’ out fluctuations in data.
4 point moving average
1/2 month 1+ month 2+ month 3+ 1/2 month 4 /4
3 point moving average
month 1 + month 2 + month 3 /3
what is extrapolation?
uses trends established from historical data to forecast future (carrying on the line)
moving average advantages
easy to interpret
- easy way to predict future sales
- good for stable markets (not dynamic)
moving average disadvantages
- doesn’t take into account external factors
- time consuming
- focus on past (retrospective)
- not useful for dynamic markets
advantages of extrapolation
simple to do
- easy to interpret
- doesn’t require much skill
disadvantages of extrapolation
- could be inaccurate
- based on past events (retrospective)
- no qualitative date ( just numerical)
what is correlation?
looks at relationship between 2 variables
independent/ dependent
importance of sales forecasting
- helps aid decision making
- help reach aims/ objectives
- measure success
- motivate staff
- show business direction to investors
what is a business plan importance
- test feasibly of ideas
- increase success chances
- attract investors
- show direction
what does a business plan consist of?
- overview eg. background
- description and USP
- strategy with aims
- marketing (research)
- operations( facilities/ equipment needed)
- Financial Information (sales forecast)
- evaluation (strengths/ weaknesses)
what is a cash flow forecast?
prediction of a businesses financial position based on both money coming in and out
balance sheet structure
non current assets current assets current liabilities working capital (CA-CL) non current liabilities net assets (NCA+ working capital - NCL) financed by... total equity (all financed by added together)
what is break even
total revenue is equal to total cost
what is budgeting?
forward financial plan concerning revenue and cost for business
what are the 3 types of stock
- raw materials
- finished goods
- work in progress
what is buffer stock?
an amount of stock held in case of unexpected orders to enable them to be able to meet demand/ orders
methods to create budget
- zero based budgeting
- historical based budgeting
what is variance?
- difference between the actual and budget figures
- favourable = better than expected
- adverse = worse than expected
what is an income statement
shows trading performance of a business and if made profit/ loss
structure of income statement
revenue cost of sales GROSS PROFIT (revenue- cost of sales) fixed overheads OPERATING PROFIT (gross profit- overheads) net financing costs(interest) profit before tax tax NET PROFIT (profit before tax- tax)
what is a balance sheet?
snapshot of businesses financial position from any point in year (assets and liabilities)
what is a push factor?
a factor that makes business want to expand internationally due to domestic issues.
what is pull factors?
a factor that makes a business attracted to growing internationally
what is international trade?
exchange of capital, goods and services across international borders.
advantages of international trade
- economies of scale
- increase demand in other countries
- may be far in product life cycle in one country
- better use of scarce resources / nearer raw materials
what is FDI
foreign direct investment
-investment from one country into another
inward/outward
what is inward FDI
when foreign capital is invested in local resources
what is outward FDI
when local capital is invested in foreign resources
benefits of FDI for MNC
- cheaper labour
- closer proximity to raw materials (decrease transportation costs)
benefits of FDI for host country
- creates new jobs
- can fulfil a missing need in market
what is protectionism?
attempt by country to impose restrictions on trade
-aim is to protect domestic business from overseas businesses
what is a tariff?
added amount onto price of imported products
what is a quota?
volume limit on imported goods
advantages of tariffs
- business in domestic market has more chance of competing as they are cheaper alternative
- increased money for government
disadvantages of tariffs
- more expensive for customers
- may decreases demand
what is ease of doing business
how accessible the market is for businesses
what is a MNC
-multi national company is a business that has operations in more than one country
what is organic growth
growing using businesses own resources (internal)
what is inorganic growth
growing using resources outside of business (external)
what is psychological pricing ?
used to make price seem lower / more attractive than it actually is
what is predatory pricing?
used by dominent businesses to reduce competition ( eg. loss leader) forces competitors out
what is demand
the number of consumers willing and able to purchase a good or service at a given price
what is supply
the number of goods and services producers are willing to sell at given time
what is equalibrium
state of equality/ balance between supply and demand
shortage in market
where demand is higher than quantity supplied
surplus in market
where demand is lower than quantity supplied
elastic
response in demand from a change in income/ price that is greater.
glocalisation
conducting business according to both global and local considerations.
what is trade liberalisation ?
-a country opening its borders to allow trade with other countries by decreasing trade barriers eg. high tariffs/ quotas
what is political change ?
-the amount of political co-operation that exists between countries
what is reduced cost of transport/ communication?
-cheaper transportation of goods has encouraged global trade
what is increased significance of global companies?
larger MNC’s have greater ability to invest in other economies
what is increased FDI?
investment into a foreign market by an MNC.
can lead to improved skill, knowledge and technology
what is migration of workers?
people ≥∫
