Paper 1 Flashcards

Question

Increase in Demand is caused by:

Answer 1

Price of substitutes rising Price of complements falling Income of consumers rising Expectations that the price will rise in the future Tastes, fashion and preferences Increased Advertising in a market Population increasing Seasonality - energy in the winter

Answer 2

Factor input costs falling Technology increasing Indirect Taxes falling Subsidies increasing Good Weather New firms entering the market

Answer 3

Price of substitutes falling Price of complements rising Income of consumers falling Expectations that the price will fall in the future Tastes, fashion and preferences - outdated Decreased Advertising in a market Population falling Seasonality - energy in the summer

Answer 4

actor input costs increasing Technology falling Indirect Taxes increasing Subsidies falling Bad Weather Firms leaving the market

Answer 5

number is less than 1

Answer 6

number is greater than 1

Answer 7

Substitutes Nessecity Addictive Percentage of income

Answer 8

positive number, as income rises, demand for these goods increases.

Answer 9

negative number,as income rises demand for these goods decreases

Answer 10

Type of good - luxury of necessity - Luxuries will have a bigger demand change when incomes change Income spent of the good/proportion of income - the more it takes up the more elastic in demand it will be. Houses are a big price and so a fall in income = a larger change in demand for houses Confidence/expectation - how long will incomes fall for? Temporary blip = no impact. Low confidence in the economy e.g. recession = bigger change in demand.

Answer 11

Sustainability Waste minimisation and reuse Recycling Ethical sourcing

Answer 12

High prices to create desirability Early adopters will pay a high price Rapid profits to pay off costs of innovation Appropriate when selling unique products/innovative ones

Answer 13

WIll deter buyers who think its a rip off or will wait till it drops in price Early buyers frustrated when price falls Image suffers

Answer 14

Low prices = low risk sampling (customers try it) Low price = high sales volume = low cost per unit Helps to develop a habit for buying it - may pay higher price later Appropriate when selling standardised products.

Answer 15

May translate to a cheap image Customer expect lower prices - price elastic

Answer 16

uarantee profit to be made Appropriate when no worry about competition

Answer 17

Unrealistic price may be charged if market changes

Answer 18

Once rivals leave, prices can be increased to the max Appropriate when firms are more powerful than local ones

Answer 19

Customers shouldn’t be put off buying the product Appropriate when taking on powerful rivals

Answer 20

It can be illegal

Answer 21

Help nudge customer into make a purchase if they are thinking about it Appropriate when selling impulse purchase products

Answer 22

Little control over price so could impact revenue and profits

Answer 23

Only effective on impulse purchases

Answer 24

PED LEVEL OF DIFFERNTIATION NEED TO MAKE PROFIT STAGE OF PRODUCT LIFE CYCLE

Answer 25

R+D. Getting the product ready. No sales

Answer 26

sales are low

Answer 27

growth in sales slows and reach their peak

Answer 28

Sales begin to fall until the product is withdrawn or extension strategies used

Answer 29

t can encourage managers to make rash decisions that move the product too quickly through the cycle e.g. we are expecting the product to go into decline as sales dip so we slash the promotion used. This speeds up sales dropping and so falls into decline much quicker than expected

Answer 30

changes to product changes to promotion

Answer 31

May be successful. May just been introduced in a rapid growing market. Heavy investment to boost sales

Answer 32

The future money makers in a rapid growing market with high market share. High spending to maintain this but to fight off rivals attracted to this market

Answer 33

in a stable market with high market share. Generate money through low marketing spend. Profits used to invest in previous two.

Answer 34

low share and low growth - unattractive. May be removed

Answer 35

Quicker/CHeaper Promotions = morale SKills already known

Answer 36

Bigger pool of applicants New ideas can be gained - innovation Better skills

Answer 37

Higher skills = boost in productivity and innovation Wider skill range = flexibility Motivates staff to staff

Answer 38

Less knowledge of methods used elsewhere - may need to be trained again With targets to be met, training may take less of a priority

Answer 39

Large financial cost Normal operations may suffer (short term costs) Staff may not be more attractive to other businesses (head-hunting)

Answer 40

Tailored to the companies way of working Can gain feedback on mistakes from workers Saves time and workers are working at the same time

Answer 41

Interviews Common method where you ghetto know the staff member on a better level BUT bias on behalf of the interviewer Tests and profiling Aptitude tests are used to judge the skill levels if high skills are needed. Profiling helps to identify the personality traits BUT is subjective Assessment centres Better assess all skills with all candidates within a series of tasks BUT expensive

Answer 42

Close supervision Communication between teams will be strong Promotions

Answer 43

Staff feel over-supervised Overall communication may be poor Less innovation

Answer 44

Increased delegation - motivation Innovation may happen Less layers = lower costs

Answer 45

More mistakes - are workers trained enough Less promotions

Answer 46

Money motivates Division of labour Paid for your output Workers complete one task again and again

Answer 47

Linked to Taylor Money wasn’t just the main motivator Importance of teamwork and freedom of work Productivity improved

Answer 48

Looked at what influenced our motivation 5 stages (see next slide Each need must be met to improve motivation The need to use different techniques for different stages and workers

Answer 49

Motivated workers want to do the best at all times and accept change He said that there are a few motivators that genuine will motivate workers The businesses needs to have in place a set of hygiene factors in order to allow motivation to happen Meeting both needed = employee offer their best.

Answer 50

self actualisation self-esteem love/belonging safety pyscholgical needs

Answer 51

Creating a business idea Spotting an opportunity Market research Running and expanding the business

Answer 52

Profit max - make as much as we can but could cause issues in the long term - customers and quality Profit satisficing - sacrifice short term profits to build a long term brand Work from home Independance Ethical/social stance

Answer 53

if the business ceases trading and the value of the assets in the business does not equal the debt - personal assets are taken

Answer 54

opposite to unlimited liability - more likely to take risks and attract shareholders

Answer 55

All MNCs started life as this or partnership. Owner has full control over decisions Owner keeps all profits Easy to set up as a business BUT Unlimited liability Hard to raise finance Common error: Sole traders do employ staff.

Answer 56

A business may start with a group of people -collective idea Shared burden of responsibility Easier to raise finance between you BUT Unlimited liability Maybe disagreements

Answer 57

As sole traders and partnerships grow - the need to access higher finance and grow is needed. May turn to become Ltd Limited liability gained Attracts shareholders - bigger finance/experience Take more risk BUT Lose control

Answer 58

Businesses that wish to grow globally may need major sources of finance - the stock market is where you can gain this High rates of capital gained Limited liability BUT Loss of control Increase cost to be on the stock market Focus on profit

Answer 59

Matching production to demand Growing the business and your customers find empty shelves as you couldn’t increase production is business suicide Financing growth Growth will require added finance costs due to more workers, new spaces to produce. Finding the right finance that doesn’t have excessive costs is key Overtrading A boom in sales could catch you off guard and so you have to make big capital investments and as such have higher cash outflows = cash flow crisis

Answer 60

Delegating WHereas once the entrepreneur made all the decisions - now as a leader they will need to delegate to ensure efficiency - control is hard to give up Communication When growth happens, good communication is vital! The owner will need to still know what is going on to make the correct decisions - workers may be resistant to tell managers what problems there are Coordinating more people With more people comes more responsibilities. All staff need to know what to do. The leader wants to achieve their objectives and so need to be able to steer people in the right direction. Can they keep them motivated and productive?

Answer 61

New export opportunities UK businesses should target China and India as the UK economy has slowed down Offshoring production Able to lower production cost and boost profit margins Increased domestic competition Growth in other markets may increase domestic businesses in those markets to export to the UK, increasing competition

Answer 62

Increase in skill level as the types of jobs shift from primary to secondary jobs Increase in need for managers and so expanding income levels Loss of jobs as businesses look to offshore Access to more choice and lower prices

Answer 63

Avoid problems when exporting If you make a product in a country you will sell in then it removes the hassle of organising onward transport to get the good to the final customer Avoid transportation costs Moving products around the world to sell is a big cost - more so when they are large like a car AVoid trade barriers No impact of import tariffs if made in that country - hence why Nissan make cars in the UK to send to the EU pre-BREXIT Lower operating costs Land and labour may be less compared to the home country

Answer 64

Trade Liberalisation: Removal of trade barriers has led to businesses being able to have cheaper imports and higher demand for exports e.g. China Reduced cost of transport/communication Containerization has led to the ability to charge lower prices due to the high volume of goods that can be shipped. EOS. Better communication has allowed global growth to be more efficiently managed Growth of global labour force High skills at a lower cost has led to more offshoring and outsourcing. Helped to overcome skills shortages Migration Access to works from all over the world. SUpport economic growth Increased significance of TNC/MNCs MNCs become a threat to local businesses. These have hi8gh EOS and look to seek higher sales.

Answer 65

Higher demand pushes up production and allows for EOS but protects from foreign MNCs outside the bloc. As well, cheaper import costs of materials if we can get from inside the bloc Free movement of labour (iff applicable) = higher skills

Answer 66

Stiffer competition for domestic producers - may lag behind and lose out to producers who are lower cost than us If we import from outside the bloc, this will increase costs - May not be able to get resources still but have to have common external tariffs - cannot make your own deals

Answer 67

Saturated markets New customers may need to be found if all customers have been exhausted in the current market. Either widen the range or new markets Competition If MNCs enter the market and can competed better than you, it may be time to look at newer markets with less competition to survive Extending the product life cycle As a product starts to decline, moving it into a new market may create extension strategies/restart it

Answer 68

Economies of Scale Boosting unit sales globally will in turn help to achieve economies of scale. Focusing production in a few locations that help reach global customers help to keep unit cst lower and boost profit margins/competitiveness Offshoring/Outsourcing The lure of lower costs of operation overseas is a great pull factor. This could be setting up production or moving production to a third party (pros/cons on next slide) Risk spreading The lure of selling in more countries where demand is mitigates against one economy entering recession

Answer 69

GDP per capita Annual economic growth Ease of doing business Political stability Population

Answer 70

GDP per capita Location in a trade bloc Geographical location Raw materials Ease of doing business

Answer 71

spread risk entering ne markets aquiring new brands securing resources global competitiveness

Answer 72

You adapt fully to the market you are going into. New name, new brand.

Answer 73

You take your successful domestic brand and enter new markets with it. No changes.

Answer 74

he use of a standardised approach (Ethno) but catering to the needs of the market (Poly). Happy medium.

Answer 75

Depends on the…product sold Commodities sell without needing to adapt to local needs/marketing. Businesses reliant on marketing need to adapt, e.g. services. Depends on the…country Going into China/India you will need to adapt to culture; especially food companies to meet religious needs, e.g. no beef in India.

Answer 76

Safety concerns MNCs use lax regulations to get away with unsafe production Short term mineral extraction Host countries should be compensated for this Weakening local cultures Mcdonalds and KFC making chinese people switch from local food to fast food Lack of commitments MNCs will leave when the country gets weaker/MNC has got all the benefits

Answer 77

political influence social media pressure groups legal control

Paper 1 Flashcards

(102 cards)