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Business > paper 1 > Flashcards

paper 1 Flashcards

1
Q

what is the boston matrix

A

a way of accessing where a product is in its lifecycle

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2
Q

the purpose of the boston matrix

A

helps market planning

identifies strategies using the 4p’s

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3
Q

4 different names for a product on the boston matrix

A

star
cash cow
problem child / question mark
dog

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4
Q

star

A

high market share in a growing market

has successfully reached the growth stage

neutral cash as still needs investment

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5
Q

problem child / question mark

A

low market share in a growing market

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6
Q

cash cow

A

high market share in a stable market
has reached maturity
high yield
generates high cash

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7
Q

dog

A

low market share in a stable market

in decline phase

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8
Q

4 strategies for products

A

milking

building

holding

divesting

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9
Q

holding

A

market spending to maintain sales

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10
Q

building

A

investing in the promotion and distribution of the product

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11
Q

milking

A

taking as much profit as possible with little investment

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12
Q

divesting

A

selling reaming stock

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13
Q

strategy for star

A

holding

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14
Q

strategy for problem child

A

building and sometimes divesting

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15
Q

strategy for cash cow

A

milking

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16
Q

strategy for dog

A

divesting

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17
Q

break even

A

is the point at which a business does not make a profit or loss

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18
Q

break even analysis

A

a technique that analyses the relationship between total revenue and total costs to determine profitability at various levels of output

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19
Q

contribution

A

looks at the surplus made on each product sold by the business. it shows how many products need to be sold to cover the fixed operation costs

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20
Q

margin of safety

A

the amount sales can fall before the break even point

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21
Q

advantages of break even

A

gaining funding- required for plans
selling revenue targets
decide appropriate pricing

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22
Q

disadvantages of break even

A

doesn’t give an insight into chances sales will meet this point
data may be unreliable

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23
Q

PED

A

the sensitivity of demand to a change in price

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24
Q

Elasticity

A

measure the extent to which demand will change

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25
Q

Elastic

A

describes demand that is very sensitive to a change in price

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26
Q

Inelastic

A

not price sensitive - price can be increased and demand won’t have a significant drop

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27
Q

Factors affecting PED

A

substitutes- lots of alternatives= elastic
proportion of income- small income= inelastic
legal protection- high income= inelastic
USP
brand loyalty
Necessity
Habit

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28
Q

most important factor affecting demand

A

price

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29
Q

differentiation

A

how you make your product stand out from other competitions using USP

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30
Q

how will differentiation affect the price elasticity of certain products

A

better differentiated product= more inelastic
nothing else in the market, so people will buy anyway

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31
Q

branding and brand loyalty

A

distinctive design that differentiates product in the market

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32
Q

why might branding and brand loyalty affect PED

A

more elastic

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33
Q

what happens to revenue if price of elastic product increases

A

decrease - price sensitive > more people will switch to different brands/products

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34
Q

strategies to reduces PED

A

increase product differentiation

reduce competition

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35
Q

YED

A

the sensitivity of demand to a change in income

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36
Q

gross incomes

A

amount the average employee receives before any deductions for tax/pension contributions

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37
Q

factors affecting YED

A

if product is a necessity
who buys the product
positive/negative elasticity

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38
Q

significance of YED

A

allow a balanced product port-folio
sales forecasting
financial planning

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39
Q

difference in PED and YED

A

PED- >1 income elastic, <income inelastic

YED- >0 normal good, <0 inferior good, +1.5= luxuary

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40
Q

subsidies role

A

can lower a firms average cost per unit, encouraging them to expand production

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41
Q

centralised organisational structure

A

when a small number of employees at the top of the hierarchy make all the important decisions in a business and often have the most experience and expertise

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42
Q

decentralised organisational structure

A

when more employees from different levels of the hierarchy are delegated to make decisions in the business and are closer to the day to day operations of the business

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43
Q

Advs of centralised

A

consistent decision across business
best positioned decisions (more experience)
operations and decisions are more closely controlled and managed

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44
Q

Disadvs of centralised

A

decisions can be slow
demotivates employees
decision makers don’t have the specialist knowledge of all the company’s functions when making decision based on them

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45
Q

Advs of decentralised

A

faster decisons
decisons are made with specialist knowledge
improves company motivation

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46
Q

Disadvs of decentralised

A

inconsistent decisions
some decisions not aligned with aims and objectives
lower experience staff could make ineffective decisions causing problems

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47
Q

maslow

A

explains our actions are motivated by certain physiological and psychological needs that progress from basic to complex (human motivation)

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48
Q

maslow motivation model

A

Self actualisation
self esteem
love and belonging
safety and security
physiological needs

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49
Q

main idea of maslow

A

the most basic needs must be met before people can progress up to the more advanced needs

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50
Q

budget

A

a spending plan based on income and expenses

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51
Q

types of budget

A

profit budget
income budget
expenditure budget

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52
Q

information needed for a budget

A

historical data
own knowledge
market research

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53
Q

benefit of budgets

A

makes sure businesses don’t spend money they don’t have

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54
Q

drawbacks or budgets

A

hard for a new business as they have no past data

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55
Q

risks of not budgeting

A

could end up running out of cash

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56
Q

expenditure budget

A

predict how much business will spend over a period of time

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57
Q

income budget

A

predicts how much money will come in from sales

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58
Q

adverse variance

A

when actual profit is lower than budgeted profit

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59
Q

favourable variance

A

when the difference between the budgeted and actual profit leads to a higher than expected profit

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60
Q

contingency cost

A

an amount included in a budget to cover any unexpected issues

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61
Q

GDP

A

gross domestic product

the value of all goods and services sold throughout the economy through a period of time, produced in the UK

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62
Q

job enrichment

A

involved adding new tasks to your employees existing told so they can contribute their full potential

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63
Q

why does labour productivity matter

A

labour costs
business efficiency and productivity
remain conpetitive
high labour productivity= lower lanky costs per unit

64
Q

factors influencing labour productivity

A

extent and quality of fixed assets
skills, ability and motivation
methods of production organisation
trained workforce
external factors

65
Q

how to improve labour productivity

A

measure performance
streamline production process
invest in capital equipment
invest in employee training
improve working conditions

66
Q

problems in increasing labour productivity

A

potential ‘trade off’ with quality
potential for employee resistance
employers may demand higher pay for improved productivity

67
Q

labour productivity

A

how productive your workforce is

68
Q

stakeholder

A

individual or organisation with a vested interest in a business

69
Q

shareholder

A

owner of the business, benefits from value increase

70
Q

return on investment

A

stakeholders interest in profits and dividends

71
Q

managers

A

interested in rewards, job security, and promotion

72
Q

employees

A

interested in rewards, job satisfaction and responsibilities

73
Q

customers

A

interested in value for money, product quality, and customer service

74
Q

suppliers

A

interested in profitable trade and financial stability

75
Q

bank and finance providers

A

interested in profitability, cash flows, and business growth

76
Q

governement

A

interested in tax collection, business growth, and compliancd

77
Q

society

A

interested in successful business and compliance with laws

78
Q

distribution

A

delivering products to buyers; how a business gets its product to their customers

79
Q

marketing mix

A

price
product
place
promotion
process
people
physical environment

80
Q

promotional mix

A

the coordination of the various methods of promotion in order to achieve marketing targets

81
Q

promotion

A

the process of communicating with customers or potential customers

82
Q

branding

A

the process of differentiating a product from its competitors through a name, sign, symbol, design, or slogan

83
Q

product

A

everything that the customer buys-brand features and benefits of a good or service

84
Q

price

A

set to match the expectations of customers and features of the product

85
Q

place

A

using the right channels to get the product to the customer

86
Q

process

A

making the transaction convenient efficient and effective for the consumer

87
Q

physical environment

A

matching the physical environment in which the transaction takes place to the product or brand

88
Q

people

A

adding to the product by using the right people in the transaction

89
Q

product life-cycle

A

the stages through which goods and services move from time they are introduced on the market until they are taken off the market

90
Q

introduction

A

prices may be low to initial sales. have a promotion to cremate awareness. low number of product variations launched

91
Q

growth

A

prices may increase with popularity. New varieties and distribution methods introduced. business must keep up with demand growth

92
Q

maturity

A

consider cutting prices to maintain demand promotion slows as customers are aware of the product

93
Q

saturation

A

or potential customers have the product and there are other better cheaper alternative
prices may be cut to maintain competitiveness

94
Q

decline

A

further prices cut to maintain demand variety of products streamlined to the most popular business may consider discontinuing the product

95
Q

influences on price

A

costs, the price elasticities of demand, competition, product life-cycle, branding, other elements of the marketing mix

96
Q

price skimming

A

starting with the highest price possible so you generate the most amount of revenue and then gradually lowering price

97
Q

dynamic pricing

A

adjusting the price to levels of demand such as hotel room

98
Q

penetration pricing

A

this is starting with a low price to gain interest and then raise in the price to maximise revenue

99
Q

influences on promotion

A

the target audience, competition, technology, the message, promotion budget

100
Q

influences on place

A

control over promotion and pricing, expectations of customers, nature of the product, scope/scale

101
Q

capacity utilisation

A

the extent to which the organisations maximum possible output is being reached

102
Q

capacity utilisation is measured

A

by over a time period

103
Q

ideal target for capacity utilisation is

A

90%

104
Q

every percentage under 100% represents

A

unused resources

105
Q

disadvantages of capacity utilisation

A

higher proportion of fixed costs per unit
lower profit
spare capacity
bored and demoralised workers

106
Q

advantages of capacity utilisation

A

spare capacity, more space
less pressure and stress
allows a company to cope with a sudden increase in demand

107
Q

unit costs of labour

A

the cost of employing labour per unit of output

108
Q

capacity

A

a measure of how much output a company can achieve in a given period of time

109
Q

how is capacity a dynamic concept

A

it can change
more working shifts= increased capacity

110
Q

personal funds

A

main source of finance for sole traders and partnerships. consists of using their own money for the business

111
Q

retained profit

A

the value of profits that the business keep after paying taxes and dividends to use within the business

112
Q

sale or assets

A

selling dormant assets such as machinery

113
Q

share capital

A

only applicable to limited liability companies. money raised from selling shares in the company

114
Q

loan capital

A

obtained from commercial lenders such as banks

115
Q

overdrafts

A

temporarily overdraw on its bank account. usually used when businesses have minor cash flow problems

116
Q

trade credit

A

source of finance that allows a business to ‘buy now pay later’

117
Q

grants and subsidies

A

government financial gifts to support business acitivities

118
Q

hire purchase

A

allows the business to pay their creditors in instalments, perhaps over 12 or 25 months

119
Q

debt factoring

A

financial service that allows a business to raise funds based on the value owed by its debtors

120
Q

leasing

A

a form of hiring whereby a contract is agreed between a leasing company and the customer. where the lessee pays rental income to hire assets from the lessor, who is the legal owner of the assets

121
Q

venture capital

A

high risk capital, usually in the form of loans or shares, invested by venture capital firms, usually at the start of a business idea

122
Q

business angels

A

extremely wealthy individuals who choose to invest their money in business that offer high growth potential

123
Q

debentures

A

a kind of loan capital

124
Q

capital expenditure

A

investment spending on fixed assets such as the purchase of land and buildings

125
Q

initial public offering

A

business converting its legal status to a public limited company by floating its shares on a stock exchange for the first time

126
Q

external sources of finance

A

funds from outside the business

127
Q

internal sources of finance

A

funds from within the business

128
Q

sale and leaseback

A

external source of finance involving a business selling fixed assets

129
Q

share issue

A

exists when an existing public limited company raises further finance by selling more shares

130
Q

too much inventory

A

can result in high storage costs including heating, lighting, insurance etc

131
Q

too little inventory

A

customer demand not fulfilled
stop production whilst waiting for inventories

132
Q

maximum inventory level

A

the largest amount of items to be stored on site

133
Q

minimum inventory level

A

the lowest amount of items to be stored on site

134
Q

re-order quantity

A

the amount of stock ordered to restore inventory levels to their maximum point

135
Q

re-order level

A

the level of inventory at which new stock is ordered

136
Q

lead time

A

the amount of time it takes between ordering stock and the stock being delivered

137
Q

buffer stock

A

stock held in case deliveries are held up or there is an unexpected large order

138
Q

centralised inventory

A

inventory that a company holds in a single storage facility

139
Q

economies of scale

A

the cost advantage of operating on a larger scale, buying more cheaply in bulk and reducing unit costs. this is an advantage to medium to large scale foodservice operations

140
Q

working capital

A

this is money that a business can access immediately, rather than. key that is tied up in investments or property. the availability of working capital is critical to the day-to-day operation of a food service operation

141
Q

cash

A

includes notes and coins of different amounts

142
Q

standing order

A

an agreement by the owner of the bank account and their bank to allow a third party to withdraw a fixed sum of money from their account on a certain

143
Q

direct debit

A

a written document instruction the bank to make a payment from on persons bank account to another bank

144
Q

mobile banking

A

the ability to complete banking transactions on mobile devices and internet connected computers

145
Q

store card

A

similar to a credit card but can only be used in certain stores. the owner can use the card to buy items from that store on credit

146
Q

debit card

A

a card issued by banks to be used to purchase goods and services with payment taken directly from the users current accounts

147
Q

electronic transfer

A

when financial payments are electronically transferred from one bank account to another

148
Q

cheque

A

an agreement by the owner of the bank account and their bank to allow a third party to withdraw specific amount from their account

149
Q

contactless card

A

a card which contains technology to enable it to be touched on a contactless terminal and for funds to be withdrawn

150
Q

credit card

A

issued by financial institutions allowing goods and services to be purchased with payment delayed

151
Q

opening balance

A

the amount of money a business starts with at the beginning of the reporting period.

it is the closing balance of the previous month

152
Q

closing balance

A

the amount of money thi business has at the end of the reporting period

it is net cash flow + opening balance

153
Q

net cash flow

A

a profitability metric that represents the amount of money produced or lost by a business during a given period

154
Q

inflows

A

the money that the business receives over a certain period

155
Q

outflows

A

the amount of money a business loses over a certain period

156
Q

why is net cash flow important

A

keeps operations running, pays bills, and helps a company to grow

Business (2 decks)

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