Paper 1 Flashcards
Analyse why a large business may choose to introduce a product into a niche market (9)
AO1=2, AO2= 3, AO3=4
Define a niche market
Example:
McPlant- performed well in Europe, flopped in US
Analysis:
Profit margins are higher- prices can be higher as market’s niche, competition’s limited so costs are lower
Helps McDonald’s image as a more aware, inclusive and sustainable fast food company- brand recognition is key for McDonalds. This attracts more consumers who care more about these values than the normal customer
A business’ sales have decline recently, leading to redundancies. Analyse how an understanding of Maslow’s hierarchy of needs might help the business to motivate its remaining employees (9)
AO1=2, AO2= 3, AO3=4
DEFINE redundancies
EXAMPLE: Ford posted their biggest loss in early 2000s.
ANALYSIS:
Safety Needs- Ford’s CEO Mullaly openly communicated their problems with employees, ensuring transparency. This led on to fulfilling Social Needs as a collaborative, open culture was introduced (lower level needs must be satisfied first in order to reach the higher motivators).
(Or) managers should understand an employee’s financial situation first before attempting to motivate.
Businesses use contingency planning for major threats -with mixed results. To what extent are these plans’ success based more on internal than external factors (25)
AO1=5, AO2= 4, AO3=6, AO4= 10
DEFINE contingency planning
EXAMPLE: Toyota after 2011 earthquake
ANALYSIS:
Internal Factors:
Toyota had mapped out their suppliers and planned alternatives beforehand, meaning they knew their vulnerabilities and how to deal with them.
Their lean production method helped for quick adaptation after the quake,
External Factors:
Quake led to global car market slowing down for everyone, leading to overall reduced demand and supply and therefore reducing Toyota’s sales
Government aid- rebuilding key infrastructure- helped Toyota resume production faster, but their competition received the same benefit
EVALUATION:
Internal Factors:
In the long-term, Toyota started to pivot slightly from lean production, stockpiling key components for future supply-chain shocks.
Lean production did help them resume production faster than their competitors
External Factors:
Infrastructure building was crucial- Toyota’s contingency planning’s useless without electricity or roads etc
Their global suppliers, and backups, were all impacted by the earthquake, slowing down production.
JUDGEMENT:
While external factors do massively shape a contingency’s planning, success would never have been achieved without strong internal planning, as they were dependent on Toyota’s supplier mapping, alongside the government aid
Is it inevitable that large, growing businesses will experience rising unit costs? Justify your view (25)
DEFINE unit costs (UCs)
EXAMPLES: Boeing have grown with rising UCs, Amazon have grown without
ANALYSIS:
For:
Boeing expanded with new 747s, experienced diseconomies of scale due to delays in production, co ordination with outsourced suppliers etc.
Poor supply-chain management paired with aggressive expansion leads to mismanaged growth and higher UCs
Against:
Amazon have used their improvements in tech (eg more automation and AI) to make their warehouses more efficient.
Bulk purchasing combined with consistently high demand and ever-changing prices reduces supplier costs, overall allowing competitive pricing.
EVALUATION/FINAL PARAGRAPH/JUDGEMENT:
Boeing have always had high unit costs due to their business nature (planes will always be expensive compared to Amazon’s products).
Growth will lead to higher unit costs, unless the highest quality of management prevents that, utilising potential economies of scale and synergy
Emerging economies are beneficial to UK businesses, but only as potential markets to help UK business to achieve growth. Do you agree? Justify your view (25)
DEFINE emerging economies
EXAMPLE: JLR operate in China to reduce costs and sell to their growing middle class demographic
ANALYSIS:
For:
Emerging economies mean richer middle class; increased demand for luxury products (eg JLR cars)- increased sales helps counteract slow UK growth. Huge success, as China’s 40% of JLR sales- compared to slow continental sales growth
Against:
China’s also a manufacturing opportunity (eg they’ve partnered production with Chery Automobile), leading to reduced shipping and production costs.
China also have expertise on EVs- matches up with JLR’s recent strategy to fully become electric, therefore helps them with tech production eg
EVALUATION:
For:
Advantages gained from access to faster growing emerging economies leads to more sales revenue
Against:
Benefits gained from improvements in efficiency acquired from access to resources in emerging economies
FINAL JUDGEMENT:
Emerging economies are beneficial in ways more than just another market for UK businesses
A business decides to make increasing profits its main objective. Is it inevitable that this business will need to improve its quality to achieve this objective? Justify your view (25)
DEFINE profitability and/or quality
EXAMPLE: McDonald’s
ANALYSIS:
For:
Improving product quality (eg using fresh beef instead of frozen patties) enhances customer satisfaction, leading to higher brand loyalty and repeat business- increasing revenue. Strong brand rep can enable premium pricing, improving profit margins
Against:
They also optimised operational efficiency (eg drive-throughs ,e-tills etc). This enabled them to leverage convenience and speed, which also led to premium pricing
EVALUATION:
For:
Quality as a differentiation matters more in certain industries (eg luxury, tech)
Against:
Cutting costs in certain industries (eg supermarkets) can be more profitable in short-term, but can hurt brand rep in long-term
CONCLUSION:
Although there are other ways to increase profitability, improving quality is a surefire way to increase profitability in long-term. But it isn’t inevitable that it’s absolutely necessary to do so to improve profitability
Analyse why non-profit organisations set financial objectives? (9)
DEFINE non profit organisations and financial objectives
EXAMPLE: Oxfam
ANALYSIS:
So they can maximise fundraising for charitable programs (eg emergency aid), ensuring they can secure their position and carry on in the long-run.
Helps provide focus to their employees as to where they need to be, gives them a clear direction in which to work towards, so that progress can be achieved
Analyse how widening a manager’s span of control might affect labour productivity within the department she manages (9)
DEFINE span of control and labour productivity
EXAMPLE: Amazon
ANALYSIS:
Lower span of control means that there’s less individual attention and monitoring, could lead to less motivation and reduced labour productivity.
Amazon’s increased automation helps managers delegate more if necessary; employees will be motivated by more responsibility. Also, less manager levels mean that communication’s quicker, meaning increased efficiency
Analyse why a business might choose to use labour intensive processes rather than capital intensive processes (9)
DEFINE labour intensive processes and capital intensive processes
EXAMPLE: Primark (Fast Fashion)
ANALYSIS:
Cheaper to outsource production in low-wage economies than invest in expensive machinery, keeping costs low and profits high
Machinery’s less flexible than human workers in designing the different clothes- helps respond to different trends
