Paper 1 - Market, People and Global Flashcards
1
Q
What is an entrepreneur?
A
Individuals who typically set up and run a business and take risks associated with this
2
Q
Give 3 entrepreneur qualities…
A
1) take risks
2) resilient
3) innovation/initiative
3
Q
what is the formula for profit…
A
P= TR-TC
4
Q
What is profit maximisation?
A
the ability for a company to achieve a maximum profit with low operating expenses
5
Q
What is profit satisficing?
A
an entrepreneur may aim to make just enough profit to keep the business moving and have another aim at the same time - this is more of a realistic goal
6
Q
social enterprise
A
a business model that puts the interests of people and planet before shareholder gain
7
Q
intrapreneurship
A
an employee within a larger business who thinks like an entrepreneur
8
Q
leadership
A
the action of leading a group of people or an organisation, or the ability to do this
9
Q
management
A
the process of dealing with or controlling things or people
10
Q
what are the 4 types of leadership
A
1) autocratic
2) democratic
3) paternalistic
4) laissez - faire
11
Q
what is autocratic leadership?
A
- tell their employees what they want done without getting the advice of their followers. eg. donald trump.
- they issue orders and expect them to be followed (ethnocentric approach) they are motivated by money
- the manager insists on obedience
- usually results in members being dissatisfied with the leader
- there is little cohesion and poor motivation
- however –>autocratic leadership may be needed in some circumstances e.g. army
12
Q
what is democratic leadership?
A
- offer guidance to group members and employees have greater involvement in decision making.
- the leader consults with subordinates and then makes a decision eg. richard branson
- can be either PERSUASIVE or CONSULTATIVE
persuasive –> leader has already made the decision but takes the time to persuade others its a good idea - consultative –> leader consults others about their views before making a decision and the final decision takes into account these views
democratic leaders need good communication skills
*however–> decisions may take longer
13
Q
what is paternalistic leadership?
A
- similar to autocratic leadership, but they are interested in subordinates
leader decides what is best for employees, based on a parent/child relationship, softer form of leadership - employees are consulted but the leader makes the final decision
14
Q
what is laissez-faire leadership?
A
where employees can carry out and make decisons freely and work in a very relaxed environment with little guidelines.
e. g. steve jobs
- leader gives little guidance and allows workers freedom
* effective when workers are highly skilled*
advantage- good in a creative environment
disadvantage - lack of supervision
- some may not be able to set their own boundaries and not meet deadlines
- could cost the business if deadlines are missed
15
Q
hierarchy
A
where employees are ranked due to their status and authority
16
Q
chain of command
A
this is the flow of information power and authority through organisation
17
Q
what happens if there is a long chain of command…
A
1) message distortion
2) takes a long time - less efficient
3) more important layers may dilute the urgency and the impact
4) more challenging with complex instructions
18
Q
span of control
A
the number of subordinates that report to an individual directly and are responsible for
19
Q
wide span of control (flat structure) - short chain of command
A
this means a single manager or supervisor oversees a large number of subordinates. this gives rise to a flat structure
20
Q
advantages of wide span of control
A
1) issues get dealt with quicker
2) more profit for managers as things are dealt with quicker - more direct
21
Q
disadvantages of wide span of control
A
1) more challenging to supervise as there are more people to monitor
2) harder to get a promotion - lead to poor motivation and lower productivity
22
Q
narrow span of control (tall structure) - long chain of command
A
this means a single manager or supervisor oversees a few subordinates. this gives rise to a tall organisational structure
23
Q
advantages of narrow span of control
A
1) allows specialisms and close control
2) lots of promotion opportunities*
24
Q
disadvantages of narrow span control
A
1) more expensive because of the different layers - have more managers to pay more
2) more distanced from decision making
25
delegation
the transfer of responsibility down the chain of command
26
centralisation
Businesses that have a centralised structure keep decision-making firmly at the top of the hierarchy
27
decentralisation
A structure in which decision making is spread out to include more managers in the hierarchy
28
how many stages are in the recruitment process?
8 stages
29
what is the first stage of recruitment
1) identify the vacancy
- retired
- moving to a different job
- promotion
- maternity leave
30
what is the second stage of recruitment
2) write a job description including:
| - responsibility and workload of position
31
what is the third stage of recruitment
3) person specification
- qualities and skills
(desirable, essential)
32
what is the fourth stage of recruitment
4) advertise the recruitment
- internally/externally
eg. newsletter, email, online, meeting
33
what is the fifth stage of recruitment
5) candidates apply
- may have to send off cv, or application form
adv - for the business it is quick and easy and also keeps costs down
disadv - might have some irrelevant info which would be time consuming
34
what is the sixth stage of recruitment
6) candidates are shortlisted
- many jobs will attract more candidates than possible
BLIND SHORTLISTING - the names and DOB are taken out so there are no sexist/bias decisions
35
what is the seventh stage of recruitment
7) shortlisted candidates are interviewed
- normally face to face
- sometimes over the phone
36
what is the eighth stage of recruitment
8) candidates may participate in other recruitment activities
- may have to go to recruitment centre
- may have to complete certain tasks/training
37
internal recruitment
workers already in the business can apply for a new position
adv- already loyal and you know what there work ethic is like
38
external recruitment
workers outside of the business can apply
- more likely to work harder if they are at a new job
- they bring 'fresh blood' and new skills
39
costs of recruitment
- cost of the advert
- cost of the wage of the new employee
- loss of productivity - takes 6 months to 'settle in'
- up to half of employees leave within the first year
40
what are the three types of training
1) induction training
2) on-the-job training
3) off-the-job training
41
induction training
- ensures they are familiar with the work place
- able to do their job
- feel part of the organisation
- quickly become productive for the business
- company policies/health&saftey
- introduce to staff
if the job is more basic the induction won't be as long
42
on-the-job training
-coaching or mentoring while doing the job, assistance and advice is provided by those more experienced
adv - less expensive than off the job
- learning can be put into practice immediately
disadv - reduces efficiency
- some workers have bad habits that they may pass on
43
off-the-job training
it doesn't reduce efficiency and staff can still do their job
44
what is work - life balance
making sure that work and life is balanced because otherwise they don't become overwhelmed
45
advantages of work life balance
- individuals are more motivated to work hard and this will lead to an increase in productivity
- less stress so your health is better reduced absenteeism
46
what is the importance of employee motivation?
- staff are more loyal, reliable, productive
- loyal staff are less likely to leave which improves labour turnover rates
- -> also reduces absenteeism
47
who are the 4 theorists for motivation?
1) taylor
2) mayo
3) maslow
4) herzberg
48
what was taylors theory?
" fair days pay for a fair days work "
- believed the employee would do minimum work if not supervised
- main form of motivation is high wages = high output
- a managers job is to tell employees what to do
- a workers job is to do what they are told and get paid accordingly
49
what was mayo's theory?
based his assumptions on research undertaken at Hawthorne factory
- changed working conditions such as break times
- found that just being watched increased motivation
- working in teams was more important than money
- non financial motivators were more important
- boring and repetitive work can be a demotivator
50
what was maslow's theory?
hierarchy of needs
1) self actualisation
2) self esteem
3) love/ belonging
4) safety and security
5) physiological needs
51
what was herzberg's theory?
two factor theory
employees have motivating factors and hygiene factors
motivating - interesting work, recognition, personal achievement, responsibility and scope to develop
hygiene factors - if not met, would dissatisfy employees but if not met, it would not motivate them any more than they already are.
--> general satisfaction / prevention of dissatisfaction
52
what are financial incentives
- piecework - worker gets paid per piece of work they do
- commission
- bonus
- profit share --> annual dividend based on profits
- performance related pay(PRP) --> based on appraisal
53
what are non financial incentives
- job enrichment - more variety of tasks so increase responsibility
- job rotation - one task to another
job enlargement - more tasks at the same level of responsibility (horizontal)
- flexible - reduces absenteeism
- team working
- empowerment - more authority than others - loyal
- consultation - H&S issues, redundancy, changes to contract
- delegation - might give too much or too little work
54
what does marketing involve?
- identifying needs of customer
- awareness of product
- designing products that meet these needs
- understanding threats from competitors
- charging the right price
- products available easily
55
what is the definition of a mass market?
when a business sells the same product to all consumers and markets them in the same way
- no. of customers --> millions --> so they can produce large quantities at a lower cost --> EOS
- may result in increase sales and revenue etc
* * but there is a lot of competition so marketing may be expensive**
56
what is the definition of a niche market?
a smaller market within a large subset of a larger market
- -> selling to a smaller group with more specific needs
- -> avoids competition - charge premium price
57
what is the definition of a brand?
something is given a name to distinguish itself from others
- important in a mass market
- differentiate
- create customer loyalty
- develop image
- can charge a premium price when the brand is strong
58
what is the definition of online retailing?
involves shoppers ordering goods online and taking delivery home
59
what is the definition of pricing strategies?
the pricing policies or methods used by a business when deciding what to charge
60
what are the 6 pricing strategies?
1) cost - plus pricing
2) price skimming
3) penetration pricing
4) predatory pricing
5) psychological pricing
6) competitive pricing
61
what is cost plus pricing?
businesses have to set a price that will make a profit
- involves adding a mark up to cover unit costs - usually common with retailers
* however --> it ignores market conditions
- may be difficult to identify all costs if a business has multi products
62
what is price skimming?
launch a product onto the market and charge a high price for a limited period
- aim to generate high levels of revenue while it is unique and has no competitors
- charging a high price helps the business to recover high development/research costs
* early adopters are prepared to pay high prices
- -> helps elevate the image of the product
* however --> skimming may draw in competition who charge lower prices
- will only be used if demand is inelastic
63
what is penetration pricing?
introduce a new product onto the market and charge low price to gain a foothold in the market
- customers are attracted by a low price and then continue to buy and repeat buy
- beneficial when targeting low/ middle class customers
- can grow the sales of a new line quickly
- can put pressure on rivals
* can't have the low prices for too long because customers will get used to them and then not respond when they raise them
64
what is psychological pricing?
set the price slightly lower than a round figure
e.g. £99 instead of £100
makes the customer think they are getting a low price
- targets customers who like a bargain
- not likely to be used with up market products
65
what is predatory/destroyer pricing?
aims to eliminate other competitors from the market
- involves charging very low prices for a period of time until one or more competitors leaves the market
- some forms of predatory pricing are illegal in the UK
* however--> can be used to sell unsold stock
66
what is competitive pricing?
pricing strategies based on the prices charged by rivals
- likely to be used in a fiercely competitive market
- could charge the same price as competitors and avoid a price war
- price leadership - mkt leader sets price for others to follow
67
what are the 6 factors that determine which pricing strategy to choose?
1) PED
2) differentiation/ USP
3) amount of competition
4) strength of brand
5) stage in Product LC
6) costs/ need to make profit
68
what are the 5 marketing strategies?
1) product life cycle
2) extension strategies
3) boston matrix
4) B2B & B2C
5) consumer behaviour
69
what are the 5 stages of the product life cycle
1) development/ research
2) introduction
3) growth
4) maturity
5) decline
70
what is involved in the DEVELOPMENT stage of PLC
- large number of new products will fail at this point
- -> because new businesses are reluctant to take risks
- it involves high costs as there will be no sales at this stage
* businesses will be spending but receiving no revenue
71
what is involved in the INTRODUCTION stage of PLC
- sales may be slow and they may need to build a new production line and the firm will have to meet promotion and distribution costs
- will need to spend on promotion --> make consumers aware of the product
- prices may be set high to cover costs OR low to get a foothold in the market
- length of this stage will vary according to product
- fast moving consumer goods - rapid sales/growth
72
what is involved in the GROWTH stage of PLC
- product has been established and sales will being to grow
- new customers buy product and repeat buy
* unit costs may fall as prodn increases --> product is then profitable
- competitors may launch their own versions
- -> business should consider prices/promotion
73
what is involved in the MATURITY stage of PLC
- product has a stable market share
- -> sales will have peaked and competitors take advantage
- as more firms enter - market becomes saturated
- may be too many firms -some forced out mkt
* business may use extension strategies to extend life cycle
74
what is involved in the DECLINE stage of PLC
- for majority of products, sales will eventually decline
- -> due to changing consumer tastes, new tech or introduction of new products
- product will lose its appeal to customers
* may also be possible to make a profit if a high price is charged and costs are low on promotion etc*
75
what is the definition of extension strategies?
methods used to prolong the life of a product
two approaches:
1) adjustment to product
2) promotion
76
what is the first approach to extension strategies?
PRODUCT ADJUSTMENT
involves making improvements, updating, repackaging or extending the range
- this may add value to the product
--> may be faster, more stylish, more functions
- extend product range
--> add new flavours/ alternatives etc
- modified with new packaging
77
what is the second approach to extension strategies?
PROMOTION
- leave product unchanged but boost sales through promotions
- find new uses for the product
- find new markets for the product
- a big advertising campaign to rejuvenate sales
- encourage frequent use of products
* firms that can predict a decline in sales from forecasts will be able to react quicker and start extension strategies
78
what is the definition of boston matrix?
analyses a product portfolio according to the growth rate of the market and the relative mkt share of products in the market
79
what is the definition of product portfolio?
made up of product lines --> a group of products which are similar
e.g. TV's --> HD, widescreen, flatscreen
" the collection of products a business is currently making "
80
what is the definition or market growth?
how fast is the market for the product growing?
| - sales of a product in a fast expanding market have a better chance of growing than in a declining one
81
what is the definition of relative market share?
how strong is the product within its market?
| - is it a leader or is it 12th in terms of sales?
82
what are the 4 elements of the boston matrix?
1) star
2) cash cow
3) question mark/problem child
4) dog
83
what are the features of STAR in boston matrix
high market growth & high market share
- ----------------------------------------------------------
- valuable to businesses
- strong position - can take advantage of a fast growing market
- likely to be profitable but may need to invest
84
what are the features of CASH COW in boston matrix
high market share & low market growth
- --------------------------------------------------------
- positioned well in market and --> likely to be profitable
- little chance of increasing sales in the future
- little need for investment
85
what are the features of QUESTION MARK in boston matrix
low market share & high market growth
- --------------------------------------------------------
- potential to turn into star if mkt is fast growing
- unlikely to be profitable with weak market share
- investment needed to cope with expanding sales
86
what are the features of DOG in boston matrix
low market share & low market growth
- -------------------------------------------------------
- poor prospects for future sales and profits
- may generate some positive cash flow, need little investment
87
what should businesses do to make sure they are in the best position with their boston matrix
businesses should balance their product to make sure they dont contain too many items in each category
88
what is the definition of marketing strategy?
a set of plans that aim to achieve a specific marketing objective
--> involves elements of the marketing mix
89
what is a mass market?
can be global and have millions of potential customers
| --> usually very competitive, rewards for success are significant
90
features of marketing mix in the mass market
PRODUCT
---------------------------------------------------------------------------------
- they will be close substitutes of each other
- most successful are those that can differentiate(USP)
- if it cant differentiate it may rely on other areas of the marketing mix
PRICE
---------------------------------------------------------------------------------
prices charged are likely to be similar
- price wars will reduce revenue for every competitor, so they try to reduce this
- price leadership is common - where the leader/ most dominant business sets a price and everyone follows
PROMOTION
---------------------------------------------------------------------------------
- help gain an edge
- prepared to invest heavily in advertising
eg - less than 5% who see a TV advert will by the product - but 5% of millions will reach a lot
PLACE
--------------------------------------------------------------------------------
- often use multiple channels to distribute goods
- fast moving consumer goods - supermarkets, wholesaler
- some manufacturers pay supermarkets to display certain goods in prominent places - e.g. eye level or on the end of an aisle
- internet used to sell good and services in mass markets
--> has allowed small businesses to have access to mass markets
91
what is a niche market?
a subset of a larger market where customers needs are very specific(bespoke) and their needs are sometimes neglected by larger firms
92
features of marketing mix in the niche market
PRODUCT
--------------------------------------------------------------------------------
- product is likely to have significant differences from rivals
- they will be designed specifically to meet the needs of the customer group e.g. quality
PRICE
--------------------------------------------------------------------------------
- more flexibility in pricing
- less competition - so higher prices can be charged without losing market share
- customers will be prepared to pay higher prices
PROMOTION
--------------------------------------------------------------------------------
* tends to be more targeted
- smaller market - so dont need to use national media
- need to identify customer profile very accurately to ensure advertising targets correct people
PLACE
--------------------------------------------------------------------------------
- more selective when choosing distribution channels
- use exclusive distributors or handle privately
- can use internet if practical
