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Business > Paper 2 > Flashcards

Paper 2 Flashcards

1
Q

Job production

A

Products made individually

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2
Q

flow production

A

one product continuously using assembly line

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3
Q

batch production

A

one type of production and then another type of product

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4
Q

advantages of job production

A

high quality
charge high price and get profit

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5
Q

disadvantages of job production

A

costly- especially if required skilled workers
production may be slow

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6
Q

advantages of batch production

A

-meet needs of customers
-no storage costs
-cheaper than job production

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7
Q

disadvantages of batch production

A

-machine needs re setting- expensive
-stock of materials
-tasks repetitive for workers- motivation and retention problems

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8
Q

advantages of flow production

A

-large quantities
use of machinery can reduce costs

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9
Q

disadvantages of flow production

A

-may not be high quality
-stock loads of materials
-can be disrupted (machine broken)
-tasks repetitive for workers - motivation and retention problems

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10
Q

advantages of technology in production

A

-can replace workers (cheaper)
-less mistakes (more accurate then human)
-24/7 operating
-human safety improved (they can do less dangerous tasks)

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11
Q

disadvantages of technology in production

A

-workers may need to be retrained to work with new tech and this expensive
-machines can break down
-new tech expensive to buy

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12
Q

benefits of providing quality goods

A

—good reputation
-less returns

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13
Q

what is quality control

A

inspection to check each product is at high standard eg mystery shopper

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14
Q

advantages of quality control

A

-stops poor quality goods being sold
-good quality products improve reputation

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15
Q

disadvantages of quality control

A

-doesn’t prevent waste
-expensive

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16
Q

quality assurance

A

all workers responsible for quality of their work

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17
Q

advantages of quality assurance

A

-reduce wastage
-motivates workers to make good product
-can improve reputation

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18
Q

disadvantages of quality assurance

A

-workers stressed by responsibility

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19
Q

advantages of face to face selling

A

-useful when customers like advice
-customer can bargain

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20
Q

disadvantages of face to face selling

A

not always convenient for customer
-if customer bargains, seller loses profit

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21
Q

advantages of telesales

A

-costs less then selling from a shop

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22
Q

disadvantages of telesales

A

-costs to stock products at warehouses
-sells may not see the call

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23
Q

3 methods of selling

A

e commerce
face to face
telesales

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24
Q

influence of e commerce

A

-levels of employment lower
-speedy delivery
-click and collect

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25
Q

advantages of e commerce to business

A

-sell around the world
-24/7
-cost of selling lower (don’t need to pay lots of workers)

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26
Q

disadvantages of e-commerce to business

A

-competition increased
-delivery systems organised
-cyber security

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27
Q

advantages of e commerce to customers

A

-compare prices online
-buy 24/7

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28
Q

disadvantages of e commerce to customers

A

-goods are what is seen on website, can be different in real life and returned
-if system not secure, data theft
-not everyone has access to tech

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29
Q

disadvantages of customer service

A

-expensive to train customers to deal with customers

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30
Q

advantage of product knowledge

A

increases sales

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31
Q

disadvantage of product knowledge

A

costs in training staff

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32
Q

When the law is broken for safety of goods

A

compensation for injuries or death
bad reputation
stop selling product
forced to close

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33
Q

why is proximity to market important for location

A

easy communication
less costs for transportation

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34
Q

why is proximity to labour important to location

A

if you need unskilled workers, find high unemployment area

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35
Q

proximity to materials

A

transportation costs
less co2 emmissions

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36
Q

4 stages of procurement

A

-identifying goods to buy
-choosing suppliers
-ordering goods
-receiving delivery from supplier

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37
Q

how does identifying goods to buy influence decisions

A

-which season
-changes in fashion and lifestyle

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38
Q

role of the finance function

A

calculating sales revenue and production costs
break-even output needed to avoid a loss

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39
Q

why do businesses need finance

A

-setting up a business
-recruitment
-expansion
-marketing

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40
Q

owners capital

A

owners savings invested
any time
sole traders and partnerships

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41
Q

retained profit

A

money NOT distributed to owners as profit
-medium or long term
-all established businesses

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42
Q

sale of assets

A

fixed goods owned by business sold to raise money
-all time
-established business

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43
Q

overdraft

A

makes more money available to a business that it has from bank
all businesses
short term

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44
Q

trade credit

A

sells goods to customer and agrees to pay them later
short term
all businesses

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45
Q

taking on a new partner

A

new partner invests some of their savings in business
-established partnerships
-long term

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46
Q

advantages of owners capital

A

no need to repay
no interest

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47
Q

disadvantages of owners capital

A

-risks saving
-may not have enough savings

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48
Q

advantages of retained profit

A

-no need to repay
-no interest

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49
Q

disadvantages of retained profit

A

-business may have no profits
-owners don’t get profit as income

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50
Q

advantages of sale of assets

A

-no need to repay
-no interest
-can get rid of old stock

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51
Q

disadvantages of sale of assets

A

difficult to sell
time to sell

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52
Q

advantage of overdraft

A

-meets short term cash flow problem
interest only paid on amount owed
repayment when overdraft no longer needed

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53
Q

disadvantages of overdraft

A

interest charged each day money is owed

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54
Q

advantages of trade credit

A

no interest if repaid within time period
can help with cash flow problem

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55
Q

disadvantage of trade credit

A

goods must be paid for even if they don’t sell
interest charged if payment late

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56
Q

advantages of taking on a new partner

A

-new skills
-no need to repay
no interest

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57
Q

disadvantages of taking on new partner

A

existing owner has to share profit

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58
Q

loan

A

money borrowed for some time, bank may take security if not repaid.
medium or long term
all businesses

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59
Q

advantages of loan

A

repayment made in fixed sums
money available immediately

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60
Q

disadvantages of loan

A

-interest must be paid

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61
Q

share issue

A

new shares sold to raise money. investor can earn dividends
long term
limited companies

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62
Q

advantages of share issue

A

-new investors can contribute a lot of money
-no need to repay
-no interest

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63
Q

disadvantages of share issue

A

existed owners have to share profits with new owners
only be sold by limited companies

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64
Q

crowdfunding

A

money donated or invested by sponsors to become part owners of business
sponsors can: donate, lend money, become part owner
-medium/long term
-all businesses

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65
Q

advantages of crowd funding

A

-new supports can contribute a lot of money
-no need to repay
- no interest

66
Q

disadvantages of crowd funding

A

interest only paid if money raised through loan
ownership shared if investment

67
Q

Which finance can be used any time?

A

owners capital
sale of assets

68
Q

what type of finance is trade credit?

A

short term (up to 1 year)

69
Q

what type of finances are medium and long term

A

retained profit
bank loan
crowdfunding

70
Q

what are the two types of long term finance

A

taking on a new partner
share issue

71
Q

external finance

A

finance raised from outside business eg loan

72
Q

internal finance

A

finance raised within business eg owners capital

73
Q

total revenue

A

all money business earns from sales

74
Q

how can a business increase revenue?

A

increase price of product
reduce price to increase sales
advertising

75
Q

why might a business not want to make a lot of revenue

A

don’t want to expand

76
Q

How do you know there’s been an improved performance

A

gross profit margin rises
net profit margin rises

77
Q

break even

A

business not making a profit or loss

78
Q

why is a break even forecast useful

A

plan how much to produce or charge
how much to make a profit
if they need a loan
margin of safety

79
Q

problems with break even forecasts

A

-prediction
competitors in market change
-variable costs can change
-may not be able to sell as price planned

80
Q

liquidity

A

ability to turn assets into cash

81
Q

cash flow forecast

A

expected flow of money into and out of business over period of time

82
Q

negative cash flow

A

more cash going out of business than coming in

83
Q

2 reasons why cash flow forecasts useful?

A

-planning- a bank manager more likely to give a loan
-anticipating periods of cash shortage

84
Q

closing balance

A

cash left at end of month. opening balance for next month

85
Q

net cash flow

A

total inflow of cash - total outflow

86
Q

consumer rights law goods must be:

A

of satisfactory quality
fit for purpose
as described

87
Q

procurement

A

management of the buying area in a business

88
Q

logistics and supply are affected by

A

time
reliability of supply
length of supply chain
costs
customer service

89
Q

unethical behaviour examples

A

using child labour
paying workers low wages
not providing safe working conditions
discriminating against workers

90
Q

problems of being ethical to a business

A

-higher costs (eg providing safe working conditions)
-lost sales (unethical businesses can earn sales by not marketing honestly)
-poor financial figures ( good for publicity)

91
Q

benefits of being ethical to a business

A

-workers can trust employer, increases motivation and retention (so recruiting new workers expenses not needed)
-good rep with customers
-investors like it , business will make them look good

92
Q

sustainable production

A

making goods and services without depleting natural resources

93
Q

examples of sustainable production

A

solar and wind energy
sustainable construction (building with recycled resources)
saving water
switching off lights
recycling waste
public transport

94
Q

problems of climate change on businesses

A

-lose their supply of energy
-farming affected so food higher price
-old people die from heat related issues

95
Q

benefits to business of being environmentally friendly

A

increased sales
reduced costs (energy saving light bulb)
reduced tax bills
reducing resources running out

96
Q

disadvantages of being environmentally friendly to a business

A

raw material costs
production methods may be expensive (eg growing food organically )

97
Q

globalisation

A

how businesses in different countries become connected in their activities

98
Q

globalisation has increased due to…

A

transport
internet
free trade agreements

99
Q

negative effects of brexit on businesses

A

-inspections and paperwork need completing (expensive time consuming)
-problems recruiting labour

100
Q

positive effects of brexit on uk businesses

A

-free to make trade with non-EU countries
-increased exports to EU because of fall in money value after brexit

101
Q

4 impacts of globalisation on businesses

A

growth of multinational companies
influences on business location
international branding
how businesses compete internationally

102
Q

advantages of being a multinational company

A

increase sales (more countries= more sales)
spreading risk (one country in recession, other in growth)
lower costs- costs of production can be lower
tax avoidance- setting up headquarters in a low tax country

103
Q

benefits of multinational company to country it locate at

A

creating demand (may employ local people so creates jobs)
taxes and public services helps them with education and health
lower prices and costs

104
Q

disadvantage of multinational company to country it locate at

A

-business closures (local businesses may not be able to compete)
-outflows of money (move profit to their headquarters)

105
Q

benefits to UK businesses of locating in another country

A

-lower costs (labour and tech and land)
-diff expertise in diff countries
-skilled workers
-demand (near their market)

106
Q

disadvantages of UK businesses of locating in another country

A

-quality control (happening far away from headquarters)
-communications
-transport of materials (late? )
-loss of sales - workers will be unemployed if this happens all over uk, incomes will fall, and their sales will fall
-access to skilled labour
-costs
-environment

107
Q

businesses need to consider with international branding…

A

-language
-names
-level and distribution of income
-legal factors
-bribery

108
Q

human resources issues internationally

A

-recruitment, training, motivation
-communications
-employment law

109
Q

business operation changes internationally

A

-production processes and tech
-quality of goods
-sales processes and customer service
-location

110
Q

4 features of interdependent nature of business

A

-operations, finance, marketing
-how these underpin decision making
-impact of risk and reward on activity
-use of financial info

111
Q

example of after sales service

A

offering refund if customer not happy
more likely to return more. reliable

112
Q

customer rights law

A

consumer rights act 2015

113
Q

3 ways customers are protected by law

A

-must be satisfactory quality
fit for purpose
as described

114
Q

4 customer rights of buying

A

rights within 30 days

rights within 6 months (presumed fault there when buying)

rights after 6 months (customers fault , prove its sellers)

services- if not completed in agreed time or up to standard, ask again or price reduction

115
Q

Why is transport infrastructure a factor of choice of location

A

-closer to raw materials keeps costs low

116
Q

why does government affect choice of location

A

-encourage to set up in a area to increase employment

117
Q

procurement

A

management of buying area in a business

118
Q

factors affecting goods to buy

A

-time of year (clothes=weather)
-changes in tech( don’t overbuy tech being replaced in near future)
-changes in fashion and lifestyle

119
Q

factors affecting goods to buy

A

-time of year (clothes=weather)
-changes in tech( don’t overbuy tech being replaced in near future)
-changes in fashion and lifestyle

120
Q

how businesses choose suppliers

A

reputation of suppliers
quality of goods supplied

121
Q

decisions on logistics and supply affected by:

A

time- vital for delivery
reliability of supply- for fresh fruit, daily. seen as unreliable if bad
length of supply chain- any problem with long ones can affect final product. shorter more reliable and easy to manage
costs- paying to much for supplies avoided
customer service

122
Q

financial info provided by businesses

A

costs and revenue of business
break even forecasts
info on profit or loss
MUST BE UP TO DATE

123
Q

sources of finance

A

where businesses get money from to make payments

124
Q

break even

A

number of products need to be sold to cover all costs. assumptions,

125
Q

why is cash flow significant

A

monitors inflow and outflow of money
will it have enough income to pay upcoming bills

126
Q

examples when financial info will be useful

A

business wants to be environmentally friendly- may need finance
-economic recession
-a business changing production type
-change marketing
-change how products sold(online)

127
Q

how do different businesses raise finance

A

-sole traders and partnerships cannot sell shares
-limited partners cannot take extra partners
- business with poor financial record unlikely to find banks willing to lend money

128
Q

revenue

A

quantity sold x selling price

129
Q

variable costs

A

quantity sold x variable cost per unit

130
Q

total costs

A

all fixed costs + all variable costs

131
Q

gross profit

A

profit by buying and selling goods without paying for day to day expenses of running business

132
Q

gross profit calculation

A

revenue-cost of sales

133
Q

net profit

A

profit from buying and selling goods and allowance for costs involved in running business

134
Q

net profit calculation

A

gross profit - costs of running business

135
Q

gross profit margin

A

gross profit/revenue x 100

136
Q

net profit margin

A

net profit/revenue x 100

137
Q

3 factors that can affect revenue due to price changes

A

number of competitors (none=business can raise finance)
action of competitors (if raise prices, then they can raise prices without losing customers)
starting price

138
Q

variable costs increasing:

A

-accept price increase and look for savings
-look for different supplier
-negotiate for different price

139
Q

if a business makes large profit it could

A

buy new equipment
look to take over businesses
pay increasing dividends to shareholders
develop new products or services

140
Q

average rate of return

A

average returns over its life

141
Q

Average rate of return calculations

A

profit= total income-cost of machine

annual average profit= profit divided by years

annual average profit/ cost of investment x 100

142
Q

break even calc

A

total costs of production = total revenue

143
Q

margin of safety

A

when actual sales are greater then level of sales needed to break even
actual sales - break even sales

144
Q

break even calculation

A

total fixed costs / price -variable costs per unit

145
Q

profit

A

total revenue - total costs

146
Q

examples of cash outflow

A

money going out of business so
paying wages to employees
paying for stock

147
Q

net cash flow

A

total inflow- total outflow

148
Q

is a negative cash flow a problem

A

-can be temporary and not a problem
-require additional finance
-delay payments to suppliers

149
Q

unethical practices

A

-fake advertising
-charging a higher price than fair
-testing beauty products on animals

150
Q

gross domestic product

A

amount of goods a business produces in a year

151
Q

economic growth

A

when gdp is rising

152
Q

recession

A

when the gdp of a country falls

153
Q

negative effects of rising incomes on business

A

if they produce cheap and low quality, customers won’t buy bc they can buy expensive products

154
Q

how businesses will be affected by a change in income

A

how much income changes
type of product a business sells

155
Q

how a business is affected by change in EMPLOYMENT

A

how much employment changes
type of employment (skilled?)

156
Q

distribution of income

A

gap between rich and poor

157
Q

what to do during recession

A

-reduce production costs
-worker productivity increase so motivated to do more

158
Q

how can human resources improve productivity

A

-motivating workers through schemes

159
Q

how finance department can reduce costs (during a recession)

A

-improving cash flow
reducing interest rate on overdrafts

160
Q

how marketing can reduce costs

A

-change the product
-more promotion
different pricing strategies
-change location or add locations

161
Q

what does globalisation involve

A

buying and selling goods made in different countries
movement of workers from different countries

162
Q

how risk and reward impact business activity

A

if profits fall perhaps introduce new tech
this has a risk
take out a loan

Business (3 decks)

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