Paper 2 Flashcards
Give an advantage and disadvantage of job production
Advantage is that the item is likely to be of high quality and can be specific to the customer if they want it to be
Disadvantage is that it is very expensive and the production may be slow
Give an advantage and disadvantage of batch production
Advantage is that it is cheaper than job production and it can vary to meet different needs
Disadvantage is that it may be repetitive
Give an advantage and disadvantage of flow production
Advantage is that large amounts can be made at once
Disadvantage is that they may not be high quality and that the workers may get bored as it is very repetitive
What are 3 ways that technology can be used in production?
- Robotics
- Computers
- Automation
What is 2 advantages of technology in production?
- Machines can replace workers at a much lower price
- Waste is reduced as machines are usually more accurate than humans
What are 2 disadvantages of technology in production?
- The business needs to recruit skilled labour to work with the technology
- Machines can break down without warning
What are 2 benefits of providing quality goods and services?
- Waste is reduced
- The business gains a good reputation
What is an advantage of quality control?
- Stops poor quality goods and services being sold
- Production can continue while inspection takes place
What is a disadvantage of quality control?
- It does not prevent waste
- Inspection can be costly
What is an advantage of quality assurance?
- It should reduce wastage and costs
- All workers are responsible for quality which may motivate them
What is a disadvantage of quality assurance?
- Workers may be stressed by the constant checking of their own work
What is an advantage of face to face selling?
- Can increase sales
- Can help sales in a business
- The customer can ask questions and bargain with the producers
What is a disadvantage of face to face selling?
- May not always be helpful for customers
- Retailers costs are high if expensive shops are needed
- Customers have to be there to have face to face selling so it isn’t available 24/7
What is an advantage of telesales?
- Can increase sales
- May cost the shop less
What is a disadvantage of telesales?
- Costs involved such as a warehouse to store goods
- Sellers may ‘cold call’
What are 3 influences of commerce on business?
- Delivery options
- Levels of employment
- New skills
- Location
- Creation of new departments
- Business opportunities
What is an advantage of e-commerce to producers?
- It is possible to sell 24/7
- It is usually cheaper
What is a disadvantage of e-commerce to producers?
- Competition will increase
- Delivery systems may be unorganised
What is an advantage of e-commerce to customers?
- Customers can buy 24/7 from anywhere
What is a disadvantage of e-commerce for customers?
- It is impersonal so customers may not feel appreciated
What is the importance of customer service and what might be a problem with it for the business?
- It increases sales as the customer feels important
- Although it can be expensive to train workers
What is the importance of after sales service?
It can increase sales as customers feel confident although it can be expensive to train workers
What is the importance of product knowledge?
It increases sales as customers are given info that helps them make decisions properly. Although it can be expensive to train staff
What is the importance of customer engagement and what might be a problem it causes for the business?
- It increases sales as customers feel comfortable with the buying experience
- Although it can be expensive to train staff
What does the law state that goods and services must be?
- Satisfactory quality
- Fit for purpose
- As described
What are 3 factors that influence location?
- Costs
- Proximity to the market
- Proximity to labour
- Proximity to materials
- Government
What are 2 roles of procurement?
- identifying goods and services to buy
- Choosing suppliers
- Ordering goods and services
- Receiving deliveries from suppliers
What are 2 logistical issues for a business?
- Time
- The supplier must be able to deliver the goods on time - Reliability
- They must be able to supply goods at a given quantity and quality - Costs
- Customers will want low delivery costs while suppliers will want them to be high
What are 2 roles of the finance function?
- Calculating the average rate of return
- Calculating the break-even output needed to avoid a loss
- Calculating sales
- Calculating profit
- Forecasting cash-flow
- Managing payments
- Arranging finance
What are 2 reasons that a business could need finance?
- Establishing a new business
- Funding expansion
- Recruitment
- Marketing
- Running the business
What is an advantage and disadvantage of owners capital?
Advantage
- no need to repay
- They won’t have to pay interest on it
Disadvantage
- Owners risk savings
- The owner may not have enough/any savings which can be used
What is an advantage and disadvantage of retained profit?
Adv
- No need to repay
Dis
- Business may not have made profits
What is an advantage and disadvantage of sales of assets?
Adv
- No need to repay
Dis
- May be difficult to resell
- The busines could have no assests to sell
What is an advantage and disadvantage of overdraft?
Adv
- meets short term cash flow problems
Dis
- Interest is charged each day
What is an advantage and disadvantage of trade credit?
Adv
- The business can have goods to sell
Dis
- Goods must be paid for even if they don’t sell so it can be more expensive than before
What is an advantage and disadvantage of taking on a new partner?
Adv
- The new partner may bring new skills
Dis
- They will have to share ideas and profit
What is an advantage and disadvantage of a loan?
Adv
- repayment is made in fixed sums over a period of time
Dis
- interest must be paid
What is an advantage and disadvantage of a share issue?
Adv
- No need to repay
Dis
- Shares can only be sold by limited companies
What is an advantage and disadvantage of crowdfunding?
Adv
- No need to repay
Dis
- Interest will be paid if it is through a loan
What are 2 examples of short term finance?
- Owners capital
- Sales of assets
What are 2 examples of medium term finance?
- Retained profit
- Bank loan
What are 2 examples of long term finance?
- Retained profit
- Bank loan
Define revenue
The money received from sales
How do you calculate total costs?
Total costs = fixed costs + variable costs
How do you calculate gross profit margin?
Gross profit x 100 / total revenue
How do you calculate net profit margin?
Net profit x 100 / total revenue
Define the break even quantity
the amount a business must sell to earn enough revenue just to cover its costs so that it doesn’t make a profit or loss
How do you calculate the break even output?
Break even output = total fixed costs / price - variable costs per unit
What are 2 ways that the break even forecast can be used?
- Planning how much to produce
- Planning the price to charge for a product
What is the importance of cash to a business?
Provides liquidity and enables a business to meet its short term debts/expenses
What is net cash flow?
Total inflow of cash minus total outflow
What are 3 ethical considerations that a business needs to take?
- Sourcing of materials (they must make sure they are from businesses that do not use child labour)
- Treatment of customers and marketing decisions (be careful not to overcharge customers)
- Treatment of suppliers (Avoid late payments to them)
- Treatment of workers (do not employ child labour and pay workers a fair wage)
What is a possible advantage of being ethical?
Sales may be higher because their reputation for being ethical will lead to a trust from customers
What is a possible disadvantage of being ethical?
Costs may be higher because they have to employ workers and pay them a full wage and not use child labour
What are 3 environmental considerations?
- Sustainability
- Waste disposal
- Pollution
- Climate change
What is an advantage of being environmentally friendly?
Sales may be higher because customers may prefer to buy from a business that cares about the environment
What is a disadvantage of being environmentally friendly?
Production costs may be higher if materials produced in an environmentally friendly way are more expensive
Define what is meant by economic climate
How well the country is doing in terms of levels of income and employment
What could happen as a result of a rise in income and employment?
- There could be more sales of luxury goods
- Cheaper goods could see a fall in sales
- all businesses will have an impact on their sales
Define globalisation
Businesses activity around the world and how it has become increasingly interconnected
What is meant by the global movement of people?
Businesses may recruit workers from other countries and send workers to work abroad
What are 2 advantages of globalisation?
- Increased sales
- Risk is spread out among countries
- Lower costs
- Tax avoidance
How is marketing affected by locating abroad?
They have to make products that are specific to different countries
How is growth affected by locating in another country?
It is expanding
How is finance affected when a business locates in another country?
They have to arrange loans and other sources of finance to help them abroad
