PAPER 2 Flashcards
what is the span of control?
the number of employees for whom a manager is directly responsible
what 3 factors does span of control depends upon?
- experience / personality of manager
- type of business
- skills and attitudes of employees
what are the benefits of wide span of control?
less layers of management so saves money, communication will be easier form top to bottom
what are the disadvantages of a wide span of control?
less control in terms of managing quality of work
what is a flat organisational structure?
few layers form the top to the bottom, short chains of command, wide spans of control
what is hierarchical / tall organisational structure?
many layers from top to bottom, long chains of command, narrow spans of control
what are benefits of delayering?
- improves communication
- reduces cost
what are the disadvantages of delayering?
- reduces promotion opportunities as layer of management has been removed
- impacts motivation levels
- staff expected to take on more responsibility
- may increase costs due to training of staff for management
what are the 2 types of growth?
internal (organic) growth and external (inorganic growth)
what are 2 ways of growing orgaincally?
- new products
- new markets (changing marketing mix, expanding overseas, technology)
what would a business ownership shift to to grow?
public limited company (PLC)
what are internal sources of finance for ESTABLISHED BUSINESSES
retained profit
selling assets
what are external sources of finance for ESTABLISHED BUSINESSES
- loan capital
- share capital
- stock market floatation (PLC)
what factors cause a business to change its aims and objectives?
- market conditions
- technology
- performance
- legislation
- internal reasons
how do aims and objectives change as businesses evolve?
- focus on survival/ growth
- enter/ exit new markets
- growing/ reducing workforce
- increasing / decreasing product range
what are the advantages of globalisation?
- increased market
- can find new production opportunities/ cheaper raw materials through imports
- increasing transfer of skills and knowledge throughout the world
what are the disadvantages of globalisation?
- increased competition
- decreased in skilled manufacturing and increase in service industry
- economy becomes vulnerable to world economic conditions
what are barriers to international trade?
- tariffs
- trade bloc
how do businesses compete internationally/
- use of internet (e-commerce)
- changing marketing mix
what are the advantages of ethical behaivour?
- sales increase due to good publicity
- improved brand reputation
- employees like working for the business: easier to recruit and retain staff
- meets owners objectives
what are the disadvantages of ethical behaviour?
- costs increase so profits decrease
- publicity may not persuade the customers to buy
- quality/ appearance of the product might not be as good
how does pressure group activity affect price?
if a price for basic or essential goods is too high there may be protests e.g. petrol ,train fares, medicinal drugs
how does pressure group activity affect product?
maybe objections to products made by exploited labour or involved testing on animals, production should be done on environmentally friendly processes
how does pressure group activity affect promotion?
may object to persuasive campaigns, bulk offers can be seen to encourage waste
how does pressure group activity affect place?
due to growth of e-sales there have been closures of retail and financial outlets e.g. banks, post office, that have been campaigned against as they will hurt the most vulnerable members of our society
what are the 3 elements of design mix?
function, aesthetics, cost
what are the stages of the product life cycle?
introduction, growth, maturity and decline
what are extension strategies?
strategies that extend the life of the product before it goes into decline
what are some examples of extension strategies?
- advertising: gain new audience or remind of product
- price reduction: makes it more attractive
- adding value: add new features
- explore new markets: sell overseas
- new packaging: brighten up old packaging by making small changes
why is differentiating a product/ service important to a business?
if they have a USP they can charge a higher price and create customer loyalty, helps develop brand for the product so customers will return and do repeat purchases, will also buy other products associated with the same brand as they perceive it as being good value
what are the 4 influences on pricing strategies?
technology, competition, market segments, product life cycle
what are some pricing strategies?
penetration pricing: very low to high
premium pricing: high
price skimming: high to low
cost plus pricing: work out cost of sale and add percentage profit you want to make
what are 5 methods of promotion?
advertising, sponsorship, product trails, special offers, branding
how can technology be used in promotion?
targeted dvertsing online, viral advertising by social media, e-newsletters
what are the advantages of advertising?
- wide coverage
- control of message being promoted
- segmentation possible through media used e.g. childrens TV
- repetition means message can b communicated effectively
- can build brand loyalty
what are the disadvantages of advertsing/
- expensive e.g. TV
- impersonal, not accurate in aiming so high wastage
- one way communication no guarantee message is received
- not all potential customers will use the chosen medias e.g. radio
- easy to get lost in competing adverts
- limited ability to close sale
what are the advantages of sales promotion?
- effective at quick boost sales
- encourages customers to try a product or switch brands
what are the disadvantages of sales promotion?
- sales effect maybe short term
- customers may come to expect further promotions
- some customers only buy special offers
- may damage brand image
what factors influence the choice of promotion?
budget, type of product, type of customer, competition, product life cycle, expertise
define a distribution channel
all the organisation through which a product must pass between its point of production and consumption
why do businesses use intermediares?
intermediares have contacts, experience and scale of operation as they are specialists in selling. this means greater sales can be made with them rather than alone as it is more effecient with them.
what organisations are in the direct marketing/sale channel?
producer -> consumer
what organisations are in the highest indirect channel?
producer -> wholesaler -> retailer -> consumer
what organisations are in the indirect channel?
producer -> retailer -> consumer
what are the advantages of using intermediaries?
- more efficient distribution logistics
- costs, even with the intermediaries profits, maybe lower
- producers may not have sufficient resources/ expertise to sell directly
what is the advantage of a wholesaler?
they receive direct loads from producers and split it into smaller units for retailers which means the retailers can hold less stock
what is the disadvantage of a wholesaler?
costs may increase due to the wholesaler’s profits
what are the advantages of selling directly?
- don’t need to share profit margins
- producer has complete control over the sales process
- products are not sold alongside those of competitors
what are the disadvantages of selling directly?
for small businesses they may find it cheaper and more time efficient to use a retailer than to sell directly as there would be more costs to sell directly then intermediaries to generate the same amount of sales
what factors affect the marketing mix?
competition, market segment, nature of the product, finance
what are the purposes of business operations?
to produce goods and to provide services
what are the 3 types of production processes?
job, batch, flow
what are the advantages of using job production?
- products are usually high quality
- meets individual customer requirements
- greater job satisfaction for employees as they are involved in all stages of production
what are the disadvantages of job production?
- costs of producing one unit is higher than producing a large number of the same good
- labour intensive, less suited to machinery
- requires skilled employees who demand high levels of pay and maybe ongoing training
what are the advantages of batch production?
- reduces unit costs as more than one unit is produced at a time so fixed cost is spread across multiple units
- can address specific customer needs
- more efficient than job as it uses machinery which increases output and productivity
what are the disadvantages of batch production?
- time lost in switching batches as machinery may need to be reset
- need to keep stock of raw materials which effects cash flow
- de-motivating for staff as they have to do repetitive tasks
what are the advantages of flow production?
- ideal for mass production
- less use of labour, reduces avg cost per unit
- workers can specialise in one job which makes them more efficient
- can create personalised products using computer programmed machinery
what are the disadvantages of flow production?
- expensive to purchase machinery and to set up
- production can be inflexible
- jobs are repetitive so de-motivating
- involves a risk as it needs time to plan and organise production process
what are the advantages of production technology?
- increase speed of production
- reduces avg unit cost than using labour
- allows for flexibility as computer can be programmed to do many things
- increases the quality of goods as human variation is removed so consistent quality is provided
- machines dont need breaks
