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Business A level - Jaya > Paper 2 - Gaps in my knowledge > Flashcards

Paper 2 - Gaps in my knowledge Flashcards

1
Q

What are two benefits of holding buffer stock?

A
  • Able to meet customer needs especially in a mass market
  • Purchasing economies of scale from buying in bulk
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2
Q

What are 4 drawbacks of holding buffer stock?

A
  • Storage costs - rents for warehouses
  • Perishable goods can become damaged
  • In dynamic markets, consumer needs are constantly changing so goods become out of date
  • Too much capital tied up in stock
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3
Q

What is the sole aim of lean production methods?

A
  • Minimising waste such as through recycling, re-using etc
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4
Q

What are 3 main benefits of just in time?

A
  • Storage costs are reduced and cash flows are improved
  • Less waste: less perishable, out-of-date and out of demand goods stored
  • More flexible to changes in consumers needs
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5
Q

What are 3 main drawbacks of Just in time?

A
  • Too reliant on frequent deliveries from suppliers
  • Excludes supply chain issues which could result in changes in demand
  • Unable to benefit from purchasing economies of scale
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6
Q

What are the 3 main benefits of having a sales forecast?

A
  • Producing a cash flow forecast - which can manage finances
  • Marketing - if sales fall
  • Resources - more labour or raw materials if demand is expected to rise (allows the business to cope with higher demand)
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7
Q

What are the benefits of budgeting to a business?

A
  • Can be motivating - they give targets to employees
  • Can help control income and expenditure - manage cash flows
  • Help some departments to coordinate their spending
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7
Q

What are some drawbacks of budgeting?

A
  • Restrictive which could be demotivating if people feel they can’t fully spend on goods and services
  • They can be time-consuming to create
  • They are based on past data and so they may be unrealistic for future purposes
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8
Q

What are the 3 different budgets and what do they set budgets for?

A
  • Income - How much a business will sell, what price it will sell it at etc
  • Expenditure - prediction of a businesses total costs and then sets a budget on their limit
  • Profit Budget - The income budget minus the expenditure budget
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9
Q

What is the difference between zero-based budgeting and historical budgeting?

A

Historical - uses past data when producing budget and then takes into account how much of the budget was used and then determines whether it should increase or fall
Zero-based budget - starts at 0 every year and then all a business activities are prepared a year in advance and they have to be requested

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10
Q

How can a business improve their GPM?

A

Increasing prices or reducing direct cost of sale

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11
Q

How can a business improve their OPM and NPM?

A

Increased prices, reducing direct cost of sale or reducing operating expenses

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12
Q

How could a business reduce capacity temporarily?

A
  • Shutting down/deactivating part of a production line
  • Closing part of a factory making products not currently in demand - move to a smaller premises
  • Temporarily making staff move into part-time contracts instead of full-time contracts
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13
Q

How to calculate re-order quantity?

A

Maximum stock level - minimum stock level

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14
Q

What are the benefits of a mission statement?

A
  • Can motivate stakeholders and motivate employees or encourage them to work for the business if they agree with the values
  • Differentiates the business from its competitors
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15
Q

What are the drawbacks of a mission statement?

A
  • Could damage business reputation if they don’t share the same values
  • Doesn’t include the same corporate strategies
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16
Q

Effect of strategic and tactical decisions on human, physical and financial resources

A

Physical - May need new machinery
Human - how skilled staff are to carry out the decisions,
Financial - Consideration on how to fund the finance

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17
Q

What are the benefits of porters strategic matrix?

A
  • Gain a competitive advantage
  • Prevents a business from being ‘stuck in the middle’
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18
Q

Drawbacks of porters strategic matrix?

A
  • Oversimplifies market structures
  • Doesn’t include businesses who have successfully done both
  • Only tells a business where they are in the matrix and not how to improve their position
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19
Q

What is overtrading?

A
  • Increased growth means they demand more raw materials etc which reduces working capital needed to pay for day-to-day expenditure
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20
Q

What are average cyclical variations?

A
  • The difference between the actual sales figure and the moving average for that year
21
Q

What are the benefits of a short-termism approach?

A
  • Shareholders will gain higher dividends
  • Managers bonuses are usually based upon short-term financial performance and so could lead to more productive workers to gain etter bonuses etc
  • Could benefit new or small businesses aiming to grow
22
Q

What are the drawbacks of a short-term approach?

A
  • Could lead to a sacrifice of little to no investments in the long-run which could limit competitiveness and future profits for the business
23
Q

Benefits of a business using a long-term approach?

A
  • Investing in R&D, training and staff etc could lead to better long-run profits and long run growth of the business
24
Q

Drawbacks of a business using a long-term approach?

A
  • Could lose focus on short-term changes to market and trends and so could lose customers from new competitors entering etc or miss opportunities etc
25
Q

Factors that affect how a corporate culture is formed?

A
  • A businesses founders
  • History and nature of the business
  • Environment recruitment and promotion
26
Q

What do shareholders look at in the statement of comprehensive income?

A
  • The trends in profits - if the profit is fluctuating it may not be worth investing in
  • If the amount of dividends it pays to shareholders is fluctuating it may not be worthwhile
27
Q

What do managers look at in the statement of comprehensive income?

A
  • Revenues and expenditures
  • It may compare this to competitors and see if there’s is worsening, how they can improve it
  • Look at ways to increase revenues and reduce costs for businesses
28
Q

What are trade debtors or trade recievables?

A

It is a current asset because it is someone who owes u money

29
Q

What are trade creditors?

A

It is a current liability because it is someone that you owe money too

30
Q

What are the benefits of cell production?

A
  • Closeness of members could lead to improve relationships (MAYO THEORY) - increased motivation could increase productivity of workers
  • Team working
  • Quality improvements
31
Q

What are the drawbacks of cell production?

A
  • Culture clashes between employees could lead to demotivation and then less productivity
  • Use machinery and capital intensive
32
Q

What is peer-to-peer lending?

A

This is through an online platform where individuals online willingly lend money to businesses - an individual will state how much money they are willing to lend with how much interest

33
Q

What is a business angel?

A

Wealthy individuals who invest money into new or innovative business and in return they get a share of the business

34
Q

What are the benefits and drawbacks of business angels?

A

B: they have good business knowledge and useful contacts - advice and guidance to the business too
C: Difficult and time consuming to find one and a share of the business has to be given up

35
Q

The benefits and costs of a firm leasing?

A

B: The business doesn’t have to pay a large up front cost and less need to pay for maintenance and repair
C: could be more costly in the long run

36
Q

What are 3 ways a business can deal with cash shortages?

A
  • Reducing cash outflows - switch suppliers and reducing budgets etc
  • Increasing cash inflows - raise prices to increase revenues
  • Arrange a source of finance such as overdraft
37
Q

What are the benefits of break-even analysis?

A
  • Be used to persuade sources of finance
  • Can help a business to increase MOS by reducing costs or increasing sales
  • It is easy to use and necessarily in a business plan
38
Q

What are the drawbacks of break-even analysis?

A
  • Assumes that TS and TC go up in a straight line which is not always true - markets are dynamics
  • Doesn’t tell a business how much are ACTUALLY going to be sold only what it SHOULD
  • Only used for a single product but businesses sell multiple products
39
Q

Internal financial causes of business failure

A
  • Poor management of working capital - unable to pay of current debts
  • Poor efficiency means higher costs leading to higher prices - less sales
  • Large amounts of overdraft
40
Q

Internal non-financial causes of business failure

A
  • Poor communication in a business
  • Lack of market research or analysis on trends in the market
  • Lack of marketing
41
Q

External financial causes of business failure

A
  • Recessionary periods
  • Changes in exchange rates or interest rates
42
Q

Benefits of cell production?

A

Greater motivation if they are working in teams
- Improved communication - more output - EOS
- Workers become multi-skilled - less absenteeism

43
Q

Drawbacks of cell production?

A
  • Productivity lower than flow production
  • Clash between cultures in the group could lead to demotivation
44
Q

What is efficiency to a business?

A
  • When production happens at an overall minimum average cost
45
Q

Ways a business can improve productivity?

A
  • Cutting costs
  • Reconsiders a design mix to it is easier and cheaper to make
  • ## Lean production approach
46
Q

What are the benefits to a business of having a distinctive capacility?

A

It can make a business have a competitive advantage against competitors which an add value to the product

47
Q

What are the three different distinctive capabilities and explain them?

A
  • Architecture - the relationship that a business has with its stakeholders
  • Reputation - if a business is able to provide high quality and provide a good customer service than it will gain a competitive edge to other businesses
  • Innovation - how much a business invests into its resources
48
Q

2 benefits of quality circles?

A
  • Could bring people from around the business - teamwork could lead to an increase in motivation - human relations theory
  • Improve quality
  • Minimise waste so fewer costs could increase profits to the business
49
Q

2 Drawbacks of quality circles to the business?

A
  • Could lead to a clash of cultures due to employees being from around the business
  • Less productivity in the time that the employees are having their meetings

Business A level - Jaya (24 decks)

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