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AQA A-Level Business > PAPER 3 - Advanced info > Flashcards

PAPER 3 - Advanced info Flashcards

1
Q

What are stakeholders?

A

Stakeholders are groups or individuals who have an interest in a business.
Stakeholders can have a considerable impact on the actions of a business, depending on their level of power and interest.

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2
Q

List 3 internal stakeholders and their interests.

A

Employees/Managers:

  • good income
  • safe working conditions
  • opportunity for development + promotion
  • meeting targets

Shareholders:

  • return on investmet
  • increased value of shares
  • ethical business practices
  • growth of the company
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3
Q

List 4 external stakeholders and their interests.

A

Suppliers:

  • regular trade
  • fsir prices
  • paid on time

Customers:

  • reliable products
  • good service
  • value for money/ fair prices

Local community:

  • employment
  • investment
  • environmentally responsible e.g. no pollution

Government:

  • abide by legislations
  • fair and open trade
  • employment opportunities
  • pay tax
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4
Q

Describe the ‘Stakeholder Mapping’ model.

A
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5
Q

What is a disadvantage of stakeholder mapping?

A

They do not provide businesses with clear solutions on how to manage stakeholders.

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6
Q

What happens when stakeholder interests are not alligned?

A

Overlapping and conflicting interests

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7
Q

How can stakeholder conflict be reduced?

A

Through effective communication and in some circumstances consultation. The extent can be determined by stakeholder mapping.

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8
Q

What is the most important stakeholder group?

A
  • Some people may consider shareholders to be the most important stakeholder group in a business because they finance the business activities and can influence decisions within the company.
  • Other people may consider other stakeholders, such as the government or employees as being the most important to the long-term success of a business.
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9
Q

List some internal factors influencing stakeholder relationships.

A
  • Management and leadership ( via Blake Mouton grid)
  • Tailored objectives e.g. profit objectives more closely alligned shareholder interests.
  • Size/ ownership - i.e. sole traders won’t have pressure from shareholders compared to Ltd’s.
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10
Q

List some external factors influencing stakeholder relationships.

A
  • Market conditions: demand + competitiveness will change business priorities.
  • Stakeholder power: major shareholders/customers will be given greater focus to influence the business.
  • Government policy: e.g. employment legislation.
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11
Q

What are the 7 P’s?

A
  • Product: goods/services
  • Price: matches product
  • Place: channel distribution
  • Process: transaction
  • Promotion: awareness
  • People: customer service
  • Physical environment: layout
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12
Q

What must be considered in new product development?

A

All products must have a balance of design, function and cost.

E.g. improving design = decreased quality

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13
Q

Draw a product life cycle. What are the stages?

A
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14
Q

Pros and cons of product portfolio analysis?

A

Pros:

  • Useful for making decisions on where funds are allocated
  • Predict future sales, plan production + distribution

Cons:

  • Products/markets don’t usually follow a pattern
  • No clear solutions provided
  • Simplifies complex issues
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15
Q

Draw a Boston Matrix model.

A
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16
Q

What is price skimming?

A

Setting a high initial price then lowering the price when the product is no longer new.

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17
Q

What is penetration pricing?

A

Initial low price in order to penetrate market and undercut competitors. Over time, price increases as demand grows.

18
Q

What is dynamic pricing?

A

Applied to products where price fluctuates with level of demand. E.g. hotel rooms.

19
Q

List some promotional methods.

A
  • Advertising - (e.g. above the line = mass ads)
  • Sales promotions - (special offers)
  • Sponsorship - (paid association)
  • Social media - (facebook, instagram)
  • Public relations (PR: media attention e.g. a blog)
  • Direct marketing - (communication with customer)
20
Q

What is the importance of branding?

A
  • Adds value to product
  • Builds trust
  • Premium price charged
  • Helps business position itself
  • Makes product recognisable
21
Q

List the different possible channels of distribution.

A
22
Q

What is the importance of digital marketing/ e-commerce?

A
  • Allows small business to reach global audience
  • Business can gather customer info easily
  • Easier to target specific segments
23
Q

What is a budget? What’s their value to businesses?

A

A budget is a financial plan for the future with 4 different types:

  • Revenue budget
  • Expenditure budget
  • Profit budget

Setting budgets helps a business acheive it’s financial objectives.

24
Q

What are the disadvantages of budgets?

A
  • A budget is only as accurate as the data on which it is based
  • Past trends can be a poor indicator of what is likely to happen in the future. So, difficult to forecast sales
  • Unexpected changes e.g. interest rate increases so interest paid on business loans increase.
  • Budget can be unrealistic
25
Q

What is vairance analysis? What do favourable/adverse variances mean?

A

Variance analysis compares the forecast data to the actual figures, and can be used to analyse the accuracy of the budgets to help inform future adjustments.

  • Favourable: better than the budgeted
  • Adverse: worse than the budgeted
26
Q

Describe how you construct a Cash flow forecast.

A
27
Q

What is the value of cash flow forecasting?

A
  • Used to support an application for lending money (*note: window dressing of figures can happen e.g. by postponing payments to suppliers so closing balance is higher)
  • Supports the budgeting process
  • Identifies potential cash flow crisis (by analysing payables+receivables days)
28
Q

What are the steps for constructing a break-even chart?

A
  1. Plot total revenue line (starting at 0)
  2. Plot fixed costs line ( doesn’t change with level of output = horizontal line)
  3. Plot total costs line
  4. Where total costs = total revenue, is the break-even point.
  5. If output is below break even = loss. If output above = profit.
29
Q

How do you calculate break-even output?

A

Fixed costs ÷ contribution per unit

30
Q

How do you calculate margin of safety?

A

current level of output - break even output

31
Q

How do you calculate contrinution per unit?

Total contribution?

A

selling price - variable cost per unit

total contribution: total output x contribution per unit

32
Q

How will raising the price by £2 affect the break even chart?

A
  • Increased revenue line
  • Lower break- even output
33
Q

How will using a cheaper supplier affect the break-even chart?

A
  • Lower variable costs = lower total costs line
  • Lower break-even point
34
Q

How will an increase in rent of £200 per month affect a break-even chart?

A
  • Increased fixed costs line
  • Increased total costs line
  • Increased break-even point
35
Q

Give some uses of break-even analysis

A
  • Simple + easy to use
  • Helps decide whether a business idea is profitable
  • Identifies the level of output and sales needed to generate profit (the scale of the business)
  • Analyses the impact of varying prices, costs and customers on the profit
36
Q

Give some limitations of break-even analysis

A
  • Over simplifies a complex process, since bsuinesses can have a large product portfolio
  • Costs are rarely constant and presumes that costs stay the same over many levels of output
  • Presumes that all businesses sell all their output at the same price
37
Q

How do you calculate the gross profit margin? Why is it useful?

A

(Gross profit ÷ sales revenue) x 100

Useful to analyse how a business has performed in terms of direct costs incurred e.g. raw materials.

Also used to determine the success of products

38
Q

How do you calculate the operating profit margin? How is it useful?

A

(Operating profit ÷ sales revenue) x 100

OP takes into account the direct and indirect costs(salaries/overheads), therefore analyses business performance more fully.

39
Q

How do you calculate Profit of the year margin? How is it useful?

A

(Profit of the year ÷ sales revenue) x 100

This ratio takes into account all revenues and costs incurred by the business.

It is a good measure for annual performance.

Also may help identify potential to pay dividends to shareholders.

40
Q

How is financial data important in business decision making?

A

Because all business decisions must be financially viable.

However, managers must also take into account the issues behind the numbers. e.g. human or ethical factors.

41
Q
A

AQA A-Level Business (5 decks)

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