PPQ Understanding Business Flashcards
Describe 2 other (than public) sectors of the economy.
Private Sector – organisations owned and run by private individuals whose main concern is to make a profit.
Third/Voluntary sector – not for profit organisations and charities operate within this sector.
Describe the following sectors in which Santander UK plc operates. (2)
sector of industry
Tertiary sector – provides a service
Quaternary sector – provides information/knowledge-based services
Sector of economy
Private sector - owned by private individuals/shareholders/profit making
Describe the 4 sectors of industry. (4)
primary − extract raw materials from their natural environment
secondary − manufacture products from raw materials
tertiary − provide a service
quaternary − involved in hi-tech research and information services
Describe the advantages of being a social enterprise. (3
Help tackle social problems it has chosen
Some funding/grants/support is only available to social enterprises
Publicity for the social issue promotes the business
Attract customers who appreciate the good causes they help
Attract good quality staff who want to help the social cause
Can make use of an asset lock
Can sell shares to raise finance if they are a limited company
Award 1 mark for each valid description point.
Award 1 mark for each developed point.
Up to 2 marks may be awarded for discussing any one use.
Describe the benefits to BT of being a multinational company. (5)
Increased sales revenue/market share/increased profitability.
Access to a wider market.
Increased brand awareness.
Can specialise in different countries.
Decreased cost of production.
Lower wage rates.
Greater economies of scale.
Availability of skilled workers.
Access to cheaper suppliers.
Take advantage of other countries’ Government incentives eg tax
breaks, grants.
Lower rates of corporation tax in different countries.
Legislation in other countries may be more relaxed.
Avoid barriers to trade/quotas.
Avoid tariffs.
Distinguish between the features of NHS Scotland and a public limited company (plc) in terms of ownership and control. (2)
The NHS is owned by the Government whereas a plc is owned by shareholders
The NHS is controlled by the Scottish Parliament/Scottish Government/Cabinet Minister for Health/Scottish Government Directorate for Health and Social Care/Regional and Special Boards whereas a plc is controlled by a Board of DirectorsfF
Describe the objectives of third sector organisations. (3)
Support a specific cause.
Provide a service.
To continue operating/survival.
Raise awareness and promote the cause.
Maximise its donations.
Increase the number of volunteers available.
To advance education.
To advance religion.
To better a community.
To operate ethically/be socially responsible.
To make a surplus/profit to reinvest for the cause.
Explain the methods NHS Scotland may use to demonstrate they are socially responsible. (4)
Using energy and water efficiently – save on energy costs
Encouraging waste reduction – to reduce landfill
To improve reputation
Reusing materials – reducing purchasing costs
Recycling materials – meeting government targets
Use of sustainable public transport – cuts down carbon footprint/reduces carbon footprint
Encourage the use of less packaging (pharmacies and medication) – reduce waste
Use hybrid/electric ambulances – to create a healthier environment
Source from ethical supplies/contractors – to encourage sustainability
Staff welfare measures – to retain staff
To attract quality staff
Describe an objective for each of the following functional areas of Police Scotland: Human Resources, Finance, Marketing (3)
Human Resources
* reduce staff turnover
* reduce staff stress/absenteeism
* reduce staff grievances
* reduce disciplinary cases
* increase recruitment applicant numbers
* provide training to police officers
* reduce staffing expenditure (watch for repetition – 1 max)
Finance
* spend taxpayer’s money wisely
* stay within budget
* reduce expenditure (watch for repetition – 1 max)
Marketing
* improve reputation
* better promote safety in society
* increase followers/presence on social media
* increase public awareness of the police role in society
Describe the ways business can demonstrate good Corporate Social Responsibility (CSR). (5)
use renewable energy (such as solar/wind energy)
use sustainable raw materials
use fair trade products
use alternatives to testing on animals
give/donate to charities
set up their own charitable arm
offer products/services for free to good causes
encouraging staff to undertake voluntary work during working hours
use less packaging on goods
recycle packaging/materials
switch to bio-fuels in production
Also accept broader ‘ethical’ examples:
pay fair wages (beyond the minimum/living wage)
offer fair working conditions for staff
ensure fair and proper (ethical) marketing
set/offer fair prices
avoid deforestation
avoid exploiting child labour
4 Methods of growth and different ways to achieve growth
and different ways to fund growth
(organic, horizontal, forwards vertical, backwards vertical, lateral, conglomerate, diversification)
different ways to achieve growth (mergers, acquisitions, takeovers, franchising, becoming a multinational, product development, advertising, increasing staffing)
different ways to fund growth (retained profits, divestment, deintegration, asset stripping, demerger, buy-in, buy-out, outsourcing)
Discuss the methods to achieve growth used by Sainsbury’s in the information provided. (6)
Organic/internal growth
Growth of a business from its own internally generated resources (1 mark for definition).
Sainsbury’s is growing by increasing the number of its state-of-the-art new supermarkets (1 mark for definition).
Advantages
Less risky than taking over other businesses.
Can be financed through internal funds, eg retained profits.
Builds on a business’s strengths, eg brands, customers.
Disadvantages
Growth may be dependent on the growth of the overall market.
Slower method of growth — shareholders may prefer a more rapid growth.
Diversification/takeover
Sainsbury’s buying a majority stake in Anobii e-books (1 mark for definition).
Sainsbury’s joining with Lloyds Banking Group to form Sainsbury’s Bank (1 mark for definition).
Advantages (can apply to diversification or takeover)
Reduces the risk of business failure.
Makes a larger and more financially secure business.
Disadvantages (can apply to diversification or takeover)
Requires allocation of significant financial and human resources.
Risk of harming the main company business.
Accept any other suitable response within each of the above headings.
Award 1 mark for each valid discussion point. Award 1 mark for a development point.
Only accept organic/internal growth and diversification/takeover as suitable growth methods.
At least two methods must be discussed to gain full marks.
Up to 5 marks can be awarded for discussing any one of the above methods.
Marks can be awarded for:
a definition of the growth method which may include an example highlighted from the case study (maximum 1 mark each)
advantages and/or disadvantages of the methods
Google’s development of its new headquarters is an example of organic (internal) growth. Describe other methods of growth available to Google. (4)
Horizontal integration
Google could acquire (takeover) or merge with a business in the same sector of industry as them
Vertical integration
Google could acquire (takeover) or merge with a business in an earlier (backward) or Later (forward) sector of industry as them
Conglomerate integration/diversification
Google could acquire (takeover) or merge with a business in a completely different market as them
Outsourcing
Google could contract out some of their procedures (eg catering, admin etc)
To allow them to concentrate on core activities
Divestment_
Google could sell off parts of their business to raise money to fund external growth eg takeover
Management buy-in…
Merger…_
Takeover…_
Asset stripping…_
Explain the advantages of internal (organic) growth. (4)
The business is not integrating with another business. This means that control is not lost.
Launch new products/services means businesses can target different markets. This means that there is an increase in overall sales.
Exporting existing products abroad widens their market
Open new physical branches means they can reach new markets by opening up in new locations
Expand existing premises to cater for more products/staff and make more sales
Selling online the business can trade 24/7 around the world
Hire more staff will bring in new ideas to the business to develop new products/increase production etc
Increase production capacity by investing in new capital and technology to make more products themselves
Explain the advantages of BT taking over EE, as detailed in the case study. (4)
Eliminates one of BT’s competitors − so BT can raise prices.
Inherit EE’s 31 million customers − which will increase BT’s market share.
To accelerate its growth − by moving into a new market by purchasing an established firm.
Allows BT to achieve greater economies of scale − which may lower BT’s costs.
BT will acquire the assets of EE eg premises, networks, transmitters − which are valuable and will contribute to BT’s financial position.
As EE was one of the leading mobile network operators − this gives BT a more dominant position in the market.
Which will reduce its risk of failure.
Largest 4G customer base in Europe − which provides a platform to European markets.
Provides innovative and seamless communication services − which will lead to better customer satisfaction.
Discuss the methods of growth that can be used by organisations. (8)
Organic/internal growth:
open new outlets
operate in more markets and/or countries
introduce new products
less risky than a takeover
can be financed internally
may be limited by the size of the market
Backward vertical
when the business takes over its supplier/source of goods and materials
this guarantees the quality and quantity of inputs
it may limit supplies to competitors
cuts out the middleman/adds to profits
Forward vertical
when the business takes over a customer
this guarantees an outlet for its products
cuts out the middleman/adds to profits
Horizontal integration
when two businesses at the same stage in the production process join together
may remove a competitor
the business may dominate the market
Diversification/conglomeration
where a business moves into an entirely different market
spreads risk
new customers may be attracted to the original product
Lateral
where two firms merge which are in a related industry but are not in direct competition (for example, a hairdresser and a beauty therapist).
Explain the costs and benefits to organisations, such as NHS Scotland, of outsourcing. (4)
COSTS
Private firm could increase costs – can create cash-flow problems
Loss of control over private firms’ activities - may result in quality issues
Loss of control over private firms’ activities – may result in confidentiality issues
Locked into expensive contracts – puts pressure on NHS’s budget
Few competitors – limits the NHS’s choice to find suitable new suppliers
BENEFITS
Fewer employees required - may lead to cost savings
Don’t need to pay as much for pensions/NI contributions/sick pay
Allows organisation to focus on core activities - therefore the core service can be improved
Only pay for the service when required - so can stay within budget
Range of equipment and services - leads to better healthcare for patients
Specialist equipment - saves the NHS on purchasing assets
Specialist labour - can cover activities where the NHS has a shortage for example GPs
Explain the effects of outsourcing on an organisation. (5)
specialists can be used to do the work - which should mean better quality
reduces staff costs in the area that has been outsourced − which may result in increased profits
outsourced companies will have specialist equipment − which would mean the organisation can sell their equipment
do not need to purchase specialist equipment − which will reduce up-front costs
the specialist company can gain economies of scale − which will reduce unit costs/allow them to quote a cheaper price
the service needs only to be paid for when required − which means organisations do not need to pay for machinery/staff that are sitting idle
organisations can concentrate on core activities − which should result in the organisation producing a better core product/service
organisations can lose control over outsourced work − therefore communication needs to be very clear or mistakes can arise
loss of confidentiality − which may mean the organisation has data protection issues to consider
Describe the possible methods of growth for a public limited company (plc). (6) 2023 q2b
Horizontal Integration
when two firms at the same stage of production combine
eliminate competition/increase market share
Backwards Vertical Integration
when one firm combines with another at an earlier stage of production, for example combines with a supplier
greater control of inventory supplies
may reduce costs of supplies
Forwards Vertical Integration
when one firm combines with another at a later stage of production, for example combines with a customer
can control promotion and pricing
Conglomerate Integration
firms in completely different markets combine
reduces risk by providing different income streams
Organic Growth
hiring more staff
opening more retail outlets/building new factories
launching new products
Diversification
products are launched in new markets
Lateral Integration –
joining with a business in the same market that does not offer the same product/a complimentary busine
Compare the features of NHS Scotland’s tall/hierarchical structure, as shown in Exhibit 1, to a flat structure. (2)
Tall structure has….
-Many layers of management
-Long chain of command
-More promotion opportunities
-May have a narrow span of control
-Slower to respond to changes
-Management may be more autocratic
A flat structure has…
-fewer layers of management
-shorter chain of command
-fewer promotion opportunities
-May have a wide span of control
-Faster communication
-Employees may feel more empowered
Describe the effects of widening the span of control of a manager (5)
Managers are in charge of more staff
Managers can be placed under more stress
Decision making can be slower due to a larger workload
Could result in less managerial promotions
Can mean managers have very little time to speed d with each employeeto discuss work
Staff could become demotivated
It can be motivational for managers as they have more responsibility
Managers will have less time for planning
May result in poor decisions
Managers can delegate to staff with appropriate skills
Subordinates may resent additional responsibility
Delegation can motivate/empower staff
Discuss the use of geographical grouping. (3)
Advantages
Each division can meet the needs of local markets eg different tastes or fashions in different towns or countries
The business can react to changing external (PESTEC) factors quickly
Easy to identify a failing division
Can hold divisional managers accountable
Can communicate better with the local area eg different languages
Disadvantages
Duplication of resources, such as administration staff or IT equipment across each division
Divisions may compete against each other
A new division must be established if a new area is targeted
Justify the decision to group NHS Scotland into regional NHS Boards, shown in Exhibit 2. (2)
Can better cater for the patients’ needs in each area
More responsive to external changes in the area
Easier for the government/managers to identify issues with individual boards
Can hold area managers accountable
Regional Boards are empowered
So can make quicker decisions
Compare functional grouping with customer grouping. (4)
Functional grouping organises staff with similar skills and knowledge together whereas customer grouping structures staff around a targeted type of customer/client/supplier.
Functional grouping caters for the whole organisation whereas each customer group will focus on its customers’ needs.
It is easier to compare performance for each customer grouping whereas function grouping will show results for the entire organisation.
Functional grouping may be cheaper than customer grouping as there is less duplication of resources.
Customer groups are more responsive to changing customer needs whereas functional groups can lose sight of market changes/may be slow to react.
Both groups can compete with each other inside the organisation.
Both groups allow staff to build expertise/specialise.
Describe a matrix structure. (3)
Employees from different functional areas work together on a project
Once complete the employees return to their functional department
Different employees can be a project leader at different times
Allows employees to develop new skills on different projects
May motivate staff
Employees may have to report to two different managers
Explain one cost and one benefit of Police Scotland operating a tall organisational structure. (2)
Benefits
* many levels of management - may mean better supervision
* possibly more promotion opportunities – reducing staff turnover
* can allow for more specialisation – improved quality of work
Cost
* increased management salaries - due to many levels of management
* may slow communication - due to a long chain of command
* organisation may be slow to react to changes - due to the length of hierarchy
Distinguish between a tactical decision and an operational decision. (3)
Tactical decisions are made to achieve the strategic objectives whereas an operational decision is made to ensure smooth running of the business on a daily basis
Tactical decisions are normally made by middle managers whereas operational decisions can be made by any level of management (most likely to be lower level)
Tactical decisions are more likely to be medium term whereas operational are day-to-day
Tactical decisions have a medium level of risk however operational decisions have little or no risk
Distinguish between a strategic decision and a tactical decision (2)
strategic decisions have…
-long term decisions
-set out the objectives
-made by senior management
-high risk
Tactical decisions have…
-medium - term decision
-taken to achieve objectives
-made by middle management.
-Medium risk
Compare operational and strategic decisions. (3)
Strategic have…
-long term decisions
-set out the objectives
-made by senior management
-high risk
Operational have…
-short term / day to day decision
-routine decisions
-made by low level supervisors / all employees
-are low risk
Describe the ways Ryanair could measure the success of its decision to improve customer satisfaction (4)
-Conduct field research
-Gather feedback from staff
-Compare passenger figures
-Compare revenue figures
-Compare profit figures
-Compare using ratio analysis
-Review the number of complaints
-Compare share price
-Compare market share
-Evaluate external media and journalism reports, such as the Which? website, TripAdvisor etc
Explain the role of a manager in an organisation. (5)
A manager plans the objectives - which means they have to decide what has to be done in order to reach the objectives
A manager organises resources - therefore ensuring the organisation is successful in achieving the objectives
A manager commands by giving instructions – this reduces confusion amongst staff
A manager coordinates to make sure everyone is working towards the same goal - which means the task is done more efficiently
A manager controls by evaluating what has been done and checks it against what was expected - therefore he/she can put different plans in place to rectify the situation
Manager delegates responsibility to carry out a task to a subordinate – which gives the manager more time to focus on other work
A manager motivates staff and inspires them - therefore the objectives may be achieved by staff working harder
Describe the ways in which a manager can measure the success of a decision (4)
Research customer’s opinions using surveys
Gather feedback from staff at meetings
Assess the situation to see if the problem has been solved
Compare the profits/sales figures for an increase
Assess using other financial information for example ratio analysis
Compare absenteeism/staff turnover levels for a reduction
Check if targets have been met
Assess key performance measures for staff
Review the number of complaints made
Customer reviews/press coverage
Describe 3 internal constraints that can make decision making difficult. (3)
the quality and quantity of information available to the manager
the amount of training/experience the manager has had in decision making
the ability and skill of the manager to make decisions
the level of risk the manager is willing to take
lack of finance to carry out the decision
the time available to make the decision
how willing the staff are to cooperate with the decision
lack of equipment/technology to implement the decision
existing company policy may restrict which decisions a manager is allowed to make
a senior management veto of what the manager decides.
Describe the role of the Chief Constable in the management of Police Scotland. (3)
- planning – setting targets for policing to meet Scottish Government aims
- organising – booking regular meetings with various departments o effective personal organisation such as using an e-diary or todo-list to prioritise work and manage time
- controlling – ensuring policing resources are spent within budget
- coordinating – carry out workforce planning to ensure there are enough police officers and support staff in the right place to do the job
- commanding – showing assertive and strong leadership to make decisions
- delegating – giving work to other members of the Senior Management Team
- motivating – rewarding police officers for excellent performance
Response must include POCCCDM labels to gain marks
Describe the ways a manager can assess the effectiveness of decisions. (4)
check to see if targets have been achieved
check to see if profits have increased
check sales levels to see if they have improved
issue questionnaires to customers for their views
check to see if the business reputation has improved
evaluate decision with the staff for their views on its success
monitor staff morale following decisions
monitor staff absence rates following decisions
Using the case study, explain the disadvantages of Santander UK plc’s decision to close many of its branches. (3)
over 800 job losses – increasing unemployment in the UK
Government may have to pay more benefits to those unemployed
may result in financial hardship for employees who cannot find a new job
may lead to redundancy payments
could lead to bad publicity for Santander
staff may be fearful of redundancy which lowers motivation
trade unions consulted – Santander may have to agree to costly terms
time consuming to carry out
a third of the UK still does not bank online – Santander may lose out on customers who are technophobes/do not have internet access/security conscious
lower income for Santander from its branches due to closures
consumers still need access to cash - inconvenience to customers who may need to travel more to a branch
customers may switch to a competitor with a branch local to them
Explain the benefits of Google’s corporate culture to the organisation and its employees. (4)
Google use flexible working patterns which means staff work when is best suited to them/ when they are most productive.
Staff can work from home/where they want which might motivate them to be more productive.
Open plan/relaxed office layout encourages collaboration which means better communication and idea sharing
This will also lead to better decisions being made
Perks such as pool tables, bowling alleys, gyms etc will mean staff are motivated and will work to a better standard
This will also mean staff turnover will also be low meaning quality trained staff aren’t lost to competition
Perks will also attract the best staff to Google meaning they have an advantage over the competition
Roof gardens, coffee shops etc will encourage staff to communicate with each other in a relaxed informal way, leading to better decision making
Casual dress code will mean there is a relaxed environment in which to work in/will mean staff want to come to the office
Strong corporate identity through corporate colours/language and jargon etc which will mean employees feel part of the organisation
Use of relaxed and informal language means staff feel comfortable working there and perform well
Explain the benefits to an organisation of developing strong corporate culture (3)
Through uniforms staff will form an identity with the organisation which should result in lower staff turnover/absences
Increased staff motivation because they feel part of the organisation/associate strongly with the culture
A single corporate identity is seen by customers which means they will then associate it with that organisation’s brands/ethics/logos etc
Easily be recognised worldwide meaning customers will feel comfortable with products wherever they are
Values/beliefs/perks can attract quality staff which results in a better quality service
Customer satisfaction can improve because the customers begin to associate with the brands/logos/ethics they like
Can attract new customers as they agree with the aims of the organisation
Customers may become loyal…
Staff can move between branches/departments more easily as they will all be using the same policies and practices
Workspace design/layout… Open door policy…
Describe, using evidence from the information provided, ethical and environmental factors Sainsbury’s has taken into account. (5)
Suppliers’ products ensure sustainability of raw materials.
Sainsbury’s commitment to reducing unhealthy food and providing nutritional information.
Suppliers’ products don’t have a large carbon footprint (1 mark) and support renewable energies (1 development mark).
Sainsbury’s commitment to making a positive difference to the communities in which it operates.
Suppliers’ products are fair trade (1 mark) meaning suppliers get a fair price for products and are likely to stay in business (1 development mark).
Sainsbury’s recycling partnership with Oxfam.
Suppliers ensure high standards of animal welfare.
Explain the impact on Sainsbury’s of the external factors highlighted in the information provided. (6)
Rising inflation means goods/services cost more, so Sainsbury’s plans to offer more great food of quality and value.
Low interest rates mean consumers are less likely to save and so spend more in shops like Sainsbury’s (1 mark). For example, Sainsbury’s sales have increased by 4·5% (1 mark for development for using Source A).
Falling unemployment means consumers may have more wages/disposable income to spend in shops like Sainsbury’s.
Rising living costs, however, mean that consumers may have less disposable income to spend in Sainsbury’s.
Customers are being more price conscious so Sainsbury’s is offering more promotional offers/deals.
Consumers are making fewer but more considered spending choices so are buying higher quality goods such as fair trade products provided by
Sainsbury’s.
Competitive factors — Sainsbury’s must be constantly aware of these, eg from Asda and Tesco, to maintain or increase its current market share of 16·8% (Exhibit 2).
Describe the ways in which Google demonstrates positive Corporate Social Responsibility (CSR) as shown in the case study. (3)
Google have a charitable arm called Google.org which promotes renewable energy
Funding environmental research proves Google are willing to pay to help the environment
Google use solar panels at the Googleplex to reduce its carbon footprint
Google focus on air quality/letting less harmful chemicals into the environment
Google offer free EV charging stations for employees vehicles to reduce emissions
Google treat their staff well eg_
Publicity in Fortune: Best Company To Work For
Perks
Describe the impact of competition policy on an organisation. (2)
Cannot collude with other organisations to fix prices eg cartel
Cannot fix the bid for tendering on projects with other firms
Cannot use market power to pay unfairly low prices to suppliers
Prevents monopolies occurring
Block mergers and take-overs that are deemed anti-competitive
Enforcing the selling of divisions/branches/premises eg divestment
May be forced to change prices
Other than competition, explain the impact of external factors on an organisation. (5)
Political
Legislation and regulations will affect an organisation in that they need to comply with the laws
Economic
Factors such as inflation, recession/boom periods, interest rates will affect organisations in a number of ways ie consumers not spending as much on luxury items/more expensive to borrow money
Social
Changes in trends and fashions mean that organisations must continually carry out market research
Technological
As technology changes organisations must keep up-to-date and this will involve a large financial cost
Environmental
Organisations now attempt to be socially responsible and environmentally friendly to possibly comply with legislation/satisfy consumer groups
Weather/flooding can mean a loss in sales if organisation cannot open due to flooding
Explain the impact of environmental factors on an organisation. (3)
Weather, such as heavy snowfall, can result in suppliers not being able to deliver goods on time.
Can delay production/sales.
Climate change may lead to changes in demand for products eg warmer coats, therefore, the firm may need to change the products they offer.
Seasonal changes can lead to changes in customer demand/shopping habits.
A natural disaster could force the company to close for a period of time which means sales/profits are reduced.
Bio-fuels will reduce a firm’s carbon footprint which will improve its image.
However eco-friendly chemicals are significantly more expensive.
Describe the interdependence of Sainsbury’s stakeholders identified in the information provided. (3)
Sainsbury’s (owners) need employees to operate stores and employees require Sainsbury’s to provide secure jobs.
Suppliers need Sainsbury’s to buy their stock and Sainsbury’s needs suppliers to provide good-quality products.
Employees need customers to give money to Sainsbury’s in order to have job security and customers need good-quality service from employees.
Employees need owners for wages/training/career development and owners need employees for productivity/good customer service.
Owners need customers to give them profits/market share and customers need owners for quality services/products.
Describe examples of conflict that may arise between different groups of stakeholders (2)
Employees are likely to want higher wages than the owners/managers are willing to pay
Owners/managers may need to reorganise the business but employees may feel this gives them extra responsibility without training or extra reward
Owners want to maintain control of their business but managers can become too powerful and influential through their decision making
Managers may focus on their objectives for financial reward which will conflict with owners desire for maximum profit
Customers want delivery of goods as soon as possible but the managers cannot meet customer expectation because of the cost
Managers want to delay payment for goods bought to improve cash flow but suppliers want their money as soon as possible to avoid cash flow issues of their own
Describe potential conflicts between any of the BT stakeholders mentioned in the case study. (4)
Shareholders want high dividends whereas customers want low prices.
Shareholders want high profits whereas employees want high wages.
Shareholders want high profits whereas government want all legislation followed which could increase costs.
Shareholders want a low rate of tax whereas the government may wish to increase it.
Shareholders will be looking for a return on their investment whereas managers may want to reinvest profits for product development.
Managers want to delay payment of suppliers whereas suppliers want prompt payment.
Employees want a low rate of income tax whereas government may wish to increase it.
Describe examples of conflict that may arise between different groups of stakeholders. (2)
employees are likely to want higher wages than the owners/managers are willing to pay
managers want to delay payment for goods bought to improve cash flow, but suppliers want their money as soon as possible
customers want delivery of goods as soon as possible, but the managers cannot meet customer expectations
owners/managers may need to reorganise the business, but employees may feel this gives them extra responsibility without training or extra reward
owners want to maintain control of their business, but managers can become too powerful and influential through their decision making
managers may focus on their objectives for financial reward, which may conflict with owners’ desire for maximum profit.
Describe the following: (2) 2023 4c
conflict of interest between employees and managers
interdependence between employees and managers
conflict of interest between employees and managers
managers may want to cut wages to cut costs whereas employees may want wage rises
managers may want to increase workload to increase efficiency whereas employees may want their workload reduced
interdependence between employees and managers
both employees and managers will need the business to succeed to keep their jobs secure
employees need managers to set them tasks so that they can get paid, whereas managers need employees to carry out the tasks
Explain the advantages of franchising for a franchiser. (3)
Can increase market share without investing further capital
Is paid a percentage of profits or sales or a royalty
Can control the way the business is run.
Explain 3 reasons why an organisation would become a private limited company (3)
Has limited liability to shareholders/owners which would reduce the risk of personal loss to the shareholders
Becomes larger organisation and should attract finance easier
Allows for economies of scale
Less risk of liquidation
Control is still not lost to complete outsiders
Experience and skills can be gained from shareholders
