STRESS Flashcards
Factors of production
Capital - money buildings machinery
Enterprise - development of ideas and drive for implementation
Land - natural resources (water fish trees)
Labour - human workers (mental physical effort)
Sectors of industry
Primary - extraction of earths natural resources
Secondary - manufacturing of raw materials to be turned into finished goods
Tertiary - selling of goods and providing services
Sectors of economy
Private - owned and run by private individuals
Public - owned by taxpayer run by government
Third - owned and run by private individuals with the purpose of helping a group or raising awareness for a cause
Entrepreneur
An individual who develops a business idea and takes on the associated risks and responsibilities
Sole trader
Owned by one person
Controlled by that person as they make all the decisions
Financed by the capital they invest in the business
Advantages of sole trader
Make your own decisions
Profits aren’t shared
No special paperwork required
Disadvantages of some trader
Long hours
Hard to raise finance
Unlimited liability for debt
What’s a business plan
Helps you lay out the aims and ideas you have for your business
Why have aims
- competitive advantage
- indicate further direction
- what employees should believe
Aims
Survival Maximise profits Growth Eliminate competition Provide high quality service Customer satisfaction
What’s a mission statement
Statement that defines the purpose of a company
What can customer satisfaction lead to
- customer loyalty
- repeat purchases
- increased reputation
Ways business can improve customer satisfaction
- provide high quality product
- highly trained employees
- customer care strategy
- customer complaints procedure
Short term finance
Bank overdraft
Grant
Medium term finance
Bank loan
Leasing
Long term finance
Owners savings
Mortgage
Grant pros and cons
Doesn’t need to be repaid, can only get once
Bank overdraft pros and cons
Simple to arrange, not a long term solution
Bank loan pros and cons
Can access large amounts of finance, repaid with interest
A partnership
Owned by between 2 and 20 people
Controlled by those people
Financed by the capital they invest in the business
Advantages of partnership
Raise more capital
Risks and responsibilities are shared
Disadvantages of partnership
Profits are shared
Unlimited liability
Disagreement amongst partners
Unlimited liability
Owners must pay off all debts of the business, may result in losing personal possessions
Limited liability
The owner(s) are only liable for the debts of the company up to what they have invested
PLC
Owned by shareholders
Controlled by board of directors
Financed through selling shares
Advantages of PLC
Raise more capital through selling shares
Shareholders have limited liability
Bigger firm
Disadvantages of PLC
Accounts are not private
Have to share profits, DIVIDENDS
More complex and expensive to set up
Public sector
Owned by taxpayer (the state)
Financed through taxes
Controlled by the government
Public sector aims
Make good use of taxpayers money
Stay within a budget
Provide value for money
Third sector
Owned by private individuals
Controlled by private individuals
Financed through selling goods, donations
Types of third sector organisations
Charities
Non profit making organisations
Social enterprises
Third sector aims
Provide support for worthy causes
Raise awareness of an issue
Social enterprise
Business that trades for a social and/or environmental purpose
Social enterprise features
Funded by grants and sponsorship
Has employees and volunteers
Creates jobs in local community
Provides benefits to local community
Advantages of social enterprise
Improve on a social mission
Use local skills and life experience
Disadvantages of social enterprise
Need specific skills/knowledge/experience
Must meet their social aims
Stakeholders
Individuals with an interest in and an influence on a business
Employees interests
Job security
Improved salaries
Employees influence
Level of productivity
Can take industrial action
Management interests
Improved salaries
Career opportunities
Management influences
Quality of decision making
Banks interests
Ability to pay back loans
Bank influences
Give/refuse loan application
Setting interest rates
Suppliers interests
Continuing custom
Ability to pay invoices
Suppliers influences
Set price of raw materials
Quality of raw materials
Set credit terms
Competing aims stakeholders
Senior management wants to maximise profits whereas customers want low prices
Internal factors
Employees Management Finance Equipment Information
Employees internal factors
Quality of production
Work rate
Management internal factors
Quality of decision making
Finance internal factors
Capital available for changes to be implemented
Technology internal factors
Do they have the required technology to carry out their decisions
Information internal factors
Can they access the information they need
SWOT analysis
Strengths weaknesses opportunities threats
Strengths
New products
Experienced staff
Finance available
Weaknesses
Declining products
Aging work force
Poor premises
External factors
Political Environmental Social Technological Economic Competition
Roles of marketing
Increase sales and therefore maximise profits
Help a business achieve increased market share
Field research
Gathering primary information first hand
How to find out field research
Surveys/questionnaires
Interviews
Focus groups
Types of questionnaires
Postal
Telephone
Online
Face to face
Pros and cons of surveys
Cheap and easy but response rates are low
Pros and cons of interview
Expensive method (trained interviewer) and time consuming
Test marketing pros and cons
Effective feedback but no guarantee the product will be a success
Focus group pros and cons
Variety of opinions but some members may dominate
Observation pros and cons
Allows companies to gather information but often people do not want to take part
Field research pros and cons
Specific to your needs, accurate, up to date
Time consuming, expensive
Desk research
Secondary information gathered from an external source
How to gain desk research
Newspapers
Internet
Market research agencies
Desk research pros and cons
Less time consuming, less expensive
Not accurate to your needs, information may be out of date
Market segmentation examples
Age gender religion
Product development
Idea, analyse, prototype, test and launch
Product lifecycle
Introduction
Growth
Maturity
Decline
Branding benefits
Charge a premium price
High awareness
Perceived high quality
Easier to launch new products
Branding costs
High marketing costs
Counterfeit goods
Own brands
What price should be based on
Competitors prices
Cost to manufacture
Time of year
Types of promotion
Advertising
Sales promotion
Public relations
Advertising aims to be
Informative
Persuasive
A reminder
Types of advertising
Print (newspapers)
Broadcast (TV)
Outdoor (billboards)
Sales promotion
BOGOF
Competitions
Free gifts
Discounts
Direct mail
Mail delivered to your address promoting a product or service
Personal selling
Salesmen coming to homes to sell a product
Businesses can promote using
Website Email QR codes Apps Texting
Other types of promotion
Product placement
Product endorsment
Sponsorship
PR department deals with
Press
Government
Public
Activities PR takes part in
Press statements
Charitable donations
Customer care
Factors of place
Competition, resources, cost of premises, nature of the product
Role of operations
Making products
Working with suppliers
Managing levels of stock
Pros of job production
Meets customers needs
High customer satisfaction
High prices as product is unique
Cons of job production
High labour costs as its labour intensive
Costs are not recovered until completion of project
Pros of batch production
Batches can be changed to meet requirements
Raw materials bought in bulk saving money
Cons of batch production
Equipment and employees not working between batches
Motivation reduced
Pros of flow production
Large quantities of goods can be produced
Cons of flow production
Every product is identical
Lack of motivation
Pros of labour intensive
Employees can be creative
No need for expensive equipment
Cons of labour intensive
Expensive to recruit and train employees
Quality of work can vary
Only machines
Automation
Humans and machines
Mechanisation
Pros of capital intensive
Can work 24/7
Consistent quality
Cons of capital intensive
Expensive to purchase
Can’t meet individual requirements
Quality control
Carrying out inspection at the end
Quality management
Ensuring the product is made perfectly every time - commitment from all employees
Quality assurance
Checking every product throughout all stages of production process
Methods of recruitment
Job analysis Job description Person specification Advertisement Applications
Methods of selection
Interiew
Testing
Making the appointment
Job analysis
Establishing whether a job vacancy actually exists
Job description
Document that allows all applicants to see what the job will involve
Person specification
Identify the type of person you want to do the job
Advertisement
How the organisation lets potential applicants know the job exists
Internal advertisement
Staff memo
Notice boards
Newsletter
Externally advertising
Newspapers
Job centre
Recruitment agency
Why advertise internally
Allows them to develop skills
Improve staff morale
Why advertise externally
Wider choice of candidates
Brings in new people with new ideas
Applications
Application form or CV
Interview
One on one, panel, group
Testing
Aptitude (skill based)
Psychometric (attitudes)
Personality (roles they’re suited to)
Making the appointment
Successful and unsuccessful candidates are informed
Induction training
Before the employee starts the job
On the job training
Within the organisation
Off the job training
College or training centre
Benefits of training
Increased productivity
Increased motivation
Costs of training
Financial costs
Staff resistance
Staff may leave once trained
Non financial motivation
Appraisal, promotion opportunities, improved working conditions
Financial motivation
Salary, time rate, piece rate, overtime, bonus
Core workers
Employed by the firm and are involved in core activities of business
Casual workers
Hired and released by the company when they’re needed
Contractual workers
Employed on a fixed term contract usually for one or two years
Flexi-time
Workers only need to be at workplace at certain times in the day
Home/tele-working
Employees working from home making use of ICT
Job-share
Two or more employees share the duties associated with one job
Employees relations groups
Trade union, ACAS
Trade union
Set up to protect and stand up for the rights of employees
What do trade union do
Collective bargaining (negotiating)
ACAS
Employee relations experts who aim to help employees and employers work together
Industrial action
Strike
Sit in
Work to rule
Overtime ban
Motivation benefits
Increased productivity
Increased quality
Motivation costs
Financial costs
Staff conflicts
Equality act 2010
Protect people from discrimination in the workplace
National minimum wage act 1998
Creates a minimum wage for all workers across United Kingdom
Freedom of information act 2000
- right to know whether information exists
- right to access that information
Data protection act 1998
Protects the rights of the individual by governing the collection, storage and use of information held
- accurate and up to date
- kept secure
Health and safety at work act 1974
Raise the standard of health and safety for all individuals at work
Employees must (h+s)
Comply with training
Take care of themselves and others
Report any hazards or accidents
Employers must (h+s)
Provide toilets and drinking water
Necessary training
Necessary equipment and clothing
Break even chart
Shows how many units must be sold before the company stops making a loss and starts making a profit
Break even point
Not making a loss or a profit
Total costs = sales revenue
Fixed costs
Costs that remain constant even when volume of production changes
Variable costs
Costs that vary directly with the volume of production
TOTAL COSTS =
Fixed costs + variable costs
Sales revenue
Total money a business has made from its sales
Cash budget
Forecast of money expected to be received and the money expected to be paid out over a period of time
Infows
Cash sales
Credit sales
Bank loan
Outflows
Purchases
Wages
Rent
Utilities
Importance of cash budgets
Allows greater control of business
Less uncertainty and fear of future
Forecast costs and income in advance
Problems and solutions with cash budgets
Decreased cash sales - increased sales (promotions)
Increase raw material costs - decrease raw materials
Income statement
Statement that shows how much profit a business has made over a period of time
Gross profit
Profit made from sales activity
Gross profit =
Sales - cost of sales
Sales revenue
Income received from customers from sales of products
Less cost of sales
Cost of buying in the stock sold during the year
Expenses
Expenses that have to be paid for other than stock (wages rent)
Net profit =
Gross profit - expenses
Overall profit made by the business during an accounting period
Income statement problems and solutions
Decrease in sales - increase selling price
Increase in expenses - reduce expenses through better deals
Role of technology in finance
Database - create reports of overdue accounts
PowerPoint - display financial information at the shareholders meeting
