Test 3 Flashcards
Advantages of a multi-national organisation
Host countries may offer grants and financial incentives such as tax breaks to entice them to open a facility in that country.
Costs of land and labour can be considerably lower in the host countries, thus reducing costs and increasing profits.
Corporation tax may be lower which means that owners can keep more of their profits.
Can benefit from economies of scale which is when the cost of production decreases as production increases as work can be divided up between the large workforce
Disadvantages of a multi-national organisation
The local currency may be too weak to allow profits to be converted back at a good rate.
Local legislation may restrict business practices that are legal in other countries.
Cultural differences and language barriers may hinder progress.
Methods of staff approval
One to one
Traditional and formal method where each staff member meets with their line manager annually to discuss the performance of their work through the year
Peer to peer
An informal method where progress is discussed with a colleague in a similar job or position, which is useful if mentoring or buddying is used within the organisation
360 degree
This is more geared towards employee self evaluation with contributions being sought from peers, managers and customers to provide a more rounded picture of the quality of work being done.
Virtual learning environments
Staff can access the virtual training resources from home or at work so employees can do it at a time that suits them best.
Employees or learners can connect with their teacher or supervisor if they need help with their learning and understanding of the training
Some staff may not like the lack of human contact when undertaking their training as it is done over the internet and on computers.
Financial ratios
Gross profit ratio
This ratios shows the percentage of gross profit for every £1 of sales and the higher the figure the more profitable the business. formula = gross profit/sales x 100
Profit for the year ratio
This shows the percentage of profit for the year for every £1 of sales. Formula = profit for year/sales x 100
Working capital ratio
This shows the level of current assets to pay for every £1 of debt and a 2:1 ratio is ideal. Formula = current assets/current liabilities.
Labour intensive production
More flexibility due to human skills and more one off jobs for customers can be produced as multiple different types jobs can be completed.
The business can charge a higher premium price for the products as they have been produced by a highly skilled workforce and should be of a high quality.
Lower start up costs than capital intensive production as initial investments can be spent on labour instead of the more expensive option which is machinery.
A skilled workforce can be expensive to recruit pay and train.
Businesses cannot take advantage of economies of scale because if production increases, more employees will need to be hired which will increase the costs of production.
Staff illness or absence can impact on the production process as employees will have to cover for the lack of work being done so it will be overall slower.
Benefits of a computerised stock control system
It allows for the use of barcode scanning meaning when the barcode is scanned, that items stock level availability will automatically be reduced so it saves time having to do it manually
It can help with decision making for example if the stock system highlights that a product isn’t selling and the stock level is staying high, management could decide to put it on discount to encourage more sales
Helps display a running balance of every products stock level and helps the business know what products need reordering or sold quickly
Computerised stock control systems are also useful as they are able to automatically order the reorder quantity of a product if the stock levels of that product has reached the re order level
Factors that influence the choosing of a reorder quantity
The lead time which is the time it takes for the suppliers to deliver the products to the business so if it takes a couple of days for the products to arrive then the amount sold in those days will have to be added on to the re order quantity
What the maximum stock level of that product is because the business does not want to overstock on a product and risk losing profit due to the product not selling quick enough and money tied up in stock
The storage space available is also a factor because if the business orders too much they might not have enough space to store it and may have to resort to using space that could be used more productively
