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Business studies > Theme 2 > Flashcards

Theme 2 Flashcards

1
Q

Business ethics

A

Moral principles that guide the way a business behaves. (environmentally friendly, cruelty free, pay workers well)

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2
Q

Promotion

A

Refers to raising awareness and desire for a product.

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3
Q

Why promote

A

To inform about existing/new products
To explain potential benefits
To persuade customers to buy the product

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4
Q

Sales promotion

A

special offers (free gifts, bogof), loyalty points, competitions, tactical

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5
Q

Branding

A

Creating an identity for your product which customers see as different from other products. (e,g. colour, packaging, theme tune)

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6
Q

Place

A

Refers to where the product is sold and how a business gets its products to customers (distribution)

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7
Q

Distribution

A

Making products at the right place, time in the right quantity

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8
Q

Distribution channel

A

Moves a product through the stages from production to final consumer.
(retailer, wholesalers ,sales agent/distributer, direct/e-commerce.)

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9
Q

Marketing Mix

A

how a business combines its products, price, uses promotion and the place of sale in order to be successful.

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10
Q

Competitive advantage

A

An advantage gained over rivals by offering consumers greater value either by means of lower prices or greater benefits.

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11
Q

Operations

A

Is the function that organises, produces and delivers the goods of a business.

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12
Q

Job production

A

Unique bespoke products, specialists, huge profit margins, focus on customer requirements

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13
Q

Batch production

A

Ability to mass produce a production in different flavours/styles ,using machinery.

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14
Q

Flow production

A

Mass producing the same product by machinery at a constant flow.

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15
Q

Organic growth

A

businesses grow by expanding their own operations

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16
Q

Benefits of organic growth

A

Less rick than external growth
Financed through internal funds (retained profit)
Builds on a businesses strengths

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17
Q

Drawbacks to organic growth

A

Growth may be dependent on growth of the overall market

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18
Q

Inorganic growth

A

Is achieved when one business joins another business by a merger or takeover, achieved through integration.

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19
Q

Merger

A

Two or more firms join to create a new business

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20
Q

Takeover

A

One business buys another

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21
Q

Types of integration

A

Horizontal
vertical
conglomerate

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22
Q

Horizontal integration

A

A business joins a business at the same stage of the production process

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23
Q

Vertical integration

A

A business joins with its supplier

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24
Q

conglomerate integration

A

a business joins a business in a different market

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25
Q

Benefits of inorganic growth

A

reduces competition and increases market shares

opportunity to diversity- enter new markets

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26
Q

Drawbacks of inorganic growth

A

if a business grows too quickly it may become inefficient

Resentment and clash of culture may occur

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27
Q

Retained profit (Internal)

A

A cheap form of finance as no interest has to be paid.

Can’t be used for unforeseen financial difficulty’s

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28
Q

Sale of assets (Internal)

A

Selling unwanted assets (land, buildings, machinery)

It’s a one off

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29
Q

Bank loan (external)

A

amount of money borrowed for a set period with an agreed repayment schedule.
Interest becomes a cost of the business.

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30
Q

Share capital (External)

A

Allows the business to raise large funds in the form of share capital that are not repayable.
Loss of control and have to share profit.

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31
Q

Stock market flotation (External)

A

Selling shares for the first time.

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32
Q

Globalisation

A

The process by which a business starts operating on an international scale.

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33
Q

Imports

A

An import is a product made overseas and brought into the UK

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34
Q

Why would a business import goods ?

A

Other countries make nice products that people would like to use.
A business doesn’t have to manufacture.

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35
Q

Exports

A

An export is a product the UK sells to overseas markets.

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36
Q

What does the UK export ?

A

Pearls and gems ect
Machinery
Vehicles
Aircraft

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37
Q

Multinational

A

Is a business which trades in more than one country

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38
Q

Tariffs

A

Is a tax places on an import to increase its price and decrease its demand.

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39
Q

Advantages of tariffs

A

UK produced goods don’t have to pay the tariffs and so are likely to be cheaper
Allows UK business to sell more because they gain a price advantage .

40
Q

Disadvantages of tariffs

A

high import prices won’t put customers off

tariffs may just increase prices for consumers.

41
Q

Trade blocs

A

Is a group of countries who make a trade agreement not to place tariffs on imported goods.

42
Q

How businesses compete internationally

A

Can use the internet and can sell using e-commerce to trade internationally.
If they have the website translated into several versions available they can sell in different countries.

43
Q

Ways a business can act ethically

A

Cruelty free
Treat workers well/ fair wages
environmentally friendly

44
Q

Advantages of being ethical

A

Brand image

Motivate workers

45
Q

Disadvantages of being ethical

A

Cost to the business

Reduces profit

46
Q

Trade-off

A

Is a compromise between one thing and another

47
Q

pressure group

A

Are organisations set up to try and influence what consumers think about the business and its environment

48
Q

Product design

A

Is the process of creating new products or services for firms to sell

49
Q

Product differentiation

A

Is making your product different to competitors

50
Q

Market driven approach

A

Is one that listens and responds to the needs and wants of customers

51
Q

The design mix

A

Function: the way the product works
Cost the design and features affect how much the product costs
Aesthetic: Product image

52
Q

Procurement

A

Is the whole process of managing the ordering and receipt of the goods and services in the business

53
Q

What does procurement involve ?

A 
Deciding what is needed
selecting supplier
terms of payment
managing logistics
negotiating contracts between the business and supplier
54
Q

Supplier

A

A business or individual that provides goods or services to a business

55
Q

Gross profit

A

Revenue - cost of sales

56
Q

Gross profit margin

A

gross profit
—————– x 100
revenue

57
Q

Net profit

A

gross profit - total expenses

58
Q

Net profit margin

A

net profit
————– x 100
revenue

59
Q

Average rate of return

A

Average annual profit (total profit / no of years )
——————————————————————— x 100
cost of investment

60
Q

Increasing the business’s sales revenue

A
  • lowering the selling price may increase demand
  • increasing the price may generate more revenue
  • increase awareness of the product
61
Q

lower the cost of sales

A
  • Cut down on the price paid to suppliers
  • Change suppliers if another supplier can offer cheaper price
  • Could review their existing products and see if they could made more cheaply to cut costs
62
Q

Improving the net profit margin

A
  • Increase it’s sale revenue
  • Lower expenses
  • Freeze recruitment
  • move to a cheaper location
  • review salary structure
63
Q

Tall structure

A

A business with more layers (hierarchy) but narrow span of control

64
Q

Flat structure

A

Less layers/ wider span of control

65
Q

Span of control

A

The number of subordinates a line manager is supervising

66
Q

Organisational chart

A

Shows how employees are organised in a business

67
Q

Chain of command

A

The route through which messages are passed

68
Q

Delegation

A

The authority is being passed on to another person ( usually a subordinate )

69
Q

advantages of tall structure

A
  • Opportunities for promotion
  • Narrow span of control
  • Can spot areas/ departments to develop
70
Q

Disadvantages of tall structure

A
  • Creates a ‘them and us’ culture
  • long chain of command
  • messages can get distorted
71
Q

Advantages of flat structure

A
  • Team motivation

- creativity as more delegated

72
Q

Disadvantages of flat structure

A
  • More likely to be unorganised

- Mistakes as more work is delegated

73
Q

Centralisation

A

Head office makes all the decisions about how the business is run

74
Q

Decentralisation

A

Managers in local branches are given more decision making power

75
Q

Advantages of centralised structure

A
  • decision making and communication can be quick due to high levels of control
  • vision of the whole organisation is clear
76
Q

Disadvantages of centralised structure

A
  • Stops creativity
  • less delegated = less motivation
  • job satisfaction may be lost as staff are not able to feel involved
77
Q

Advantages of decentralised structure

A
  • motivation for managers

- Increase sales through using local knowledge

78
Q

Disadvantages of decentralised structure

A
  • lose cost cutting opportunities through bulk buying

- damage brand name through poor decisions

79
Q

Motivation

A

is essentially the commitment to do something. ‘the will to work’

80
Q

Importance of motivation

A
  • increased productivity
  • lower absenteeism
  • higher staff retention
  • good reputation
  • improve product quality
81
Q

What motivates staff

A 
Praise
Pay
Fringe benefits
Promotion
Responsibility
Bonus
Training
Team
Recognition
82
Q

Job enlargement

A

Gives staff a greater variety off tasks to do, which makes the work more interesting

83
Q

Job enrichment

A

Involves workers being given more responsibility and a wider range of more complex and challenging tasks

84
Q

Training

A

Will motivate staff to do their existing job well, learn new techniques or be trained for future posts.

85
Q

Autonomy

A

refers to how much freedom a member of staff has to make their own decisions and to shape the way in which they work

86
Q

Logistics

A

A process which plans, implements and controls the distribution and storage of goods and services from when they are received from the supplier to when they are delivered to the customer

87
Q

The sales process

A

The chain of events (from purchase to later customer service) where a business sells to a customer

88
Q

Important aspects of the sales process

A

Speed and efficiency of service
Post sales service
Product knowledge
Good customer engagement

89
Q

Benefits of good customer service

A
  • Customer loyalty

- Increased spending

90
Q

Dangers of poor customer service

A
  • Dissatisfied customers are less likely to purchase a product again
  • Customers are likely to share their negative experience giving them a negative image
91
Q

Average rate of return

A

average annual profit ( total profit/ no of years)
——————————————————————– x 100
cost of investment

92
Q

Infographics

A

A graphic representation of information to make it interesting and catchy

93
Q

What businesses do with numerical data

A
  • compare performance with rivals
  • monitor performance
  • Set goals or targets
  • make decisions about production volumes
  • anticipate needs of customers
94
Q

Limitations of financial data

A
  • It is historical (using old data to make decisions about the future)
  • Statistics can be manipulated
  • Qualitative factors could be more important - business reputation, employee motivation, why sales have fallen
95
Q

Types of financial data

A
  • ARR
  • cash flow forecast
  • break even point
  • profit and loss
  • Gross and net profit
96
Q

Marketing data

A

Includes a businesses internal data, such as data on sales figures, marketing spending and primary market research

97
Q

Market data

A

Is generally available through secondary data for the industry concerned and includes population information such as age distribution, income levels and employment and unemployment information.

Business studies (2 decks)

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