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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
Benefits of inorganic growth
reduces competition and increases market shares | opportunity to diversity- enter new markets
26
Drawbacks of inorganic growth
if a business grows too quickly it may become inefficient | Resentment and clash of culture may occur
27
Retained profit (Internal)
A cheap form of finance as no interest has to be paid. | Can't be used for unforeseen financial difficulty's
28
Sale of assets (Internal)
Selling unwanted assets (land, buildings, machinery) | It's a one off
29
Bank loan (external)
amount of money borrowed for a set period with an agreed repayment schedule. Interest becomes a cost of the business.
30
Share capital (External)
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.
31
Stock market flotation (External)
Selling shares for the first time.
32
Globalisation
The process by which a business starts operating on an international scale.
33
Imports
An import is a product made overseas and brought into the UK
34
Why would a business import goods ?
Other countries make nice products that people would like to use. A business doesn't have to manufacture.
35
Exports
An export is a product the UK sells to overseas markets.
36
What does the UK export ?
Pearls and gems ect Machinery Vehicles Aircraft
37
Multinational
Is a business which trades in more than one country
38
Tariffs
Is a tax places on an import to increase its price and decrease its demand.
39
Advantages of tariffs
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
Disadvantages of tariffs
high import prices won't put customers off | tariffs may just increase prices for consumers.
41
Trade blocs
Is a group of countries who make a trade agreement not to place tariffs on imported goods.
42
How businesses compete internationally
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
Ways a business can act ethically
Cruelty free Treat workers well/ fair wages environmentally friendly
44
Advantages of being ethical
Brand image | Motivate workers
45
Disadvantages of being ethical
Cost to the business | Reduces profit
46
Trade-off
Is a compromise between one thing and another
47
pressure group
Are organisations set up to try and influence what consumers think about the business and its environment
48
Product design
Is the process of creating new products or services for firms to sell
49
Product differentiation
Is making your product different to competitors
50
Market driven approach
Is one that listens and responds to the needs and wants of customers
51
The design mix
Function: the way the product works Cost the design and features affect how much the product costs Aesthetic: Product image
52
Procurement
Is the whole process of managing the ordering and receipt of the goods and services in the business
53
What does procurement involve ?
``` Deciding what is needed selecting supplier terms of payment managing logistics negotiating contracts between the business and supplier ```
54
Supplier
A business or individual that provides goods or services to a business
55
Gross profit
Revenue - cost of sales
56
Gross profit margin
gross profit ----------------- x 100 revenue
57
Net profit
gross profit - total expenses
58
Net profit margin
net profit -------------- x 100 revenue
59
Average rate of return
Average annual profit (total profit / no of years ) --------------------------------------------------------------------- x 100 cost of investment
60
Increasing the business's sales revenue
- lowering the selling price may increase demand - increasing the price may generate more revenue - increase awareness of the product
61
lower the cost of sales
- 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
Improving the net profit margin
- Increase it's sale revenue - Lower expenses - Freeze recruitment - move to a cheaper location - review salary structure
63
Tall structure
A business with more layers (hierarchy) but narrow span of control
64
Flat structure
Less layers/ wider span of control
65
Span of control
The number of subordinates a line manager is supervising
66
Organisational chart
Shows how employees are organised in a business
67
Chain of command
The route through which messages are passed
68
Delegation
The authority is being passed on to another person ( usually a subordinate )
69
advantages of tall structure
- Opportunities for promotion - Narrow span of control - Can spot areas/ departments to develop
70
Disadvantages of tall structure
- Creates a 'them and us' culture - long chain of command - messages can get distorted
71
Advantages of flat structure
- Team motivation | - creativity as more delegated
72
Disadvantages of flat structure
- More likely to be unorganised | - Mistakes as more work is delegated
73
Centralisation
Head office makes all the decisions about how the business is run
74
Decentralisation
Managers in local branches are given more decision making power
75
Advantages of centralised structure
- decision making and communication can be quick due to high levels of control - vision of the whole organisation is clear
76
Disadvantages of centralised structure
- Stops creativity - less delegated = less motivation - job satisfaction may be lost as staff are not able to feel involved
77
Advantages of decentralised structure
- motivation for managers | - Increase sales through using local knowledge
78
Disadvantages of decentralised structure
- lose cost cutting opportunities through bulk buying | - damage brand name through poor decisions
79
Motivation
is essentially the commitment to do something. 'the will to work'
80
Importance of motivation
- increased productivity - lower absenteeism - higher staff retention - good reputation - improve product quality
81
What motivates staff
``` Praise Pay Fringe benefits Promotion Responsibility Bonus Training Team Recognition ```
82
Job enlargement
Gives staff a greater variety off tasks to do, which makes the work more interesting
83
Job enrichment
Involves workers being given more responsibility and a wider range of more complex and challenging tasks
84
Training
Will motivate staff to do their existing job well, learn new techniques or be trained for future posts.
85
Autonomy
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
Logistics
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
The sales process
The chain of events (from purchase to later customer service) where a business sells to a customer
88
Important aspects of the sales process
Speed and efficiency of service Post sales service Product knowledge Good customer engagement
89
Benefits of good customer service
- Customer loyalty | - Increased spending
90
Dangers of poor customer service
- Dissatisfied customers are less likely to purchase a product again - Customers are likely to share their negative experience giving them a negative image
91
Average rate of return
average annual profit ( total profit/ no of years) -------------------------------------------------------------------- x 100 cost of investment
92
Infographics
A graphic representation of information to make it interesting and catchy
93
What businesses do with numerical data
- compare performance with rivals - monitor performance - Set goals or targets - make decisions about production volumes - anticipate needs of customers
94
Limitations of financial data
- 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
Types of financial data
- ARR - cash flow forecast - break even point - profit and loss - Gross and net profit
96
Marketing data
Includes a businesses internal data, such as data on sales figures, marketing spending and primary market research
97
Market data
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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