Theme 2 Flashcards by Sinead CPC

What is external (inorganic) growth

Joining forces for a business to grow

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What is internal (organic) growth

Selling more output over a period of time and growing

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What is a merger

Two or more businesses voluntarily agreeing to join up and work as one business

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What is a takeover

Where one business buys another

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Name two benefits of internal (organic) growth

Helps to increase market share

Less risk than external growth

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Give two benefits for external (inorganic) growth

Competition can be reduced

Market share can increase overnight

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Give two drawbacks of internal (organic) growth

Slow growth

Growth is dependent on the overall market

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Give two drawbacks if external (inorganic) growth

Can be expensive to merge/ takeover

Managers may lack experience to deal with the other businesses

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Give three methods of internal (organic) growth

New markets
New products
New technology

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Give a benefit and drawback of retained profit (internal)

+ involves no risk or debt

- profit is not guaranteed

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Give a benefit and a drawback of selling assets (internal)

+ Quick way of raising capital

- looses the benefit of owning the assests sold

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Give a benefit and drawback of loan capital (external)

+ once applied for the process is quicker

- interest & fixed repayments can affect cash flow

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Give a benefit and drawback of share capital (external)

+ can raise considerable capital

- risk control of the business & dividends

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Give a benefit and drawback of stock market flotation

+ quick way to receive capital

- risk control & shareholders may lack experience

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Give two reasons why business aims & objectives change (externally)

New competitors

New legislation

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Give two reasons why business aims & objectives change (internally)

Change in working culture

Change in business’ leaders

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What is the definition of globalisation

Where businesses operate internationally and gain a lot of influence or power

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State three ways globalisation can impact a business

Imports (cheaper raw materials & competition)
Exports (growth opportunities & problems)
Location ( opportunity to relocate closer to important factors)

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What is the definition of a tariff

A tax added to the price of an import

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What is the definition of trade blocs

A group of countries that work together to provide special deals for trading

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Give two ways in which businesses can compete internationally

E- commerce (24/7 & no need for foreign retailers)

Globalisation ( adapting product to culture)

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What is the definition of ethics

Weighing up decisions or actions on the basis of morality not personal gain

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What is the definition of trade-off

How having one thing may force a business to have less of another

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What is the definition of a pressure group

A group of people who join together to try to influence government or business policy for a particular cause

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Give three elements of the design mix

Aesthetics Function Cost

What is the definition of a product life cycle

A business model that represents the sales of a product through different stages

What is a definition of extension strategies

Slightly changing the product so that is has a fresh appeal to the target market

What are the four stages in a product life cycle

Introduction Growth Maturity Decline

Give two ways differentiating helps businesses

Helps to position their products and target different market segments Helps to gain competitive advantage when facing competition

Give three influences on pricing stategies

Competition Branding Product life cycle

What are three reasons why business use promotion

Inform consumers of a new product / service Persuade consumers to purchase Remind consumers of the benefits of that product

Give three promotional strategies

Advertising Sponsorship Special offers

Give three ways technology can be used in promotion

Email Social media Apps

What is the purpose of business operations

To organise, produce and deliver the goods and services provided by a business

What is Job production

Production of one-off or bespoke products

What is a benefit and drawback of job production

+ high profit | - longer production process

What is batch production

Production of a larger volume of products

What is a benefit and drawback of batch production

+ some levels of flexibility and automation | - productivity reduced when switching between batches

What is flow production

Production of high volumes of products

What is a benefit and drawback of flow production

+ high productivity | - setting up expensive machinery increased costs

Give three ways technology impacts production

Speeds up the production process Lowers production costs Ensures fewer mistakes and defects

What is the definition of just in time (JIT)

A stock management system where stock is delivered only when it is needed by the production system so no stock is kept

What is the definition of procurement

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

Give three factors that lead to the efficient procurement of raw materials

Flexibility Availability Cost & Quality

Give three three impacts in logistics and supply decisions

Flexible suppliers can help a business meet customer needs easier Late deliveries hold up production Poor quality can lead to dissatisfaction and products returned

What is quality control

Testing for quality once a product has been made

What is quality assurance

Focusing on quality at every stage of the production process

Why is quality important to a business

Can charge a premium price | Builds a string brand image

What are the five stages of the sales process

``` Customer interest Speed & efficiency of service Customer engagement Post- sales service Customer loyalty ```

What is gross profit

The profit that a business makes before any indirect costs have been deducted

What is net profit

The actual profit after indirect costs that are not included in gross profit have been paid

Calculation for gross profit

Sales revenue - cost of sales

Calculation of Gross profit margin

Gross profit / sales revenue (x100)

Calculation of net profit

Gross profit - any other expenses and interest

Calculation of net profit margin

Net profit / sales revenue (x100)

Calculation of average rate of return

Average annual profit / cost of investment (x100)

Give a use and limitation of financial information

+ monitor performance of business | - business performance isn’t solely judged on financial performance

What are the differences between hierarchical & flat structure

H: long chain of command & shorter span of control F: shorter chain of command & wide span of control

Give a benefit and drawback of a hierarchical structure

+ easier to control & promotional opportunities | - costly & slow communication

Give a benefit and drawback of a flat structure

+ clear communication | - no promotion opportunities (= low motivation & retention)

What is the difference between a centralised and decentralised structure

Centralised: decisions made by head director Decentralised: decisions delegated to regional branch directors

Give a benefit and drawback for a centralised structure

+ increased control | - decisions can be slow

Give a benefit and drawback for a decentralised structure

+ decisions suited to local customers | - loss of control

Give three impacts of bad communication

Bad employee motivation Bad customer service Increased mistakes made

Give three reasons why motivation is important in the workplace

Can create a hard working & flexible workforce Attracts & retains hood employees Improved customer service

Give three financial methods of motivation

Fringe benefits Bonuses Promotions

Give three non- financial methods of motivation

Job rotation Job enrichment Employee reward scheme

Calculation of revenue

Price x quantity

Calculation of variable costs

Cost of one unit x quantity