theme 2 Flashcards
methods of business growth
internal(organic)
external (inorganic)
what is internal growth
new products (innovation, research and development)
expanding into new markets (changing marketing mix or expanding overseas or taking advantage of tech
what is external growth
growth by merging with or taking over another business
merger- two business join together
takeover- one business buys another
types of business ownership for growing businesses
public limited company (plc) - sells shares on the stock market therefore raising large amounts of capital
sources of finance for growing an established business
internal- retained profit, selling assets
external-loan capital, share capital (including stock market flotation)
stock market flotation (for plcs)
when a private company becomes a plc and sells shares on the stock exchange to raise capital
as a business grow, their aims and objectives change, influenced by
Market conditions
Technology advancements
Business performance
Legislation
Internal factors
how do business aims and objectives change as a business evolve
-focus on survival or growth
● entering or exiting markets
● growing or reducing the workforce
● increasing or decreasing product range.
impact of globalisation on a business
imports- buying cheaper supplies abroad but facing increased foreign competition
exports- selling to international markets, increasing revenue potential
changing business locations- relocate to access lower costs or new markets
multinational business- operate in multiple countries
globalisation
increasing interconnection of business worldwide
barriers to international trade
tariffs= taxes on imports to protect domestic businesses
trade blocs- groups of countries that trade freely with each other
how businesses compete internationally
using internet and e commerce(lower costs, global reach, targeted market, 24/7 access)
adjusting marketing mix (changing pricing, packaging or promotions for different countries)
impact of ethical and environmental considerations on business
ethical:
treat workers fairly
avoid exploitation
using ethical sourcing like fair trade
trade off between ethical responsibility and profit
environmental
reducing waste + pollution
using sustainable resources
investing in renewable energy
trade off between environments, sustainability and cost saving
potential impact of pressure group activity on the marketing mix
consumer boycotts
protests and petitions influencing business decisions
what is the design mix
function
aesthetics
cost
product life cycle
introduction- high costs, low sales, high marketing costs too
growth- rising sales and profit, competition starts
maturity- sales peak, competitors try take market share
decline- sales drop, products may be discontinued
extension strategies to delay decline
changing packaging
targeting a new market
adding new features
promotional discounts
importance of product differentiation
allows a company to make its products stand out in a crowded market (usp) over competitors
by highlighting unique features and benefits
it helps attract customers,
build brand loyalty,
and gain a competitive advantage
by providing a reason for consumers to choose their product over others
price
cost plus pricing= adding a percentage to production cost to calculate a products selling price
competitive pricing- based on what competition charge
penetration pricing- low initial price to attract customers
skimming- high price at launch, then lowering over time
promotional- temporary price reductions to boost sales
factors influencing pricing
tech
market segment
product life cycle state
competitor pricing
promotional strategies
advertising
sponsorships
product trials
special offers
branding
use of tech in promotion
targeted online ads
viral marketing (social media)
e- newsletters and emails
place (distribution)
retailers- physical stores
e- commerce (online)- selling through sites or apps
how each element of the marketing mix can influence other elements
Product affects Price: A high-quality product allows for premium pricing, while a budget product requires competitive pricing.
Price affects Promotion: A low price might be promoted using discount-based advertising, while premium pricing requires a focus on exclusivity.
Place affects Product: Selling online may require different packaging or features compared to selling in physical stores.
using marketing mix to build a competitive advantage
differentiation- set apart business from competitors
cost leadership- efficient distribution and pricing starts can help a business offer lower prices than rivals
brand loyalty- consistent promotion and customer experiences can help build long term customer trust + repeat sales
how an integrated marketing mix influences competitive advantage
consistency- aligning them all creates strong brand message
adaptability well integrated mix allows businesses to quickly respond to change in market
customer satisfaction- seamless experience across all of the mix = increased customer loyalty and retention
purpose of business operations
producing goods
providing services
production processes
job - one off, custom made products like handmade furniture, high skill but slow and costly
batch production- identical groups of products made together , like bread
flow production- continuous production of identical products like cars, maximising efficiency but needing high investments
Quality in Controlling Costs and Gaining Competitive Advantage
cost control- reduces waste and returns,keeps production costs down
efficient- high quality leads to fewer errors, reduces need for costly fixes
competitive advantage- consistently delivering high quality products builds customer loyalty and enhances reputation, setting business apart from competitors
impact of diff production processes
productivity- Flow is the most efficient, while job takes longer per item.
costs- job has high costs due to skilled labour while flow reduces unit costs through automation
competitive prices- Efficient processes (batch/flow) allow businesses to charge lower prices, attracting more customers.
impacts of technology on production
cost- automation reduces long term costs but high initial investment
productivity- tech speeds up production, reducing waste and improving efficiency
quality +flexibility- advanced machinery improves product quality and allows for quick adjustments in design
managing stock
JUST IN TIME- ordering stock only when needed ( reduces waste but risk of shortage)
bar gate stock graphs -used to track stock levels
procurement
getting the right supplies from right supplier at right price
relationships with suppliers
high quality suppliers ensure good products, fewer defects
negotiating good deals + fast delivery helps keep costs down and production efficient
strong relationships ensure suppliers meet demand, reducing risk of shortages
impact of logistics and supply decisions
costs- efficient supply chains reduce transportation and storage costs, keeping prices competitive
reputation-reliable suppliers and smooth logistics help maintain a strong brand image
customer satisfaction- fast and accurate deliveries improve customer experience and encourage repeat business.
managing quality
quality control- checking products at the end of production
quality assurance- checking products through production
total quality management- continuous improvement approach
sales process
product knowledge- sales staff need to understand product throughly to persuade
speed+ efficiency of service-fast and smooth transitions improve satisfaction, repeat business
engagement- building rapport and addressing customer needs creates a positive buying experience, customer loyalty
feedback response- actively listening and acting on feedback, improves satisfaction
post sales service- providing support after sale (returns repairs advice etc) helps maintain loyalty + satisfaction
importance of providing good customer service to business
customer loyalty-consistency encourages repeat sales+ long term relationships
brand rep- enhances, attracting new customers, positive word of mouth
can differentiate a business from competitors, esp in similar markets
gross profit
revenue- cost of sales
net profit
gross profit- tot costs (expenses)
gross profit margin
(gross profit/ revenue) * 100
net profit margin
(net profit/ revenue) * 100
average rate of return
(average profit per year/ investment) * 100
How businesses use financial data:
Graphs and charts – Identify trends
Marketing data – Track consumer behavior
Financial ratios – Assess profitability
Limitations of financial data:
Doesn’t account for external factors (e.g., economic changes)
Past performance may not predict the future
