Theme 2 analysis COPY Flashcards
Benefit of using batch production
Drawback of batch production
Benefit of using budgets
Drawback of Using Budget
- Budget set limit on Spending
- Prevent Businesses Pursing Opportunites
- Limits chance of growth
- Produce Lower Output
- Less likely to gain EOS
- Fixed Cost Spread over Less units
- Increase Unit Fixed Cost
- Lower operating profit Margin
Benefit of using cell production
Cell production Drawback
- Cell Production Involves Employees
coming Together as a Team to
Complete Each part of Production - Means that Employees will need to
be Multi-Skilled to Work across
production - Business need to Invest into
Training so Staff have Necessary
Skills - Increase Expenses
- Reducing Operating Profit
- Less profit to Retain + Reinvest
Quality control benefit
Drawback of quality control
Benefit of just-in-time stock management
Drawback of just-in-time stock management
Importance of good stock management
Benefit of low capacity utilisation
Benefit of using flow production
Flow Production Drawback
- High Vol of Identical products
Made - Through use of Machinary
- Damage Business Liquidity in ST
- As Sig Investment needed to
purchase Machinary - Reducing Cash Reverseves ST
- Low Current Assets + Low Liqudity
Benefit of using historical budgeting (for large businesses)
Drawback of historical budgeting
Benefit of using job production
Drawback of job production
Benefit of adopting a Kaizen approach
Drawback of Kaizen
Benefit of quality assurance
Drawback of quality assurance
Benefit of zero-based budgeting
Drawback of zero based budgeting
Benefit of a capital intensive production approach
Gaining a competitive advantage from lean production
Drawback of Gaining Competitive Advantage with Lean Production
- If Business adopts Lean production
Approach - e.g. JIT or Kaizen - Require Business to have Highly
Skilled Staff - Either tasked with identifying Area
for Continuous Improvement or
being able to adapt quickly to
trends - Require Business to Invest Heavily
into Training - Increase Expenses
- Reduce Operating Profit
- Less Retained profit
Benefit of a strong pound
Drawback of a strong pound
Reasons why incomes may not be impacted by rising inflation
Impact of inflation on cost of sales
Why incomes may be affected by rising inflation
Impact of a stronger pound on demand for domestic businesses
Benefit of improved productivity
Interpreting a stock control diagram
Benefit of a labour intensive production process
Drawback of a labour intensive production process
Production at minimum average cost
Benefit of quality circles
Drawback of quality circles
Reasons why inflation may not impact cost of sales
Benefit of a weaker pound
Drawback of a weaker pound
Impact of high interest rates
However….. of high interest rates
Impact of low interest rates on consumer incomes
Impact of low interest rates on savings
Impact of changes in national insurance
benefit of government increasing national insurance
recession
how businesses can benefit from a recession
spreading risk across different countries
Boom
inflation risk during a boom
effect of economic uncertainty on business environment
Benefit of a grant
Drawback of a grant
retained profit benefit
retained profit drawback
sale of asset benefit
sale of asset drawback
family and friends benefit
family and friends drawback
peer to peer benefit
peer to peer drawback
Venture Capital + Business Angle Benefit - SMALL BUSINESS ONLY
- Business Angel likely to have
experience - They Provide support with Finance
- Give Competitive Advantage =
Porter Differentiation Strategy - Increase Sales Volume
- Increase Order to Suppliers
- For Raw Material Such as..
- Lower Unit Variable Cost
- Opportunity to Lower Selling Price
to Increase Sales Further to
Increase Market Share
drawback venture capital
benefit of crowdfunding
drawback of crowd-funding
benefit of loans
drawback of loans
benefit of share capital
drawback of share capital
benefit of overdrafts
drawback of overdrafts
benefit of leasing
Drawback of leasing
Benefit of trade credit
Drawback of trade credit
limited liability benefit
limited liability drawback
benefit of business plan
drawback business plan
cashflow forecast benefit
cashflow forecast drawback
Sales forecasting Benefit
Sales forecasting drawback
Adapting to Break-even as the ‘hook’ in a question…….
break-even is useful because…
Break-even is not useful because..
Improving the break-even point
- Reduce fixed costs
Eg. Move to a smaller premises, reduce marketing budget, reduce staff wages/make redundancies
- Reduce variable costs (higher contribution per unit)
Eg. Switch to a cheaper supplier
- Increase selling price (higher contribution per unit)
consumer protection legislation
Employee protection
- Employee Protection Legislation ( Min Wages , Sick Pay ect)
- Ensure Business must meet Employee Basic Needs
- By Giving them Min wage + Allowing them Aqequate Rest
- Means Employee Hygience Factors met
- Prevent Demotivation according to Herzberg
- Increase productivitiy
- Increase Output Per Worker
- Fixed Cost of Wages spread over more units
- Lower Fixed Cost per Unit
- Increase Operating Profit Margin
Environmental Protection
- Prevent Businesses from Causing Excess Pollution + Producing Large Amount of Waste
- If Business Follow Legislation
- Appear more Enviromentally Friendly
- Makes them More Ethical
- Strong Brand Image
- More Price Inelastic
- Able to Increase Price without SIG Decrease in Demand
- Increase Revenue
- Increase Gross + operating profit
Competition Policy
- Prevent business Suppliers from Colluding or Forming Monopolies
- More Choice between Diff Suppliers
- Reduce Bargaining Power of Supplier
- Supplier unable to charge High Price
- Reduce Cost of Raw Materials
- Lower Variable cost
- Increase Gross profit Margin
- Increase Operating profit
Health + Safety Benefit
- Business responsible for ensuring safety of staff
- Employee are trained + Working Conditions safe
- Ensuring Employee Safety Needs Met ( Maslow)
- Increase Motivation
- Increase productivity
- Fixed Cost of Wages Spread over More Units
- Lower Fixed Cost Per Unit
- Increased Operating profit Margin
Drawback for ALL Legislations - MUST ADAPT
- Legislation lead to Increase bureaucracy
- As Process + proeceduares need to be Implemented to Ensure Legislation Followed
- Experts need to be Hired to ensure this is followed
- Increase cost of Wages
- Increase Fixed cost
- Reducing Operating profit Margin
- Reduced Retained Profit
- Reducing Capital for Reinvestment into…
