Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Business Johni > Theme 2: Building a business > Flashcards

Theme 2: Building a business Flashcards

1
Q

What is Economies of scale? how does it make businesses grow?

A

Economies of scale is when the cost per unit of a product is reduced, allowing a business to charge lower prices and increase market share by selling more

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

How does increased sales help businesses grow?

A

Increased sales brings in greater revenue, which will increase profits if cost stay the same

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

How does market share increase?

A

Market share increases if sales increase faster than competitors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are the different ways businesses can grow?

A

Internal growth (organic)
External growth (Inorganic)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is Internal / Organic growth

A

Businesses do this by selling more products (more revenue).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

How can Internal growth be achieved?

A

Launching better products
Lowering prices
Advertising

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is external growth

A

External growth is done by either:
Having a merger with another business
or
Having a takeover of another business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Why would a business grow externally?

A

A business may externally grow because they:

lack expertise in an area
or
want to increase market share and eliminate competition.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Benefits of external growth (3)

A

Eliminate competition

Increased market share

Benefit from economies of scale

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Risks of external growth (2)

A

If money is borrowed in order to buy another business and the business plan doesn’t work, the business could end up in debt

Workers may become redundant, affecting staff motivation and business reputation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Name 3 objectives a business might have

A

Growth

Diversification

Expansion abroad

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is Diversification?

A

Diversification is when a business moves into a new market.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is expansion abroad?

A

Going international, which can help businesses target a larger customer base, will help increasing sales and reducing risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What other objectives would a business have?

A

Ethical objectives

Environmental objectives

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is ethical objectives?

A

example:

Paying workers a fair wage

Paying suppliers a fair amount

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is environmental objectives?

A

Aiming to do minimum damage to the environment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Why would a business change their objectives?

A

Market conditions
Technology
Legislation
Internal reasons

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is Internal reasons?

A

New shareholders believe they should reduce their environmental impact

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Features of a LTD company?

A

Owned by shareholders
They have limited liability
The business is a separate entity from the shareholders and do not risk the shareholder’s assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Different types of LTD companys?

A

Private Limited Company

Public Limited Company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What are the features of a Public Limited Company?

A

Shares are traded on the stock exchange

Shares can be offered to the general public, making it easier to raise money.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What are the features of a Private Limited Company?

A

Shares are not traded on the stock exchange

Shares not offered to general public, making it harder to raise money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Advantages of being a Public Limited company

A

Easier to raise finance by selling shares

More likely for a loan approval

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Disadvantages of Public limited company

A

Annual reports are published which competitors get to see

Can be costly to set up

Shareholders must be paid dividens, meaning money is lost and focus is diverted from the business into focusing on shareholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Give 2 examples of external sources of finance

A

Loan capital

Share capital - stock market floatation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Give 2 examples of internal sources of finance

A

Retained profits

Selling assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

What is Share capital as a source of finance?

A

Selling parts of the business by floating shares on the stock market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Disadvantages of share capital as a source of finance

A

Must pay shareholders dividends

Must publish accounts, meaning competitors may benefit

Lose some control of the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

What is Loan capital as a source of finance?

A

An amount borrowed from the bank for a purpose

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

What are the disadvantages of using loan capital?

A

Loan must be repaid with interest

Assets may be used as security, meaning the bank can take assets if the loan isn’t paid back

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

What is using retained profits as a source of finance?

A

Profit kept in the company instead of paying it to shareholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Disadvantages of using retained profits as a source of finance?

A

Profits are lost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

What is selling assets as a source of finance?

A

Selling unwanted items to raise money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Disadvantages of selling assets?

A

Assets no longer owned by company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

What are the problems with loans?

A

Banks will ask for security
The company must be credible - small businesses may have issues when asking for large sums

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

When should a business use an overdraft?

A

If money is needed quickly or there are cash-flow problems within the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

Advantages of globalisation

A

fewer tariffs and taxes making it easier to trade internationally

E-Commerce means companies can sell to all over the world

Businesses can import materials for cheaper prices

Businesses can expand internationally

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

Disadvantages of globalisation

A

Greater competition

Greater environmental damage, drawing attention to pressure groups who want governments to act

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

What is free trade?

A

When countries reduce or eliminate taxes to encourage trade between each other

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

What are tariffs?

A

Taxes placed on imports to protect domestic jobs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

Advantage of tariffs?

A

Makes imports more expensive so people will switch to domestic jobs and create more jobs and money in the economy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

What are trade blocs?

A

When a group of countries work together to promote free trade

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

Advantages of trade blocs

A

Lower prices all around

Businesses can expand into other countries

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

Disadvantages of trade blocs

A

Domestic businesses may go out of business

Countries outside the trade bloc must pay more and it discourages trading outside of the bloc

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

How do businesses compete internationally?

A

Internet and e-commerce

Changing the marketing mix to compete internationally

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

3 examples of unethical behaviour

A

Child labour, low paid, long hour shifts with bad working conditions and bad health and safety

Misinforming customers

Buying materials from unsustainable sources

47
Q

What is a pressure group?

A

A group of people who join together to try to influence government policy or business policy

48
Q

What methods may pressure groups use?

A

Boycotts
Social media campaigns
Protests
Online petitions

49
Q

What are the 5 stages of the product life cycle?

A
  1. Development
  2. Growth
  3. Maturity
  4. Saturation
  5. Decline
50
Q

What happens in the development stage of the product life cycle?

A

Product is being tested and advertised

51
Q

What happens in the growth stage of the product life cycle?

A

Product sees growing sales, revenue grows

52
Q

What happens in the maturity stage of the product life cycle?

A

Sales reach it’s peak

53
Q

What happens in the saturation stage of the product life cycle?

A

Prices start dropping, competition arises

54
Q

What happens in the decline stage of the product life cycle?

A

Sales fall, profits fall

55
Q

Give 4 examples of extension strategies

A

Cutting prices to increase sales
Updated versions
Spending more on advertising
Introducing the product to another country

56
Q

What are the different quarters of the marketing mix

A

Price
Product
Promotion
Place

57
Q

What is penetration pricing?

A

Setting a low price to boost sales and market share

58
Q

What is price skimming?

A

Setting a high price to boost profits

59
Q

What is competitive pricing?

A

When a business decides to set it’s price based on that charged by rivals

60
Q

What is cost-plus pricing?

A

Setting a price by adding a fixed amount to the cost of making a product.

61
Q

What are the disadvantages of advertising?

A

Can be very expensive

62
Q

Give 5 different ways a business could promote it’s products

A

Advertising
Sales promotion
Sponsorships
Use of technology for direct marketing
Use of technology to deliver advertising using social media

63
Q

What are the advantages of sales promotion?

A

Effective to achieve quick sales and get customers to switch products

64
Q

What are the disadvantages of sales promotion?

A

Sales promotion is only short term

65
Q

What are the advantages of sponsorships?

A

Improves brand image

66
Q

What are the disadvantages of sponsorships?

A

can be expensive
Hard to measure success rate

67
Q

What is direct marketing?

A

Promotional material directed through email or telephone

68
Q

What are the advantages of direct marketing? (4)

A

Allows business to targeted groups of customers.
Allows business to increase brand loyalty
Easy to measure success
Cheap form of promotion

68
Q

What are the advantages of direct marketing? (4)

A

Allows business to targeted groups of customers.
Allows business to increase brand loyalty
Easy to measure success
Cheap form of promotion

69
Q

What are the disadvantages of direct marketing?

A

Some customers consider it to be junk mail

70
Q

What are the advantages of using social media?

A

Only selected customers are targeted using cookies, creating a bigger chance that they will buy the product

Cheap

71
Q

What are the disadvantages of social media

A

Some customers don’t purchase online

72
Q

How does technology affect the marketing mix?

A

Business can promote their products online
Businesses can reduce costs due to more efficient technology
Customers can compare prices online, leading to lower prices

73
Q

What are the 3 methods of production

A

Job production
Flow production
Batch production

74
Q

What are the advantages of job production?

A

Manufactured to meet customer needs
Charge higher prices for higher quality products

75
Q

What are the disadvantages of job production?

A

Very labour intensive so higher wages must be paid

76
Q

What is batch production

A

Making products in groups

77
Q

Advantages of batch production

A

Faster than job production
effective for small businesses

78
Q

Disadvantages of batch production

A

Stock may run out, causing customers to go to other brands
Higher costs

79
Q

What are the advantages of flow production?

A

High levels of quality
Business can benefit from economies of scale, producing goods which will lower cost per unit.

80
Q

What are the disadvantages of flow production?

A

Start-up costs of machinery is expensive
Flow production capital is expensive

If there any problems with the machinery then the whole cycle must stop

81
Q

Span of control meaning

A

the number of employees each manager is responsible for

82
Q

Chain of command meaning

A

The line in which orders and decisions are passed

83
Q

What is the hierarchical structure?

A

It has many layers of management and a long chain of command.

84
Q

What is a flat structure?

A

Only a few layers of management
Managers have a wider span of control and a shorter chain of command.

85
Q

Advantages of a flat structure

A

Decisions made more quickly
Higher worker motivation as organisation is smaller

86
Q

Disadvantages of a flat structure

A

No clear chain of command so may be unproductive

87
Q

Advantages of a tall structure

A

clear chain of command
Decisions made quickly at the top

88
Q

Disadvantages of tall structure

A

Decisions take time to be passed down
Decisions can be distorted
Demotivated workforce due to isolated departments

89
Q

What is a centralised structure?

A

Where senior managers have control over the whole organisation, making decisions for the whole business

90
Q

What is a decentralised structure?

A

Decision making is spread out to include other managers in the hierarchy

91
Q

Pros of centralised structure

A

easier to control business as decision making is quick and does not have to go through several layers of managemen

Chain of command and accountability is clear

92
Q

Cons of centralised structure

A

Less ideas from other managers
Decisions require authorisation from senior managers

93
Q

Pros of Decentralised structure

A

Gives power to other managers, motivating them and improving their morale

Decision making which caters to the needs of local customers

94
Q

Cons of decentralised structure

A

No strong leadership to give direction to the organisation.

95
Q

Why is communication important?

A

Motivates staff
No mistakes
Customers and suppliers stay happy
Increase customer loyalty

96
Q

What is the result of insufficient communication?

A

Unproductive workers
Ignored customer feedback

97
Q

What are the 3 different ways of working for a business as an employee?

A
  1. Full time work
  2. Part time work
  3. zero-hour contracts
98
Q

What is meant by full time work?

A

People who work 5 days a week for at least 35 hours

99
Q

What is meant by part time work?

A

People who work for a limited number of hours in a week, usually people who can’t work full time

100
Q

What is meant by zero-hour contracts?

A

Employees who are only called into work when the business becomes too busy

101
Q

What are the 3 types of job contracts?

A
  1. permanent contract
  2. Temporary contract
  3. freelance contract
102
Q

What is meant by the permanent contract?

A

An ongoing contract which expires when the employee leaves the business

103
Q

What is meant by temporary contract?

A

A contract which includes a clear end of contract of when the worker will leave.

104
Q

What is a freelance contract?

A

Someone who is self employed but carries out work for another business.

105
Q

What are the advantages of part time employment?

A

Lower hourly wage
Flexible working hours

106
Q

Disadvantages of part time employment

A

Staff may not be fully committed to role
Increased staff turnover as part time jobs lack career progression.

107
Q

Advantages of temporary contracts

A

If a business does not like an employee, they can be replaced at the end of the contract

Allows businesses to then employ the best employees on permanent contracts

108
Q

Disadvantages of temporary contracts

A

Staff may not take role seriously

Increased staff turnover as they are more likely to accept a permanent contract offer somewhere else

109
Q

What impact has technology had on how businesses work with employees?

A

Working from home reduces business overheads and workers become more motivated

Better technology results in more efficient staff

110
Q

What is staff retention? What effect does it have on costs?

A

The ability of a business to hold onto workers, lowering recruitment costs

111
Q

What is staff turnover?

A

Percentage of workers that leave a business per year

112
Q

What is a job description?

A

A document which describes the role and responsibilities of the candidate

113
Q

What is a person specification?

A

A document which lists the qualities a company looks for in a candidate.

Business Johni (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions