Theme 2 - Business Activities

Question 1

Define legislation.

What are the different how’s of legislation ?

Answer 1

Creating and enacting laws in order to protect individuals, firms and society as a whole. > they impact the day to day working of a business

• consumer protection
• employee protection
• environmental protection
• competition policy
• health and safety
  (Laws are passes through the UK acts of parliament) (used to be subject to EU laws until brexit)

Question 2

Define the consumer protection law

What does the CPL include ?

Answer 2

Protect the consumer from firms in regards to quality of goods and services. > legislation attempts to stop large businesses from exploiting individual customers with their power.

> sales of goods act / goods must be as described, fit for purpose & merchantable quality
trades description act/ goods must be fully as described ie not misleading in anyway
consumer protection act/ businesses are liable for any costs incurred as a result of faulty or damaged products and prices quoted must be correct and not misleading.

Question 3

How can consumer protections laws impact costs and working practices ?

Answer 3

> A business may have to ensure that all that materials are of satisfactory standard
implementation of quality management systems
fully trained workers
cost of compensating consumers if standards aren’t met
marketing decisions eg promotional methods and pricing decisions

Question 4

Define employee protection.

What are the two types of laws employees have? Give 2 examples.

Answer 4

Laws designed to safeguard employees right in the workplace.

> individual labour laws =guarantees the certain rights for individual employees : equal pay/minimum wage, fair treatment during recruitment, selection and training etc
collective labour laws = rights for the workplace as a whole these relate to the rights and responsibilities of employers when dealing with trade unions.

Question 5

What are the effects of employee protection laws on businesses

Answer 5

• labour costs may be pushed up as a result of the government increasing the national minimum wage forcing businesses to either cut profit margins or look to reduce the number of types of employed workers.
• costs associated with upgrading facilities to ensure they meet anti-discriminatory legislations
• monitoring and reviewing recruitment, depriving, promotion, and train go procedures
• negotiating with trade unions.

Question 6

Define business failure?

Define the internal/external causes ?

Answer 6

The inability of a business to continue to operate. Failures can be the result of internal or external causes financial/non-financial causes.

Internal causes = from within the business and point responsibility for the failure towards owners/leaders. = Can be the result of poor decision making.

External cause = from outside the business and responsibility is outside the businesses control. Though inability to respond to external factors may be due poor internal decisions.

Question 7

What are the financial/non-financial factors ?

Answer 7

Financial factors - based around raising finance, financial planning and managing finance. = poor financial planning eg poor budgeting or poor financial management eg) liquidity problems. & can be external interest rates rising forcing costs up

Non-financial factors - based around the resource management of the business. Could be the business using its resources efficiently to achieve productive efficiency. Or use of HR to and a good embedded marketing mix. External) change in degree of competition

Question 8

Internal causes to business failure ?

Answer 8

Failing to understand the market

• market research
• wrong segment
• underestimate the degree of competition
• poor planning
• inaccurate cash-flow forecasts
• inadequate resources
• poor decision making
• management inefficiency
• lack of innovation
• badly organised
• poor stock control
• inefficient labour
• bad customer service
• cash-flow/liquidity problem
• overtrading
• non-viable idea in the first place

Question 9

What are the external causes to business failure ?

Answer 9

Economic environment

• recession of 2008
• dip in consumer confidence
• increased globalisation
• consumers spending power

Changing in social trends

• online shopping
• out of town outlets
• price sensitivity

Demographic changes
- ageing population with less disposable income

Political environment
- changes to tax rates eg) VAT increases again to 20%

Question 10

Define resource management.

Define production and the 4 menthols of production.

Answer 10

The aspects of a business which is directly linked to the fulfilment of customers orders.

Production is the process of turning inputs into outputs. Expressed as = Number of units produced in a given time period.

Job
Batch
Flow
Cell

Question 11

Define job production.

What are some of its characteristics?

Answer 11

The production of one off items to meet the specific needs of each individual customer.

Characteristics:

• cheap and easy to set up but results in higher average costs/ materials
• often a specialist service and therefore may be able to charge a premium price/usp/quality
• time consuming to proxy’s as it tends to be labour intensive

Question 12

Define batch production

What are some of its characteristics?

Answer 12

When identical items are produced in a small groups(batches). Each item using the same resources and passing through the production process at the same time.

Characteristics:

• allows for cheaper and wicker production of individual items
• more uniform products as each batch should be identical
• variation can be achieved in different batches allowing a degree of flexibility
• requires a mix of capital and labour resources

Question 13

Define flow production

What are some of its characteristics?

Answer 13

A capital intensive production technique in which items flow along a production line in a continuous process

Characteristics:

• suitable for the mass production of large scale, identical items
• uses specialist machinery but costs are spread over a high level of output
• workers are each responsible for a small step along the process this involve specialisation and division of labour.

Question 14

Define cell production

What are its characteristics?

Answer 14

The production line is plait into a series of self contained cells. Workers are organised into teams where each group is responsible for the production of a product from start to finish.

Characteristics:

• encourages team work and accountability
• helps improve motivation and quality
• each cell takes responsibility for the production of imposts units of output
• the members In the cell work as a team to achieve the goals and ensure quality standards are met
• depends upon staff being well-trained

Question 15

Define production

Answer 15

A measure of output (sales) per unit of input(inflows) in a given period of time. Firms look to increase productivity by improved capacity utilisation . introducing new tech, or improving workforce.

One Measure is labour productivity = output per worker per input (land and capital)
CALCULATION: total output/number of employees

Question 16

What are the factors influencing productivity?

Answer 16

• age of machinery and maintenance
• the skills and motivation of employees
• quality of inputs
• machine hours used versus down time of machinery eg) switching machinery to alternative uses
• efficiency for programming
• unforeseen events eg) power cuts or stoppage of supplies
• production methods used
• complexity of the product

Question 17

What is increased productivity?

Answer 17

Increased productivity is the quantity of goods in proportion to the cost of inputs is improving, so costs average costs of production will be lower.

This will give the the business competitive advantage as they can:

• lower the price charged to customers
• increase expenditure on R&D to bring new, innovation products to market.

Question 18

Define efficiency

Answer 18

Maximising the output achieved from the given inputs including machinery, materials, and propel in a given period of time. This allows a firm to produce at a minimum average cost
(operations management involves combing the four factors of production or resource implants
Land
Labour
Capital
Enterprise
Firms will attempt to minimise the cost of using these resources whilst maximising the quality of the product and the service that the customer receives.

METHODS OF IMPROVING 
Increasing capacity utilisation 
Optimal resource mix 
Increasing labour productivity 
Lean production techniques 
Using technology 
Changing production methods