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Business A level Folland > Themes 1 and 4 > Flashcards

Themes 1 and 4 Flashcards

1
Q

What are the benefits to a business for being in a mass market?

A
  • Customer needs and wants are less specific
  • Easier to reach economies of scale
  • Option to use bulk buying method
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2
Q

What are the disadvantages to a business for being in a mass market?

A
  • Product may be successful in one area but unsuccessful in other regions.
  • High break even output
  • Low product prices as the product is generic and less specific to customer needs.
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3
Q

what are the Benefits to a business being in a niche market?

A
  • Less competition from other businesses and products can be tailored to customer needs
  • Can charge higher price as more product is more tailored to customer.
  • Customers tend to be more loyal.
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4
Q

Disadvantages for a business for entering a niche market?

A
  • Fewer potential customers, therefore may be difficult to get retailers to stock the products.
  • Low potential for growth.
  • Low potential for higher profits.
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5
Q

What is a dynamic market

A

A dynamic market is a market that is in a rapidly changing business environment, e.g. samsung, nestle.

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6
Q

What are the factors that contribute to change in dynamic markets?

A
  • Changes in legislation
  • Social changes
  • Innovation
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7
Q

What is the formula for market share?

A

Sales of the business/total sales in the market X100

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8
Q

How does a successful business adapt in order to stay competitive?

A
  • Carrying out market research to gain better knowledge on customer preferences
  • Investments in new technology and products
  • Continuous improvement. Wanting to get better.
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9
Q

Advantages to a business for being in a market with high competition

A
  • Incentive to innovate and get better
  • Focus to improve inneficienties
  • Competitive pricing
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10
Q

Advantages to a customer for having their product in a highly competitive market.

A
  • Lots of choice
  • Good value for money
  • Exciting new product development
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11
Q

Disadvantages to customer for wanting a product in a low competitive market

A
  • Limited choice
  • High prices
  • Poor service
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12
Q

Benefits to a business for having low competition

A
  • Can dominate the market
  • Can afford inefficiencies
  • Set high prices
  • Little incentive to increase
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13
Q

What is primary market research

A

Data collected first hand for a specific research purpose

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14
Q

Examples of primary market research

A
  • Focus groups
  • Interviews
  • Mystery shoppers
  • Product testing and trial
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15
Q

Advantages of primary market research

A
  • Tends to be up-to-date
  • Tailored to what the business wants to know
  • Better if want to collect qualitative data
  • More detailed insights- particularly into customer views.
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16
Q

Disadvantages to primary market research

A
  • Time consuming
  • Costly to obtain
  • Risks of survey bias- results may not show views of whole population.
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17
Q

What is secondary research

A

Data that already exists and was collected by another business for a different purpose

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18
Q

Advantages of secondary research

A
  • Easily accessible and a good starting point
  • Fast and less time consuming
  • Better if want to collect quantitative data
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19
Q

disadvantages to secondary research

A
  • Some data free, detailed reports are expensive to purchase
  • Might not be up to date
  • Not specific to the business’s needs
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20
Q

examples of secondary research

A
  • Market research reports

- Government statistics and newspaper articles.

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21
Q

Define Product orientated

A

Focus on product inefficiencies and the product itself

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22
Q

Define market orientated

A

Focused on customer needs. Understanding what customers want and developing a product that meets their needs.

23
Q

What are the limitations to market research

A
  • It is often biased
  • A small sample limits the reliability of the research
  • Casuality can be hard to identify
  • Collecting it is very time consuming
24
Q

Uses of market research

A
  • Cash-flow forecasting
  • Product development
  • Developing marketing
25
Q

Market segmentation allows a business to…

A
  • Differentiate itself from it’s competitors
  • Identify and satisfy needs of customer
  • Build loyalty to brand and products
26
Q

What are the factors that influence the price of a product

A
  • Costs
  • Competition
  • Product life cycle, and what stage product is in
27
Q

What is dynamic pricing

A

where the price fluctuates due to levels of demand, e.g. hotel rooms

28
Q

What is price skimming

A

Business sets high price when product is first released due to high demand, then when demand decreases the price drops.

29
Q

What is competitive pricing

A

Businesses sets price based on nearest competitor

30
Q

What is psychological pricing

A

Where the business sets a price below next whole number, e.g. £9.99 instead of £10

31
Q

What is predatory pricing

A

Where a business sets a low price in order to drive competitors out the market. The business may make a loss for a period of time until competitor falls.

32
Q

What is cost plus pricing

A

A business bases a price on the unit cost then adds a % as a mark-up. this is effective as it considers the profit margin the business is willing to accept.

33
Q

What is protectionism

A

Protectionism is when the government limits the amount of imports into the country to protect domestic businesses and home industries

34
Q

What are the main kinds of protectionism

A
  • Tariffs
  • Import quotas
  • Government Legislation
  • Domestic + export subsidies
35
Q

What is a tarrif

A

A tarriff is a tax that raises the price of an imported good.

36
Q

what are import quotas

A

Quotas are volume limits on the level of imports allowed.

37
Q

What are subsidies

A

A payment to encourage domestic production by lowering their costs

38
Q

Key arguements in favour for protectionism

A
  • Infant industry protection,(Help small industries grow as well as reaching EOS)
  • Protection of strategic industries, (jobs, skills and capabilities)
  • Protection against import dumping
39
Q

Key arguements against protectionism

A
  • High prices for consumers
  • Retaliation from other countries
  • Extra costs for exporters
40
Q

What is a trading bloc

A

Trading blocs are partnerships between countries to allow nations to free trade.

41
Q

Benefits of trading blocs

A
  • Opportunities to expand into new markets

- Allows businesses to to benefit from comparative advantages (CHEAPER HIGHER QUALITY)

42
Q

Negatives of trading blocs

A
  • Infant industries more vulnerable to large international competitors
  • Inefficient producers may be protected = poor quality and high prices
43
Q

External factors that affect global competitiveness

A
  • Exchange rate fluctuations

- Market demand

44
Q

What is cost competitiveness

A

when a company projects itself from the cheapest manufacturer of a particular product or commodity in a competition

45
Q

what is meant by differentiation

A

when a business tries to make its product unique and different from other competitors to entice customers to buy it.

46
Q

What is skills shortages

A

this is where a business has less specialised workers leading to a decrease in producttivity of its workforce.

47
Q

What is capacity utilisation

A

How much the business is producing at the moment compared to how much they can actually produce

48
Q

formula for capacity utilisation

A

Exisiting output / Maximum possible output X100

49
Q

Benefits of internal recruitment

A
  • Cheaper than external recruitment
  • Managers know their employees = less risk
  • May require less training
  • Promotion opportunities are good for staff motivation and retention.
50
Q

Benefits of external recruitment

A
  • May widen number of applicants
  • Brings in new skills and ideas
  • Helps increase the capacity within the business
51
Q

Benefits of Private limited companies (LTD)

A
  • Shareholders have limited liability
  • Easier to raise capital through internal shareholders
  • Owners may pay less tax if they operate as sole traders
52
Q

Disadvantages to Private Limited Companies (LTD)

A
  • Harder to set up than sole trader or partnerships
  • Accounts published and publicly available
  • Cannot raise large amounts of capital through selling shares publicly
53
Q

Benefits of Public limited companies (PLC)

A
  • Lots of money can be raised through stock market flotation
  • Finance easier to raise through issuing shares
  • Size makes it easier to reach economies of scale
54
Q

Negatives of Public Limited Company (PLC)

A
  • Accounts openly available to public
  • Greater external pressures from media and pressure groups
  • Board of directors is accountable to external shareholders.

Business A level Folland (1 decks)

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