Topic 2 Flashcards
STEEPLE
Social Technological Environmental Economic Political Legal Ethical
Eurozone definition
The eurozone is countries who use the euro as a currency
EU définition
A political and economic union featuring 27 countries that aim to jointly aid trade.
Social impacts
- education
- age
- health
- ethnicity
- culture
Social factors definition
Influences that arise from society in which a business operates, including cultural norms, demographics, and lifestyle trends.
Demographic definition
Characteristics of human population groups eg. Age, race
Ethics definition
The moral principles that govern a person or groups behaviour
CSR (corporate social responsibility) definition
A business model in which companies incorporate social and environmental on Ernst into their operations and interactions.
Stakeholder definition
A person or group of people with an interest in a business
Disadvantages of ethical behaviour
- higher costs
- competitive disadvantage
Advantages of ethical behaviour
- good brand reputation as customers agree with the businesses practices
- brand loyalty as customers want to support an ethical brand
Disadvantages to a business of unethical behaviour
- bad reputation as not morally correct
- fines if it is illegal practices
Advantages to a business of unethical behaviour
- possibility for larger profit margins as they pay unfair wages
- larger funds available due to tax avoidance
GDP (gross domestic product) definition
Total value of output produced in an economy in a year.
Impacts of high GDP
- reduction in unemployment
- high levels of confidence
- business investment
Inflation definition
Persistant general tendency of prices in the economy to rise.
Consumer price index (CPI)
A measure that examines the weighted average of prices of a basket of consumer goods/ services.
Exchange rates (exporting and importing)
WIDEC (weak pound imports dear exports cheap)
SPICED (strong pound imports cheap exports dear)
Opérations management définition
An area of management concerned with designing and controlling the process of production and redesigning business operations in the production of goods and services.
Operation management objectives
- productions targets
- quality and rejection targets
- increased productivity rate
Critical path analysis (CPA) definition
A project management technique that is done to complete a project in the shortest possible time.
Total float equation
LFT ( this activity) - duration - EST (this activity)
Free float equation
EST (next activity) - duration - EST (this activity)
Job production definition
Firms producing items that meet specific requirements of the customer. Eg. Wedding dress
Advantages of job production
- able to charge higher prices
- meets customer needs
Disadvantages of job production
- higher costs to produce
- time consuming
- requires skilled labour
Batch production definition
Occurs when similar items are produced together. each batch goes through a stage before continuing to next stage eg. Jumpers (sizing)
Advantages of batch production
- more opportunity for economies of scale
- less time consuming
- flexibility (still meets specific needs)
Disadvantages of job production
- demotivating due to repetitive tasks
- potential time lost switching between batches
- need to stock work in progress
Flow production definition
Continuos movement of items through the production process. Eg. Mass production
Advantages of flow production
- benefits from economies of scale (lower unit costs)
- standardised products
- specialisation
Disadvantages of flow production
- inflexible (cannot alter products to meet needs)
- high set up costs
- demotivating
Cell production definition
Workers organised into multi skilled teams and each team is responsible for a part of the production process.
Advantages of cell production
- cell members can become multi skilled
- improved motivation due to teamworking
- improved communication between cell members
Disadvantages of cell production
- company may have to invest in new materials handling and ordering systems suitable for cell production
- may not allow a firm to use its machinery as intensively as in traditional flow production.
Interest rates definition
An interest rate is the reward for savings and cost of borrowing expressed as a percentage of the money saved or borrowed
National minimum wage definition
The minimum pay per hour workers of school leaving age are entitled to by law and is reviewed yearly by the government. The rate for each age group is different
Consumer rights act 2015 (laws)
- goods must fit their description
- goods and services must be satisfactory quality
- goods must be fit for purpose specified
Copyright
A legal concept that grants the creator of original works exclusive rights to their use and distribution, typically for a limited time, with the intention of enabling the creator to benefit financially
Trademark
A company can register a trademark for its business name, slogan, logos or other items that essentially brand the product or company/ indicate the source of the good
Intellectual property
Intangible property that is the result of creativity eg. A song melody
R and D definition
The proceed that enables the creation of new and improved products to meet the needs of customers
Benefits and costs of R & D
Benefits:
- improve the production process
- waste reduction
- improving products
Costs:
- changes in technology
- customer needs
- limited protection of ideas
Morphological studies
A method that generates ideas cheaply and quickly, a grid system with a range of alternatives to be considered
Value anaylsis
Approach to improving the value of a product or process, seeks to find improvements to the components by either reducing their cost or increasing the value of the functions
Gant charts definition
A graphical representation of the order and duration of tasks within a project. Planning and monitoring of a project.
Advantages and disadvantages of gantt charts
Advantages
- visual representation
- easy to monitor
- shows time and resource allocation
Disadvantages
- does not show critical activities eg. Critical path
- can not calculate float times
PERT analysis equation
Estimated duration of a project = optimistic time + (4 x likely time) + pessimistic time / 6
Advantages and disadvantages of PERT analysis
Advantages
- more realistic given the pessimistic view
- simple formula to apply
- a lot of data can be visually represented
Disadvantages
- changing the pessimistic and optimistic times can be difficult to judge
Labour productivity
Concerned with the volume of output (units) or their value (£) produced by each employee
Division of labour
The allocation of labour into specific tasks, intended to increase productivity
Specialisation
Where workers perform specific tasks
Advantages and disadvantages of specialisation
Advantages
- increased productivity (perform tasks quicker)
- lower labour costs
- increased profit margins (gives competitive advantage)
Disadvantages
- tasks can become repetitive
- can make a business reliant on one employee
- low motivation can lower staff retention
Higher labour productivity impacts
Lower labour costs per unit
Capacity utilisation definition and equation
Refers to the extent in which your resources are used to create output
Capacity utilisation = actual output / maximum possible output x 100
Lean production
An approach to management that focuses on cutting out waste, whilst ensuring quality and improving efficiency. It involves the employees in the continued process of improvement.
Quality assurance
An approach that aims to achieve quality by organising every process to get the product ‘right first time’ and prevent mistakes ever happening. Aka ‘zero defect’ approach.
Quality assurance advantages
- reduced costs due to less wastage and reworking of faulty products
- improves worker motivation as workers have more ownership and recognition for their work
- helps teamwork between managers and workers
Quality benchmark
Compares best practices, setting quality targets, and using internal or industry standards to enhance performance and efficiency. Seen as difficult if there’s an inflexible workforce, lack of finance.
Quality control
A process of inspecting products to ensure that they meet the required quality standards
Advantages and disadvantages of quality control
Advantages
- prevents faulty products from reaching customers
- means not everyone is responsible for quality
Disadvantages
- profitability of a business may suffer if defect levels are high
- as products are complete rejected products are expensive
Costs of poor quality
- unresponsive customer service
- wasted material
- lost customers
Benefits of improved quality
- improved image and reputation
- higher demand
- lower unit costs because of less waste
- less complaints
Factors affecting location choice
- labour costs
- land cost
- energy costs
- transport costs
- expansion potential
Logistics involve…
- transportation (how to be delivered)
- warehousing
- procurement (process of buying goods at the right price, amount and quantity)
Reshoring
The process of returning the production and manufacturing goods back to the company’s original country
Offshoring
Transferring activities or ownership of a complete business process to a different country from the country where the company receiving the service is located.
Outsourcing
The practice of hiring a party outside a company to perform services or create goods
Reasons for reshoring
- minimising risk of supply chain disruptions
- reducing the complexity of the supply chain
- greater certainty over delivery times
Reasons for offshoring
- to access lower manufacture costs
- to access potentially better skilled and higher quality supply
- to take advantage of free trade areas and avoid protectionism
Drawbacks of offshoring
- longer lead times and risk poor quality
- additional management costs
- impact of exchange rates
Subcontracting
The process of a particular part of the product is undertaken by another firm
Advantages and disadvantages of subcontracting
Advantages
- flexibility
- short term specialist skills
Disadvantages
- higher costs
- no business loyalty
- delays
Internal stakeholders
- directors
- managers
- employees
Connected stakeholders
- shareholders
- customers
- suppliers
External stakeholders
- government
- locals
- media
Mission statement
A description of a company’s culture, values, or purpose for being.
Business aim
The overall long term target or goal of the business
Strategic objectives
Long term organisational goals which help to set and share the strategy of the business. Eg. Increase revenue
Tactical objectives
Immediate short term desired result of a given activity, task or mission. Eg. Increase market share by 2% in the next 6 months
Strategy
A clear set of plans, actions and goals that outline how a business will compete in a particular market. Eg. Which markets it should compete in
Internal audit
Allows a business to assess its strength and weaknesses in relation to its competitors across the whole of the business
External audit
Looks at opportunities open to the business and threats which it faces in its external environment
