UB

Question 1

Which sector of industry provides research and development and other information based services.

Answer 1

quaternary

Question 2

Describe some features of a public limited company. (Ownership, control, finance and objectives.)

Answer 2

Owned by shareholders. Controlled by a board of directors. Financed by selling shares in the stock market. Objectives include profit maximisation, growth and survival.

Question 3

Describe some features of a public sector organisation. (Ownership, control, finance and objectives.)

Answer 3

Owned and controlled by the government. Funded through taxes. Goal is to provide a service and stay within a set budget.

Question 4

List objectives of the private sector. There are 8.

Answer 4

Profit maximisation
Sales maximisation
Satisficing - aiming for satisfactory result rather than the best possible outcome
Survival – to continue to be in business, especially important in a recession
Growth – to have more outlets, staff and higher turnover, increased market share
Provide quality service
Managerial objectives - managers pursuing objectives which they may believe improve their status etc
Corporate Social responsibility – aiming to act in an ethical way in order to benefit the environment or society

Question 5

What are 3 advantages of good CSR

Answer 5

Gains good reputation, Customers with similar views use business, Attract high quality staff with same ethical values

Question 6

Discuss Internal growth 5 marks.

Answer 6

Advantages

Less risky than taking over other businesses.
Can be financed through internal funds, eg retained profits.
Builds on a business’s strengths, eg brands, customers.

Disadvantages

Growth may be dependent on the growth of the overall market.
Slower method of growth — shareholders may prefer a more rapid growth.

Question 7

Describe 2 types of external growth

Answer 7

Merger - Where 2 firms join together on agreed terms
Takeover/acquisitions - Where one firm purchases another firm and takes control
Shareholders sell shares – may be a hostile takeover

Question 8

Describe 7 methods of growth

Answer 8

Organic growth - Growth of a business from its own internally generated resources eg firms open more stores
Horizontal integration - Firms (in the same sector) producing the same type of product/service join together (
Lateral integration - business acquires / merges with a business that is in the same industry but does not provide the exact same product eg Greggs buys a wedding cake bakery. Both bakeries but competing for very different customers
Backward vertical - takes over a business in earlier sector of industry
Forward Vertical - takes over a business in later stage of production
Diversification - products are launched across different markets eg Samsung sell phones but also washing machines
Conglomerate - Businesses in different markets join together ie two businesses merge whose activities are totally unrelated

Question 9

Discuss horizontal integration 2 marks.

Answer 9

dominate the market by taking over competition

Merger may breach competition rules

Question 10

Discuss lateral integration 2 marks

Answer 10

The business can target new markets and therefore increase sales

Lack of knowledge in a slightly different market may affect the performance of the products

Question 11

Discuss backwards vertical 2 marks.

Answer 11

Guaranteeing supply of stock

Focusing on new activity may affect focus on core activity

Question 12

Discuss forwards vertical 2 marks.

Answer 12

Control of distribution is possible

Monopolising markets may have legal repercussions

Question 13

Discuss diversification 4 marks

Answer 13

Reduces risk of failure across different markets
Safer from seasonal fluctuations in different markets

A large product range requires numerous resources such as using a product grouping structure

Less expertise in a different market

Question 14

Discuss becoming a conglomerate 2 marks

Answer 14

Overcome seasonal fluctuations in markets leading to more consistent year round sales

The business may become too large and inefficient to manage

Question 15

Discuss outsourcing 4 marks.

Answer 15

Advantages
To allow them to concentrate on core activities
High quality work from outsourced business as it has the expertise and specialist equipment

Disadvantages
Clear communication required to ensure exact specifications met
Sensitive information shared with outsourced business could get into the hands of competitors

Question 16

Distinguish between a tall and flat structure

Answer 16

Tall – many levels of management, long chain of command, narrow span of control (how many people a manager is directly responsible for)
Flat – fewer levels of management, shorter chain of command, wide span of control

Question 17

Discuss wide span of control 7 marks.

Answer 17

Advantages
Staff are empowered to make their own decisions and to carry out their own tasks without interference by managers.
Less managers are required and wages are saved.
Less levels of communication for decisions to pass through.

Disadvantages
Managers may make snap decisions as they are looking after too many employees.
Managers time will be at a premium.
Managers will have less time for planning.
Subordinates may make decisions they are not trained to make.

Question 18

Discuss delayering 5 marks.

Answer 18

Advantages
Cuts out a complete level of management within the organisation decreasing salaries
Communication should be improved and quicker to pass on which means the organisation will be more responsive to changes in the marketplace
Empowers the staff which can lead to increased motivation

Disadvantages
Managers have an increased span of control
staff having to wait to meet with a manager
Fewer promotion opportunities for staff which could lead to them leaving the organisation to gain promotion

Question 19

Name 7 methods of measuring the success of decisions.

Answer 19

Conduct field research
Gather feedback from staff
Compare sales, profit, share price, market share
Compare using ratio analysis
Review the number of complaints
Evaluate external media and journalism reports, such as the Which? website, TripAdvisor etc
Issue questionnaires to customers to evaluate their response

Question 20

Name 9 factors affecting the quality of a decision.

Answer 20

The ability and skill of the manager – if the manager has not had proper training or not skilled enough to make decisions then a poor decision may be made
The appropriate use of decision making models
The quality of the information used to make the decision
The level of risk taken
The managers own interests
The finance available to implement the decision
The time available to make the decision
PESTEC factors eg Brexit
Technology available

Question 21

Explain the role of the manager in making decisions (POCCCDM)

Answer 21

Plan the objectives of the organisation, this can be either long term or short term in order that the organisation has a vision/direction
Organise the staff and resources required to carry out the decision
Control staff who the decision affects/ impacts in order to get the best work possible/meet targets
Command – inform the staff of decisions that have been made/consult with staff to improve the decision
Coordinate the activities and ensure timescales/targets met
Delegate decision making to junior staff to give them experience/empower them
Motivate - Empowerment to make decisions will motivate staff and improve their performance

Question 22

Describe external factors (PESTEC)

Answer 22

P – Political – Government actions such as changing the law eg government changing rate of tax , increasing the minimum wage, economic & competition policy
Competition Policy - policies that a government is following. It covers various areas for eg blocking mergers if it leads to a ‘substantial lessening of competition’ in any market, cannot use market power to pay unfairly low prices to suppliers, May be fined for anti-competitive behaviour
Economic Policy - government tries to control the economy through its economic policy. They do this through fiscal policy (concerned with tax and public spending) and monetary policy (supply of money in the economy eg Bank of England changing interest rates).

E – Economic – factors that affect how much money people spend eg Recession, Unemployment, interest rates
S – Social – changing beliefs / values of the population eg trends and fashions, awareness of health eg obesity
T - Technological – anything to do with Technology eg internet, e-commerce etc
E – Environmental/Ethical eg weather, being environmentally friendly by recycling etc, paying work force a fair rate
C – Competition – eg what are the prices of competitors products

Question 23

Describe 7 Covid interventions and there impact on business.

Answer 23

Introducing lockdown means shops, restaurants and businesses have to close – which reduces sales revenue
Introducing lockdown means many staff have to work from home – forcing organisations to invest in technology to allow this to happen
Lockdown increase the demand for home delivery – organisations had to invest in more vehicles
Introducing social distancing means reduce revenue in a given time period due to less customers allowed in the shop at one time
Businesses may have to increase their opening hours to make the same amount of revenue – which will increase overhead costs such as electricity
Government grants are available for businesses which allows them to survive
The furlough scheme means government pays 80% of wages for staff – allows businesses to keep on highly trained staff for future