Understanding business Flashcards
What is the secondary sectors and some examples
The manufacturing process
Eg construction, building and car production
What is the primary sectors and what are some examples of these?
The extraction of raw materials
Eg
Farming
Oil extraction and fishing
What is the tertiary sector and some examples of this
Providing a service
Eg hospitality, retail
What are the 4 sectors of industry
Primary sector
Secondary sector
Tertiary sector
Quaternary sector
What is the quaternary sector and what are some examples
It and knowledge based services
Eg research and development
Ict
What is the definition of a plc
A company owned by shareholders who buys shares on the stock market
What’s the definition of a ltd
- a company owned by shareholders who are invited to buy shares
What are advantages of plc (3)
- limited liability- can’t loose everything
- economic of scales- can buy in bulk which is cheaper
- easily borrow money to expand
What are advantages of ltds (3)
- shares not sold to the general public- no loss of control
- smaller number of directors- easier decisions
- business and owner separate- if in debt shareholders don’t have to pay
What are disadvantages of ltds
- shares not sold to general public- less finance
- financial info available to public- can see your financial situation
- share of profits to shareholders- more shareholders means less profits you get
- info to register of companies, time consuming and expensive
What are disadvantages of a plc (3)
- general public can view accounts- competition have access to the amount of profits
- complicated and expensive to set up- £50,000 capital
- Easily get taken over by buying stock exchange, loose control
- shareholders have little say unless own a lot of shares
What are some similarities of a ltd and plc (4)
- both have limited liability
- both follow legal procedure forms
- both owned by shareholders and controlled by a board of directors
What are differences between a plc and ltd
Plc requires a £50,000 start up capital whereas ltd have no start up capital
- ltd can have one shareholder whereas plc must have at least two
- ltd invites shareholders whereas plc sells stock on the market
Relating to a brewery whah is horizontal integration
Taking over another competitor-
Buy another brewery
Relating to a brewery
What is back wards integration
Taking over a business in a earlier sector of industry
Buying a potato farm
Relating to a brewery
What is forward integration
Taking over a business in a later sector of industry
Buying a pub
Relating to a brewery
What is lateral integration
Taking over a business in a similar industry
Buying a cider making company
Relating to a brewery
What ops conglomerate integration
Open in a new unrelated market
Buying a show shop
What are some disadvantages of outsourcing (4)
- organisation can loose control over quality/ flexibility
- communication have to be clear or mistakes can occur
- may cause redundancies which looses morale and costs
- may be expensive, outsourced company have to make a profit too
What are some advantages of outsourcing (4)
- cheaper- economics of scale which is buying in bulk
- allows organisation to concentrate on its activity
- if not a tied contract, can use service as and when they want, saving money
- reduces costs- no excess staff need to be employed
What is the definition of outsourcing
This involves hiring another firm to supply or do parts of a job instead of a firm doing it themselves
What are some advantages of horizontal integration (3)
- can dominate the market- strong
- economic of scale- buying in bulk
- control prices and increase profits
What are some disadvantages of horizontal integration
- quality may suffer with lack of competition
- high prices for companies
What is objectives of the private sector (6)
- Sales maximisation- create as many sales as possible staff enjoy as more bonuses
- customer satisfaction, high standards, loyal customers
- profit maximisation, achieve as many sales as possible
- growth, small firms become larger and becoming more competitive
- manejerial objectives- increase there salary
- corporate social responsibility, Creates a good image
What are advantages of lateral integration (2)
- target new markets and increase sales
- products and service may compliment eachother
What are disadvantages of lateral integration (2)
Lack of knowledge and experience in sector
New forces can affect new ideas
What are advantages of conglomerate integration
3
- larger, more financially stable
- gain new customers and sales of new customers
- spreads risks out as can overcome seasonal fluctuations
What are disadvantages of conglomerate integration (3)
- lack of experience and knowledge on in the sector
- very large to manage and managing tel very different markets
- lots of focus on new industry as differing products
What are advantages of backwards vertical integration (3)
- business can control the supply of raw materials
- quality of stock can be controlled
- can increase profits by cutting off suppliers
What are the disadvantage of backwards vertical integration(3)
- inexperience in managing new industry
- new focus can affect main activities
- legal restrictions may not allow the integration
What are the advantages of forward vertical integration (3)
- increase profits by cutting out the ‘middle man’
- can decide to not supply to competitors
- business can control the supply of raw material/ stock
What are disadvantages of forward vertical integration (3)
- inexperience in managing new industry
- new focus can affect core activities
- legal restriction may not allow for integration
What are advantages of organic growth (3)
- less risky as you know your own company
- business doesn’t loose control and can do what they want
- can build what is already good at
- don’t need outsider finance
What are disadvantages of organic growth (3)
- slow growth method
- growth depends on overall market
- hard to build on market share if already market leader
What is a flat structure
Pyramid structure with a few levels of hierarchy- suits smaller sized organisations
What are advantages of a tall structure (3)
- everyone knows there individual roles- small amounts of miscommunication
- motivation- good chance of promotion
- easy to mange- narrow span of control
What are the disadvantages of tall structures (3)
- hard to pass on info- many layers
- slow to react to external factors
- fewer staff- hard to share ideas with
What is a tall structure
Tall pyramid structure can have a high structure of hierarchy
Suits a large organisation
What is delaying
Removing layers of hierarchy
What are advantages and disadvantages of delayering (2 each)
+- save money, quicker decisions for response to change
- quicker response to external factors
- fewer promotional opportunities creating lack of morale
- loose key member of staff
What are advantages of flat structures (3)
+ quick response to change
- positive morale- feels part of decision making
- wide span of control- lots of delegation and empowerment
What are disadvantages of flat structures (3)
- less employees, not as much managers and much chance of promotion
- managers have lots to do- more pressure
- lots of supervision requires
What is a chain of command
The rate that decisions and information flow
What is span of control
The number of people you are in charge off
What are external factors and examples (6)
- political factor- gov increase tax
- economic factor- inflation and change of interest
- social factor- changes in society, fashion trends
- technology factors - increase use of social media
- economic factors- weather
- competitive factor- what competitors do
What’s the positive and negative impact of increased interest rates ( 2 each)
+- greater returns of saving- more people saving than spending
-reduces inflamitary pressure ( costs of items don’t increase
— more expensive to borrow, hard to get capital
-people may not be able to afford new/ current loans
What’s the impact of increased taxation (2)
- less spending for consumers to spend as money goes to gov
- less purchasing, business needs to work hard to increase sales
What the factors affecting structures (4)
- skill of manager- unskilled staff are in no place to make decisions- decentralised isn’t suited for them
- skill of employees- unskilled staff should rely on managers to affect decision making, tall structure better for the,
- size of company- small decisions should Stick to flat and entrepreneurial structures as not many management
- finance available- if limited staff then a structure like entrepreneurial as not having to pay for many managerial wages
What are the role of a manger (7)
-planning- look ahead to set aims and strategies
-commanding- tell subordinates what their resources are
-organisations- make arrangements for all the resources of the organisation to be in the right place at the right time
-commanding- tell subordinate what their resources are
-controlling, evaluates companies results against plans and makes sure works done
-co-ordinating- make sure everyone is working towards the same aims and that activities fit in with the correct work
-delegation, make sure employees are responsible for tasks
Motivating- encourages others to complete their tasks efficiently and empower them with non-financial methods
Factors affecting decision making (3)
HR-Senior managers may not agree with the decisions.
finance- may not have enough finance to make affective decisions
-technology-Lack of the correct equipment or technology may restrict the decision-making process
How will managers assess decisions (4)
- Measuring sales- whether sales have increased or decreased
- analysing profit levels- would it improve
- interviewing staff- are employees happy
- mounting staff- is morale High enough
Advantages of using decision making models (3)
Builds on strength
Address weaknesses
Takes a look at the business current position to help make decision making
What are disadvantages of decision making models (3)
- time consuming
- needs to be organised and structured
- snapshot and can be out of date quickly
Difference between a ltd/plc and public limited companies (3)
- plc controlled by a board of directors- public company is controlled by mps/ maps
- plc funded by shares sold on stock public is taxes
- plc owned by shareholders and lads- public is owned by gov
Difference between tall and flat structures (5)
- tall narrow span of control easy management, flat wide span, harder management
- tall slow to pass on info, slow response to PESTEC factors, fast to pass on info, fast reaction to pestec
- tall = higher manegerial wages, flat not as much manejerial wages
- tall, good morale as lots of chances of promotion, flat not as much chance of promotion
- tall everyone knows their individual roles, less pressure, flat, managers have a lot more to do
