Understanding Business Flashcards
Methods to max customer satisfaction 4
Research customer wants
Customer comment cards
Produce products customers want
Charge fair prices
Why should firm try to max customer satisfaction 5
More likely to max sales
Complaints reduced which saves time
Customer loyalty
Good rep, grant may be easier to get
Avoids bad press
What is the 4 sectors of industry
Primary
Secondary
Tertiary
Qiatinery
What is primary sector
Extraction of raw mats
What is secondary sector
Development of products or raw mats
What is tertiary sector
Sectorninvolved in providing service
What is quatenery sector
Consists of industries proving info services
What is the sectors of economy
Private
Public
Third
Describe social enterprise
Set up to support cause
Profits reinevtesd
What is thus ord OWNED , CONTROLLED AND FINANCED by - LTD
Owned by shareholders
Controlled by director or manager in charge of specific area
Financed by share capital from friends n fam
What is thus ord OWNED , CONTROLLED AND FINANCED by - PLC
Owned by shareholders
Controlled by board of directors
Financed by share capital the stock market
What is thus ord OWNED , CONTROLLED AND FINANCED by - charity
Owned by board of trustees
Controlled by manager of shop
Finanaced by donations
What is thus ord OWNED , CONTROLLED AND FINANCED by - government org
Owned by government offices
Controlled by local councillors
Finance by tax revenue
Benefits of LTD 3
Raise more capital than sole graders and partnerships
Shareholders have limited liability
Annual accounts don’t have to be made public
Disadvantages of ltd 3
Profits shared with other shareholders
Consent of other shareholders needed before shares sold
Expansion limited to freinds and fam
Advantages of PLC 4
Shares sold on stock exchange
Firm ran by board of directors
Raise very large amount of capital from selling hsares
Can accesses larger loans for cheaper as less risky investment than a sole trader or partnership
Disadvantages of PLC 4
Shareholders can freely sell shares
Dividends must be shared with tons of shareholders
Could be subject to financial takeober
Annual accounts must be published which costs and can give potential investors bad view
Charity advantages 4
Funded by donations
Attract good employees
Exempt from some taxes
Lower wage costs as staff often volunteers
Negatives of a charity
High staff turnover
Lesser marketing budget than other firms
Government funded org advantages 3
Funded by taxes
Ran by ministers who aren’t always experts in feild
Accountable to public so can’t take large risks
Government funded org disadvantages 2
Slow to make decisions
Cannot chase profit as an objective
What is unlimited kiability
Means owners or partners have full responsibility for business debts
Positives of having objectives 3
Firm can measure performance against goal
Objectives influence future decisions (makes firm think twice)
All workers follow a common goal
Ways to be social responsible 5
Recycle
Donate to charity
RSPCA AND FAIR TARDE N THAT
treating staff fairbby giving fair wages and hours
Equal opportunities policy (pay men n women equal )
Advantages of being socially responsible 4
Good rep
Employees more motivated
Can boost sales
Can attract a new market segment
Costs of being socially responsible
Additional costs
Firm may focus on being it too much and loose focus of more important goals like sales n profits
Firm need to make sure stance is implied through allsegments if firm (eg marketing and finance)
What’s the 2 methods of growth
Organically
Inorganicallly
Give 3 methods of organic growth
New machines that increase outpu
Advertising to increase customer base
New product development
What is organic growth
Growing from inside firm
What is inorganic growth
Growth from outsude firm, ie buying iver or merging with another firm
Advantages of organic growth
No loss of control of firm
Launch if new products mean firm can gain new market segments
Opening new physical branches means can reach new customers if it’s in new location
Expanding existing premises can increase space for products n boost sales
E-commerce means business can trade 24/7 worldwide
What is horizontal growth
When two firms on same stage of production join together
Ie a retailer buys over another retailer
Pros of horizontal integration 4
Common knowledge of market
Reduces number of competitors
Similar skilled employees
Easier to get bulk buying discounts
Cons of horizontal integration 2
Firm not spreading risk
If firm raise prices too much due to less competitors to the point it’s unfair on customers gov can step in
What is vertical integration
When a firm acquires a firm on different stage of production either forwards or backwards
What is backwards vertical intergrstionn
When a firm merges with a supplier
What is forward vertical integration
When a firm merges W it’s customers
Pros of backwards vintergartiom 2;
Control supply of raw mats
Removes profit margin supplier would demand
Pros of forwards intergrstion 1
Control image and distribution of products
Cons of vertical integration
May be difficult to get bulk buying discounts
More risky as firm lack knowledge or skills in new area
What is divestment
A method of growth where firm sells off some assets such as a factory or smaller oats of business to raise finance
What is a political factor
Any action taken by government
What is an economic factor
Current state of economy that will influence a business
What is a social cultural factor
1) population trends
2) cultural trends and buying habits
What is a technological factor
Latest developments with tech that influence how firm operates
What is an environmental factor
Involves any law or action to promote the uphold the upkeep of environment
What is a competitive factor
Actions of competitors that force the firm to react
What is a completion policy
Prevent and reduce companies that holdback or limit competition
Basically when a firm dominates the market too much
What is 3 implications of competition policy
Firms prevented from merging or acquiring other business if they become too large
Firms will be monitored to ensure they’re prices aren’t too high
Companies can complain to CMA if they see other business being anticompetitive ie agreeing with another business to lower prices to knock a firm out the market
What’s a stakeholder
Any Person or org that has an intrest in the succes of a firm
Name 4 internal stakeholders
Shareholders
Employees
Managers
Owners
Name 5 external stakeholders
Bank
Suppliers
Government
Customers
Local community
Stakeholder conflict example
Manager wants employees to work extra hours WHERE AS employees want to work required payed hours
Interdependent stakeholders example
Managers want employees to produce as many goods as possible AND SO employees want firm to train them on how to use machines properly
AND SO …. THEREFORE
