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BUSINESS HIGHER > UNDERSTANDING BUSINESS > Flashcards

UNDERSTANDING BUSINESS Flashcards

1
Q

Explain the advantages of franchising for the franchiser.

A

-It is a quick way to to enter new geographical markets and the franchisers name becomes more well known as their expanding
this meaning the franchiser can get more sales while being more well known meaning more customers

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2
Q

Distinguish between the features of NHS Scotland and a PLC in terms of ownership and control.
(3) marks

A

Definition
A PLC is a generally large company with a minimum of £50000 in market share ,PLC members must also sign a memorandum of Association

In terms of the CONTROL The NHS is ran by the Scottish government/Scottish parliamentt Whereas a PLC is ran by shareholders
In terms of Ownership The NHS is Owned by the government Whereas a PLC is owned by a board of directors

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3
Q

Describe the benefits of being a multinational company
(5marks)

A
  • An increase in market shares
    -A decrease in cost of production such as lower wages due to operating in other companies(cheaper)
    -lower tax rates in different countries
    -To take advantages of government grants available
    -secure cheaper premises and labour
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4
Q

all private sector organisations

A

sole trader

partnership

Private limited company

public limited company

franchise

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5
Q

describe the advantages and disadvantages of a sole trader

A

-its easy to set up and also cheap compared to other private sector organisations as there isn’t any legal formalities
-The owner has complete control and takes all decisions.
-Profits are kept by the owner
-business affairs kept private

Disadvantages
Unlimited liability
Limited capital
New ideas are limited
Commitment to the business

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6
Q

what objectives would businesses have

A

-maximising profits
-survival i.e staying alive
satisfying i.e hitting an objective of profit to keep the stakeholders happy
-CSR (corporate social responsibility) i.e good reputation
-growth

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7
Q

What is Horizontal Integration
Advantages and Disadvantages

A

-Two organisations joining together at the same stage of production

A=can dominate the market as the company has gotten larger
A=benefit from ecnomies of scale
A=Due to reduced competition,the new business can raise prices therefore increasing profits

D=merger could break EU laws/break laws making it illegal
D=Overall quality of product may drop because of lack of competition
D=customers may have to pay higher prices for the same goods due to less competiton

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7
Q

what are the four factors of production

A

land,labour,capital and enterprise

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7
Q

what is “land”

A

land is the natural resources businesses use to create products

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7
Q

what is “labour”

A

labour is the human resources used,i.e businesses employ people to make/manufacture products

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7
Q

what is “capital”

A

capital is the man made resources required to create the products

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7
Q

what is “enterprise”

A

Enterprise is the combination of land,labour and capital that the entrepreneur use to create the product

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8
Q

what are the four sectors of industry

A

Primary,secondary,teritary and Quaternary

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8
Q

What do primary,secondary,teritary and Quaternary DO

A

primary-Raw materials
Secondary-Produce goods
Quaternary-Knowledge based services
Teritary-sales and goods

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9
Q

What does the primary sector do

A

businesses taking natural resources from the land

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10
Q

What does “teritary sector” do

A

businesses that provide services instead of goods i.e messages

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11
Q

What does the “secondary sector” do

A

Involved in manufacturing and construction i.e take natural resources and turn them into goods that can be sold

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12
Q

what does the “quaternary sector” do

A

businesses providing information and knowledge based services

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13
Q

What are the 3 sectors of the economy

A

Private,public and charity

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14
Q

What is a private sector organisation

A

owned by a private individual and a board of directors/investors

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15
Q

What is a public SECTOR organisation

A

owned by the government and also has a board of directors

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16
Q

What is a third sector organisation

A

organisations that are set up for a good cause to raise money

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17
Q

Benefits/disadvantages of a partnership

A

A=increased capital
-shared workload
-holiday/sickness cover
D=unlimited liability
=profits are shared
=disagreement and fallout

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18
Q

Advantages/disadvantages of a PLC(private)

A

A=Increased capital
-limited liability
-less risk of business failure
D=Dividends only paid to shareholders if profits are made
-must be registered with companies house(legal proceddings are costly

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19
Q

Advantages/disadvantages of a PLC(public)

A

A=limited liability
-can dominate the market
-more capital than Private limited companies due to shares being issued through stocks
Easier for PLCS to borrow money

D=must publish account
-Formation highly expensive (legal and admin)
-dividends need to be shared among shareholders
Diseconomies of scale (rising average of costs)

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20
Q

Multinationals
advantages and disadvantages

A

-provide Jobs and income,increasing the brands reputation
-economies of scale (Lower average costs
-lower tax rates
-legislation is relaxed

D=All profits go back to parent nation
D= Language barrier
D=cultural differences
D=exploiting workers with lower wages could lower the companies reputation

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21
Q

Difference between public sector organisation and a public limited companies

A

Public sector organisations serve the General public and public limited companies this sells shares

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22
Q

Advantages and disadvantages of social enterprises

A

A social enterprise is is an organisation that exists with a decisive goal to help the community but runs the organisation like a business.All money is reinvested

Advantage
-help tackle social problems
-attract customers who support the cause

Disadvantages
-lack of support and funding if grants are not available
-the initiative may require hard work to achieve success

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23
Q

What are the 3 business objectives

A

Survival
CSR
Profit maximisation

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24
Q

Profit maximisation

A

Make as much profit as possible
Two ways to do this include
I-ncrease/sales/selling price
-reduce costs

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25
Q

CSR

A

CSR is an organisation aiming to act in a ETHICALWAY or in any way that benefits either society or the environment

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26
Q

Positives of CSR

A

Business gets a good reputation for being kind/care
Customers are more likely to use the business

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27
Q

What is managerial objectives

A

Usually large organisations with many managers

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28
Q

What is satisficing

A

To have a “satisfactory result” instead of an exceptional one

Because it may not be ideal to maximise profits due to external factors

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29
Q

What does growth means
-advantages and disadvantages

A

Growth means expanding sales and increasing profits this would be a business objective

Ad
Reduces the risk of failure
Increases profits
Avoids being taken over

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30
Q

What are some advantages of customer service

A

-Increased sales and profits
-Less staff turnover as staff will be more motivated
-good word of mouth

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31
Q

Objectives of public sector businesses
(PRIVATE and PUBLIC limited companies)

A

Private limited companies
-growth
-profit maximisation
Public limited companies
Growth
Profit maximisation

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32
Q

What does a Public sector organisations objectives

A

Public corporations
-provide a quality product
-to make best use of funds

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33
Q

what is internal and external growth

A

Internal growth also known as organic growth is besically a business growing naturally i.e through staff/new branches

external is through joining with another organisation usually by takeover or merger

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34
Q

Advantages of a merger and disadvantages

A

market share and resources are shared, increasing profits
-economies of scale

customers may dislike the changes a merger can bring
marketing the merger may cost loads in advertisement

35
Q

advantages and disadvantages of a takeover

A

Advantages
risk of failure reduced
competition reduced
-economies of scale

Disadvantages
expensive to take over a business
less competition could mean higher prices
Quality of products can go down

36
Q

What is backward and forward Vertical integration

A

Backward forward integration
-Business joining with a supplier e.g previous stage ,starbucks taking over a coffee bean plantation

Forward vertical Integration
business joining with the next stage
-breward taking over a pub

37
Q

What is backward and forward integration

A

backwards
business joining with their supplier

forward
business joining with sales/retail like a alcohol company joining with a pub

38
Q

Advantages of Forward and backwards integration

A

Forward
business can control supply of stock
increase profits as no middleman

backwards
cheaper stock/supply costs
quality can be controlled

39
Q

advantages and disadvantages of diversification/Conglemerate integration

A

(conglomerate integegration)
Joins with another organisation in a completly different market
Advantages
business is larger and more fiancially secure
-business can reduce risk
-business gains customers and sales
-can overcome seasonal fluctuations

Disadvantages
-business could become to big to handle
-business may not know much about the market
too many products can make the company lose focus

40
Q

advantages and disadvantages of outsourcing

A

-Could be cheaper to outsource
-business can concentrate on what their good at

-could be more expensive trying to get a specilist
-communication needs to be clear

41
Q

advantages and disadvantages of a merger

A

-each new branch can focus on what they specialise
–they can run more efficiently

-expensive to market and brand the new branches
-customers may be put off and not go to either company

42
Q

Describe a Tall hierarchical system

A

-many levels of management
-commands go from top all the way to the bottom
-long chain of command

43
Q

Describe a flat structure
along with the advantages and disadvantages

A

-few levels of management
-shorter chain of command
-managers have a wider span of control

advantages
-employees have more authority
-decision making is quicker

disadvantages
-employees onload a greater workload
-fewer promotion opportunities

44
Q

Adantages and disadvantages of delayering

A

advantages
-quicker communication
-moneys saved on salaries as less people can get promoted

disadvantages
-less promotions
-wider span of control

45
Q

Entrepreneurial
management system

A

One boss

advantages
decisions are made extremely quick
decision makeing doesnt need to consult other staff

disadvantages
can annoy employees as there thoughts and ideas are stifled
heavier workload

46
Q

What is centralised management system
Advantages and Disadvantages

A

Decisions made from HQ,senior managers

-Decisions made for whole organisation
-Benefit from economies of scale
-greater uniformity in the organisation run more smoothly

disadvantages
-slower decision making
-slower communication
-less responsive to external factors

47
Q

Decentralised MANAGEMENT system
(Advantages and disadvantages)

A

Advantages
-empower staff/motivates staff
-decisions can match local needs
-business can react well to external factors

Disadvantages

-less supervision
-decisions made differ from each branch
-transfer of staff may lead to confusion due to different practices
-Slower decision making

48
Q

Downsizing
Advantages and Disadvantages

A

-costs are cut
-the business is more effective

-valueable skills and resources are lost
-staff feel vulnerable

49
Q

What is functional grouping

A

Departments where staff have similar skills and expertise and do similar jobs

50
Q

What are the advantages and disadvantages of functional grouping

A

Advantages
Allow specialisation
Clear organisational structure

Disadvantages
Organisation may become too large and unwieldy
May be unresponsive to change

51
Q

What is Product/service grouping

A

Divisions/departments that each deal with a different product range

52
Q

Customer grouping advantages and disadvantages

A

Each division has varying customer needs
Customer loyalty can build due to personal connections

Expensive due to staff costs for each
New staff lose feelings of importance

53
Q

Customer grouping

A

Customer groups are divisions dealing with different types of customers

54
Q

Advantages and disadvantages of product/service grouping

A

-easy to identify low sales in products
-expertise can develop in dealing with each product/service

-Duplication of effort
-divisions may end up competing with each other

55
Q

What is location grouping

A

Staff divided into divisions each dealing with a geographical area

56
Q

Advantages and disadvantages of location grouping

A

Advantages
Can cater for local needs/tastes
-better response times to customers

Disadvantages
-Duplication of effort and resources
Very costly to staff to be relocated

57
Q

Technology grouping

A

Grouping their business according to technology or production process

58
Q

Advantages and disadvantages of technology grouping

A

-increased specialisation amongst staff
-quicker and cheaper to train staff

Specialist training requires
Higher salaries for skilled special workers

59
Q

Advantages and disadvantages of corporate culture

A

-employees feel part of the organisation
-staff loyalty

-staff may resist change
-hard to introduce staff culture

60
Q

What does PESTEC stand for

A

Political
Environmental
Social
Technology
Environmental
Competitive

61
Q

What is political factors

A

Actions taken by the government

-change in VAT rates
-change in income tax rates

62
Q

What are some examples of Economic factors

A

-Economic growth
-interest rates
-exchange rates

63
Q

Economic influence -unemployment rate

A

Advantages
-high unemployment means a larger pool for vacancies-people
-low unemployment means higher disposable income

Disadvantages
-low unemployment means less people to choose from
-High unemployment means consumers feel insecure about their future

64
Q

Economic factor-Interest

A

Lower interest means it’s cheaper to pay back a loan thus businesses can expand as it’s easier for a loan
-lower interests means consumer can take out loans for cheap to fianance large purchases

-high interest means businesses will hold of from expanding
-high interest means consumer will save more

65
Q

Economic factor-Economic factor

A

-changes by the chancellor may increase consumer spending meaning more disposable income meaning more sales and profits

-changes to ecnomic policy means the banks will be unable to lend money as freely

66
Q

Social factor-changes in taste

A

Market research may indicate holes in the market which businesses can exploit as a development opportunity

Having a market based orientated approach means the business needs to constantly watch the market

67
Q

technology-social media

A

increasing access to more customers thus increasing sales and profits

costs of administration i.e keeping the website up

68
Q

environment-Recycling

A

use recycling as a marketing method which enhances their public image

adds to overall costs as specific bins might need to be added to recycle effectively all the different kinds of waste futhermore increased wages as pick up men will have to paid for more frequently

69
Q

Environment-weather

A

Depending on the product Summer might cause an increase in sales compared to in winter

poor summer could mean a businesses crop has a poor harvest decreasing sales as sales have fallen

70
Q

Competitive-Competitive influence

A

Improves the market as more competition means businesses have to improve their quality over their competitors
wider choice for customers

expensive as businesses will have to conduct more market research to develop their product

71
Q

What are stakeholders and what are the 3 “I” when answering a stakeholder question

A

groups of individuals who have an interest in and stand to be affected by the success or failure of an organisation

Identify-who are they
Interest-what do they want with the business
influence-how will what they want affect the business

72
Q

internal stakeholders

A

owner/shareholders-want high profits, high dividends
managers-want promotions, job security
employees-better wages, job security

73
Q

External stakeholders

A

Government-can change legislation i.e tax
banks-can grant/deny loans

74
Q

what are the 3 types of decisions

A

Strategic,Tactical,Operational

75
Q

Strategic Decision making

A

-Long term
-Made by CEO or board of directors

76
Q

tactical Decision making

A

-made by middle level managers
-try to hit the strategical decision
-made over weeks and months

77
Q

Operational Decision making

A

-short term day-to-day activities
-made by the lowest in the company i.e employees day managers

78
Q

SWOT Strenghts and weaknesses

A

-Identifies strengths and weaknesses
-allows weaknesses to be focused on

Time consuming to make
chosen decisions could be biased

79
Q

Role of a manager

A

Planning
Organising
delegating
co-ordinating
commanding

80
Q

What does diversification mean

A

Diversification is when a business reduces risk by expanding their goods and services

81
Q

What does delayring mean

A

-This Involves cutting layers of management within the organisation which in turn flattens the structure

82
Q

Private sector

A

Organisations are owned and controlled by private individuals and investors

83
Q

Public sector

A

Organisations are owned and controlled by the government

84
Q

Third sector

A

Organisations are set up raise money for a good cause

85
Q

What is the difference between Privately owned Organisations and publicly owned organisations

A

Privately owned businesses are business which sells us things

Publicly owned things are things done for us by the government hospital and school

86
Q

What is a social enterprise

A

A social enterprise is a business that trades for a social and or environmental purpose

They are specifically set up to generate their income by selling goods and services rather than through grants and donations

87
Q

Franchisee benefits and downsides

A

A=takes over a known brand,winning formula
A=franchiser still controls and owns their business
A=franchise benefits from centralised advertisement
A=low risk form of growth for franchiser

D=may not agree with decisions made by franchiser
D=A large fee and royalties is paid to the franchiser

D=franchisee doesn’t have complete freedom
D= reputation easily damaged as one poor performance from a different franchise can damage every franchise

88
Q

Difference between public sector and public limited

A

Public sector organisations serve the general public, while public limited companies sell shares to the general public

89
Q

Advantages and Disadvantages for a tall structure

A

A=more promotion opportunities
A=employees will know immediate bosses
A=clear lines of responsibility and communication
A=Narrow span of control, managers have more time for planning

D=many layers of management
D=slow decision making
D=higher labour costs due to many labours increasing (salary demands)
D=managers have more time to supervise employees which could make them nervous, influencing them into making a mistake

90
Q

What happens when interest rates are high

A

Customers are less likely to borrow money

banks have to pay out more money

91
Q

Reasons why a businesses profit for the year could increase

A

Increased sales revenue
decreased expenses

92
Q

What is the private sector

A

Organisations ran by private individuals and controlled by private individuals/shareholders/investors

93
Q

What is the public sector

A

organisations ran and owned by the government

BUSINESS HIGHER (7 decks)

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