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Business GCSE Edexcel > Unit 2 > Flashcards

Unit 2 Flashcards

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1
Q

Internal/organic growth

A

Growth within the business

Eg.opening more stores

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2
Q

External/inorganic growth

A

Growth from outside the business

Eg. Merging stores

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3
Q

Merging business

A

Businesses that merge together

+more customers
+more money
-disagreements

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4
Q

Takeover

A

A business buying another business

+access to different markets
+less competition
-costly
-negative publicity

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5
Q

Public limited company

A 
•form of business ownership
•limited liability 
•must be a minimum of 2 shareholders
•can sell shares on the stock exchange 
Meaning access to large capital
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6
Q

Advantages and disadvantages of internal finance

A

+natural
+no interest

  • may not be a lot
  • can be slower
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7
Q

Examples of internal finance

A
  • retained profit

- selling assets

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8
Q

Advantages and disadvantages to external finance

A

+money
+potentially skills from shareholders

  • potentially giving up a percentage of the business
  • potentially giving up control over the business
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9
Q

Examples of external finance

A
  • loans

- shares

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10
Q

Retrenchment

A

A business downsizing the scale of its operation

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11
Q

Efficiency

A

The attempt to avoid wasting materials, energy, effort, money and time with the aim of reducing costs more effectively

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12
Q

Globalisation

A

When a business operates on an international scale and gain international influence of power

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13
Q

Examples of globalisation

A
  • have stores in different countries
  • deliver to more places
  • suppliers from other countries (sometimes cheaper)
  • workers moving all over the world for work
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14
Q

Multinational company

A

A multinational company is a large company with facilities and markets all over world

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15
Q

Imports

A

The flow of goods and services into one country from another

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16
Q

Exports

A

The flow of goods and services out of one country to another

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17
Q

Business location

A

The area the business operates

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18
Q

International trade

A

Buying or selling of goods and services between countries

However there can be many barriers preventing countries from trading

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19
Q

Free trade

A

There are no barriers to international trade

ie trade between countries

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20
Q

Protectionism

A

When countries take action that restrict the flow of imports into their country

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21
Q

Types of tariffs

A

•tax charged on imports

•quotas
Provides a physical limit put on that import
Eg. 2000 bottles of whiskey

•non tariff barriers
Imposing difficult quality or safety standards on imported goods

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22
Q

Ethics

A

Moral guidelines which govern good behaviour

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23
Q

Advantages of acting ethically

A
  • competitive advantage
  • brand loyalty
  • avoids negative media
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24
Q

Pressure group

A

A group of people who join together to try and influence government policy or business policy for a particular cause

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25
Q

Direct pressure groups

A

Directly impacting the business or service eg. Boycotting

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26
Q

Indirect pressure groups

A

Promotion of issues through education, debate and lobbying eg in schools and colleges

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27
Q

What are the 3 things in the design mix?

A
  • Function
  • cost
  • Aesthetics
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28
Q

What are the 4 stages of a Product life cycle?

A
  • introduction
  • growth
  • maturity
  • decline
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29
Q

Product extension strategies

A
  • finding new users
  • finding new markets
  • targeting a specific market with promotion
  • changing the appearance
  • lowering prices
  • encouraging people to use the product more often
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30
Q

Pricing strategies factors

A
  • the volume of the product
  • the profit margin
  • popularity
  • brand loyalty
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31
Q

High volume, low margin strategies

A
  • lower prices

* sell more

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32
Q

High margin, low volume strategies

A

•higher prices
•sells less
•adding value
Eg.Gucci

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33
Q

Mass market

A
  • everyone
  • lots of competitors
  • lower prices
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34
Q

Niche market

A
  • specific customers
  • less competition
  • higher prices
  • less customers
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35
Q

Supply chain

A

The sequence of process involved in the production and distribution of a product/service

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36
Q

Producer to consumer

A
  • most direct route
  • products may be customised
  • prices may be lower (as there are less profit margins to be considered)
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37
Q

Producer to superstores to consumer

A

-most common route for food, clothes and most household items
-producers sell to superstores in bulk
-superstores store items in warehouses and distribute it to different stores
Eg. Morrison’s

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38
Q

Traditional method (producer to wholesaler to small business to consumer)

A
  • buy in bulk
  • sell in small quantities to village shops
  • the wholesaler carries out the important function of “breaking bulk”
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39
Q

Income statement

A

Shows the profit or loss that a business makes

A business makes an income statement annually

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40
Q

Gross profit

A

The profit the business makes on selling its product.

It takes into account all costs to make and supply the product but not the businesses expenses

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41
Q

Expenses

A

Not direct link to cost of sales

Eg.advertising, utility bills, administration (usually fixed costs)

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42
Q

Turnover

A

Revenue

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43
Q

Net profit

A

The amount of money left over when all expenses have been deducted from the gross profit

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44
Q

ARR (average rate of return)

A

ARR is used to compare different investment opportunities in order to identify which is the most profitable

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45
Q

Business operations

A

Transforming resources into finished goods

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46
Q

Benefits of technology

A
  • lower costs (bulk-buying)
  • faster (machinery)
  • higher quality (less mistakes)
  • flexible (can change the output)
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47
Q

Disadvantages of technology

A
  • initial costs may be high
  • repair is expensive
  • staff need training
  • problems are harder to detect until it’s too late
  • a robot can’t react to unexpected changes
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48
Q

Job production

A

Making one product at a time

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49
Q

Advantages of job production

A

+specific to the individual needs of customer

+high profit margin

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50
Q

Disadvantages of job production

A
  • expensive for customer
  • takes skilled workers
  • slower than other production techniques
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51
Q

Batch production

A

Relatively large production runs (in batches)

Eg. A bakery

52
Q

Advantages of batch production

A

+allows customers to be flexible (eg. Ingredients)

+reduced costs due to large scale production (bulk-buying)

53
Q

Disadvantages of bulk production

A
  • high wastage (eg.bakery)

- downtime between batches (where the rate of production falls)

54
Q

Flow production

A

Production on a mass scale, standardised products

Eg. Cars

55
Q

Advantages of flow production

A

+low cost of production
+can be done by low skilled workers
+mostly done by machinery

56
Q

Disadvantages of flow production

A
  • lower salaries
  • initial cost of machinery
  • not flexible
57
Q

Procurement

A

The process of obtaining the right supplies from the right supplier

58
Q

Factors entrepreneur needs to consider when picking a supplier

A
  • quality
  • delivery
  • availability
  • cost
  • trust
59
Q

Stock management

A

The task of ordering, storing, tracking and controlling a businesses stock

60
Q

Effect of ordering too much stock

A
  • waste
  • takes up space
  • obsolete products
  • profit decreases
61
Q

2 ways of managing stock

A
  1. Just in case (bar gate chart)

2. Just in time (JIT)

62
Q

Just in time (JIT)

A

Supplies are delivered when a business needs them

Eg. Some small businesses or bakery

63
Q

Pros and cons of just in time

A

+business holds no stock
+less waste
-relies on supplies arriving on time
-trustworthy suppliers

64
Q

Just in case

A

Where a business has stock and is automatically reordered when stock reaches a certain level
Eg. Supermarkets

65
Q

5 areas of promotional mix

A
  • special offers
  • public relations (eg. Sponsorships)
  • advertising
  • direct marketing
  • personal selling
66
Q

Pros and cons to just in case

A

+have a buffer stock
+doesn’t need too much trust in suppliers
-holding stock can be costly
-more wastage

67
Q

Buffer stock/ minimum level

A

Lowest amount of stock you want to keep

68
Q

Bar gate stock graph

A

The graph to show just in case stock control

Shows when supplies need to be ordered and how much stock a business has

69
Q

Quality

A

Being fit for the customers purpose

A good quality product should meet the customers requirements

70
Q

The 2 ways businesses can ensure quality

A
  1. Quality control

2. Quality assessment

71
Q

Quality control

A

Checking standard of products at the end of product process

72
Q

Quality assurance

A

Checks products at all stages of production

73
Q

Kite mark

A

Given to products where safety is an important aspect of quality

74
Q

CE mark

A

Products that comply with the essential requirements of European safety and environmental protection

75
Q

Investors in people

A

Awarded to organisations committed to training and developing their staff

76
Q

5 steps of the sales process

A
  1. Customer interest
  2. Speed and efficiency of service
  3. Customer engagement
  4. Post-sales service
  5. Customer loyalty
77
Q 
Customer interest
(Sales process)
A

To grab attention

  • branding
  • sponsorship
  • advertising
  • sales promotions
78
Q

Speed and efficiency of service

Sales process

A
  • not too long to purchase
  • customers may choose a business who are quick & convenient
  • e-tailing user friendly
  • retailing minimal queues
79
Q

Customer engagement

The sales process

A

Interaction between customer and business during the sales transaction

80
Q

Post sales service

Sales process

A

Support the business provides after sale

Eg. Surveys

81
Q

Customer loyalty

Sales process

A

Customers keep coming back due to the effective sales service

82
Q

Hierarchy

A

The management structute of a business

83
Q

Chain on command

A

Line on which orders and decisions are passed down

84
Q

Span of control

A

The number of employees that are managed by a manager.

If a person manages four their span of control is four

85
Q

Advantages of a hierarchical organisational structure

A

+more promotions

+less work for managers

86
Q

Disadvantages of a hierarchical organisational structure

A
  • not as easy to communicate

- more expensive (more managers)

87
Q

Advantages of a flat organisational structure

A

+easier communication

+cheaper (less managers)

88
Q

Disadvantages of a flat organisational structure

A
  • less promotions

- more work for managers

89
Q

Hierarchical organisational structure

A
  • many layers of management
  • narrow span of control
  • long chain of command
90
Q

Flat organisational structure

A
  • few layers of mangement
  • wide span of control
  • short chain of command
91
Q

Centralised structure

A

Decisions are made at the top of the company

92
Q

Decentralised structure

A

Decisions are made locally or at a lower level in the business

93
Q

Advantages of centralised structure

A

+consistency
+clear direction
+operations and decisions are closely controlled
+chain of command is clear

94
Q

Disadvantages of centralised structure

A
  • can demotivate employees
  • a standardised approach may not work in all business locations
  • may lower productivity
95
Q

Advantages of decentralised structure

A

+improved employee motivation
+allowing managers lower down the chain to make decisions which suit their local area
+more responsibility for employees

96
Q

Disadvantages of decentralised structure

A
  • not consistent over the business
  • managers can make ineffective decisions
  • may negatively impact on sales, reputation and overall business performance
97
Q

Problems when communicating:

A
  • communicates too much
  • communicates too little
  • bad technology
  • accents/languages
  • time differences
98
Q

Ways of working

A
  • hours worked
  • contracts used
  • technology used
99
Q

Flexible hours

A

Flexible hours, suits the employyee

100
Q

Zero hours contract

A

Casual contract, “on call” work

101
Q

Contract

A

Written agreement between two people or organisations

102
Q

3 examples of contracts

A
  • permanent
  • temporary
  • freelance
103
Q

Permanent contract

A

An employee will be employed by a business on an ongoing basis

104
Q

Pros and cons to a permanent contract

A

+employees feel secure
+less likely to leave the business

-most expensive contract

105
Q

Temporary contract

A

An employee will be employed for a fixed amount of time

Eg.maternity leave

106
Q

Pros and cons to temporary contract

A

+evaluate potential employees (could offer them a permanent contract)
+required for business operations

  • less job security
  • less employee loyalty
107
Q

Freelance contract

A

Self employed, paid by the business to do a specific job/project

108
Q

Pros and cons to freelance contracts

A

+fills business needs

  • may not be available
  • lack of trust
109
Q

Benefits of motivated staff

A

+productivity
+business reputation improves
+higher attendance
+employees want to contribute ideas

110
Q

Unmotivated staff are:

A
  • inefficient
  • make more mistakes
  • damage business reputation
111
Q

2 methods of motivation

A
  • Financial

* Non-Financial

112
Q

Remuneration

A

The money paid to an employee for working

-overtime pay for staff who work etra

113
Q

Advantages of remuneration

A

+staff want to work overtime

+more motivation

114
Q

Disadvantages of remuneration

A

-costs the business more

115
Q

Bonuses

A

An additional payment if they acheive a target or high level of performance

116
Q

Advantages of bonuses

A

+staff want to work harder

+more motivation

117
Q

Disadvantages of bonuses

A
  • costs the business

- staff make be pushy towards customers trying to sell things

118
Q

Comission

A

An extra amount of money paid to an employee, usaully if they can make a certain amount of sales

119
Q

Promotion

A

A promotion is when an employee is given a more senior role within the organisation usually with more responsibilities

120
Q

Fringe benefits

A

Benefits by the business that financially benefit employees

Eg. Gym membership, comapany car, free childcare etc

121
Q

Non financial methods of motivation

A
  • job rotation
  • job enrichment
  • autonomy
122
Q

Job rotation

A

When employees rotate between jobs. Taking on different tasks

123
Q

Pros and cons to Job rotation

A 
\+gain experience 
\+gives employees a better understanding of the business 
-time consuming
-possible lower standard of work
-teaching
124
Q

Job enrichment

A

Giving employees more responsibility

125
Q

Pros and cons to job enrichment

A

+ increased productivity
+ opportunities
-may be overwhelming
-pay hasn’t increased

126
Q

Autonomy

A

Employees are able to make more choices and have more freedom/independence

Eg. Team decisions or working your own hours

127
Q

Pros and cons to autonomy

A

+freedom
+staff feel in control
-wrong decisions
-employees make take advantage of freedom

Business GCSE Edexcel (2 decks)

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