Unit 2 Flashcards
1
Q
Internal/organic growth
A
Growth within the business
Eg.opening more stores
2
Q
External/inorganic growth
A
Growth from outside the business
Eg. Merging stores
3
Q
Merging business
A
Businesses that merge together
+more customers
+more money
-disagreements
4
Q
Takeover
A
A business buying another business
+access to different markets
+less competition
-costly
-negative publicity
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
6
Q
Advantages and disadvantages of internal finance
A
+natural
+no interest
- may not be a lot
- can be slower
7
Q
Examples of internal finance
A
- retained profit
- selling assets
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
9
Q
Examples of external finance
A
- loans
- shares
10
Q
Retrenchment
A
A business downsizing the scale of its operation
11
Q
Efficiency
A
The attempt to avoid wasting materials, energy, effort, money and time with the aim of reducing costs more effectively
12
Q
Globalisation
A
When a business operates on an international scale and gain international influence of power
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
14
Q
Multinational company
A
A multinational company is a large company with facilities and markets all over world
15
Q
Imports
A
The flow of goods and services into one country from another
16
Q
Exports
A
The flow of goods and services out of one country to another
17
Q
Business location
A
The area the business operates
18
Q
International trade
A
Buying or selling of goods and services between countries
However there can be many barriers preventing countries from trading
19
Q
Free trade
A
There are no barriers to international trade
ie trade between countries
20
Q
Protectionism
A
When countries take action that restrict the flow of imports into their country
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
22
Q
Ethics
A
Moral guidelines which govern good behaviour
23
Q
Advantages of acting ethically
A
- competitive advantage
- brand loyalty
- avoids negative media
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
25
Direct pressure groups
Directly impacting the business or service eg. Boycotting
26
Indirect pressure groups
Promotion of issues through education, debate and lobbying eg in schools and colleges
27
What are the 3 things in the design mix?
* Function
* cost
* Aesthetics
28
What are the 4 stages of a Product life cycle?
* introduction
* growth
* maturity
* decline
29
Product extension strategies
* 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
30
Pricing strategies factors
* the volume of the product
* the profit margin
* popularity
* brand loyalty
31
High volume, low margin strategies
* lower prices
| * sell more
32
High margin, low volume strategies
•higher prices
•sells less
•adding value
Eg.Gucci
33
Mass market
* everyone
* lots of competitors
* lower prices
34
Niche market
* specific customers
* less competition
* higher prices
* less customers
35
Supply chain
The sequence of process involved in the production and distribution of a product/service
36
Producer to consumer
- most direct route
- products may be customised
- prices may be lower (as there are less profit margins to be considered)
37
Producer to superstores to consumer
-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
38
Traditional method (producer to wholesaler to small business to consumer)
- buy in bulk
- sell in small quantities to village shops
- the wholesaler carries out the important function of “breaking bulk”
39
Income statement
Shows the profit or loss that a business makes
A business makes an income statement annually
40
Gross profit
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
41
Expenses
Not direct link to cost of sales
| Eg.advertising, utility bills, administration (usually fixed costs)
42
Turnover
Revenue
43
Net profit
The amount of money left over when all expenses have been deducted from the gross profit
44
ARR (average rate of return)
ARR is used to compare different investment opportunities in order to identify which is the most profitable
45
Business operations
Transforming resources into finished goods
46
Benefits of technology
- lower costs (bulk-buying)
- faster (machinery)
- higher quality (less mistakes)
- flexible (can change the output)
47
Disadvantages of technology
- 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
48
Job production
Making one product at a time
49
Advantages of job production
+specific to the individual needs of customer
| +high profit margin
50
Disadvantages of job production
- expensive for customer
- takes skilled workers
- slower than other production techniques
51
Batch production
Relatively large production runs (in batches)
| Eg. A bakery
52
Advantages of batch production
+allows customers to be flexible (eg. Ingredients)
| +reduced costs due to large scale production (bulk-buying)
53
Disadvantages of bulk production
- high wastage (eg.bakery)
| - downtime between batches (where the rate of production falls)
54
Flow production
Production on a mass scale, standardised products
Eg. Cars
55
Advantages of flow production
+low cost of production
+can be done by low skilled workers
+mostly done by machinery
56
Disadvantages of flow production
- lower salaries
- initial cost of machinery
- not flexible
57
Procurement
The process of obtaining the right supplies from the right supplier
58
Factors entrepreneur needs to consider when picking a supplier
* quality
* delivery
* availability
* cost
* trust
59
Stock management
The task of ordering, storing, tracking and controlling a businesses stock
60
Effect of ordering too much stock
* waste
* takes up space
* obsolete products
* profit decreases
61
2 ways of managing stock
1. Just in case (bar gate chart)
| 2. Just in time (JIT)
62
Just in time (JIT)
Supplies are delivered when a business needs them
| Eg. Some small businesses or bakery
63
Pros and cons of just in time
+business holds no stock
+less waste
-relies on supplies arriving on time
-trustworthy suppliers
64
Just in case
Where a business has stock and is automatically reordered when stock reaches a certain level
Eg. Supermarkets
65
5 areas of promotional mix
* special offers
* public relations (eg. Sponsorships)
* advertising
* direct marketing
* personal selling
66
Pros and cons to just in case
+have a buffer stock
+doesn’t need too much trust in suppliers
-holding stock can be costly
-more wastage
67
Buffer stock/ minimum level
Lowest amount of stock you want to keep
68
Bar gate stock graph
The graph to show just in case stock control
| Shows when supplies need to be ordered and how much stock a business has
69
Quality
Being fit for the customers purpose
| A good quality product should meet the customers requirements
70
The 2 ways businesses can ensure quality
1. Quality control
| 2. Quality assessment
71
Quality control
Checking standard of products at the end of product process
72
Quality assurance
Checks products at all stages of production
73
Kite mark
Given to products where safety is an important aspect of quality
74
CE mark
Products that comply with the essential requirements of European safety and environmental protection
75
Investors in people
Awarded to organisations committed to training and developing their staff
76
5 steps of the sales process
1. Customer interest
2. Speed and efficiency of service
3. Customer engagement
4. Post-sales service
5. Customer loyalty
77
```
Customer interest
(Sales process)
```
To grab attention
- branding
- sponsorship
- advertising
- sales promotions
78
Speed and efficiency of service
| Sales process
- not too long to purchase
- customers may choose a business who are quick & convenient
- e-tailing user friendly
- retailing minimal queues
79
Customer engagement
| The sales process
Interaction between customer and business during the sales transaction
80
Post sales service
| Sales process
Support the business provides after sale
| Eg. Surveys
81
Customer loyalty
| Sales process
Customers keep coming back due to the effective sales service
82
Hierarchy
The management structute of a business
83
Chain on command
Line on which orders and decisions are passed down
84
Span of control
The number of employees that are managed by a manager.
If a person manages four their span of control is four
85
Advantages of a hierarchical organisational structure
+more promotions
| +less work for managers
86
Disadvantages of a hierarchical organisational structure
- not as easy to communicate
| - more expensive (more managers)
87
Advantages of a flat organisational structure
+easier communication
| +cheaper (less managers)
88
Disadvantages of a flat organisational structure
- less promotions
| - more work for managers
89
Hierarchical organisational structure
- many layers of management
- narrow span of control
- long chain of command
90
Flat organisational structure
- few layers of mangement
- wide span of control
- short chain of command
91
Centralised structure
Decisions are made at the top of the company
92
Decentralised structure
Decisions are made locally or at a lower level in the business
93
Advantages of centralised structure
+consistency
+clear direction
+operations and decisions are closely controlled
+chain of command is clear
94
Disadvantages of centralised structure
- can demotivate employees
- a standardised approach may not work in all business locations
- may lower productivity
95
Advantages of decentralised structure
+improved employee motivation
+allowing managers lower down the chain to make decisions which suit their local area
+more responsibility for employees
96
Disadvantages of decentralised structure
- not consistent over the business
- managers can make ineffective decisions
- may negatively impact on sales, reputation and overall business performance
97
Problems when communicating:
- communicates too much
- communicates too little
- bad technology
- accents/languages
- time differences
98
Ways of working
- hours worked
- contracts used
- technology used
99
Flexible hours
Flexible hours, suits the employyee
100
Zero hours contract
Casual contract, “on call” work
101
Contract
Written agreement between two people or organisations
102
3 examples of contracts
* permanent
* temporary
* freelance
103
Permanent contract
An employee will be employed by a business on an ongoing basis
104
Pros and cons to a permanent contract
+employees feel secure
+less likely to leave the business
-most expensive contract
105
Temporary contract
An employee will be employed for a fixed amount of time
Eg.maternity leave
106
Pros and cons to temporary contract
+evaluate potential employees (could offer them a permanent contract)
+required for business operations
- less job security
- less employee loyalty
107
Freelance contract
Self employed, paid by the business to do a specific job/project
108
Pros and cons to freelance contracts
+fills business needs
- may not be available
- lack of trust
109
Benefits of motivated staff
+productivity
+business reputation improves
+higher attendance
+employees want to contribute ideas
110
Unmotivated staff are:
- inefficient
- make more mistakes
- damage business reputation
111
2 methods of motivation
* Financial
| * Non-Financial
112
Remuneration
The money paid to an employee for working
| -overtime pay for staff who work etra
113
Advantages of remuneration
+staff want to work overtime
| +more motivation
114
Disadvantages of remuneration
-costs the business more
115
Bonuses
An additional payment if they acheive a target or high level of performance
116
Advantages of bonuses
+staff want to work harder
| +more motivation
117
Disadvantages of bonuses
- costs the business
| - staff make be pushy towards customers trying to sell things
118
Comission
An extra amount of money paid to an employee, usaully if they can make a certain amount of sales
119
Promotion
A promotion is when an employee is given a more senior role within the organisation usually with more responsibilities
120
Fringe benefits
Benefits by the business that financially benefit employees
| Eg. Gym membership, comapany car, free childcare etc
121
Non financial methods of motivation
* job rotation
* job enrichment
* autonomy
122
Job rotation
When employees rotate between jobs. Taking on different tasks
123
Pros and cons to Job rotation
```
+gain experience
+gives employees a better understanding of the business
-time consuming
-possible lower standard of work
-teaching
```
124
Job enrichment
Giving employees more responsibility
125
Pros and cons to job enrichment
+ increased productivity
+ opportunities
-may be overwhelming
-pay hasn’t increased
126
Autonomy
Employees are able to make more choices and have more freedom/independence
Eg. Team decisions or working your own hours
127
Pros and cons to autonomy
+freedom
+staff feel in control
-wrong decisions
-employees make take advantage of freedom
