What? Flashcards
What are the aims of a business?
(1) offer high quality
(2) Excellent customer service
(3) Good reputation
(4) new products before competitors
(5) Sustainable
(6) Invest in local community
What are the adv and disadv of a mission statement?
adv - (1) purpose, (2) beliefs - ethics,(3) staff have a shared purpose - cooperation
disadv - No proof needed - say what customers want to hear - bad reputation
What makes functional objectives effective?
Specific - aims are clear, more effective in achieving them
Measurable - met?
Agreed
Realistic - demotivation
Timely - met?
What are the different types of objectives?
(1) profit - loss or increase
(2) growth - increase revenue, market share or expand
(3) survival - competition, recession
(4) cash flow - increase to better survival
What are some short terms and long terms of a business?
ST- survival, profit
LT- growth
What is revenue affected by?
sales volume and price
What can you do with profit?
(1) Dividends to shareholders
(2) Re - invest in new activities
(3) Staff bonuses
(4) Charity, fund projects in local community
What are the aims of a non profit business?
(1) Help people in need or benefit the community
(2) fund charitable activities
What are the adv and disadv of being a sole trader?
adv - (1) freedom - control, (2) Profit can be kept , (3) less form filling and no legal costs
disadv - (1) Risk - take all responsibilities, (2) time - work long hours, (3) expertise - limited skills, (4) unlimited liability - responsible for all debts, (5) finance - limited
What is a private limited company (LTD)?
(1) Can’t sell shares publicly
(2) share prices not on stock exchange
(3) need agreement with shareholders
(4) no minimum share capital
often family owned
What is a public limited company (PLC)?
(1) Can sell shares publicly
(2) share prices quoted on stock exchange
(3) freely transferable - don’t need agreement with shareholders
(4) over 50,000 share capital
What determines share price?
supply and demand
what factors influence share price?
(1) performance of the company - better performance means higher dividend payments so more demand so share price rises
(2) new product launch - increased company profits so more shares brought
(3) current share price - bargain if brough for low price or capital gain if high
(4) Economy state - income and consumer confidence
What external factors affect cost and demand?
Political - tax and interest rates
Economical - incomes, costs during recessions may lead to redundancies to decrease labor costs
Social - trends and pressure groups, ageing population
Technological - improves marketing, social networking and advertising
Legal
Environment - ethical
What do managers do?
Set objectives, analyze and interpret data to make decisions
What are the different management and leadership styles?
(1) Authoritarian / autocratic - leader makes decisions on their own - unskilled workers and in crisis management can be demotivating
(2) Paternalistic - leader consults workers then explains decisions to persuade them that decisions are in their interests
(3) Democratic - workforce participation, leaders discuss with workers - confidence in workforce means increased employee motivation
(4) Laissez faire - weak form of leadership - leaders offer coaching but rarely interfere - highly motivated staff
what are some internal and external factors that affect management and leadership?
Internal - urgent tasks such as large orders - authoritarian, unskilled workers - authoritarian, educated - democratic
External - recession - strong leadership - authoritarian / democratic, increased competition - democratic leadership to motivate workers
What is the Tannenbaum Shmidt Continnum?
Places managers on a scale ranging from autocratic management to increasing levels of participation in decision making by the workforce
Tells - Authoritarian, 0 involvement of workforce - can cause divisions
Sells - Manager makes decision but makes it seem rationale. workforce don’t influence
Consults - invites discussion, decisions can be modified - insight and value of workforce
Joins - manager proposes problem and workforce find solutions - manager makes final decision
What is the scientific decision making process?
based on data
set objectives, collect data, analyze data, make decision, implement decision, review decision
What are the adv and disadv of the scientific decision making process?
Adv - reduces risk of expensive mistakes, logical and structured
Disadv - costly, time consuming, can be out of date - reliability
What is intuitive decision making?
Making decisions based on hunch or gut instinct, good intuition based on past experience
What are the adv and disadv of intuitive decision making?
adv - quick, good for new situations where you can’t use data
disadv - risky due to mistakes, irrational and sometimes illogical
What influences decision making?
Risk -
Reward - financial or beneficial
Uncertainty
What factors influence decision making?
Mission, objectives, ethics, external environment, resource constraints
What is decision tree analysis?
Using probability and expected value to predict outcomes of decisions
What way is a decision tree implemented?
(1) Identify courses of action
(2) Possible outcomes of each course of action and assign probabilities
(3) Calculate EV and net gain of each course of action
(4) choose the course of action with the highest net gain
What are the adv and disadv of decision trees?
adv - works out probabilities and potential pay offs of each outcome - not vague, nice visual representation, compare options quantitatively, good for familiar situations - accurate estimates
disadv - quantitative - ignores employee opinions (qualitative data), probabilities are hard to predict accurately, wide range of potential outcomes
What are the internal and external stakeholders of a business?
Internal: owners - profit, shareholders - dividends, employees - job security and promotion
External: customers - high quality at low costs, suppliers - income, local community - local employment, government - taxes, creditors - owe money to
What is stakeholder mapping?
Helps identify how much interest and power / influence over a business different stakeholders have
What are marketing objectives based on?
sales volume, growth and value, market share - compares against competitors, size and growth
What internal and external factors affect marketing objectives?
Internal: corporate objectives, finance - budget, human resources - staff
External: market - sate of economy, technology, competitors, ethics and environmental factors - brand image
What are the different ways a market can be classified?
Geography - local, national, international
Nature - agricultural, technological
Seasonality
Development
Product destination
What is market mapping?
Shows extremes for 2 measures that are important for customers - price and quality
What does market mapping help with for a business?
(1) spot gaps in a market
(2) shows close competitors - plan marketing strategies
(3) Helps see how customers view their products so you can reposition
(4) helps pricing strategy
What are the adv and disadv of primary research?
adv - make predictions of whole markets with just a sample, see customers response to new products, specific to it’s purpose, exclusive to the business - competitors don’t benefit
disadv - labor - intensive, expensive, slow
What are the adv and disadv of secondary research?
adv - easier, faster and cheaper
disadv - may be unsuitable if they have different purposes, may have errors or be out of date
What are the 3 types of sampling?
(1) simple random - names picked randomly from a list
(2) stratified - population divided into groups and people selected randomly from each group - number of people picked is proportional to group
(3) quota - category based - opinions from target audience
What can time series analysis be used for?
to see links between sales and marketing activity
What can extrapolation be used for?
trends in sales data from previous years can be continued into the future to forecast future sales - helps set sales targets and measure performance
What can sales forecast help with?
producing cash flow forecasts, future sales, prep for production and HR departments
What ways can technology be used to gather info on customers?
helps make sure promotions are targeting the right people
loyalty cards - give customers money back according to how much they spend - helps form a database on preferences - makes campaigns cheaper and effective
Social networking websites - see customer following to see their interests, demographics, specific adverts to those who are interested, follow competitors
search engines - targeted advertising
Wi fi signals used to track movement to decide store layout - promotion
What are the advantages of using IT for marketing analysis?
(1) Computers can process much more data than people
(2) Reduces risk of errors
(3) measure potential changes in expenditure or sales - marketing decisions
(4) point of sale
What are the disadvantages of using IT for marketing analysis?
expensive - upgrade
Train staff to use software - expense, time consuming
what ways are marketing efforts staged?
STP
segment - similar characteristics
target - market segment and adapt the product and marketing mix to appeal
position - target audience
what are the different ways to segment a market?
demographic - age, gender, class
geographic
income
behavior, lifestyle
What are the adv and disadv of segmentation?
adv - identifying new customers, markets and products - find the best way to market products
disadv - hard to break the market into obvious segments and to market specific demographics
what are some approaches to segmentation?
concentrated - limited resources, growth potential
differentiated - large companies
undifferentiated - segments ignored, tries to reach the entire market - widely used products
What is niche marketing?
concentrated marketing, specialize - don’t compete directly with larger businesses
What is the traditional marketing mix?
Price, product, place, promotion
What are the 3 extra P’s in the marketing mix?
People, physical environment, process - waiting times, ordering
What are the factors that influence the integrated marketing mix?
(1) market research / decisions,
(2) competitors,
(3) target market segment,
(4) promotion,
(5) position,
(6) product life cycle
(7) corporate objectives
(8) Finance
(9) skill of employees - promotion
What are the 3 types of consumer products?
convenience - don’t look for cheaper alternatives
shopping - particular brand, less available
specialty - quality, luxury
What are the different sections of the Boston matrix?
Question marks - new products, small market share high growth, could succeed or fail - heavy marketing, brand building or divestment
Cash cows - high market share low growth, maturity - promoted and high sales volume low costs
Stars - high market growth high market share, profitable growth phase and has most potential, future cash cows - high promotion to keep market share, increase capacity to meet demand
Dogs - low market share low market growth, harvest profit in the ST or sell off
What does the Boston matrix help with?
shows position of products in a market which affects marketing decisions
e.g. money from cash cows can be used to invest in question marks to become stars
however may predict wrong
What does the product life cycle show?
sales of a product over time, effect marketing decisions and valuable for planning marketing strategies and changing marketing mix
What are the 5 stages of the product life cycle?
1 Development - Research and development (R&D), market research, costs are high but no sales, high failure rate
2 introduction - launched with complementary goods, promotes, price skimming at initial price to cover promotional costs or price penetration so prices are low to increase demand, limited competition for new products
3 Growth - new and repeat customers, competitors attracted, improvement and development, more outlets stock
4 Maturity - peak sales as fixed costs and developments have been paid for, saturation, prices reduced to stimulate demand
5 decline - unappealing to customers, rapid decrease in sales and profit, either decrease promotion to make profitable or sell off
What are some extension strategies?
1 product development - redesign packaging, special editions - new focus for marketing
2 market development - new markets of uses
3 different product distribution -internet, countries , convenience stores
4 pricing, special offers
5 promotion
What ways can the product life cycle help with the marketing mix?
1 development - product and price, promotion
2 introduction - place and promotion, price
3 growth - people, physical environment and process
4 maturity - price and promotion
5 decline - decreased promotion, price, people
What are the adv and disadv of price skimming?
adv - scarcity value - boosts product image, usually for technological products, trademarks to prevent imitative products, LT strategy for exclusivity
disadv - potential customers put off by high initial price, customers who brought product at initial price are annoyed after price drops
What are the adv and disadv of price penetration?
adv - effective for price sensitive products, used as an extension strategy to prolong a products life, targets budget conscious market segment - can keep existing customer base
disadv - customers expect low price to remain unchanged so may lose customers, can damage brand image
What are some promotional objectives?
increasing sales and profits and increasing awareness of the product
What are some ways of digital advertising?
target online adverts to customers who have shown an interest in that type of product by browsing for it
advertising on mobile phones - banners in app, charged only when clicked on so reduces costs
viral marketing - pass adverts onto friends on socials - interesting such as humorous vid or free product
What ways can branding help with product image?
1 premium pricing
2 confidence in quality - new products are accepted more readily
3 Distinguishment
4 eliminates or deters new competition - inelastic
5 ethical image
What are some examples of promotion?
1 sales promotion - special offers such as BOGOF
2 direct mail
3 personal selling or direct selling - salesperson and customer
4 relationship marketing - LT such as socials and loyalty cards
5 event sponsorship
6 direct response TV marketing
What is the promotional mix?
mixture of methods to promote products
depends on: product, market, competitors, Product life cycle and budget
What are the different channels of distribution?
manufacturer, consumer - e commerce
manufacturer, retailer, consumer - large supermarkets - perishables
manufacturer, agent, consumer - sales representative but unemployed - commission instead of salary
manufacturer, wholesaler, retailer, consumer - convenience goods e.g. fast food
What are some elements in the ‘process’ part of the marketing mix?
1 ease of appointment timings
2 waiting time
3 stock available
4 payment methods
5 user friendly website
6 after sales service - guarantees
what ways can technology be used to improve processes?
queue management technology used by airports to shorten queues
e tailers giving the option to pay through PayPal so customers can use their addresses and payment linked to their PayPal account
what are some aspects of the physical environment that businesses need to think about?
1 decor and cleanliness
2 appearance of the website
3 appearance of staff
4 layout
5 practicality and safety
What are some operational objectives?
1 quality - maintain and improve, reduce complaints
2 costs - cut costs to compete on price
3 flexibility - supply meets demand
4 efficiency - reduce costs and increase resources - increase capacity utilization, improve labor
5 innovation - research and development
6 environment - ethics, recycle
7 speed of response - decrease production time and waiting time
8 dependability - reliable
What ways can a business add value to their products?
1 increase selling price
2 reduce costs of raw materials
3 increase quality
4 environmentally friendly
5 quick speed of response
What are the internal and external factors that affect operational objectives?
Internal: nature of products, availability of resources, other objectives
External: competitors, market conditions, demand, trends - ethics, new technology
What are the drawbacks of 100% capacity utilization?
1 quality may be affected
2 supply doesn’t meet demand as you can’t produce more
3 no downtime - machines breaking down cause delays
4 no margin of error- stressful
5 can’t temporarily increase output e.g. seasons
What ways can a business increase capacity utilization?
1 use facilities more during the week - more shifts
2 more machinery
3 increase staff levels
4 increase productivity - reallocate staff which increases motivation
5 outsource
What ways can a business deal with under utilization?
1 change marketing mix
2 outsource
3 downsize - reduce capacity by closing some production facilities
4 don’t renew temporary contracts and stop overtime
5 make staff redundant, not replacing natural wastage workers and sell off factories
What ways can labor productivity be increased?
1 improve worker motivation but bonuses may mean quality suffers
2 training but can lead to redundancies
3 new technology but it’s expensive
What are the adv and disadv of just in time production?
adv - reduced storage costs, cash flow improves as money isn’t tied up in stocks, less waste - less out of date goods, flexible in demand and can adapt to meet customer requirements
disadv - no stock during production strikes, suppliers must be reliable
What are the adv and disadv of time based management?
adv - reduce wasted time - lead time socost of holding stock falls, flexible production processes - varied product range, multi skilled workers, customer needs met faster - competitive adv
disadv - speed > quality, higher training costs
What are the adv and disadv of technology?
adv - increased productivity and quality - more accurate, reduced waste - efficient, effective marketing campaigns, better communication, dangerous / repetitive tasks
disadv - initial costs are high, maintenance and updates - cost, increased staff training, staff redundancies
What are the adv and disadv of capital intensive production?
adv - cheaper in the LT, more precise so better quality, works 24/7, easier to manage then people
disadv - high set up costs, inflexible as can only do one task, long delays, staff motivation decreases
What are the adv and disadv of labor intensive production?
adv - flexible and can be retrained, cheaper for small scale production and low cost labor, solve problems during production and suggest ways to improve quality
disadv - harder to manage, unreliable, need breaks, labor costs are high
What are some developments in IT that can make companies more efficient?
1 CAD (computer aided design)
2 CAM (// manufacturing)
3 stock control - EPOS, stock can be reordered automatically
4 emails - communication
What are the advantages of improving quality?
less resources wasted, less advertising and promotional mix to persuade keeping of stock, fewer returns, USP, improve image and reputation, keep existing customers and attract new customers
What are the costs in holding stock?
storage costs, wastage costs, opportunity cost
What are some ways a business can get supply to meet demand?
peripheral workers, outsourcing, mass customization - order then produce
What are some factors that help decide suppliers?
1 price - total costs and more value added
2 payment terms - credit
3 quality
4 capacity - demand
5 reliability
6 flexibility - company terms
What are some ways to improve relationships with suppliers?
1 linked networks such as inventory stock control management and electronic data interchange
2 JIT production
3 Shared costs - share warehouses
4 innovation - manufacturing
What are some ways a business can improve its cash flow?
1 overdrafts - allows a business to borrow according to its needs up to a present amount but LT expense with interest
2 hold less stock - less cash tied in stock but causes problems for sudden change in demand
3 longer / shorter credit period - reduce time between paying suppliers and getting money from customers
4 debt factoring
5 sale and leaseback
What are the adv and disadv of technology?
adv - ensure you have enough money to pay suppliers and employees - arrange loans and overdrafts in time, prove businesses have an idea of where they’ll be in the future for borrowing, checks to see if the business is holding too much cash e.g. stock
disadv - can be based of false assumptions, circumstances can change suddenly - competitors and costs, needs past data, wrong predictions can make the business insolvent
What are the adv and disadv of budgets?
adv - helps achieve targets, control income and expenditure, managers can review and make decisions, focus on priorities, persuade investors for success
disadv - restrictive - market conditions, time consuming, hard to predict inflation, inaccurate
What are some decisions made based on adverse variances?
1 change marketing mix e.g. cut prices or change promotional mix
2 streamlining production
3 motivation
4 negotiate with suppliers for lowering costs
5 market research
What does break even help businesses with?
banks and venture capitalist see break even to decide whether to loan or not
prepare to launch new products - cash flow
What are the adv and disadv of break even analysis?
adv - easy to do, quick action, forecasts cost, revenue and profit and how much to sell, persuade bank to get a loan, whether to launch a new product
disadv - variance costs are not directly proportional to output - bulk buying, hard to look at multiple products, assumes all products will be used without wastage, doesn’t tell you actual figures of sales
What are some sources of finance and their adv and disadv?
1 overdraft; adv - easy to arrange and flexible and only pay interest on the amount they borrow. disadv - banks charge high interest and have fixed charges
2 debt factoring; adv - instantly get money they’re owed. disadv - company keep some of the money owed as a fee
3 bank loan; adv - guaranteed money for the duration of the loan, only pay loan and interest not profit, interest usually lower than overdraft, disadv - difficult to arrange as bank need security in assets, hard to keep up with repayments, may have to pay a charge if they pay the loan back early
What are the adv and disadv of hard and soft HRM?
Hard HRM adv - keep control of workforce, easy to replace. disadv - don’t use employees to full potential - lose profit, demotivational so higher labor turnover
Soft HRM adv - increased staff morale as staff feel valued, business benefits from skills of employees. disadv - employees may not be interested in development, costly, time consuming
what are the adv and disadv of high staff turnover?
adv - new ideas, already trained by competitors, natural wastage is better than costly redundancy
disadv - lack of loyal and experienced staff, lose trained staff, recruitment costs are high
what are the adv and disadv of a tall structure?
adv - less responsibility and span of control so can monitor closely
disadv - poor communication thus affecting decisions, demotivating is micromanaged
what are the adv and disadv of a flat structure?
adv - more freedom, better communication
disadv - overwhelming wide span of control - hard to manage effectively
what are the adv and disadv of decentralization?
adv - involvement in decision making motivates employees, expert knowledge in their sector, decisions made quickly for day to day
disadv - may not have experience in decision making, inconsistencies with divisions, can’t see overall situation of the business
What are the adv and disadv of centralization?
adv - leaders have experience in decision making, overview of the whole business, aren’t biased towards one department, decisions made quickly as you don’t have to consult
disadv - not easy to be an expert, excluding employees from decision making can be demotivating, slow to notice consumer trends
What is the process of recruitement?
1 identify vacancy
2 write person specification and job description
3 advertise job
4 process applications
5 shortlist most suitable candidates
6 interview
7 appoint
What are the adv and disadv of internal and external recruitment?
internal; adv - know the business, short and cheap, motivates workers to go for a promotion. disadv - leaves a vacancy in another department, can cause resentment among colleagues who aren’t selected
External; adv - fresh ideas, larger number of applicants, experience from other organizations. disadv - long and expensive, larger induction process
What is Taylors theory on motivation?
Workers are motivated by money (financial incentive).
He would figure the most efficient way to do a job and make every worker do it that way
he favored division of labor so breaking tasks into lots of small repetitive tasks with managers taking responsibility of the workforce
piece pay rate - paying workers according to the quantity they produced - most productive workers got a better rate
disadv - quality reduces, seen as exploitation, ignores demotivating effect of respective tasks
What is Maslow’s theory of motivation?
Maslow’s hierarchy of needs - people start by meeting needs at the bottom and move up. Appealing as each need has importance to workers
1 basic physical needs - pay and working conditions
2 safety - job security - health and safety policies and secure employment contracts
3 social needs - teamwork and social outings
4 self esteem - recognition and promotion
5 self actualization - meet potential by giving opportunity to develop skills
disadv - isn’t obvious where worker is at and order of importance may be different
What is Herzberg’s theory on motivation?
Focuses on individual needs
Hygiene factors like company policy, supervision, working conditions, pay and relationships - leads to dissatisfaction if not met
motivating factors - interesting work, personal achievement, personal development
disadv - based on a small sample of people and people have different hygiene and motivating factors
What are some ways to job design?
1 job enlargement - more work
2 job enrichment - challenging work and training
3 empowerment - greater role in decision making
4 teamworking
5 better working conditions to improve motivation
What prevents communication from being effective?
Attitudes, intermediaries, language barriers, sense of purpose, group behavior
How can communication be improved?
1 democratic management style - inclusiveness
2 recognize each others objectives and needs
3 change organizational structure - delayer
4 delegation and decentralization - helps to give a sense of purpose
What are benefits to the employer / employee of good relationships?
employer - great reputation so better recruitment, productivity and efficiency is improved - more competitive, diverse opinions - informed decisions, employees objectives align with the business
employee - job security, increased productivity and efficiency means more profit so pay increases, job satisfaction
What are the adv and disadv of trade unions?
adv - strengthened bargaining power for employees - bigger influence and more effective, collective bargaining - allows employers and workers to communicate with each other in LT contracts, direct concerns of the workforce, greater job security, can bring in legislation
disadv - can turn violent, industrial action can lead to lost profits, majority vote overrules demands of the individual
What can the different measures of profit tell you about the financial performance of a business?
gross profit, operating profit, profit before tax, profit after tax and retained profit
gross profit - money made from making and selling products
operating profit - money made from normal business operations such as marketing
profit before tax - shows if expenses come from selling or buying
profit after tax - profitable - used by potential investors
retained profit - how much money is available to invest
What are some ways a business can improve its liquidity problems?
decrease stock levels, speed collection of debts, slow down payments to creditors (suppliers)
What are the adv and disadv of high gearing?
adv - extra funds for expansion - high profits, attractive during the growth phase and a competitive adv, interest for lenders and dividends for shareholders
disadv - risk of not being able to repay which can lead to more or higher interest, shareholders lose money they’ve invested
What are the adv and disadv of ratio analysis?
adv - business performance - spot trends and see strengths and weaknesses, helps with decision making, potential inventors can see ratios to invest, compare with competitors
disadv - need to take into account variable external factors, don’t show quality of staff, future changes like technological advancements, only shows past and present so not accurate for new businesses
