Whole course Flashcards
get an AAAAAAAAAAAAAAA
Product led companies:
- Spend a huge amount on research and development
- products are very expensive
- usually drug and tech companies, for example Apple, Samsung, Tesla
Market led companies:
- Products are cheaper
- responds to market demand
- does a lot of market research
- usually companies in clothing or beauty such as Boots or Primark
Describe each stage of the product life cycleee
- The first stage in the product life cycle is development, R+D costs are high, sales are 0. 80% of products never go further than this stage
- Then is introduction, sales are low because the product is not well known, there is little profit made as R+D costs have to be paid back. Promotion costs are high because there is no promotion
- Next is growth, R+D costs are paid back. There are a high number of sales so more profit is being made, the product is going through rapid growth.
- Maturity: the product’s sales are maximised. and it is established. Promotion costs are lowered because the product has a reputation and previous promotion is still effective. The R+D costs are paid back and a large amount of profit is made, this is re-invested into more development. There is more competition and loyal customers.
- Decline: The market is saturated, there are less sales and less profit is made.
Describe extension strategies.
- Premium pricing: High prices that don’t always reflect the quality; (for example Louis Vitton handbag, DMs, Coco Chanel Perfume)
- Low pricing: (H&M, Primark)
- Competitive pricing: Set your prices the same as your competitors, (eg: Electronics)
- Skimming: Have high prices for a short time, before reducing the price (eg: Movies)
- Penetration pricing: Have temporarily low prices when breaking into a new market-> very competitive
- Promotional Pricing: Sales, BOGOFs.
Name the 7 P’s (marketing mix)
- Product
- Price
- Promotion
- Place
- People
- Physical Evidence
- Process
Advantages of a limited company (public+private)
- Limited liability for shareholders, if the business fails, investors won’t lose their money
- People can buy and sell shares at any time, a large amount of money can be raised in a short time
- The business has access to economies of scale
- In a private limited company, there is control over who can buy shares, meaning that there is security
Disadvantages of being a limited company (public+private)
- Have to publish their annual accounts, their competitors can see this.
- Setting up legal requirements is expensive
- A PLC could be subject to a hostile takeover as they have no control over who buys shared for the company
- Big companies are hard to manage effectively
Advantages for a franchiser
- allows the brand to grow without having to personally invest in new property or staff
- reduces competition because if a franchisee buys into their brand it stops them from opening a competitor business
- reduces risk- failure is taken by the franchisee largely
- they retain control over their brand
- royalties are guaranteed income
Disadvantages for a franchiser
- reputation depends on the success of franchisees
- franchiser only gets a share of the profits of each branch
Advantages for a franchisee
- training and support available through the original organisation
- marketing done by franchiser
- launching the business is less risky because of the established brand and product
- all creative decisions are made by franchiser
- competition is limited because number of franchises in an area will be controlled
disadvantages for a franchisee
- all decisions made by the franchiser
- must pay royalties to franchiser
- bad reputation of one franchisee can affect all franchises
- franchisee usually can’t be involved in any other business venture at the same time
- very expensive and very long term- up to 25 years in cases.
advantages of being a multinational
- governments might offer grants for a company to operate there
- lower wage rates makes production costs lower
- higher skilled workers available for less cost
- Lower corporation tax so can keep more profits
- Can operate in new (local) markets
- Can use technology to communicate easily
disadvantages of being a multinational
- Legislation might be too restrictive
- Local currency may be too weak to make a profit
- the country could have poor infrastructure
- cultural differences might make a product undesirable, for example beef in India
- Countries’ governments might be unstable, leading to violence and danger
- taking advantage of lax laws could give a company a bad reputation
- language barriers and time zones could lead to difficulty communicating across the world
possible objectives of a charity:
- relieve poverty
- advance education
- advance religion
- carry out activities beneficial to a community
Advantages of being a social enterprise
- help tackle social problems through practical steps eg: a social enterprise helping homeless people employs homeless people
- may have grants available to them
- publicity for social issues can also promote the business
- can attract passionate, good quality staff
- Can make use of an asset lock where if a social enterprise is closed down, the proceeds from the sale of any assets and any profits will be used to benefit the good cause
- Can sell shares to raise finance if they are a limited company; this also means that the shareholders benefit from the advantage of limited liability.
What kinds of organisations make dividend payments?
PLCs, Co-ops
Factors of Production: (CELL acronym)
- Capital (Money, tools, equipment)
- Enterprise (the idea behind the business)
- Land (Natural resources used by a business)
- Labour (Employees)
Why might an Entrepreneur start a business?
- To make money
- They were made redundant
- They saw a gap in the market
- They wanted to be their own boss
- They wanted to do what they enjoy as a job
Sectors of Industry:
- Primary (Raw materials)
- Secondary (Processing)
- Tertiary (Services)
- Quarternary (Providing a service to a business Eg: IT or accountancy)
Advantages of a sole trader
- Easy to set up
- Owner makes all decisions
- Owner keeps all profits
Disadvantages of a sole trader
- Nobody to brainstorm ideas with
- Hard to get holidays or sick leave
- Unlimited liability
Advantages of a partnership
- A range of skills are brought to the business
- Workload and decisions are shared
- Creates more profit than a sole trader
Disadvantages of a partnership
- Disagreements can occur
- profits must be shared
- unlimited liability
What do business plans often include
- The business idea, what goods and services are provided
- The aims and objectives of the business
- projected costs and profits
- the target market
- location of the business
- how the business products will be marketed
Sectors of the economy
- Private sector
- Public sector
- Third sector
What do local authorities do?
- provide services such as education, housing, leisure and recreation
Strategic Objectives:
- Set by top layer of management
- Outline main goals and aims of the organisation
- Long-term
- Lacks detail
Tactical Objectives:
- Made after Strategic Objectives
- More detailed than Strategic objectives
- how the strategic objectives can be achieved by each department in the organisation
8 Objectives:
- Profit Maximisation
- Survival
- Sales Maximisation
- Provision of a service
- Corporate and Social Responsibility
- Growth
- Satisficing
- Managerial Objectives
Methods of Growth
- Organic/Internal
- Integration
- Vertical (forwards and backwards)
- Merger
- Diversification
Costs of Organic/Internal growth:
- May be dependant on the growth of the overall market
- Slow method of of growth, shareholders unhappy
Benefits of Organic/Internal growth:
- Easier to finance
- Less risky than buying other businesses because you already know how the business functions
Benefits of Horizontal Integration (Eg: 2 hotels)
- You know the business
- Economies of scale with both supplies and staff
- Can share expertise
Costs of Horizontal Integration (Eg: 2 hotels)
- Different company cultures
- Might have to sack people, resulting in a bad reputation
Benefits of Vertical Integration:
- You have a guaranteed supply/customer
- You have a guaranteed quality of supplies
- You can charge yourself less for your supplies and other people more
Costs of Vertical Integration:
- Risky because you’re not an expert in that business
- Could be expensive because you have to set up a new business
Costs and benefits of a merger:
❤economies of scale
❤can share staff/resources💔different corporate cultures might lead to conflict or tension
💔might need to lay off staff leading to a bad reputation
Diversification definition
- goes into a completely different field (eg: a taxi driver buys a fishing boat)
External Factors (PESTEC)
- Politics
- Economics
- Social
- Technology
- Environment
- Competitors
External Factors (PESTEC) Politics
- Laws
- Taxes
- Minimum wages
- Brexit
- Health and safety laws
External Factors (PESTEC) Economics
- Inflation+Recession
- Cost of living
- Oil prices
- Employment rates
External Factors (PESTEC) Social
- Trends
- Working from Home
- Demographic
- Shopping from home
- Ageing population
- Cashless Society
External Factors (PESTEC) Technology
- Self checkouts
- Training for new tech
- Will need to replace technology, expensive
- Obsolescence
- Card readers
External Factors (PESTEC) Environment
- Weather
External Factors (PESTEC) Competitors
- Competitor could lower prices
Internal Factors:
- Finance
- Staff
- Technology
- Corporate Culture
Internal Factors: Finance:
- More investors -> more money -> more growth
- ## Allows you to meet running costs such as paying wages and rent and suppliers, if running costs can’t be met then the company will go out of business
Internal Factors: Staff:
- polite staff -> good reputation -> customer satisfaction + loyalty
- could have no staff
- need well trained staff
Mechanisation Vs automation:
Mechanisation-> People are still operating the machines
Automation-> Few people are needed to operate/manage machines
Internal Factors: Technology
- machines can increase productivity and efficiency
- Don’t need to pay wages for skilled workers
- Good website design allows for international online sales
- New technology takes a lot of money and time to train staff how to use
Internal Factors: Corporate Culture
- Democratic: happy staff, good new ideas
- Autocratic: could lead to recruitment and retainment problems if the company has a bad reputation
Benefits of a good corporate culture:
- employees feel like a part of the organisation
- Adds to customer satisfaction
- Prevents recruitment/retainment problems
- Attracts new problems
- Increases employee loyalty
- Motivates staff
- Improves the company’s image
- Less absences
Costs of a bad corporate culture:
- Might lose good ideas if people aren’t encouraged to speak up
- New employees might take a while to adjust to a new corporate culture
Examples of Internal Stakeholders:
- employees
- owners
- managers
Examples of external stakeholders:
- Customers
- Government
- Local Community
- Pressure groups
- Suppliers
- Banks
- Shareholders
What do owners and managers do as stakeholders
Make decisions
What do employees do as stakeholders
Dictate the quality of the product by how hard they work
What does the government do as a stakeholder
sets minimum wages and taxes, creates laws and can fine the business
What does the customer do as a stakeholder
Dictates the number of sales and the prices (what are the customers willing to pay?)
What does the local community do as a stakeholder
provides employees and customers and can complain about the business (eg. about pollution/noise etc)
What do pressure groups do as stakeholders
can boycott the business, raises awareness about the bad parts of a business which can impact its image
What do suppliers do as a stakeholder
- could choose to not sell an item any more
- controls the price of products and therefore the resale price
- controls the speed and reliability of delivery
- controls the quality of the product
What do banks do as a stakeholder
can decide to approve or deny an application for a loan
What do shareholders do as a stakeholder
they can vote on decisions in the business
Shareholder Vs Stakeholder
- shareholders own shares in a business, they own part of the business. They can vote on certain decisions in the business and make money from it based on what they invest and how successful the business is
- A stakeholder is ANYONE who has an interest in or an influence on the business, internal stakeholders are people like the owners, shareholders, employees, and external stakeholders are for example the local community, the government, customers, suppliers.
What is a flat business structure?
There are few levels eg:
- Top level, Board of directors
- Middle level, senior managers
- Bottom level, individual employees.
Managers have a wiiiiiiiiiide span of control.
Benefits of a flat business structure:
- Quick communication
- Fewer managers so save money on salaries
- Staff motivated because they’re not micromanaged
- Consultation is easy
- changes can be made quickly to adapt to market changes
- Can respond to customers’ needs quickly
Costs of a flat business structure:
- Managers have a lot of responsibility
- Workers are unhappy with the level of responsibility
- Fewer managers means the quality of management decreases and more mistakes are made by employees
- Unpromoted managers with a lot of responsibility might resent not being promoted
What is a tall (hierarchical) business structure
there are many levels of management
eg:
- top level: board of directors
- middle level: Chief Executive
- middle level: Senior management
- middle level: middle management
- middle level: supervisors
- bottom level: employees
Managers have a narrow span of control
Benefits of a tall business structure:
- High level of control and supervision
- Better quality assurance
- Promotion and career pathways are available which motivates workers
- Employees have clear roles and responsibilities which gives employees confidence and expertise
Costs of a tall business structure:
- Slow communication
- changes happen slowly because the business is less responsive to market changes
- Have to pay higher salaries because of promoted positions
What is an entrepreneurial structure?
When one owner/manager is in the middle and everyone else is employees
Benefits of an entrepreneurial structure:
- Decisions are made quickly by confident owners
- Clear who an employee has to go to for help
- The entrepreneur is an expert
Costs of an entrepreneurial structure:
- Could be disagreements between the owner and employees
- Could miss out on ideas
- The business could fail if it’s overly reliant on one person
Examples of departments in a functional structure:
- Human Resources
- Accounting and finance
- Research and Development
- Marketing
- Operations
- Administration
What is a functional structure/functional groupings?
when a company has multiple departments, all with their own managers
Benefits of a functional structure:
- Clear roles and responsibilities for employees which leads to them being motivated and having confidence and expertise
- Team work means that there’s cooperation and good communication
- Easier to train new employees
Costs of a functional structure:
- Staff may be loyal to their department and not the whole company
- Departments may have conflicts leading to a bad corporate culture
- May be a duplication of roles which is a waste of money
What is a matrix structure?
A short term structure where members from different departments come together to plan projects, for example building a hospital or planning a film/TV show
Benefits of a matrix structure
- More ideas and expertise is shared
- Joined up working is good for the corporate culture
- Employees feel motivated and empowered
Costs of a matrix structure:
- Taking people away from their regular workplace will create a vacancy
- Employees might not get on
- Can be costly to set up and manage
- Can be confusion about leadership
What is a centralised structure
similar to entrepreneurial but for BIG businesses
There is one central head office that makes all of the decisions and everything else is branches, for example banks or supermarkets.
Benefits of a centralised structure
- Economies of scale
- good corporate culture
- experts are in head office are making decisions
- Quick, strong decision making
Costs of a centralised structure
- Heavy reliance on head office
- Stifles creativity and new ideas
- Staff may be demotivated
- Doesn’t respond easily to local demand
What is a de-centralised structure?
the decisions in a company are made locally by middle and lower managers, rather than a central head office
Benefits of a de-centralised structure:
- Managers feel empowered and motivated to make decisions which is good for staff retainment and recruitment
- Decision making is quick
- There are still senior managers for support
- Can respond to local demand which increases sales
Costs of a de-centralised structure:
- Miss out on economies of scale because managers need to be paid
- Must pay higher salaries for staff with more responsibility
- middle and lower managers need to be trained and supervised
- could lose control over the different branches
Benefits of product/service groupings (structure)
- each product/service has different operations, marketing and R+D
- Staff become experts and work at a higher quality
- decision making is faster
Costs of product/service groupings (structure)
- duplication of roles and effort is a waste of time and money
- Might be difficult to have a good corporate culture
- \departments may have rivalry
- Less economies of scale
Benefits of Customer groupings: (structure)
- Can respond to the needs of each type of customer (eg: by age/gender/income)
- Employees become experts in their grouping
- Encourages customer loyalty because their needs are accurately met
Costs of Customer groupings: (structure)
- Need to have a high enough demand for each type of group (Eg: there might not be enough people needing budget options in a shop in Beverly Hills, I don’t know, make it up!)
- Staff may be too specialist and not develop transferable skills
- Staffing costs will be high because they are all specialist
Benefits of Geographic Groupings: (Structure)
- Can respond to changes in the local market
- Can deal with staff locally
- More likely to have customer loyalty
- Quality assurance is easier when managers are local
Costs of Geographic Groupings: (structure)
- More costly to have international bases rather than just one
- Will have duplication of effort and resources which costs time and money
- Quality assurance maybe more difficult as local managers could lie about working conditions etc
Benefits of Technological Groupings: (structure)
- Staff are specialised, motivated, and empowered
- Motivated staff means a better quality product is produced
- Wastage and other costs are reduced because specialist equipment and staff knowledge is available, which saves money
Costs of Technological Groupings: (structure)
- Staff are very expensive and difficult to replace due to their specialisation
- Effort and Resources are duplicateddd
- Can only be used in large organisations
Name 3 kinds of decisions:
- Strategic
- Tactical
- Operational
Strategic Decisions
- Long-term
- Made by senior management
- Few details
- Large financial risk
(eg: open 50 new restaurants by March 2026)
Tactical Decisions:
- Made by middle managers
- Medium term
- Detailed, they focus on how exactly to achieve the strategic goals
(eg: Employing/firing staff, improving the quality of the product, We will raise the prices of our best selling meals in order to earn enough to open 50 new restaurants by 2026)
Operational Decisions:
- Day to day routine decisions
- made by low level staff/managers
eg: Staff rotas, menu specials, ordering supplies
Why is it important to make good decisions? (4)
- To ensure a business’ objectives are met
- To motivate staff by setting targets to work towards. people like to work for a successful business so will be happy if goals are met
- They can attract investment if potential shareholders see that a business consistently makes good decisions
- It makes sure that teams/departments/managers are held accountable
what does SWOT stand for?
- Strengths
- Weaknesses
(Internal and for now) - Opportunities
- Threats
(External factors to consider for the future)
What is the role of a manager? (Pandas Often Can’t Climb Cacti During May)
❤ Plan: (Set targets, identify aims, identify solutions to problems)
🧡 Organise (people and resources, where are they needed?)
💛 Command (Direct staff)
💚 Communicate (Explain things and make sure people know what is up)
🩵 Control (Quality control, ensure departments are working well and if not, how do they improve?
💙 Delegate (Give jobs to the right people)
💜 Motivate (staff!)
How to evaluate/measure decisions (how good/bad they are)
- Measure them against targets (sales, profit, customer satisfaction)
- Use surveys
- Has the share price increased?
Benefits of Outsourcing (as a form of 🌟growth🌟
- saves time which can be used to specialise in other areas
- Saves space (for equipment, eg: washing machines)
- Saves money and time which would be spent training and managing employees
- The other company has better quality, more specialist equipment (washing machines), which leads to customer satisfaction
- Economies of scale
- Can charge more if your bedsheets are cleaner
Costs of Outsourcing (as a form of 🌟growth🌟
- More expensive than washing your bedsheets yourself
- Might lose control over the quality
- The service might not be reliable
What impacts consumer behaviour?
- trends
- Lifestyle
- Age
- Family structure
- Occupation
- Social class
- Personality
- Location
5 types of consumer decision:
- Routine: (eg: bread, milk)
- Impulse: (eg: hot wheels cars at the Aldi checkout)
- Informed: (eg: a car or computer)
- Brand conscious
- Price conscious
- Confused
Costs (3) and benefits (2) of a personal interview/street survey as field market research:
💔People don’t want to give up their time
💔Not popular
💔Can be expensive and labour intensive for the business
❤Can confirm/deny and questions/confusions in person
❤Can get different opinions about the product
Costs (2) and benefits (2) of a postal survey as field market research?
💔 Can survey people from specific places/postcodes
💔 Easy to distribute from a mailing list and relatively cheap
❤ Seen as junk mail and has a poor response rate because people have to put effort into posting them back
❤ Takes time and effort to process answers, have to do them from paper rather than using technology like google forms.
Yap about Desk research:
- Can use journals, competitors’ websites, reviews, trade journals, government reports and local demographics
- Good because its a lot cheaper than field research, much quicker to access online information and there’s a very wide range of information readily available
- However, online information might be unreliable AND! journals can be expensive to access
Costs and benefits of random sampling for Market Research (when a random list of people for a survey are selected using a telephone directory or electoral register
💔 not focused on the particular market segment
💔 assumes all group members are the same
❤ no chance of bias
❤ easy to produce the sample
Costs and benefits of quota sampling, when participants are selected in proportion to the whole population by class, age, gender. eg: for gender quota sampling, you would have a 50/50 split of men and women, but if you had generated your sample randomly from a telephone directory, you might have 70/30
💔 less representative than random sampling
💔 more biased than random sampling
❤ more realistic to the whole population
❤ someone else can be substituted in if one person in a quota isn’t available
❤ may be cheaper as less people are needed to complete a sample
Benefits of a Mission Statement:
- Can inspire employees by making them feel as though they are working towards something meaningful
- Can help attract customers by explaining what they believe in as an organisation, eg: LGBTQ+ rights or sustainability
- Helps communicate to stakeholders what the purpose of the organisation is
Name 7 Pricing Strategies
- Premium pricing
- Low pricing
- Competitive pricing
-Skimming - Penetration pricing
- Promotional pricing
- Psychological pricing
Premium Pricing:
- When you are able to charge high prices for something that may not be worth it because of brand loyalty and reputation Eg: Louis Vitton, Dr Martens, Coco Chanel perfume/clothes
Low pricing:
- Does what it says on the tin innit
- eg: H&M, Primark, Home Bargins
Competitive/Market pricing:
- Price is set at the SAME LEVEL as competitors
- Used for identical products (eg: Regular smartphones are usually the same price)
Skimming pricing:
Price is set very high initially, usually when there is no competition. For example, the first VR headsets (I’m making this UPPP) will have been extremely expensive, but once competitors started emerging, there’s no point keeping the price super high so it’s lowered to market price (competitive pricing)
penetration pricing:
- Price is set a little lower than competitors initially to attract new customers, and the price is then raised once there is a loyal customer base, basically the opposite of skimming.
Promotional Pricing:
Lots of sales and things like Buy One Get One Free
Psychological Pricing:
Making the price seem lower than it is, eg: £285 seems closer to £200 than £300 at a glance
Advantages of selling via a mail order: (catalogue)
- You can pay either up front or over a long time
- You can get exclusive products
- Saves space, storage, that you would have to take up if you had a physical shop
Disdvantages of selling via a mail order: (catalogue)
- People won’t want to phone up/write a letter to buy it
- Expensive/time consuming to make
What decides what channel of distribution a business chooses?
- Organisation’s distribution capabilities
- Durability of the product
- Size and age of the business
- What the product is
Advantages of internet selling:
- Consumers can order at any time, any where, quickly and easily.
- can have cheaper prices because less employees/rent have to be paid
- People in remote areas who can’t go to the shops can still buy from you
Disadvantages of internet selling:
- There is a delay between spending the money and getting your parcel
- Returns are a lot of hassle and expensive for both parties
- Customers can’t try on the items, so they might not purchase it or might need to return it
- Easy to be scammed online, leading to the business having a bad reputation
Advantages of selling via Direct Mail:
- Can reach wide geographical areas
- Can target specific people
Disadvantages of selling via Direct Mail:
- Consumers might not respond to or even read junk mail
- Will likely get very few responses
Advantage of personal selling (door-to-door)
- The product can be demonstrated to the potential customer
Disadvantage of personal selling (door-to-door)
- Consumers don’t like being disturbed at home
Disadvantage of selling via local stores (Eg Sainsbury’s local)
- Expensive to operate
Advantages of selling via local stores (Eg Sainsbury’s local)
- Convenient for the consumer as it is near to their homes or workplaces rather than on an industrial estate full of big supermarkets
- Can provide specific services such as cash machines and payment services
- Can get loyal/repeat customers
Advantages of selling via high street stores
- Customers are likely to impulse buy if they are in a physical store
- Customers can interact/try on items before buying so they know it’s exactly what they want
Disadvantages of selling via high street stores
- Competitors are selling similar products nearby
- The best locations are very expensive
Advantages of selling via wholesalers:
- Saves the manufacturer on transport costs (only has to deliver to one warehouse Vs 20 tescos
- Saves the manufacturer on storage costs as much of their stock/inventory can be taken to the wholesaler
- The manufacturer doesn’t have to worry about their items not selling and building up in their own storage facilities
- Manufacturer doesn’t have to worry about presentation of their product as the wholesalers can do this for them, saving time and money
- Retailers can buy from wholesalers which increases the amount of total sales for the manufacturer
Disadvantages of selling via wholesalers:
- Manufacturers can lose control over the image of their product
- The wholesaler gets to keep profits that otherwise could have been kept by the manufacturer
3 kinds of production:
- Job production
- Batch production
- Flow production
Job production: (what, costs and benefits)
- Specific to the customer and one off each time. Staff are extremely specialist and the work is very labour intensive❤The product is bespoke and very high quality
💔Very time consuming
💔Could fall out with the customer
eg: Personalised houses, wedding cakes, nails… maybe idk
Batch: production (what, costs and benefits)
- Use the same equipment to make different products
❤Can expand your product portfolio which leads to more sales
❤Different products might appeal to different people, again, more sales and customer satisfaction
❤Employees are motivated because they can be employed for longer and have a range of jobs to do
💔Production has to stop in order for equipment to be cleaned or repaired
💔If there is a problem, the whole batch is ruined
eg: bakeries, wallpaper factories
Flow production: (what, costs and benefits)
❤A high volume of product can be made
❤The quality is consistent
❤Low unit costs so you can sell more
❤You can save on labour costs
💔High maintainence costs
💔Workers may be demotivated or bored from repetitive tasks
eg: Car manufacturing, biscuit factories
Draw the Inventory (stock) management diagram!
(Can’t insert images) https://www.bbc.co.uk/bitesize/guides/zcbr87h/revision/2
promotion meaning marketinf mix
- communicating with the customer
Examples of promotions into the pipeline: (from the manufacturer to wholesalers/retailers)
- Dealer loaders, the wholesaler/retailer gets extra free, eg: five boxes for the price of four
- Providing staff training for the wholesaler/retailer
- Providing the wholesaler/retailer with point of sale displays
- Allowing goods to be purchased on a sale-or-return basis, so if the wholesaler/retailer can’t sell the stock they don’t waste the product
- Running competitions
- Providing credit facilities (eg buy now and pay later)
- Giving bulk-buying discounts
- Paying the wholesaler/retailer to display the item in a good spot (eg, right at the door or right by the tills)
Examples of promotions out of the pipeline (the wholesaler/retailer to the customer)
- Giving out free samples or trial packs to the customer
- Selling bonus packs (50% extra free!)
- Reducing the price of an item temporarily, eg a marvellous creations large chocolate bar is now only £1:25 for a short time.
- Buy one get one free
- Deliver items by direct mail
- Giving in-store demonstrations or tasting sessions
- Celebrity endorsements and social media advertising
Examples of PR (public relations)
- using a press conference to counteract bad publicity
- donating to charities
- sponsoring events
- giving out merchandise
Costs and benefits of celebrity endorsement
❤ customers may buy the product to be like the celebrity/influencer
❤ can charge higher prices for a celebrity-endorsed product
❤ can create brand loyalty
💔 can be very expensive for the business
💔 if the celebrity gets a bad reputation then your business might too
Rules for ethical marketing
- can’t mislead the customer
- adverts can’t be obscene or indecent
- product must do what it says on the tin
- the company should comply with the consumer’s morals or beliefs.
How to get good customer satisfaction (people, marketing mix)
- Train employees well so they know how to take care of customers
- Develop a customer-care strategy
- Have good websites and call centres
What might a business need Process (marketing mix) for?
- handling customer complaints
- identifying the needs of customers
- handling orders
- using loyalty cards
- providing e-commerce
- providing home-delivery services
- tracking online orders
- setting up warranties and guarantees
Examples of good physical evidence (marketing mix)
- Bright and modern buildings
- Easy to navigate shops
- Nice displays
- Good website layout
- Self-checkout
- Convenient parking
Benefits of good customer service:
- customer loyalty
- improved reputation
- easier to attract new customers
- higher sales/profits because customers come back or recommend the business
- fewer complaints/returns
- less chance of legal action against the company
- can give a company a competitive edge
What is the purpose of inventory control systems?
- if too much is ordered it will take up lots of space, which costs money (rent) and space (which could be used for other products)
- Minimise insurance costs
- avoid running out of stock (why?)
- Make sure customer orders aren’t delayed because the thing they ordered isn’t in stock
Issues with under-stocking:
- Might run out of inventory or have to stop production because raw materials aren’t available
- miss out on economies of scale from ordering a LOT at one time
- can damage the reputation
- can lose loyal customers
- can lose out on sales and profits
Issues with over-stocking:
- Can have a lot of storage costs
- inventory may perish, go off, get mouldy, leather may dry out etc
- item may become obsolete (if Tesco bought 3 million fidget spinners and only sold 1 million before they went out of fashion, now they have 2 million useless fidget spinners that they can’t get rid of)
- Increased risk of theft, increased security costs
Benefits of electronic inventory management (barcodes, EPOS)
- managers can see instant, up to date information
- allows for automatic re-ordering of inventory
- reduces human error
- highlights changes in demand
- can alert managers about theft
What is Just In Time (JIT) (Inventory management?)
when inventory is held by the supplier and only taken to the factory/shop when it is needed
costs (4) of Just In Time (inventory management)
- Can miss out on economies of scale
- Relies on the suppliers heavily
- High admin and delivery costs
- May not have enough inventory if there is sudden high demand
Benefits (3) of Just In Time (inventory management)
- Capital (money) is not ‘tied up’ in inventory, it can be spent on other things
- Less storage costs
- Less chance of theft, obsolescence, perishing or damage
Types of inventory storage:
- Centralised
- Decentralised
- Warehousing
Costs (4) and benefits (3) of centralised inventory storage
💔 Waste is more likely
💔 It is expensive to move inventory
💔 High rent costs
💔 Can be time consuming to deliver inventory to departments
❤ Economies of scale
❤ Standard procedures can be used for ordering, receiving, and issuing inventory
❤ Avoids duplication of inventory
Costs (1) and benefits (2) of decentralised inventory control
💔 can be more expensive than centralised, and duplication of inventory is possible
❤ Makes sure inventory is always ready for production
❤ Easier to make decisions about what is needed for the department and how much of it
requirements of warehousing as a form of inventory management
- Must be the correct environment for the product (dry, correct temp)
- Must be ground level only for ease of moving products around
- Must have a stock rotation system
- Mechanical handling is needed
- Use pallets to store and move products
Benefits of warehousing as a form of inventory management:
- Less chance of theft if everything is in one secure warehouse
- Categorisation and organisation is easier than in small storage facilities
- Allows stockpiling in case of sudden high demand (eg: loo roll and long-lasting food in covid)
Costs of warehousing as a form of inventory management
- Can be expensive (rent, machinery, security)
- May be located far from where the products need to end up
- If there is a flood/fire/contamination, all inventory will be impacted
One cost and one benefit of using your OWN transport
- You have complete control over it
- High initial investment and running costsO
One cost and one benefit of using hired transport
- No capital investment, can change requirements easily (hire a small van or a lorry depending on the situation)
- Less control
One cost and one benefit of using public transport (train, boat, plane)
- No capital investment, relatively cheap
- Less control, it can be unreliable and there is poor value for money
Methods of physical distribution
- Road
- Rail
- Air
- Sea
Benefits (3) and costs (2) of using Road to transport inventory
❤️ much cheaper and more convenient than other methods
❤️ Can get refrigerated vans for perishable products
❤️ Relatively quick with improving road networks
💔 Fuel can be expensive
💔 Risk of accidents or other delays
benefits (4) and costs (3) of using rail to transport inventory
❤️ Convenient for large or heavy products
❤️ More eco friendly than road
❤️ Less delays and accidents
❤️ Faster than road because lorry drivers can only be on the road for a limited amount of time per day
💔 May be disrupted by bad weather
💔 Specialist freight terminals may be needed for loading and unloading
💔 Rural areas might not have rail connections
Benefits (1) and costs (2) of using air to transport inventory
❤️ Fastest method for very long distances and good for small, perishable products
💔 Can be very expensive compared to other methods
💔 Road will still be necessary to transport products to storage
Benefits (4) and costs (1) of using sea to transport inventory
❤️ Best for international transport
❤️ Less expensive than air for large shipments
❤️ Cargo ships can transport huge amounts of products at the same time (economies of scalleeeeee)
❤️ Good for non-perishable items
💔 Takes a relatively long time compared to other methods
How does a business decide which method of production it uses? Labour Vs Capital intensive
- the skills of its workforce
- available finance
- available technology
- size of business
- type of product
- demand for product
- level of quality and consistency needed
THINK WHY FOR EACH
Benefits (5) and costs (4) of capital intensive production
❤️ economies of scale
❤️ fewer labour costs
❤️ can run 24/7
❤️ saves time and money
❤️ built-in quality control
💔 machinery is expensive to set up and maintain
💔 workers might be bored and demotivated
💔 Product is standardised and can’t be changed to suit an individual customer’s needs
💔 Too much may be produced
Benefits (4) and costs (3) of a labour intensive method of production
❤️ easier to organise and manage than large-scale production
❤️ skilled workers make high quality products -> customer satisfaction
❤️ Orders can be customisable
❤️ can charge high prices for a bespoke product
💔 longer production time
💔 skilled workers have to be paid high wages
💔 any machinery is not constantly in use -> opportunity cost
Why should a business strive for good quality
- increases customer satisfaction
- improves reputation
- can increase sales and profits
- reduces time and effort spent on complaints and returns
Describe quality control
- when a sample of raw materials and a sample of end products are checked
Costs (5) and benefits (0 lol) of quality control as a method of quality management
💔 can lead to a lot of waste (whole batches being discarded)
💔 Can cause increased production costs
💔 Goods tested have to be destroyed (can’t sell chicken nuggets that you’ve opened and stabbed and sniffed and tasted and whatnot)
💔 The products in the selected sample might not represent the whole batch
💔 Will have to deal with complaints about low quality items that weren’t tested and slipped through the cracks like an eel doused in olive oil
describe quality assurance
- all staff members quality check all items at every stage of production
- should be a 0% defect rate
costs (2) and benefits (2) of quality assurance as a method of quality management
❤️ reduces wastage
❤️ saves money by reducing waste
💔 constant checking is costly
💔 can slow down production and lower productivity
describe quality circles and give 2 benefits
- small groups of workers from all levels of production come together to solve production issues
- voluntary
- everyone’s opinion and ideas are respected
❤️ employees feel valued and motivated
❤️ employees learn how to improve the standard of their work
what goes in a job description
- hours
- roles and responsibilities
what goes in a people specification
- experience needed
- qualifications needed
- aptitudes and interpersonal skills
- transferable skills
How to advertise a job post
- social media
- posters
- newspapers
steps of dealing with applications
- long leet/list
- short leet/list
- interview (in person or online, or over the phone)
- testing (can the person applying for a taxi driver post actually drive?)
Stages of Maslow’s hierarchy bottom to top: (draw it)
- physiological/biological
- safety
- belonging
- esteem
- self actualisation
4 examples of Hygiene factors (Herzberg)
- pay
- job security
- high level of supervision
- basic working conditions
4 examples of Motivation factors (Herzberg)
- recognition
- bonuses
- corporate culture
- target setting
what does a manager do, leadership styles NOT roles of manager
- delagates jobs
- oversees employees
- follows procedure
- sets objectives
- analyses data
- risk averse
what does a leader do
- motivates
- innovates
- is people focused
- initiates change
- takes risks
Autocratic leadership style
- doesn’t invite opinions
- downward communication
- controlling/bossy
4 costs of an autocratic leadership style
- Miss out on employee’s ideas
- Workers might be micromanaged and unmotivated
- Bad for experienced workers who are independent
- propagates a culture of blame and fear
4 benefits of an autocratic leadership style
- Employees know exactly what they’re doing
- Can be efficient
- Decision making is fact because of little consultation
- Good for inexperienced workers
Describe a democratic leadership style
- Discussion is welcomed
- Upward communication
- Good communication between managers and workers
4 benefits of a democratic leadership style
- Experienced workers can be independent and are motivated
- Can get good ideas from employees
- Positive corporate culture, good for recruitment and retainment of staff
- Employees are prepared for more responsibility and promotion
3 costs of a democratic leadership style
- Decision making can be slow due to lots of consultation
- Inexperienced workers might not know what they’re doing and be demotivated
- There might be conflict between workers
Laissez faire leadership style (describe)
- Employees are left to get on
- Low levels of supervision
- High levels of trust in employees
- Employees are expected to be problem solvers
3 benefits of a laissez faire leadership style
- Employees are motivated because they are trusted
- Managers have low stress levels because they aren’t micromanaging workers
- Employees can become skilled very quickly
3 costs of a laissez faire leadership style
- Employees are under a lot of pressure
- Could have a low standard of work as they’re not being managed or guided
- Skilled workers might feel they aren’t paid enough for the level of responsibility they have
What is an appraisal and what does it doooo
- yearly performance review between an employee and their line manager
- identifies the needs of the employee
- identifies areas of improvement for the employee
- Sees if targets from previous appraisals have been met or not
name 3 kinds of appraisals
- one-to-one
- 360-degree
- peer-to-peer
One-to-one appraisals
- yearly reviews by a line manager
- reviews previous targets and sets new ones
- identifies training needs and future career paths
360-degree appraisals
the following people all get asked the same questions about the employee:
- line managers
- peers
- subordinates
- the employee themself
peer-to-peer appraisals
- the line manager is not involved, only the other employees are
4 benefits of appraisals
- motivates employees by congratulating them
- identifies training needs which can lead to a higher quality product
- improves employee relations
- is an opportunity for promotion
3 costs of appraisals
- time consuming
- if the feedback is negative, employees can become demotivated
- employees may feel under pressure because of it
what is benchmarking as a form of quality management
- find the best practice in the industry and copy the competitor, but add a unique selling point to the product
3 costs of benchmarking as a form of quality management
- time consuming, new competitors may emerge quickly and a new benchmark has to be set up
- can be difficult to collect the information from competitors
- the product is only as good as the benchmark set
3 benefits of benchmarking as a form of quality management
- can improve company performance
- workers are working towards clear goals which is motivating
- makes the organisation more competitive
what is continual improvement as a form of quality management?
- aims for 100% customer satisfaction
- every single person in the company is responsible for the quality of the product/service
it relies on:
- highly trained staff
- zero tolerance for error
- a strong focus on the customer
what is mystery shopper as a form of quality management (1 benefit and 1 cost)
- people are paid to act like customers and give feedback on the company
❤ feedback is accurate to the customer experience
💔 the shopper only experiences and gives feedback on a limited example of the company’s customer service
A benefit of training as a form of quality management
- workers make less mistakes and produce a higher quality product if they’re well trained
3 costs of training as a form of quality management
- staff training is expensive to provide
- skills take time to develop
- might have to replace the worker for vocational training
what is the CE marking
- shows that a product meets EU safety, health, or environmental standards
- a product complies with EU legislation
what is the BSI Kitemark
- a UK quality trademark set by the British Standards Institution
3 trade logos
- fairtrade logo
- recycling logo
- keep britain tidy logo
2 costs and 2 benefits of achieving a quality logo
💔 time consuming and expensive to meet all of the criteria
💔 If the quality standard has to be removed, it can cause bad publicity
❤ They can provide a competitive advantage
❤ They can increase customer loyalty
cost of operating an ethical business:
- could increase costs and therefore reduce profits
2 benefits of operating an ethical business
- customers are prepared to pay a higher price for an ethical product
- ethical businesses have good publicity
2 costs of fairtrade activities
- fairtrade products cost more
- can limit supplier options
3 benefits of fairtrade activities
- improves the quality of life of workers in primary industries
- customers are attracted to products with the fairtrade marking
- improves the company’s reputation
