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Business A - Level > Year 13 Autumn Assessment - 3.1.2, 3.2.1, 3.2.3, 3.3.2, 3.4.2, 3.4.5, 3.5.2, 3.6.2, 3.6.3, 3.7.1, 3.7.7, 3.8.1 > Flashcards

Year 13 Autumn Assessment - 3.1.2, 3.2.1, 3.2.3, 3.3.2, 3.4.2, 3.4.5, 3.5.2, 3.6.2, 3.6.3, 3.7.1, 3.7.7, 3.8.1 Flashcards

1
Q

What is a soletrader

A
  • 1 exclusive owner
  • have employees
  • entitled to all the profits (after tax)
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2
Q

Advantages of soletrader

A
  • easiest set up
  • own boss
  • decides what to do with profit
  • easy to change legal structure if circumstances change
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3
Q

Disadvantages of soletrader

A
  • unlimited liability = no legal distinction between the sole trader’s assets and business’ assets
  • hard to raise finance = banks see them as riskier
  • own responsibility = sharing decision making can improve performance
  • harder to keep good employees = not given a share of profits
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4
Q

What does Ltd mean

A

Private Limited Company

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5
Q

What is an Ltd

A

Companies where ownership of shares is restricted. For the company to sell shares, all the current shareholders must agree to sell them.

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6
Q

Advantages of Ltd

A
  • limited liability
  • restricted ownership = shareholders must agree to sell shares, owners retain (keep) a lot of control over how the business is managed
  • easier for an Ltd to get a loan as it’s seen less risky. This (should) increase a company’s access to finance
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7
Q

Disadvantages of Ltd

A
  • Finance need to incorporate a business = upfront fee as well as costs associated with paperwork = may not be possible for smaller firms (or brand new firms)
  • Legally obliged to publish their accounts each year and competitors may use these to become more competitive
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8
Q

What does PLC mean

A

Public Limited Company

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9
Q

What is a PLC

A

A company that sells shares on stock exchange ( anybody 18+ can buy shares - often through brokers )

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10
Q

When a firms likely to become a PLC and an example

A

The desire to expand because selling shares on the stock exchange allows them to raise finance for investment.
- e.g = 2017, Snapchat went through this process (flotation)

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11
Q

Advantages of PLC

A
  • selling shares on stock exchange = raise money for investment so company can grow faster or bigger
  • easier to raise capital from banks if they are PLCs due to presenting less of a risk (number and size of investors)
  • Limited liability because the company is incorporated
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12
Q

Disadvantages of PLC

A
  • owners have little say over running of business - hard to agree on how it runs
  • anyone can take over the company if they buy 51+% share, then they have control
  • account public = competitors can see the success / failure
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13
Q

What is a Not-For-Profit organisation?

A

Any profit made by these organisations is reinvested (put back) in the business. Any profit cannot be kept by the owners.

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14
Q

Types of Not-For-Profit organisations

A
  • Unincorporated association
  • Charities
  • Social enterprise
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15
Q

Features of an Unincorporated association and example

A
  • unlimited liability = no profit and are legally responsible for all the debt
  • e.g Oxfam
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16
Q

Features of a Charity and example(s)

A

Getting charitable status lets a business to get tax relief and lets it apply for certain grants. For a business to get a charitable status, they must follow rules and regulations.
- e.g Save the Children

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17
Q

Features of a social enterprise and examples

A
  • Similar to for-profit business
  • they make a surplus through selling goods or services. This profit is reinvested to support the social enterprise’s aim
  • e.g Big Issue or TOMs
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18
Q

What is franchising

A

Where a business gives someone the right to sell its products and use its trademarks. The ‘franchisee’ usually pays the business an upfront fee and a % of the profits.

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19
Q

Example of franchising

A

KFC, part of the TacoBell Group.
Many KFC’s all over the world are not owned by KFC but instead owned by individuals who pay a fee and % of the profits to KFC. This lets them use the KFC brand name and the “original recipe”

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20
Q

Advantages of franchising

A
  • Can expand without needing large investment = doesn’t incur costs involved with opening new stores
  • not to be concerned about some of the risks of becoming a larger corporation, e.g, diseconomies of scale (which may be caused by the growth from opening and operating new stores themselves)
  • increases brand awareness of the firm’s products or services
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21
Q

Disadvantages of franchising

A
  • Franchiser doesn’t have complete control over how they operate
  • If a franchise is run badly, then a single franchise or store can negatively affect the brand image
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22
Q

Other examples of franchises

A
  • Subway
  • Krispy Kreme
  • McDonald’s
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23
Q

What is a partnership

A

Two or more owners involved in the day-to-day running of the business.
Up to 20

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24
Q

What document is needed to set up a partnership

A

Deed of Partnership

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25
Q

What is included in the Deed of Partnership

A
  • Amount capital each partner invested
  • How profits / losses should be divided
  • How many votes each partner has
  • Rules on how to take on new partners
  • How the partnership is brought to an end, how a partner leaves
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26
Q

Advantages of a soletrader becoming a partnership

A
  • Increase risk across more people, more to share the burden of debt
  • Partner may bring money and resources to the business
  • Increased skills and ideas
  • Increased credibility with potential customers and suppliers - who may see dealing with the business as less risky than trading with just a sole trader
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27
Q

Disadvantages of becoming a partnership

A
  • shared profits
  • less control for each partner
  • workload disputes
    -problems could arise if partners disagree over direction of business
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28
Q

Advantages of remaining a partnership rather than becoming an Ltd

A
  • Costs money to set up limited company (solicitor may be needed to set up paperwork)
  • Company accounts are filed so the public and competitors can view them
  • May need to spend money on an auditor to check the accounts before they are filed
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29
Q

What are shareholders

A

Individuals / groups who buy shares in limited companies

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30
Q

Ordinary share capital definition

A

The amount of finance raised through selling shares to shareholders. Businesses usually use this as a source of long-term finance

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31
Q

Market capitalisation calculation

A

no. shares issued X current market price of one share
- one way of valuing a business

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32
Q

What is Royal Mail’s market capitalisation

A

£3.95 billiob

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33
Q

Dividend definition

A

A proportion of a business’ profits that is given to shareholders

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34
Q

Advantage of a dividend for a business

A

Makes shareholders satisfied - won’t sell shares

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35
Q

Disadvantage of a dividend for a business

A

Profit is not spent on long-term growth which can limit the growth potential of the business

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36
Q

What is the benefits of shareholders to a PLC

A

They provide finance, though they are not routinely involved in the running of the business

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37
Q

Who is involved in the running of a PLC

A

Board of directors

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38
Q

Are shareholders involved in the running of an Ltd

A

Yes

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39
Q

What do shareholders have a right to attend and what is it

A

The business’ Annual General Meeting (AGM), where votes can be made on key decision affecting the business, including appointing a Board of Directors

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40
Q

Factors why shareholders may decide to invest in a business

A
  • If share price may increase in future years = creates a return for shareholder
  • Would like to receive an annual dividend
  • IF they agree with a company’s aims and values and wish to be part of the company’s future journey
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41
Q

Factors influencing the value of shares

A
  • Business performance = greater performance increases demand, so increases share price
  • Economic performance = gives individuals confidence in the market, might increase demand for shares and increases share price
  • News articles = businesses accused of scandal involvement may receive a bad reputation, decreases demand for shares so decrease in share price
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42
Q

Impact of changing the value of shares

A

Future investors are concerned about the business and this will make it more difficult for the company to raise additional finance through the sale of shares

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43
Q

Impact of changing the value of shares

A

Future investors are concerned about the business and this will make it more difficult for the company to raise additional finance through the sale of shares

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44
Q

Analyse franchising as a method of growth for a business - EXPLAIN FRANCHISING (1)

A

1) Franchising involves the franchisor selling a license to the franchisee, who can then own a business that used the brand of the franchisor. Many larger businesses, such as McDonald’s operates as franchises. Entrepreneurs running their own franchise of McDonald’s take on less risk because people already know & like the product, and they benefit from an established brand name and product portfolio. Franchising is often used as a method for businesses like McDonald’s for external growth.

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45
Q

Analyse franchising as a method of growth for a business - INCREASED REACH (2)

A

Allowing franchisees to open franchises allows for faster growth, both in terms of the number of stores and the number of geographic location. The business does not have to find the finance to open every store and franchisees often have to pay a large lump sum to purchase the license. Franchisees are motivated and have the drive to start and run a new business. Franchising can be a cost-effective way of reaching a wider target market and increasing sales.

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46
Q

Analyse franchising as a method of growth for a business - FINDING THE RIGHT FRANCHISEE (3)

A

However, it is important for the franchisor to find the right franchisee for the business and brand. If one franchise is run badly and a customer has a particularly negative experience, this can impact the reputation of the overall business and all franchises within this. The franchisee is restricted in terms of lots of decision (e.g the branding, uniforms, processes) and so it is important for them to be bought into the business and the culture, to ensure that the individual business is aligned to the overall business that owns the brand and trademarks.

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47
Q

What do franchisees usually pay the franchisor

A
  • upfront fee
  • royalties
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48
Q

A further disadvantage of franchising shown in the failure of Blockbuster

A

Reduces the potential strategic options of a business. Once you have franchisees, technology can change & your business model may have to change. Franchisees might make it harder to change

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49
Q

Is a sole trader incorporated?

A

No

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50
Q

What are managers responsible for?

A

Ensuring tasks are completed in the day-to-day running of the business

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51
Q

Characteristics of managers in a small business

A

The leaders and managers are often the same people

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52
Q

What happens to leaders and managers once a business grows

A

Their roles become distinct from one another

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53
Q

What is the role of a leader in a growing business

A

Provide a focus on long-term vision and direction is often needed

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54
Q

What is the role of a manager in a growing business

A

Focus on ensuring tasks are completed, and deadlines are met, in such way to support the long-term vision and direction of the leader

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55
Q

Roles of a manager, as a decision maker

A
  • Set objectives so that success criteria are available to later establish whether or not a task has been completed successfully
  • Review and analyse data so that adaptations to current processes ca be made if required
  • Select strategies and implement these to ensure processes are working efficiently and are supporting overall objectives
  • Review the impact of their decision and use this review to inform the setting of future objectives
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56
Q

Factors which influence styles of management and leadership

A
  • External environment ( appropriate for the business)
  • Culture of business (best suited to the business’ needs)
    e.g = in businesses with a very clear and well-defined culture, a change of leadership style may be difficult to introduce without resistance from the majority of employees
  • Skill level of workforce (may or may not want workforce to be in decision making process = value the knowledge of skilled and qualified staff)
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57
Q

Autocratic leadership

A

An approach by leaders or managers to keep control of decision making and ensure that employees are closely supervised

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58
Q

When is an autocratic approach most suited

A

If a business has a largely unskilled workforce so a manager or leader may wish to maintain decision making powers

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59
Q

Democratic leadership

A

An approach by leaders or managers to discuss and consult with employees, delegate decision making authority and empower employees through their involvement

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60
Q

When is a democratic approach most suitable for a business

A

In businesses which employ highly skilled and highly qualified employees, such as universities, Google & Microsoft, a manager or leader may decide that the contributions of such staff could be highly valuable to the business. Employees can contribute their expertise to the decision making process

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61
Q

What does Blake Mouton’s Theory grid classify

A

Styles according to whether a manager or leader places more emphasis on concern for people or concern for task completion

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62
Q

Blake Mouton’s Grid:
Low Concern about task, Low concern about people

A

Impoverished

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63
Q

Blake Mouton’s Grid:
Low Concern about task, High concern about people

A

Country club

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64
Q

Blake Mouton’s Grid:
High concern about task, low concern about people

A

Produce or persih

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65
Q

Blake Mouton’s Grid:
High concern about task, High concern about people

A

Team leader

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66
Q

Blake Mouton’s Grid:
In the middle

A

Stuck in the middle

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67
Q

What is country club leadership

A

Real focus on business’s employees, though this may be an enjoyable place to work, it can be detrimental to the business’s levels of production

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68
Q

Example of a business with country club leadership

A

Virgin- some employees have unlimited holidays - ensures employee satisfaction but comes at cost in terms of production and efficiency

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69
Q

What is team leader

A

Values both the importance of task completion and people. People are satisfied, feel valued and production is also a focus.

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70
Q

What is produce or perish leadership

A

So focused on production that the effect of this on employees is of no concern to the business in any way. e.g call centres- accused of focussing heavily on no. of outbound calls made p/h with no concern for staff well-being

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71
Q

What is impoverished leadership

A

Ineffective - often difficult to find examples for this type of leader as leaders in this category usually fail and do not become well known

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72
Q

What is middle of the road / stuck in the middle

A

some focus on task completion and people; neither gains the advantage of a full focus so there will be a poorer performance in each area

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73
Q

What did Tannenbaum and Schmidt make to show theories on management

A

The management continuum

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74
Q

What is to the left of the management continuum

A
  • managers maintain full authority and decision making power
  • managers communicate such decisions to employees who have to comply
  • similar to an approach of autocratic leadership
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75
Q

What is to the right of the management continuum

A
  • employees are given authority ad decision making power
  • democratic leadership
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76
Q

Stages of the continuum (left - right)

A
  • manager alone makes a decision and tells employees
  • manager sells their decision to employees
  • manager presents decision t employees and asks for questions
  • manager presents decision to employees and is open to change
  • manager presents an issue and asks for suggestions
  • manager outlines limits of an issue and asks employees to make a decision
  • manager allows employees to make their own decision, within limits
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77
Q

What leadership focus increases from left to right on the management continuum

A

employees (freedom)

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78
Q

What leadership focus decreases from right to left on the management continuum

A

manager (authority)

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79
Q

When is appropriate to change style of leadership

A
  • state of emergency = managers/leaders may prefer to retain decision making and authority
  • fast communication required = e.g BP’S Deepwater Horizon oil spill (killed 11 people, 2010)
  • if employees’ views are valued, managers/leaders may adopt position on right so these views can be gathered
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80
Q

What are stakeholders

A

groups or individuals affected by a business and its decisions

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81
Q

Employees are an internal stakeholder, what are they affected by

A
  • decisions made in terms of salaries/ wages, recruitment policies and job security
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82
Q

External stakeholders and what affects them

A
  • suppliers = decisions in terms of order quantities and payment terms
  • communities = decisions in terms of local jobs, traffic congestion in residential areas because of deliveries, noise pollution etc
  • customers = decisions in terms of products and services sold and prices charged
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83
Q

How can businesses manager their relationship with stakeholders

A

Through communication and consultation
communication = between business and stakeholders to share info, through methods such as email and newsletters so stakeholders can remain informed of developments within the business
consultation = used to investigate the views and feeling of stakeholders so that they feel involved in any decisions made by the business, though the power of stakeholders to change decisions made is still limited as the business defines the stakeholder’s influence

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84
Q

The power of stakeholders

A
  • diff levels of power and interest - business must consider this when deciding how to manager their relationship
  • the business may wish to ensure that certain stakeholder groups remain satisfied and this may require consultation instead of communication
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85
Q

Stakeholder map
Low Interest, Low Influence

A

Monitor

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86
Q

Stakeholder map
Low Interest, High Influence

A

Keep satisfied

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87
Q

Stakeholder map
High Interest, Low Influence

A

c

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88
Q

Stakeholder map
High interest, High influence

A

Manage closely

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89
Q

Stakeholder map, Manage closely means

A

Consultation may be appropriate for these individuals and groups

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90
Q

Stakeholder map, keep satisfied means

A

they have the power to influence the business if they become dissatisfied

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91
Q

Stakeholder map, monitor means

A

they lack influence and interest in many business decisions

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92
Q

Stakeholder map, keep informed means

A

consultation may be appropriate

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93
Q

What can affect the relation with stakeholders

A
  • Power and influence
  • Expertise and skill level of staff as an employer may wish to consult with staff if they are able to contribute their expertise to a decision being made
  • The business’ performance, poor financial performance may require the business to build a stronger relationship with customers and suppliers so that more favourable payment terms can be negotiated
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94
Q

How can you measure a business’ success

A

By calculating market growth, sales growth and market share

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95
Q

What is market growth

A

When an industry grows in terms of either volume or value

96
Q

What is sales growth

A

When a business increases its sales in terms of volume or value

97
Q

What is market share

A

The proportion of a market that a business controls in order to satisfy customer needs

98
Q

How to calculate market share

A

( sales of one product / total market sales of that product ) X 100

99
Q

What is market research

A

The process of collecting and processing information about the market that a business operates in.

100
Q

Market research gathers info on…

A
  • Demand
  • Competition
  • Target Market
101
Q

What info does market research gather on demand

A
  • insights into customers’ wants and needs = help improve the product, spot market opportunities and stay competitive
  • insights into overall demand trends can help a business to spot opportunities for growth and potential threats from new products / technology
102
Q

What info does market research gather on competition

A
  • understand the major threats in the market and then prepare the business to deal with these
103
Q

What info does market research gather on target market

A

insights into their customers’ wants and needs and how they are changing over time

104
Q

What is Qualitative research

A

info about opinions and views

105
Q

What is quantitative research

A

facts and figures

106
Q

When is market mapping used and why

A
  • once business have segmented the market
  • can identify a gap in the market by looking at what competitors offer
107
Q

What variables are commonly used when market mapping

A

Quality and price

108
Q

Methods of market research are

A
  • Sampling
  • Technology
109
Q

What is sampling in market research

A

When a business selects a sample of the population to save collecting data from everybody in that population

110
Q

Advantage of sampling

A

Reduces cost as a business can choose a cross-section of the population instead of collecting data from everybody

111
Q

Disadvantage of sampling

A

May not accurately reflect the full target market if the sample is not chosen properly

112
Q

Why is technology a method of market research

A

Used to analyse market research data by completing calculations and creating graphs and charts which can be used by managers and leaders

113
Q

How to calculate PED

A

% change in quantity demanded / % change in price

114
Q

What is the co-efficient

A

a value / number

115
Q

What elasticity is penetration pricing pricing likely to have

A

Elastic

116
Q

What elasticity is price skimming likely to have

A

Inelastic

117
Q

What does PED measure

A

The responsiveness of demand after a change in price

118
Q

What does PED actually mean - simpler

A

For every 1% change of price, demand is going to change by the co-efficient value

119
Q

PED:
Co-efficient GREATER than 1 means a product is…

A

Price Elastic

120
Q

PED:
When a product is price elastic it means…

A

% change in quantity demanded is GREATER THAN the % change in price

121
Q

PED:
Co-efficient LESS THAN 1 means a product is…

A

Price Inelastic

122
Q

PED:
When a product is price inelastic it means…

A

the % change in quantity demanded is less than the % change in price

123
Q

PED:
When the price elasticity is exactly 1, it means…

A

the % change in quantity demanded = the % change in price

124
Q

PED:
Impact on profit & sales revenue if a product/service is price ELASTIC

A

Decrease in price = increase in sales revenue
WHEREAS
Increase in price = decrease in sales revenue

125
Q

PED:
Impact on profit & sales revenue if a product / service is price INELASTIC

A

Decrease in price = decrease in sales revenue
WHEREAS
Increase in price = increase in sales revenue

126
Q

Example of a product that is price inelastic

A

Petrol - it is a necessity

127
Q

What does YED stand for

A

Income elasticity of demand

128
Q

What does YED measure

A

The responsiveness of quantity demanded to a change in consumer income

129
Q

How to calculate YED

A

( % change in quantity demanded ) / ( % change in income )

130
Q

YED:
If the co-efficient is positive it means…

A

An increase in income will increase demand
AND
a fall in income will decrease demand

131
Q

YED:
If the co-efficient is negative it means…

A

An increase in income will decrease demand
AND
a fall in income will increase demand

132
Q

YED:
The larger the YED co-efficient…

A

The greater the responsiveness if quantity demanded to a change in income

133
Q

YED less than 1 means it is

A

Income Inelastic - a change in income will lead to a change in quantity demanded which is LESS THAN the change in income

134
Q

YED more than 1 means it is…

A

Income Elastic - a change in income will lead to a change in quantity demanded which is GREATER THAN the change in income

135
Q

Example of a product that is income elastic

A

Premium cars

136
Q

Role of the operations department

A

Looks after the production of the products that a business sells - collects data bout the production of products and this date can be used to support different calculations

137
Q

How to calculate labour productivity

A

Output per period of time / no. of employees in that period

138
Q

How to calculate unit costs

A

Total costs / units produced

139
Q

How to calculate capacity utilisation

A

( total output / total capacity ) X 100

140
Q

What is inventory

A

A list of all the stock held by a business

141
Q

What is an inventory control diagram

A
  • shows the maximum stock level that a business is willing to operate at
  • shows the re-order level which is the point at which further stock is order
  • shows the buffer stock which is the spare stock a business holds in case there is an unexpected increase in demand
  • shows lead time which is the time taken for the stock to arrive after it is ordered
142
Q

What is outsourcing

A

When a business uses another business to make part of its product or provide part of its service

143
Q

Advantage of outsourcing

A

Provides cost savings because a third party business may be able to create or produce a product or service at a lower cost than the original business

144
Q

Disadvantages of outsourcing

A
  • can lead to quality problems if the business that wins the outsourcing contract does not uphold the same quality standards
  • the business may lose its influence on quality control
145
Q

Example of outsourcing

A

Many schools outsource their IT network management services as other businesses with specialisms and expertise in this area can provide a more reliable service, at a lower price, than the school can offer itself

146
Q

Why will a business use cash flow forecasts

A

To estimate their total cash inflows and their total cash outflows for a future period of time

147
Q

What is shown a cash flow forecast and what are they

A
  • total inflows = include all cash inflows coming into the business during the period
  • total outflows = includes all cash outflows leaving the business during the period
  • net cash flow = difference between total inflows and total outflows
  • opening balance = the balance at the start of the month and is the same as the closing balance the previous month
148
Q

Why do businesses have cash flow problems

A

Businesses that are profitable but have cash-flow or liquidity problems can become bankrupt as they lack short-term cash to pay short-term debts

149
Q

How can a business improve cash flow

A
  • Money owed to the business is known as a RECEIVABLE and businesses can reduce the trade credit period given to increase how quickly they receive their receivables
  • Money owed by the business to others is known as a DEBTOR (or payable) and a business can ask others for longer trade credit to reduce how quickly they must pay payables
150
Q

How to calculate net cash flow

A

Total inflows - total outflows

151
Q

What is a revenue budget

A

Forecasts expected revenues for a business during a period.
Favourable variance = actual revenue higher than forecast
Adverse variance = if revenue is less than expected

152
Q

What is an expenditure budget

A

Forecasts expected costs for a business during a period
Favourable variance = lower actual cost than forecast
Adverse variance = higher actual cost than forecast

153
Q

What is a profit budget

A

Revenue and expenditure budgets can be used to create profit budgets.
Favourable variance = overall profit is higher than forecast
Adverse variance = Overall profit is lower than forecast

154
Q

Advantages of budgeting

A
  • helps businesses achieve targets and objectives
  • help managers and leader focus on cost control which can increase profit
  • can be used to motivate staff by providing spending authority to individual departments and teams
155
Q

Why do businesses use breakeven analysis

A

To predict the level of output at which total costs and total revenues will be the same

156
Q

What is contribution per unit

A

The amount of revenue which contributes to covering a business’ fixed costs after the variable cost per unit has ben taken away from revenue per unit

157
Q

How to calculate contribution per unit

A

Selling price per unit - variable cost per unit

158
Q

What is total contribution

A

The amount of revenue from the sale of all products which contributes to fixed costs once total variable costs have been taken away

159
Q

How to calculate total contribution

A

Total revenue - total variable costs

160
Q

What are gross profit targets

A

involve the amount of profit remaining once direct costs ( cost of sales ) have been paid by the business

161
Q

How to calculate gross profit margin

A

How to calculate gross profit margin

162
Q

What is operating profit

A

Involve the amount of profit remaining once direct costs ( costs of sales ) and indirect costs (expenses) have been paid by the business

163
Q

How to calculate operating profit

A

(operating profit / sales revenue) X 100

164
Q

What is a profit for the year target

A

Involves the amount of profit remaining once all costs and financing fees have been considered

165
Q

How to calculate profit of the year

A

(profit for the yar / sales revenue) X 100

166
Q

How to calculate profit of the year

A

(profit for the year / sales revenue) X 100

167
Q

How to calculate labour turnover

A

(total number of staff leaving / average number of total staff) X 100

168
Q

Why could there be a high labour turnover

A
  • if competitors offer higher wages and salaries
  • if employees are demotivated
169
Q

Advantages of low staff turnover

A
  • experienced employees remain within the business
  • training and recruitment costs are low as there are fewer vacancies to be filled
170
Q

Disadvantage of low staff turnover

A

Fewer opportunities for the business to recruit new talent, skills and ideas

171
Q

How to calculate retention rates

A

(total number of staff who worked at a business for the whole period of time / total number of staff at the beginning of the period of time) X 100

172
Q

A cause of high retention rates is

A
  • the business pays a higher salary or wage than its competitor - employees are motivated, empowered and valued
173
Q

How to calculate labour productivity

A

Total output / total number of employees

174
Q

Why does calculating labour productivity benefit HR managers

A

They may reward employees if productivity is increasing, though may plan training for employees if productivity is decreasing

175
Q

Why does calculating employee costs as a % of turnover allow HR to assess

A

the amount that is spent on staffing costs

176
Q

How to calculate employee costs as a % turnover

A

(Total employee costs / total revenue) X 100

177
Q

How to calculate labour cost per unit

A

(total labour costs / total units produced)

178
Q

importance of labour costs per unit

A
  • HR managers can compare data to previous years, to competitors and to the wide industry
  • if HR managers are unhappy with their current labour cost per unit, they may decide to increase productivity, so that employees produce more, or they may reduce employee costs
179
Q

How to improve labour costs per unit

A

Increasing productivity or reducing employee costs

180
Q

What is job design

A

Refers to an employer’s creation and planning of a job considering the job’s aspects

181
Q

What does the job design include

A
  • the roles & responsibilities of the job itself
  • the systems & methods used by an employee to carry out their role
  • the relationships between the employer and the employee, and between other managers, subordinates and stakeholders
182
Q

How does business objectives influence job design

A

The overall business objective may influence job design as all jobs within the business should contribute to the overall business objectives and they should be designed in such a way to do so

183
Q

How can an individual influence job design

A

If employees are demotivated and there is a problem with productivity, managers may use job design to motivate employees and improve productivity

184
Q

How available resources influence job design

A

Major changes to job design may require the additional support of resources such as labour and capital, and these resources must be available for the change to be successful

185
Q

How market research influences job design

A

If a HR manager is expecting there to be a change in the external environment, jobs may be designed or redesigned to reflect the demands of a changing external environment

186
Q

Examples of approaches an employer can to take to job design

A

Job enlargement, enrichment, empowerment & rotation

187
Q

When will job enlargement used

A

When a business is considering the motivation and productivity of its employees

188
Q

What is job enlargement

A

When an employer increases the number of jobs an employee is responsible for in order to increase the challenge of their role. Additional jobs assigned to employees are usually at a level similar to their original duties

189
Q

When is job enrichment used

A

When a business is considering the motivation and productivity of its employees

190
Q

What is job enrichment

A

When an employer provides and employee with jobs which are more complex and challenging jobs assigned to employees are usually at a level above their original duties in terms of complexity and challenge

191
Q

What is job empowerment

A

When an employer gives an employee more control over their job, including the ability to decide the best way to fulfil their duties

192
Q

What is job rotation

A

It is an example of job enlargement and refers to an employer allowing an employee to move from one role or duty to another, regularly

193
Q

What does hackman and Oldham’s job model show

A

That there are five core characteristics of a job which motivate employees

194
Q

Hackman and Oldham’s Job Model: skill variety

A

Refers to employees being given opportunities to use a range of skills as part of their normal duties and responsibilities
1st core characteristic

195
Q

Hackman and Oldham’s Job Model: task identity

A

Refers to employees being given a sense of conclusion or completion
2nd core characteristic

196
Q

Hackman and Oldham’s Job Model: task significance

A

Refers to employees feeling as though their duties and responsibilities contribute to the overall business success
3rd core characteristic

197
Q

Hackman and Oldham’s Job Model:
What does the 1st, 2nd and 3rd characteristic lead to

A
  • Allows employees to experience meaningfulness of work
  • results in high motivation
198
Q

Hackman and Oldham’s Job Model: autonomy

A

Refers to employees having some independence within their duties and responsibilities
4th core characteristic

199
Q

Hackman and Oldham’s Job Model:
What does the 4th characteristic lead to

A
  • allows employees to take responsibility for outcomes
  • results in high job satisfaction
200
Q

Hackman and Oldham’s Job Model: Feedback

A

Refers to employees receiving feedback, whether oral, written or verbal, on the work they have completed.

201
Q

Hackman and Oldham’s Job Model:
What does the 5th characteristic lead to

A
  • Allows employees to develop knowledge or their own results
  • leads to lower absenteeism and lower turnover
202
Q

What is organisational design

A

Involves making sure that an organisation is designed appropriately to increase its chances of meeting its aims and objectives.

203
Q

When leaders are planning the design of their organisation, they will consider…

A
  • authority
  • spans of control
  • hierarchies
  • delegation
  • centralisation and decentralisation
204
Q

What is authority

A

Linked to delegation. Delegation involves passing authority to employees further down in the hierarchy.
- can motivate and empower employees = increases productivity

205
Q

What is spans of control

A

The number of people who report directly to a supervisor or manager
- tall hierarches = narrow spans of controls , monitored more easily
- flat hierarchies = wider spans, harder to monitor as each manager will manage & lead a larger group of employees

206
Q

What are hierarchies

A

Levels and layers of management. Tall hierarchies = many layers, flat = few levels
- communication more difficult in tall hierarchy = more layers for communication to pass through
- tall hierarchies = promotional opportunities

207
Q

What is delayering

A

Reducing the number of layers in the hierarchy of a business, usually by removing middle managers

208
Q

What is delegation

A

Refers to a manager passing responsibility or authority to a employee below them in the hierarchy

209
Q

What is a business mission statement

A

Aims to set out the organisation’s purpose

210
Q

Influences that affect a business’ mission statement

A
  • culture
  • ethos and values (of the founders)
  • shareholders (their views)
  • stakeholders (community and employees)
211
Q

What are corporate objectives

A

Overall business objectives that are designed to steer a business towards achieving its overall mission

212
Q

Influences that affect business’ corporate objectives

A
  • short-termism
  • business ownership
  • internal business environment
  • external business environment
213
Q

What is short-termism

A

Pressures for short-termism, of focussing on short-term gains at the expense of long-term gains, can influence corporate objectives as managers may seek short-term profit at the expense of long-term investment in R&D

214
Q

Why does business ownership influence corporate objectives

A

Owners in the private sector are likely to place emphasis on profit maximisation

215
Q

How can a business analyse their strategic direction

A

Using Ansoff’s Matrix

216
Q

Ansoff’s Matrix:
Existing goods & services, existing markets

A

Market penetration

217
Q

Ansoff’s Matrix:
Existing Goods & services, new markets

A

Market development

218
Q

Ansoff’s Matrix:
New Goods & services, existing markets

A

Product development

219
Q

Ansoff’s Matrix:
New goods & services, new markets

A

diversification

220
Q

Market penetration

A

Involves increasing sales of existing products to existing markets

221
Q

Market development

A

Involves targeting existing products at new markets to increase sales

222
Q

Product development

A

Involves targeting products in existing markets to increase sales

223
Q

Diversification

A

Involves targeting new products at new markets to increase sales

224
Q

Advantages of diversification

A
  • can provide large rewards as a business can benefit from both selling a new product and accessing a new market
  • spreads risk as it gives businesses an alternative if demand for one product declines
225
Q

Disadvantage of diversification

A

Have limited expertise in each market and product which increases risk

226
Q

Influences on strategic direction

A
  • The level of risk accepted by a business
  • opportunity costs = a business may need to decide whether it is willing to forfeit the benefits of an alternative direction
  • business culture = culture and leadership must support the strategic direction chosen
227
Q

Porter’s Five Forces model - what does it show

A

Allows you to analyse the competitiveness of a business environment

228
Q

What is in the middle of porter’s five forces

A

Rivalry between existing competitors

229
Q

What is outside the middle of porter’s five forces

A
  • barriers to entry
  • buyers’ bargaining power
  • threat of substitutes
  • suppliers’ bargaining power
230
Q

Porter’s five forces:
What is bargaining power of SUPPLIERS

A
  • How much power suppliers in the market have. More power = less attractive market = suppliers can charge higher prices
231
Q

Porter’s five forces:
What is bargaining power of BUYERS

A
  • How much power buyers have in the market. More power = less attractive market = buyers can demand a lower price
232
Q

Porter’s five forces:
What is barriers to entry

A

How easy it is for new business to enter the market - if barriers are low = market will be more competitive as new businesses are likely to enter

233
Q

Porter’s five forces:
What is the threat of substitutes

A

Whether customers are likely to buy an alternative product. If threat is high = market less attractive = customers likely to shop elsewhere

234
Q

Porter’s five forces:
What is rivalry

A

Refers to competition that currently exists within the market. More competition = less attractive to other businesses.

235
Q

Advantages of porter’s five forces

A
  • allows businesses to understand the competitiveness of a market and make decision about their own competitiveness
  • allows new entrants to consider how profitable a market may be
  • it is a good framework to identify strengths, weaknesses, opportunities ad threats

Business A - Level (20 decks)

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