C1 key terms

Question 1

Monopoly

Answer 1

A single or dominant business within a market, high barriers to entry, price makers and high economies of scale

Question 2

Oligopoly

Answer 2

A few large companies dominate the market, in terms of sales revenue/market share as well as which there may be many small firms

Engage in non price competition like branding + advertising

Question 3

Monopolistic competition

Answer 3

Many relatively small businesses, no dominant businesses, few barriers to entry, similar products with some differentiation

Question 4

Perfect competition

Answer 4

A market in which many small firms produce virtually identical products at similar prices, with the ability to enter and leave the market freely, low entry

Question 5

PED formula

Answer 5

Percentage change in quantity demanded / Percentage change in in price x100

Question 6

Inferior good

Answer 6

Negative income elasticity, as income decrease, demand increases and vice versa

Question 7

Normal goods

Answer 7

A product that has positive income elasticity, as income increases demand increases and vice versa

Question 8

Quota sampling

Answer 8

Involves the population being split into specific groups with the same characteristics and then a number selected from each group

Question 9

Unlimited liability

Answer 9

When the owners become personally responsible for the debts of the business, individuals may be forced to sell personal possessions or use personal savings to meet such debts

Question 10

A private limited company

Answer 10

A business that is owned b y its shareholders, run by directors and where the liability of shareholders for the debts of the company is limited liability, shares only sold privately

Question 11

A public limited company

Answer 11

A business that is owned by its shareholders, and by directors and where the liability of shareholders for the debts of the company is limited liability, shares only sold publicly, available on the stock exchange

Question 12

Contribution formula

Answer 12

Selling price - variable cost per unit

Question 13

Break Even Formula

Answer 13

Fixed Costs /
Contribution (Selling price - VC)

Question 14

Market Orientation

Answer 14

Market orientation is when a business bases its marketing mix on the perception of what the market wants, using market research and customer opinions

Question 15

Product orientation

Answer 15

When a business bases its marketing mix on the businesses strengths and capabilities, the business develops products based on what it is good at making or doing

Question 16

Asset led marketing

Answer 16

A marketing strategy based on a firms own strengths, not solely on the customers needs, this could include production techniques and distribution, rather then solely relying on customer demand

Question 17

Boston Matrix definition, include all 4

Answer 17

The Boston Matrix is a strategic tool used to analyze a company’s product portfolio based on market growth rate and relative market share.

Four Categories:

Stars ⭐

High market share, high growth

Need investment to grow, but generate strong returns

Cash Cows 🐄

High market share, low growth

Generate steady cash with little investment

Question Marks ❓

Low market share, high growth

Risky; need investment to become Stars or may fail

Dogs 🐕

Low market share, low growth

Usually not profitable; often divested

Question 18

Gross profit

Answer 18

Gross profit calculates a companies revenue minus its cost of goods sold (direct costs)

Question 19

Net Profit

Answer 19

Net profit measures the revenue minus all of the expenses

Gross profit - Expenses

Question 20

Gross Profit Margin formula

Answer 20

Gross Profit / Sales Revenue x 100

shows how well a business controls its production costs, e.g raw materials

Question 21

Hot Desking

Answer 21

Means that an employee has no fixed work space, often booking work desks when required, this reduces the need for office space

Question 21

Net profit margin

Answer 21

Net Profit / Sales Revenue x 100

Show how efficiently a business controls all its expenses

Question 22

Appraisal

Answer 22

The process whereby the performance of an employee is evaluated against targets set set, feedback is usually provided by their manager and new targets for the next cycle are set.

Question 23

Labour productivity + formula

Answer 23

Labour productivity can be measured by diving the output by the number of workers, over a period of time

Total output per period of time / Average number of employees per period of time

Question 24

Labour turnover + formula

Answer 24

Number of staff leaving / Avg number of staff employed x100

Question 25

Delegation

Answer 25

Where managers passes authority onto employees for particular functions, tasks , and decisions. Allow employees gain more autonomy and become empowered

Question 26

Centralisation

Answer 26

A centralised structure is where businesses decisions are made at the top of the hierarchy or in a head office and distributed down the chain of command.

Question 27

Decentralisation

Answer 27

A decentralised structure is where businesses allows decisions to be made by mangers and subordinates further down the chain, this structure provides managers with more decision making responsibilities.

Question 28

Delayering

Answer 28

The process of removing one or more layers in a hierarchy/organisational structure, this can result in a flatter organisational structure, and a wider span of control

Question 29

Leadership style, Autocratic

Answer 29

The leader makes all of the decisions and does not require input from the workers.

Question 30

Leadership style, Democratic

Answer 30

This leadership style encourages employees participation in decision making. The leader still makes the decision but could consider the workers opinions

Question 31

Leadership style, Paternalistic

Answer 31

The leader is autocratic but makes decisions in what they believe to be the best interest of the workers like a parent

Question 32

Leadership style Bureaucratic

Answer 32

Decisions can only be made if rules and procedures are followed, this makes decision making slow but clear

Question 33

Leadership style Laissez faire

Answer 33

The leader allows the workers to make their own decisions and trusts the workers to work without direction

Question 34

Motivation theories: Taylor

Answer 34

Money is the only motivator, piece rates should be paid/other monetary rewards meetings targets should be given

Question 35

Motivation theories: Mayo

Answer 35

Communication and teamwork motivate workers. Firms should enable workers to work together and managers should show an interest in employees

Question 36

Motivation theories: Maslow

Answer 36

Workers are motivated by different needs, there's are in hierarchy, once a need in the hierarchy has been satisfied it no longer motivates and workers are motivated by the next level up.

Question 37

Motivation theories: Herzberg

Answer 37

Said there were two factors when motivating workers, **hygiene factors** (pay, working conditions, teamwork ) and workers satisfied with their jobs but didn't motivate them to work harder **Motivators: ** Such as recognitition and achievement, make workers more productive, creative and committed

Question 38

Motivation theories: Vroom

Answer 38

Expectancy theory states that employees motivation is an outcome of : how much an individual wants a reward, the assessment that the likelihood that the effort will lead to expected performance and the belief that the performance will lead to reward.

Question 39

Motivation theories: Porter and Lawler

Answer 39

An individuals motivation is affected by the reward they expect to receive for completing the task. The individuals view of the attractiveness of the possible reward will determine their level of motivation

Question 40

McGregor theory X

Answer 40

A theory that managers view their workers as lazy and only motivated by money and needing constant supervision

Question 41

McGregor theory Y

Answer 41

A theory that managers view their employees as self motivated, able to work without direction and enjoy the challenge of work

Question 42

Fielders theory

Answer 42

Leaders are not able to change their leadership style to suit circumstances. Leaders have particular traits that make them appropriate for particular situations. Some leaders are focused on getting the task done where others care a much more about emotional engagement with the people they work with.

Question 43

Wrights and Taylors Theory

Answer 43

That its possible to improve a leaders performance and that this could be done through education. Whatever the style, managers and leaders can improve their style with support

Question 44

Added Value

Answer 44

Added value is the difference between the price of the finished product (selling price) and the costs of inputs involved in making it

Question 45

Job Production

Answer 45

Producing a one off item that has been tailor made to suit a specific customer

Question 46

Batch Production

Answer 46

Manufacturing a limited number of identical products. At each stage of production work will be completed for the whole batch before the next stage is begun

Question 47

Flow Production

Answer 47

Continuous production on production lines, allowing a large quantity of identical products to be made

Question 48

Lean Production

Answer 48

Aims to eliminate / remove waste from the production process, and as a result increases productivity and reduces costs. Aims to increase efficiency in the production process by minimising the use of resources while maintaining quality

Question 49

Kaizen

Answer 49

The continuous of improvements, employees are encouraged to make regular small changes so that the business continuously improves in terms of waste reduction, productivity and quality

Question 50

Cell Production

Answer 50

The production line is subdivided into a number of cells. The workers are trained so that they can fulfil a number of tasks within the cell. This allows job rotation and the skills of the workers, meaning they can play a role in improving quality

Question 51

Time based management

Answer 51

Emphasise is place on reducing time taken in all aspects of the whole production

Question 52

Quality Control

Answer 52

Quality control is based on inspection of finished products. Quality checking occurs at the end of the production process.

Question 53

Quality assurance

Answer 53

Quality assurance is a system of agreed quality standards at each stage of production. Quality checks are carried out by employees throughout the production process

Question 54

Total quality management

Answer 54

A managerial approach which focuses on quality and aims to improve the effectiveness, flexibility and competitiveness of a business, it could include empowerment, teamwork, achieving zero defects and benchmarking

Question 55

Benchmarking

Answer 55

Benchmarking is where a business sets a target in terms of its standard of quality, based on competitors / best performing areas of a business

Question 56

Debt Factoring

Answer 56

Where a business can raise cash by selling their outstanding sales invoices (money owned by customers) to a third party (a debt factoring company) at a discount. Short term source of finance, useful when the business has a cashflow problem

Question 57

Draw the Product lifecycle

Answer 57

Question 58

Explain penetration pricing

Answer 58

Charging a low price to penetrate the market, this may used to enter the market where there is much competition and price is elastic

Question 59

Explain Price Skimming

Answer 59

Market skimming means charging a high price to maximize profits while the price is inelastic in the short term then reducing price overtime

Question 60

Explain cost plus pricing

Answer 60

Cost plus pricing is where a profit percentage is added to the average cost of producing the good/service

Question 61

Explain competitive pricing

Answer 61

Competitive pricing is where a business considers what their competitors are charging for a product or service, based on this they will decide their pricing strategy.

Question 62

Explain psychological pricing

Answer 62

Psychological pricing is where a business prices products to make customers believe they are paying less for example 1.99 instead of 2

Question 63

Contribution pricing

Answer 63

Price will be based on the variable cost plus a contribution towards overheads and profits

Question 64

Distrubution channel

Answer 64

The path/route taken by a product as it geos from the manufacturer/producer to the ultimate/final customer

Question 65

What is venture capital

Answer 65

Usually investors invest in small-medium high risk growing businesses in return for a high stake in the business and has a direct say on how to run it

Question 66

Explain Flat structure

Answer 66

Relatively few or none management layers, can be achieved through a process of delayering. In a flat structure managers have a wide span of control with more subordinates and there is usually a short chain of command

Question 67

Explain Matrix structure

Answer 67

Is often used when cross functional teams are created to run a project, team members will come rom different disciplines, the team will disband when the project is completed

Question 68

What is ACAS

Answer 68

The Advisory, Conciliation and Arbitration service is an independent organization that can offer 3 services when there is a dispute in the work place 1, it can give advice to both sides 2, it conciliates e.g tries to help both sides reach an agreement 3, it can arbitrate e.g listen to both sides and decide which side is right

Question 69

What is lead time?

Answer 69

The amount of time that elapses between placing an order and the delivery of that order