Component 2 revision Flashcards

Question

what is outsourcing

Answer 1

when outside suppliers are involved in activites that could be taken internally by a business to improve effiency. Outsourcing moves jobs outside the business and may replace them with employment overseas( sometimes called offshoring). The outside business who will take on the job will often carry out the work for a lower cost. advantages: -reduced staffing costs -existing workload and stress relief -less investment risk, let outside supplier take the investment risk -lower costs enables more profit for R&D therefore speeding up the development of new products disadvantages: -harder to implement JIT systems -lost tax revenue to the government when offshoring is used -potential of poor customer service( call centre related) with communication made difficult because of cultural differences -may make existing employees feel demotivated as they believe there job is at risk which can increase staff turnover

Answer 2

how much money is left after removing the cogs calculation= gross profit/sales revenuex 100 why may gross profit change: -increase or decrease in sales turnover -increase or decrease of cogs

Answer 3

these measure a businesses profit against its resources that make the profit, they concentrate on profit, capital employed and turnover, these are the profitability ratios: -ROCE- net profit/capital employedx100- shows the profitability of an investment by calculating its percentage return. Anything over 3% would be classed as "good". However, the higher the percieved risk the better the return would be to the investors -Gross profit margin-gross profit/sales revenue x100 -Net profit margin- net profit/sales revenuex100 if there was a constant gross profit and declining net profit that means the business is having issues with its expenses The gross profit and net margin can assess the ability of the company to control their overheads

Answer 4

ratios can only reveal a limited amount of information about a business if they are analysed in isolation. A deeper understanding forms when comparisons can be made to undercover trends and measures of efficiency advantages: -easy to compare over time -easy to compare against competitors -simplifies complex financial info by turning them into simple percentages that are easier to interpret -useful for different stakeholders such as banks to lend money, investors use ROCE to decide whether to invest disadvantages: -one ratio isnt usually enough -major events can disort figures -accounts can be "window dressed" to look better than they are

Answer 5

can the business pay its debts? current ratio- can it pay its short term debts using all current assets? ideal is around 1.5 to 2 Calculated by: current assets/ current liabilities:1 acid test ratio- same but excluding stock because stock cant always be sold quickly- ideal is around 1 calculated by: current assets-inventory/current liabilities:1

Answer 6

how is the business funded Measures how much of the business is funded by debbt vs shareholders. Above 50% is considered highly geared(risky) calculated by net profit/capital employed x 100

Answer 7

an accounting statement showing a businesses sales revenue over a trading period and all the costs that was made by earning that revenue, this includes: cost of sales- all cost of any production used formula= opening stock+purchases-closing sales gross profit- the difference between revenue from selling the product and the direct cost of making it formula= sales revenue-cost of good sold net profit- the profit that belongs to the sole trader following the reduction of all expenses apart from income tax Formula=gross profit-expenses

Answer 8

measures the sensitivity of demand to a change in price. Price elasticity is always negative as the increase in price will lead to a fall in sales and coversely a reduction in prise will lead to a rise in sales. precentage change in quantity demand/ percentage change in price A value greater than 1 would be elastic whilst a value between 0 and 1 would be inelastic

Answer 9

-number greater than 1 -means a change in price will cuase a more proportional change in quantity demanded. The level of demand is sensitive to a change in price. To draw price elasticity is like a straight line across the page price elastic goods include: -goods that have lots of substitutes in a competitive market -luxury goods -expensive foods

Answer 10

-number is less than 1 -if a good has inelastic price of demand then a change in price causes a less propotional change in quantity demanded -if the price goes up, demand falls a little -if the price foes down the demand increases just a little the graph is almost a straight vetical line down the page inelastic goods include: -necessities such as water,power petrol and basic foods -addictive goods such as cigarettes -strong branding goods with fewer alternatives

Answer 11

-number is equal to 1 -if a good has a unitary price then a change in price will cause and equal proportional change between price and quantity demanded. On a graph this would look like a horizontal line going through the top left to bottom right of the page

Answer 12

-PED is important when deciding a pricing strategy as the price of a product determins its sales revenue -If demand is elastic then increasing the price would lead to fall in sales revenue. Conversely, lowering the price when demand is elastic will lead to a rise in sales revenue -If demand is price inelastic a rise in price will lead to a rise in sales revenue????????? and a fall in price will lead to a fall in sales revenue profit is calculated as sales revenue minus costs so if sales revenue decreases so does profit

Answer 13

normal goods- as income increases, the demand increases so a positive income elastiticy is created making a results less than one. For example, lemonade luxury goods-the demand will grow at a faster rate than increase in income so number is greater than 1 example is holidays inferior goods- these are substitutes people prefer to buy when there income is reduced such as lidl made crisps, this number is negative

Answer 14

-yed of a product helps a business respond to changing economic situations and allows them to plan -if a business knows the income elasticity of demand for its products it can use this info to help develop a product strategy -Many Uk businesses are likely to focus on normal and luxury products as the economy tends to grow. However, in times of a recession where income goes down inferior goods could be profitable. For example covid.

Answer 15

-the collecting and interpretating of data about customers and a market to fulfil there customers needs and wants quantitative data- allows a business to gather and interpret data to answer questions like: what are the demographics of the market? what are customers buying habits? in what ways is the market evolving? qualitative data- allows businesses to explore answers to questions like: -what are customers intentions when purchasing a product? -what are customers current views on competitor products?

Answer 16

access to markets- does your business have to be near customers?, do you need to be located close to your suppliers?do you have access to infastrucutre? cost and nature of factors of production: -where would be best for labour such as skilled workers?-universitys -where is land available?-greenfields -where are your raw materials coming from and is it expensive to transport?- moving closer can reduce costs social reasons -managers living near families or low crime rates etc historical reasons -placing your business is the locality of where the business was orginally establisged

Answer 17

-where is there tax advantages for transfer costing -freedom of restrictions- can perform different practices or systems where less red tape is present perhaps in less developed countries different operations are more accepted -footloose business- a business that isn't tied to a set location means they can change to economic conditions of areas in booms to encourage sales -access to international markets- access to a trading bloc like the EU or NAFTA may depend on setting up a production facility within those trading countries

Answer 18

computer tec can be used to make day to day business decisions stock inventory- when to order new stock, how to manage deliveries can be managed by IT systems info can collect inputs- can organise and distribute data and then make the most efficient decisions eg a EPOS( a modernised cash register) whats the advantages of buying online? buying online can allow: -you can analyse your browsing and purcasing habitats -cookies show customers interests -database marketing is the collecting of customer information and using these buying behaviours to create direct advertising decision making models such as decision trees and critical path analysis can be carried out by computers to save time and accuracy

Answer 19

it involves looking at data in a systematic way to arrive at a evidence based decision. This approach includes: clearly identifying objective or problem to solve then collecting all relevant info to make the decison then analysing the information to identify possible ways forward then make and implement decision then monitor and review if the decision needs change

Answer 20

its using your gut feeling to make desicions, often used when there is no data or system to back up approach

Answer 21

-training costs -recruitment costs -capacity management -marketing impacts -the effects of decisions on stakeholders

Answer 22

a method used to ensure projects have the correct time to complete and resources. Its used to find the cheapest and quickest way to complete a task advantages: -allows effective management of resources such as labour -allows jit production-parts can be ordered exactly when needed -can give a competive advantage through efficiency disadvantages: -external factors can influence the time taken -supplies may be delayed if wrong type or poor quality -cpa doesnt ensure quality main focus is on time and meeting demand -requires ongoing checking of activites perhaps by management which can decrease employee morale if constantly monitored

Answer 23

est=earliest start time lft=latest finish time an activity without spare time is CRITICAL spare time is referred to the FLOAT time There are two types of float with their own formulas: -free float- how long it takes to hold up the next activity -total float-how long it takes to delay the whole project in order to use: -identify and prioritise the activities -identify what activities MUST be done first -EST-earliest finish time -LFT-latest finish time -identify the FLOAT- tasks that can be completed outside the critical path -identify the critical path- points connecting ESTs and LFTs where these are the same

Answer 24

a method for measuring costs and benefits of an investment project. Cost benefit analysis is often used by the government when considering what projects to invest in such as a new bridge with the different options being ranked in order. The advantages: -the impacts on society and community are included -put a value to external benefits that the private sector tend to ignore so potentially improving public relations disadvantages -will all stakeholders benefit? -if the social costs and benefits are incorrectly calculated then the wrong choice could be made -valuation often include judgements and one managers judgement may be different to another increasing bias

Answer 25

private costs: -these are costs that the business must accept including training and recruitment costs private benefits: -these are benefits that the business gains from as a result of the investment such as improved productivity public costs: these are the external costs to the business making the investment public benefits: these are the external benefits made from the investment such as job creation which then leads to tax creation for the government especially useful in areas of high unemployment or crime

Answer 26

a financial plan for the future. it includes sales revenue budgets and expenditure budgets advantages: -you can regulate the spending to highlight waste and inefficiency easier -they allow for delegation without the loss of control as sub ordinates can now have their own targets -can be a motivator is budget is met staff can be rewarded disadvantages: -poorly constructed budgets can cause poor decision -can be time consuming -if the actual figures are different to the budgeted ones the budget looses its important

Answer 27

the variance is any unplanned change from the budgeted figure. There is adverse where the actual figure is more than budget and favourable where the actual figure was lower than budget.

Answer 28

managers have no budget but are trusted in that their expenditures are necessary and they must be able to justify all their purchases. this budget type allows: -improved control -helps with allocation of resources -reduces unnecessary costs -motivates managers to look at alternative options -limits the tendency for budgets to increase

Answer 29

favourable sales variances: -favourable weather like icecream peak in sales in summer -successful advertising -the failure of a competitor adverse sales variances is the opposite of the above favourable cost variances: -raw material costs falling -improved labour productivity -strengthening of the currency causing reduced costs of imports adverse cost variances: -devaluation of currency -a strike by employers -unexpected price rise from supplier

Answer 30

A measure of the assets and liabilities of a business to compare data over time, if current liabilities increase more than current assets then business can have an issue is paying debts fixed asstes: items owned by a business for long term use like buildings current assets: assets which can be converted into cash quickly current liabilities: what the business owes in the next year eg overdraft long term liabilities: money owed to others that will take more than a year to pay back eg a loan capital employed: The total amount of money thats been invested into the business such as share capital, retained profit etc. Calculated by total assets-current liabilities. debtors: -people who owe the business money -they show the total value of their sales that they havent got the payment for yet trade creditors: -a business that the business owes money to -the business was likely to have purchased goods from suppliers or services on credit so they are still outstanding these months must be paid within 12 months drawings: -money taken out of business by owner for personal reasons -if the business is owned by one person then this will show their salary working capital: -the day to day finance to run the business. Calculated by current assets-current liabilities capital expenditure: -spending on new fixed assets like machinery

Answer 31

-needed to fund day to day business finance. If there's not enough cash available then the business may not be able to pay its bills on time. If a business grows too much through trade credit they may not be able to pay its invoices when due -working capital pays for raw materials so production and growth would be limited if business runs out of materials -working capital is needed to fund the credit offered to customers(Debt) to make a sale without receiving the finance on the day

Answer 32

marketing human resources finance operations

Answer 33

a goal of each functional department closely linked with corporate objectives. For example, if the marketing department have a 10% sales goal and the human resources is trying to reduce staffing by 5% then they will be working against each other. Goals must be carefully co-ordinated against to sure they are consistent with the corporate objectives- so all departments should be aiming towards the same goal

Answer 34

a predition of the movement of cash into and out of a business over a time to: -identify the timing of cash shortages and surpluses- to support business steps -supports attempts to raise finance -helps determining the liability of new business ventures -helps see where issues are

Answer 35

net cash flow= total inflows- total outflows

Answer 36

opening balance + total inflows- total outflows+ interest and other fees

Answer 37

improve revenue through increased sales but its unlikely to work if economic conditions are against them increase prices but this will depend on price sensitivity and may cause a decrease in revenue reduce wage bill using redundancy- trade unions will fight this and staff may leave and be de motivated cut costs- this would depend on how efficient they already are eg finding a new supplier may compromise quality sale assets- will loose assets cut advertising budget- could this impact sales numbers? increasing promotions- may lead to increased sales but might not

Answer 38

directors- security of position, has past planning been sucessfull and to aid decision making workers- to see if business is successful which can impact job security also if business can afford wage increases managers- if business is successful can they have a raise, has their management been effective, job security investors/shareholders- success can affect value of shares impacting there dividends. Should they then keep, buy or sell their shares customer- high profits might show business is charging high prices supplier- want to know if the business can afford their trade credit bank- can business repay loan/overdraft government- should more tax be applied, is profit to excessive competitors- to make comparisons and form competitive strategies

Answer 39

the reduction in average costs of production that occur as a business increases its scale of production.

Answer 40

reductions in average cost per unit of output as a result of increasing internal efficiencies of a business

Answer 41

marketing- as a business grows, each pound spent on advertising will have a greater benefit as as the advertising costs are spread over more units managerial- able to employ specialist staff like accountants which are more efficient thereby reduce average cost of production risk-bearing- larger producers can spread the risks so they can fall back on different markets if one fails financial-easier to access loans as are able to offer security and can negotiate more favourable rates of interest technological- machinery can allow products to be made quicker- can improve specialisation and speed up labour purchasing- order numbers increase as business grows increasing raw materials- this may cause discounts given and the component price may fall

Answer 42

the advantages of scale that benefit a whole industry and not just a singular business eg more skilled workforce

Answer 43

labour- concentration of businesses may cause for a more skilled labour force required by the industry supplier economies- a network of suppliers may be attracted to an area with a growing industry. educational economies- local colleges can set up training programmes making a pool of skilled labour. This reduces recruitment and training costs for businesses involved financial economies- banks and financial services can provide services particularly geared towards an industry. For example, an industry where cash flow may be a problem debt factoring may be available at competitive rates commercial services- a growing industry tends to attract smaller businesses trying to serve it needs. A wider range of commercial support can be offered like banking, marketing, waste disposal co-operation- businesses located in the same region might join forces to fund a R&D research centre for their industry

Answer 44

the factors that cause higher costs per unit of output than when the scale of on organisations continues to increases- the causes of ineffiency in large organisations when diseconomies occur the average cost of production rises with output

Answer 45

they occur when the average costs increase as output expands( in the long run) these problems are mainly management issues like poor communication and control

Answer 46

-risk aversion -rising costs of complexitity -regulatory costs -waste/ineffiency -the principal agent problem

Answer 47

-they can provide specialisation -they are happy with levels of profit and remain small avoiding the added responsibilities that occur with growth -they are more flexible in circumstances -they have customer loyalty -small businesses are in niche markets- the size of market share can dictate there potential for growth

Answer 48

overcrowding in industrial areas- traffic congestion occuring can result in late deliveries and staff arriving late. increased price of resources- more businesses in an area means increased demand for work so the best employees are hard to keep. Land, services and material may also become more expensive as the industry frows and demand for resources increases

Answer 49

the minimum amount that an employer can pay their employee an hour

Answer 50

+may be more motivated as they are receiving more money +more use of zero-hour contracts where employees only ger paid for hours they work +employees may have a higher disposable income which may be spent and the business/shop so may see an increase in sales +reduces negotiating pay with unions which can lead to disputes -wage costs would increase maybe meaning more staff cuts to cut wage bills -min wage can cost-push inflation making raw materials rise in price -may be tempted to employ younger/ cheaper workers or exploit workers illegally in order to make bills cheaper

Answer 51

+more disposable income +benefits those in low skilled work +working becomes more attractive +younger people are finding it easier to get jobs as employers are looking for cheaper wage bills -older workers find it harder getting a job as employer favours hiring the younger workers -loss of job security as business may reduce staff numbers to cut costs -increase may not be substantial enough therefore little benefit -businesses may move abroad to find cheaper labout

Answer 52

protects discrimination in the workplace. and discrimination in the wider society. You cant discriminate against: age disability being pregnant/ have a kid sex race, nationality, ethics sexual orientation these are all "protected characteristics" discrimination is: -direct discrimination- treating someone with a protected characteristic less favourably than others -indirect discrimination-putting rules or arrangements in place that apply to everyone but someone with a protected characteristics would have an unfair disadvantage -harassment- behaviour linked to a protected characteristic that makes someone offended -victimisation- treating someone unfairly because they have complained about discrimination or harassment This is to be protected from: dismissal and redundancy pay and benefits promotion opportunities training opportunities

Answer 53

an organisation that represents employees in trade, industry or occupation. its purpose is to protect its members in terms and conditions of employment. They can create collective bargaining which will provide a bigger voice than one.

Answer 54

-collective bargaining -health and safety like work induced accidents or illness -protecting employee employment rights i-nformation and legal advice

Answer 55

employee action is the actions taken out by the employees that are encouraged to achieve there wishes: -strikes- stopping working -work-to-rule- only doing tasks mentioned in job description -go-slow- carrying out tasks but slowly -overtime ban- refusing to do any more work over contracted hours meaning some orders might not be completed on time employer action is the action employers can take like: -withdrawal of overtime- in hope to encourage a positive environment -lock-out- if a business believes there has been a disruption to there smooth working conditions the business may lock them out until and grievance is resolved

Answer 56

If employee feels mistreated they can ask unions to help sort out issue but if it cant be solved amicably they may go to a employment tribunal( a court that make sure laws are adhered properly). These tend to be about pay, unfair dismissal, redundancy etc.

Answer 57

+can avoid time consuming individual bargaining +improved communication links between worker and employer +a strong union can encourage managers to take employee needs more seriously -employees are more likely to take industrial action -high health and safety requirements -high wages negotiated by trade unions -employees know their rights -free legal assistance in case of unfair dismissal and discrimination

Answer 58

+collective bargaining- negotiation of pay and conditions +ensures health and safety +can support unfair cases +access to free legal advice -may call on members to take industrial action -costs money to be a member -redundancies due to high wage demands

Answer 59

its a conciliation and arbitration service independent from the government made up of union representatives and university professors and members with knowledge of businesses they can: mediate- can give the best possible solution to resolve a dispute and leaves two parties to find a settlement arbitration- recommends solution to a dispute which both parties have already agreed that they will abide by individual cases- investigates individual cases of discrimination and dismissal codes of practice- can give practical guidance on how to improve employee and employer relations

Answer 60

financial plans for the future that shows expected levels of expenditure and revenues +controlling income and expenditure +regulate the spending by highlighting where money is being lost like waste +allow delegation of power +can act as an motivator if budget is met +provide clear targets -can be time consuming -if actual figures vary from budgeting ones it will loose significance and be inaccurate which can cause poor decision making

Answer 61

we have been moving towards more flexible work with more flexi-time shift work home working part time work job sharing multi skilling temporary working due to: -a decline in trade union power -the end of demarcation( the process that separated different types of work with different trade unions) -deindustrialisation -the increasing number of women in work

Answer 62

an employee on flexible hours has an agreed number of working hours. There would be a set amount of hours needed to be worked but the remaining contracted hours can be used on a more flexible basis. Eg if you have to work 35 hours from 10-3pm and had 10 hours remaining you can choose when to work them like doing and 8-10am. This works perfectly for parents who may need to collect kids up from school

Answer 63

businesses train their workforce to be able to work across a wide range of tasks for a greater degree of flexibility and to ensure motivation

Answer 64

the splitting of a job, letting 2 people share it +can retain employees who may leave if cant receive part time work- maybe an experienced or valued member +meets employees request so keeps them motivated- performance could of suffered if they had to stay full time +somebody can cover the other person if they are on leave or ill- an element of continuity -administration costs for training another employee -communication between the two workers may cay cause inefficiency

Answer 65

during busy periods, pert time employees are employed to meet the needs of the employer. At quieter times the full time staff are needed allowing cost saving

Answer 66

may perform similar functions to managers but in addition they inspire and motivate workforce

Answer 67

they control and direct workforce to follow orders established by leaders

Answer 68

planning- ensure tat the required resources are where they need to be leading-encouring employees to carry out tasks effectively co-ordinating- ensuring employees and departments functional- organisating departments such as sales oragnising control

Answer 69

employees are motivated by money employees are lazy and dislike work employees dont want to be involved in decsion making processes employees are selfish and lack responsibility employees need to be controlled and directed employees must be supervised in this scenario managers have strict control of communication, responsibilties must be clear with high levels of independence on the decision making from senior management

Answer 70

employees are ambitious, willing to train and contribution for promotion employees arent motivated by money alone- other factors exist employees will be more efficient when left alone- trust breeds repsonsibility in this scenario managers use training, use of cell working, flexible working, promotion structures

Answer 71

review objectives for whole business (corporate objectives) then set objectives for the management of the different business functions then set objectives for indiviual departments and employees then monitor progress to see if objectives are reached then evaluate performance

Answer 72

advantages improved management control improved financial control aware of responsibilities work of managers and department are co-ordinated can motivate workers with employee empowerment disadvantages time spent on process on setting objectives rather than managing objectives unrealistic demotivation if all levels of hierarchy arent involved

Answer 73

role of leaders empowering and delegating anticipating issues creating new jobs and roles creating aims role of management -interpersonal roles like hiring, firing, motivating -decsion making -information roles to flow information between departments

Answer 74

where the manager sets objectives and allocates tasks groups will be reliant on leader employees arent involved in decision making high levels of supervision often linked to poor levels of motivation most suitable in a crisis situation eg the ARMY# when may this be helpful +if the workforce isnt performing well in a crisis +some employees dont want to take on extra responsibility -the employees can become independent of the leader -people are often dissatified with their leader- people leave their work -the high levels of supervision may cause resentment as employees can lack cohesion -talent is often not recognised- valuable human resources may have been lost or underutilised -no two way communication

Answer 75

a hierarchal strcuture with a chain of command with rigid rules and regulations. Used when leadership cant be developed in subordinates which need to be closley controlled -decision making is stiffed with paperwork and re checking of decisions and outcomes -employees lose interest of their work and only do whats expected

Answer 76

encourage participation by employees in decisions- running a business using a majority vote +research shows decisions are better when they exploit there employees knowdlege of the working conditions +lower abseentism- more motivated- more likely to accept decisions made +have more trust +empowers employees -may take a bit longer due to consultation -may not be helpful in a crisis- may require autocratic -a more highly skilled workforce may prefer laissez faire -the greater size of the group, the more confusion -some people may prefer being directed- they may believe management are being paid to make decisions and therefore should take responsibility

Answer 77

meaning "let do" in french. Leader has minimal input leaving the running of the business down to the staff within broad limits +relaxed atmosphere +employees can make own decisions +there are few restrictions +employees can be creative and imaginative -tends to be a lack of direction causing low productivity -employees may feel like they have been "thrown in the deep end" -rudeness to customers due to lack of customer service training as employees unsure on how to operate equipment -some employees may be demotivated -doesnt work with new employees who lack confidence

Answer 78

theres no best type of leadership it depends on situation the leadership style- the personality of the leaders situational control- the amount of control the situation provides 3 factors underpin the situational control( situational favourableness) leader member relations- the level of trust task structure- is the task your doing clear and structured or not leader position power- amount of power given to direct a group and the provided award or punishment In order to identify a managers leadership style fieldler created a least preferred co-worker scale. This was used to identify two types of leadership style. A high score of 64 is more of an high LPC person is called relationship motivated. This leader finds others pleasent or sincere even if they find it difficult to work with them. 57 would be a low LPC person who is task motivated. This leader sees there co-workers negatively and is determined to get the job done. An inbetween score makes it difficult to see what group the indiviual is in LPC stands for least preffered co-worker

Answer 79

believed it was possible that leaders can perform better with education. the skills that leaders need to learn are both verbal and non verba leaders need improve their ability to adapt

Answer 80

advanced tec means more people can do work at home as tasks are being more technoligcal focused. benefits and drawbacks for employee: +greater flexibility +stress of travelling is gone +cost savings of travelling -may miss out on learning from others -may miss out socially/ feel isolated -more difficult to impress management benefits and drawbacks for employer: +cost reduced as less equipment and space needed +absenteeism is reduced +lateness is no longer an issue +staff may be more motivated if home working suits them -may be harder to control and monitor -communication issues may occur -cross fertilisation of ideas may be reduced as staff dont communicate with each other easily

Answer 81

a contract that means an employee has to be available for work but not gaurenteed any +gives employer total felxibility -employees may be sent home if demand falls -employees have no income security at all

Answer 82

an employee has no fixed workspace within an office +cuts down the need for office space +may allow greater innovation -some employees who hot desk complain as they feel disconnected from the organisation

Answer 83

employment for a specific period of time for example 6 months to cover maternity leave. Works for employers who are looking for someone for set skills in a set time

Answer 84

offering the right product at the right price at the right time to make profit. It may be selling goods, raw materials, components or services. methods used to sell to industrial customers: finely targeted approach not aiming at mass markets trade fairs and exhibitions to establish contacts specialised sales personnel to enable negotiation trade magazines to advertise the goods

Answer 85

+a much larger market +can earn greater profits +spreads risk +economies of scale- marketing economies -selling abroad can be more risky than a domestic market -different government policies making marketing innapropriate -cultural differences -economic factors suich as the level of income will need to be considered -understanding the degree of competition that already exists -exchange rate difficulties

Answer 86

sets out targets for the marketing department. for example how much money is available to be spent, targets for sales, targets for market share etc. Its aim is plan and control spending +helps control marketing costd +sets targets which can be used as motivation +helps plan the future of the business +helps to co-ordinate strategies +can identify where costs have been to high -they may be too rigid in relation to changes in marketing conditions -may be conflicts with other objectives in the business -if to ambitious can cause demotivation -time and expense on setting the budget

Answer 87

achioeving the reduction and removal of waste. Aims to remove all elements of waste from the production process as a result increase productivity and reduce costs examples of waste include; -unused raw materials -skills and knowledge of workers not being used -finished product waiting to be delivered they include: -kaizen -cell prodction -just-in-time -time based management methods the advantages of lean production: -productivity is raised -costs are reduced -dont hold stock is JIT is implemented -lead times are cut -waste is cut -number of defects is reduced

Answer 88

ensures that parts, raw materials and components are recieved when there is demand 'if it isnt wanted dont order it, if it isnt sold dont make it' +improves cash flow as little stock held +waste is reduced as no obselete or damaged stocks occur +factory can be freed up for more productive use +motivation is improved as employees are given greater responsibility and encouraged to work in teams -depends on relability and flexibility of suppliers -ordering and administration cost rise -bulk buying economies of scale may be lost -difficult to cope with sudden changes of demand -reputation can be damaged with late deliveries as no buffer stocks are held -extra pressure on staff because of JIT -unforeseen interruptions in supply

Answer 89

the production line is subdivided into a number of cells. These cells are group of workers involved in related tasks -they are trained so they can fulfil a number of tasks within a cell allowing job rotation -the skills of the employees mean that they can all play a role in improving quality -communication is improved -cells can self manage breaks, shift arrangements and holidays

Answer 90

speed of development, speed of response and speed of delivery can add product value. It aims to reduce time taken in every production process. it involves using concepts like JIT, CAD and CAM, critical path analysis and simultaneous engineering

Answer 91

businesses use the idea that b y taking small incremental steps can improve the quality, design and waste reduction. To do this groups of employees who have a common stake in the production process can meet regularly to discuss problems with improvements being made at a minimal cost. This means that over time the business can reduce costs whilst quality and production increases with minimal investment key elements of kaizen: -all employees should be asking "how can i do better" -a motivated workforce -a management with belief -a trained workforce -security of jobs- jobs cant be threatened by their improvements. Kaizen does suggest that demand for labour will fall but should be achieved through natural wastage -management must have clear understanding of production process so they can organise employees to meet the improvements benefits of kaizen: -improved labour -improved quality -increased productivity -improved motivation -increased competitiveness -less large scale investment

Answer 92

the predicitng and anticipating and satisfying customer needs it involves: researching the market analysing the market setting goals of the market developing a marketing strategy- using 4ps and marketing mix

Answer 93

when a business bases its marketing mix on its perception of what the market wants benefits: +customers get greater satisfaction +customer focus means the business will continue to improve +loyal customers- less suscepitble to competition +repeat customers and brand loyalty +can add emotional impact to advertisements- increasing growth -high cost market research to understand it -abandonment of earlier product investment -unpredictability of the future -constant change as the market changes

Answer 94

when a business bases its marketing mix on what the business sees as its internal strenghts. They sell whatever they can make rather than the customers wants. For example, Mcdonalds focus is developing and making products then trying to sell it consumers. Contact with the consumer is largely at the final stage benefits: increase economies of scale focus on product development focus on quality disadvantages: changes in market structure wont be responded to fashion and taste arent accounted in the product mix

Answer 95

a marketing strategy based on a businesess strengths not just customer needs advantages: strengths linked to market needs the cost of market research may be less likelihood of success likely to be greater the business will be aware of its weaknesess and will not produce products that its doesnt believe it can do well just because the market has requested them case study: tesco and back to school clothes. They thought those who spend money on fish fingers are likely to have young children. In this example we see an internal strenght og the business using the effective application of IT.

Answer 96

removing tiers of management usually the middle. advanatges -the removal of managerial layers to save money on salaries -better communication as lines will be shorter -can improve efficiency disadvantages -cost implications- redundancies -demotivation as chances of promotion reduced -those managers become fearful of their jobs and become demoralised -cost of training of other staff so they meet extra responsibilties

Answer 97

believed money (piece-rate) is the main motivator. Scientific management also known as Talyorism is a management theory that emphasises the systematic anaylsis of work processess to maximisr efficiency. According to taylor, employers should reward works for increased productivity rather than scold them for every minor mistake. Taylor= top down his objectives: -science, not rule of thumb -co-operation not indivualism -harmony not discord how to implement: -delegating responsibilties to skilled workers -investing into training and development -monitoring performance -they are paid for their levels out output- this involves the piece rate payments

Answer 98

Mayo separated six volunteer female employees from their workmates and tried different working methods on them such as different bonus methods, different lighting and different rest periods. He found that productivity increased with every change made even when the conditions were worse he believed productivity rose because of: -responsibility -recognition -growth advancement -interest in the work itself

Answer 99

job satisfaction comes from hygiene factors( pay, security, conditions) which prevent dissatisfaction but dont motivate while the motivatiors (achievement, recognition, responsibility) create job satisfaction and motivation if hygiene factors are met first

Answer 100

a pyramid model showing that people are motivated to fulfil basic survival needs first (food,water and safety) before moving up to more complex physiological needs like esteem and self actualisation to reach ones full potential

Answer 101

they propose that motivation is affected by rewards, the split these rewards into both instrinsic ( pride satisfaction-comes from within) and extrinsic rewards( pay increases and bonuses)

Answer 102

-increased productivity -increased quality -lower levels of staff turnover -improved communication -lower levels of industrial action -improved customer service -greater employee satisfaction -higher levels of innovation

Answer 103

vroom assumed people acted in there best interests he believed that people ppted to maximise their happiness and minimise their unhappiness. vroom uses 3 component for this motivation model (VEI) valence- an indiviual will complete a task if they believe it to be worthwhile instrumentality- an individual wants the task to lead to a particular result, an indiviual believes that if they work hard it will lead to a positive valent result eg hard work leading to a promotion expectancy- people believe the target is achieveable

Answer 104

methods that directly involve monetary rewards like piece rates- money paid per item made or each task completed, bonuses, pay rise, fringe benefits like company cars +motivation +can motivate others after seeing the reward +improving employees standard of living -can demotivate other especially in team work as some can feel like there doing more work than others -when targets arent reached the workforce may be resentful -jealousy can cause demotivation -may only have an impact on short term motivation

Answer 105

non financial methods that apply the ideas behind Mayo, Maslow and Hezberg these include: job enrichment- more control over tasks job enlargement- increasing number of

Answer 106

a series of actions designed to give employees greater control +delayering is possible as middle managers may not be needed +can make work more interesting +productivity may rise due to increased motivation +decision making is decentralised -delayering can cause costly redundancies and damaged morale -doesnt work in all circumstances like in a crisis -employees may be given too much responsibility causing stress and no extra pay -doesnt work for junior employees who need the experience

Answer 107

is there a great deal of risk, control may be safer it depends on company culture and experience of staff it depends on how staff perceive the management it depends on the trustworthiness of the staff it depends on wether the employees welcome authority and accept responsibility

Answer 108

the development of the internet has allowed marketing to expand causing the 4ps to evolve this includes: clicks and bricks m-commerce social media e-tailing

Answer 109

clicks and bricks is a marketing term which means a business has both an online and physical presence eg argos

Answer 110

the buying and selling of goods and services through handheld devices

Answer 111

a form of selling online allowing consumers to directly buy goods or services buy a seller on the internet

Answer 112

the way a business is arranged to carry out its activites. It shows: -the communication routes to other parts of a business -delegation-the passing of work and responsibilities to others -promotions -control- who has authority over whom and who has responsibility for whom -specialisation -problem solving

Answer 113

layers of hierarchy: who is responsible for whom chain of command: the paths that communication occurs along in which orders are passed in levels of responsibility: each layer of the hierarchy will have its own level of responsibility span of control: the number of subordinates answerable directly to the manager. When theres a high level of delegation the span of control is wide and where control is tight and centralised its narrower line manager: the person who is immediately above the employee subordinate: the person who is immediately below the line manager

Answer 114

when an organisation doesnt have an obvious strucutre like lawyers and doctors where members operate in a team

Answer 115

a structure where each level has responsibility and authority over the levels below +control is centre with senior management +paths of communication are clearly defined +each employee knows how they fit into the organisation -producures can be bureaucratic -there may be groups that are in between departments -organisation can be slow to respond to customers -communication may be poor between departments

Answer 116

when cross functional departments are created to run a project together. This is when managers call upon specific people in different skills/expertise to run projects in which they will then be disbanded when the project is complete. +allows individuals with specifric skills to contribute +communication is better co-ordinated between groups +helps spread of ideas an dinoovation +theres more efficieint use of human resources and employee knowledge -can be more expensive as may require extra office staff -employees may have divided loyalties with potential conflict occuring

Answer 117

few workers are at the core of business( frequently the owner) and they make all the decisions this is in a small business

Answer 118

where the majority of decisions are made by senior managers at the top of the business characteristics: can demotivate staff tight control on activities quick decision making good direction can have poor direction

Answer 119

where authority has been passed down to lower levels in the hierarchy for decision making characteristics: motivates staff lack of direction decision making takes longer good communication loss of control by head office

Answer 120

a long chain of command, many levels of hierarchy and narrow spans of control to control employees with delayering occuring

Answer 121

short chain of command, few levels of hierarchy and wide spans of control giving employees more independence +increased motivation as a result of delegation +empowerment of employees +communication is quicker as suffers less distortion +decisions are made quicker -loss of central control -different departments may not be working to the same objectives

Answer 122

when a business closes down or merges part of their operations in order to reduce costs and stay competitive

Answer 123

the route taken by a product as it passes from producer to customer. the more distribution channels a business has the better chance they have to reach a bigger market manufacturer-agent-wholesaler-retailer-consumer

Answer 124

they buy in larger quantities from manufacures and break into smaller quanities for retailers- " break bulk"

Answer 125

they dont take ownerships of goods, they represent a brand and try to gain sales. They are often used to enter overseas markets like travel agents used by footballers -they can negotiate sales on behalf of the seller -can reduce the risk a business is taking when trading abroad -can help a business when they are unsure about trading practices and legal requirements in the countries in which they hope to trade into

Answer 126

when wholesalers buy in bulk it can reduce the need for producers to make smaller deliveries to retailers who may not have the facilities to hold large stocks

Answer 127

its when large retailers have regional warehouses so they are able to buy in bulk from producers like Sainsburys. Producers can also sell directly to consumers through mail like clothes

Answer 128

when a business accepts the market price( only option in a perfect market)

Answer 129

when a business has enough power to set there own prices. They do this through both market-orientated strategies and cost based stategies market orientated: when they produce what the market wants meaning they set a price the market is willing to accept cost based: businesses concentrate on internal costs so price is set based around the cost of production. this includes contribution pricing where price is based on variable costs plus a contribution for profits. Also, cost plus pricing where you add a profit percentage to the cost of operating a good ( named a mark-up) this allows changes in costs to be transferred to consumer and every good is sold at a profit but doesnt take in competitor pricing which may cause loss of sales

Answer 130

The objective is to gain market share by pricing at a low level intially so consumers are encouraged to purchase in large quantities. They can then raise price once market share is gained +can help establish brand loyalty and recognition -if price is set too low people may think its low quality -business may loose revenue initially especially if product life cycle is short and there wont be enough time to recover from the cost, so should be avoided

Answer 131

for small businesses this just means accepting the current pricing set. they must sell goods or services in line with their competitiors price.

Answer 132

market skimming( creaming) is when you charge high prices for a unique good that has an USP. +can generate revenue in a short period of time so r&d costs can be discovered quickly +can take advangtages of newness of product and gain as much profit as possible

Answer 133

setting a low enough price to drive competitors out of the market. This is used by larger businesses but can also appear in local businesses. Its anti-competitive and therefore illegal. Microsoft has been investigated for this

Answer 134

involves selling products at a loss with an expectation that this will generate sales somewhere else in the business. Eg supermarkets selling demanded goods like wine cheaper to encourage customers into their store.

Answer 135

prices are set at the level customers expect to pay and their percieved value. However it can also be used by pricing goods below a round figure like £19.99

Answer 136

-right strategy can boost sales-increasing revenue- increasing profits -prices can reflect the market for the product ie high income in others -prices can take into account actions of competitors

Answer 137

no effect-no increase in sales customers not attracted need for expensive advertising so profits not as excepted some segments may not be happy with pricing strategies- may allow less well off to afford more expensive products

Answer 138

added value is the difference between cost of purchasing raw materials and the cost of goods sold formula: selling price- bought in goods and services

Answer 139

purchasing cheaper raw materials- but quality cant be compromised, this may be done from eos improving effieciency of production- for example training the workforce raising the price of the product- this demands on price elasticity if possible achieving brand status- for example Chanel can sell their perfume at a much higher price than other competitors offering additional services- the more product depth improving customer access- by providing convenience you can boost sales eg home deliveries

Answer 140

a product that is usually made by a skilled craftsman specific to a person requirements eg wedding dresses +unique product- can charge higher prices +likely to be high quality +specialised employees who enjoy their job as they are using their skills -can be expensive for customers -time-consuming to produce -higher wage bill comes with more specialised staff -only targeting a smaller market

Answer 141

the manufacturer makes a limited number of identical products eg bread +reduction in unit costs from ecos +quicker than job +uses specialist machinery so doesnt need employees which can reduce cost of production +allows for variation eg product can be different sizes -if theres a faulty product in the batch the whole batch has to be scrapped -time lost between batches by cleaning etc -employees may be bored and demotivated -can loose production time if machinery breaks

Answer 142

production is organised so operations are continuous with the production being a sequence moving from one stage to another eg car manufacturing +large quantities can be produced- ecos +unit costs can be reduced by ecos +quality and uniformity is apparent +less labour is required- low labour costs- reduction in wage bill -set up costs are high -reliant on tec with breakdowns becoming costly -products will become standardised -can have motivation issue with staff being bored due to repetiveness

Answer 143

-the cost of labour -cost of capital -skills of labour -size of market -customer requirements -technology -the product being produced

Answer 144

how efficiently a company can turn its resources into goods or services reflecting the effectiveness of labour and capital capital productivity output/capital employed labour productivity output( per period)/ no. of employees (per period)

Answer 145

+increased ecos +increased competitiveness +lower unit costs +performance bonuses- motivation +spreading fixed costs over a higher output

Answer 146

-improving technology -replacing labour with machinery -using quality circles -improve the motivation of workforce -redesigning production process- changing office -job enrichment, rotation etc -changing management styles -adapting a kaizen approach, TQM/ lean production -delayering and empowerment -benchmarking( must be developed to productivity)

Answer 147

measures how well the business uses its resources formula: actual level of output/maximum possible output x100

Answer 148

+fixed costs are spread as average costs decrease +employees feel more secure in there jobs- motivation raised +improves company image as busy businesses may encourage customers to place orders

Answer 149

-possible fall in quality if resources are overworked -pressure on staff- overtime- can cause stress, tedium - absencenes- accidents machinery can be overworked and break down -lack of flexibility if they are no capacity to meet an order so arent available to new customers

Answer 150

refers to the unused production potential a company has allowing it to increase output without additional investment- underutilisation. You can see it by looking at output as a percentage of total capacity issues of spare capacity -demotivation of staff- overtime isnt available, bonuses are limited, may be a threat of redundancy -increased costs like redundancy payments -reduced profits- can limit r&d investment reducing competiveness -lack of return on goods- depreciation of assets to solve it subcontracting rationalisation increase the use of assets

Answer 151

getting someone else to produce the goods for you so theres a reduction in risk +reduction in capital investment- if the business isnt making the goods, they dont have to purchase the machines to make the goods but lease a factory space instead -lack of control especially with quality -may be delays in delivery causing customer dissatisfaction -if theres a limited number of subcontractors available then they might charge more reducing profitability

Answer 152

concentrating on relevant products and disposing the less profitable or not necessary one to the businesses long term success. It allows management to focus on the businesses strengths but may also can imply redundancy costs and lost of customers as 'one-stop shopping' is now not available

Answer 153

an statement showing an organisations sales revenue over a trading period including income and expenditure sales revenue ( minus) cost of sales ( equals) expenses ( equals) net profit cost of sales: any direct cost used in the production process eg wages. To calculate it: opening stock+ purchases-closing sales gross profit: the difference between the revenue from selling the product and the direct cost of making it. Sales revenue- cost of sales net profit: the profit minus all expenses, a sole trader would have to pay income tax on this. Gross profit- expenses

Answer 154

gross profit/sales revenue x100 reasons for change: increase/decrease in sales turnover increase/ decrease in cost of goods sold

Answer 155

net profit/sales revenue x 100 reasons for change increase/decrease in sales turnover increase/decrease in cost of goods sold increase/decrease in expenses

Answer 156

to increases sales to raise awareness to target specific groups to try and beat competition to improve company image

Answer 157

the attempt to gain attention to gain and retain customers

Answer 158

independent mass media which is indirect and allows a business to reach a large audience methods include: television newspaper radio cinema websites billboards the choice depends on target market the product itself the cost the reach of the media

Answer 159

below the line are direct promotion targets to the consumers directly includes: direct mailing point of sale flyers packaging personal selling

Answer 160

-product differentiation eg if you were a coffee shop, products are likely to be similar to competitors -the marketing budget available -the products like cycle stage- introduction stage there may be more information given than the maturity -cultural sensitivity- if in a international market will need to consider local sensitivities -the target market- the people who make up eg the younger generation who access info on their phones may be targeted via the internet

Answer 161

the organised acquisition of goods and services on behalf of an entity

Answer 162

businesses must ensure stock is available when needed part finished goods( work in progress) dont sit around unused, loosing value but brought to the next stage asap finished goods are available for timely delivery

Answer 163

re-order level- the level of stock at which a new order is placed re-order quantity- the quantity ordered in order to return stock level to the max. Calculated by difference between maximum and minimum stock holding levels lead time- the amount of time that exists between an order and its delievry buffer stock- the amount of stock held between the minimum stock holding and zero stock used. Used in case of late deliveries

Answer 164

when quantity or stock decreases or increases a database is updated which allows for an automatic reorder of stock if the level falls under the reorder level eg the supermarket tills which scans which is being taken out

Answer 165

a system designed to minimise costs by linking production to demand so resources can flow throught the production process smoothly. Materials are delivered and go straight on the production line so virtually no stock is stored on site. Products are only made when an order is placed the requirements for JIT systems -reliable suppliers who deliver when needed -a efficient ordering system -a well trained workforce who can work in teams and can be trusted -where theres a positive corporate culture whereby employees are encouraged to work flexibly and meet goals issues with this ordering and adminstration costs rise and advantages of bulk buying can be lost suppliers who dont deliver on time can pause the production line leading to damaged reputation if customers dont recieve their goods on time in order to achieve affective stock management you must have -effective relationships with suppliers and customers- with supplied epos systems are normally created for integration -effective internal relationships

Answer 166

-reduction in working capital -freeing of storage space -improved relationships with customers -less wastage as small buffer stock can enable less finished goods which my become out of date or out of fashion

Answer 167

-orders may be cancelled and profits fall -orders may be late and the firms reputation damaged -employees may be laid off or sent home if work cant be found

Answer 168

-high costs for storage, insurance, lighting etc -takes up space that make be more productively used -opportunity cost as money is tied up and may have better use somewhere else in the business -theft mat occur as employees might feel that something taken from a large stock will be unnoticed -stocks can be damaged ie a changing in temperature

Answer 169

increased sales reduced costs reduced waste market orientation customer satisfaction

Component 2 revision Flashcards

(194 cards)