Business Studies ALevel Exam 2 FULL REVISION

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Demand- the desire of customers to buy a product or service when backed by the ability to
pay. Factors which influence demand are: the price, incomes, competitor's actions, the firm's
own marketing strategy and seasonal factors. As the price increased the demand will go up as
more people can afford the product and people will buy more when it's cheaper.
Supply- the quantity of a product or service producers are prepared to sell at a particular
price. Factors which influence supply are: change in the cost of outputs, changes in
technology and changes in taxes. As the price increases the quantity supplied increases
Labour Turnover- measure of the number of staff leaving in relation to the staff employed.
Having a high labour turnover could be
good as it gets rid of aging staff and
replaces them with younger staff that
brings new ideas. However it's also bad because it's costly and there may be added training
costs, they would no longer have a loyal workforce, bad reputation, level of quality and level
of productivity will suffer, low team spirit and morale. There is a direct correlation between
the level of productivity and labour turnover. In Tipton Sweets as productivity increases so
does labour turnover. The measure of the rate of change of a firms workforce
Absenteeism- measure of staff absences in relation to staff attendances.
It does have an advantage it shows
the business who the poor staff are
and who aren't motivated. However
if it's a high absenteeism it can cause productivity to suffer and can put stress on other staff
to pick up the slack, which can result in missing deadlines and quality to suffer. There is a direct correlation between the level
of productivity and absenteeism. In Tipton Sweets as productivity increases so does absenteeism.
Productivity- a measure of the level of production for staff.
Can be compared to other year to see if it's got better or worse. The
higher the productivity the better it is performing. Any increase in
productivity suggests an improvement in efficiency.
The organisational structure of a business
When hiring large numbers of staff organisation is important, everyone within the company needs to understand their role
Organisational structure- the formal and systematic way the business management is organised
A method of organisation is to set up departments covering the four main areas of the business activity: finance, human
resources, marketing and operations. An organisational chart is used because it shows the; relationship between individuals,
who is in charge, who has the authority to make decisions and who carries out those decisions. Small businesses have and
informal structure because it doesn't employ many workers. However bigger businesses need organisation and structure as
they employ more people. Directors employ management for each function and ensure all functions are so-ordinated
Delegation- means passing authority down the hierarchy of a business. Effective delegation can be hugely motivating.
It also makes it easier in the future to identify staffs that have the qualities needed for promotion.
A manager is a person responsible for organising other to carry out tasks
A line manager is the person immediately above someone in the organisational chart.
Span of control- this describes the number of people directly underneath the supervision of the manager. If managers
have a wide span of control they are directly responsible for many staff. If managers are only responsible for a few staff then
they have a narrow span of control. Wide span of control has fewer layers to pass through; costs less and the managers can
manage faster
Narrow span of control has close management supervision, the communication would be excellent and with more layers there
are more chances of promotion
Communication- small teams will use informal communication such as coffee breaks while as more staff join it is
necessary to have formal communication such as department meetings with notes taken. An the business employs more staff
communication is weakened
Centralisation- decision making is restricted to the higher level of the organisation. Advantages are tight control of
decisions, quicker decisions and it consistent. However it would also cause a lack in motivation for the workers.
Decentralisation- Delegates decision making-power to workers lower down the organisation. The advantages are it is
good for motivating staff; it also encourages initiative and allows the boss to identify staff with the qualities needed for
promotion. However it can lead to a lack of control and consistency
Tall Structure- Has many levels of hierarchy. The span of control is narrow and there are opportunities for promotion.
Lines of communication are long, making the firm unresponsive to change.
Flat Structure- Few levels of hierarchy. Lines of communication are short, making the firm responsive to change. A
wide span of control means tasks must be delegated and managers can feel overstretched.
De-layering- this is the removal of layers in the organisational structure

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Operations Management- the process and acts which an organisation performs to satisfy customers. The production function
changes raw materials into finished goods. During the process value is added. There are three types of production:
Job Production- items which are made to meet the specific requirement of the customer. Made in small teams or by
individuals who pay full attention to the piece so they are flexible to change. They make a unique one off piece which to
purchase the cost is very high.…read more

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Prevention- try to avoid problems from occurring
Detection- ensures quality problems are detected before reaching the customer
Correction- correcting faults and making sure it doesn't occur again
Improvement- customer expectations of quality are always changing
Quality Initiatives
Bench Marking- Comparing a firms performance with the best practice in the industry
Zero Defects- Eliminating quality defects by getting things right the first time
Continuous Improvement- a system where the whole organisation is committed to making changes on a continual basis
Quality Assurance- assures customers that detailed…read more

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Management style- the way in which a manager deals with there employees
Leadership Styles
McGregor- (Theory X and Theory Y) Their are two types of managers. Theory X managers believe all staff cannot be trusted,
lazy, don't enjoy thier work and need to be controlled. Theory Y managers believe all staff want to take an active role in their
work and that the staff will seek responcibility.…read more

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Stock control
The management process that ensures stock is ordered, delivered and handled in the best possible way. An efficient stock
control system will balance the need to meet customer demand against the cost of holding stock.
Stock- the raw materials a business needs to carry out it's operations
The purchasing department of a firm must jkmeet the needs of those running the internal operations of the business.…read more

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Fixed Costs- expenses that do not change, they have to be paid whether or not the business is trading, examples are costs like
rent and interest charges.
Variable Costs- they will alter as demand and output adjust. An increase in output will require greater supplies and the costs of
these items will rise.
Break-Even Charts- show a business's revenues and costs at all possible levels of demand or output.…read more


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