Unit 3.2 Business Studies

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Managing Stock - Just in Case

Managing Stock is managing the materials and products in the most efficient and effective way.
 - Bar gate stock graph used in Just in Case
Maximum sotck level - The highest amount of stock the business can hold

Re-order level - Point at which new stock will be ordered by the business

Buffer Stock/Minimum Stock Level - Lowest amount of stock the business will hold.     Safety net just in case a surge for demand is needed

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Managing Stock - Just in Case - +'s and -'s


  • Business can meet unexpected demand
  • Discount on supplies as you are bulk buying
  • Lower delivery cost - only one delivery needed


  • Higher Costs - warehouse to store stock
  • More chance of damaged or stolen stock - stock is stored on site
  • Employees can't focus on other tasks - someone has to manage stock
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Managing Stock - Just in Time

Just in time stock control is a stock management system, where stock is only delivered when it is needed. No stock is held in the business.

For JIT to work effectively they need to have:

  • Good relationships with suppliers - so the suppliers try extremely hard to get goods delivered on time.
  • Well organised production system - so no time is lost when supplies have arrived. The supplies arrive and product is shipped to customer on the sameday.
  • Regular demand

Just in time is usually used by larger companies . However it depends on the demand and nature of the product.

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Managing Stock - Just in Time - +'s and -'s


  • Cost saving - no warehouse to store stock
  • Less chance of damaged or stolen stock - no stock is on site
  • Employees can focus on other tasks, rather than managing stock
  • Can reduce costs of production, which makes pricing more competitive


  • Business can not meet unexpected demand
  • No chance of discount of supplies as you are not bulk buying
  • Higher delivery cost - more deliveries needed
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Managing Quality

2 ways of achieving good quality in business:

  • Quality Assurance
  • Quality Control

Quality control is where finished products are checked by some one at the end of the production chain to see if the quality is good enough.

Quality assurance where quality is built into the production process. For example, all staff check all items at all stages of the production process for faults.

In this way everyone takes responsibility for delivering quality. Successful quality assurance results in zero defect production.

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Managing Quality - 2

Why sell good quality products?

  • Allows you to sell them for a premium price
  • Builds a strong brand image
  • Meets customer needs - no customer wants a poor quality product/service
  • Way of differentiating a product
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Productivity = output per worker
     How much each worker produces over a period of time
Calculated by - Total Output ÷ Nom. of Workers 

Increasing productivity leads to greater competitiveness in a market. Productivity can be improved by increasing output or by lowering cost of production whilst maitaining the output.

How to increase output?

  • Train better employees
  • Better equipment
  • More effective work practice
  • Working overtime
  • Motivation in employees
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Competitive Pricing

Cost effective operations can help reduce costs. This then helps the business lower its price and become more competitive.

Increased prodctivity     
Lower Costs
Lower Prices
Attract More Customers
Increased Sales and Profits

How to reduce costs?
 - Improved purchasing - Cheaper suppliers
 - Better design of products
 - Cut labour and overhead costs
 - Streamline the production process
 - Relocate 

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Effective Customer Service

To have effective service you need to...

  • meet and exceed customer needs
  • provide quality products
  • have innovation
  • spot problems and potential problems
  • listen to customers
  • deal with complaints quickly and effectively
  • be on time
  • train staff in customer service

Drawbacks of poor customer service:

  • Poor customer satisfaction
  • Poor brand image
  • Wont be able to get a competitive advantage
  • Wont be able to charge a premium price
  • Fall in sales and profits
  • No repeat purchase
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Consumer Production Laws

The Sales of Goods Acts

All product being sold by a business must:

  • Be merchantable quality
  • Match the description
  • Be fit for purpose

The Trade Description Act

This law is to do with the desciption of the prodcut. They must not...

  • Give false information
  • Fail to give important information
  • Act aggresively (Force the sale)
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Consumer Production Laws - +'s & -'s


  • Less fines - cant be punished for not following laws
  • Improve business image
  • Imporved relationship with stakeholders
  • Good publicity


  • Must keep up to date with the law, must follow it
  • Restricts business from doing what they want sometimes
  • Business have to comply with laws - this could be costly
  • Bad publicity if not followed
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Louisa Grandi


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