Business revision, Business choices 1.5.5

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What is opportunity cost?
This is an economic term that defines true or real cost, in non-monetary terms, as the cost foregoing the next best alternative when making a decision. It implies that the real cost of something is what is sacrificed to get it.
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For instance, what is the opportunity cost of a new motorway?
A hospital
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What is the opportunity cost of a CD
A DVD
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What is the opportunity cost of employing extra staff?
A machine purchase
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What may a marketing departments objectives?
Achieve or exceed monthly sales targets, have dedicated, trained and motivated staff.
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What may be an objective for production?
To sustain efficiency by having the newest machinery and tech. To have a highly motivated and skilled production team.
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What may be the advantages for businesses if they invest in their marketing department?
Increase team size, Increase motivation, Possible sales increase, Improved training.
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What may be the disadvantages for businesses if they invest in their marketing department?
Demotivation of other departments, No mew production machinery or tech, Poorer cash management.
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What are the possible opportunity costs for businesses who invest in marketing?
Possible increase in production forgone by not investing in new machinery.
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What may be the advantages for businesses if they invest in their production department?
Additional workers, New machinery, Increased motivation and output.
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What may be the disadvantages for businesses if they invest in their production department?
Demotivation of other departments, Possible loss of sales, Poorer HR management, Possible cash flow problem.
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What are the possible opportunity costs for businesses who invest in production?
Possible increase in sales if the investment had been made in the marketing department.
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What may be the advantages for businesses if they invest in their HR department?
Better staff management, Increased motivation, Additional workers, Better selection procedure.
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What may be the disadvantages for businesses if they invest in their HR department?
Demotivation of other departments, Fewer new sales, Poor financial management, Less efficient production.
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What are the possible opportunity costs for businesses who invest in HR?
Possible benefits of improved cash flow that may have arisen from an increase in investment in the finance department.
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What may be the advantages for businesses if they invest in their finance department?
Additional workers, Equipment/software upgrade, Increased motivation, Better cash management.
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What may be the disadvantages for businesses if they invest in their finance department?
Demotivation of other departments, Poorer sales, Ineffective selection process, Inefficient production.
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What are the possible opportunity costs for businesses who invest in finance?
Benefits that would result from an improved selection procedure.
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Card 2

Front

For instance, what is the opportunity cost of a new motorway?

Back

A hospital

Card 3

Front

What is the opportunity cost of a CD

Back

Preview of the front of card 3

Card 4

Front

What is the opportunity cost of employing extra staff?

Back

Preview of the front of card 4

Card 5

Front

What may a marketing departments objectives?

Back

Preview of the front of card 5
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