business studies unit 3

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What is market research?
the process of gathering information about customers, competitors and market trends through primary or secondary data.
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Identify one way in which a business might collect quantitative market research data.
Questionnaires or surveys or tally counts or observations or other relevant answers with a scale response.
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Explain one way in which market research data might benefit a business.
Market research will enable a company to find out how many people are interested in its product or might be willing to buy it so the company can decide whether the product is appropriate for customers and if enough people will buy it to make a profit
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What is meant by the term 'product trial'?
A method used by businesses to persuade customers to try out a product for the first time. Consumers buy the goods, then decide whether or not they want to buy it again.If customers like the product they are likely to make repeat purchases.
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What is meant by the term 'customer loyalty'?
Where customers continue to buy from the same business or buy the same product.
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Identify two possible extension strategies that a chocolate manufacturer might use.
1. Create new packaging. 2. Add new ingredients or flavours.
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Explain how one of the strategies you identified would extend the product life cycle of the new chocolate bar.
Developing a new packaging for the chocolate bar could make it more eyecatching therefore attarct customer attention. As chocolate bars are often bought on impulse this could help boost sales and revive the product.
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Explain one reason why a business might use an extension strategy in the maturity phase of the product life cycle.
In the maturity phase sales have peaked and sales growth will have slowed down. Launching a new product will be expensive. Using extension strategies may be a cheaper option. Changing the design of a product may encourage customers to buy the product
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Describe how the Boston Matrix can benefit a business.
The Boston Matrix puts products into categories according the the growth rate and share of the market they have. It tells the business whether it has too many similar products or not and can help it to identify when it needs to introduce new products
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What is meant by the term 'product portfolio analysis'?
Product portfolio analysis allows a business to investigate the combination of products that it sells. It helps a business to make decision aout these combinations such as when to launch products to, or remove products from the market.
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Explain one way in which managing a product portfolio analysis can benefit a business.
Product portfolio analysis allowes a business to manage the different products in its product mix. It allows it to see which products are doing well and which are not. It can then assess the revenue, costs and profit they are generatingINFO
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Identify one possible method a business could use to differentiate its brand.
Quality or unique name or packaging or customer service.
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Explain one reason why a strong brand might benefit a business.
A strong brand might benefit a business because it will allow it to charge a premium price. As a result it will recieve greater sales revenue. This will increase the probability of higher profits.
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Explain one reason why place is an important aspect of the marketing mix.
If a business gets 'place' right they will make theur products more accessbile to customers. As a result it is likely that there will be greater customer awareness which could lead to increased sales overtime.
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Explain why direct is an important aspect of the marketing mix.
If a business gets 'direct' right they will get more attention from customers. As a result customers will feel more inclined and tempted to buying the product could lead to increased sales.
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Explain why retail is an important aspect of the marketing mix.
If a business gets 'retail' right they will improve the buying experience of customers. As a result this will lead to more praise and positive feedback towards the companies customer service which could lead to increased sales over time.
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What is meant by the term 'premium price'.
A premium price is a price that is relatively high compared to the price of other rival products. Businesses often charge premium prices for high value, luxury, scarce or high-cost products.
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Explain one reason why a business might charge a premium price for its product.(finish answer)
A business might charge a premium price for its product because it is seen by customers as being a luxury good. Customers percieve the product as being of greater value or quality than other products. They will therefore be prepared to pay more for.
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Describe how a business might benefit from carrying out effective promotion. (finish answer)
Effective promotion will boost customer awareness. This is likely to lead to an increase in product trials. As a result the product will move into growth stage of the product life cycle. The sales of the product should grow and eventually make profit
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Explain one benefit of research and development such as Marks and Spencers. (finish answer)
Research and development will help a business like Marks and Spencer differentiate its products from competitors. Through R&D Marks and Spencer was able to develop a new technology that other suit retailers do not have and therefore its product have
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Explain one benefit for a business of producing high-quality products.
Achieving a high standard of quality will improve customer satisfaction. This will lead to repeat purchase and therefore increased sales revenue.
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What is meant by the term 'competitiveness'
Competitiveness is where a firm has some kind of advantage over a rival firm such as higher productivity that will allow it to gain customers from rivals.
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Explain one benefit to Sony of improving its productivity.
By increasing productivity Sony can make more products per hour such as Sony Playstations. This will reduce the costs of making each product. Reducing costs could allow Sony to lower its prices and gain sales from rivals.
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Identify two consumer protection laws that a business will have to adhere to.
The Sales of Goods Act and The Trade Descriptions Act.
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Benefits of a business adhering to consumer protection laws.
A business that follows the law is less likely to receive fines or be sued by customers, meeting customer protection laws can improve a business's image, improved relationship with stakeholders and good publicity is followed.
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Drawbacks of a business adhering to consumer protection laws.
Businesses must know the law and keep up to date, laws can restrict businesses from operating as they would wish, businesses have to comply with laws by changing their products and practices and this can be costly. Also bad publicity is followed.
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Identify two possible ways Lidl could improve its cash flow.
Lease rather than buy assets and de-stocking.
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Explain one reason why strong cash flow is important to a supermarket such as Lidl.
Lidl requires a strong cash flow as it wants to expand the number of stores. With a strong cash flow Lidl is less likely to default on payments and therefor be able to cover any costs associated with the expansion.
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Identify one problem a business might face if it made a loss.
A business may face insolvency/bankruptcy/lack of staff motivation/reduced investment.
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What is meant by the term 'break-even point'?
The break-even point is the level of output where total revenue is equal to total costs. At this point the business makes neither a profit or a loss.
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Sony's fixed costs for the PlayStation 3 are £2,400,000 and variable costs are £140 per console.Calculate the level of profit or loss Sony would make if it sold 20,000 PlayStation 3 consoles at £300 each. (finish answer)
Profit = revenue - total costs. Revenue = quantity - total costs. Revenue = £20,000 x £300 = £ 6,000,000. Total costs = fixed costs + variable costs. Total costs = £2,400,000 + (£140x20,000)= £2,400,000 + £2,800,000 = £5,200,000. Profit = £6,000,000-
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A business is using a break-even chart to examine the effect of a reduction in the price of its product. Identify one problem a business may face as a result of reducing the price.
Change in total revenue or change in the margin of safety/change in profit or loss/move away from the break-even point.
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Explain the relevance of margin of safety to Jason and Balvir's restaurant business. (finish answer)
Jason and Balvir's restaurant needs to have considerable margin of safety because sales could easily fall in a competitive market like the restaurant market. Falling below the margin of safety would lead to a loss and therefore the business could str
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Explain one disadvantage to the business of borrowing money from a bank to finance growth.
If a business borrows money from a bank it has to repay the loan on a fixed-term basis with interest. A business could then struggle to make these regular payments and this could lead to cash-flow problems.
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List three internal sources of finance.
Owners funds, asset sales, retained profit.
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List four external sources of finance.
Overdraft, loans, bonds, trade credit.
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Centralised or decentralised [page 59] (insert table on the back)
(insert table)
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What is meant by the term 'empowerment'?
Giving workers more responsibility further down the chain of command in a hierarchy.
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Explain one drawback of a business having a wide span of control.
A wide span of control can make it difficult for superiors to manage the workforce who are their immediate subordinates. This could lead to communication problems and therefore reduced performance and organisation of employees.
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Explain one reason why a business might choose to delayer the organisation.
Delayering can reduce costs and unnecessary employees. As a result the organisation could operate more efficiently and this could lead to increased profitability.
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Identify three factors that could improve the motivation of workers in a business.
Higher pay, or bonuses, respect from superiors, increased job security or friendships with work colleagues/chance to express yourself in your work.
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Explain one benefit to a business of improved worker motivation.
Improved motivation of the workforce could lead to the long-term commitment of employees. This means they are less likely to leave the company and this will help the business retain their best employees.
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Identify two barriers to communication if a business.
Jargon and skills of sender or receiver or cultural differences/using inappropriate communication media/feelings or behaviour of sender or receiver.
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Identify two other methods of remuneration, apart from salary and payment by the hour, that a business could use to reward employees.
Piece rate and commission or fringe benefits (company car, extra holiday)/ shares in the company.
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Explain one benefit to a business of rewarding workers using a 'piece rate' method of payment.
A piece rate system will encourage manual workers to work harder and produce more units per hour. This will lower the average cost of production and lead to a greater profit margin on each product sold.
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Discuss the importance of increasing wages as a method of motivating workers employed in low-skilled industries. (page 62 q2 finish answer)
Increasing wages is an important aspect of motivating low-skilled workers as this will help them achieve their physiological needs.If there are few opportunities for promotion or reward it is also important to motivate them through higher comparable
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Identify two methods a pressure group could use to persuade a business to act responsibly
Lobbying and protests.
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List impacts a business might have on the environment.
Noise pollution, air pollution, traffic congestion and resource depletion.
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Explain one way that a business can limit the impact it has on the environment.
A business could use recycled packaging with its products. This would reduce the amount of waste going to landfill sites and therefore, encourage households to do the same.
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Economic issues affecting international trade (page 65 )
(insert text)
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What is meant by the term 'tariff'?
A tax put on goods imported into a country which makes them more expensive for buyers.
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What is meant by the term 'export subsidy'?
Measures that reduce the price of goods sold abroad encouraging firms to export.
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Government and the EU (page 66)
(insert text)
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Identify two EU regulations that might affect UK businesses.
Health and safety regulations and accounting regulations or maternity and paternity rights.
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Explain one benefit to a business of the UK being part of the European Union.
Being part of the EU encourages free trade between countries. This means that UK businesses can export their products abroad without any taxes imposed. As a result, opportunities for expansion and growth are created.
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Other cards in this set

Card 2

Front

Identify one way in which a business might collect quantitative market research data.

Back

Questionnaires or surveys or tally counts or observations or other relevant answers with a scale response.

Card 3

Front

Explain one way in which market research data might benefit a business.

Back

Preview of the front of card 3

Card 4

Front

What is meant by the term 'product trial'?

Back

Preview of the front of card 4

Card 5

Front

What is meant by the term 'customer loyalty'?

Back

Preview of the front of card 5
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