Business theme 2

What is organic growth? 2.1.1

organic growth is growing the business from within e.g. new products, new markets (changing marketing mix)

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what is inorganic growth? 2.1.1

inorganic growth is changing the business fronm outside. E.g merger or takeover.

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what are some of the internal sources of finance? 2.1.1

retained profits and selling assets

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what are external sources of finance? 2.1.1

loan capital, share capital, stock market floatation

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what is meant by the term 'multinationals'? 2.1.1

if a business grows and starts operating in more than one country through factories, offices or shops.

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what is part of the design mix? 2.2.1

the function, aesthetics and the cost

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what is the product life cycle? 2.2.1

has 5 main functions which are: development, introduction, growth, maturity and decline

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what are some of the extention strategies? 2.2.1

dropping the price, more advertising, find new customers (selling abroad), find a new market

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why do business aims and objectives change? 2.1.2

in response to: market conditions, technology, performance, legislation and internal reasons

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how do business aims and objectives change as businesses evolve? 2.1.2

focus on survival or growth, entering or exiting markets, growing or reducing the workforce

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what is the use of internet and e-commerce? 2.1.3

this allows the business to compete a lot more internationally, you can communicate 24/7 by setting up websites, e-mails, social media accounts etc...

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what is the impact of globalisation on a business? 2.1.3

Imports: competition from overseas, buying from overseas. Exports: selling to overseas markets. changing business locations. multinationals

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what are the barriers to international trade? 2.1.3

tarrifs and trade blocs

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what are the pricing strategies? 2.2.2

high-volume pricing: lots are made at low cost, high-marging pricing: adding value, strong usp and big difference between cost and price of product

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what are the influences on pricing strategies? 2.2.2

technology, competition, market segments, mass markets, first movers (people who want to buy things first so price is set high)

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what are the stategies for promotion? 2.2.3

advertising, sponcorship, product trials, special offers and branding

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what is the use of technology in promotion? 2.2.3

targeted advertising online, viral advertising via social media and e-news letters

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what are the methods of distribution? 2.2.4

retailers (brick and morter) and e-tailers (click and morter- shop and online)

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what are the methods of production? 2.3.1

job production (baubles), batch production (greggs), and flow production (quality streets)

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the impact of the technology on production has.... 2.3.1

improvement in quality, improvement in productivity and improvement in flexibility

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what are the advantages of job production? 2.3.1

high quality item made by one person or group, it is specific and unique to customer prefrences, premium price can be set, motivation for the employees

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what are the disadvantages of job production? 2.3.1

skilled labour and craftsmen are expensive, wide range of tools may be required, slow production process

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what are the advantages of batch production? 2.3.1

can use machinery to speed up, can make large quantities in batches, employees can specialise in certain tasks

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what are the disadvantages of batch production? 2.3.1

workers are less motivated, time may be wasted in between batches,if one batch delays all of them do

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what are the advantages of flow production? 2.3.1

automated and computerised production means improved quality, allows more complex designs, business can use JIT system

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what are the disadvantages of flow production? 2.3.1

high initial costs to buy machinery, low motivation of staff, break downs/faults may be costly, very inflexible and hard to change

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what is the impact of technology on production? 2.3.1

the costs are reduced per unit, designs can be easily changed, computers and robots help speed it up, allows to improve deliveries, more flexibility

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what can stock be described as? 2.3.2

raw materials, work in- progress and finished goods

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what is meant be minimum stock level (buffer stock)? 2.3.2

this is the least the business should store any less and the business will run out and not be able to meet customer demand

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what is meant by maximum stock level? 2.3.2

this is the most you can store in your shop, if any more it might go out of date or run out of space

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what is the re-order level? 2.3.2

this is when the stock has reached a certain amount and has to re-order for more stock

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what is just-in-time stock control (JIT)? 2.3.2

this is when a business orders the stock when they need it

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what is a bar gate stock graph? 2.3.2

a graph which shows minimum stock, maximum stock and re-order level

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what is quality check? 2.3.3

this is when quality inspectors check at the end that stardards have been met

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what is quality assurance? 2.3.3

this is when the checks are made regulary and throughout the production line

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how does a business maintain consistent quality? 2.3.3

make sure suppliers are reliable and their products are good quality, ensure staff have the right equiptment, inspect products at every stage of production, involve staff

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why does quality matter? 2.3.3

customers are more likely to come back and recomment to others, avoiding mistakes saves money, gives competitive advantage, can charge higher prices

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What is gross profit? 2.4.1

this is the profit made after deducting the costs from making its product or providing its service

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What is net profit? 2.4.1

this is more accurate as it reflects what the business ha left to spend when ALL costs are deducted.

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What is a gross profit margin? 2.4.1

allows to compare the gross profit figure from the P&L account with the sales revenue. The higher the percentage then the better as it shows cots of sales is low relative to revenue

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What is a net profit margin? 2.4.1

probably a better judgement as it considers the profit left when all costs are deducted and it measures this against revenue

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What is average rate of return? 2.4.1

it is the annual amount of income generated over the lifetime of the investments. Its calculated as a percentage.

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How do you calculate the gross profit margin? 2.4.1

gross profit/revenue x100

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how do you calculate the net profit margin? 2.4.1

net profit/revenue x100

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how do you calculate the avarage rate of return? 2.4.1

average annual profit/cost of investment x100

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what is market data? 2.4.2

this may provide info on market size, number of competitors in the market, average prices, average incomes, population changes and unemployement rates.

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what is tall organisation structures? 2.5.1

tall organisation is where there is a number of levels of authority (secondary schools)

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what is flat organisation structures? 2.5.1

flat organisation is where there is only 2 or 3 levels of authority (primary schools)

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what is meant by 'span of control'? 2.5.1

span of control is the number of employees who report directly to someone

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what is meant by 'centralisation'? 2.5.1

centralisation is when the senior management give little independence and authority to make decisions

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what is meant by 'decentralisation'? 2.5.1

decentralisation is when senior managers give their junior workers the freedom to make decisions

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how can decentralisation improve a business? 2.5.1

reduses pressure on senior managers, motivates employees as they become more involved, quickens the decision making

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what is the impact of too much communication? 2.5.1

the workers may get mixed uo messages and not do their jobs effectively, it may take more time to read through all of the instructions so they become slower, this may be a result of too many meetings, e-mails and forms to complete

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what is the impact of insufficient communication? 2.5.1

may lead to mistakes, people may not be informed of certain things, may lead to higher costs or lower sales therefore less profit

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what are the barriers to effective communication? 2.5.1

written- spelling errors, illegible handwriting (cannot read it), poor presentation. verbal- accents not understandable, speaking to fast. general- use of jargon, cultural differences and different interpretations of something, unclear structure

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what is the recruitment process? 2.5.2

-identify need for new employees, -creat job description and needed qualifications, - advertise job, -recieve applications, -interview, - and then test (optional)

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what are some of the selection processes? 2.5.2

interviews- meet face to face, psychometric tests- multiple choice to find suitable personality for the job, assessments- test to see if candidate is suitable

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What is the internal method of recruitment? 2.5.2

this is where the you promote from inside the business. This is advetised by notices or internal adverts on business computers

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What are the advantages of internal recruitment? 2.5.2

already have experience of the business, cheap metjod of recruitment, offers oppurtunities for promotion

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What are the disadvantages of internal recruitment? 2.5.2

choosing from a limited field of candidates, lose out on fresh ideas and skills from outside, may need more training

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What is the external method of recruitment? 2.5.2

getting someone who does not work for the business. Methods of advertising include: job centres, advertising e.g radio, recruitment agencies

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What are the advantages of external recruitment? 2.5.2

get a wider range of candidates applying, brings fresh ideas and enthusiasm, gets people with the right skills immediately

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What are the disadvantages of external recruitment? 2.5.2

it can be expensive, the business does not know the person (may be liars)

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What are the forms of training? 2.5.3

induction, on-the-job and off-the-job

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What is meant by 'induction' training? 2.5.3

trainig given to new employees on things like equiptment, knowing who is who, key info on the business and their role

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What is menat by 'on-the-job' training? 2.5.3

provided training in the workplace, working with more experienced employees who provide guidance whilst working- this is cheap and gives needed training

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What is meant by 'off-the-job' training? 2.5.3

can involve attending courses or going to college- this will bring in new ideas however it can be expensive and doesnt guarantee the worker will stay

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Explain the advantages and disadvantages of training? 2.5.3

ads-employees learn new skills so it makes them more flexible and knowledgeable=less mistakes, stay motivated and improve levels of sales, employees feel more valued. disads- costly and doesnt cover for the missing job, worker may not stay and leave

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What are the examples of 'formal' training? 2.5.3

conferences, webinars, presentations, professional exams, online traing courses, workshops, qualifications at college

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What are the examples of 'informal' training? 2.5.3

talking with colleagues, talking to people from other businesses, observing colleagues, reading papers and articles

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why are retention rates important? 2.5.3

retention rates are important because it shows how many workers have stayed at the business over a certain period (usually a year), 95% is good for qa business

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what are the reasons to train and develop employees? 2.5.3

ensures employees how much the business values them, ensures employees are up-to-date with latest changes, identifies gaps in knowledge and allows employees to do their jobs well and continually improve

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What is target setting and performance reviews? 2.5.3

this is where employees set targets with their bosses, these are monitored and then evaluated e.g training needs may be identified

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What are the benefits of motivated staff? 2.5.5

hard-working employees who want to do well, employees are more loyal=saves money becasue there is no need to get new ones, supportive employess (offer to their bosses)

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What are monatary benefits given to employees? 2.5.5

these may be necessary to attract people and keep good staff: bonuses- sales targetsor production targets being achieved, pension contributions- (employees likely to stay with the business), profit sharing- sharing profits to workers

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What are the non-monatary benefits? 2.5.5

often a business can not afford monetary benefits so the following may be given: flexible hours, job enrichment-give workers a range of challenging and testing tasks, training, team working- organising workers into teams

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Business theme 2

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