Business flashcards part 2

All keywords for year 10 and 11.

Sole trader and Partnership
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Primary Research
(Field research) involves gathering new data that has not been collected before. For example, surveys using questionnaires or interviews with groups of people in a focus group.
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Advantages of Primary research
Accurate, up to date, specific, individual results, can be quick if online.
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Disadvantages of Primary research
May take along time, expensive, may create misleading results.
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Secondary Research
(desk research) involves gathering existing data that has already been produced. For example, researching the internet, newspapers and company reports.
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Advantages of Secondary reseach
Cheap, quick, large amounts of data.
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Disadvantages of Secondary research
Not unique, too general, may be out of date.
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Internet reseach
A form of secondary reseach when used to collect data or primary if doing onlibe surveys.
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Internet research advantages
Access to large amounts of data, can be updated.
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Internet research disadvantages
May be unaccurate, quick, may not be able to find the information needed.
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Telephone survey
Questionaire over the phone.
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Telephone survey advantages
Large market, people may feel more comfortable answering personal questions because they can't see the interviewer.
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Telephone survey disadvantages
May not get accurate opnions, may create a negative view of the business, phone calls can be expensive, it is difficult to get people's phone numbers.
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A given topic that can be filled in by an interviewer or by the person being asked the questions.
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Questionnaire (Face to face)advantages
People are more likely to answer questions, the interviewer can ask more complex questions and explain them if necessary.
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Questionnaire (face to face) disadvantages
It takes a long time, as it's less anonymous, the interviewee is more likely to lie or to refuse to answer a question.
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Supplier feedback
Getting feedback from the people who supply the business with the things they need.
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Supplier feedback advantages
Improve relationship, helpimprove the business.
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Supplier feedback disadvantages
If the feedback is negative could damage reationship.
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Customer feedback
Feedback from exsisting customers on how to improve the business and what current things they like about the business.
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Customer feedback advantages
Competitive advantage, gain a good reputation for customer satisfaction, motivating.
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Customer feedback disadvantages
May be unmotivating if negative, may not help improve the business if too vague.
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Focus group
A small group of people meet together to examine a product and answer indepth questions. Usually used when a business creates a new product or brand image.
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Focus groups advantage
In depth, less likely to be biased.
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Focus group disadvantage
May be biased, more expensive.
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Marketing mix
The marketing mix is the combination of product, price, place and promotion for any business venture.
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The features and appearance of a good and service.
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How much a customer pays for a product.
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The point where products are made avaliable to customers.
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How customer are informed about products.
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Brand image
Personality of the product.
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Target market
A specific group of consumers at which a company aims its products and services .
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Product portfolio
range of items sold by a business. It can be analysed using the Boston Matrix.
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Product differentiation
Making products that stand out from the competition in terms of price, quality or service
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Why do small businesses adapt their products?
Competitive advantage, to fit their target market.
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Demand is the amount of a product customers are prepared to buy at different prices.
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The link between price and demand
An increase in demand following a successful advertising campaign usually causes an increase in price.
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Where a business pays for messages about itself in mass media such as television or newspapers
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Advertising advantage
Wide coverage, effective, builds brand loyality, control over the message.
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Advertising disadvantages
Non-personal, expensive, lacks flexability.
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Getting customers to talk to their friends and family about your product or service.
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Word-of-mouth advantages
Free, trustworthy.
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Word-of-mouth disadvantages
Impossible to control.
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Gaining press coverage for your business.
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Publicity advantages
Can be free.
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Publicity disadvantages
Not controlled.
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Direct mail
Sending promotional material directly to the consumer.
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Direct mail advantage
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Direct mail disadvantage
Often not read, low success rate.
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Personal selling
Employing a person to visit potential customers to persuade them to buy your goods or services.
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Personal selling advantages
Indivdual approach.
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Personal selling disadvatages
May annoy customers, expensive.
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Many business now have their own website on the internet to provide information about their business fpr consumers.
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Website advantages
provide basic information, can be used for e-commerce.
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Website disadvatages
Needs to be updated, needs be be found easily.
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An internet advert shown on another firm's website in the form of a horizontal bar across the page.
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An internet advert that 'pops up' in a new window when visiting another companies website.
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Banner and pop-ups advantages
Can target people.
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Banner and pop-ups disadvantages
May be ignored, can be seen as annoying.
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Email advantage
Fast, 24/7, international, cheap, can be sent to indivduals or groups.
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Email disadvatage
Needs access to the internet, viruses can be spread, phishing, no guarantee it will be read, may be regareded as spam.
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Channel of distribution
How a product gets to a customer.
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Transactions between people and business carried out entirely via the internet.
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The person who makes the product.
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Middleman ir distributor that buys in bulk, holds stock and sells mainly to retailers not consumers.
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Persuading shops to stock products means customers can buy items locally.
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Someone who makes direct contact with customers.v
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Net cash flow
The difference between money in and money out.
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Opening balance
The amount of money in the bank at the beginning of the month.
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Spending funds
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Money in
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Net cash flow formula
money in (Payments) - money out (receipts)
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Closing balance formula
Opening balance + Net cash flow
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Attracting people to apply for a job vacancy.
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Part-time workers
Working for a proportion of the full working.
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Part-time workers advantage
Saves on wages, more flexible, good for busy times to provide better customer service.
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Part-time workers disadvantage
May be less commited, less knowledge.
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Full-time workers
Working for the normal full working week e.g 36hours
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Full-time workers advantages
Fewer staff needed, lower recruitment or training costs, easier to control, more motivated staff, no other loyalties.
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Full-time workers disadvantages
Difficult to get out of their contracts,
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Internal recruitment
Appointing an existing employee of the business to fill a vacancy.
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Internal recruitment advantages
Skills are already none, less training needed, cheaper, motivate employees.
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Internal recruitments disadvantges
Creates a vacancy, creates jealousy
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External recruitment
Appointing an employee of another business to fill a vacancy, may have other loyalties.
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External recruitment advantages
New ideas and skills, more applicants, doesn't create another vacancy, no cause for jealousy
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External recruitments disadvantages
Doesn't motivate staff
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Job description
a detailed statement of the nature of the job and the tasks involved.
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Person specification
A profile of the type of person likely to make a good applicant.
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An unoccupied position or job.
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A person who applies for a job.
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A list of selected candidates from which a final choice is made.
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This allows managers to see, in person, how the person is likely to fit into the business and how they respond to some challenging questions.
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The ability to do something well.
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Practical contact with and observation of facts or events.
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A pass of an examination or an official completion of a course.
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When a worker is paid a fixed amount per month or year, no matter what hours they work.
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When an employee is paid a fixed amount for each hour or day they work.
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Payments made to retired workers. In addition to the state pension, businesses are expected to offer their own pension schemes.
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Fringe benefits
Rewards to employees that do not involve direct payments of money to them.
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Without money.
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The will to work due to the enjoyment of the work itself
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Monetary rewards
Reward with money
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When the employee gets a percentage of the amount they sell
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Piece Rates
A fixed amount for producing each piece of work
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Equal Pay Act 1970
Act of Parliament that estanlished in law equal pay for equal work to stop pay discrimination.
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Minimum Wage Act 1998
Created a minimum wage across the UK
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Discriminiation Legislation
Laws that make discrimination illegal on most grounds (race, sex, disability).
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Employment rights
The legal rights of an employee and employer
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Health & Safety Acts
Acts of law that protect the employee in the workkplace and set out the employers' obligations
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Job production
Making one-off specialist products for each customer
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Job Production advantages
Can charge customers more for specialist product. Higher customer satisfaction.
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Job production disadvantages
Production costs can be high. Slow process. Higher labour costs
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Batch production
Groups of identical items that pass through different stages of the production process at the same time.
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Batch production advantages
Unit costs low. More efficient. Different consumer tastes can be met.
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Batch production disadvantages
Can't customise products. Long time to switch batches. Finishing stock may take time.
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Operational Efficiency
Producing goods and services to an acceptable standard with as few resources as possible to keep unit costs low
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Unit cost
The average cost of making each unit
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Unit cost formula
Total cost divided by output
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Work is divided into separate tasks or jobs that allow workers to become skilled at one of them
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Computerised stock control programmes
The use of computers to keep records of all stock and reorder necessary stock automatically.
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The use of electronic technology to gather store, process and communicate information.
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Design technology advantages
CAD enables designers to lay their works out on screen, quicker, reduced resource costs, reducing the risk of errors,
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Computer-aided design (CAD)
Using computer based tools to design products.
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A good or service that that meets customers' expectations and is therefore 'fit for purpose'.
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Customer expectations
The minimum quality standards for a product or service that is acceptable to consumers.
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Quality assurance
A system of agreeing and meeting quality standards at each stage of a production.
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Customer service
Providing services to customers before, during and after purchases to standards that meet their expectations.
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Opening at convenient times, keep appointment and keep promises.
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Giving product advice on range of options available.
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Service at times of purchase
Makes sure the product meets customers' needs, different purchasing methods (credit card etc).
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After-sales service
helpline, advice on future products, repairs.
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Good customer service advantages
Repeat business, word-of-mouth promotion, less complaints, more motivated staff.
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Consumer protection
Laws that protect the intrests of consumers whem buying goods or services.
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Sales of Goods act 1979 and Supply of Goods and Services act 1982
Goods and service sold to custoers must be as described, they must be 'fit for purpose', must be of satisfactory quality.
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Consumer Protection Act 1987
Compensation must ve paid to a consumer who suffers injury or damage to property when currectly using the goods.
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Competition Act 1998
Business must not agree to fix prices at a high level with other similar businesses.
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Consumer Protection (distance selling) 2000
Firms must give clear information about the good or service, information must be provided in writing, fims must provide a cooling-off period of 7 days for customers to change their minds.
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Consumer protection from unfair trading regulations 2008
Advertising must not mislead or deceive, it must be possible for consumer to check prive comparisions made in advertisements with other businesses.
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Benefits of following consumer laws to the business
Consumers have the confidence to make purchases, reducing risk of losing customers, prevents unfair competition.
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Benefits of following consumer laws to the consumer
Can't be taken advantage of by businesses, won't be mislead or decieved so can get products and srvices that are reliable.
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Benefits of using IT for the consumer
Easier to access a business' details and products, easier to compare prices, 'comfort of their own home', easier to contact the business.
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Limitations of using IT for the consumer
Must have access to a computer, wdebsites may not be up to date, cannot try on or test goods, there is no personal contact and may have a slow response.
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Benefits of using IT for the business
Cheap to set up aswell as not having to pay for overheads, international.
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Limitations of using IT for the business
needs to be updated frequently, may have to hire IT specialists, communication and transport problems for international, the business needs to be prepared to reply to emails quickly.
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The buying and selling of goods and services over the internet.
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Global marketing using e-commerce advantages
cheaper, same price for consumers to access no matter how far away, quicker orders(this leads to better customer service), cheaper suppliers can be bought, improved cutomer service and customer loyalty.
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Global marketing using e-commerce disadvantages
Long distance deliverys can take a long time, may be seen as untrustworthy, limitations on perishable goods, small transactions may not be worth the cost of transport, communication problems (Wrong language).
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Economies of scale
The reasons why average costs of each item fall as a firm expands.
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Reasons for business growth: Economies of scale benefit
Reduce cost of each item.
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Reasons for business growth: Economies of scale risk
It's hard to manage a large business and this could increase the cost of each product produced.
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Reasons for business growth: Increase sales benefit
Increased profits.
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Reasons for business growth: Increase sales risk
Profits will not increse if the business had to lower its prices too much in order to sell more.
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Reasons for business growth: Increase market share
Retailers will be more prepared to stock the products of the business.
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Reasons not to expand
Keep control, offer personal service, avoid risk, avoid increase worry and workload.
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Organic growth
Expansion from within the business e.g by opening more shop branches.
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Opening new branches benefits
Less risky, usually from profits no need for a loan, easier to control.
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Opening new branches risks
Slow, market share could fall, no gains from intergrating with another business.
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Franchises benefits
Business growth is paid for by franchisee, franchisees are likely to gave a high incentive to expand quickly, the franchisor has fewer staff and fewer management problems.
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Franchises Disadvantages
A franchisee may not keep to their legal agreements, most profits are kept by the franchisee, if one frnachise is poor it will effect the businesses brand image.
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Inorganic growth
Expansion by merging with or taking over another business.
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Purchasing another business from its owners.
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Takeover disadvantages
It can be expensive and may require a loan.
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An agreement between between businesses and operate as a larger one.
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Merger disadvantage
May have problems of managing and controlling a much larger business.
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Horizontal intergration
Joining two businesses in the same industry and stage of production.
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Horizontal intergration benefits
Increased market share, reducing competition, economies of scale,
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Vertical backward integration
Joinging two businesses in the same industry but a different stage of production, towards the suplier.
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Vertical backward integration benefits
Offers reliable supploes of materials.
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Vertical foward intergration
Joining two businesses in the same industry but a different stage of production, towards the customer.
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Vertical foward intergration benefits
Offers a relianle out let for products.
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Joining two businesses in different industries.
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Diversification benefits
Spreads risks over more than one industry.
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Vertical intergration and diversification disadvantage
management may lack experience of the other business, the products they deal with and the markets they sell in.
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Conflict between stakeholders
The differnent stakeholders have different goals for the business and therefore defend their intrests.
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Someone who is affected by the business decisions.
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Positive imapact of growth on owners (stakeholders)
There should be a higher level of sales and profit.
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Negative impact of growth on owners
If the owners are the managers as well, there might be more responsibility and stress.
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Positive impact of growth on workers (Stakeholders)
There might be more opportunies for promotion and, possibly, greater job security.
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Negative impact of growth on workers (Stakeholders)
There may be job losses if jobs are dublicated in a merger or takeover. Shareholders will expect cost cuts.
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Positive impact of growth on customers (Stakeholders)
Prices may be lower.
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Negative impact of growth on customers (Stakeholders)
May be a rise in price due to the cost of merger or takeover, loss of personal customer service.
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Positive impact of growth on suppliers (Stakeholders)
More orders may be recieved from a larger business.
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Negative impact of growth on suppliers (Stakeholders)
The business may insist on lower prices for supplies.
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Positive impact of growth on banks (Stakeholders)
Lending more finance to the expanding business makes this a more profitable.
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Negative impact of growth on banks (Stakeholders)
Increase risks as if the expansion is unsuccessful the business can't repay its debt.
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Postive impact of growth on the government (Stakeholders)
Strong and expanding businesses pay more tax.
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Negative impact of growth on the government (Stakeholders)
If a monoply is created then the public intrest could be at risk.
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Any business with more than 25% market share.
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Ways to defend workers' intrests during an expansion
Prevent job losses, use trade unions to negotiate the best possible settlement, negotiate for higher paid, internal recruitment.
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Ways to defend customers' intrests during an expansion
Check prices to see if cost saves are being passed on, use consumer groups and their websites to put pressure on a larger firms to offer good value to consumers,
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Ways to defend suppliers' intrests during an expansion
Insist on reasonable prices for products and prompt payment.
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Ways to defend a banks' intrests during an expansion
Keep a close watch on the firm's bank account, have a senior manager to sit in on the firm's Board of Directors meetings.
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Ways to defend the government's intrests during an expansion
The Competition Commission can be asked to investigate and might recommend that a merger or takeover be stopped.
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Limited company
A business recognised as a legal unit that offers inverstors (Shareholders) limited liability.
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Private limited company (LTD)
A company that cannot sell shares to the general public. It is not listed on the Stock Exchange.
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Public limited company (PLC)
A company able to sell shares to the general public by being listed on the Stock Exchange.
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Limited liability
Inverstors (Shareholders) in a limited company can only lose their investments in the business if it fails, they cannot be forced to sell assests to pay off the firms debts.
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Part owners of a limited comapany -they own shares in it.
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Advantages of a LTD
More status, attracts private investors, orginal owners remain as directors so still have some control, limted liability.
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Disadvantages of a LTD
Cannot be listed on the Stock Exchange, expansion is limited, shareholders can't be kept up to date, accounts are public.
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Advantages of a PLC
Able to raise capitol by selling more shares, high status, shareholders are kept up to date, limited liability.
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Disadvantages of a PLC
Loss of control, directors have different aims to shareholders, accounts are public, are at risk of takeovers.
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Objective for expanding business: Increasing shareholder value
Share prices rise over time, increasing dividends can be paid out to shareholders.
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Objective for expanding business: Managerial objectives
Increase their status, increase salaries, gained publicity.
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Payment made to shareholders from company profits- usually made annually.
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Divorce between ownership and control
When directors control a public limited company and thousands of shareholders own it, but the two groups may have different onjectives.
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Ethical objective
A business aim to 'do do the right thing' accourding to the values and beliefs of managers, even if this not the most profitable way.
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Enviromental objective
A business aim to protect the enviroment during its operations.
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Social costs
The costs off business activity, including both finacial cost paid by the firm adn the costs on society.
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Social Benefits
The benefits of a business activity, not just to the firm but to society.
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Benefits of being ethical
Other firms want to work with you, motivated workers, more likely to get government contracts, gain more consumers, good relatonship with suplliers.
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Location- cost of site
The costs of buying or renting a premises.
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Location- Labour costs
The money spent on staffs wages. This can vary from country to country.
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Location- Transport costs
If heavy raw materials are used in production the business will have to pay hight transport costs if the suplliers are long distance.
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Location- sales potential
The sales of a business may be effected by the location.
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Why is the cheapest location not always the best location?
Increased transport cost back to the 'home country' may outweigh the cost of having more expensive land.
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Benefits of lacting abroad
Lower site or land prices, lower labour costs, avoid trade barriers if in the EU, take advantage of fast growing economies and markets,
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Increasing trend for goods to be traded internationally and for companies to be located abroad.
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Making products or parts of procuts in other countires. Services can be off-shored too, as with telephone call centres moving to India.
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A business with operations in more than one country.
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Product portfolio/ product mix
The rnage of products sold by a business.
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Spreading risks by selling in different markets.
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Product lifecycle
The life span of a product, recorded in sales from launch to being taken off the shelves.
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Extension strategies
Steps taken to extend the life cycle of the product.
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Competetive pricing
Setting a price for a product based in prices charged by competitiors.
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Price skimming
Setting a price at a high level to create a high quality and exclusive image, Price is usually dropped after the first adopters.
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Penetration price
Setting a price at a low level to gain greater market share and then increasing the price.
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Cost plus pricing
Setting a price by adding a profit margin to the toal cost of making the product.
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Loss-leader pricing
Setting a price below the cost hoping to gain other profitable shares.
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Sales promotion
Activities to attract consumer attention to a product to increase ssale.
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A business pays for an activityor event to gain publicity.
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Promotional mix
The combination of promotion methods used by a business.
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Factors that affect the choice of promotional mix
Cost and affordability, nature of the product, nature of the market and competitors' promotions.
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Selling to customers through telephone contact.
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Mail orders
Direct marketing through mail shots leading to goods being delivered directly to the customer.
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Purpose of financial statements
See whether profit or loss is being made, how much cah is flowing into and out of the business, when suplliers must be paid.
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Profit and loss account
This shows whether the business made a profit or loss over the last period (usually a year) It is also known as the income statement.
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Costs of sales
The cost to the business of the goods sold.
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Expenses of the business that are not directly part of the production process.
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Gross profit
The difference between sales revenue and costs of making the products solds.
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Gross profit formula
Gross profit= sales revenue-costs of sales
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Net profit
The difference between sales revenue and total costs.
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Formula of net profit
Net profit= gross profit-overheads
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Gross profit margin
The percentage of sales revenue that is gross profit.
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Gross profit margin formula
Gross profit margin%= (Gross profit / sales revenue) x100
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Net profit margin
Th percentage of sales revenue that is net proft.
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Net profit margin formula
Net profit margin%= (Net profit/sales)x100
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Net profit
The difference between sales revenue and total costs of the business.,
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Net profit formula
Net profit= gross profit-overheads
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How can you increase gross profits?
increasing sales, reducing costs, reduced labour.
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How can you increase net profit?
reduce costs, reduce overheads.
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Balance sheet
This lists the value of a company's assest and liabilities.
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Items of value owned by a business.
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Fixed assests
Items owned by thge business with a lifespan of more than one year. E.g buildings, equipment and machinery.
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Current assest
These are assets owned by the business that are either in a cash form or are likely to be turned into cash within one year. E.g stock, debtors, cash.
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Net current assets
If the business has short term debts greater than current assets it may have difficulty paying these debts.
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Total assets less current liabilities
This is the total number of assets owned by the company minus its short term debts.
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Net assets
Value of assets after liabilities have been subtracted.
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Capital and reserves
Share issued: value of shares bought by shareholders, Retained profit: profit kept by the business after tax and dividend have been paid.
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Debts owned by a business.
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Current liabilities
Short term debts of the business- they will have to be repaid within one year. E.g creditors or overdraft.
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The value of products supplied by other businesses that have not been paid for yet.
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The value of goods sold to customers that have not been paid yet.
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May include raw materials, components and finished goods.
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How easy it is for a business to pay its short-term debts.
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Current ratio formula
Current assests/current liabilites
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Acid test ratio formula
(Debtors + cash)/current liabilities
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What does the current ratio show?
The company provides information on its ability to meet its short-term debts by publishing its current ratio. This assesses how many times it could afford to pay its current liabilities out of its current assets.
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What does the acid test ration show?
This deducts the value of currently held stock to find the company's ability to meet its liabilities immediately. Stock is the least liquid current asset so it is deducted to give a more realistic view of the company's liquidity.
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Organisational structure
The internal links between managers and workers showing lines of authority.
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Layers of management
The number of differenct levels of management and responsibility in a structure.
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Span of control
The number of junior employees each manager is directly responsible for.
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Narrow span of control
Tall organisations have 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.
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Advatages of a tall organsational structure and narrow span of control
Easier to control fewer staff, less risk of workers making the wrong decision, lower training costs, controlled staff.
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Flat organisational structure
Flat organisations have few levels of hierarchy. Lines of communication are short, making the firm responsive to change.
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Wide span of control
A wide span of control means that tasks must be delegated and managers can feel overstretched.
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Advantages of flat structure and wide span of control
Quicker communitcation, more responsibility given is to each manager, training of workers could motivate them, workers are more involved.
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Senior managers take all important decisions.
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Advantages of centralisation
Senior managers have full control, quick decisions, decisions benefit the whole business.
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Decision-making power is spread to managers in branches and devsions of the business.
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Advantages of decentralisation
Motivates junior staff, the local managers have a better knowledge of the local area, junior managers gain experience.
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To remove a layer of management in a hierarchy while expecting staff to produce the same level of output.
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Attracting people to apply for a job vacancy.
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Job analysis
Identifying the tasks and skills needed to perform a job well.
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Job description
A detailed statement of the nature of the job and tasks involved.
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Person specification
A profile of the type of person likely to make a good applicant.
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Application form and personal details
These will be used to decide who to call for the next selective stage.
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This allows managers to see, in person, how the person is likely to fit into the business and how they respond to some challenging questions.
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Many firms now use some form of testing during the selcetion process. This can include apptitude and personality tests. this gives them a more accurate view than the personal impressions.
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Induction training
Intial training to familiarise new recruits with the systems of the business.
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On-the-job training
Takes place when employees recieve training as they are working at their place of work.
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Off-the-job training
Takes place from the job at another place.
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Staff appraisal
Assessing how effctively an employee is working.
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Staff appraisal advatages
Provide feedback, staff know how to improve, increase motivation, set objectives, identifies needs, provides basis for wage increase.
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Superior appraisals
The worker's senior manager assesses performance based on their knowledge of the recent work done.
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Individuals carry out an assessment of their own work and progress, which can then be checked and agreed with a superior.
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Peer appraisals
Carried out by work colleagues at the same level within the organisations.
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Staff turnover
The amount of employees that go in and out of the busienss.
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Autocratic management
Managers who believe in taking all decisions and just passing instructions to workers.
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Democratic mangement
Manages who involve workers and less senior managers in decision-making.
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Retaining staff
Keeping exsisting staff in the business, which cuts down the cost of recruitment, selection and training.
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the will to work due to the enjoyment of the work itsef.
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Piece rate
A fixed amount for producing each unit of work.
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Piece rate advantage
Should lead to higher output if workers are only motivated by the chance of earning more money.
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Piece rate disadvantage
May lead to poor quality,
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Hourly wage
Paid based on the amount of hours they work.
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Hourly wage advantage
Workers can calculate how much they should recieve each day or week,
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Hourly wage disadvantage
Doesn't profide any direct incentive to increase output or effort.
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Fixed annual sum, paid monthly.
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Salary advantage
Provides pay security.
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Salary disadvantage
No direct links between daily effort and pay.
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Profit sharing
A share of annual profits given as a bonus in additional basic pay.
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Profit sharing advantage
Makes workers responsble towards the company and keen to help it increase profits.
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Profit sharing disadvantge
There might be some lack of pay security, such as during a recession where the business may make a loss.
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Staff are paid for the number of items they sell.
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Flow production
Large scale production where ach stage of production is carried out one after the other, continuously, on a production line.
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Advantages of flow production
Low unit costs due to high output and efffciency, when computers are used the quality is high consisdatly, lower stock holding costs.
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Disadvantages of flow production
High set up costs, if there is a problem it is costly to fix and the whole production has to stop, low motivated workers, basic standard product can't be changed.
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Work is divided into seperate tasks or jobs that allow workers to become skill at one of them.
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Division of labour
Breaking a job down into small, reptitive tasks thatcan be done quickly by workers or machines specialised in this one task.
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Lean production
A production approach that aims to use fewer resources by using them more efficently.
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Continuous improvements
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Just in time producton
Ordering supllies so that when they are needed and making goods only when ordered by customers.
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Just in time production advantages
Cuts stock holding costs, increases effeicient use of factory space, capital that was used for stock can be spent on other things, impoves cash flow efficiency of the cash flow, close contract with suppliers.
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Just in time productuon disadvantages
customers have to wait longer of their products, costs of ordering supplies are hight, requires very reliable suppliers and transport.
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Lean design
Producing new designs as quickly as possible.
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Cell production
Cell production has the flow production line split into a number of self-contained units. Each team or ‘cell’ is responsible for a significant part of the finished article and, rather than each person only carrying out only one very specific task.
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Disconomies of scale
The reasons why production costs of each item rises as a firm expands.
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Economies of scale Bulk-buying
Delivering one very large order will be cheaper than delivering many smaller orders.
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Economies of scale Tecnical economies
Larger factories and pieces of equipment are more efficent than smaller ones.
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Economies of scale Specialist managers
A larger business can afford to buy specialist managers who can increse efficiency.
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Economies of scale Finacial economies
Large firms have a larger security so are more likely to be given loans.
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Disconomies of scale Poor communication
Sending and recieving messages become less efficent.
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Disconomies of scale poor motivation
Workers may feel less uninvolved.
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Disconomies of scale poor coordination
Having many locations it can make, making decsions difficult.
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Quality product
Goods or service that meets customers' expectations and is therefore 'fit for purpose'
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Using the businesses to make all or part of a product or provide or provide an aspect of the customer care.
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Quality standards
The expectations of cusomers expressed in terms of the minimum acceptable production or services standards.
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Quality assurance
Setting and trying to meet quality standards throughout the business.
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Total quality management (TQM)
An approah to quality that aims to involve all employees in the quality improvement process.
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What causes poor quality?
Poorly motivated by workers, no clearly responsibility for quality, lack of consistancy, outsourcing, inspection costs.
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(Field research) involves gathering new data that has not been collected before. For example, surveys using questionnaires or interviews with groups of people in a focus group.


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Accurate, up to date, specific, individual results, can be quick if online.


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May take along time, expensive, may create misleading results.


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