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Name three ways business impacts a country and its residents: - ansProvides employment New products can enhance the lives of consumers Improve a country's reputation What do businesses do in the primary sector? - ansExtract or grow raw materials What do businesses do in the secondary sector? - ansManufacture goods using raw materials What do businesses do in the tertiary sector? - ansProvide services What do mission statements create? - ansCorporate aims What are the benefits of setting business objectives? - ansProvide direction and can support planning and operations Allow a business to co-ordinate resources and ensure that all employees are working towards the same overall aim What is profit maximisation? - ansA business objective that requires a business to achieve the highest amount of profit for shareholders Which business objective requires a business to continue trading despite challenges in the external environment? - ansSurvival Which business objective requires the growth of stores or locations, sales value, sales volume or product range? - ansGrowth Which business objectives require a business to focus on supporting society through initiatives including sustainability and fair trade? - ansSocial, ethical and environmental What can corporate objective be broken down into? - ansFunctional objectives Team objectives Individual objectives What is revenue? - ansThe income earned by a business from the sale of its goods and services What is the calculation for revenue? - ansnumber of sales x sales price What are the types of costs? - ansVariable Fixed What are variable costs? - ansCosts that change directly with output What are fixed costs? - ansCost that do not vary as the company changes its output Who argued in 1980 that a business can be a cost leader or differentiated but not both? - ansMichael Porter What is profit? - ansThe amount of money that the business makes when taking into account costs What is the calculation for interest? - ansinterest rate x the size of the loan What is the calculation for profit? - anstotal revenue - total costs What do we call things like raw materials that businesses convert into outputs? - ansInputs What kind of sector do forestry businesses operate in? - ansPrimary sector What does the SMART acronym of business objectives stand for? - ansSpecific Measurable Agreed Realistic Timely Which type of costs don't change with a business' output? - ansFixed costs What is a sole trader? - ansA single person who is the exclusive owner of a business. What is the term used to describe the lack of distinction between a sole trader's assets and their business' assets? - ansUnlimited liability
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What are the advantages of sole trader business ownership? - ansEasiest type of business to set up Sole trader is their own boss Sole trader decides what to do with the profit Easy to change the legal structure What are the disadvantages of sole trader business ownership? - ansUnlimited liability Hard to raise finance Sole trader has all the responsibility Harder to retain good employees What is a partnership? - ansBusinesses that are owned by 2 or more partners that have an equal share of the profits and say in the decision-making process What are the disadvantages of partnership business ownership? - ansShared profits mean lower profits for individuals Unlimited liability Partners may disagree about business decisions Each partner is liable for the actions of the other partners Which type of limited company is where the ownership of shares is restricted? - ansPrivate limited company Which type of limited company is where it sells share on the stock exchange? - ansPublic limited company What are the advantages partnership business ownership? - ansMore partners mean more experience and ideas Easier to raise money Easier to retain good employees as they can be made into partners What are the advantages of private limited companies? - ansLimited liability The owners retain a lot of control over how the business is managed Easier to get a loan What are the disadvantages of private limited companies? - ansFinance is needs which has a lot of costs Legally obliged to publish their accounts which can be used by competitors What are the advantages of public limited companies? - ansAble to raise money for investment allowing the company to grow Easier to raise capital Limited liability What are the disadvantages of public limited companies? - ansOwners have little say over how the business is run Anyone is able to take over the company by buying enough shares Accounts must be public which can be used by competitors What is flotation? - ansWhen firms become public companies and their shares are made available to buy Which suffix follows the name of a private limited company? - ansLtd What is a not-for-profit organisation? - ansAn organisation where any profit is reinvested in the business and it cannot be kept by the owners What are some types of not-for-profit organisations? - ansCharities Social enterprise Unincorporated association
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What are the impacts of a market increasing in size for a business? - ansIncreases costs as a business must ensure it competes against other competitors What are the impacts of increasing net migration for a business? - ansDemand for cultural shops increase "What are a manager's responsibilities?" - ansSet objectives Review and analyse data Select and implement strategy Review the impact of their decisions What factors influence styles of management and leadership? - ansExternal environment Culture of a business Skill level of the workforce Do managers and leaders prefer the input of skilled or unskilled staff? - ansSkilled What does country club leadership focus on? - ansBusiness' employees What does team leadership focus on? - ansTask completion and concern for people What does impoverished leadership focus on? - ansIt lacks focus on either task completion or concern for people What does produce leadership focus on? - ansTask completion "What are the types of leadership outlined in Blake Mouton's theory?" - ansCountry club Team leadership Produce leadership Impoverished leadership Middle of the road At the left of the 'management continuum', who maintains full authority and decision making power? - ansManagers At the right of the 'management continuum', who is given authority an decision making power? - ansEmployees What type of leadership is the left of the 'management continuum' similar to? - ansAutocratic leadership What type of leadership is the right of the 'management continuum' similar to? - ansDemocratic leadership When will democratic leaders switch to an autocratic style of leadership? - ansA state of emergency What does middle of the road leadership focus on? - ansSome focus on both task completion and concern for people "An approach by leaders or managers to discuss and consult with employees, delegate decision making authority and empower employees" What does this definition describe? - ansDemocratic leadership "An approach by leaders or managers to keep control of decision making and ensure that employees are closely supervised." What does this definition describe? - ansAutocratic leadership Whose management theory classifies management styles based on a manager's emphasis on concern for people vs concern for task completion? - ansBlake Mouton In Mouton's theory, which management style has a high concern about people and low concern about the task? - ansCountry club In Mouton's theory, which management style has a low concern about people and low concern about the task? - ansImpoverished
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Whose continuum says that managers on the left of the continuum keep full authority and decision making power? - ansTannenbaum and Schmidt In an unstructured business, would you expect a change in leadership to face much resistance? - ansNo What are the factors influencing decision making? - ansAvailability of data Levels of experience Risk a business will accept What are the disadvantages of scientific decision making? - ansTime-consuming Experience may not be considered Poor data is unreliable What are the advantages of scientific decision making? - ansReduces the risk of making mistakes Provides guidance to those who have limited intuition Is intuition decision-making more suitable for staff with experience, or without experience? - ansWith experience What are the advantages of intuition decision making? - ansLots of experience means intuition is accurate Decisions made quickly What are the disadvantages of intuition decision making? - ansLack of experience means mistakes are likely to be made Decisions can be made for illogical reasons What does opportunity cost mean? - ansA manager must consider the impact a decision can have on alternative projects What factors does a manager need to consider when making decisions? - ansBusiness missions Business objectives Ethical positions External environment Resources What are the different external environmental factors? (PESTLE) - ansPolitical Economic Social Technological Legal Ethical and environmental What are Kahneman's 3 criteria for trusting your intuition? - ansThe situation is regular You've had lots of practice Immediate feedback What kind of diagram involves multiplying probabilities and working out an estimated value?
- ansA decision tree Which type of stakeholder will need to be managed closely? - ansStakeholders with high power and high interest Which type of stakeholder will need to be kept satisfied? - ansStakeholders with high power and low interest Which type of stakeholder will need to be monitored? - ansStakeholders with low power and low interest
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What is the PED coefficient if a product has perfectly inelastic demand? - ans What is an advantage of sampling as a method of market research? - ansReduces cost by having less people to collect data from What is a disadvantage of sampling as a method of market research? - ansIt may not accurately reflect the full target market if the sample is not chosen properly What is market segmentation? - ansThe process of dividing potential customers into different groups based on characteristics Why do businesses use market segmentation? - ansChoosing a market mix Choosing a promotion Market mapping What variables can used to segment customers in a market? - ansAge Gender or ethnicity Location Income What are the two types of market segments? - ansMass segment Niche segment Which market segment appeals to all types of consumers? - ansMass market What are the advantages of mass markets? - ansHave lots of customers Benefit from economies of scale Able to build a strong market presence What are the disadvantages of mass markets? - ansHigh levels of competition Low profit margins What are the advantages of niche markets? - ansLow levels of competition Able to develop specific expertise High profit margins Customer loyalty What are the disadvantages of niche markets? - ansNo economies of scale Vulnerable due to undiverse product portfolio What is adding value? - ansIt is a process through which a business increases the worth of the resources included in production so that customers perceive the product to be worth more that the cost of the inputs What is a bank overdraft? - ansIt is borrowings from a bank on a current account which are payable on demand What is a breakeven output? - ansIt is the point at which the total sales of a business equals total costs What is a budget? - ansIt is a detailed plan of income and expenses expected over a certain period of time What is a business angel? - ansIt is a type of investor who is willing to invest in high risk, high growth firms at a very early stage What is a business plan? - ansIt is a detailed description of a new or existing business including its strategy, aims, objectives and marketing and financial plan What is a business objective? - ansIt is a stated goal or target of a business What is cash flow? - ansIt is the movements of cash into and out of a business What is a cash flow forecast? - ansIt is a projection of the likely cash inflows and outflows in a business What is contribution? - ansIt is the difference between total sales and total variable costs
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What are costs? - ansThey are the amounts incurred by a business as a result of its trading operations What is demand? - ansIt is the amount of a product or service that customers are willing and able to pay at a given time What is demographic? - ansIt is a defining in a market in terms of social-economic factors What is the elasticity of demand? - ansIt is the responsiveness of demand to a change in price or income What is enterprise? - ansIt is the process by which new businesses are formed in order to offer products and services in a market What is an expenditure budget? - ansIt is a budget which sets out the expected costs to be incurred by the firm What is a franchisor? - ansIt is the owner of a franchise which is licenses out to other people or businesses What is a full-time employee? - ansIt is an employee who works more than 30 hours a week What is an income budget? - ansIt is a budget which sets out estimates of the likely demand for and value of the firms sales What are inputs? - ansThey are the resources that go into producing goods and services What is limited liability? - ansIt is where shareholders are only liable for the money that have invested, not for the overall debts and liabilities of their company What is the margin of safety? - ansIt is the difference between the actual level of output and the break even output What is market size? - ansIt is the total value or quantity of demand in a specific market over a specific period of time What is a niche market? - ansIt s a smaller part of a larger market in which customers have more specific needs and wants What is a patent? - ansIt is the right to be the only producer of a specified product or process What is a permanent employee? - ansIt is an employee who is employed on a formal employment contract and remains with the firm for an open-ended period until the contract is ended What is qualitative research? - ansIt is market research concerned with collecting data on attitudes, opinions, etc What is quantitative research? - ansIt is market research concerned with collecting data that can be quantitified What is return? - ansIt is the rewards to an enterprise What is a sample? - ansIt is a subset of a population in market research What is share capital? - ansIt is the finance invested in a business by the shareholders What is a social enterprise? - ansIt is a business that has objectives other than making profit What is a supplier? - ansIt is a business that provides goods and services to other firms What are total costs? - ansIt is the total of variable and fixed costs in a business What is trade credit? - ansIt is the amounts owed to suppliers of a business What is unlimited liability? - ansIt describes the potential risk that sole traders and partnerships face as they are liable for the debts of the business What is a USP? - ansIt is a feature of a product or service that makes it stand out compared with the competition What is venture capital? - ansIt is the investment made by specialist funds to finance the launch, early development or expansion of a private company
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The degree of competition What is price penetration? - ansIt is where a business tries to increase market share by offering a low initial price What are loss leaders? - ansThey are products or services that are sold by a businesss at a price where the business makes a loss, in the hope that customers make extra purchases What is cost-plus pricing? - ansIt is when a business charges the customer based on what it costs to produce the product or service What is competitive pricing? - ansIt is when a business prices its products or services based on what other firms in the market charge What is the ""mark up"" in cost-plus pricing? - ansIt is an addition to the cost of production to make sure the business makes a profit on each unit sold What are some promotional methods? - ansAdvertising Public relations Sales promotion Sponsorships Social media Product placements What are promotional methods? - ansThey are the different methods that businesses use to inform consumers about their products and services in order to persuade them to buy them What is advertising? - ansIt is when a business pays to have their product or service promoted in a public space Why is choice of advertising platform important? - ansTo make sure they have the maximum impact To make sure the business reaches the right target market Who names the Long Pocket strategy? - ansPalich et al What's another term for advertising? - ans"Above the line" promotion Why do businesses use sales promotions? - ansTo try and boost sales What type of sales promotion is a "buy one get one free" deal? - ansValue for money offer PR involves maintaining a good public image. What does PR stand for? - ansPublic Relations What are some types of sales promotion? - ansDiscount coupons Competitions Free gifts Free samples Point of sales displays Value for money offers What is the promotional mix? - ansThe combination of different promotional methods that a business uses What are the factors influencing the promotional mix? - ansThe nature of the market The nature of the product Competitor actions Target market Finance available What are the 4 main reasons why businesses use promotion? - ansTo inform/remind customers about the product To create or increase sales To create or change the image of a product
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To persuade customers to buy the product When a farmer sells their produce in their own farm shop, which distribution channel are they using? - ansDirect to consumer What are distribution channels? - ansThey are the different ways that a business can distribute their product Why can wholesalers lead a business to have worse customer service? - ansBusinesses have less interaction with customers Why can wholesalers make a business less competitive on price? - ansWholesalers and retailers both take a cut of the profit Why can wholesalers let a business reach a lot of customers quickly? - ansWholesalers have a large network of buyers Why do businesses bypass wholesalers? - ansTo reduce prices for customers To have more control over which retailers stock the product What is a benefit of selling direct to customers? - ansNobody else takes a cut of the profits Why might a start-up use a wholesaler to sell their products? - ansIt's hard for them to get retailers to stock their products What are the disadvantages of bypassing wholesalers? - ansIt is hard to contact retailers Higher logistics costs What is a retailer? - ansIt is any shop that sells directly to the customer in small quantities What is E-commerce? - ansIt is buying goods electronically on the internet What are some benefits of e-commerce and m-commerce? - ansReach more customers Cheaper to set up a business Sell direct to consumer What are the drawbacks of e-commerce and m-commerce? - ansSelling online can create problems Increased competition Investment needed Why do businesses using e-commerce and m-commerce usually have lower prices? - ansThere are no middle men take a cut Why is it becoming easier for businesses to reach more customers without setting up a store?
- ansE-commerce and M-commerce What are the four main functions of a business? - ansMarketing Operations Human resources Finance What can the operations objectives be focused on? - ansCosts Quality Dependability Environmental Adding value What are the influences on operational objectives and decisions? - ansObjectives of other business functions Type of product or service produced Availability of internal resources Technological advancements Changing customer tastes
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What can businesses do to measure and identify quality? - ansCheck quality in production process Customer service and complaints How does customer service help businesses improve product quality? - ansIt helps spot problems that have not yet been identified by the company What is Total Quality Management (TQM)? - ansIt is a set of management principles that places quality at the heart of everything a business does What are the benefits of maintaining high product/service quality? - ansPositive image Higher price Avoid product recalls What are the costs of maintaining high quality products and services? - ansProvision of services Staff training Inspection costs How does mass customisation help a business improve its flexibility? - ansIt allows businesses to respond to customer needs through customising products requested by customers How can a business improve its speed of response? - ansIncreasing efficiency Does outsourcing usually increase or decrease a business' ability to grow its production? - ansIncrease What can a business do in order to meet demand? - ansMinimise waste Hire flexible workers Outsource What is an inventory? - ansIt is a list of all the stock that is held by a business What does an inventory control diagram show? - ansMaximum stock level Re-order level Buffer stock Lead time What is lead time? - ansIt is the time taken for stock to arrive after it is ordered What is buffer stock? - ansIt is the spare stock a business holds in case there is an unexpected increase in demand What is the re-order level? - ansIt is the point at which further stock is ordered What is outsourcing? - ansIt is when a business uses another business to make part of its product or provide part of its service What are the benefits of financial objectives? - ansMeasure financial performance Provide direction Support decision making Motivate employees How do you calculate return on investment? - ans((investment return - investment cost) / investment cost) x 100 What do capital structure objectives focus on when setting their targets? - ansThe proportion of capital received from different sources of finance What can return on investment help calculate? - ansThe efficiency and profitability of a project What are the influences on financial objectives? - ansOverall business objectives Different departments
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Shareholders Competitors Who, primarily, needs to be satisfied by the objectives of the financial department? - ansShareholders What sources of waste did Ohno identify in Toyota's factories? - ansDefective products People movement Time on production line Transportation Waiting time Overproduction What do businesses use cash-flow forecasts for? - ansTo estimate their total cash inflows and their total cash outflows for a future period of time How can a business receive their receivables quicker, in order to improve cash-flow? - ansReduce the trade credit period How can a business reduce how quick they must pay their debtors, in order to improve cash- flow? - ansAsk for a longer trade credit period How do you calculate net cash flow? - anstotal inflow - total outflow What are the advantages of budgeting? - ansHelp business achieve targets and objectives Help managers and leaders focus on cost control Motivate staff by providing spending authority What other budgets are used to create profit budgets? - ansRevenue budgets and expenditure budgets How do you calculate total contribution? - anstotal revenue - total variable costs What is gross profit? - ansIt is the amount of profit remaining once direct costs have been paid by the business How do you calculate the gross profit margin? - ans(gross profit / sales revenue) x 100 What is operating profit? - ansIt is the amount of profit remaining once direct costs and indirect costs have been paid by the business How do you calculate the operating profit margin? - ans(operating profit / sales revenue) x 100 How do you calculate the profit for the year margin? - ans(profit for the year / sales revenue) x 100 What are three internal sources of finance? - ansRetained profit Selling assets Personal savings What does internal sources of finance describe? - ansThe money that is raised within a business What is retained profit? - ansIt is profit that the business has saved whilst it has been operating What is an advantage of selling assets to raise money? - ansIt is a cheap source of finance because the business does not have to pay interest What is a disadvantage of selling assets to raise money? - ans"It can harm a business' operations" What are the disadvantages of retained profit? - ansIt is limited It may not be high enough to fund big, long-term projects
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Diversity Aligning values Location and skills What are the internal influences on HR objectives? - ansBusiness objectives Different departments Availability of internal funding What are the external influences on HR objectives? - ansLegal considerations Technological advancements Ethical considerations In soft HR management, what is recognised as the most important resource for a business to value? - ansEmployees Which type of HR management views employees as a resource to be used? - ansHard HR What is an advantage of hard HR? - ansManagers are able to retain full control of employees What is a disadvantage of hard HR? - ansIt does not allow employees to contribute to their full potential to the business What is an advantage of soft HR? - ansIt empowers employees which can increase production and efficiency What is a disadvantage of soft HR? - ansIt gives employees more freedom so mistakes may occur if employees make poor decisions What do labour turnover rates show? - ansThe percentage of staff that leaves the business per year What do retention rates show? - ansThe percentage of staff that stays at the business per year How do you calculate labour turnover? - ans(total number of staff leaving / average number of total staff) x 100 How do you calculate average number of total staff? - ans(number of staff at the beginning of the year + number of staff at the end of the year) / 2 Why might labour turnover rates be high? - ansCompetitors offer higher wages Employees are demotivated What are the advantages of low staff turnover rates? - ansExperienced employees remain within the business Training and recruitment costs are low as fewer vacancies to be filled What is a disadvantage of low staff turnover rates? - ansFewer opportunities to recruit new talent, skills and ideas How do you calculate retention rates? - ans(total number of staff who worked at a business for the whole period of time / total number of staff at the beginning of the period of time) x 100 Why might retention rates be high? - ansHigher salary than competitors High levels of motivation Why is labour productivity important? - ansHR managers use this as a measure of an employee's performance during appraisal reviews to inform decision about employee pay and any possible training requirements How do you calculate employee costs as a percentage of turnover? - ans(total employee costs / total revenue) x 100 What will HR managers consider if productivity is decreasing? - ansTraining How do you calculate labour cost per unit? - anstotal labour costs / total units produced How can a business improve the labour cost per unit? - ansIncrease productivity Reduce employee costs
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What is job design? - ansIt is an employer's creation and planning of a job considering the job's aspects What aspects of a job should an employer include in job design - ansThe roles and responsibilities of the job itself The systems and methods used by an employee to carry out their role The relationships between the employer and the employee What factors influence job design? - ansOverall business objectives Individual employees Availability of resources Market research What are the different forms of job design? - ansJob enlargement Job enrichment Job empowerment Job rotation What is job enlargement in regards to job design? - ansIt is when an employer increases the number of jobs an employee is responsible for What is job enrichment in regards to job design? - ansIt is when an employer provides an employee with jobs which are more complex and challenging What is job empowerment in regards to job design? - ansIt is when an employer gives an employee more control over their job What is job rotation in regards to job design? - ansIt is an example of job enlargement and it is when an employer allows an employee to move form one role or duty to another, regularly What are the five core characteristics of job which motivates employees according to Hackman and Oldham? - ansSkill variety Task identity Task significance Autonomy Feedback What factors do leaders need to consider when planning the design of their organisation? - ansAuthority Spans of control Hierarchies Delegation Centralisation and decentralisation What is centralisation and decentralisation? - ansIt is the decision making power within the business and how this power is held by different individuals in the business What are spans of control? - ansThey are the number of people who report directly to a supervisor or manager What is delegation? - ansIt is when a manager passes responsibility or authority to an employee below them in the hierarchy What are the advantages of delegation? - ansReduces the workload of managers Empower and motivate employees What is a disadvantage of delegation? - ansA business might need to invest in and provide training What are hierarchies? - ansThey are the levels and layers of management
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Salary schemes Performance-related pay What is commission? - ansIt is a payment based on the amount of goods an employee sells What might influence a business in choosing their financial and non-financial methods of motivation? - ansThe business' financial position Demands of employees Actions of competitors What are the bases of performance-related pay? - ansWhether employees meet objectives Products sold in a period of time What are the two forms of employee representation? - ansA works council Trade union What is a works council? - ansIt is a committee, including employees and the employer, where regular meetings take place to discus work related issues on behalf of all employees What is a trade union? - ansIt is an organisation that represents a group of employees and negotiates with the employer on their behalf What are the influences on employer-employee relations? - ansSkill set of employees Culture of the business Size of the business Why are good employer-employee relations important? - ansEmployees feel valued and trust their employer, supporting retention and productivity Improves the decision-making process, minimising mistakes What are the influences on a business' mission statement? - ansCulture Ethos and values Shareholders Stakeholders What are corporate objectives? - ansThey are overall business objectives designed to steer a business towards achieving its overall mission What are the influences on a business' corporate objectives? - ansShort-termism Business ownership Internal business environment External business environment What are tactical approaches? - ansThey are short term plans which often require few resources and can be stopped or reversed if required What are strategic approaches? - ansThey are long-term plans which require many resources and can be difficult to reverse once implemented What two approaches can business use to achieve their corporate objectives? - ansStrategic approaches Tactical approaches What are corporate objectives designed to do? - ansMeet the overall business mission What does SWOT stand for? - ansStrengths Weaknesses Opportunities Threats Which sector would a declining market be in a SWOT diagram? - ansAn external threat Which sector would cash flow problems be in a SWOT diagram? - ansAn internal weakness
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Which sector would an expanding market be in a SWOT diagram? - ansAn external opportunity Which sector would a trusted and reputable brand be in a SWOT diagram? - ansAn internal strength How do you calculate return on capital employed? - ans(operating profit / total capital employed) x 100 How do you calculate current ratio? - anscurrent assets / current liabilities Which departments can provide non-financial information on the business' strengths and weaknesses? - ansOperations Marketing Human resources What non-financial information can be provided from the operations department on the business' strengths and weaknesses? - ansLabour productivity Capacity and capacity utilisation Quality control measures What non-financial information can be provided from the marketing department on the business' strengths and weaknesses? - ansSales forecasts Brand loyalty and satisfaction data What can data be compared against? - ansDepartments Different years Competitors The industry What alternative sources of non-financial information to the operations, marketing and HR departments, can be provided on the business' strengths and weaknesses? - ansAbsenteeism Labour costs per unit of production Labour turnover Employee costs Which department would provide information on brand loyalty? - ansThe marketing department What are core competences? - ansThey are the business' ability to combine its skills, knowledge and processes to provide it with an advantage over competitors Who first used the term 'core competences'? - ansHamel and Prahald What are the advantages of core competences? - ansThey allow businesses to attract and retain customers They allow businesses to add value throughout their production process What are the four areas of business performance in Kaplan and Norton's balanced scoreboard model? - ansFinancial performance Customer performance Organisational capacity Learning and growth How is customer performance measured in Kaplan and Norton's balanced scoreboard? - ansBrand loyalty Customer retention Customer satisfaction How is financial performance measured in Kaplan and Norton's balanced scoreboard? - ansRevenue Cash flow
