Flashcards
Business Studies Unit 2
Cards in this deck (72)
- 1Advantages of becoming a big business- More resources
- Holiday time
- Economies of scale (buying, research and promotion) - 2Disadvantages of becoming a big business-Slow to bring about change
-Slow communication
- Reduced motivation
- Culture clashes - 3MergerWhen two or more firms join together and create another joint business.
- 4TakeoverWhen one firm gains control of another and buys it up
- 5Advantages of selling franchises- Brand awareness
- Fast growth as franchisee finances it
- Franchisees are motivated - 6Lean productionAims to reduce the amount of waste in a business, to reduce costs. This includes just in time and kaizen production.
- 7Disadvantages of selling franchises- Quality problems and bad reputation spreads through whole business
- Original entrepreneurs no longer own the business - 8Advantages of becoming a plc- Advertise shares on stock market
- More media coverage
- More status (investors more willing to buy shares as they're sold on easily) - 9Disadvantages of becoming a plc- More media coverage shows mistakes
- Can't control who buys shares
- More regulated than plc and expensive to start up and run - 10Just in time productionWhen a customer order is received, the business orders stock from the supplier and starts producing.
- 11Advantages and disadvantages of just in time production- The business holds little stock, so it is not damaged or stolen.
- Less waste as there is little unwanted stock to be thrown away
- Delays can be very expensive - 12What is divorce between ownership and controlOwners of company (shareholders) may not have the same aims and objectives as the people who control the company and make the decisions (managers).
- 13Kaizen productionEveryday teams of employees think of new ways to improve the production process.
By involving employees, they are more motivated and also the changes reflect their needs. - 14Advantages of expanding abroad- More customers
- Reduces risk (eggs/basket)
- Government incentives abroad - 15Management styles - Authoritarian leadershipSenior managers take most important decisions
- Piece rate pay system
- Bonuses and other financial benefits - 16How does lean production affect employees?- Staff must be motivated, as strikes can be damaging to JIT production
- Kaizen requires staff to want to help
- Staff must be trained to check quality at every stage and be willing to send back faulty products - 17Disadvantages of expanding overseas- Employees may not want to move
- Different rules
- Different market (may need to alter products which may be expensive) - 18Advantages of flow production- Cheap per unit
- Allows for specialisation
- Huge volumes
- Easier quality control - 19SpecialisationThe process is broken down, so individuals only focus on one part of production. Through repetition, staff become more efficient, but it may lead to boredom.
- 20Disadvantages of flow production- High initial costs (only use if high demand)
- Specialisation leads to boredom
- Lacks flexibility - 21QualityThe extent to which a consumer is satisfied with a product or service.
- 22Cross subsidyWhen a company produces a range of products then they can use revenue from their cash cows (high share/low growth market) to support the new product. They subsidise the extra money that needs to be spent.
- 23Stages of Product life cycleDevelopment
Introduction
Growth
Maturity
Decline - 24Measuring quality- Customer questionnaires
- Mystery visitors
- Staff checking own work - 25Extension strategies- Redesign product
- Advertise more
-Cut prices
-Find new customers
- Deals (BOGOF) - 26Difference between current liabilities and long-term liabilitiesCurrent liabilities (e.g. tax) are debts that have to be paid within a year
Long-term liabilities are debts that will be paid back over many years - 27Price skimmingHigh price when product first enters market
(High demand - e.g. iPhone) - 28Advantages and disadvantages of customer questionnaires- Unbiased opinions of the people who matter most to the business
- Customers may not have time
- Take a long time to read and log - 29Penetration pricingLow price when product is launched to try and get quick sales
- 30DebtorsPeople that own you money
(include these in current assets) - 31Competitive pricingWhen firms try to match the prices of their competitors
(Common in markets when a few big firms are competing (eg. supermarkets) - 32Advantages and disadvantages of mystery visitors- Good outsider's view
- Staff feel spied on
- May not be indicative of every experience - 33Loss LeaderWhen a product is sold at a loss in the hope that customer will buy more of something else where firm will profit.
(Printers are cheap, ink is not) - 34CreditorsPeople that you own money to
(Include these in current liabilities) - 35Advantages and disadvantages of staff checking their own work- Allows reflection
- Staff feel like their thoughts matter
- Need training to be effective
- Staff may be biased - 36Quality assuranceThe process of determining whether products meet customer expectations and making sure they do.
- 37Advantages of intermediaries in the distribution channel- A producer can access more customers by selling to wholesalers or retailers
- By selling its products in other business' stores, customers can compare products - 38Total quality managementInvolves all employees in the process of preventing mistakes in order to achieve zero defects.
- 39How would a business maintain consistent quality?- Ensure suppliers are reliable
- Train staff
- Invest in modern equipment
- Inspect products - 40Disadvantages of intermediaries in the distribution channel- More mark ups at each stage mean final price is far higher for customers
- By selling the product onto someone else the producer loses control and may not like store layout etc. - 41Why is good quality important?- Customers are more likely to return and recommend the business
- Avoiding mistakes saves money
- They can charge more for the products - 42Name the two profit margin equations Which is more useful and why?Gross profit/net profit margin =
(net/gross profit x 100) ÷ revenue
Net profit is more useful as it includes overheads. - 43Sources of finance for a large business- Retained profits
- Selling assets
- Bank loans
- Mortgages
- Selling shares - 44Current ratioCompares the current assets the business has with the current liabilities.
2:1 is a good figure, and the business should be able to pay the debts on time. - 45Acid test ratioSame as current ratio but doesn't include stock.
A good figure is 1.1:1. This may be a better guide than the current ratio, as it may be hard for a business to sell its stock quickly enough to pay its debts. - 46Organisational chartA plan showing the roles of and relationships between all employees in a business.
- 47Line managerAn employee's immediate superior or boss
- 48Retained profits advantages and disadvantages- No interest payments
- Quick to arrange
- Only available to profitable firms
- Shareholders may oppose decision - 49Span of controlNumber of employees managed directly by a manager.
- 50Advantages and Disadvantages of selling assets- No interest payments
- May keep assets (if leased back)
- Many firms have no suitable assets
- Leasing assets back means regular payments - 51Advantages and disadvantages of bank loans and mortgages- Can be arranged quickly
- Allows repayment over a long time
- Interest must be paid
- Bank may require asset as collateral - 52Advantages and disadvantages of selling shares- No interest payments
- Owners may lose control of the company
- Only available to plcs - 53What is a profit and loss account?A financial statement showing a business' revenues and costs over a period of time.
- 54Flat organisational structure(Few levels of hierachy, wide span of control)
- Quicker communication
- More responsibility given to junior managers
-Workers need training to take responsibility (increases motivation)
- Appropriate for senior managers who think that workers should take responsibility and make decisions. - 55OverheadsFixed costs
- 56Tall organisational structure- Managers can easily control fewer staff
- Senior managers have all responsibility (fewer risks)
- Lower training costs as workers aren't trained for making decisions
- Appropriate for managers who believe workers must be closely controlled. - 57DelegationThe passing down of authority onto more junior employees
- 58DecentralisationWhen employees working in branches, departments or factories across the business are given more authority to take decisions.
- 59What factors would be taken into consideration when choosing a source of finance?- Profitability of business (retained profits and bank loan)
- Assets owned by business
- Past history and future prospects (chance of getting a loan/paying it back)
- Legal structure (selling shares)
Amount of finance to be raised (may use more than one source - selling too many shares could cause lack of control) - 60Advantages of decentralisation- Reduces pressure on senior managers
- Employees are motivated
- Local managers - better knowledge
- Quicker decisions - 61Disadvantages of decentralisation- Employees may take decisions to benefit their branch, not whole firm
- Costly training
- Hard for senior managers to send messages to all employees
- Risky as inexperienced junior managers may make bad decisions - 62Person specification- Education requirements
- Special skills
- Experience - 63Induction training- Introduction to company and workplace
- Basic rules - 64Advantages and disadvantages of 'On the Job' training- Job specific
- Cheap
- Employee learns and works
- Trainer is not as productive - 65Advantages and disadvantages of "Off the job" training- Staff can get qualifications
- Staff bring new ideas back
- Expensive
- Staff don't work while being trained - 66Financial methods of motivation- Piece rate pay
- Bonuses
- Company car or health insurance - 67Gross profitRevenue minus cost of sales
(That figure's grossly miscalculated, you Forgot Fixed costs!) - 68Non-financial methods of motivation- More demanding jobs / responsibility
- Rota (saves boredom)
- Teams (social and more authority)
- Training - 69Net profitRevenue - cost of sales and overheads
(Just profit really...) - 70Management styles - Democratic leadershipEmployees play a major role in decision making
- Team work
- Training
- Varied and demanding tasks - 71Function of a balance sheetSets out the assets and liabilities that a business has on a particular day.
- 72Difference between fixed and current assetsFixed assets are kept for many years (e.g. buildings and machinery)
Current assets are only kept for a short time (e.g. cash and stock) and are used by the business to settle debts.
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- GCSE Business Studies Flashcards on Business Studies Unit 2, created by tara.springate on 18/05/2013.
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