Question | Answer |
What is a sole trader? | A business that is fully owned by one person. |
Advantages of being a sole trader? | >Full control over decision making. >Get to keep all the profits. >Financial privacy |
Disadvantages of being a sole trader? | >Unlimited Liabililty >No economies of scale >Limited capital >Lack of continuity |
What is a limited company? | A company which has a seperate legal identity from its owners. |
What is an LTD | A private limited company: ie, a limited company with shares that cannot be bought by the public. |
What is a PLC? | A private limited company: ie, a limited company which its shares can be bought by the public. |
Advantages of an LTD? | >Continuity >Limited Liability >More Control >Raising Capital is easier |
Disadvantages of an LTD? | >Shared Profit >Lack of financial privacy >Limit on capital >Set up costs |
Advantages of a PLC? | >Raising capital is easy because of shareholders >Limited Liability >Continuity |
Disadvantages of a PLC? | >Threat of hostile takeover! :( >Lack of control >Set up costs >No financial privacy |
What are the two documents required for a Limited company? | 1. The "Memorandum of association." >Basically the outside view of the company eg. name, function, objectives 2. The "Articles of association." >Basically the inside workings of the company eg. How board meetings will work, how profits will be split, duties of the directors |
Who are the internal customers? | >Owners >employees |
Who are the external customers? | >Customers >Other businesses |
Why is value added a good thing? | It is cheaper to keep existing customers than find new ones. (Value added=customer loyalty) |
What is the difference between an aim and an objective? | An aim is a goal to achieve An objective is a stated measurable target to achieve that aim. |
What are the five main business aims? | 1. Survival 2. profit maximisation 3. growth 4. Improving corperate image 5. Concern for the enviroment. |
Alternative goals for the public sector businesses and social enterprises? | public sector= to provide a service social enterprise= reinvest profit |
What is a stakeholder? | Someone with an interest in the business. |
Examples of internal stakeholders | Managers and employees |
examples of external stakeholders | customers, community, compeditors, creditors, goverment, enviroment ect |
what are the ***TYPES*** of production. *key word* | Primary (extraction of raw materials) Secondry (construction using raw materials) Tertiary (services) |
Advantages of flow production? (also known as mass production) | >Because it is capital intensive production is quicker >Can be 24/7 >economies of scale >producing on a large scale |
Disadvantages of flow production? | >Large initial investment > one part off assembly line breaks down whole production process can be effected >lower staff motivation (work is repeditive) >products are standardised/loss of flexiblity |
What is batch production? | When a number of similar or identical products are produced in a group. |
Advantages of batch production? | >less costs (fewer workers) >economies of scale |
Disadvantages of batch production? | >Down time >Storage costs >demotivation >no flexiblity |
What is job production? | The one off (bespoke) production of a product for one specific customer. |
Advantages of job production? | >high worker motivation >can charge more for their products >flexibility customised products |
Disadvantages of job production? | >High cost of production >time consuming >few oppertunities to automate the production process |
What is CAM? | Computer aided manufacturing. The use of computer based software to assist the actual manufacture of a product. |
What is CAD? | Computer Aided Design. The use of computer technology to assist in the design and drafting of a product. |
What are the advantages of technology? | >improved quality >increased productivity >Lower average costs >Speedier development of new products |
What are the disadvantages of technology? | >Higher fixed costs >Retraining costs >Demotivation of workers >Redundancies |
What is Quality assurance? | Getting the service or product "right first time" with "zero defects." It is trying to prevent faults from happening and every stage may be checked for quality. |
Benefits of quality assurance? | >Reduces the number of faulty products. >Reduces costs through wastage. >Motivational for workers who are involved in quality. |
What is primary market research? | Original data that the company has collected themselves for a specific purpose. Adv- relevant & up to date Disadv- Time consuming & expensive |
What is secondary market research? | The processing of data that has already been collected. Also known as desk research. adv- Cheap & quick disadv- may be irrelevant, out dated and biased. |
Methods of Market research? | >Surveys >Focus groups >Interviews >Test Marketing |
What are the two types of sampling? | Random (everyone has an equal chance of being selected) Quota (a specific number of people are chosen from a specific criteria) |
What is a highly compeditive industry? | one were a large number of relatively small firms offer similar products |
What is a highly concentrated industry? | One that is dominated by a small number of large firms. |
What does level of competition depend on? | >The number of firms and their relative size >The extent of which products from each firm are similar >How easy it is to enter or leave the industry |
What are the indicators of level of competition? | >Measures of market share and market competition >Measuring the entry and exit from the industry >Measuring customers switching behaviour |
How can a company manage their competition? | >Reducing price >Improving quality >Product differentiation >Advertising |
What is the marketing mix? | Price Product Promotion Place |
What does price depend on? | >The type of product >Level of competition >Cost to produce the product >the price customers are willing to pay |
What are the pricing strategies? | >Compeditive pricing >Cost plus pricing >Penetration Pricing >Predatory/destroyer pricing >Psycological Pricing |
What are the main stages in a product life cycle? | Development Introduction Growth Saturation and Maturity Decline |
What is the saturation point? | The point of which sales are at their peak and very few new customers can be found. |
How can you extend the life of a product? | >product modification >repackaging >Re-branding >reducing price |
What is advertising? | The process of drawing attention to a product, brand or company. The purpose is to inform customers and persaude them to purchase the product. |
What are the methods of advertising? | >TV >Magazines and newspaper >Internet >Cinema >Billboards and posters >radio |
What is a sales promotion? | A short term incentive that is used to encourage customers to purchase a good or service. |
Examples of sales promotions. | >sales/ price reductions/ discounts >Loss leaders >Competitions >Money back/ money off coupons >free gifts |
What is the channel of distribution? | The method used to get goods and services to a location where consumers can purchase them. |
What are the three main channels of distribution? | 1. Manufacturer to consumer 2. Manufacturer to retailer to consumer 3. manufacturer to wholesaler to retailer to consumer |
What does your choice of distribution channel depend on? | >Cost of channel >Speed that goods reach customer >Geographical coverage of channel >reliablity of channel |
What is marketing? | The process involved in putting the right product, in the right place, at the right time, at the right price. |
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