business LRQ's structures

how do you answer a 9 marker?

knowledge, understanding, application, analysis, evaluation

how do you answer a scaffolding 9 marker?

parts a and b (analyse) understanding, application, impact, part c (evaluate) judgement, justification, application

how do you answer a 6 marker?

make two points, with understanding, analysis and application for each

what is a merger?

when two businesses join to make a larger business

give an advantage of merging with another business

larger market share

name a benefit of having a larger market share

able to charge higher prices as you are more well known → more profit

give a disadvantage of merging with another business

conflict of objectives within the two merged businesses

name a drawback of having a conflict of objectives

makes decisions harder to make + causes disruption in the running of the business → could possibly lose customers if the business starts going in a completely different direction

name the five pricing methods

promotional pricing, penetration pricing, skimming, cost-plus, competitor pricing

why would promotional pricing be used?

if they are trying to lengthen the products life cycle or get rid of old stock

why would penetration pricing be used?

if they are entering a new, competitive market, they could set their prices lower to gain more market share (only for short-term)

why would skimming be used?

if they are already a well-known brand, and can set their prices for a new, highly anticipated product higher as people will buy it anyway (only for short-term)

name 3 advantages of being an ltd

continuity - if the old owner dies, the business can continue operating

easier to raise money - banks see ltd’s as less of a risk than sole traders and partnerships

control over share sale - shares can only be sold through private transactions and with agreement from all existing shareholders

name 3 disadvantages of being an ltd

privacy - the financial information of an ltd can be seen by the public (and competitors

setup - these are more complicated to set up and there are lots of forms to fill out

harder to raise money - shares cannot be sold on the stock market so it is more difficult to quickly raise capital

name 2 advantages of being a plc

ability to raise large amounts of capital - they can sell shares to the general public on the stock market

easier to borrow money - banks see them as low risk

name 4 disadvantages of being a plc

possibility of takeover - no control over who buys shares, so anyone who buys over 50% of their shares can takeover the business

cost of setting up + operating - these are much more complex to run

problems with size - it can be difficult to control all areas of the business

financial information is public