Studied by 5 people
FoP's
factors of production
oppurtunity cost
benefit that could've come from an alternative use of the same resource
scarcity
lack of resources needed to satisfy needs and wants
categories of the factors of production
land
labour
capital
enterprise
fop's - land
natural resources
fop's - labour
physical/mental effort exerted by employees
fop's - capital
man-made resources used in production
fop's - enterprise
the risk taken to organise fop's
division of labour
workers specialising in only one task
categories of goods & services
consumer goods
consumer services
capital goods
g/s - consumer goods
tangible products sold to the public
g/s - consumer services
intangible goods sold to the public
g/s - capital goods
products sold to businesses to aid in production
added value
the value of a product increasing than the cost of its raw materials with every stage of production
categories of added value
branding
excellent service quality
product features/design
convenience
categories of business classification
primary
secondary
tertiary
business classification - primary
extraction of raw materials from the earth
business classification - secondary
processing of raw materials
business classification- tertiary
providing services to final customers
chain of production
stages of production being connected in order to produce a finished good/service
categories of business sectors
private sector
public sector
mixed economy
business sectors - public sector
owned by the government/state
business sectors - private sector
owned by individuals/businesses
business sectors - mixed economy
owned by both public and private sectors
MDC
more developed country
LDC
less developed country
business objective
a goal for a business that gives workers and managers a clear target
common private business objectives
business survival
profit
returns to shareholders
growth of the business
market share
service to the community
social enterprises
businesses whose main goal are to serve the community that are non-profit
CSR
corporate social responsibility
stakeholder
groups or individuals who are affected by business decisions
types of stakeholders
- internal stakeholders
- external stakeholders
stakeholder - internal stakeholders
people within a business that are affected by it
stakeholder - external stakeholders
people outside the business that are affected by it
trade unions
organisations that defend workers rights
pressure groups
groups that inform businesses of their environmental//societal impacts
sole trader
a business that is run by a single person
unlimited liability
the owner having the same legal identity and therefore full reponsibility to pay any debts if the business fails
limited liability
owners with a separate legal identity so they only lose their original investments wiithout paying for additional losses
PLC
public limited company
stockholder
type of shareholders that are members of the public that privately own shares in a largely public traded company
start-up capital
the business owner providing all of the finances for a business
unincorporated
when the business does not have a legal identity separate from its owner
partnership
unincorporated business owned by two or more people
deed of partnership
legal document which states the rights and obligations of partners
incorparated
when the business has a separate legal identity to its owner
eg: plc & ltd
LTD
private limited company
a written and electronic method of communication that could be either internal/external. It is quick and easy to send and can reach multiple recipients.
letter
a written method of communication that is more formal and takes the form of a physical document
memorandum
a method of communication that is usually written but can sometimes be electronic and is always internal
advertising
creating awareness about a product
capital
money invested into a business by the owner
delegation
giving a subordinate a task
depreciation
fall in value of a fixed asset over time
entrepreneur
person who organises and takes the risks for a business venture
external growth
business takes over//merges with another business
factors of production
limited resources needed to produce goods or services
kaizen
continuous improvement
net profit
profit made by a business after all costs have been deducted from sales revenue
opportunity cost
next best alternative given up by choosing another item
organisational structure
levels of management and division of responsibilities within an organisation
partnership agreement
written and legal agreement between business partners
quality control
quality is maintained or improved by random quality check of products at different stages of production
job production
making one thing at a time
used for individual, unique products
when one product is finished, production on another can begin
examples of job production
ships, bridges and wedding cakes
pros of job production
easier to customise
high price can be charged
workers more likely to be motivated
specifications can start after production
cons of job production
expensive due to high skillset of staff
high research, development, administration & transport costs
variety of tools//instruments needed
can take a long time to produce
flow production
making of a product is broken down into small, simple tasks
features of flow//mass production
mass market products
highly automated
production is continuous
mass production of identical products
advantages of flow//mass production
can sell at competitive prices
economies of scale (yr11)
disadvantages of flow//mass production
lots of money invested
machinery can break down
pros of flow production
costs are spread out over goods
cost per item is reduced
bulk discounts on raw materials
huge quantities can be produced
automated - lower labour costs
machinery can work faster and longer
cons of flow production
large investment to set up
no individualisation for customers
inflexibility with equipment
repetitive work - low motivation
breakdowns can be costly
batch production
same equipment to make batches of different products
features of batch production
combination of job and flow production
produce limited number of one product, then changeover and make a batch of something else
examples of flow production
fizzy drinks
mobile phones
televisions
examples of batch production
airplanes
bread
milk
Airplanes, Bread, Different Sized Clothing; Milk
pros of batch production
less waste than job production
production happens in limited quantities
mistakes in production only affect that batch
don’t need to wait for parts of final product for production to begin
less need for highly skilled staff - low labour costs
machinery is relatively standardised - reduction in costs
batches are changed to meet customer requirements
cons of batch production
requires expensive equipment
required good management skills
if one stage faces a delay then entire production is slowed down
high stock levels
repetitive work - low motivation
high costs for small batches
machinery//workers idle during changeovers
changeover
time switching production from one product to another
which method for which size of production
high - flow
medium - batch
small - job
factors to choice method of production
skill of employees
size of market
size of business
product being produced
technology available
resources available to the business
finances available to the business
specialisation
worker concentrates on one specific task based on their abilities
economies of scale
cost of producing each unit decreases because you are producing more
why is quality important for a business?
develops a brands image
keeps and attracts new customers
lengthens products life cycle
reduce costs
reduce customer complaints
less goods being returned
charge a premium price for products
encourage retailers to stock their products
pros of quality control
identify poor quality products before they become finished goods
ensure products meet the requirements of customers - generate more sales and a better reputation
cons of quality control
required time - waste of raw materials
costly
doesn’t check every product
quality
when products are of a good standard
quality assurance
quality is maintained by workers self-checking throughout production process
pros of quality assurance
quality is a key aspect of everyones job
no additional quality checkers required - lower labour costs
cons of quality assurance
whole workforce must support system
employees require quality checking training
pros of using automation to improve productivity
technology has no labour costs
less workforce needed
technology can run longer than people
cons of using automation to improve productivity
large initial cost for technology
technology reduces responsibility - therefore motivation - of employees
technology can become out of date quickly
just in time
method of production where production only happens when an order is made
JIT
just in time
features of just in time (jit)
goods are only produced when a customer places an order
supplies arrive just in time to be used in production
pros of just in time
stock matches production
improves cash flow
less stock wastage
less production delays
responds to changes in demand
closer ties with suppliers
savings on purchase//storage costs
cons of just in time
danger of lost sales
increased volume of traffic on road
increase in suppliers’ transport costs
lose bulk buying discounts
suppliers must be willing and able
high dependency on suppliers
less time for quality control on material arrival
increased ordering and administration costs
increased order processing costs
increased chance of production//transport failures
7 phases of the continuous cycle of kaizen
identify an opportunity
analyse the process
develop an optimal solution
implement the solution
study the results
standardise the solution
plan for future
kaizen improves in several areas such as…
quality
cost
delivery
management
safety
Note 
Flashcard (48)