WJEC Eduqas A-Level Business — Component 1 Flashcards

Comprehensive practice flashcards covering key topics from WJEC Eduqas A-Level Business Component 1, including operations, finance, management, and marketing.

What is the definition of Buffer Stock?

Extra inventory (raw materials, work-in-progress or finished goods) held in reserve above expected demand to protect against unexpected events such as demand spikes or supplier delays.

What is the simple formula used to calculate Buffer Stock?

$$\text{Buffer stock} = (\text{Max demand} \times \text{Max lead time}) - (\text{Average demand} \times \text{Average lead time})$$

How is a budget defined in a business context?

A quantified financial plan setting targets for income, expenditure, and profit over a set period (usually 1 year), linked to business objectives.

In budget variance analysis, what is the difference between Favourable (F) and Adverse (A) variances?

A Favourable variance indicates the actual result was better than the budget (higher profit), while an Adverse variance means the actual result was worse (lower profit).

What is the core concept of Economies of Scale?

Falling average cost per unit as output increases, resulting in cost advantages from a larger scale of operations.

What does the Minimum Efficient Scale (MES) represent?

The lowest output level where average costs are minimised and all economies of scale are fully utilised.

According to Fayol, what are the five functions of management?

Planning, Organising, Commanding, Coordinating, and Controlling.

What is the main difference between McGregor’s Theory X and Theory Y workers?

Theory X assumes workers dislike work and need strict control (Autocratic style), while Theory Y assumes workers enjoy work and seek responsibility (Democratic/Laissez-faire style).

What are the five levels in Maslow’s Hierarchy of Needs?

1. Physiological, 2. Safety, 3. Social/Belonging, 4. Esteem, 5. Self-Actualisation.

According to Herzberg’s Two-Factor Theory, what is the difference between Hygiene Factors and Motivators?

Hygiene factors (e.g., pay, conditions) prevent dissatisfaction but do not motivate; Motivators (e.g., achievement, recognition) actually create satisfaction and improve performance.

What is the formula for Vroom’s Expectancy Theory of motivation?

$$\text{Motivation} = \text{Expectancy} \times \text{Instrumentality} \times \text{Valence}$$

What does the SMART acronym stand for in setting objectives?

Specific, Measurable, Achievable, Relevant, and Time-bound.

In Fiedler’s Contingency Theory, what determines situational favourableness?

Leader–member relations, Task structure, and Position power.

What is the primary difference between Quality Assurance (QA) and Quality Control (QC)?

QA is a proactive approach to prevent errors during production, while QC is a reactive, inspection-based method to find faults after production.

What are the four categories of the Boston Matrix (BCG Matrix)?

Star (High share/High growth), Question Mark / Problem Child (Low share/High growth), Cash Cow (High share/Low growth), and Dog (Low share/Low growth).

What is the difference between Fixed Costs and Variable Costs?

Fixed Costs do not change with output (e.g., rent), whereas Variable Costs change directly with output (e.g., raw materials).

What is the formula for Total Cost?

$$\text{Total Cost (TC)} = \text{Fixed Cost (FC)} + \text{Variable Cost (VC)}$$

What is the difference between Unlimited Liability and Limited Liability?

Unlimited Liability means the owner is personally responsible for all business debts; Limited Liability means the owner only loses the money they invested.

What is Price Skimming?

A pricing strategy where a high price is set at launch to target early buyers and recover R&D costs fast, before lowering it later.

What is the formula for Price Elasticity of Demand (PED)?

$$\text{PED} = \frac{\% \Delta \text{ Quantity Demanded}}{\% \Delta \text{ Price}}$$

What does a negative Income Elasticity of Demand (YED) indicate about a product?

A negative YED ($\text{YED} < 0$) indicates the product is an inferior good, meaning demand falls as consumer income rises.

Economies of scale

Internal:

• Technical - Better machinery, Automation

• Purchasing - Bulk buying, supplier deals (discounts, trade credit)

• Managerial - Hire specialist managers (increased job efficiency from experience and guidance)

• Financial - Banks give bigger loans at lower interest as less risk

• Marketing - Ad spending cheaper per unit when selling millions as cost gets spread out

Diseconomies of scale

• Communication struggles (too many layers of management)

• Worker demotivation (especially in factories), no real connection to the business

• Inflexibility, harder to switch production quickly to meet a new trend

• High administration cost (more managers, offices, paperwork, etc)

• High fuel costs as many locations to deliver too