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structure for 2 marker
PEC
structure for 12 marker evaluate question
2 x PEACH, 2 x BLTMC and conclusion, one positive and one negative
structure for conclusion
Answer the question
Justify - use data from case study etc
Key flaw - it depends on
Overall -short and long term impacts, impacts on stakeholders
9 marker justify option
para 1 - option 1 is better because, BLTM
para 2 - option 1 has issues because, BLTM
conclusion - AJKO, could talk about other option
6 marker analyse question
2 x PEAC, BLT, consider benefits and drawbacks
6 marker discuss question
2 x PEAC, BLT
3 mark explain questions
PEA
impacts on marketing
demand
sales volume/ value
market share
brand loyalty
competitive advantage
price elasticity
impacts on operations
unit costs
quality
added value
efficiency
productivity
flexibility
E of S, D of S
Impacts on finance
cash flow
break even level of output
profit margins
additional finance
dividends to shareholders
Impacts on human resources
labour productivity
labour cost per unit
motivation
recruitment
need for training
five stages of purchasing a product
customer interest
speed and efficiency of service
customer engagement
post-sales service
customer loyalty
factors contributing to good customer service
knowledgeable, helpful and friendly staff
meeting all legal requirements
quick delivery
efficient service
excellent post-sales service and support
good product availability
quality control
the process of inspecting products and services to ensure that what customers receive is of a high standard.
benefits of quality control
quicker than quality assurance
cheaper costs
less training
checks still happen
drawbacks of quality control
more defects
poor customer satisfaction
refunds
negative reviews online
benefits of quality assurance
zero waste
zero defects
warranties/ guarantees
gives USP/ competitive advantage
premium pricing
drawbacks of quality assurance
slower production
extra training
higher wages
quality assurance
process of carrying out quality checks at specific stages during the production process.
consequences of holding too much stock
high storage costs
increased waste, if the products are perishable,
reduced income, if the business needs to sell off excess stock at a reduced price
Just-in-time (JIT) stock control
business has regular deliveries that bring only what is needed before its existing raw materials run out
relationships with supplier in JIT
good relationship with its suppliers. Suppliers will ideally be local to reduce both delivery costs and lead time.
advantages of JIT
Removing buffer stock space means more space can be used for sales.
Smaller but more frequent deliveries mean that the products will be fresher.
Businesses will no longer have large amounts of capital put in stock.
having less stock that could go out of date will reduce waste, saving money.
JIT reduces production costs, allowing businesses to price their products to give a more competitive advantage.
disadvantages of JIT
It can be hard for businesses to react to unexpected changes in demand
Businesses are unable to use bulk-buy discounts if they only buy in small quantities.
Customers could receive a poor service if business misjudges amount of stock it needs
key factors when trying to build relationship with supplier
cost
quality
availability and capacity
trust
delivery
impacts of logistics
costs can be made lower if production is quick
delays can cost money and limit cash flow
job production
when individual products are made one at a time to meet specific customer preferences.
batch production
making a set quantity of identical products. This quantity is known as a ‘batch’.
flow production
continuously making identical products. This allows the production process to be heavily automated.
advantages of job production
High profit margins for bespoke products
Employees may gain enjoyment from using their specialist skills
Customers get exactly what they want
disadvantages of job production
Highly skilled staff are required, which increases costs
Highly skilled staff may not be available, which can make training staff very expensive
advantages of batch production
Able to make a variety of sizes or flavours
Can be partially automated
Can produce more products than job production
disadvantages of batch production
Not as flexible regarding customers’ tastes as job production
As batch production is not fully automated, costs may be higher than in flow production
advantages of flow production
Able to make far larger quantities
products are identical, which means customers know exactly what they are buying
Highly automated process
disadvantages of flow production
In competitive markets for similar mass-produced goods, profit margins can be low
Customers like products that are tailored to their specific preferences
Expensive to buy all the machinery needed for automation
how can a business improve productivity
Investing in up-to-date machinery may replace employees
providing incentives to employees
providing training to staff
Encouraging staff to come up with time-saving ideas
effects of being productive
enables businesses to lower their costs per unit This means they can price more competitively or increase their profit margins.
design mix
function, aesthetics, cost
stages of product life cycle
R+D, introduction, growth, maturity, decline
extension strategies for product life cycle
decreased price
rebranding
re-positioning
increased advertising
packaging
ways to differentiate product
unique name
quality
design/ function
packaging
customer service
Pricing strategies
premium
competitor
price skimming
cost plus
influences on pricing strategies
tech
competition
market segments
product life cycle
branding
costs
marketing strategies
advertising
sponsorship
product trials
special offers
branding
technology in advertising
targeted online ads
viral advertising
e-newsletters
apps
what does product life cycle depend on
how dynamic the market is
how strong the brand image is
promotion is used to
inform consumers of a new product or service
persuade consumers to buy a product or service
remind consumers about the benefits of a product or service
advantages of direct channel of distribution
can control the distribution of their products
can control the prices that are charged
disadvantages of direct channel of distribution
it can become increasingly difficult to sell directly to a large number of customers.
indirect channel of distribution
introduces an intermediary into the distribution process.
intermediaries make
it easier for producers to distribute their products
it more convenient for consumers to buy those products
advantages of E-tailers
they can offer a wide range of products as they are not limited by the size of a shop
they allow small producers to sell through their website for a fee
their prices are often lower, as they do not have to pay for a physical shop
customers can shop whenever and wherever they want
Disadvantages of e-tailers:
customers need to have internet access
customers cannot pay by cash
goods need to be delivered, so customers must be willing to wait
items cannot be seen in person before purchasing them
how do UK businesses compete internationally
they adapt the marketing mix for different cultures, incomes, laws, local preferences
marketing mix
4Ps - Product, Price, Promotion, Place
how do business objectives and aims change
focus on survival? or growth
entering/exiting new markets
grow/reduce work force
increase/decrease product range
why do business objectives and aims change
in response to:
changes in market conditions
new tech
business performance
changes in legislation
internal reasons e.g. new CEO
economic climate
imports
cheap supplies/more choice leads to decreased costs and increased profit
but increased foreign competitors means decreasing prices to be competitive
exports
huge markets around the world (8 bil people to sell to) lead to increased sales & profit
but different tastes, law, culture (need to adapt 4Ps, need good market research)
Business location in globalisation
relocate production
reduced labour costs
closer to raw materials/ new markets
decreased costs and increased profit
barriers to trade
tariffs - tax on import
Quota - numerical import limit
Trade Blocs - no tariffs for members only
why are there barriers to trade
to protect UK jobs
protect infant industries
stop dumping
tariffs raise revenue for govt
things to do when acting morally
ethical policy
treat workers and suppliers
follow laws
fair trade
don’t pollute/ no single use plastics
no animal testing
consequences of acting morally
staff are more motivated so increased productivity
increased costs
consumers may accept higher prices with ethical company
how does acting morally affect costs
increased labour costs
increased raw material costs
increased packaging costs
what does higher costs from acting morally lead to
increased selling prices
less competitive
lower sales
how does helping/protecting the environment benefit a business
marketable USP and competitive advantage
good brand image
no fear of pressure groups
no negative publicity
how is internal growth acheived
new markets
new products
new tech
pros of internal growth
increased market share and profit
lower costs due to E of S
inexpensive
focus on its core business - less risk
cons of internal growth
slow growth
less diversification of business
pros of external growth
diversify the business
increased customers, products, sales/profits, market share
guaranteed supply chain
market power = able to charge higher prices
E of S
effects of E of S (lower average unit costs)
bulk buying
afford better tech
afford better staff
lower int rate on bank loans (less risk)
cons of external growth
very expensive
50% risk of failure
corporate culture
staff are less motivated - redundancy may occur
huge redundancy costs
D of S
effects of business being too big
poor communication
worker are demotivated
increased sick days and resignations
slower decision making
how to finance growth internally
retained profit
sale of assets
advantages of retained profit
no risk, no debt, no interest
cheap + instant access
disadvantages of retained profit
less funds for emergency (recession)
stakeholders are unhappy, because of fewer dividends
more substantial investment needed (not enough funds)
advantages of sale of assets
sell premises/equipment not in use
disadvantages of sale of assets
lose flexibility once sold
may be difficult to sell, or may sell at low price
sources of external finance
share capital
bank loan
advantages of bank loan
no loss of control of business
big business is less risk for banks as it is proven
easy, quick and substantial funds available
disadvantages of bank loan
interest repayments + loan amount
collateral needed
repayment - fixed period of time
advantages of share capital (PLC or LTD)
sell share to public on the stock market
huge amounts of capital can be raised
company expands/diversifies quickly
ltd protection for shareholders
disadvantages of share capital (PLC or LTD)
risk of takeover
accounts have to be public
profits now diluted to more shareholders
expensive to sell shares of market, admin + marketing costs