Whole of 2.1-2.3

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

1. customer interest

2. speed and efficiency of service

3. customer engagement

4. post-sales service

5. 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

• email

• 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