A-Level Business Year One- Unit 1,3,4

mission statement

mission statement

firm’s qualitative intention e.g. values, purpose

corporate objective

long term strategy e.g. SMART profit, growth etc.

functional objectives

department objectives e.g. HR, operations

why’s profit important?

source of finance, reward for risk taking, not for profit, motivation, security, success

P, R, TC, VC = ?

R-TC, sales x price, FC+VC, VC/unit x quantity

factors of production?

land- natural resources, labour, capital- machinery, entrepreneurship

incorporated?

different legal identity, personal assets are safe

unlimited liability?

risk for all debts

sole traders

unincorporated, unlimited liability, 1 shareholder

adv of sole trader

simple set up, no publish accounts, retain all profits, 100% control and decision making

cons of sole trader

fewer sources of finance, multi-skills needed, possible long hours

Ltd

incorporated, limited liability, shareholders choose a director

Ltd pros

lots of sources of finance, control of shareholders

Ltd cons

no stock exchange, shared profits, publish accounts, more admin

Plc

on the stock exchange (flotation), minimum of 50k share capital

flotation pros

external finance, high reputation, limited liability, growth

flotation cons

expensive, anyone can buy, legal requirements

public sector

by government e.g. NHS, schools, BBC

private sector

by entrepreneurs

market capitalisation

number of shares x price of 1 share

share capital

number of shares x initial price of 1 share

not for profit organisations

objectives to benefit society e.g. UNICEF

external influences

competition, market conditions, incomes, interest rates, demographic factors, environmental issues

PESTLE

political, economic, social, technological, legislation, environmental

bad revenue (good revenue opposite)

one time, diminishes in recession, price taker, low value added, no customer loyalty

increase / (decrease opposite) in interest rates

Consumers= increase savings, fall ion spending, less borrowing, existing debts cost more. Producers= existing debts would increase, higher borrowing costs, less revenue

HR objectives

employee engagement, employee mix, training, talent development, diversity

delegation

managers give authority to subordinates

delegation pros

empowered- motivated, productive and efficiency. Internal recruitment, less stress for manager

delegation cons

demotivated through higher workload

centralised / (decentralised opposite)

when control is made my higher levels of management

centralised pros

quick decision making, consistency and motivation through clear jobs

centralised cons

less ideas in decision making, lack of authority can demotivate

tall organisational structure

many layers and managers, smaller span of control, opportunity for promotion, better supervision, long chains of command

flat organisational structure

less layers, larger span of control, two way communication, lots of delegation, less promotion

autocratic leadership

one way communication, good in emergencies, demotivating to lower staff

paternalistic leadership

employees are consulted, makes them feel more involved, long term issues

democratic leadership

two way communication, motivation, slow decision making and ideas may be bad

laissez faire leadership

full decision making with employees, highly skilled lower staff, managers could get bad rep

part time workers vs full time

cheaper, flexible, range in potential vs loyalty, staff retention, lower training costs

why recruit internally?

cheaper in recruitment costs, more informed process, faster process

why recruit externally?

larger pool of workers, fresh ideas, don’t have to replace a worker

recruitment process

job analysis, job description and specification, job advert, selection process

on the job training pros vs off the job training pros

cheaper, hands on, build relationships vs full supervision, mentor is an expert, learn new skills

on the job training cons vs off the job training cons

mentor’s ability, mentor’s time, friction vs expensive, not bespoke

types of contract

permanent- guaranteed to work for the employer unless redundancy etc. temporary- agreed period of time. freelance- they work with the business

financial motivation

bonuses, commission, promotions, fringe benefits

non financial motivation

job rotation, job enrichment, autonomy

why increase motivation?

increase productivity- output and quality, increase staff retention- increase experience and skills, low turnover and recruitment costs

Taylor- Scientific Management

1- monitor workers 2- develop best procedures 3- training to increase efficiency 4- create realistic output target 5- introduce the piece-rate. Cons- may be seen as too just, can lack innovation

Maslow- Hierarchy of Needs

1- physiological e.g. shelter 2- safety needs e.g. security 3- social needs e.g. teamwork 4- esteem needs e.g. recognition 5- self actualisation e.g. potential. Cons- order can be different for everyone

Herzberg- Two Factor Theory

Hygiene factors ( prevents dissatisfaction)- basic pay, working conditions. Motivating factors- training, development and are set after hygiene factors

factors of suppliers

price, quality, speed, reliability

what is procurement?

the process of selecting a supplier, agreeing on payment terms and contract details

what is logistics?

process of getting goods or services to a different stage of the supply chain

what’s job production?

‘one-off’ production to meet customer needs

job production pros

higher quality, unique to customer, workers feel motivated

job production cons

unit costs can be higher, takes time, may need a higher amount of labour

what is batch production?

producing a small quantity of goods e.g. cakes

what is flow production?

continuous production of identical products usually for a mass market

flow production pros

produce to meet higher demand, specialised workers, economies of scale

flow production cons

high initial costs, workers are less motivated, hard to change final product

what is lean production?

reducing waste to increase efficiency, productivity and revenue

what is Kaizen?

the continuous improvement in the production process

consequences of good quality

repeat purchases, charge higher prices, likely to be highly stocked by a retailer

how do you measure quality?

random sampling, customer surveys, amount of products returned

what is total quality management (TQM)?

where all employees seek to constantly improve production

what is just in time (JIT)?

limited inventory that arrives just in time for the sale

JIT pros

reduces waste in storage costs and stock, greater productivity

JIT cons

possible higher average cost per unit, needs a reliable supplier, risk of not meeting demand

what is quality control?

checking the final product to see if it meets the standard of quality

what is quality assurance?

a process that prevents defects from happening in production