AQA A level Business unit 4

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46 Terms

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Functional objective
these are goals for each functional area of a business and are based on corporate objectives
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Operational objectives
costs, quality, speed of response and flexibility, dependability, environmental objectives, added value
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Profit
sales revenue - total costs
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Improve profit
increase sales or reduce costs
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Quality
those features of a product or service that allow it to satisfy customers
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Ways to measure quality
customer satisfaction rating, customer complaints, scrap rate, punctuality
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Punctuality
how promptly a business delivers its goods
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Punctuality formula
(deliveries on time/ total deliveries) x 100
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Environmental objectives
reducing waste, reducing carbon footprint, minimising waste products or materials, increase recycling, achieving self-sufficiency in energy use
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Added value
the difference between the costs of producing a good and the price it is sold for
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How to measure efficiency
labour productivity, unit costs, capacity, capacity utilisation
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Labour intensity
when labour costs outweigh capital costs of a business
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Labour productivity
the amount of output that is obtained from each employee
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Labour productivity calculation
output per period / number of employees in that period
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Ways to achieve high labour productivity
quality of machinery, skills and motivation of workforce, methods of production used, reliability of raw materials
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Increasing productivity
increasing number of hours worked, training to employ output, investment in technology, changing the way work is done, motivating employees
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Unit costs
the cost of producing one unit of output
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Unit costs calculation
total costs / units of output
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Unit cost influences
efficiency of workforce, efficiency of machinery, how easily variable costs can be controlled
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Capacity
the maximum total level of output or productivity that a business can produce in a given time period
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Capacity utilisation
the percentage of a firm's total possible production level that is being reached
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Capacity utilisation formula
(capacity output) / maximum capacity) x 100
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Spare capacity
resources not being used that could be
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Reasons for spare capacity
new competitors, change in customer taste, unsuccessful marketing, seasonal demand, over investment in fixed assets
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Lean production
aims to reduce all forms of waste in the production process
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Aims of lean production
zero delay, zero stocks, zero mistakes, zero waiting, zero accidents
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Cell production
organising production around teams instead of a production line
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Just in time production
reducing the stock holding of a business to make it more efficient by ordering just when it is needed
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Stocks
raw materials, work in progress, finished goods
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Factors influencing resource mix
type of operating process, relative price of resource, availability of resource, nature of product, state of technology, ethics
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Using technology
robotics, automation, communication, design
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Benefits of using technology
reducing costs, improving quality, reducing waste, increasing productivity, financial monitoring, new products, better working conditions
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Quality
a measure of excellence which is free from defects or significant variations.
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Intangible quality
image and brand, reputation, exclusiveness
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Tangible quality
appearance, reliability, durability, functions, after-sales service, repair and maintenance
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Benefits of quality
sales, USP, selling price, flexibility, cost reduction, firm reputation
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Quality control
system that uses inspections to check the quality of work at stages of the manufacturing process
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Quality assurance
system that improves quality by arranging every process to get products right first time
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Total quality management
approach to long term success that aims for improvement continually throughout every functional area of the business
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Kaizen
policy of implementing incremental changes in order to achieve better quality and greater efficiency
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Quality standards
set of criteria used to establish quality systems which are accredited
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Consequences of poor quality
productivity, profitability, customer satisfaction, costs
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Mass customisation
personalisation or custom tailoring of goods to meet customer needs
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Rationalisation
a process by which a firm improves its efficiency by cutting the scale of its operation
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Outsourcing
when a business asks another business to make all or part of its products
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Temporary contracts
an employee contract that is for a fixed period