Business Exam Final cards

Name the sectors of industry

Name the sectors of industry

primary, secondary, tertiary, quaternary

Describe the primary sector

includes activities that directly extract materials from Earth through agriculture and sometimes by mining, fishing, and forestry

Describe the secondary sector

includes manufacturers that process, transform, and assemble raw materials into useful products, as well as industries that fabricate manufactured goods into finished consumer goods

Describe the Tertiary sector

involves the provision of goods and services to people in exchange for payment, such as retailing, banking, law, education, and government

Describe the Quaternary sector

The Quaternary sector is industries that provide specific information service and offer knowledge and advice. People working in this sector are highly skilled

Name objectives of a third sector organisation

To grow, to spread awareness of their cause, to maximise donations for their cause

Name objectives of a public sector organisation

To provide a good quality service, to benefit the local community, Satisficing

Name objectives of a private sector organisation

To survive, grow, and maximise profits

Explain benefits of outsourcing to a business

Less labour and equipment required

High quality work from outsourced business as it should have greater expertise and specialist equipment

May be cheaper than in house

Need only use service when required

Explain cost of outsourcing to a business

Less control over outsourced work, could increase charge or quality of work.

Risk of losing sensitive information

What is horizontal integration?

This is when two business from the same sector of industry become one business

What is vertical integration?

When two businesses from different sectors of industry become one business

What is lateral integration

When two organisations who produce similar products join together

What is conglomerate integration

When to businesses from completely different markets join together. For example when Microsoft bought Nokia

Methods of organic growth

Launch new products

Open new branches or expand

Introduce e-commerce

Hire more staff

Increase production capacity

What is diversification

When business introduces new products in to its portfolio which cater to different markets. No merge with another business

What are advantages of organic growth

No loss of control as the business is not integrating with others

Selling online means that business can trade 24/7 around the world

Hiring more staff will bring in new ideas to the business to develop new products and increase production

Expand existing premises to cater for mor products can make more sales

Launch new products means businesses can target different markets

Can be financed through internal funds such as retained profits therefore don't have to borrow from a third party

Disadvantages of organic growth

Slower method of growth- shareholders may prefer a more rapid method

Growth may be dependent on the growth of the overall market

Advantages of diversification

Spread risk as business have a wider product portfolio to rely on

Overcome seasonal fluctuations

Provides different income streams form the core business activity

Disadvantages of diversification

May take on business in a market they no nothing about and cause the new product or service to fail

Can cause the company to loose focus impacting their existing products

Advantages of horizontal integration

Competition is reduced

Can dominate the market therefore market share increases

Benefit from economies of scale

Aquire assets of the other firm

Advantages of forward vertical integration

Business can control supply of their products and could decide to not supply to competition

Can increase profits by cutting out the middle man

Disadvantages go horizontal integration

Quality may suffer due to lack of competition

May breach EU competition rules

Disadvantages of forwards and backwards vertical integration

Company may be incapable of managing new activities effectively meaning higher costs

Focussing on new activities can adversely affect core activities

Monopolising market may have legal repercussions

Advantages of backwards vertical integration

Guaranteed and timely supply of stock

No need to pay a supplier their marked up prices so stock is cheaper

Quality of supplies can be strictly controlled

Advantages of lateral integration

Organisations products are related therefore should already have good knowledge of the industry therefore more likely to make a success from the purchase

The firm acquired the assets of the other companies

Provides different income streams from the core business activities so pressed risk if one area is not performing

Advantages of conglomerate integration

Spreads risk

Overcomes seasonal fluctuation

Firm acquires assets of other organisation

Provides different income stream

Disadvantages of conglomerate integration

May take in a business in a market they know nothing about

Can cause the business to lose focus

May become to large and difficult to manage

Advantages of tall structure

Direct chain of command clear division of responsibility and allocation of authority. Therefore each staff member knows their role and who to report to

Leads to stable and more easily controlled organisation

More chances of promotion

Narrow span of control which means managers have more time for planning decision making supervision and supporting subordinates

Features of tall structure

Has many levels of management

Long chain of command where commands flow down from decision makers at the top of the organisation to the workers at the bottom

Disadvantages of tall structure

Each members experience across the organisation as a whole may be limited

Leaders may be autocratic and thus stifle the initiative of subordinates

Communication can be slower therefore decision making can make more time

Managers have few staff to share idea with therefore limited solutions to problems

Feature of flat structure

Shorter chain of command where commands flow down from decision makers at the top of the organisation to workers at the bottom

Advantages of a flat structure

Communication is faster

Effects of increasing managers span of control

Can increase stress

Lead to rash decision making

Can confuse employees on the chain of command

Characteristics of entrepreneurial structure

Used by small organisations. One person usually the owner makes all the important decisions

Describe matrix structure

Normally set up to carry out a specific project like creating a new product

Will consist of different specialist from different functional areas of the business

Once the project is complete employees will return for their functional department

Impact of delayering

Where an organisation decides to restructure by removing levels of management a taller structure becomes flatter.

Ad and disad same as flat structure

What is interdependence of stakeholders

Stakeholder need to work together if the business is to succeed some stakeholder groups rely on other help the achieve their interests.

E.G. managers and employees Managers need employees to perform their best while employees need managers to make good decisions to keep the business profitable and their jobs safe

conflict of interest

Although all stakeholder want a business to succeed they can often conflict in their aims. In other words to stakeholders both can't get what they want

Interest of customers

Good quality products with good value for money

Influence of customers

Choosing to with that organisation rather than a competitor

Bad reviews

Interest of managers

High salary/wages

Business surviving

Job security

Bonuses

Promotion

Influence of managers

Ability to motivate staff

Hire/fire

Make important decisions

Interest of suppliers

Payment on time in full

Loyal customers

Influence of suppliers

Quality of supplies

Price charged

On time with deliveries

Interest of government

Taxes from business

Legislation - NMW

Influence of government

Changing legislation

Emission rates

Choice of vehicles

What is the political fsctor

Government changing or introducing laws which the business must comply with Eg NMW

Impact of political factor

Corporation tax

VAT. 20%

Interest rates

Government bank sets the base rate of interest

Impact of economic factor

High unemployment

Exchange rates

Recession

Inflation

Impact of social factor

Social cultural factors cover changes k. So issues such as fashion of habits eg less people smoking and people caring more about their health

Demographic changes relate to the population eg more pensioners less children per family

Impact of technological factor

Profess in technology has caused some products to become obsolete. Eg typewriters

Failure to computerise a business or make use of e commerce can lead to customers reducing

Offering free wifi

Use of social media

Impact of environmental factor

Weather

Natural disaster

Packaging

Impact of competition factor

The actions of rival business Eg changing prices, starting an advertising campaign

Competition policy

Part of political factor

The aim is to promote competition

Make markets better

And contribute towards improved efficiency in individual markets

And enhanced competitiveness of UK businesses within the EU single market

Methods of being socially responsible

Reducing carbon footprint

Creating new safety measures

Improving working conditions

Recycling

Reducing packaging

Using sustainable materials

Advantages of good CSR

Good reputation

Customers agree with morales

Attract high quality staff

Investors attracted

Government more likely to award grants

Effect of managers in effective decision making

Poorly skilled managers can make bad judgements which impact sales and profit as well as affecting staff morale

Role of a manager

Plan

Organise

Command

Coordinate

Control

Delegate

Motivate

Role of a manager PLAN

Managers will look ahead and set targets for the future

Role of manager. ORGANISE

Managers will ensure that their employees are given appropriate tasks and resources in order to achieve success

Role of managers. Command

Managers will supervise their employees and ensure that they work to a high standard

Role of manager. Coordinate

Managers will ensure that all employees and resources are where they need to be at the right time in order to succeed

Role of manager CONTROL

Managers will regularly check the progress in meeting targets and evaluate on an ongoing basis

Role a manager delegate

Managers will pass some responsibility to employees for example giving them control of a department budget

Role of manager. MOTIVATE

Managers will use a variety of methods both financial and non financial to prompt employees to work hard and achieve the company targets

How to measure success of decisions

Increase in sales

Increases in positive customer reviews

Increased product quality

Increased satisfaction

Better staff morale

What is selection testing

Where organisations arrange for candidates to be assessed on a variety of areas eg IQ. personality

Advantages of testing

Tests are used to provide further information is obtained during an interview. Therefore helps management decide a candidates suitability for a position

Can see how a candidate copes under pressure

Used to allow candidates to demonstrate skills they require for their position

Helps assess the natural abilities of people

What is an assessment centre

Used by firms to see a larger number of candidates doing a number of tasks in different situations

Advantages of using an assessment centre

It allows the business to also watch applicant interact with other during breaks and lunch

Less chance of interviewer bias

Large numbers or candidates can be assessed at one time

Being carried out be experts and specialists

Benefits of workforce planning

• Gaps in the current workforce can be identified

• Relevant training can be given to upgrade the skills of existing staff

• Managers can prepare and plan for changes rather than react to them

• Avoids overstaffing/the employment of surplus staff

• Can decrease the organisation's costs through outsourcing and sub-contracting

• Allows the business to prepare for periods of significant change (e.g. restructuring and growth)

• Staffing forecasts can be carried out

Advantages of CVs

Contains personal information on the candidate such as skills and experience

Can be used to compare against the person specification

Advantage of interviews

Can ask a series of questions and question the content of the CV

Can assess the applicants personality

Can assess how the applicant reacts under pressure

Describe the purpose of appraisals

Allows the employee to reflect on how ell they are performing and identify area of strength and areas to work on

Provide the opportunity to discuss trading and potential career progression

Advantage of appraisals

Improves communication between management and employees

Employees receive positive feed back for good work increasing their motivation

Employee training needs can be identified allowing them to improve their work

Targets will be set for the employee which motivates them to be be successful

One on one appraisal

A formal meeting between a worker and manager to discuss their performance and decide how their work can be improved

Sometimes called a performance review

Peer to peer appraisal

When the review interview is carried out be a colleague at the same level in the organisation as the employees

360 appraisals

Whoever conducts the appraisals interviews fellow employees supervisors and subordinates about the performance of the employee

Methods of ensuring good employee relations

Trade unions

ACAS

Grievances

Discipline

Dismissal

Absenteeism

Effects of Equality Act 2010

No discrimination

All employees have to be treated equally

Impact of NMW regulation on organisation

Increases costs

Costa increase annually

Name the sources of finance

Bank loan

Debenture

Mortgage

Retained profits

Selling shares

Sell asserts

Venture capitalists

Leasing

Debt factoring

What are retained profits?

Profits kept back from the previous years trading and then reinvested back into the organisation

adv of retained profit

Organisation own money therefore no debt or finance charges are incurred

Disadv of retained profits

Shareholders may not be happy as reduces dividend

What is debt factoring

Where organisations which has sold goods on credit sells its debt to a factor specialising in collecting debts. The factor then collects and keeps the debts

Adv of debt factoring

The factor chases up the unpaid debt which saves the organisation time and money

Disadv debt factoring

Lose money as factor buys at a discount

What is selling an assets

Sale of a non current asset for cash

Adv of selling assets

Selling the assets generate a large cash injection

No longer responsible for repairs and maintenance

Disadv of selling assets

Reduces assets available to offer as security on loans therefore it could make it difficult to secure finance in the future

What is a bank loan

An agreed amount of money borrowed from the bank which is paid back in instalments with added finance charges

Adv of bank loan

Repaid in instalments over a set period of time this makes it easier for organisations to budget

Disad of bank loan

Added finance charges

What is a share issue

Selling shares in an organisation to raise finance sold on the stock exchange/or sold to invited parties

Adv share issue

Large amount of capital can be raised

Disadv of share issue

Admin costs are expensive

In issuing shares the organisation is spreading ownership

Dividends have to be paid to shareholders

What is leasing

Acquiring use but not ownership of an asset through making rental payments

Adv of leasing

Usually maintenance and upgrade provided by leasing company