Business Studies GCSE Unit 3 Revision Exam Information: 1 hour 30 minutes You will need a black pen and a calculator. Exam information Always check what the question asks you to do. e.g. If you are asked to write about one point do not give more than one as you will not gain any more marks. If a business name is used in the question it must be used in the answer Explain questions require you to write a paragraph with three sentences or phrases. You must use connectives to show how the ideas link together. Describe questions require you to write a paragraph with three sentences. The sentences do not need to link together. Assess questions must have arguments for and against and must have a conclusion. Topic 1 Marketing Satisfying consumer desires. Providing the right product in the right place at the right price. It includes promoting the product. Marketing is not the same as advertising Topic 1 Marketing Market research is used to get information about the target market. Helps business identify and satisfy the desires of customers. Gives a competitive advantage. Topic 1 Marketing Primary Research (field research)– this is done first hand by the business e.g. questionnaire of existing customers. Secondary research (desk research)– this is using information that has already been gathered by another organisation e.g government statistics. Topic 1 Marketing Quantitative research – provides numbers that can be analysed e. g questionnaire results shown as a bar chart. Qualitative research – in depth and gives opinions e.g. a focus group discuss what they think of a new product Topic 1 Marketing Product trial- consumers sample a product for the first time. Repeat purchase – consumers regularly purchase the brand Brand loyalty – a strongly motivated and long-standing desire to purchase a particular product. Topic 1 Marketing Product Life Cycle – the amount of time the business expects the product to sell. Topic 1 Marketing Introduction – product launch, costs high, no profit. Growth – sales increase, advertising strong, revenue and profit increases. Maturity – sales high but slow growth, advertising to maintain awareness and beat competitors. Profits peak. Decline – Sales and profits fall. Topic 1 Marketing Extension strategies – attempts to prolong the sales of a product and prevent it from declining. Methods – new uses, wider product range, change appearance or format or packaging, reduce the price. Don’t give advertising as an extension strategy as this is used throughout product life cycle. Topic 1 Marketing Product portfolio – the range of products sold by the business. The Boston Matrix- a method of analysing the products in the portfolio according to their market growth and market share. Problem child– low market share of a high growth market With the right promotion it will hopefully become a.. Star – high market share of the high growth market. As market growth slows this may become a … Cash Cow - keep a high share and generate high revenues. But if a competitor’s brand is stronger it turns into a .. Dog- kept for a while to attract customers to buy other products from the business. Topic 1 Marketing Brand- a product with a unique character usually in design or image. Maintains customer loyalty and repeat purchase. Allows businesses to charge higher prices. Maintaining a brand is expensive. Brand names have to protected by copyright. Important for the brand to have a good reputation. Topic 1 Marketing Product differentiation Making your product different from competitors. Brand plus logo, name, quality, content, packaging, design Unique Selling Point – a key feature of a product not shared by rivals. Topic 1 Marketing Marketing mix – getting the right mix of product, price, promotion and place to sell to customers and achieve objectives. Product – think: product portfolio, life cycle, Boston Matrix. Price – cost plus, psychological, loss leader, competitive. Place – distribution channel means how products reach customer e.g through supermarkets or online orders. Promotion – advertising plus competitions, loyalty cards, BOGOFs etc Topic 2 Meeting Customer Needs Design Mix- aesthetics, function and economy of manufacturing. Topic 2 Meeting Customer Needs Stock management – making sure the business has enough products to sell to customers. Traditional system Store in stock room to sell to customers. Make regular orders with suppliers when stocks reach re-order level. Keep a buffer stock – the minimum amount in the stockroom. Topic 2 Meeting Customer Needs Stock bar gate graph Topic 2 Meeting Customer Needs Just-in –time Bring stock to business just in time to meet customer demands. No storage, no waste, new stock. But.. no buffer stock so can run out, may miss out on bulk-buying discounts. Topic 2 Meeting Customer Needs Quality control –checking the product once completed. Quality Assurance – checking throughout the production or selling process. Quality culture- all employees are involved with producing the best work. Topic 2 Meeting Customer Needs Efficiency means getting the cost of producing the good or service as low as possible without reducing quality. Investing in new machinery increases output per worker per hour. This is productivity. Training and motivation improve efficiency. Efficiency gives competitive advantage and increases profit. Topic 2 Meeting Customer Needs Customer service – putting the customer at the heart of the business. The customer is always right. Sale of Goods Act – satisfactory quality, as described, fit for purpose. Customer entitled to refund or replacement. Trade Descriptions Act- features claimed must be true. Topic 3 Effective Financial Management Cash Flow improvements Reduce outflows e.g Improve credit terms Use just-in–time delivery Increase inflows e.g. Customers pay on time Use an overdraft Discount sale Topic 3 Effective Financial Management How to improve profit? ( Revenue-Costs) Either Reducing costs- fixed or variable e.g. reduce workforce, find cheaper suppliers. Or Increasing revenue – e.g. raise prices, promotions, new products, expansion. Topic 3 Effective Financial Management Break-even output- the level of output where costs = revenue. Break-even formula Price - variable cost = contribution Fixed costs/ contribution = break-even output Margin of safety – the difference between current output and break-even. Topic 3 Effective Financial Management Break-even chart Break-even output falls if revenue increases or costs decrease. Break-even output rises if revenue falls or costs increase. Topic 3 Effective Financial Management Business growth can be financed internally through… Retained profits – no interest paid Sale of assets – e.g. sell equipment and lease back instead Personal funds - savings Topic 3 Effective Financial Management External sources of finance Companies can raise money through the sale of shares. A private limited company can become a public limited company (plc) and sell shares to the public. This is called flotation. But a plc can be bought by a competitor. Topic 3 Effective Financial Management Bank loans Interest can be difficult in a tough year. The original loan has to be repaid. Shares are good as they are interest free and are a permanent source of finance. Topic 4 Effective people Management An organisational chart is a diagram showing the structure of a business. Chain of command Span of control Topic 4 Effective people Management Hierarchy – the number of layers in the structure. Tall structures have many layers Opportunities for promotion Easy to manage workers But… little flexibility and long chain of command means communication can be difficult. Topic 4 Effective people Management Flat structures Few layers Wider span of control gives more flexibility to workers. Can lead to more job satisfaction But fewer opportunities for promotion. Topic 4 Effective people Management A centralised organisation has the management in one headquarters. A decentralised organisation spreads the management and allows decision making to occur in local offices. Topic 4 Effective people Management Motivation- the will to work. Maslow’s hierarchy of needs theory. Managers use this theory to motivate their workers and improve productivity. Topic 4 Effective people Management Physiological needs must be met first – pay allows workers to provide for their needs. Healthy environment, rest breaks etc Safety needs must be met second– security e.g. contract of employment, pension. Social facilities can motivate workers. Esteem needs such as praise will only motivate if the worker already has good pay, secure employment and a social environment. Self- actualisation – the worker is motivated by enjoying their role at work. Topic 4 Effective people Management Communication is the life blood of business. Internal –within the business from managers to employees and between employees. Important for motivation, productivity and efficiency. External – with customers, suppliers, banks etc. Important for marketing, quality, reliability, finance. Topic 4 Effective people Management Barriers to effective communication. Language, culture, wrong choice of method. Information overload- no time to respond, wastes time, miss important information, inefficient. Analyse consequences in terms of quality, reputation or efficiency Topic 4 Effective people Management Remuneration = pay Time rate - by the hour = wage, or by the year = salary. Piece rate – payment per product, can boost productivity. Commission – payment per sale, must be in addition to regular pay. Fringe benefits – non financial rewards such as discount card or company car. Topic 4 Effective people Management All remuneration is a cost to business. Business must balance this cost against the benefit of employing the worker. Pay is used to reward, motivate and attract workers to particular roles. Some work is now contracted out to freelance( self employed) or agency (temporary) workers. Trade Unions represent workers in pay negotiations. Topic 5 The wider world affecting business. Ethical behaviour – when a business behaves in the right way. In employing workers e.g. good pay In sourcing products e.g. fairtrade products. In production and distribution e.g. environmentally friendly methods. In marketing e.g truthful advertising. Topic 5 The wider world affecting business. Environmental impact of business. Supplies e.g non renewable resources. Production e.g air and water pollution Distribution e.g transport pollution. Products e.g packaging, disposal. Topic 5 The wider world affecting business. Why be environmentally friendly? Law Customer demand Reputation Pressure groups –organisations that promote a particular issue e.g Greenpeace But.. business costs may increase. Topic 5 The wider world affecting business. International trade- exports and imports. MEDCs- high income countries LEDCs – low income countries Fast growing or emerging economies (B R I C) represent an opportunity to sell exports. Import protection – governments try to reduce imports. Tariffs – import taxes paid by businesses importing goods. Export subsidies – paid by governments to exporters to reduce prices. Topic 5 The wider world affecting business. EU -27 countries in a customs union. This means free trade with member countries. A market of 500m people. Tariffs on other countries’ imports. 17 members use a common currencythe Euro. Businesses can locate in any EU country. Topic 5 The wider world affecting business. Regulation = laws e.g minimum wage, health and safety laws, maternity/paternity rights. Adds to business costs but motivates workers and ethically correct.