Download Unit 3 Revision - Sprowston Community High School

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
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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.
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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.
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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.