EDEXCEL A-Level Business - Theme 1.
Added Value - ANSWER-Added value is the value of the finished output over and above
the cost of achieving it i.e. the cost of inputs and transformations.
Value can be added by manufacturing, branding, technology and a unique selling point.
Calculated as:
Selling price - cost of inputs - cost of transformation
Advertising - ANSWER-A promotional method that involves the use of media to
communicate with existing and potential consumers.
Media used may be wide ranging from magazines and television to billboards and
posters.
Can be informative or persuasive but is designed to generate awareness and desire.
Aesthetics - ANSWER-The element of the design mix that considers the look and the
feel of the product as well as how our senses respond to the product.
Combined with cost and function in new product development.
Autocratic Leadership - ANSWER-The leader makes all of the decisions and informs
subordinates.
Subordinates are closely supervised and given little autonomy or authority.
Decision making is centralised.
Bias - ANSWER-A preference to hold a viewpoint that does not take into account all of
the alternatives within a population.
A statistic is biased if it is weighted towards a specific subgroup of a population.
Bias may be caused due to the self interest of those undertaking the research.
Bonus - ANSWER-The payment of a discretionary lump sum to an employee, normally
based on predetermined criteria.
Bonuses are a financial incentive, they can be:
-Personal - based on performance e.g. following a review
-Company - based on company performance e.g. year end results
-Seasonal - based on manager's decision e.g. a Christmas bonus.
,Bonuses are not guaranteed and should be viewed as "one offs", however once
employees have received them they may grow to expect them.
Boston Matrix - ANSWER-A model used to analyse a firm's product portfolio by
considering market share in relation to market growth for each product.
It helps inform future marketing decisions.
Products are classified as:
-Rising Stars
-Cash Cow
-Problem Child
-Dog
Boston Matrix Diagram - ANSWER-
Brand - ANSWER-A feature of a business or product that is recognised by customers
and distinguishes it from competitors.
Brand portrays an image to the customer and makes a promise as to what they can
expect based on consistency and perception.
Leads to brand loyalty whereby customers will continue to buy products from that firm.
Branding - ANSWER-A promotional method that involves the creation of an identity for
the business that distinguishes the firm and its products from other firms.
Branding can add value to a product allowing firms to charge higher prices.
Leads to brand loyalty whereby customers will continue to buy products from that firm.
Business Objectives - ANSWER-Targets that a business wants to achieve within a set
period of time.
A business will set objectives for the organisation as a whole e.g. social and ethical
objectives.
Each functional area will set functional objectives.
Objectives should be SMART.
Business to Business (B2B) - ANSWER-When one business sells its goods or services
to another business (B2B) i.e. industrial markets.
B2B markets are likely to involve less intermediaries with greater emphasis on the
relationship between buyers and sellers.
,Within the marketing mix greater emphasis is likely to be on price and quality of the
product.
Business to Consumer (B2C) - ANSWER-When one business sells its goods or
services to individual consumers (B2C) i.e. consumer markets.
Although there may have been a number of B2B transactions up until this point this
represents the end of the supply chain.
An integrated marketing mix is crucial to generate demand from consumers.
Cash Cow - ANSWER-A classification of product within the Boston Matrix characterised
by low market growth and high market share.
Profits can be 'milked' from these products in order to support the growth of other
products.
Promotional expenditure is likely to be relatively low.
Centralised Structure - ANSWER-A HR strategy where the responsibility for decision
making is maintained by a limited number of senior managers at the top of the
hierarchy.
Decision making is therefore quick and made by senior personnel.
Often linked to a hard HR strategy.
Managers are able to maintain tight control of expenditure budgets.
May demotivate employees lower down the hierarchy.
Chain of Command - ANSWER-The route of communication as it travels down the
levels of the hierarchy.
A tall organisational structure will have a long chain of command as opposed to a short
organisational structure that has a short chain of command.
A long chain can slow down communication and lead to distortions, a potential
diseconomy of scale.
Collective Bargaining - ANSWER-Collective bargaining occurs when a trade union
negotiates with an employer on behalf of all employees who are members.
Strength is gained from numbers.
, Individual bargaining occurs when one employee negotiates with an employer on their
own behalf.
Commission - ANSWER-A form of payment that rewards the employee by giving them a
percentage of their sales as a financial reward.
A financial motivator.
This is in addition to a basic salary.
Competition - ANSWER-The number of competitors that a business faces within the
market that it operates.
Larger competitors are likely to have more finance available and are therefore more
powerful within that market.
A business may try to identify a gap in the market in order to differentiate itself from its
competitors.
Competitive Advantage - ANSWER-A feature of a business' product that allows it to
perform more successfully than others in the market.
A competitive advantage can be achieved in a number of ways including:
-Training
-Customer Service
-USP
-Brand loyalty
Competitive Pricing - ANSWER-When a business sets a price for its products after
considering the prices set by its competitors.
The business may undercut the prices of its competitors in order to achieve higher
market share.
By differentiating its product from the competition a firm might be able to charge higher
prices.
Complementary Goods - ANSWER-Goods that are bought alongside each other as they
complement each other e.g. fish and chips, games and games console.
If the price of good A increases, the demand for good B will decrease.
There is a negative correlation between price of good A and demand of good B.
Consultation - ANSWER-The process of discussing issues with employees before
making decisions.
Added Value - ANSWER-Added value is the value of the finished output over and above
the cost of achieving it i.e. the cost of inputs and transformations.
Value can be added by manufacturing, branding, technology and a unique selling point.
Calculated as:
Selling price - cost of inputs - cost of transformation
Advertising - ANSWER-A promotional method that involves the use of media to
communicate with existing and potential consumers.
Media used may be wide ranging from magazines and television to billboards and
posters.
Can be informative or persuasive but is designed to generate awareness and desire.
Aesthetics - ANSWER-The element of the design mix that considers the look and the
feel of the product as well as how our senses respond to the product.
Combined with cost and function in new product development.
Autocratic Leadership - ANSWER-The leader makes all of the decisions and informs
subordinates.
Subordinates are closely supervised and given little autonomy or authority.
Decision making is centralised.
Bias - ANSWER-A preference to hold a viewpoint that does not take into account all of
the alternatives within a population.
A statistic is biased if it is weighted towards a specific subgroup of a population.
Bias may be caused due to the self interest of those undertaking the research.
Bonus - ANSWER-The payment of a discretionary lump sum to an employee, normally
based on predetermined criteria.
Bonuses are a financial incentive, they can be:
-Personal - based on performance e.g. following a review
-Company - based on company performance e.g. year end results
-Seasonal - based on manager's decision e.g. a Christmas bonus.
,Bonuses are not guaranteed and should be viewed as "one offs", however once
employees have received them they may grow to expect them.
Boston Matrix - ANSWER-A model used to analyse a firm's product portfolio by
considering market share in relation to market growth for each product.
It helps inform future marketing decisions.
Products are classified as:
-Rising Stars
-Cash Cow
-Problem Child
-Dog
Boston Matrix Diagram - ANSWER-
Brand - ANSWER-A feature of a business or product that is recognised by customers
and distinguishes it from competitors.
Brand portrays an image to the customer and makes a promise as to what they can
expect based on consistency and perception.
Leads to brand loyalty whereby customers will continue to buy products from that firm.
Branding - ANSWER-A promotional method that involves the creation of an identity for
the business that distinguishes the firm and its products from other firms.
Branding can add value to a product allowing firms to charge higher prices.
Leads to brand loyalty whereby customers will continue to buy products from that firm.
Business Objectives - ANSWER-Targets that a business wants to achieve within a set
period of time.
A business will set objectives for the organisation as a whole e.g. social and ethical
objectives.
Each functional area will set functional objectives.
Objectives should be SMART.
Business to Business (B2B) - ANSWER-When one business sells its goods or services
to another business (B2B) i.e. industrial markets.
B2B markets are likely to involve less intermediaries with greater emphasis on the
relationship between buyers and sellers.
,Within the marketing mix greater emphasis is likely to be on price and quality of the
product.
Business to Consumer (B2C) - ANSWER-When one business sells its goods or
services to individual consumers (B2C) i.e. consumer markets.
Although there may have been a number of B2B transactions up until this point this
represents the end of the supply chain.
An integrated marketing mix is crucial to generate demand from consumers.
Cash Cow - ANSWER-A classification of product within the Boston Matrix characterised
by low market growth and high market share.
Profits can be 'milked' from these products in order to support the growth of other
products.
Promotional expenditure is likely to be relatively low.
Centralised Structure - ANSWER-A HR strategy where the responsibility for decision
making is maintained by a limited number of senior managers at the top of the
hierarchy.
Decision making is therefore quick and made by senior personnel.
Often linked to a hard HR strategy.
Managers are able to maintain tight control of expenditure budgets.
May demotivate employees lower down the hierarchy.
Chain of Command - ANSWER-The route of communication as it travels down the
levels of the hierarchy.
A tall organisational structure will have a long chain of command as opposed to a short
organisational structure that has a short chain of command.
A long chain can slow down communication and lead to distortions, a potential
diseconomy of scale.
Collective Bargaining - ANSWER-Collective bargaining occurs when a trade union
negotiates with an employer on behalf of all employees who are members.
Strength is gained from numbers.
, Individual bargaining occurs when one employee negotiates with an employer on their
own behalf.
Commission - ANSWER-A form of payment that rewards the employee by giving them a
percentage of their sales as a financial reward.
A financial motivator.
This is in addition to a basic salary.
Competition - ANSWER-The number of competitors that a business faces within the
market that it operates.
Larger competitors are likely to have more finance available and are therefore more
powerful within that market.
A business may try to identify a gap in the market in order to differentiate itself from its
competitors.
Competitive Advantage - ANSWER-A feature of a business' product that allows it to
perform more successfully than others in the market.
A competitive advantage can be achieved in a number of ways including:
-Training
-Customer Service
-USP
-Brand loyalty
Competitive Pricing - ANSWER-When a business sets a price for its products after
considering the prices set by its competitors.
The business may undercut the prices of its competitors in order to achieve higher
market share.
By differentiating its product from the competition a firm might be able to charge higher
prices.
Complementary Goods - ANSWER-Goods that are bought alongside each other as they
complement each other e.g. fish and chips, games and games console.
If the price of good A increases, the demand for good B will decrease.
There is a negative correlation between price of good A and demand of good B.
Consultation - ANSWER-The process of discussing issues with employees before
making decisions.
