GCSE-Knowledge-Organiser.pdf

3.1.1 - The purpose and nature of businesses 3.1.3 - Setting business aims and objectives 3.1.5 - Business Location Businesses in the Private Sector (owned by individuals) usually exist t...

3.1.1 - The purpose and nature of businesses 3.1.3 - Setting business aims and objectives 3.1.5 - Business Location Businesses in the Private Sector (owned by individuals) usually exist to make a profit but Objective Explanation Businesses location can be extremely important for the success of a business. How close may also exist for the benefit of others. Profit or other benefits are achieved through you are to raw materials or to customers can have a significant impact on the costs of Survival For the business to avoid going bust getting your product to market. producing a good or providing a service where a business opportunity exists in the business environment. Public Sector organisations (owned/run by government) exist to Profit Maximisation To achieve the most profit possible Some businesses will want to be close to their competition – such as casual dining provide services to the population, such as schools and hospitals. restaurants, as it will bring more potential customers to the area. While others, such as Growth Getting bigger / expansion through internal or external small independent restaurants may want to be far from their big-chain rivals. growth Manufacturing companies are likely to need skilled labour, and so being near to a suitable Factors of Production - the elements needed for businesses to operate: Market Share The % of a product sold in the UK sold by a single business number of skilled workers will be important. Land Labour Capital Enterprise Most businesses will have some essential services they need to be near to, such as the Buildings/offices Work of staff Money / machinery Ideas and risk-taking Social/Ethical To meet or exceed customer expectations related to the motorway network, high-speed internet connection, or international travel hubs. environment / treatment of staff or other issues Sectors of Industry - businesses divided by their stage of production: Customer Satisfaction How pleased a customer is with the product or service Primary Secondary Tertiary received 3.1.6 - Business Planning Extracting raw materials Manufacturing Providing a service Shareholder Value Improving performance of the business to raise the share price or the amount of profit that can be shared as A business plan is a written document that describes a business, its objectives, its dividends strategies, the market it is in and its financial forecasts. Needs Wants Goods Services The business plan has many functions, from securing external funding to measuring Products I need in Products I want to Physical items Actions done for you Objectives give a business direction. Over time we achieve things success within the business. order to survive have but don’t need by someone else and the world changes around us, so objectives change over time. Business size will affect their choice of objective in the same way A business plan needs to address the issues of interest to the reader and user. that business ownership will change their objectives. Bigger Assuming that the plan is meant to be read by potential finance providers (e.g. a bank, Opportunity Cost: Enterprise & Entrepreneurship: businesses will have different aims to smaller ones, and those owned business angel or venture capitalist) then it ought to provide convincing and realistic The value of the next best Enterprise is the act of doing business - investing and by shareholders will have be different to Sole Traders. answers to questions such as: alternative, lost when we make working in order to increase the value of raw What is the business? Costs / Profitability a choice. For example; if our materials or our actions. Who are the people? When will we break-even? choices could generate a)£10, Entrepreneurship is the act of creating new business What is the product? What investment is needed? b)£100, or c)£1000. The ideas, taking opportunities, while being innovative Who are the target market? Who is financing the business? opportunity cost of choosing and prepared to take risks in order to turn their AQA GCSE Business 9-1: 8132 Is the market growing? Risks / Solutions? Business in the Real World option c is the value of b = £100 money into more money. Customers – what price will be acceptable? 3.1.2 - Business ownership Liability/Size Advantages Disadvantages Unit 1 Appears in: Paper 1 & Paper 2 3.1.7 - Expanding a business Forward Vertical Towards the customer Sole Trader Owner: Unlimited Own Boss - Keep control all liability / need insurance Horizontal Lateral Liability Keep all profits Not working = not earning 3.1.4 - Stakeholders (Same industry) (different industry) Small Can employ people Cheapest to set up A Stakeholder is a person or organisation with a concern (an investment) or an interest in (they might be affected by) a business. Backwards Vertical Partnership Partners: Unlimited Shared responsibility Have to share profits Liability More investment Not in complete control Away from the customer Not working = business still More expensive to set up Common Stakeholder Groups include: Small/Medium earning Takeover Also called an acquisition, one company buys another. This could be by buying a majority of - Workers - Shareholders the shares, or by buying the company outright. Can have “sleeping partners” (Limited Liability but no say in - Managers - Customers Merger Two companies agree to join together – both original sets of owners keep some ownership. how the business is run) - Owners - Local Community External Internal Can keep control by keeping Cannot sell on the stock market - Directors - Government Forwards A business integrates (merges with or takes overs) a business closer to the customer. i.e. a Private Shareholders: manufacturer buying a retailer who sells their goods. Limited Liability a majority of the shares Selling more than 49% of the - Banks / Creditors Vertical Limited Small—Large Opportunity for additional shares could see you lose control - Suppliers (Ltd.) investment Profit likely to be shared Backwards A business integrates with a business further away from the customer. i.e. a retailer buying - Trade Unions a manufacturer that supplies them with goods. through dividends Vertical - Special Interest Groups Public Shareholders: Can sell shares on the Stock Kudos / greater reputation Horizontal A business integrates with a business who operate in the same market as them, at the Limited Liability Market - more investment Share Price controlled by the Different groups will have more or less of an interest and more or same stage of production. i.e. two car manufacturers like Jaguar and Land Rover. Limited Medium-Very Large Kudos / greater reputation market - investment might less influence over the business and its decisions. Groups like (PLC.) increase or decrease depending Lateral A business integrates with a business who operates in a different market, possibly at a Shareholders will influence the business as they want the business to different stage of production. i.e. Tata, who bought Jaguar Land Rover, and PG Tips. on the economy Risk of a Hostile Takeover - deliver them Shareholder Value, whereas Directors have significant could be voted out as CEO by the influence as they control the business. Outsourcing Paying another company to do some of your work for you, or perform certain jobs for you. shareholders at an AGM Franchising Selling the right to use your brand – you (the Franchisor) allow other companies Opportunity to increase Close scrutiny by the Charity Different stakeholder groups may be in conflict with (Franchisees) to use your name, logo, products, in exchange for an annual fee and share of Not for Trustees: Limited Liability income/impact by publicising Commission one another as their interests contradict each others. the revenue. Profit ‘Charity’ status For example, the local community will want fewer Economies of Scale: benefits of getting larger (Purchasing / Technical) lorries on the road, but managers want more sales. Diseconomies of Scale: drawbacks of getting larger (Communication / Coordination)  Key Term Definition AQA GCSE Business 9-1: 8132 Integration Businesses joining together through either a Merger or Acquisition / Takeover Business in the Real World Encouraging your employees to take risks and act as if they were an entrepreneur – but while Unit 1 Intrapreneurship working for you. Appears in: The work done by employees are those running the business. One of the four Factors of Paper 1 & Paper 2 Labour Production. Land Land and buildings. One of the four Factors of Production. Key Term Definition The extent of the owner's/owners' responsibility for the debts of the business. Acquisition / Takeover One business takes control and ownership of another. Liability Limited Liability: The owners are not responsible for the debts of the business. The limit of The range of external factors that influence a business: PESTLE-C – Political, Economic, Social, their liability for the business' debts is the amount they have already invested. Business Environment Technological, Legal, Environmental and Ethical, and Competition. Merger When two or more businesses agree to join together. Investment in machinery, and the money required to start the business. One of the four Where a business has a market share of 25% or more. This allows them to dictate prices, their Capital Factors of Production. Monopoly size in the market makes them difficult to compete with as they are able to achieve economies of scale. Competition The rivalry between businesses looking to sell their goods/services in the same market. A specific statement that defines a precise goal that can be measured and delivered within a Businesses compete for the same customers, no one business has more than 25% market Objective Competitive market given time. share. A business that owns brands in a range of different industries. For example, easyGroup own Opportunity Cost The cost of the next-best alternative that has to be given up when a choice is made. Conglomerate easyJet, easyHotel, easyPizza, easyGym, easyMoney, easyEnergy, and more. Contracting another business to carry out some of the business' activities, often to reduce Outsourcing costs. The money spent by a business on goods and services. Primary Industry Industries which extract natural resources. e.g. farming, oil drilling & mining. Costs Fixed Costs: The costs that stay largely the same, regardless of the business' output. Private Sector Businesses not owned by the state (government) but by individuals or groups. Variable Costs: Profit: Where income is greater than expenditure. These are people or organisations who have supplied goods or services to a firm but have Profit / Loss Creditor Loss: Where expenditure is greater than income. not yet been paid for them. Organisations where the activities are carried out either by national or local This is a legal document which shows how responsibilities, profits and workload Public Sector Deed of Partnership government. are to be shared. Raw Materials Materials and resources that are found / grown / extracted in the form that they will be used. Diseconomies of Scale When a business grows too large, leading to a possible increase in unit cost. Revenue Income from the sale of goods and services over a period of time. A portion of the after-tax profit that is paid to shareholders according to the number of shares Dividend they own. Secondary Industry Industries which manufacture, assemble, process and construct goods. E-Commerce Business transactions carried out electronically on the internet. A partner who puts in finance but does not take part in running the business. They have limited Sleeping Partner The cost advantage of producing on a large scale. As output increases the unit cost decreases. liability. A stakeholder in an organisation with a particular interest, such as the Environmental Lobby – a Technical Economies of Scale: Being a larger organisation allows you access to more capital, Special Interest Group group with a specific interest in businesses operating in an environmentally friendly way. with which you can buy larger machines that enable you to increase you output while lowering Economies of Scale unit costs. Tertiary Industry Industries which provide services both to individuals and other sectors of industry. Purchasing Economies of Scale: Buying in larger quantities enables you to access higher price An organisation who work to ensure that the interests and rights of their members (a group of Trade Union breaks which leads to a fall in the unit costs. workers) are protected. The ability to identify business ideas and opportunities to bring them to fruition and to take Unit Cost The costs of the raw materials and components that have been combined to create a product. Enterprise risks where appropriate. One of the four Factors of Production. A person who is willing to take a risk by investing money into a business, organising the resources and hoping to make a profit. e.g. Richard Branson. Usually they do this because; they Entrepreneur are ambitious, dissatisfied with working for other people, to pursue an interest, or because they have seen an opportunity, Entrepreneurship The act of being an entrepreneur – starting your own business and taking risks. A business that can be set up virtually anywhere – it has no specific need to be close to any Footloose specific resource or set of customers. 3.2.3 – The economic climate 3.2.1 - Technology 3.2.5 - Legislation E-Commerce has changed the process of doing Legal changes affect business, when the law changes it is likely that a business will have to Interest rates are the cost of borrowing and the reward for saving. business dramatically. Not just retail, but all change how they operate in order to comply with the law. Even small changes can mean markets have been affected by the introduction large costs for the business, as the administration and work involved in making the change Higher interest rates means that borrowing is expensive – people and of new technology and online shopping. takes time. businesses borrow less. Everyone shops online – even businesses. Lower interest rates mean that borrowing is cheaper – people and businesses Key Legislation: Ordering is now completed online. borrow more. National Minimum/Living Wage: M-Commerce is now growing even faster, it’s possible for - This sets a minimum amount of money a worker can be paid per hour, depending on The Bank of England can raise or lower interest rates businesses to access more customers in more places more easily. their age. They might do this to either stimulate or suppress borrowing. If Social media marketing allows businesses to target individuals - Raising the minimum wage will increase costs and could lead to the business having to people are spending money too quickly, prices will rise because based on their likes and dislikes. It puts advertising in front of reduce its workforce. demand rises. If prices rise too fast, soon we won’t be able to them at the right time to make it more likely for them to buy. - By increasing the minimum wage, the government should see the lowest earners in the afford to live as comfortably. This is called inflation. country receive higher wages allowing them to improve their living standards. Digital Communication speeds up the rate at which information can Equality Act (2010): be moved around. It has also replaced the need to travel as far and - This protects individuals from discrimination by employers in relation to certain One person’s spending is another person’s income. protected characteristics as often. Video conferencing apps like FaceTime and Skype mean If fewer people have jobs, then the average amount of money being - This Act is an important part of British Values as it promotes mutual respect and that you can talk to people all over the world, face to face, without earned is lower. If, on average, we have less money then we can only tolerance – it protects our individual liberty as it ensures who we are does not limit travelling, saving time, money, and the environment. spend less money. If we spend less, then someone else will earn less, what we can do. and so they spend less. It becomes a self-reinforcing cycle. Health and Safety at Work Act (1974): Important examples: - Sets out the duties of the employer and employee in creating a safe working The more we spend the more companies must supply environment As people earn more or less money, and can borrow more or less - A safer environment for employees makes them feel safe and cared for, and more likely money, the amount we spend (and so the amount of goods and to see the company as a good employer. This can lead to better retention of staff, and services we demand) will change. When people earn more or can so lower recruitment costs, and to a better reputation making it easier to recruit better borrow more, we see demand increase, but the same is true vice- quality workers. versa. If people stop spending so much then demand falls, and Trade Descriptions Act (1968): when demand falls prices fall, this is called deflation. AQA GCSE Business 9-1: 8132 - This Act prevents businesses from misleading customers. This helps to protect the consumers from being tricked into spending money or receiving poor quality goods and Influences on business services. 3.2.2 - Ethical and environmental considerations Ethics are the rules that require a business to operate in a way that is fair and honest. Unit 2 Appears in: Paper 1 & Paper 2 3.2.6 - The competitive environment Monopoly – a market which is dominated by one seller or producer. By law a Modern consumers expect businesses to behave in a way that treats them well, but that monopoly occurs if a firm has a market share of 25%. Trying to compete with a also minimises: business that has a monopoly is very difficult because they can dictate prices. The use of single-use materials such as black plastic which cannot easily be recycled, or 3.2.4 - Globalisation Competitive Market – a situation where multiple businesses compete for the same of palm oil the production of which is responsible for significant deforestation and Imports and Exports customers. harm to wildlife. Unnecessary travel, particularly air travel, which is especially bad for the environment. Foreign currency exchange has a major The amount of waste going to landfill, and an increase in the amount of recyclable raw impact on how much we import or export. Selecting the right price can improve your competitiveness – customers may be attracted by a Price lower price or by promotional pricing materials used. If a currency is strong then it buys more of The emission of air pollution, this is a topical issue at the moment – diesel exhaust another currency. If it is weak it buys less. Higher quality may set a product apart from the competition. In relation to luxury goods in Quality particular, quality is often the most important factor. fumes cause significant harm to human beings living in cities. Noise pollution, from loud vehicles, factories, and antisocial behaviour. SPICED – Strong Pound, Imports Cheaper, Exports Decline After sales For products like cars, the quality of after sales care is very important. i.e. the features of the Traffic congestion, as a result of increasing numbers of vehicles on the roads. £1 can buy more of the product coming from overseas so it service warranty, whether a courtesy car is available. becomes cheaper. But it costs someone overseas more to buy Businesses selling convenience goods are going to benefit from being very close to their Ethics in business are mostly concerned with doing what is right. However, this often products made here, so exports are more expensive and reduce. Location customer, where casual dining restaurants need to be near to the competition to benefit from comes at a cost; there is likely to be a trade-off between doing what is cheapest and WPIDEC – Weak Pound, Imports Decline, Exports Cheaper increased footfall. doing what is right. £1 buys less of the product coming from overseas so it becomes Unique Selling Point – this is a feature of the product or service that is unique to this business. more expensive, so less is imported. It costs someone overseas less USP By having a unique selling point that adds value, it allows the business to charge a higher price Sustainability is a goal of most businesses, and it is to avoid unnecessary use of to buy products made here, as their currency can buy more pounds. and to attract more customers. materials and energy to avoid causing damage to the planet. Exports become cheaper. A range of options for customers for how they receive/take possession of the product will increase the number of customers by adding convenience. Click and Collect and home They take this approach to achieve two things: Operating worldwide – globalisation has made it cheaper to Delivery delivery alongside in-store shopping make it easier for customers by reducing wait time and - Improve their reputation relocate to other parts of the world to be nearer to raw materials the need to travel. - Ensure they can continue to operate long into the future or markets. International travel and shipping means that products The design and reputation of a brand can increase the appeal. Apple have managed to make can be made anywhere and sold anywhere. Costs remain an Branding the most obvious success of branding, as it has become such a desirable brand to own – Operating this way can result in short-term losses as operating important factor in any decision. whether with an iPhone, iPad, Watch, TV, MacBook, iMac, iPod etc. sustainably can be expensive – reusable materials can often cost more.  Key Term Definition AQA GCSE Business 9-1: 8132 Influences on business Globalisation The increasingly ‘local’ nature of the planet – businesses operate worldwide, with money, goods, services, and people moving across national borders. Unit 2 Health and Safety at Work Act Laws relating to processes and procedures that businesses must follow in order to keep Appears in: (1974) their employees and customers safe. Paper 1 & Paper 2 Import Buying from a company outside your national borders. “The reward for saving and the cost of borrowing.” Expressed as a percentage, it is the rate Key Term Definition at which either savings or debts grow over time. Borrowing or saving £1,000 at an interest Interest Rates rate of 5% means that at the end of the year you would either owe £1,050 or have £1,050 Harmful substances and fumes in the air that cause disease, allergies, or damage to humans Air pollution in your account. or other living organisms, or to the environment. People and businesses from outside of your national borders investing in your country’s Inward Investment The presence of other businesses in the same market attempting to sell to the same businesses or land. Competition customers What percentage of the population who could work, are working. Often a percentage, if the Level of employment level of employment is 97%, then it means that 3% are unemployed. Laws that are designed to protect the consumer, by ensuring that products and services The place where buyers and sellers meet, to exchange money or credit, for goods and Consumer law offered by businesses are safe, and that they deal with their customers in an honest and Markets services of a particular type. i.e. the Car market, clothing market, wheat market, or the fair way. stock market. The amount of money being spent by households on the goods and services they want and Consumer spending M-Commerce Business transactions completed on a mobile device such as smartphone or tablet. need. The legal document that states the terms and conditions for both the employer and the Multinational Company (MNC) A company with offices or divisions in more than one country. Contracts of employment employee when paying someone to do a job. The minimum hourly rate for employees in the UK. It tends to increase each year and Digital communication Transmitting information between computing devices. National Minimum/Living Wage changes in April. As of April 2019, the rate for 25 year olds was £8.21/hour. The rate is E-Commerce Transactions that are carried out using the internet. i.e. Amazon different for different age groups below that. Key factors within a country such as the level of consumer spending, the level of Noise that causes some level of disturbance, either from vehicles, or business operations. It Economic Climate Noise Pollution production, the number of people unemployed, rates of inflation and interest. could include customers arriving or leaving a business. These laws govern what can and can’t be expected of an employee, and how a business Recycling Converting waste into useable material. Employment Law may treat its employees. Risk The chance that an investment might not deliver a profit. This act of parliament is a set of laws that protect individuals from discrimination. It lists the Businesses needing to act in a way that protects people within society rather than harming Social responsibility characteristics that are protected, and that cannot be discriminated against. These are: them. Equality Act (2010) Age / Disability / Gender reassignment / Marriage and civil partnership / Pregnancy and Businesses operating in a way that does not damage the environment or use up natural maternity / Race / Religion or belief / Sex / Sexual orientation Sustainability resources. Traffic congestion More vehicles on the roads than they can handle without queues and longer journey times. Aims that relate to abiding by their moral code in order improve reputation. This could Ethical Objectives include trying to act fairly, protecting the environment, or contributing to charitable This occurs when it is difficult to predict the outcome. In economic terms, uncertainty leads Uncertainty activities. to people saving rather than spending money. The level of investment falls. Ethics The moral principles that determine how a business wishes to operate. Waste Unwanted materials. Businesses may have to pay to dispose of waste. The price at which one currency can be exchanged for another. The removal and disposal or destruction of unwanted items or materials. Through either Waste Disposal For example, £1:€1.10 landfill, incineration, or recycling. Exchange Rates Terms of a job that mean there is no minimum number of hours guaranteed for a worker, To find £250 in Euros, multiply by 1.10 To find €250 in Pounds, divide by 1.10 Zero-hour contract per week. Likewise, there is no expectation that a worker has to accept hours that are offered. Export Selling a product to a customer outside of the country that you operate in. Don’t forget! PESTLE-C P – Political issues like a change in government, leading to different types of laws being passed. External Costs Negative impacts caused on people, places, or other organisations by a business’ activity. is a useful acronym for E – Economic increases or decreases in consumer spending, interest and exchange rates, or borrowing. reminding yourself of S – Social changes in the fashions and trends that lead consumers to buy and try different products all of the external T – Technological things like Apple Pay have been disruptive they have changed how businesses operate. The increase in the average temperature of the earth, leading to negative consequences for factors that affect L – Legal new laws change the rules and businesses have to change to follow them, increasing costs. Global Warming businesses. E – Environmental and Ethical changes in what people want to see your business doing life, caused by the release of carbon dioxide and other greenhouse gases. C – Competition what they do will have a big impact on you, their actions will affect your decisions. 3.3.1 - Production processes 3.3.3 - The concept of quality Job production is the production of a one-off product made to order. It is used where the Quality means different things to different people (markets). A product can have high quality if it provides good value (low variety in output needs to be high but the volume in output of the product is low. Often, this price but acceptable wear and tear – Primark) however some products have a high price and low performance. Often, leads to high costs of production. customers will only pay a high price if they are confident of the quality they will receive. This may be based on: Higher costs in terms of higher skills (specialisation), and longer lead times, result in higher The reliability of the product or service – does the product or service always do what is says it will prices, meaning products are not price competitive, meaning job production is used for Customer expectations – does the product or service meet up to what the customer expected it to do premium, highly customized large products. E.G Houses, Bespoke Wedding Cakes. Achieving higher quality Total Quality Management (TQM) is a philosophy where people involved in the manufacture Flow production is the continuous, mass production of a standardized, uniformed of a product or the delivery of a service are internal customers to each other, and therefore product. The product is moved from one stage to another, often on a production line. check and ensure quality at all stages of the manufacture or delivery. In TQM, all people It is most suitable when there is low variation in the quantity being produced, and the involved are encouraged to continually improve their approach by making small incremental volume of output needs to be high. It results in low costs of production. However, changes to the service they provide each other. there are higher initial set up costs in land and capital to create the production line, but Lowers costs as fewer mistakes are made the product moves through a sequence of often automated stages, meaning lower staff Improves staff motivation as they take more pride in their work and are listened to costs, and higher, continuous output. E.G Plastic Bottles, Laptops. Better reputation as all aspects of the customer experience are higher quality Lean production is an approach that aims to minimise waste in order to increase efficiency Quality Control - a check performed to see if a completed product meets the required quality standard – i.e. doing more with less. It does this by using a range of tactics; + Ensures only high quality products are sent to the customer Quality assurance is ensuing quality issues do not happen by perfecting the production - Reactive: waits for the whole product to be created before checking, leading to high costs in rework and waste in process, rather than quality control which deals with mistakes after they happen. defective products Kaizen (Japanese for continuous improvement) – employees are responsible for making Quality Assurance - checks made to materials, machinery and the product itself during the manufacturing process that small improvements to cut waste. Cutting waste reduces manufacturing costs. insures a high quality outcome Examining processes to identify areas for improvement / increased efficiency + Preventative: reduces costs as mistakes are found before additional work is done to a product Just-in-time stock management reduces the amount of stock held (waste) by - Involves all employees to care for quality, and many more quality checks producing items just in time for them to be used. Lean production should reduce costs, allowing the business to be more profitable. Costs of high quality: Benefits of high quality: However, mistakes add to the lead time and can cause problems such as the need to AQA GCSE Business 9-1: 8132 Higher price of raw materials Increased revenue though improved reputation Higher staff training costs Can set higher prices Business Operations outsource work or compensate customers for delays. Higher costs of quality inspection Lower costs in reduced product recalls 3.3.2 - The role of procurement Procurement is establishing a relationship with suppliers to buy the raw materials, Unit 3 Appears in: Paper 1 3.3.4 - Good customer service producer goods and services business require. Increasingly, quality is determined by the service provided around the product. For example, where the product is bought (online or in store). The quality experienced is higher if the customer service matches (or exceeds) customer wants and Just-in-case; a push stock control Just-in-time; a pull stock control expectations. Customer expectations are managed through the PEAK process system whereby stock is ordered and system whereby stock is ordered and arrives just-in-time for its use. Prospect: the marketing (advertisement) of a product. At this stage it is stocked just-in-case it is needed. + Low stock, storage and insurance important to explain what value or quality features the product or service + You will have buffer stock if it is costs has. However it is important to manage customer expectation – not promise needed suddenly (spike in + Items do not perish or become what cannot be achieved, so the product or service is more likely to meet or demand) obsolete exceed customer expectations. + Benefit from Purchasing - High reliance on suppliers Engage: the customer in a dialogue about the product. This could be face-to- Economies of Scale - May lose out on Purchasing face with a sales representative, a customer visiting premises (a shop) or a - High costs in storage and Economies of scale click on a webpage. To add value, high quality service may involve customers insurance. having questions answered by knowledgeable staff or the product or service - Some stock may be perishable or adapted to meet their specific needs. obsolete Acquire: encourage the customer to purchase the product or service. Customers are only likely to do this if they are The choice of supplier depends on the: convinced the product or service will meet their needs at a price that is reasonable to them. This could be achieved by Price of materials or services good product information, multiple methods of payment (including finance, e and m-commerce), offer of good post Quality of materials, services or customer care sales service. Reliability and speed of deliveries – do they always achieve what they say (lead time) Keep: building customer loyalty such that customers will return and buy more from you in the future. This could be Flexibility in the volume (quantities) ordered achieved by offering loyalty schemes and targeted email advertisements based on data analysis – suggesting what other Reputation and ethical issues – how and where are the materials made products they should buy based on past purchases and interests Payment terms - do they offer trade credit? Methods of good service: IT impact on service: The supply chain is the sequence of businesses and processes that take place between the Highly trained staff who have good product knowledge Use of websites to provide customers with a more creation of the raw materials into the finished product or service. Logistics is the movement of and can provide personal advice to customers convenient way of ordering/tracking (e-commerce) goods between these processes. After (post) sales service – providing discounted or Social Media – to engage customers through m- free parts and servicing, customer care/training lines commerce: location-based notifications & easier payment  Key Term Definition AQA GCSE Business 9-1: 8132 Business Operations Just In Time (JIT) Organising the ordering of raw materials and components to be delivered just before they will Unit 3 be used, reducing the need for storage. Appears in: Continually working to reduce the resources used to create products: raw materials, labour, Lean Production Paper 1 machines and premises Managing the movement of supplies and products to ensure the timely delivery of supplies to Logistics the production process and finished products to customers. Key Term Definition M-Commerce Business transactions are carried out electronically by mobile phone. The consumers’ perception of the brand; its character, qualities and shortcomings. It is Brand Image developed over time and operates as a consistent theme through advertising campaigns. Motivation The reasons people are interested in and committed to their job. A stock of raw materials held in reserve to protect the production process from unforeseen Buffer Stock Contracting another business to carry out some of the business’ activities, often to reduce shortages. Outsourcing costs. Cost The money spent by a business on goods and services. Maintenance or repair of equipment by the manufacturer or supplier during or after the Post Sales Servicing warranty. The relationship between the business and the customer that puts the customer’s Customer Engagement requirements at the centre of the operation to Primary Industry A business that extracts the earth's natural resources. build brand loyalty. The removal, storage or destruction of unwanted material. Methods include recycling, burning The process of buying goods and services including dealing with: Disposal of waste demand and landfill sites. selection of suppliers Procurement analysing and negotiating prices E-Commerce Business transactions carried out electronically on the internet. making the purchase managing payments. Economies of Scale The cost advantage of producing on a large scale. As output increases the unit cost decreases. An in-depth understanding of the features, use and application of the good/service that will Product Knowledge enable the person selling it to provide any information that the purchaser wants before Export Good/service sold to a customer in another country. committing to buy. Product Recalls The withdrawal from sale by the manufacturer of a defective or contaminated item. Fixed Costs The costs that stay largely the same, regardless of the business’ output. The amount produced by a worker/machine/factory in a given time; the ability to produce Productivity more output with fewer resources. Flow Production Using a production line to make goods continuously and in large numbers. Businesses that use raw materials that are heavy and/or bulky choose to locate close to their Raw Materials suppliers to reduce the cost of transport or storage. Good Items that are produced from raw materials for sale to businesses or consumers. Recycling The conversion of waste into reusable material. Import Good/service bought from a supplier in another country. Supplier A business that provides goods/services. Training given to a new employee when they start a new job; it provides information about the Induction business, its operation and working practices. The network of organisations, people, activities, information and resources that take the Supply chain product/service from supplier to customer. Testing/examining items to check that materials or items conform to the specified Inspection A philosophy that involves everyone in the business in the quest for continual improvement in requirements/standards. Total Quality Management (TQM) the attitudes, practices, structures and systems that combine to create a top-quality product. Job Analysis The process of determining what the job entails, including responsibilities and tasks. The process of buying items from a supplier and paying for them later; for example, 30 days Trade Credit after invoice date. Job Production A method of creating a single product to meet an individual order. A business or person that buys goods in large quantities from producers, stores them in Wholesaler warehouses and sells them on to retailers. Organising procurement to ensure that the production process never runs out of stock, Just In Case (JIC) reducing the number of sales lost due to insufficient raw materials. 3.4.1 - Organisational Structures 3.4.3 - Motivating employees The organisation of a business defines how information is passed around the business and how decisions are made. In Benefits of a highly-motivated workforce: general, the more centralised a business is, the more layers there are, and the slower information travels, however decisions Higher retention – lower recruitment costs as fewer people leave are made faster. The structure of a business can be shown in an organisation chart or hierarchy (like below). Higher productivity – employees will be more willing to do more or better work Higher levels of sales – employees will go above and beyond to satisfy customer needs A line manager is the “boss” of the An organisational structure The span of control of an employee Easier to attract new employees – more people will want to work for the business people below them in the hierarchy. can be described as tall if is the number of employees directly For example, the directors are line there are many layers, or manged by that employee. For Financial methods of motivation: managers of 4 managers each. flat if there are few. example, the span of control for this Wages – pay a person by the hour. Represents a variable cost to the business. Encourages employees to pick up extra Chief Executive is 4. shifts. Can also offer overtime – a higher hourly rate for employees who work over their contracted hours Authority is the power people have to make A Salary – pay a person a fixed amount for a year. No set number hours for employee. Represents a fixed cost to a business. u 1 Chief Executive Chain of Command Piecework/Piece rate – money paid to an employee per “output” they produce: E.G per item manufactured. The business decisions. Authority t C refers to how must also ensure they pay the minimum wage h h increases the higher you go o a commands are passed Commission – money paid to an employee when they make a sale. May be a fixed amount or a percentage of the sale ri 4 Directors i up the hierarchy t n down from people in y o amount Delegation occurs when f authority and who Profit sharing – where a percentage of the profits made by a business is shared with all employees – encourages all responsibly for making D 16 Managers they travel through, employees to work better together e decision is passed down to l C and how information is e o m passed up from Non-Financial methods of motivation: subordinates (people g m Job Enrichment – giving employees more interesting or challenging tasks to do. Could also give them more autonomy lower in the hierarchy). a a subordinates (people t 48 Workers n d lower in the (choice) in what job they do (job rotation). This is sometimes referred i Communication happens downwards from the top Training – providing good training will help employees feel they are doing their job better (job satisfaction) and feel like to as “giving autonomy” to o hierarchy). n of the hierarchy, upwards from the bottom and they are being invested in employees. horizontally across departments. Management style – when managers show more trust in employees by allowing them to make decisions, employees are Centralisation is when there are many layers and De-centralisation is the process of removing layers of the hierarchy said to have more autonomy over their working day which can be motivational decisions are only made by a few people at the top to improve communication and delegate responsibility Fringe benefits are benefits given in addition to pay that come with a job. Could include: Discounts when buying the + Decisions are made quickly by a few people – + Decisions made closer to the customer (potentially better) business’s products/services, company car, health Insurance good for emergencies + Motivating for employees (autonomy) - Decisions are made far from the customer – - May be disagreements AQA GCSE Business 9-1: 8132 communication diseconomies of scale - Low skilled employees could mean bad decisions Human Resources 3.4.2 - Recruitment and selection of employees Internal recruitment is when an employee is recruited from Unit 4 External recruitment is when an employee is recruited from Appears in: Paper 1 3.4.4 - Training Good training: inside the business outside the business + Improves productivity. Employees will have more skills to do more with less time and materials + Candidates already know the business operates + Recruit people with new ideas and enthusiasm + Improves motivation. Employees feel they know more about their job and therefore feel more satisfied + Offers a chance of promotion which motivates people + May be from a competitor and have insider knowledge + Increases employee retention. Fewer people leave as they feel invested in and feel they have the skills to do their job + Lower cost to a business + Wider choice of candidates + Results in higher quality products and higher levels of customer service - Cost of retraining employees for a new job + May have expensive specialist qualifications or degrees - Costs money – some training and skills can cost money to receive. Employees may also need time off to attend. - May lead to stagnation or complacency – no new ideas - High costs in advertising and selection - Candidate needs induction training Induction training is provided for new employees joining the business. Its purpose is to introduce 5. Selection: using new employees to the people they will be working with, and the procedures and policies of the 2. Job Description: 3. Person Specification: interviews, 4. Advertise the job: 1. Job analysis: what do they do? describes the roles and describes the kind of newspapers, jobcentre, psychometric tests and business. It is also used to align the recruit with the values of the business, so they can integrate What skills are needed? responsibilities of the person needed and assessment centres to job qualifications required employee agencies choose the right well with their new team and reduce the likelihood they will leave candidate On-The-Job training is when an experienced colleague shows you how a job is done. This it done by Employee retention is a measure of how long Selection methods: a combination of observing the colleague and doing the job with the support or feedback from the employees stay at a business. A high retention rate Interviews – a face-to-face meeting with manager(s) with the colleague. It is useful as the person being trained knows exactly how to do the job for the specific means lower recruitment costs, higher experience applicant business (it may be done slightly different elsewhere) and means that the person being trained and therefore higher level of customer service and Psychometric tests – a questionnaire that measures personality doesn’t need