International A Level Unit 1 Business Revision PDF

International A Level Revision Unit 1 What is mass market Mass market refers to a large group of consumers who have similar needs and preferences for a product or service, and are willing and able to purchase it at an affordable price. What is niche market A niche market is...

International A Level Revision Unit 1 What is mass market Mass market refers to a large group of consumers who have similar needs and preferences for a product or service, and are willing and able to purchase it at an affordable price. What is niche market A niche market is a small and specialized group of consumers with unique and specific needs and preferences for a product or service. Smaller segment of a larger market. Two benefits and two drawbacks of mass markets Benefits Drawbacks It allows businesses to intense competition and achieve economies of price wars, as businesses scale by producing and try to attract customers selling large quantities of with lower prices. products at a lower cost it may require significant per unit advertising and marketing It provides a wider expenses to reach a large customer base for and diverse customer increased sales and base. revenue. Two benefits and drawbacks of niche markets Benefits Drawbacks Less competition than in Higher unit costs so no the mass markets economies of scale Easier to target customers Very risky as demand may not be constant Define market size Market size refers to the total number of potential customers or sales revenue available for a specific product or service in a particular market. How to calculate growth in market size For example, if the market size for a product was $10 million at the beginning of the year and increased to $12 million at the end of the year, the growth in market size would be: [($12 million - $10 million) / $10 million] x 100 = 20% Define market share Market share refers to the percentage of total sales revenue/customers of a specific product or service that is generated by a particular company. How to calculate market share For example, if a company sells $10 million worth of smartphones in a market that has total sales revenue of $50 million for smartphones, its market share would be: ($10 million / $50 million) x 100 = 20% Define the term brand A name, logo or symbol that distinguishes a product or service from its competitors. Two benefits of a strong brand increased customer recognition and loyalty, which can lead to higher sales and revenue the ability to charge a premium price for the products or services, which can improve profit margins. Define online retailing Online retailing refers to the process of selling products or services through a website or other online platform, with the aim of reaching a wider customer base Benefits and drawbacks of online retailing Benefits Drawbacks increased accessibility increased competition and convenience for from other online retailers, customers, which can lead which can make it difficult to higher sales and to differentiate from reduced costs competitors the ability to reach a the potential for technical global audience. issues and security concerns related to online transactions. What is product innovation. The development/creation of products not previously available. Benefits and drawbacks of product innovation Benefits Drawbacks increased customer the high costs and risks satisfaction and loyalty, associated with research which can lead to higher and development. sales and market share. the potential for failure if the ability to charge a the product does not meet premium price for unique customer needs or fails to and innovative products. gain acceptance in the market. What is meant by dynamic market Markets that are characterized by frequent changes in consumer preferences, technological advancements, and competitive forces, which can create challenges and opportunities for businesses operating within these markets. Identify two ways a business may respond to changes in a market? Flexibility Conduct market research Develop niche What is the difference between risks and uncertainty this is the possibility that the business will have a lower than expected profit or a loss is when businesses are unable to predict external shocks or future events Market Research Define market research Market research refers to the process of collecting and analyzing data related to consumer preferences, market trends, and competitive forces, with the aim of informing business decisions and strategies. Difference between primary and secondary research Primary market research involves collecting new and original data directly from consumers or the market. secondary market research involves analyzing and using existing data from published sources or databases. Define quantitative market research Quantitative market research involves using numerical data collection and analysis methods to measure and quantify consumer behaviors and preferences. Define qualitative market research Qualitative market research refers to the collection and analysis of non-numerical data through methods such as focus groups, interviews, and observation, with the aim of gaining insights into consumer attitudes, perceptions, and motivations. List 4 methods of primary research Surveys/questionnaire Focus group/consumer panel Face to face/telephone interviews Product trials/test marketing  Give one benefit and one drawback Surveys/questionnaires: Benefits: Efficient method of collecting data from a large sample size. Enables the collection of quantitative data that can be easily analyzed and compared. Drawbacks: Responses may be limited to pre-determined options or questions. Participants may not provide accurate or truthful responses, leading to biased data. Focus group/consumer panel: Benefits: Provides in-depth insights into consumer attitudes, perceptions, and motivations. Enables the collection of qualitative data that can provide rich and detailed information. Drawbacks: Responses may be influenced by group dynamics or the desire to conform to the opinions of others in the group. Findings may not be representative of the broader population due to the small sample size. Face to face/telephone interviews: Benefits: Allows for the collection of in-depth and detailed responses. Enables the interviewer to clarify any confusion or ambiguity in the questions. Drawbacks: Can be time-consuming and costly. Participants may not feel comfortable providing honest or complete responses. Product trials/test marketing: Benefits: Provides valuable feedback on the product's performance, usability, and appeal. Allows businesses to identify and address any issues or concerns before launching the product on a larger scale. Drawbacks: Can be expensive and time-consuming. Results may not be representative of the broader market, as participants may have different behaviors or preferences than the broader population. List 4 methods of secondary research methods Website /social media Newspaper/TV/Radio Reports Database Benefits and drawbacks of secondary research Identify the three methods of sampling methods Random Quota Stratified Explain the types of sampling methods Random sampling means picking people from a group in a completely random way, giving everyone an equal chance to be chosen. Quota sampling is selecting a specific number of people from different groups to make sure each group is fairly represented in the sample. Stratified random sampling involves dividing a population into groups based on certain characteristics, then randomly choosing people from each group to get a well-  Give one benefit and one drawback of each of the sampling methods? Random Sampling: Benefit: Simple and easy, ensuring each individual has an equal chance of being selected. Drawback: Might not represent all subgroups well; some groups could be left out. Quota Sampling: Benefit: Ensures proportional representation of specific groups, making it easy to compare subgroups. Drawback: May not capture the full diversity of the population; potential bias if quotas are poorly chosen. Stratified Random Sampling: Benefit: Provides a more accurate representation of diverse subgroups within the population. Drawback: Requires detailed information about the population to create strata/bands; can be more complex and time-consuming. Market research in exam When answering questions about market research... Always remember that businesses conduct market research to find out from customers what they can do about the product, price, promotion and place. Look out for these in the case study and use them in your essays for A02. The A03 will then be on how a knowledge of these areas can help the benefit the business For example, if a company uses focus group as a primary research method to get insights about the product.... The A03 will be that the company can use this information to create products tailored to customers' needs, this will lead to customer satisfaction.....If customers are satisfied then it will lead to repeat custom which will generate more revenues for the business.  Market Positioning What is market orientation Market orientation refers to the approach where businesses focus on understanding and meeting the needs and wants of customers, and aligning their strategies and activities accordingly. What is product orientation Product orientation refers to the approach where businesses focus on developing and improving their products and production processes, without necessarily considering the needs and wants of customers. What are the benefits and drawbacks of the product orientation approach. Benefits Drawbacks Less costly as the business Ignores changing does not spend money on customer needs and market research. preferences, leading to Can lead to the the development of development of high-quality products that may not be and innovative products. in demand. Enables businesses to Can result in businesses achieve economies of scale being outcompeted by through efficient production rivals who are more processes. customer-oriented. Define market mapping Market mapping is a technique used by businesses to identify and see the position of their products or services in relation to those of their competitors and to spot a gap in the market. Benefits and drawbacks of market mapping Benefits Drawbacks Helps businesses identify Market mapping can be gaps in the market and time-consuming and potential opportunities for expensive to conduct. product differentiation. The accuracy of market Provides businesses with mapping may be limited insights into how by the quality of data customers perceive their used, which can be products and how they difficult to obtain in can position themselves certain industries. against competitors. What is market segmentation Market segmentation is the process of dividing a market into smaller groups of consumers with similar needs or characteristics. Benefits and drawbacks of market segmentation. Benefits Drawbacks Allows businesses to develop Market segmentation can be more targeted marketing expensive and time- strategies that better meet consuming to conduct, the needs of specific customer particularly if a business needs groups, leading to increased to gather extensive data on customer satisfaction and multiple segments. loyalty. Focusing too narrowly on Enables businesses to identify specific customer groups can and capitalize on niche limit a business's ability to markets that may be appeal to a broader audience, overlooked by competitors, potentially resulting in lost thereby increasing market opportunities for revenue and share and profitability. growth. Explain the following methods of market segmentation. Demographic Psychographic - Lifestyle Geographic Behavioural  Demographic segmentation: This involves dividing a market into groups based on demographic factors such as age, gender, income, education level, occupation, and family size. This type of segmentation is useful because it is relatively easy to obtain data on demographic characteristics, and these characteristics often correlate with differences in consumer behavior and preferences. Income segmentation: This involves dividing a market into groups based on the income level of consumers. This type of segmentation is useful because income often correlates with spending behavior and purchasing power, which can be important factors for businesses to consider when developing marketing strategies. Geographic segmentation: This involves dividing a market into groups based on geographic factors such as location, climate, and cultural differences. This type of segmentation is useful because it allows businesses to tailor their marketing strategies to specific regions or areas, taking into account local customs and preferences. Behavioral segmentation: This involves dividing a market into groups based on behavioral factors such as purchasing habits, usage rate, loyalty, and attitude towards the product. This type of segmentation is useful because it focuses on actual consumer behavior, rather than just demographic or geographic characteristics, which can be more predictive of future purchasing patterns. Psychographic segmentation: This involves dividing a market into groups based on psychological and social factors such as personality traits, values, interests, opinions, and lifestyles. This type of segmentation is useful because it allows businesses to understand the deeper motivations and attitudes of consumers, and to tailor their marketing strategies accordingly. Market segmentation in exam Try to include the 4 P’s when discussing the purpose of segmenting the market. Look in the source to see the different segments mentioned and then give the benefits based on pricing, promotion or product why segmenting is appropriate. List 5 ways a business can achieve competitive advantage? Price Adding value Innovation Reliability Quality Reputation/image Advertising/marketing and branding, Convenience and customer service. Explain what is meant by product differentiation Where a business seek to distinguish its products from those of rivals. Identify and explain two purposes of product differentiation Helps the business to gain a competitive advantage. Consumers should be able to perceive the difference in product and may pay a premium price for the product. Explain two benefits and two drawbacks of production differentiation Gain recognition Charge high prices if product is perceived as good quality Helps to create a USP and win market share. Product differentiation often leads to higher production costs. It may limit the company's market reach and potential customer base. Explain what is meant by adding value This is the difference between the price that is charged and the total cost of the inputs required to create the product/service. How can a business add value? Packaging Customisation Speed of response to customers Customer service Frequent buyer offers Explain two benefits of adding value 1. The more value that is added, the higher the price that can be charged, which means higher profit margins 2. Helps to differentiate your product and gain competitive advantage. 3. Customer loyalty which means repeat business  TOPIC THE MARKET Define demand This is the willingness and ability of consumers to purchase a good or service at a particular price over period of time. Identify the factors influencing demand S Changes in the prices of substitutes Substitutes A Advertising Changes in price of complementary F Fashions, goods taste and Changes in consumer incomes E preference Fashions, tastes and preferences External shocks Marketing, advertising and branding Demographics D Demographic External shocks I s Incomes Seasonality S Seasonality C Complement ary Supply The willingness and ability of producers to sell goods and services at a particular price over a given period of time. List and explain the factors influencing supply Costs of production Subsidies New technology S Production Costs Indirect taxes P External shocks. Government subsidies E New technology External shocks. Taxes indirect N T Define the term market equilibrium price This is the price at which demand equal supply. What is the difference between excess demand and excess supply? Excess demand exists when demand for goods and services are higher the supply. This causes a shortage. Excess supply exists when supply is greater than demand. This is called a surplus> Draw a diagram to show an increase and decrease in both demand and supply Market for rice: Draw a supply and demand to show how a new way to harvest rice farm was introduced in the market? Market for Samsung mobile phones: Draw a diagram to show the impact on the market for Samsung mobiles if the price for Huawei were to increase? Define Price elasticity of demand Price elasticity of demand (PED) measures the responsiveness of demand to a change in price How quantity demanded responds to price changing in the market. State the formula for PED What is the difference between elastic and inelastic? Elastic means that quantity will change by a large amount when there is a small change in price. Inelastic means that demand will not change by much even when price increase by a lot. What the following elasticity mean -0.4 -5 Inelastic Elastic Identify factors influencing PED Availability of substitutes The frequency of purchase The relative price/expense of a product Whether the product is a luxury or necessity Time.  Why is PED important? Helps to determine pricing strategy: lowering pricing policies (competitive pricing) are more likely where PED is elastic; setting a high price (skimming) is more likely where PED is inelastic. If PED is inelastic then a rise in price increases total revenue and a fall in price reduces total revenue. if PED is elastic then a rise in price reduces total revenue and a fall in price increases total revenue EOIS Define Income elasticity of demand Income elasticity of demand (YED) measures the responsiveness of demand to a change in income. State the formula for YED Define normal goods A normal good is a good that increases in demand when an individual income increase. What is the difference between luxury, necessity and inferior goods Luxury goods are goods that demand will increase by a large amount when income increases. Necessity goods are goods that demand will increase by a small amount when income increases. Inferior goods are goods that demand will decrease as income rises. What the following YED means -0.4 6 -5 0.9 Inferior Inelastic Luxury elastic Inferior elastic Necessity Inelastic Identify factors influencing YED whether the product is a luxury, necessity or inferior good Expectations of changes in income, such as loss of job, promotion, recession or economic growth  Why is YED important? YED is an important tool in telling a business what their products/services should be in order to increase sales Company selling inferior goods will do well when incomes are falling, but they will struggle to do well when incomes are rising. As such, they would need to improve the quality of their products to match the rising incomes.  Topic: Marketing Mix and Strategy Identify and explain the 3 marketing objectives? Increase market share Increase revenue Building a brand. Define Product life cycle All the stages the product goes through in its life from development to decline. List and explain the stages of the PLC What is meant by the term extension strategies? Give examples These are all the activities the business uses to prolong the life of the product. 1. updating packaging 2. adding more or different features 3. changing target market 4. advertising 5. price reduction What is the benefits and limitations of using PLC for businesses. helps businesses make good choices for their products as they grow, making sure they spend money wisely on things like marketing. It helps businesses balance and change the products they offer so they can stay competitive and adjust to what people want. Disadvantages Doesn’t indicate how long the stage will last. All products do not go through the same life cycle It doesn’t inform us of actions of competitiors PLC in exam Understand which stage the product is at… Then explain how this knowledge can help the business makes decision. For example a recently new product would be regarded to be at introduction… As such the business would need to increase advertising and promotion to help it to grow. What is a Product Portfolio This represents a range of product that a company sells. Define Boston Matrix Management tool that helps a business to analyse its range of products based on market share and market growth. Explain each area of the Boston Matrix Boston matrix in exam What is the implication for cash cow and marketing for the other areas of the boston matrix A business can use the revenues generated from the cash cow to help invest and promote other areas such as star and question mark. Dog are products that they should consider Explain the concept of the marketing mix? This consists of the elements of a company marketing strategy which entails price, place product and promotion. A successful marketing mix exists when all the P's complement each other..... For example a product that is targetted at high income earners, should ensure that it is highly priced and the best of quality  Describe marketing strategies for a B2B compared to B2C Marketing strategies B2B B2C PRODUCT Tailored to meet the specific Normally focus on design and needs of business quality, branding and features PRICE Charge a lower price based on Based on production costs and volume being purchased other pricing factors. Also higher as fewer items are bought PLACE involving relationships with Various channels focusing on wholesalers, distributors, and access for customers and direct sales to businesses. ecommerce PROMOTION Informative Persuasive  Describe marketing strategies for a mass market compared to niche market Mass market Marketing Niche market strategies PRODUCT typically standardized, aiming to products are specialized and cater to appeal to a broad range of the unique preferences or needs consumers PRICE tends to be competitive due to Higher prices due to the specialized economies of scale, allowing for nature of products and the potential lower prices due to high production for lower production volumes volumes. PLACE widespread, involving multiple more focused and may involve channels such as retail stores, selective channels that specifically online platforms, and convenience cater to the preferences and outlets behaviors of the niche audience. PROMOTION large-scale and utilize mass media more targeted, leveraging specific like TV, radio, and online channels, influencers, and tailored advertising to reach a broad messaging to connect with the Define customer loyalty This is continued and repeat purchase of goods and services from a specific seller/manufacturer. List the different ways to build customer loyalty Communication – keeping customers informed Customer service – good quality product or service Customer incentives – loyalty rewards/special offers Personalisation/ Personalised service – giving individual attention Preferential treatment – VIP lounge airports Design Mix Define the design mix The combination of key elements that businesses consider when developing or improving a product or service  Explain the three key areas of the design mix Aesthetics - the visual and sensory aspects of a product or service. It's about how it looks, feels, and appeals to the senses. Function - how well a product or service performs its intended job and meets the needs of its users Cost of manufacturer - the total expense of making a product. It includes the cost of materials, labor, and everything needed to create the product Give two benefits and two drawbacks of each element of the design Design Mix mix? Benefits Drawbacks Aesthetics Enhanced brand image Expensive Charge premium prices Very subjective Function Satisfied customers who are more likely to make Focusing Function limits innovation repeat purchases Production costs can be Competitive advantage high due to reliability Cost of Lower production costs mean more profit Could lead to lower product quality Manufacturer Lower costs can lead to Stifles innovation cheaper product prices Identify the social trends involving product Recycling Reuse Ethical sourcing Define ethical sourcing Means getting products from suppliers who treat their workers well, care for the environment, and do business responsibly.  What would be the benefit and drawbacks of considering Ethical Sourcing? Drawbacks Benefits Higher Costs as it involves higher Good Reputation meaning that expenses, such as paying fair wages and ensuring responsible the business will have a good environmental practices. This can image, so more people want to lead to increased production costs, buy from them, and they tell potentially reducing profit margins. their friends. Challenge of monitoring suppliers less risks from legal troubles and their behaviour is very difficult with suppliers or bad publicity. for a company. Competitive advantage as the Limited Supplier Options due to business can demonstrate how finding ethical suppliers may be they operate responsibly over hard. Especially those that meet the criteria. This may lead to their rivals. increased lead times and difficulties in meeting production demands. PROMOTIO N What is promotion? All the activities that a business would use to make customers aware of or draw attention to their product. List the types of promotional methods Personal selling Direct marketing Advertising Public relations Sponsorship Sales promotion Digital communication Give one benefit and one drawback of each promotional strategy? Promotional strategies Benefits Drawbacks Personal selling Direct and personal Time-consuming communication Direct marketing Personal messages for Might annoy people individuals Advertising Reach a large group of people May not reach specific target audience Public relations Improves reputation Hard to measure sales Sponsorship Able to connect the brand with Very expensive good experience Sales promotion Drives customers to purchase Only for short term, may lose immediately revenues Digital communication More targeted promotion Customers may ignore all forms of promotion Give three types of branding Manufacturing branding Product Branding Own Label Branding Give two benefits of having a strong brand Added value Charging premium prices Reducing PED Give three ways to build a brand Creating a USP Advertising Sponsorship Social Media Give three social trends influencing promotion Viral marketing Social media Emotional branding PRICING STRATEGIES  List and explain the pricing strategies Cost plus (mark-up on unit cost) – putting profit on cost to determine price Price skimming – setting high price at start and reduce over time Penetration pricing – setting low price at beginning and increase over time Predatory pricing – selling a product below cost to drive rivals out of the market Competitive pricing – setting a similar or lower price to rivals Psychological pricing - a tactic where prices are set to make customers feel a certain way, often using Think about specific benefits numbers and drawbacks of each to make products seem more appealing or affordable. Give four factors influencing a pricing strategy number of USPs/amount of differentiation price elasticity of demand level of competition in the business environment strength of brand stage in the product life cycle costs and the need to make a profit. Social trends influencing pricing decisions Online sales Price comparison websites PLACE Define channels of distribution All the different methods a company uses to sell their products to consumers or for customers to have access to their products.  What is the difference between the four stage, three stage and two stage distribution channels? Four stage – manufacturer/producer to wholesaler to retailer, then consumer. Three stage – manufacturer/producer to retailer, then consumer. Two stage (direct marketing, no intermediary levels) manufacturer/producer to consumer. HUMAN RESOURCES APPROACH TO STAFFING  What is the difference between staff as an asset and staff as a cost Staff as an Asset: Staff as a Cost: Staff as an asset refers Staff as a cost to viewing employees as valuable resources considers employees whose development, as an expense to be training, and well-being managed and are prioritized for long- minimized for term organizational success. financial efficiency.  Give two benefits and two drawbacks to a business of treating staff as an asset? Staff as an Asset: Advantages: Disadvantages:​ 1.Investment in Growth: 1.Costly Investment: Initial Companies invest in employee training and development, investment in training enhancing their skills and and development can be knowledge. expensive.​ 2.Enhanced Productivity: Motivated and skilled 2.Retention Challenges: Skilled employees often exhibit higher employees may seek better productivity levels. opportunities elsewhere after 3.Employee Loyalty: Focus on growth and development being trained.​ fosters loyalty and 3.Uncertain Returns: There's no commitment to the guarantee that the investment in organization. staff will yield desired results.​  Give two benefits and two drawbacks to a business of treating staff as a cost? Staff as a Cost: Advantages: Disadvantages:​ 1.Cost Control: Emphasis on 1.Reduced Morale: Employees reducing labor costs and might feel undervalued maximizing efficiency in or expendable, leading to lower workforce management. morale and decreased 2.Flexibility: Ability to adjust productivity.​ workforce size based on 2.Quality Compromise: Cost- immediate financial needs or cutting measures can impact market demands. the quality of work due to 3.Short-Term Savings: reduced investment in resources Immediate cost reductions can and training.​ lead to short-term financial gains. 3.Talent Attrition: Constant focus on cost reduction might What are the components of flexible working? 1.Multi-skilling: Employees are trained to perform multiple roles or tasks within the organization. This allows for greater versatility and adaptability within the workforce. 2.Part-time and Temporary Staff: Hiring employees on part-time or temporary contracts allows companies to adjust their workforce based on fluctuating demands without the commitment of full-time employment. 3.Zero Hour Contracts: These contracts provide flexibility to both employers and employees, where the employer is not obliged to provide a minimum number of working hours, and the employee is not obligated to accept any work offered. 4.Flexible Hours: Allowing employees to set their own working hours or offering flexible scheduling options can accommodate personal needs and improve work-life balance. 5.Home Working (Telecommuting): Employees work remotely, usually from their homes, using digital tools and technologies to perform their job responsibilities.  What are the benefits and drawbacks of flexible working? Advantages: Disadvantages: 1. Adaptability: Easily adjust to changes 1.Stability and Continuity: Higher turnover in workload or market demands by rates and less stable employment conditions scaling the workforce up or down as due to reliance on temporary or part-time needed. staff, leading to potential disruptions in 2. Cost Efficiency: Reduced fixed labor workflow. costs as companies can hire part-time or temporary staff rather than full-time 2.Training Needs: Frequent onboarding and employees. training for changing workforce compositions 3. Diverse Skills and Expertise: Access can be time-consuming and affect productivity. to a broader range of skills and 3.Employee Engagement Challenges: expertise due to hiring individuals with Difficulty in fostering a sense of belonging or diverse backgrounds and experiences. loyalty among flexible workers due to their 4. Work-Life Balance: Flexible hours and temporary or remote nature. remote working options promote better 4.Communication and Collaboration: work-life balance, leading to potentially Remote work may hinder effective happier and more productive employees. communication and collaboration among team members.  Managing People: Distinction between dismissal and redundancy Dismissal: It refers to the termination of an employee's contract by their employer. This can happen due to various reasons, such as poor performance, misconduct, or breach of company policies. Redundancy: Redundancy occurs when a job role is no longer required by the employer due to business needs, restructuring, or technological advancements. It's not related to the individual's performance but rather to the position becoming unnecessary  Give three reasons why conflicts might arise in an organization? 1.Rates of Pay: Disputes can arise if employees feel they are not fairly compensated for their work compared to industry standards or their colleagues. 2.Introduction of Technology: Employees might resist technological changes if they perceive these changes as threatening their job security or making their work more challenging. 3.Flexible Working: Conflicts may arise if there's a lack of agreement between employers and employees regarding the implementation or terms of flexible working arrangements. 4.Working Conditions: Disagreements might occur if employees believe that their working conditions are unsafe, uncomfortable, or not meeting legal standards.  What is the difference between individual approach and collective bargaining? Individual Approach: Collective Bargaining: Involves negotiations and Collective bargaining refers to the negotiation between agreements made between employees and workforce an individual employee and representatives; for their employer regarding example, this could be terms of employment, such through a trade union. Trade as salary, working hours, or unions act to protect and specific job-related matters improve the economic and  Give one benefit and two drawback of individual approach Advantages: Disadvantages: 1.Flexibility: The individual approach 1.Inequality: Individual negotiations allows for flexibility in negotiations, as may lead to inequalities in terms and terms can be tailored to the specific conditions among employees, as not needs and preferences of each employee. everyone may possess the negotiation 2.Direct Communication: Direct skills to secure favorable terms. communication between an employer 2.Lack of Collective Representation: and an employee simplifies the Individual negotiations lack the negotiation process, reducing the collective strength that comes with complexity and potential for bargaining as a group, which can limit misinterpretation. Therefore, negotiations employees' ability to secure better can be quicker and more efficient. overall conditions. 3.Performance-Based Rewards: 3.Potential for Exploitation: In Individual negotiations can be based on situations where employees are not an employee's performance, allowing well-informed or lack bargaining power, high-performing individuals to negotiate there is a risk of exploitation as terms better terms. may be skewed in favor of the employer.  Give one benefit and one drawback of collective bargaining approach? Advantages: Disadvantages: 1.Increased Bargaining Power: Collective 1.Strain on Relationships: It can strain bargaining gives employees more negotiating relationships between employers and power as a group, compared to negotiating employees if negotiations become prolonged or individually. contentious. 2.Fairer Terms: It can lead to fairer terms and 2.Rigidity: Collective agreements might limit conditions for employees, ensuring their interests the flexibility of employers in making changes are represented collectively. or adaptations swiftly. 3.Conflict Resolution: Provides a structured 3.Costs and Demands: Meeting the demands process for resolving conflicts between employees of collective bargaining agreements might and employers. increase costs for the employer, impacting profitability or competitiveness.  RECRUITMENT AND SELECTION  Define recruitment and selection? Recruitment: It involves attracting, sourcing, and hiring candidates for job vacancies within an organization. This process typically includes activities like job posting, candidate sourcing, screening, interviewing, and making job offers. Selection: Refers to the process of evaluating and choosing the most suitable candidate from the pool of applicants. This involves assessing qualifications, skills, experience, and cultural fit for the organization.  What is the difference between internal and external recruitment? Internal recruitment: involves External Recruitment: filling job vacancies from within External recruitment the organization by promoting or involves hiring candidates transferring existing employees to from outside the new roles. organization to fill job vacancies.  Give two benefits and two drawbacks of internal recruitment? Advantages: 1.Faster Process: Internal recruitment can be Disadvantages: quicker as existing employees are familiar with 1.Limited Pool: It restricts the selection the company's culture, policies, and procedures. pool to existing employees, potentially 2.Boosts Morale: It boosts employee morale limiting the diversity of skills and and motivation as it demonstrates career perspectives. progression opportunities within the 2.Creates Vacancies: Filling one position organization. internally might create vacancies elsewhere 3.Cost Savings: Generally, internal recruitment in the organization, requiring subsequent is cost-effective as it reduces advertising and onboarding expenses. hiring to fill those gaps. 3.Stagnation: Constantly hiring internally 4.Known Entities: The organization is already familiar with the skills and capabilities of might limit the influx of new ideas and internal candidates. perspectives, leading to stagnation in innovation.  Give two benefits and two drawbacks of external recruitment? Advantages: Disadvantages: 1.Diverse Talent Pool: It opens the door to a 1.Higher Costs: External recruitment can wider range of skills, experiences, and be more expensive due to advertising, perspectives that may not exist internally. recruitment agencies, and onboarding 2.Fresh Ideas: External hires can bring in fresh expenses. ideas, innovation, and different approaches to problem-solving. 2.Longer Onboarding: New external 3.Reduced Internal Politics: Hiring externally hires might take longer to adjust and can mitigate internal conflicts that might arise become productive within the from promoting one employee over others. organization. 4.Filling Skill Gaps: It allows the organization to 3.Cultural Fit: There might be challenges fill specific skill gaps that may not be available in assessing the cultural fit of external internally. candidates compared to internal ones who are already familiar with the company culture. TRAININ G List and explain the three types of training Induction Training: Induction training is the initial training provided to new employees when they join an organization. It aims to familiarize them with the company culture, policies, procedures, and their roles. On-the-Job Training: Involves learning and skill development while performing the actual job tasks. It can be formal or informal, with experienced employees or supervisors guiding new hires. Off-the-Job Training: Off-the-job training involves learning outside the immediate work environment, often through workshops, seminars, online courses, or formal education.  Give two benefits and two drawbacks of Induction training Advantages: Disadvantages: 1.Standardization 1.Faster Integration: Helps Challenges: It might be new employees settle in challenging to standardize quickly, reducing the time induction training for employees taken to become productive. with diverse backgrounds and roles. 2.Clear Expectations: Sets 2.Overwhelming Information: clear expectations about job Too much information in a short roles, responsibilities, and period might overwhelm new employees, affecting retention. company standards. 3.Time and Resources: 3.Improved Retention: Proper Designing and conducting induction can improve induction programs require time employee retention by making and resources, which can be a constraint for some new hires feel valued and organizations. integrated.  Give two benefits and two drawbacks of On the Job training Advantages: 1.Immediate Application: Disadvantages: Learning occurs in real work 1.Disruption in Workflow: Training on the job situations, allowing immediate might disrupt regular workflow and productivity. application of newly acquired 2.Quality Variance: The quality of training skills. depends on the expertise and availability of 2.Cost-Effective: It can be cost- trainers, leading to inconsistency. effective as it doesn’t require 3.Limited Scope: May limit exposure to broader separate training facilities or industry practices or innovative techniques beyond dedicated trainers. the immediate workplace. 3.Tailored Learning: Training can be customized to specific job requirements and individual learning speeds.  Give two benefits and two drawbacks of Off the job training Advantages: Disadvantages: 1.Specialized Learning: Provides 1.Costly: Off-the-job training can access to specialized knowledge and be costly due to course fees, expertise not available within the travel, and accommodation organization. expenses. 2.Skill Diversity: Exposure to diverse 2.Time-Consuming: Takes training methods and environments employees away from their can enhance skills and perspectives. regular duties, affecting 3.Higher Focus: Learning away from immediate productivity. the workplace allows for a focused 3.Application Challenges: environment conducive to learning. Implementing newly learned skills back in the workplace might be challenging due to differences in the learning environment. ORGANISATIONAL STRUCTURE Define organizational design Organizational design and structure refer to the way in which an organization arranges its hierarchy, roles, and relationships to achieve its goals effectively.  Explain the following key terms? Hierarchy refers to the structured ranking of individuals and departments within an hierarchy organization, indicating levels of authority and responsibility.​ chain of Chain of command is the formal path through command which instructions and information flow from top management to lower levels, illustrating the span of organizational structure and decision-making flow. control Span of control refers to the number of subordinates or employees that a manager or centralised supervisor can effectively oversee and manage. and In a centralized structure, decision-making decentralise authority is concentrated at the top of the hierarchy, typically with senior management. d. Decentralized structures distribute decision- making authority across various levels or units within the organization.  Give one benefit and one drawback of a wide structure? Advantages: Wider spans can lead to a more efficient organization with fewer layers of management, promoting faster decision-making. Disadvantages: Too wide a span can overwhelm managers, reducing their ability to provide adequate supervision and support to their subordinates.  Give one benefit and one drawback of a centralized structure? Advantages: Ensures consistency in decision- making, enables faster responses in emergencies, and maintains tight control over operations. Disadvantages: Slows down decision-making at lower levels, may stifle innovation, and limits adaptability to local  Give one benefit and one drawback of a decentralized structure? Advantages: Promotes quicker responses to local needs, fosters innovation and creativity, and encourages employee empowerment and engagement.​ Disadvantages: May lead to inconsistent decision-making, lack of cohesion in organizational goals, and potential conflicts between units.​ Define a Tall structure. Give one benefit and one drawback of a Tall structure Tall Structure: A tall organizational structure has multiple layers of management and a narrow span of control, resulting in a hierarchical and vertical layout. Advantages: 1. More opportunities for promotion. 2. Less people to supervise 3. Specialization: Allows for specialization and expertise within specific layers or departments. Disadvantages: 1. Slow Decision-Making: Decisions take longer as they pass through several layers of management. 2. Communication Hurdles: Communication may be slow or distorted due to numerous levels of hierarchy. 3. Costly Structure: More layers means more labour costs Define a Flat structure. Give one benefit and one drawback of a Flat structure Flat Structure: A flat organizational structure has few layers of management and a wide span of control, encouraging a more horizontal and decentralized approach. Advantages: Disadvantages: 1. Quick Decision-Making: Decisions 1. Limited Supervision: Reduced layers of can be made faster due to fewer management might lead to less oversight layers of management. and guidance for employees. 2. Flexible Communication: Promotes 2. Less opportunity to be promoted in open communication and the company. collaboration among employees. 3. Potential Overload: Managers might 3. Cost-Efficient: Reduces costs by become overwhelmed with wider spans of eliminating excessive managerial control, affecting their ability to effectively positions. oversee subordinates. Define a Flat structure. Give one benefit and one drawback of a Flat structure Matrix Structure: Definition: A matrix organizational structure is where a group of people come together to complete a project based on their skills an expertise. Advantages: 1. People with different skill can share ideas to complete a task 2. Skill Development: Offers opportunities for skill development and exposure to diverse projects. Disadvantages: 1. Workers have to report to two different departments which may cause conflict. 2. Power Struggles: Potential for power struggles and conflicts between functional managers and project managers. 3. Time-Consuming: Decision-making might be slower due to the need for consensus among multiple people who regard themselves to be expertise.  How can different structure have an impact on employees’s efficiency and levels of motivation? Impact on Business Efficiency: Impact on Employee Motivation: 1.Tall Structure: 1.Tall Structure: Impact: While offering clear hierarchies and Impact: Offers clear career paths and supervision, tall structures often lead to opportunities for promotion, which can motivate slower decision-making, bottlenecks in employees. However, rigid hierarchies might communication, and increased limit innovation and employee autonomy, leading bureaucracy, potentially hindering to demotivation. efficiency. 2.Flat Structure: 2.Flat Structure: Impact: Encourages empowerment and Impact: Promotes faster decision-making autonomy, which can boost motivation. and streamlined communication. However, Employees feel more involved in decision-making if not managed well, it might lead to processes. However, it might lead to role overload for managers and unclear roles, ambiguity and reduced guidance, impacting affecting efficiency. motivation negatively. 3.Matrix Structure: Impact: Enhances flexibility but can create 3.Matrix Structure: complexities and conflicts due to dual Impact: Provides opportunities for skill reporting. This structure may slow down development and exposure to diverse projects, decision-making processes and impact which can motivate employees. However, the MOTIVATIO N Define Motivation All the activities of a business to try and encourage employees to work  Give Three purposes of motivation? 1.Improved Morale: High motivation levels lead to better morale among employees, fostering a positive work environment and reducing turnover rates. 2.Innovation and Creativity: Motivated employees are more likely to contribute innovative ideas, leading to improved processes and products. 3.Reduced Absenteeism and Turnover: Motivated employees are more likely to be present and committed to their roles, reducing absenteeism and turnover rates. 4.Cost Savings: Higher motivation levels can lead to reduced recruitment and training costs as well as fewer errors or rework, saving the business money. 5.Increased Productivity: Motivated employees tend to be more productive, leading to higher output and better-quality work. However motivating staff may become costly  Motivation theory in theory & practice: Theories Taylor's Scientific Management: Herzberg's Two-Factor Theory: Taylor's theory focuses on using Herzberg's theory differentiates between scientific methods to improve motivators (factors that lead to job efficiency in the workplace by satisfaction) and hygiene factors (factors analyzing tasks and optimizing that prevent dissatisfaction). processes. Maslow's Hierarchy of Needs: Mayo's Human Relations Theory: Maslow's theory posits that individuals Mayo's theory emphasizes the significance of have a hierarchy of needs, starting from social and human elements in the workplace, basic physiological needs and highlighting the impact of employee progressing to higher-level needs like relationships and recognition on motivation. self-actualization. List the financial methods of motivation Piece rate Bonus Commission Performance related pay Profit share Explain piece rate and give one benefit and one drawback? Piecework: Piecework involves paying employees based on the number of units they produce or tasks they complete. Advantages: Increased Productivity: Encourages higher productivity as employees earn more by producing more. Clear Measurement: Easy to measure output, making performance assessment straightforward. Disadvantages: Quality Overlooked: Employees may prioritize quantity over quality to increase output. Potential Burnout: Can lead to fatigue or stress as employees push to produce more for higher pay. Explain profit share and give one benefit and one drawback? Profit Share: Profit-sharing involves distributing a portion of the company's profits among employees. Advantages: Sense of Ownership: Fosters a sense of ownership and alignment with company success. Collective Effort: Encourages teamwork and collaboration toward common organizational goals. Disadvantages: Limited Control: Employees might feel disengaged from factors affecting profits that they cannot influence. Dependency on Company Performance: Employees' earnings become tied to the company's financial success, which can be uncertain. Explain performance-related pay and give one benefit and one drawback? Performance-Related Pay: Performance-related pay links compensation directly to individual or team performance. Advantages: Increased Motivation: Encourages employees to perform better to earn higher rewards. Focus on Objectives: Aligns employee goals with organizational objectives. Disadvantages: Subjectivity in Evaluation: Evaluation criteria might be subjective, leading to perceived unfairness. Potential for Rivalry: Can create competition among employees, impacting teamwork and collaboration. Explain bonus and give one benefit and one drawback? Bonus: Bonuses are one-time payments given to employees for achieving specific goals or milestones. Advantages: Recognition: Offers recognition and reward for exceptional performance or meeting targets. Motivation Boost: Encourages employees to strive for higher performance to attain bonuses. Disadvantages: Expectation and Entitlement: Employees might come to expect bonuses, reducing their impact as motivators. Subjectivity: Determining bonus criteria might be subjective, leading to dissatisfaction or perceived unfairness. Explain Commission and give one benefit and one drawback? Commission: Commission-based pay involves compensating employees based on sales or business generated. Advantages: Motivated Sales Force: Incentivizes employees to sell more, leading to increased revenue. Direct Link to Performance: Easy to correlate pay with sales performance. Disadvantages: Unpredictable Income: Inconsistent earnings can lead to financial uncertainty for employees. Short-Term Focus: Might encourage short-term sales goals at the expense of long- term customer relationships or quality Explain delegation and empowerment and give one benefit and one drawback of each? Delegation: Delegation involves transferring authority and responsibility from a manager to an employee for specific tasks or decisions. Advantages: Skill Development: Offers opportunities for skill enhancement and career growth. Empowerment: Empowers employees, leading to increased motivation and engagement. Disadvantages: Lack of Control: Managers might feel a loss of control over tasks delegated, impacting quality. Poor Delegation: Inadequate guidance or training can lead to mistakes or errors in delegated tasks. Empowerment: Empowerment involves granting employees the authority, autonomy, and responsibility to make decisions related to their work. Advantages: Increased Motivation: Empowered employees feel more engaged and motivated in their roles. Better Problem-Solving: Allows for quicker problem-solving as decisions are made closer to the source. Disadvantages: Risk of Errors: Lack of experience or guidance might lead to poor decision-making. Resistance to Change: Employees might resist taking on additional responsibilities or decision- Explain consultation and teamworking and give one benefit and one drawback of each? Consultation: Consultation involves seeking input, feedback, or suggestions from employees in decision-making processes. Advantages: Improved Decision-Making: Diverse perspectives lead to more informed and well-rounded decisions. Employee Engagement: Involves employees in the decision-making process, increasing their sense of value. Disadvantages: Time-Consuming: Decision-making might take longer due to the consultation process. Not Always Feasible: Might not be applicable in all situations, especially urgent or sensitive matters. Team Working: Teamworking involves employees collaborating and working together toward common goals. Advantages: Synergy: Collective efforts often yield better outcomes than individual contributions. Skill Sharing: Allows for skill sharing and knowledge transfer among team members. Disadvantages: Conflict: Differences in opinions or working styles might lead to conflicts within teams. Dependency: Strong dependency on team dynamics might hinder individual initiative or accountability. Explain job enrichment and enlargement and give one benefit and one drawback of each? Job Enrichment: Job enrichment involves adding tasks, responsibilities, or challenges to an employee's role to make it more engaging. Advantages: Increased Motivation: Challenging tasks lead to increased motivation and job satisfaction. Skill Development: Offers opportunities for skill enhancement and personal growth. Disadvantages: Overloading: Adding too many tasks might overwhelm employees, leading to burnout. Skill Mismatch: Tasks added might not align with an employee's skills, impacting performance Job Enlargement: Job enlargement involves expanding an employee's role by adding more tasks of a similar level of complexity. Advantages: Variety: Offers variety in tasks, reducing monotony and increasing interest in the role. Skill Enhancement: Allows employees to develop a broader skill set. Disadvantages: Overwhelming: Increased workload might overwhelm employees, impacting performance. Role Clarity: Might blur the boundaries of the role, leading to confusion about responsibilities. Explain flexible working and job rotation and give one benefit and one drawback of each? Flexible Working: Flexible working offers employees options for adjusting their work schedule or location to suit personal needs. Advantages: Work-Life Balance: Enhances work-life balance, reducing stress and increasing job satisfaction. Increased Retention: Attracts and retains talent seeking flexible work arrangements. Disadvantages: Coordination Challenges: Managing flexible schedules might create coordination challenges within teams. Communication Issues: Reduced face-to-face interaction might hinder effective communication and collaboration Job Rotation: Job rotation involves moving employees through different roles or departments within the organization. Advantages: Skill Diversification: Enhances employee skills and understanding of various functions. Reduced Boredom: Reduces monotony and boredom, keeping employees engaged. Disadvantages: Learning Curve: Takes time for employees to adapt to new roles, impacting initial performance. LEADERSHI P  Explain the difference between leadership and management Leadership: Leadership involves inspiring, guiding, and influencing individuals or a group to achieve common goals. It's about setting a vision, motivating others, and steering them towards the desired objectives. Management: Management involves overseeing processes, coordinating resources, and ensuring operational efficiency to accomplish specific objectives within an organization Explain autocratic and paternalistic and give one benefit and one drawback of each? Autocratic Leadership: Autocratic leadership involves a leader making decisions without much input or participation from subordinates. The leader holds full authority and control over decision-making. Advantages: Quick Decision-Making: Decisions can be made rapidly as the leader has sole authority. Clear Direction: Provides clear direction and instructions for tasks and objectives. Disadvantages: Low Morale: Employees might feel demotivated or disengaged due to limited involvement in decision-making. Creativity Suppression: Limits creativity and innovation as ideas from subordinates are disregarded Paternalistic Leadership: Paternalistic leadership involves a leader who acts as a parental figure, considering the well-being of employees but retaining decision-making power. Advantages: Employee Welfare: Focuses on the well-being of employees, fostering loyalty and trust. Supportive Environment: Creates a supportive work environment by considering employees' needs and concerns. Disadvantages: Dependency: Employees might become overly dependent on the leader for decisions and guidance. Resistance to Change: Innovation might be stifled as the leader's decisions are often unquestioned. Explain democratic and laissez-faire and give one benefit and one drawback of each? Democratic Leadership: Democratic leadership involves shared decision-making where the leader collaborates with the team, seeking input and consensus before making decisions. Advantages: Increased Engagement: Encourages employee involvement, leading to higher engagement and commitment. Diverse Perspectives: Benefits from diverse viewpoints, leading to more informed and well-rounded decisions. Disadvantages: Time-Consuming: Decision-making might take longer due to the need for consensus or input from multiple individuals. Laissez-Faire Leadership: Conflict Handling: Differences in opinions might lead to conflicts, impacting decision quality or speed. Laissez-faire leadership involves a hands-off approach, where the leader provides minimal guidance or direction, allowing subordinates to make decisions autonomously. Advantages: Employee Empowerment: Fosters autonomy and independence among employees, promoting creativity and innovation. Highly Skilled Teams: Works well with highly skilled and self-motivated teams. Disadvantages: Lack of Guidance: Can lead to confusion or lack of direction among employees, affecting productivity or cohesion. Accountability Issues: Without clear guidance, accountability for outcomes might become unclear,  List and explain the difficulties in moving from an entrepreneur to a leader. need to 1.Need to Delegate: Going from entrepreneur to leader means delegate learning to trust and let others take on tasks. 2.Trust and Verify: trust and verify As a leader, it's about trusting your team but also checking in to make sure things are going learning to well. listen 3.Learning to Listen: have an open Switching to a leader role involves getting good at listening to different ideas and mind opinions. be less reactive 4.Having an Open Mind: Being a leader means being open to new ways develop of doing things and different viewpoints. emotional 5.Being Less Reactive: Leaders take a moment to think before making intelligence decisions instead of reacting quickly. 6.Developing Emotional Intelligence: A leader understands and handles emotions Entrepreneurs hip Define an entrepreneur? An entrepreneur is a person who sets up a business and takes risks in the hope of a profit or reward Explain what an entrepreneur can do to set up a business? Creating and Setting up a Business: Idea Generation: Develop a business idea or concept. Market Research: Analyze the market, target audience, and competition. Business Plan: Outline objectives, strategies, and financial projections. Legal Requirements: Register the business and comply with regulations. Financing: Secure funding through loans, investors, or personal investment. Explain what an entrepreneur do when running a business Financial management – preparing financial statements Administration – organising and overseeing the day-to- day operations Marketing – promoting the business Purchasing – buying resources to use in the business Managing People – hiring workers and taking care of their welfare Production – organising the making of the product.  Explain what is Intrapreneurship This means encouraging employees to think like entrepreneurs, fostering creativity, and taking initiative to come up with new ideas and projects within the organization to drive innovation and improve An employee within a larger business performance. who thinks like an entrepreneur Basically Takes risks Creative or innovative You are simply an entrepreneur Solves problems working for someone else as an Focusses on processes to improve employee. So, all that you would do productivity in your own business you are doing Drives innovation for someone else. Understands trends Self-confident Proactive in adding value  Explain the barriers to entrepreneurship 1. Entrepreneurial capacity - This means possessing the skills and attitude in order to be successful. 2. Access to finance - Lack of capital or difficulty in funding 3. Lack of training / knowhow - not have the necessary knowledge or training to run a business, which can hinder their ability to succeed. 4. Fear of failure - The fear of not succeeding can hold entrepreneurs back, making them hesitant to take risks or pursue their business ideas 5. lack of confidence - lack of self-assurance, doubting their ability to succeed Explain the difference between risk and uncertainty This is the possibility that the business will have a lower than expected profit or a loss Uncertainty is when businesses are unable to predict external shocks or future events Uncertainty (unlike risk) is not objective and does not assume knowledge of alternatives  List and explain the characteristics of an entrepreneur Characteristics and Skills Required: Leadership: Ability to lead and inspire others towards a common goal. Resilience: Capacity to bounce back from setbacks and learn from failures. Creativity: Capability to innovate and generate new ideas. Adaptability: Flexibility to adjust to changing environments or market conditions. Risk-taking: Willingness to take calculated risks and make decisions. Problem-solving: Skill in addressing challenges and finding effective solutions. Communication: Ability to convey ideas clearly and interact  What are the financial and non-financial entrepreneurial motives for setting up a business Non-Financial Motives: Ethical Stance: Desire to align Financial Motives: business practices with ethical Profit Maximization: standards or beliefs. Aim to generate Social Entrepreneurship: Focus on creating positive social impact maximum financial gains. alongside profits. Profit Satisficing: Independence: Desire for Strive for a satisfactory autonomy and freedom from traditional employment. level of profit rather than Home Working: Preference for maximizing it. working from home or having a flexible work environment. Definitions from Edexcel an entrepreneurial characteristic is the personal skill or quality or trait entrepreneurial motive is the purpose Motivations or what drives a person to start a business Motivations are NOT characteristics Characteristics Motivations Resilient To be own boss For social reasons (to help the Hard-working community) To make a profit Determined To have more control over working life Creative To turn a hobby into a revenue Self confident generator Increase income Lots of self initiative Become independent Driven by personal passion Risk taker To sell something new  Identify and explain the different business Objectives OTHER OBJECTIVES: Objectives of Businesses: Sales Maximization: Survival: Focuses on increasing sales revenue without necessarily Key Focus: Ensuring the maximizing profits. business remains operational Emphasis on expanding market reach and customer base. and viable for the future. Market Share: Priorities: Securing enough Aims to capture a larger portion of the market compared to revenue to cover expenses and competitors. sustain operations. Indicates the business's dominance or competitive position. Cost Efficiency: Profit Maximization: Strives to reduce expenses without compromising Goal: Focuses on maximizing product/service quality. profits, exceeding costs, and Focuses on streamlining operations and optimizing resources. increasing returns. Employee Welfare: Approach: Emphasizes Prioritizes the well-being, satisfaction, and development of revenue growth or cost employees. reduction strategies. Aims to create a positive work environment and foster employee loyalty. Customer Satisfaction: Focuses on meeting or exceeding customer expectations.  Explain the difference between trade off and opportunity cost? Trade-offs: Opportunity Cost: A trade-off occurs when two things cannot be Refers to the value of the next best fully achieved; having more of one thing may alternative foregone when a decision mean having less of another. is made. Nature: Often arises due to limitations in Relevance: Helps businesses weigh resources, time, or capabilities. the benefits of one choice against the benefits of another. Decision Impact: Necessitates evaluating Consideration: Involves assessing and prioritizing options based on their associated trade-offs. potential gains from an action against what could have been gained from an Application: Essential in resource allocation, alternative action. wherein allocating resources to one area Decision-Making: Helps in making means fewer resources available for other areas. informed choices by acknowledging the trade-offs between different options  Summary for opportunity costs and trade-offs Opportunity cost is about the value of what you give up when you choose one thing over another. It helps businesses compare the benefits of different choices. It means looking at what you could gain from one action compared to what you could have gained from another. It helps make smart choices by understanding the trade-offs between different options. Trade-offs happen when you can't have everything you want at once - getting more of one thing might mean having less of another. This often comes up because of limits like not enough time, resources, or abilities. When making decisions, you have to think about and choose what's most important, considering the trade-offs. This is crucial when deciding where to put resources, as putting more into one thing means less for something else. Business objectives in exam Look out for questions that will ask you to compare different objectives that business may purse. Especially if a trade-off exists between different types of objectives. One to look out for is profit maximization and ethical or social objectives.