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Business Studies by Mind Map: Business Studies

1. Section 1

1.1. Business activity

1.1.1. Factors of production Land Labour Capital Enterprise

1.1.2. Division of Labour Adv Workers are trained in one task and specialise in this -this increases efficiency and output Less time is wasted moving from one workbench to another Disadv Workers become bored doing just one job -efficiency might fall If one worker is absent and no one else can do the job, production might be stopped

1.2. Classification of businesses

1.2.1. Reasons for De-Industrialisation Sources of some promary products, such as timber, oil and gas become depleted. Most developed economies are losing competitiveness in manufacturing to the newly industrialised countries such as Brazil, India and Japan As a country's total wealth increases and living standrds rse, consumers tend to spend a higher portion of their incomes on services such as Restaurants and Travel than on manufactured products produced from primary products

1.2.2. Public sector businesses health education defence public transport water supply electricity supply

1.3. Enterprise, business growth and size

1.3.1. Entrepreneurship Adv independence able to put own ideas into practise may become famous and successful if business grows may be profitable and the income might be higher than working as an employee for another business able to make use of personal interests and skills Disadv risk - many new businesses fail, especially if there is poor planning capital - entrepreneurs will have to put their own money into the business and, possibly, find other sources of capital lack of knowledge and experience in starting and operating a business opportunity cost - lost income from not being an employee of another business Characteristics of successful entrepreneurs Hard working Risk taker Creative (new ideas) Optimistic Self-confident Innovative independent effective communicator

1.3.2. Why goverments support business start-ups Reduce unemplyment increase competition (give consumers more choice) increase output benefit society can grow further (all businesses were small once)

1.3.3. What's in a business plan products you want to provide target audience main costs BEP Location Labour needed

1.3.4. Business size Who cares? investors governments competitors workers banks How to measure? number of employees value of output value of sales value of capital employed

1.3.5. Growth Why? possibility of higher profits more status or prestige lower average costs (economies of scale) larger share of its market How? Internal growth External growth Problems of growth difficult to control poor communication expansion costs more difficult than expected Why stay small? type of industry owner's objectives the market size Why some businesses fail poor management failure to plan for change poor financial management over/expansion risks of new business start ups

1.4. Types of business organisation

1.4.1. private sole trader Adv Disadv partnerships Adv Disadv private limited companies Adv Disadv public limited companies Adv Disadv Joint Ventures Adv Disadv Franchise Francisor Franchisee

1.4.2. public Adv some industries are so important so goverment onership is essential else there would be monopolies govermetn can open and secure jobds non-profiatble, but important can be brought to the public like that Disadv no private shareholders to insist on efficiency and high profits lead to inefficiency because managers will think that the goverment will help the busines if it fails no close competition to public cooperations goverment can use it for political reasons

1.5. Business objectives and stakeholder objectives

1.5.1. why set business objectives give workers clear target -> motivation decisions can be focused on goal units business to common goal you can measure your success

1.5.2. what objectives do businesses set? business survival profit to pay back owners to provide finance for future projects returns to the shareholders increasing profit increasing share price growth of the business to make jobs more secure to increase salaries and status of managers to open up new possibilities spread the risk obtain higher market share economies of schale market share good publicity increased influence over suppliers increased influence over customers service to the community social: to provide jobs environmental: to protect the environment financial: to make a profit to to invest back into the social enterprise to expand the social work it performs

1.5.3. Why could business objectives change? after surviving for long time, more profit is wanted after increasing market share, more money should be returned to the shareholders if serious economic recession in a country, businesses objectives might be surviving

1.5.4. Which stakeholder groups are involved in business activity? owners Features Objectives consumers Features Objectives workers Features Objectives goverment Features Objectives managers Features Objectives banks Features Objectives the whole community Features Objectives

1.5.5. Objectives of public-sector businesses financial: meet profit targets service: provide service to the public social: protect or create employment

2. Section 2

2.1. Motivating Workers

2.1.1. Why work? money security job statisfaction esteem-needs (self-importance) social needs

2.1.2. Motivation theories F.W. Taylor Ideas Criticsms Maslow Ideas Herzberg hygiene (basic) factors motivators

2.1.3. Motivating workers Financial rewards wages (paid every week, cash or bank account) time rate (payment by the hour piece rate (payment by quantity of work salaries (monthly, straight to bank account) commissons share ownership bonus Non-financial rewards Job statisfaction Job rotation (workers swapping around) Job enlargement (extra tasks of similar level of work) Job enrichment (extra tasks of more skill) Fringe Benefits

2.2. Organisation and management

2.2.1. Advantages of an organisation chart shows how everybody is linked together individual can see his position inside a business you can see how departments are linked together it gives workers a sense of belonging

2.2.2. Advantages of a short span of control communication is quicker top managers are less remote from lower levels of hierachy spans of control will be wider: Why is this an advantage? encourages delegation less direct control of each worker, they will feel more trusted

2.2.3. Roles of management planning organising coordinating controlling

2.2.4. Delegation Advantages for manager can do more work less likely to do mistakes because less stressed managers can see performance of workers Reasons not to delegate subordinates might fail manager wants control subordinates might do a better job than manager, which makes the manager feel insecure Advantages for subordinate work is more interesting and rewarding feeling of importance gives them career opportunities

2.2.5. Why do you need good managers? to motivate employees to give guidance to inspire employees they manage to achieve more than they thought possible to keep costs under control to increase profitability of the business

2.2.6. Types of leadership Autocratic Democratic Laissez-faire buerocratic

2.2.7. Trade unions Adv strength in numbers improve conditions of employment, for example health and safety, rates of pay, hours to work improved benefits for members who are not working because they are sick, retired or have been made redundant improved job satisfaction by encrouaging training advice and/or financial support if unfairly treated or made redundant benefits like discounts, provision of sporting facilities or clubs employment where there is a closed shop improve communication between workers and management Disadv costs money to be a member may be required to take industrial action even if they don't agree

2.3. Recruitment, selection and training of workers

2.3.1. Human resource department recruitment and selection wages and salaries industrial relations (communication between workforce and management) training programmes health and safety redundancy and dismissal

2.3.2. Recruitment process vacancy arises job analysis job description job specification job advertised in appropriate media application forms and short-listing interviews and selection vacancy filled

2.3.3. Features of job description canidates know exactly what the job entails allows a job description to be drawn up once someone is employed it shows if he does his job

2.3.4. Job descriptions contain information about conditions of employment training that will be offered opportunities for promotion

2.3.5. Job specification includes these requirements level of educational qualifications amount of experience special skills, knowledge, aptitude personal characteristics

2.3.6. Advertising vacancy Internal Adv Disadv External Local Newspaper (office or factory positions, low skill, likely to find people locally) National newspaper (senior positions, few have right experience) specialist magazins (technical people) recruitment agencies (works for most positions) job centres (goverment: unskilled, semi-skilled)

2.3.7. CVs include name address phone number date of birth nationality education and qualifications work experience positions of responsibilities interests names and addresses of referees (for reference) why you want the job why you are suitable

2.3.8. Interviews are used to jugde the ability to do the job personal qualities general character

2.3.9. Examples of tests included in interviews skills tests aptitude tests personality tests group situation tests

2.3.10. Contract of employment should include name of employer and employee job title date when employement is to begin hours to be worked rate of pay and any other benefits when payment will be made holiday entitlement what to do to end employment

2.4. Internal and external communication

2.4.1. Advantages of two-way communication it is clear to the sender if the receiver understood it and acted upon it both people are involved in the communication process. More part of process. Motivates receiver

2.4.2. Choosing the right communication method speed cost message details leadership style the receiver importance of written record importance of feedback

2.4.3. Verbal communication methods Examples one to one talks telephone video conferencing meetings Adv information can be given out quickly immediate feedback message reinforced by seeing speaker Disadv big meeting - no direct feedback when feedback needed, it takes longer no accurate or permanent record of the messages

2.4.4. Written communications Examples business letters memos reports notices faxes text messages email, social networking Adv evidence of the message cannot easily be forgotten can be copied and forwarded electronic is quick and cheap to reach large number of people Disadv Direct feedback not always possible not easy to check if message has been recieved might be confusing or boring no body language

2.4.5. Visual communications Examples films, videos, powerpoints charts and diagrams photographs and cartoons Adv appealing and attractive clearer than written messages Disadv no feedback graphs are difficult to interpret for some people

2.4.6. Communication barriers with sender language to difficult speaks to quickly message too long with the medium message lost no feedback received breakdown of the medium (computer failure) with the receiver might not be listening may not like/trust the sender with the feedback no feedback too slowly

3. Section 3

3.1. Marketing, competition and the customer

3.1.1. Role of marketing identify customer needs statisfy customer needs maintain customer needs maintain customer loyalty gain information about customers anticipate changes in customer needs

3.1.2. Why do customers spending patterns change? customer tastes and fashion changes changes in technology change in incomes ageing population

3.1.3. Why did some markets become more competitive? globalisation transportation improvements internet/e-commerce

3.1.4. How can business respond to changing spending patterns and more competition? maintain good customer relationships keep improving its existing product bring out new products to keep customers' interests keep costs low

3.2. Market research

3.2.1. Why is research needed? find features customers like and dislike would somebody buy the product would they be prepared to pay that price for it where would they be most likely to buy my product what type of promotion is effective what is the competition like

3.3. The marketing mix: product

3.3.1. the four Ps Product Price Place Promotion

3.3.2. Types of products Consumer goods Consumer services Producer goods Producer services

3.3.3. Product developement Generate Ideas further research decide if the company will be able to sell enough develop a prototype partial launch (test the market) full launch

3.3.4. Developing a new product Adv USP diversification expand into new markets expand into existing markets Disadv Costs lack of sales if target market wrong loss of company image

3.3.5. Product life cylce Developement Introduction Product newly launched skimming or penetration pricing informative advertising limited distribution channels Growth raise price if penetration before promotional activities for brand image increase distribution channels (maybe e-commerce) Maturity/Saturation plan for product changes or start to develop new products lower price to remain competitive sales promotion to encourage repeat purchases all distribution channels used Decline adapt product to extend its life relaunch the product (extension strategy) sell through low cost distribution outlets Ways to extend the product life cyle new variations (children's version) new advertising campaign new version of old product selling through additional, different retail outlets make small changes to design, colour or packaging sell into new markets (another country)

3.4. The marketing mix: price

3.4.1. Pricing strategies cost-plus pricing penetration pricing price skimming promotional pricing psychological pricing dynamic pricing

3.5. The marketing mix: promotion and technology in marketing

3.5.1. The advertising process set objectives decide on advertising budget create an advertising campaign select the media evaluate the effectiveness

3.5.2. Types of sale promotion price reduction gift BOGOF Competitions Point-of-sale displays and demonstration after-sales service free samples

3.5.3. Advantages of sales promotion promotes sales at times when sales are tradidionally low encourages new customers to try an existing product encourages consumers to try a new product encourages to by more often and in larger quantities encourages to customers to buy your product instead of a competing brand

3.5.4. Benefits of using facebook for marketing guarantees target customers see advert when they go on facebook cheap to use reaches groups that are difficult to reach information can be updated regularly

3.5.5. Disadvantages of using facebook for marketing might be annoying lack of control of advertising used by others may be altered or used in a bad way

3.5.6. Benefits on advertising on its own website no extra cost can be changed quickly interactive more information and links

3.5.7. Disadvantages of using own website may not be in google search results relies on customer finding the website design costs of websites might be high

3.6. The marketing mix: place

3.6.1. Distribution channel: producer ---> consumer Adv very simple lower prices products can be sold by mail oder catalogue or internet Disadv impractical because most customers don't live nearby the factory may not be suitable for products which cannot easily be mailed expensive to send by post

3.6.2. Distribution channel: producer ---> retailer ---> consumer Adv producer sells large quantities to retailer reduced distribution costs Disadv No direct contact with customers

3.6.3. Distribution channel: producer ---> wholesaler ---> retailer ---> consumer Adv saves storage space for smaller retailers small retailers can buy small quanitites Disadv more expensive than if bought straight from manufacturer wholsaler might not have full range of products takes longer for fresh products to reach consumer

3.6.4. Distribution channel: producer ---> agent ---> wholesaler ---> retailer ---> consumer Adv manufacturer may not know the best way to sell in other markets agents are aware of local conditions Disadvantage Less control over the way the product is sold to consumers

3.7. Marketing strategy

3.7.1. Common marketing objectives increasing sales increasing market share maintaining market share

3.7.2. Legal controls on marketing weights and measures trade descriptions sale of goods must be able to do what stated misleading price claims The distance selling reulations 7 work days after the good has been delivered to give it back

3.7.3. Oportunities of markets abroad new markets give chance for higher sales wider choice of location to produce the goods

3.7.4. Problems of entering new markets lack of knowledge cultural differences exchange rate changes import restrictions increased risk of non-payment Increased transport cost

3.7.5. Methods to overcome problems of entering new markets joint venture licensing international franchising localising existing brands

4. Section 4

4.1. Production of goods and services

4.1.1. What are the typical manager positions of the operations department? factory manager (responsible for quantity and quality of products | Includes maintenance) purchasing manager (responsible for providing materials required for production) research and development manager (responsible for design and testing of new production processes and products)

4.1.2. Ways to increase productivity: improving layout of machines to reduce time improve labour skills by training workers, more productive techniques of working introducing automation

4.1.3. Benefits of increasing efficiency? increased output relative to inputs required lower costs per unit (average cost) fewer workers needed higher wages for workers increase motivation

4.1.4. Seven types of waste that can occur in production overproduction waiting transportation unnecessary inventory motion (movement of employees and machines) over-processing (complex machinery for simple tasks) defects (faults which need to be fixed)

4.1.5. Benefits of lean production less storage of raw materials or components quicker production no need to repair defects or provide replacement service for dissatisfied customers better use of equipment cutting some processes which speeds up production less money tied up in inventories imporved health and safety, less time off due to injury

4.1.6. Lean production might include following methods: Kaizen JIT inventory control cell production

4.1.7. Advantages of Kaizen increased productivity less space needed work-in-progress is reduced improved layout of the factory

4.1.8. Advantages of JIT reduces cost of holding inventory finished product is sold quickly so money will come back to the business more quickly

4.1.9. Advantages of Job production meets exact requirements of the customer workers have more varied jobs it is flexible often used for high quality goods so higher price can be charged

4.1.10. Disadvantages of Job production Skilled labour labour intensive production takes long time errors are expensive to correct materials have to be specifically purchased leading to higher costs

4.1.11. Advantages of Batch production flexible, can easily change from one product to another gives some variety to workers allows more variety to identical products (flavours, colours etc. production may not be affected to any great extent if machinery breaks down

4.1.12. Disadvantages of batch production expensive machines have to be reset between batches warehouse space will be needed

4.1.13. Advantages of flow production high output capital-intensive production methods can be used economies of scale purchasing low average costs automated production lines can work 24/7 goods are produced quickly no need to move goods from one part of the factory to the other

4.1.14. Disadvantages of flow production very boring for workers significant storage requirements capital costs of setting up are very high if one machine breaks down, the whole process will have to be halted

4.1.15. factors affecting the method of production the nature of the product (uniqueness) size of the market nature of demand size of the business

4.1.16. Technology which can be used in businesses automation mechanisation CAD CAM CIM EPOS EFTPOS

4.1.17. Advantages of new technology higher productivity greater job statisfaction: boring jobs done by machines better quality products more accurate consumer demand results

4.1.18. Disadvantages of new technology unemployment expensive to invest in technology will become outdated soon employees unhappy with the changes

4.2. Costs, scale of production and break even analysis

4.2.1. Why should costs not be ignored? costs of running a factory can be compared to the revenue costs of different locations can be compared can help to decide the price which should be charged

4.2.2. Types of Economies of Scale Purchasing Economies Marketing Economies Financial economies

4.2.3. Diseconomies of scale poor communication low morale slow decision making

4.2.4. Advantages of break-even charts expected profit or loos impact of decisions can be shown by redrawing shows the margin of safety

4.2.5. Limitations of Break even charts assumes all goods are actually sold fixed cost only remains constant if scale of production does not change not all aspects of business operations are shown assumed that costs and revenues can be drawn with straight lines

4.3. Achieving quality production

4.3.1. Advantages of good quality establish brand image builds brand loyalty will maintain a good reputation will help to increase sales attracts new customers

4.3.2. Consquences of bad quality lose costomers to other brands replace faulty products bad reputation (word of mouth)

4.3.3. Advantages of Quality control tries to eliminante faults before the customer receives the product less training required for workers

4.3.4. Disadvantages of QC expensive: staff needs to be paid to check products does not find why the fault has occured increased cost if products have to be scrapped or reworked

4.3.5. Adv of QA tries to eliminante faults before the customer receives the product fewer customer complaints reduced costs if products do not have to be scrapped or reworked

4.3.6. Disadv of QA expensive to train people to check the product or service relise on employees following instructions

4.3.7. Advantages of TQM quality becomes coentral to the ethos of all employees eliminates faults it has a right first time approach no customer complaints improved brand image waste is removed and efficiency increases

4.3.8. Drawbacks of TQM exxpensive relies on workers following the TQM ideology

4.4. Location decisions

4.4.1. Factors affecting the location of factories market raw materials/components external economies of scale availability of labour government influence transport and communications power and water supply climate (not often of importance)

4.4.2. Factors affecting the location of a service sector business customers personal preference of the owner technology availability of labour technology climate near to other businesses rent/taxes

4.4.3. factors affecting the location of a retailing business shoppers nearby shops customer parking availability of suitable vacant premises rent/taxes access for delivery vehicles security legislation

4.4.4. Why move to/stay in a country? cheaper or new sources of materials difficulties with the labour force and wage costs rent/tax considerations government grants trade and tariff barriers

4.4.5. Why do governments try to influence location decisions? encourage businesses to set up in an area of high unemployment discourage firms from locating in overcrowded areas or which are noted for their natural beauty

5. Section 5

5.1. Business finance: needs and sources

5.1.1. What are the groups of finance internal external short-term long-term

5.1.2. Sources of internal finance retained profit Adv Disadv sale of existing assets Adv Disadv sale of inventories to reduce inventory levels Adv Disadv owner's savings Adv Disadv

5.1.3. Sources of external finance bank loans Adv Disadv selling debentures Adv Disadv Factoring of debts Adv Disadv grants and subsideies from ouside agencies e.g. the government Adv Disadv overdrafts Adv Disadv Trade credit Adv Disadv Hire purchase Adv Disadv Leasing Adv Disadv

5.1.4. How do loans differ from share capital? loan interest is paid before tax and is an expense loan interest must be paid every year, but dividends do not have to be paid if the firm makes a loss loans must be repaid loans are often secured

5.1.5. How to choose which source of finance is best? purpose time period amount needed legal form (PLC or Ltd or ...) business size control risk

5.1.6. How do you increase the chances of loans? cash flow forecast income statment details of existing loans and sources of finance used evidence that security is available business plant with plans for the future and why finance is important

5.1.7. When are shareholder most likely to buy new shares? share price has been increasing dividends are high other companies do not seem such a good investment company has a good reputation and plans for future growth

5.2. Cash flow forecasting and working capital

5.3. Income statements

5.4. Balance sheets

5.5. Analysis of accounts

6. Section 6

6.1. Goverment economic objectives and politics

6.2. Environmental and ethical issues

6.3. Business and the international economy