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Edexcel A Level Business Theme 1 Flashcards Sample

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188 views

Edexcel A Level Business Theme 1 Flashcards Sample

Uploaded by

Lohitha
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Edexcel A-Level BUSINESS

Theme 1
Marketing
& People
revision flashcards
1.2 MARKET
1.2.3 Markets 13

THE INTERACTION OF
SUPPLY AND DEMAND
A market is said to be in equilibrium when there is a balance between demand and supply.
If something happens to disrupt that equilibrium (e.g. an increase in demand or a decrease
in supply) then the forces of supply and demand respond (and price changes) until a new
equilibrium is established.
Below is a supply and demand diagram for chocolate spread. The equilibrium price for the
chocolate spread is £3 where quantity demanded and supplied = 300 units. At a price of £3
per unit, supply & demand are in balance. This can be illustrated using demand and supply
curves as shown below:
Equilibrium is a state of balance
between market demand and supply -
£5 there is no excess demand or supply Market supply of
Price of Chocolate Spread

chocolate spread
£4

£3 £3 is the market clearing price where


market demand = market supply
£2

£1 Market demand for


chocolate spread
£0
0 100 200 300 400 500
Quantity of Chocolate Spread Demanded / Supplied
1.3 MARKETING MIX AND STRATEGY
1.3.3 PRICING STRATEGIES 25

FACTORS THAT DETERMINE THE MOST


APPROPRIATE PRICING STRATEGY FOR
A PARTICULAR SITUATION
There are several factors that will determine the most appropriate pricing strategy for a
particular situation:
• Number of USPs/ amount of differentiation. If a product has a USP and is sufficiently
differentiated from other products in the market, then it may be easier for that product
to sell at a higher price
• Price elasticity of demand. If a product has a high price elasticity of demand, then
competitive pricing may be more appropriate. If the price elasticity of demand is
relatively low, or inelastic, then it may be able to set relatively high prices which will
have little impact on sales volume
• Strength of the brand. A product with a strong brand may be able to utilise price
skimming, especially for the launch of new products
• Stage in the product lifecycle. When a product is first launched and introduced to the
market, a business could choose penetration pricing in order to quickly establish the
product. Price skimming may also be used when a product is launched in order to
recover initial development costs and attract early adopters
• Costs and the need to make a profit. Pricing has a direct impact on the sales revenue
of the business and subsequently profit. A business will therefore be mindful of the cost
and the need to make a profit when setting a price
1.4 MANAGING PEOPLE
1.4.1 APPROACHES TO STAFFING 38

FLEXIBLE HOURS
AND HOMEWORKING
Flexible working is the name given to working patterns which are different from
normal and existing working patterns. For example, working term-time only,
starting later or finishing earlier some days or working from home.
Advantages – Employer Disadvantages – Employer
• Can lead to a happier, productive and more • Homeworking can make it more difficult to
loyal workforce manage employees compared to when
• In the case of homeworking, costs can be they are in the actual workplace
reduced, for example, reduced office space • Can be difficult for the employer to foster
team spirit within the business if staff work
different patterns

Advantages – Employee Disadvantages – Employee


• Workers can balance work with other • Flexible working may result in fewer hours
commitments meaning lower pay
• In the case of homeworking, less travel • May not feel part of the business, especially
time homeworkers
1.4 MANAGING PEOPLE
1.4.3 ORGANISATIONAL DESIGN 50

DECENTRALISED STRUCTURES
In a decentralised organisational structure, decision-making is spread out to
include more junior managers in the hierarchy, as well as individual business
units, trading locations and retail outlets.
Advantages of Decentralisation Disadvantages of Decentralisation
Benefits are made closer to the customer
• Decisions Drawbacks is not necessarily
• Decision-making
• Better able to respond to local market “strategic”
conditions • Harder to ensure consistency throughout
• Improved level of customer service the organisation

• Consistent with aiming for a flatter • Diseconomies of scale may be experienced,


organisational structure for example, a duplication of roles may
exist across the business
• Good way of training and developing junior
management • Harder to achieve tight financial control

• Can improve staff motivation • Who provides strong leadership when


needed, for example, in a crisis?

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