Edexcel Business A Level Revision

Dynamic markets - Markets which are constantly changing. The environment is dynamic, for example buyers may choose to buy less of one product and more of another. It can grow, change and decline very quickly Some markets are quite stable and change little over time. For example, the market for Kelloggs cornflakes has changed very little, although there are far more competing products than there were when they were invented in 1894. Market size and market share do not change much and there is little innovation. Other markets are far more dynamic, subject to rapid and continuous changes. All businesses must adapt to the changing nature of their markets. Reasons for dynamic markets constantly changing: Social trends Changes in technology Competitiveness Trends Consumer tastes Fashion Rising/Falling incomes Arrival of a superior product offered by competition External shocks Business have to adapt their marketing in response to these changes... If they do not keep up, the

Porter's Strategic mix -  describes how a company pursues competitive advantage across its chosen market segment by using four generic strategies: mass vs niche and lowest cost vs highest differentiation strategies. Competitive advantage - An advantage over the competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher price. Lost-cost positioning -  Where a business is able to operate at the lowest unit cost in the market, enabling it to charge lower prices than the competition or earn a higher profit margin Differentiation positioning - Where a business is able to distinguish its product or service in the minds of consumers as offering better value - perhaps through quality, branding or other attributes that consumers value Porter suggested two overall business strategies that could be followed in order to gain a competitive advantage: Low cost Differentiation If a b

Ansoff Matrix - The Ansoff is a famous strategic maketing planning tool that helps a business determine its product and market growth strategy. The matrix identifies four alternative growth strategies to product and market strategy based around whether a business chooses to focus on existing/new products and existing/new markets and the relationship between risk and reward. MARKET PENETRATION   This is a growth strategy where a business aims to sell EXISTING products to EXISTING markets. Key Points: Trying to sell more of an existing product/service to the same target audience LIMITED RISK = limited potential reward also. Getting existing customers to buy more Widen the range of existing products Gain market share from competitors through competitive pricing or advertising Changes to the marketing mix e.g. loyalty scheme to increase repeat customers Extension strategies Evaluating market penetration: Business focuses on markets and products it knows well Can exp

Stock control - stock is a current asset held by business to help meet the demand of customers Stock can be held in 3 forms: Raw materials Work in progress Finished products Stock can be used to fill differences between production output and demand The amount of stock held will depend upon: the business' attitude to risk (Hate risk = large buffer stock) (Love risk = small buffer stock) the importance of speed of response as an operational objective speed of change within the market nature of the product e.g. perishable or long lasting STOCK CONTROL DIAGRAM - A managment tool used to control and monitor the flow of stock LEAD TIME - The time it takes between placing an order and receiving delivery. The GREATER the lead time, the HIGHER the minimum stock level. RE-ORDER LEVEL - The level of stock which triggers and order, this may be done automatically by a computerised system. The re-order level will be determined by both the lead time and the minimum sto

Cell production - A form of flow production whereby the production line is split into a series of self contained cells which teams in these cells work together to create one unit of output. Each cell takes responsibility for the production of complete units of output. MASLOW AND HERZBERG ALERT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! The members of the cell work as a team to achieve goals and ensure quality standards are met. Cell production often leads to increased productivity due to: Increased motivation (team spirit and added responsibility) Specialisation ( the process of concentrating on and becoming expert in a particular subject or skill)   CELL PRODUCTION ADVANTAGES DISADVANTAGES Increases quality, teamwork and motivation Depends on staff being well trained or experts in their role

Flow production - Items flow along the production line in a continuous process making high volumes of the exact same product. Once one task is finished the next task is started immediately, therefore time taken on each task must be the same. FLOW PRODUCTION ADVANTAGES DISADVANTAGES Costs per unit of production are reduced through improved work and material flow Very long set up time and reliant on high quality machinery, so if machinery breaks and therefore breaks the flow, production will be shut down Suitable for manufacture of large quantities High raw materials and finished stocks unless lean production is used Capital intensive which means it can work constantly without the interference of employees Goods are mass produced which means there is no customisation to meet specific needs for customers Less need for training and skill as most work is done by machines Uses specialist machinery so investm

Batch production - Identical or similar items are produced together in groups (batches), each item passing through the production process at the same time, before moving onto the next Examples of batch production: Printers = printing a certain number of newspapers, magazines or books and then resetting their machines to produce a batch of another issue or titles Baker = produces a batch of 50 white loaves. Only after they are completed will he or she start baking 50 loaves of brown bread. Factory = produces a batch of size 14 t-shirts, then a batch of size 12 t-shirts Aims: Concentrate skills Achieve better use of equipment and so will produce good quality products more economically than manufacturing them individually.   BATCH PRODUCTION ADVANTAGES DISADVANTAGES Costs savings can be achieved when buying in bulk and allows for quicker and cheaper production of individual items Time consuming as it may take time to switch