Edexcel Business A Level Revision

Global competitiveness -  is the ability of a business, usually a MNC, to perform better than its rivals across markets in different countries. This can be achieved through performance on price and quality or customers' perception of these factors.  Demand for highly skilled workers is outstripping their supply. This is impacting heavily on global businesses, many of whom are producing differentiated products. There is an imbalance in the global economy, with too many low skilled workers and not enough skilled workers. This is partly accounted for because many low skilled jobs have now been replaced by machinery. Machines find it more difficult to replace highly skilled workers e.g. the creative industries.  A lack of ability to recruit skilled workers could lead to a decline in competitiveness as global businesses will not be able to take advantage of lower unit costs and/or higher-quality products. This will be a particular risk for businesses that take the differ...

Global competitiveness -  is the ability of a business, usually a MNC, to perform better than its rivals across markets in different countries. This can be achieved through performance on price and quality or customers' perception of these factors.  Competitive advantage - is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.    Cost competitiveness - the differences in unit costs between competitors. Outsourcing -  A practice used by companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally. Outsourcing is an effective cost-saving strategy when used properly. Offshoring -  When a company moves various operations to another country for reasons such as lower labour costs or more favourable economic conditions in that other country. This topic is split into two; ...

Competitive advantage -  A sustainable advantage over the competitors in the long term, gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher price. Specialisation - When a business concentrates on a product or task and in many cases means producing only a small number of products. Specialisation is particularly important when competing in international markets as it can create a competitive advantage for the business and act as a barrier to stop others from entering the market. Specialisation increases output as economic units become more effective and efficient in what they produce due to: Greater understanding of the requirements of production Each economic unit can specialise in what they are best at Efficient use of time as there is no switching between tasks Technical economies of scale such as capital equipment is used to produce goods and services The increased output can...

Growth - A common corporate objective which means expanding the sales revenue of a business, probably in the hope that profits will increase too. A business will aim to achieve greater market power, which gives it more control over its future, including a greater ability to increase prices. Greater dominance over customers means pricing control ; greater dominance over suppliers gives increasing power to keep purchasing costs down. This allows the business to gain a competitive advantage.

Internal economies of scale - The cost savings that can come about from the growth of the business itself e.g. as it increases the scale of its current operations this leads to a fall in unit costs. External economies of scale - The cost savings that come about from growth outside a business but within the market or industry in which it operates. All competitors benefit Growth - A common corporate objective which means expanding the sales revenue of a business, probably in the hope that profits will increase too. One reason for a business wanting to grow it to achieve economies of scale. By growing the scale of output, a business can achieve lower unit costs which can thereby improve a firm's competitiveness. Unit costs = Total production costs in period (£) / Total output in period (units) = £? How can economies of scale provide a Competitive Advantage?    The main types of Internal economies of scale are: Purchasing Technical Managerial Purchasing = B...

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. Distinctive Capabilities - Proposed by Professor John Kay in 1993. The capabilities or special quality a business has which is product of the people employed there, which other firms cannot replicate even after they realise what the benefits are that owning the capability confers. For example, Land Rover's distinctive capability is its mastery of how aluminum can be used to build cars that are string but light. From this, can create a competitive advantage. For Land rover, the benefit has shone through in its Evoque series, which benefits hugely from an aluminum frame. That can feed through to an especially positive consumer image - for technology perhaps, or like Apple, for great design. For example, James Dyson's creation of a unique bag-less vacuum cleaner gave th...

Business plan - is a document that sets out what the business is, what it does, what it wants to achieve and how it is going to do it. It is normally used as part of an attempt to gain financial backing for the business. All businesses should have a business plan; it is both essential in helping to raise finance and an effective way for a manger to think about the business and how best to move it forward. A business plan informs potential investors or lenders about the business. It is used both internally by the entrepreneur and externally by banks, external investors or those willing to provide grants. It contains useful evidence of the viability of the business and how it will use any finance available. In particular it will show how the business plans to achieve a competitive advantage. An investor will want to know that the business is on a sound financial foundation and that future plans are likely to generate sufficient cash flows to meet debt obligations. The purpose o...

In terms of approaches to how management view human resources, a popular distinction is made between treating staff as an asset ("soft" HRM) and treating them as a cost ("hard" HRM). Staff as an Asset (SOFT HRM) ▪ Treats employees as the most important resource in the business and a source of competitive advantage. ▪ Employees are treated as individuals and then needs our plan accordingly. FOCUS = Concentrate on the needs of the employees - their roles, rewards, motivation etc Staff as a Cost (HARD HRM) ▪Treats employees simply as a resource of the business. ▪ Strong links with corporate business planning - what resources do we need, how do we get them and how much will they costs FOCUS = Identify workforce needs of the business and recruit and manage accordingly ( hiring, moving and firing) KEY FEATURES TO SOFT AND HARD HRM SOFT HRM Strategic focus on longer-term workforce planning Strong and regular two way communication Competi...

Positioning map - is used to place products in a range of positions in the market based on two significant qualities that customers feel are important when looking for the best product in contrast with other products in the market. Competitive advantage - an advantage over competitors gained by offering consumers greater value either by means of low price or by providing greater benefits and services that justifies high prices. Possible properties of products customers may be interested in - low price / high price - basic quality / high quality - ethical / not very ethical - high reputation / low reputation - light / heavy Whilst positioning maps are useful conceptual models, care has to be taken when using them in marketing decision making. ADVANTAGES OF POSITIONING MAPS ☆ help spot gaps in the market that a business could potentially fill ☆ useful for analysing competitors to see who is your main competition and whether there is a need for product differentiati...