Edexcel Business A Level Revision

The changing competitive advantage  means that most markets are continually evolving, with businesses entering and leaving the market. In every market businesses are trying to keep at the cutting edge of product development and changes in customer tastes and fashions. The competitive environment or market structure involves all the external factors that either compete with  or have an impact on a business.  It is constantly changing, it is dynamic and a business that fails to monitor these changes and take action  runs the risk of losing market share or even failure. Direct competitors – Businesses are likely to have direct rivals who produce very similar products and  services, Domino competes directly with Papa John’s, Nationwide with Halifax, Asda with Tesco and so on.  They are competing for the same consumer and will try to find more effective ways of competing. Indirect competitors – are not direct rivals but they are competing for the sam...

PESTLE - is a method used to analyse external influences on a business, in particular Political, Economic, Social, Technological, Legal and Environmental influences. External environment - is all of those factors outside of their control of a business that will impact on its day to day operations, decision making and strategies. Fiscal Policy - They ways the government can adjust spending and taxation to influence the national economy Monetary policy - The ways the government, via the Bank of England, can alter how much money is circulating in the economy and the level of interest rates to create stable prices and a set inflation target. PESTLE can be used by a business to make the most of factors that are seen as beneficial and minimise the impact of factors that have a negative impact. The advantage of PESTLE is that like SWOT it can help identify area of opportunity and threat. A disadvantage is that time and money need to be spent gathering data to perform the analysis. Un...

Stakeholder - is any individual or group with an interest in the actions and decision making of the business. A SHAREHOLDER IS A STAKEHOLDER INTERNAL STAKEHOLDER EXTERNAL STAKEHOLDER Employees Customers Managers Suppliers Owners Shareholders Shareholders Government Local community Society Creditors (owes money to a business) STAKEHOLDER MAIN INTERESTS Shareholders/owners Return on investment and profits and dividends Success and growth of the business Proper running of the business Managers/employees Rewards, including basic pay and other financial incentives Job security and working conditions Promotion opportunities and job satisfaction and status – motivation, roles and responsibilities Customers Value for money Product quality and customer service Suppliers Continued, profitable trade with th...

Organic growth - Where a business expands through increased output, sales and market share via strategies developed within the business causing revenues and profits to grow. Inorganic growth - Growth that comes from outside the business e.g. through a takeover or joint venture. Organic growth Inorganic growth May mean increasing existing production capacity through investment in machinery and technology May mean increasing production capacity through the merger with or takeover of another business May mean developing and launching new products The product range will be expanded through the takeover/merger so new product development is less necessary May mean finding new markets Growth can be achieved relatively quickly as employees, capacity and distribution are already in place Is likely to take longer to achieve, as capacity will need further employees, machinery and distribution resources,...

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...

SWOT analysis - An investigation conducted by a business to identify internal strengths and weaknesses and external opportunities and threats within the business, its resources and its environment. S trengths W eaknesses O pportunities T hreats AIM = to discover what the business does better than the competition, what competitors do better, whether the business makes the most of opportunities available and how the business should respond to changes in the external environment. Internal strengths and weaknesses   The business must prioritise those that are important to success. For example, brand image, sales and revenue, market shares and capacity utilisation. They are internal so are within the control of the business They relate to the present situation Strengths = Things the business is good at, giving them a clear advantage over rivals. Distinctive capabilities and resources are also strengths which will help the business achieve its objectives. They also help to ...