Marketing
Define two products of industrial markets
machinery
equipment
Identify two methods of production
job production
batch production
flow production
Identify two non-current assets
Machineries
Equipment
State one benefit of new product development
new products developed for new markets increase potential sales and profit
What is margin of safety?
the difference between the current level of output and the break-even output
Identify two sources of secondary data
internet
local library
Identify two costs of holding inventories
Increase storage costs
Sometimes, not all inventories can be sold
Define micro-finance and explain its use
small amounts of capital loaned to entrepreneurs in countries where business finance is often difficult to obtain
State and explain two methods of pricing
market skimming
promotional pricing
State and explain two causes of diseconomies of scale
poor communication
weak coordination
lack of commitment from employees
Explain two advantages of test marketing
the cost of any problem is limited to a smaller output
increases the chance of a more successful introduction of the product into the main market
State and explain three economies of scale
purchasing economies
managerial economies
financial economies
A business has revenue of $400 000. The cost of sales is $160 000. Calculate the gross profit margin.
Gross profit = $240 000
Gross profit margin = 60%
Explain the concept of price elasticity of demand
it measures by how much demand for a product changes when there is a change in its price
Identify two limitations of break-even charts
assume that all costs and revenues can be represented by straight lines
assume that all output is sold
Explain three roles of packaging
to protect the product
to provide information about the product
to help consumers recognise the product
Explain two benefits of quality assurance
it encourages teamwork and this can act as a motivator for employees
it reduces the cost of waste and faulty products
Explain two uses of an income statement to employees of a business.
To see profits, a high profit increases job security and employees might expect to receive a good pay raise.
To compare the results from previous years and analyze which are to improve
Identify two legal controls that affect marketing activities and how it affect marketing activities
prevent businesses from using advertising to mislead consumers
protect consumers from faulty and dangerous goods
Explain two reasons why a business might decide to locate in another country
lower labour costs
access to global markets
avoidance of legal barriers and import tarrifs
government incentives
Explain the purpose of extension strategies and explain one strategy and how it is used
Purpose: to keep the product in the maturity stage because it is the most profitable stage of a product's life cycle
Strategy: finding new markets for the product
Explain the relationship between quality and a product's life cycle
Products that are of good quality will continue to meet the needs of customers. These products will have a longer life cycle, and it will stay in the most profitable maturity stage much longer.
Explain two limitations of ratio analysis
Ratios compare past data
Financial statements do not include all the strengths and weaknesses of a business
Explain three ways a business might overcome the problems of entering foreign markets
licensing
joint ventures
franchising
Explain three reasons why quality is important to a business
develop a strong brand image
keep customers and attract new customers
reduce costs, customer complaints and returns
charge a premium price
encourage wholesalers and retailers to stock the product
lengthen product life cycles