Business Management

Sample Answers by Command Word

Word
Compare / Identify similarities and differences between two or more factors. Each comparison should be made in one sentence
Define / Give a clear meaning
Describe / Provide a thorough description
Discuss / Examine closely taking account of strengths and weaknesses in an argument; offer reasons for and against
Distinguish / Identify the differences between two or more factors
Explain / Give a detailed response (definition and explanation) as to how/why something may benefit/hinder
The impact on the organisation
Justify / Give reasons to support suggestions, conclusions
Name, state, identify, list / X State the factors (with no explanation or elaboration)
Outline / State the main features
Suggest / Give reasons to support suggestions, conclusions


DISCUSS

Discuss the advantages and disadvantages of empowering staff within an organisation.

You have to have at least 2 viewpoints: When looking at advantages/disadvantages so discuss these with reference TO at least 2 stakeholders. This question implies: Employees, Management

Employees / Management
Advantages
Employees will be more motivated and will produce more
Decisions are made quicker as the employees doing the work make the decisions
Employees should come up with better ideas on how to solve problems / Managers may not trust lower level employees to make correct decisions – management style
Senior managers are freed up for strategic decision making – types of decision
Employees gain more skills
Employees are better prepared for promotion
Disadvantages
employees may not want the responsibility of making decisions / Can mean increased cost of wages to employ appropriate staff

Discuss the effects of ICT on an organisation.

You have to have at least 2 viewpoints:Look at the pros an cons of ICT: with reference TO at least 2 stakeholders. This question implies: Employees, Organisation/Management

Employees / Management
Advantages
Teleworking will be possible for staff within the organisation as the ICT will exist to allow them to work from home / Increased productivity for the organisation as more is produced using CAM and robotic machinery
Improved communications should exist both internally and externally with EMAIL
The organisation will gain a competitive edge over its rivals who do not fully use ICT
More professional documentation will be produced using WP and PUBLISHING software
Disadvantages
May lose job as firm moves from labour to capital intensive methods of production – increased mechanisation / Increased initial costs – the initial financial costs will be high to install the ICT
Staff training may be required in order that staff fully utilise the ICT
Resistance to the technology by staff


Discuss the effects of becoming part of a franchise.)

You have to have at least 2 viewpoints: This question implies: Franchiser & Franchisee

Franchiser (Firm selling the franchise) / Franchisee (Firm buying the franchise)
Advantages
Royalties are paid to the franchiser from profits Franchiser can demand exactly how a business operates
Bad publicity can affect the whole franchise / Using an established name/brand
Reduces the risk of failure in the marketplace Franchiser will provide training
Franchiser will advertise nationally
Business idea is already successful
Product innovation is shared
Disadvantages
None listed because they are opposites of the above

Discuss methods that an organisation could use to ensure their stay motivated.

You have to have at least 2 viewpoints: This question implies: Management/Organisation & Employee

Method of Motivating Staff / Positives and Negatives
staff training / May encourage staff to stay with firm to develop self and it may encourage loyalty to the firm
Cost of training may be high and the employee could leave and take that training/knowledge to competitor firms
financial rewards like bonuses or pay rises or profit sharing schemes / May be linked to performance – eg sales commission so the cost is covered by the employees’ efforts
Profit Sharing may keep employees in the firm and only costs money in the form of dividends if firm is doing well
Not all employees are motivated by money – Maslow’s Hierarchy of needs
team building days or social events / Helps to promote strong corporate culture
May result in unhelpful competition between different sections of the firm
staff involvement in works councils/quality circles / Staff may have sense of self-worth as a result of these
Management style may not be conducive to these – new/failing firm may require strong autocratic leadership
regular consultation with staff


Many organisations group their activities by function. Discuss other methods an organisation could use to group their activities.

Look at the pros an cons of other ways of grouping activities: with reference TO organisation. This question implies: Employees Organisation/Management

Product/service grouping - Each division will be grouped according to a product or product range
Advantages / Disadvantages
Allows for an organisation to be more responsive to changes in that market
Expertise is developed within each specialised division
Allows management to identify poor performing products / There can be duplication of resources and personnel across group
Divisions may find themselves competing against each other.
Geographical - Grouping of resources is carried out across a geographical area, ie,Midlands, Scottish, South-East Division, etc.
Allows to cater closer for the needs of different area
Can become familiar with local customs and cultures / Is expensive with regards to administration and staffing costs.
Technological - Organisations group their activities according to technological process.
Suitable for large organisations with different production processes / Again duplication of resources occurs
Customer - • Resources are organised around groups of customers with similar needs.
Allows for services to be tailored to each group of customers or a specific customer
Builds up customer loyalty due to the personal service they receive / There can be large staffing costs with this type of grouping
Also duplication of resources in administration, finance


Wholesalers buy goods in large quantities directly from manufacturers. Discuss the advantages and disadvantages to a manufacturer of using a wholesaler.)

The question asks you to discuss the “advantages and disadvantages”. However, the word “Discuss” implies looking at the advantages/disadvantages – or pros/cons, benefit/drawbacks.

Offer reasons for and against - In this question imagine you are a large manufacturer selling your product to a wholesaler rather than directly to your final customers

What happens / Positives and Negatives about
Manufacturer delivers larger amounts to wholesalers than if selling to individual customers, therefore / Fewer deliveries are made so save cost of petrol, van, driver etc
Less profits as wholesaler makes profit, ie using middle men
Administration – Invoicing and Labelling products / Administration costs are reduced – one invoice sent to wholesaler rather than thousands sent to individual customers
Wholesalers may label the product
Wholesalers break product down into smaller more saleable size
Wholesalers can give market research direct to manufacturer
Loss of control of how the product is presented
Costs involved in producing point of sale merchandising for wholesalers
Opportunity Cost (Money tied up in stock) / Less money tied up in stock – because once items are produced they can be shipped in bulk to wholesalers rather than waiting on each individual customer ordering one item from a mass/batch production run
Less stock goes obsolete – same reason as above


JUSTIFYING (usually with Identifying or Describing)

Describe and justify 4 methods of direct selling that could be used by an organisation. (A different justification must be used to support each description but do not use any disadvantages).

Command Words: Describe; Justify

There are 2 parts to this question:

1  Describing methods of direct selling (not just identifying them

2  Justifying why you would use the methods of direct selling

Here you will get some marks for describing and some for justifying

Describing / Justifying
Personal selling
products are sold by experienced sales personnel / Direct contact can be made to the retailer or consumer encouraging sales
Can be tailor-made to customer requirements therefore customer more likely to buy
Demonstrations of the product or service can be shown which may persuade an uncertain customer
Mail order
goods sold via catalogues / Offers credit facilities therefore customer can spread payments
No need for High Street stores which reduces costs to the organiation
Internet selling
making use of websites to sell products / • Consumers can order online from offices or homes meaning 24/7 sales for the organisation
• Consumers can order online from offices or homes which means they are relaxed when browsing and may order more than if they were in a shop
• Is available worldwide allowing access to a far wider market than a shop front, resulting in more customers
Specialist magazines
used to describe and sell specialised products or services / Customers who are sent or purchase the magazine are directly interested and will buy
Consumers can phone in orders or speak to specialists gaining personal advice which can persuade them to purchase


Organisations use various forms of advertising media to bring their products to the attention of consumers. Describe and justify different forms of advertising media)

Command Words: Describe; Justify

There are 2 parts to this question:

1  Describing forms of advertising media (not just identifying them)

2  Justifying why you would use the form of advertising media

Here you will get some marks for describing and some for justifying

Describing / Justifying
Television
Large audiences can be targeted
Products can appear appealing
High profile can be maintained with regular advertising / allows it to cover all market segments which
will attract more customers
which will keep the product in the consumer’s mind encouraging impulse buys
Newspapers/Magazines
National or local exposure can be obtained
Technical information can be given to customers
Customers can refer back to the advert
Large national circulations / necessary for some products or situations such as high specification cars as a picture can be photoshopped to improve the look
allowing consumers to keep the advert which allows them to refer to it constantly and reminds them that the product exists
allow for a large exposure of the product or service over wide geographical locations at a relatively inexpensive cost compared to TV
Radio
Cheaper than television
listeners tend not to change channels
Particular radio shows / therefore saves the organisation’s costs
captive audience
allow for specific market segments to be
targeted which means money is not wasted advertising to the masses
Billboards/Posters
excellent visual impact
frequently seen / will last in the consumer’s mind and remind them of the product
will enhance the impact
Internet Websites
use of links
easy to change adverts / allow exact markets to be targeted which should increase the effectiveness of the advert
allows for them to be constantly changed quite cheaply


Describe and justify 3 sources of finance that could be used to expand a business.

Describing / Justifying
Government Grant
Funds given to an organisation for a particular purpose – ie – for training young people; unemployed people or locating in an area of special need / does not need to be paid back if criteria for giving grant is carried out
Can be fairly large – and may help provide training from which the firm gets benefit
Bank loan
Funds borrowed from a bank usually over a lengthy period ie 6 months to 15/20 years – it may or may not be secured on particular assets of a business. In limited companies directors may have to be guarantors for the loan – ie if the firm is wound up – directors have to repay the loan personally. / paid back over a number of years with interest
Can be fairly easily obtained – if business has good ideas supported by a well-researched business plan
can supply large amounts of funds for growth – may finance building of new factory/equipment etc
Share issues
shares are sold to raise finance either privately or publicly on stock market / can raise large amounts of finance that does not need to be paid back – esp if PLC
Returns are only paid if the business is successful and making (high) profits therefore capital is gained without an immediate payback required
Venture Capitalist
Like the Dragons on Dragons Den
Money given in exchange for shares usually – ie the business is a Limited Company which minimises risk of investors/Dragons
The investors may specialise in your line of business – ie manufacturing; IT etc / Can raise finance for risky ventures which are unlikely to obtain finance through normal avenues
No return has to be paid unless business is successful
Debenture
This is a loan of funds but the lenders are issued a certificate. / Same as Bank Loan, then
The “loan” may be sold to more than one lender which will spread their risk
You may be able to raise the finance from many sources whereas one bank may not be willing to lend all this money
Retained Profits
These are the profits the business has made over many years – which have not been paid to the owners as Dividends/Drawings / No return is paid on these – ie no interest – thus this is a cheaper source of finance than some of the others
Sale of assets
This is where unwanted/unused assets in the firm are sold off for cash / You get some benefit out of the unproductive assets rather than letting them rust away
There may be no charges on selling the assets – although you may have to advertise


EXPLAINING

Explain the effects that poor employee relations could have on an organisation.

Command Word: Explain

What are you explaining: The Effects or Impact.

There are 2 parts to this type of question

1  Identify what happens when there is “poor employee relations”; and

2  The effect/impact on the organisation

What Happens / Effect on Organisation
De-motivated workforce which will result in …. / Increased staff turnover costing the organisation lack of continuity/more money for recruitment
Increased staff absenteeism leading to lower productivity
Impact on the quality of output leading to poor customer service/loss of custom
Less co-operation of staff during periods of change could make it harder to introduce new policies or procedures
Increased industrial action may result in ….. / Reduced productivity which impacts on customer sales /has a long-lasting effects on sales
Poor image of the organisation might mean potential customers and investors go elsewhere


Some organisations still sell their original product a number of years after it was first launched. Explain how extension strategies can prolong the life of a product.