Business P1

• What is E-commerece?


  E-commerce is the trade of goods on the internet.
• Name 2 advantages to a business of using E-commerce.


  1)Websites offer a direct,cheap promotional method

  2)An easy-to-use website can encourage customers to buy more

  3)

  • dynamic pricing- techniques can be implemented so profit can be maximised during periods of high demand
• Name 2 disadvantages to a business of using E-commerce


  1)Competition increases and customers can easily switch brands

  2)Large warehouses and efficient stock control systems are needed to fulfill online orders.

  3)Lack of face-to-face contact with consumers means businesses miss out on instant feedback
• Give one way in which employees may impact a business.


  Behaviour positively or negatively impacts brand image.
• Define services


  Services are non-physical actions performed by a business to help a customer.
• Name 2 advantages of using e -commerce to a consumer.


  1)Competition drives prices down and allows customers to easily 'shop around' and compare prices.

  2)E-commerce is convenient as it allows customers to shop from anywhere in the world

  3)Customers can buy from worldwide retailers so have increased choice
• Name 2 disadvantages to a consumer of using e-commerce


  1)Products cannot be handled or tried out before purchase,which means customers frequently return them because they are unsuitable.

  2)Poor connections or technical difficulties can deter customers from using a website to make purchases
• Digital communication refers to the use of:

  electronic devices to transfer information
• What are stakeholders?

  Indivuals that affect or are affected by the actions of a business.
• What is lead time?

  The amount of time that passes from a product being ordered until its manufacture is complete.
• Give 2 points on how digital technology for communication benefits suppliers.

  -Email and online purchasing systems speed up the purchasing process

  -Problems with orders can be raised with suppliers immediately and a record of communication is recorded for future reference

  -This can reduce lead times, improve efficiency, and lead to better relationships with suppliers
• Give 2 points on how digital tools/technology is benefical for employees

  1)Shared drives allow employees to work collaboratively with colleagues across different locations

  2)Web-chat apps allow real time communication between staff , creating to some degree, a face-to-face work environment.
• Ethical acts that may not increase revenue:

  -Paying fair wages and ensuring the welfare of workers may increase staffing costs

  -Improving environmental controls may require signigicant capital investment in green technologies

  -Paying suppliers on time may reduce the amount of working capital available to fund day-to-day business activities

  -Implementing a responsible supply chain may mean paying more for raw materials and components.
• The process/production of transforming raw materials into finished goods/services depends on a number of factors:

  -The level of output required to be produced

  -The nature of the product

  -Whether the product is standardised or customised

  -The level of automation (the use of machineryect in production process) used in production
• Define job production


  Where products are made to meet the specific requirements of individual customers.
• Name 2 advantages of job production:

  -Provides flexbility to adapt to changes in customer demands and market trends

  -Job production allows for great attention to detail and quality control

  *meaning products can be sold for a premium price
• Name 2 disadvantages of job production:

  -Tends to be more expensive and takes longer then other production methods (This may not be suitable for customers requiring products to be delivered quickly)

  -Job production can be more complex and challenging to manage compared to other production methods(Coordination between the production team and the customer is needed so that the final product meets expectations)
• Define flow production

  Involves the manufacture of a product in a continuous sequence of operations on a production line
• As a product moves along the production line, it undergoes a serious of operations, such as:

  assembly,testing,packaging, or quality control.
• Name 2 advantages of flow production:

  -The continuous flow of production eliminates the need for frequent equipment start-ups and shutdowns * This reduces energy consumption and minimises waste

  -It enables fast production, resulting in short lead times, which help companies respond quickly to customer demands.

  -Unit costs are low -due to automation processes carried out by unskilled workers and costs are spread across a large volume of output.
• Name 2 disadvantages of using flow production

  -Installing production lines often requires significant capital investment

  -Relies on the reliability and efficiency of machinery equipment*If any part of the production line breaks down, it can disrupt the entire process leading to costly down time
• Define lean production

  Lean production involves the minimisation of the resources used in production
• Name 5 advantages of lean production

  1)Less time is required- production process is organised in the most efficient way

  2)Fewer materials are used-there is a focus on waste reduction

  3)Less labour- lean production is capital intensive (using machinery in production

  4)Little space is required for production and storage

  5)A small number of suppliers work closely with the business
• Name 2 elements of lean production

  -Just In Time Production

  -Kaizen
• What is Just In Time production?

  Just in time production means that the business only manufactures products when a customer confirms an order with them

  -This reduces the need for storage , as stock is only ordered to arrive when needed and products only made when there is demand
• What is Kaizen?


  Involves taking continous steps to improve productivity.
• Problems may arise from holding too much stock:


  -Storage costs (e.g. warehouse rental, security costs) will be higher than necessary

  -The risk of spoilage and stock will be increased, leading to increased costs.
• Problems may arise from holding too little stock:

  -A business may run out of stock, resulting in production stoppages and higher unit costs related to underused capacity

  -A sudden increase in demand may not be capable of being met, leading to a loss of potential sales revenue.
• What is Just in Case stock Management?

  Involves a business holding a quantity of raw materials, components or finished goods as buffer stock.

  -Stock is held in case of shortages so as to provide a competitve edge over rivals unable to meet demand.
• Define Obsolete

  An asset that has become out of date and is no longer useful.
• 2 advantages of of Just In Case Stock Management

  -Businesses with a regular supply gain a reputation for always being able to meet customers needs

  -Businesses that are dependent on particular raw materials avoid supply disruption

  -Buffer stocks enable a stable supply of goods, allowing a business to respond to increases in demand
• Name 2 disadvantages of Just In Case Stock Management

  -Holding buffer stocks can be expensive, as it requires storage facilities and inventory management systems

  -Holding buffer stocks ties up cash that could be invested in other areas of the business.
• What is Just In Time Stock Management?

  A process in which raw materials and components are ordered as required and delivered 'just in time' to be used in production
• Facts about suppliers in the Just-In-Time Stock Management.

  -Close,long-term relationships with these suppliers need to be developed

  -They must be flexible and reliable

  -They may be required to hold stock on behalf of a JIT -operating customer

  -They are often in close proximity to their key JIT-operating customer
• Advantages of Just In Time Stock Management

  -Stockholding costs including storage rental and security are minimised

  -Cash flow is improved as money that is not tied up in stocks can be put to other uses

  -Stock and finished goods are less likely to be damaged in storage
• Disadvantages of Just In Time Stock Management

  -Unable to respond to unexpected increases in demand without precises forecasting of demand

  -Unreliable suppliers can quickly halt production
• What is procurement?


  Procurement refers to the sourcing and buying of raw materials, goods or services.
• Procurement includes:

  -Identifying and selecting suitable suppliers

  -Negotiating prices and other important terms and conditions (lead times, payment terms)

  -Taking receipt of products and paying for them
• What is logistics?


  Involves the management of acquiring, storing and transporting products to their final destination.
• Logistics include:


  -Warehousing

  -Fulfillment, including packaging, labelling, and arranging delivery

  -After-sales-service ,including tracking orders and managing returns