Impact lead to profit, competitiveness, increase market share

Short

 Global*
 Business failure*
 Flow production*
 Topic 11 – type of financing internal or external, no advs and disadvs
 Internal: retained profits, apply JIT stock management, delay payment to suppliers, sales of unused assets.
Request debtor to pay early by giving them discounts, reduce working capital
 External: bank loan, leasing, higher purchase, bond, equity financing (unsure advs and disadvs of al and debt,
equity financing)
o Advs: large amount of finance, plan business financial (need to pay interest on time), lack of conflict
with workers, lack of conflict with debtors, reduce opportunity cost – more fund for development

Long

 JIT*
 Profit(shareholders, workers, suppliers)*
 Competition)(technology, training, JIT, research and development, competitivepricing cannot talk about JIT)*
 Topic 7 – high inflation (1advs and 2disadvs to business) exchange rate (strong and weak 1advs and 2
disadvs) unemployment(high or low 1advs or 2 disadvs) CSR or Law&regulation (1advs and 2 disadvs) [CSR
0.5% (advs, disadvs) high Inflation 0.4% (advs, disadvs) Unemployment 0.1%(advs, disadvs)]
 All answers must lead to impact to business NO TQM

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 Competition:

 Competitive pricing

o Set price lower that their competitors – if PED = elastic – competitive pricing can influence more
customers to purchase their product
o Increase business sales – increase market share – become market leader – achieve EOS – bargain for
more discount – reduce business cost of production
o More resources for business to carry advertising – create awareness- influence their purchasing
behaviour
o Achieve brand recognition which can use as a marketing tools to create brand loyalty thus business
can create a market barriers to prevent other business enter their market

 R&D – added values

 Training

o Increase workers skills, experiences

o Provide quality services to customers
o Increases customer satisfaction
o Create customer loyalty
o Continue purchase business product

 JIT (check gallery)

 TQM

 Technologies
  NO ADVERTISING, MARKET RESEARCH

JIT:
 Effective stock management such as just in time provide favourable condition for business to add more
values to their business competitive advantages.(1m)
 JIT provide opportunity for business to be more efficient in utilize their holding costs such as storage costs,
insurance costs, labour costs and utility bills, thus allow business to achieve costs effective.
 Cost effective allow business to add more values to their marketing activities such as implement more
effective pricing strategies such as competitive pricing which can influence more customers to purchase their
product and create a market barriers to prevent new business enter their market.
 Thus business can increase their market share and maximize their profit which allow business to generate
sufficient cash flow for business to allocate more funds for further development such as new market
development.
 Business can expand their business to international level – become market leaders – achieve brand
recognition and achieve customers’ loyalty. (impact to business)

If use JIT, cannot use competitive pricing

TQM(cannot write short form):

 Business can implement Total Quality Management (TQM) as their quality management tools to improve
business competitiveness.
 TQM request business to implement new business cultural such as decentralization management where it
involves manager provide delegation and empowerment of authority to their workers in quality decision
management
 Involvement of workers from different background in decision making can create brainstorming – which can
provide an opportunity for business got determine their SWOT (strength, weaknesses, opportunities,
threats) of their quality management.
 It provide clear ideas for management to introduce more effective added values management to improve
business productivity, efficiency and reduce wastages.
 Thus it allow business to offer quality product which can meet customers expectation and influence
customers purchasing behaviour – business can create customers loyalty and brand recognition.

Technologies (flow production easy):

 Business can invest in latest technologies such as Computer Aided Manufacturing (CAM).
 CAM - business to implement capital intensive production or flow production – produce in mass - allow
business to distribute their product in mass market or larger market segment.
 Mass production - allow business to purchase raw material in bulk – bargain for more discount from
suppliers – reduce business cost of production and achieve (EOS) according to porter 5 force theory.
 Higher bargaining powers from suppliers – allow business to achieve cost advantages – business can use
such advantages to introduce more competitive pricing to create market barriers which can prevent other
firms enter business target market – allow business to increase their market share and improve their
competitiveness.

 Training
 Increase workers skills, experiences, knowledge
 Able to provide more quality services to customers – increase customers satisfaction – create customer
loyalty – continue support business
  Business can use customer’s positive relationship as viral marketing – to create customers awareness and
differentiate their product from competitors
 Differentiate business products from competitors and increase their sales
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Format:
 Your knowledge – point 1m
 Application – explain about 1m
 Analysis – impact to business 3m

E.g. 1
Question: How to improve competition?
Your knowledge: R&D to improve their competitiveness
Application: add more value to the product – such as improve the quality, introduce more advance features and
designs to the product
Analysis: R&D create USP, to differentiate your products from competitors. (1m) Influence customers purchasing
behaviour – create customer loyalty (1m) Purchase business product and stop support competitor product (1m)

E.g. 2 (From Topic 7)

Question: CSR
(YOUR KNOWLEDGE)
Advantages: Improve business reputation as ethical company – attract workers from different background to work
for business (ONLY THIS ADVANTAGE CAN APPLY)
(APPICATION 1M)
Business apply minimum wages, maximum working hour, health and safety regulation – increase living standard –
thus increase workers satisfaction, thus business can use tier positive relationship with workers as a human
resources management tools to attract more new workers to join the business.
(ANALYSIS 3M)
 New workers can provide new direction to business such as marketing strategies – business can use e-
commerce to distribute their product to larger market segment.
 Increase their sales – increase market share – increase bargaining power from suppliers – achieve economic
of scale
 Achieve EOS – more discount - reduce cost - improve cash flow – more fund to carry out advertising – create
customers awareness.

DISADVANTAGES:
 Reduce business competitiveness - Customers stop purchasing their product
 Increase costs because apply minimum wages, maximum working hours, environment regulation
 Higher costs – force business to increase their selling price – customers stop purchasing business products –
reduce sales revenues – lack of money to pay their expenses

 Conflict of interest between shareholders and management

 Increase costs because apply minimum wages, maximum working hours, environment regulation - profits
reduce – less dividend to shareholders
  Reduce shareholders return of investment – reduce their return of investment – stop investing – reduce
business capital – lack of fund to carry out R&D – reduce customers satisfaction – reduce sales.
Question: Inflation (1ADVS & 2DISADVS)
No need to give any definition.
Demand pull inflation
 Demand pull inflation – higher inflation – higher purchasing power – demand > supply – business increase
selling price – maximum profit
 pay more dividend to shareholders – increase shareholders satisfaction – raise more capitals – more funds
for business to carry out R&D or new market development

Cost push inflation

 Higher cost of living – workers will demand for higher salaries – increase business labour costs – force
business to increase selling price – more expensive – not allow business to export their product to overseas –
reduce their market – not able to achieve economic of scale.
 Higher cost of investment – business not able to raise fund to invest in new technologies – reduce business
productivity and efficiency – increase wastages – cause business produce low quality product – reduce
customers satisfaction – thus reduce business sales – lower sales cause business not able to generate
sufficient sales to achieve breakeven for them to close down their activities.

Question: Unemployment
Advantages: Hire cheap labour – reduce business labour costs – lower costs of production – set low price – allow
business to export their product to international market – increase their market share – achieve EOS – increase their
bargaining power from suppliers – more discounts – reduce costs – allocate more fund to invest in latest
technologies such as computer aided design CAD – it can add more values to business product such as advance
features and designs – create USP – attract more customers to purchase their product
Disadvantages: Reduce sales – higher unemployment – reduce household income – reduce customers’ purchasing
power – reduce business sales – not able to generate sufficient revenues to cover their expenses (such as pay their
bank loan in time – legal action from bank – force business to close down.)

(such as pay their suppliers on time – create conflict of interest between management and suppliers – cause
suppliers to stop supplying raw materials to business – reduce business production process – reduce business
productivity, efficiency – cannot produce the product in time and deliver the products on time to customers – create
customers dissatisfaction – customer stop purchasing business products – customer will look for new alternative –
stop supporting business – reduce business sales)
Pay higher taxes to government – support government policies – government need to pay more unemployment
benefits to society – higher taxes – reduce business funds available to pay dividend to shareholders – reduce
shareholders satisfaction – stop investing in the firm – lack of capital

Full employment:
Advantages: higher sales
Disadvantages: Lower labour, higher wages
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Topic 11
List types of … question
No advantages and disadvantages
T11 External Internal (may not come out)
Universal answer: (if question did not ask for external or internal source then use this answer)
 Business Plan
 Market research report
 Income statement
 Statement of positioning
 Cash flow statement

 Types of documents business need to show to bank in order to get bank loan.

 Types of documents business need to start up the operation.

 Documents need to show shareholders.

Impact to business JIT

 Sales forecast accuracy Produce sufficient product to meet market demand thus provide opportunity for
business to deliver the products on time to customers – meet customer expectation – create customers
loyalty – customers will continue support business for longer period and increase their market share.
 Workers multi tasks  provide opportunity for business to be more efficient in utilizing the resources and
reduce their wastages – thus business can improve their cost of production – lower COP provide opportunity
for business to introduce more competitive pricing to attract more customers to purchase their products.
 Relationship with suppliers’  excellent relationship allow business to maintain their productivity – able to
produce sufficient products and deliver on time to customers thus increase customers satisfaction. Supplier
also will supply more quality raw materials to business - allow business to produce more quality products
which can meet customers’ expectations and quality regulations set by local government – thus it allow
business to influence customers purchasing behaviour and increase their market share