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AQA Business Studies Unit 2 (BUSS2) - 24th May 2011 - Pre & Post Exam Discussion

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can anybody tell me the methods of improving profits/ profitability.

Increasing price
Increasing sales volume
Decreasing variable costs
Decreasing fixed costs
Increasing output

as well as reducing the firm's product range & outsourcing.

Reply 81

racheatworld

Original post by Rebecca9109

can anybody tell me the methods of improving profits/ profitability.

There are 3 main ones we need to know.

1) Sell more, at the same price.
2) Sell the same amount, at a higher price.
3) Sell the same, at the same price, but decrease costs.

1) Advantages of selling more at the same price is that the company will get more revenue, increased profitability, they will also increase their customer base, could increase market share. Also, will have no impact on existing customers as price is not changed. Disadvantage is that to sell more they'll need to promote the product, will mean increased promotion costs.

2) Advantages of selling the same amount, at a higher price is that the company gets more revenue, does not have to spend extra money on promotion. Disadvantage - putting the price up could decrease in demand (link this to price elasticity of demand, if the product is elastic it is likely that increased price will decrease demand, so the company may actually end up decreasing profitability).

3) Advantages of selling the same, at the same price, but decrease costs is that there are no extra marketing costs, no danger of decreased demand if the product is elastic, increased profit margin. However, a disadvantage is that the company may sacrifice quality to cut costs - eg: if they buy cheaper raw materials from suppliers. This could also end up backfiring so instead of increasing profitability, the company may decrease it.

To be honest, for this exam I don't think you need to know everything in the textbook. You'll need to have an idea of key terms for knowledge marks, formulas and any of the harder topics such as Price elasticity. But other than that, everything should be in the case study. I hope they're nice to us tomorrow! :biggrin:

Getting an A grade answer is to relate the question to the other functional objectives of the business. For example, a question on marketing will need to show how this effects finance, operations and people in business. Also, application is so underated so make sure this is used throughout your argument/point.
Finance should relate to each question such as figures taken from the case study. DO NOT USE A FORMULA IF NOT ASKED TO DO SO.
Weigh up evaluation through "it depends on", short/long term and are there enough funds to carry out this task. Look at all sides of the argument but makes loads and keep them short by paragraphing each one, relating to each functional objective.

Look out for capacity utilisation as it might come up this time round.

Reply 84

craigbrad

you will find all the keywords and definitions here: http://www.tutor2u.net/business/glossary/aqaunit2/engage.html

Reply 85

Sarzy94

Original post by craigbrad

you will find all the keywords and definitions here: http://www.tutor2u.net/business/glossary/aqaunit2/engage.html

yeah im not guna be able to memorise all of them :s-smilie:

Reply 86

Saffcake

Can someone give me a a definition for subcontracting please? I know what it is but cant think of a nice way to put it. Thanks!

Reply 87

POWW!

Original post by Saffcake

Can someone give me a a definition for subcontracting please? I know what it is but cant think of a nice way to put it. Thanks!

Lol what is it? explain plz

Reply 88

ngnav

Original post by Saffcake

Can someone give me a a definition for subcontracting please? I know what it is but cant think of a nice way to put it. Thanks!

essentially, letting other business' doing the dirty work for you ie i need to make 100 puddings, im able to make 50 so i subcontract another company to make the rest 50 puddings

Reply 89

srudland8

Original post by lubz

from looking at the spec and past papers i think that the following will come up

measuring and increasing profits
measuring the effectiveness of the workforce
developing an effective workforce: recruitment, selection and training
developing and retaining an effective workforce: motivating employees
developing effective operations: quality
customer service
working with suppliers
designing an effective marketing mix
product
pricing
place
marketing and competitiveness

That is basically the entire course! Ha.

Reply 90

sandy21

what are the disadvantages of a niche market?

Reply 91

Gunnerzz

One extra large fail coming right up...

Reply 92

POWW!

Original post by sandy21

what are the disadvantages of a niche market?

Can't think of many but
Less potential customers
Limited revenue/ profit

Reply 93

lubz

help!

how to structure the answer for like
a to what extent question?
justify your view?
examine possible drawbacks/benfits?
analyse..

hw would i answer these sorts of questions?

Reply 94

Terminator7t

Original post by Saffcake

Can someone give me a a definition for subcontracting please? I know what it is but cant think of a nice way to put it. Thanks!

*taken from the mark scheme*
Sub-contracting takes place when a business uses a supplier to produce some proportion of its output.

Reply 95

Nshah8

niche markets can afford to charge premium/higher prices than mass markets because they target a limited audience.

They however have a higher unit cost per product because of their smaller scale products thus why it is reflected in the price also.

But the exclusivity of the product means that it can be made to meaure and is fit for purpose fo the customer in comparison to mass market/generic products

Reply 96

Rebecca9109

Original post by sandy21

what are the disadvantages of a niche market?

too specialised - overestimate demand
not enough demand if competitors enter
high prices cause fall in demand

Reply 97

sandy21

Original post by POWW!

Can't think of many but
Less potential customers
Limited revenue/ profit

oh okay so basic reasons
Thanks :biggrin:

Reply 98

SBradford

Original post by lubz

help!

how to structure the answer for like

justify your view?

hw would i answer these sorts of questions?

To do this question:
EG, the question might be "Should GL LTD expand its distribution to retailers" Justify your view"

It would go like this:

Definition
For distrubting through a retailer
Against distributing through a reatailer
Evaluation, try to make this 5/6 lines, with a some good points, include information from the case study here.