State two costs of rationalisation to a business.

Redundancy payments and site closure costs fall due immediately. Morale among the staff who remain often collapses as well.

How does delayering reduce costs during rationalisation?

A delayered structure removes one or more levels of management from the hierarchy. Salary costs fall and communication shortens, though workloads on the remaining managers rise.

How does rationalisation affect employees?

Redundancies remove jobs and often demand relocation from those who keep theirs. Survivors face heavier workloads and reduced job security.

Eduqas A-Level Business A510QS

Enterprise, Business Plans and Location

Topic overview Enterprise, entrepreneurs and SMEs Needs, wants and spotting a business opportunity The role of the entrepreneur in setting up and running a business Financial and non-financial motives of entrepreneurs Characteristics and skills of entrepreneurs Entrepreneurs, SMEs and the sectors of the UK economy Stakeholders and their interests Business plans and sources of advice Choosing a business location

Markets, Demand and Market Research

Topic overview Markets and competition Types of market Market size, market share and market trends Market segmentation Market structures and degrees of competition Consumer protection Demand and the factors that shift it Supply and the factors that shift it Equilibrium price and shifts in the market Price and income elasticity of demand Primary and secondary market research Qualitative and quantitative data Sampling and bias in market research

Business Structure and Sources of Finance

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Topic overview Revenue, costs and profit Fixed, variable and semi-variable costs Direct costs, indirect costs and overheads Calculating revenue, costs and profit Contribution and its uses Calculating the break-even point Break-even charts and the margin of safety What-if analysis of changes in costs and revenue The usefulness and limits of break-even

Marketing and the Marketing Mix

Topic overview The purpose of marketing and market orientation The marketing mix and the four Ps Product, brand, USP and differentiation The product life cycle Extension strategies The product life cycle and cash flow The Boston matrix Pricing strategies Choosing the right pricing strategy Promotion above the line and below the line Place and distribution channels The marketing mix in different contexts New technology in marketing

Financial Planning and Accounts

Topic overview The role of the finance department Budgets and the purpose of budgeting The benefits and drawbacks of budgets Internal sources of finance External sources of finance Choosing the right source of finance Cash flow and cash flow forecasts Constructing and interpreting a cash flow forecast Cash flow problems and how to improve cash flow The income statement, gross profit and net profit Gross and net profit margins

People in Organisations

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Motivation, Management and Employee Relations

Topic overview Motivation and the benefits of a motivated workforce Taylor and scientific management Mayo and the Hawthorne studies Maslow's hierarchy of needs Herzberg's two factor theory Expectancy theories of Vroom, Porter and Lawler Financial methods of motivation Non-financial methods of motivation Management, management by objectives and Theory X and Y Leadership and leadership styles Leadership theories and choosing a style Employment rights, contracts and equal opportunities Trade unions, industrial conflict and dispute resolution

Operations Management

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Data and Market Analysis

Topic overview Presenting and interpreting business data Index numbers and comparing figures over time Calculating price elasticity of demand Interpreting price elasticity and its effect on revenue Income elasticity of demand Sales forecasting and the reliability of a forecast Moving averages and time-series analysis Correlation, scatter graphs and extrapolation Qualitative forecasting techniques

Analysing Business Performance

Topic overview Budget variances and how to calculate them Analysing and evaluating budget variances The balance sheet and how it is constructed Working capital, capital employed and depreciation Liquidity ratios: the current ratio and the acid test Return on capital employed and gearing Comparing accounts over time and between businesses Evaluating the financial position of a business Non-financial measures of performance and vision statements

Aims, Objectives and Strategy

Topic overview Aims, objectives and SMART targets Mission and vision statements Strategy, tactics and corporate plans SWOT analysis Porter's Five Forces The Ansoff matrix Organic growth External growth: mergers and takeovers Horizontal and vertical integration Franchising as a method of growth Rationalisation and relocation Outsourcing production

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Change and Risk Management

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PEST Factors and the External Environment

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Ethical, Legal and Environmental Factors

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International Trade, Globalisation and the European Union

Topic overview International trade and why it happens Free trade and protectionism Trading blocs and the single market Entering new international markets Globalisation and its causes The effects of globalisation on business Strategies for global growth Glocalisation and adapting to local markets Multinational companies The European Union and the single European market The euro, the Eurozone and membership

Aims, Objectives and Strategy

Rationalisation and relocation

3 things to know
Component 2

Overview

Two costs of rationalisation to a business, four factors that influence a decision to relocate and two costs of relocating a business.

What you need to know

Answer each one before you reveal it.

Your recallNot started

Key term

What is rationalisation?

Key term

Why do businesses rationalise?

Key term

How does rationalisation affect unit costs?

Questions from this subtopic

Each one with the model answer underneath.

1
What is rationalisation?
Model answer
Rationalisation is the reorganisation of a business to cut costs and improve efficiency. Closure of sites, fewer product lines and reduced staff numbers are typical measures.
2
Why do businesses rationalise?
Model answer
Falling demand can leave a business with far more capacity than it needs. Rationalisation removes the surplus so that fixed costs fall.
3
How does rationalisation affect unit costs?
Model answer
Concentration of output on fewer sites raises capacity utilisation at those remaining. Fixed costs are then spread over more units, so unit costs fall.
4
State two costs of rationalisation to a business.
Model answer
Redundancy payments and site closure costs fall due immediately. Morale among the staff who remain often collapses as well.
5
How does delayering reduce costs during rationalisation?
Model answer
A delayered structure removes one or more levels of management from the hierarchy. Salary costs fall and communication shortens, though workloads on the remaining managers rise.
6
How does rationalisation affect employees?
Model answer
Redundancies remove jobs and often demand relocation from those who keep theirs. Survivors face heavier workloads and reduced job security.

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