Business Flashcards
Consumer laws
Consumer law is designed to protect the consumer against poor sellers
Satisfactory Quality of Goods
- Is to a level of quality that should reflect the price of the item and is functional.
Fit for purpose
Means that it must do what it says it will do e.g. work or will not work.
As described
Means it must be to a quality as prior described off the business or seller of the item.
In a timely delivery
Must arrive within a realistic and timely manner.
Employment laws
Employment law is set to protect any workers active, prior or aspiring at a business.
Prevents discrimination in the work force through disabled, racial motivation or gender discrimination.
This is within limit for example it is perfectly legal for a disabled person to be declined from a role like a scaffolder as it would not be suitable. It is also very difficult to prove that discrimination was the only reason for the failed application.
Ethical issues
Ethical issues can be related to the
Treatment of workers
If workers are treated with a low wage, poor working conditions and long hours it may lead to ethical issues which can damage a reputation of a business.
Sourcing Materials
Can lead to issues if the sourcing of materials comes for what is deemed as an unethical source such as through slavery or child exploitations.
Treatment of supplier
- Pay fair prices to the supplier included in the fair trade triangle ideas
Treatment of customers
Fair and reflective prices on items not overcharging and caring for the customers following there purchases.
ALL CAN LEAD TO DAMAGE REPUATIONS, LOSE OF SALES AND LOSE OF INVESTMENT
Stakeholders
There is 9 Stakeholders
there is a mix of internal and external stake holders.
Internal Stakeholders
- Share holders
- Owners
- Managers
- Employees
External Stakeholders
- Customer
- Suppliers
- Local Community
- Pressure group
- Government
- Competition
A stakeholder is someone with interest into the business operations and Business outcomes
Types of business
Sole trader
- An individual or apprentice set up a Unlimited Liability business, usually for Trade jobs e.g plumbers.
Partnership
- 2-20 members of an Unlimited Liability business, usually a dentistry or law firm.
** Private Limited Company (LTD)** Incorporated business with limited liability has shares available to family and friends and is NOT publicly traded. Requires a payment to the government “Corporate” tax
Public Limited Company (PLC) Incorporated business with limited liability has shares available on the public domain (Stocks market). pays a corporation tax and requires a Head Quarters. Can be exposed to a hostile take over if 51% of their shares are bought
Production Methods
Business Use 3 diffrenet types of production for their products depends on several factors: The amount of capital available, The space they have, The items they sell and staff.
Job production
- When items are made per item sold e.g Wedding Dress.
- Higher selling point
- Slower to produce
- Higher costs.
Batch Production
- item is made in sets based of characteristics for example different colour shirts
- Produces more than job
- Changing/ cleaning equipment between batches.
Flow Production
- When items ae made on a continuous production line e.g. Water bottles
- Larger output
- Quicker
- Requires maintaince
- Expensive start up
Globalisation
How business are connected on a global level.
Includes:
- Global Movement of People
- Global Movement of Capital
- Global Production
- Global Buying and Selling
Globalisation has been made easier through easier transport methods, more interlinked nations, easier ways of communication and deals including free trade agreements.
International Branding
When businesses sell their goods in foreign countries they must consider there international branding and how it is represented in that Nation,
Considerations Required:
- Bribery, is expected in some nations so nations may need to consider if they are willing to compete with ethical and legal issues for business deals.
- Language, can be a large problem as different brands may translate to different meanings in nations not how they intended.
- Legal Issues, Legal problems can differ from one country to another e.g. age restrictions on goods and their usages.
- Product Promotion, Advertisements will be different based of cultures in nations, a consideration needed to be taken into account by the PR department.
- Income level, for example it would be pointless a high end brand opening in a poor nation or a country as there security levels would need to be high and their sales low.
This is how brands are recognized on an international scale, can have huge affects on their reputation, risks and rewards
Influence on Business Location
Globalisation has large impact on a business location, A business will aim to establish itself in a nation with a large customer demand for their product or services. A country with strong trade and infrastructure, Best labor for their cost and A nation without over the top taxation.
Locations can make or break a company e.g. having a sun tanning business in countries who are hot would not capitalize their market.
Factors which effected by competing internationally
Growth
- Expanding the business overseas
Marketing
- Make a products suit the nation of sales
- locate area to sell and locate store locations
HR
- Recruit, train and employ new staff overseas
- Manage existing staff to maybe migrate to new stores
- Obey the countries employment laws
Business Operations
- Choose the most efficient method of production
- Ensure positive quality control measures to maintain a good reputation.
Finances
- Arrange loans overdrafts and the sale of shares to move abroad
- Ensure currency is correctly dealt with.
Exchange Rates
- Business can benefit or be disadvantaged by rising or dropping exchange rates.
- Exchange rates can lead to issues if there is a economical collapse in a country.
Ethical
- Business wishes to be more ethical need to consider the wages of whom they employ.
- Working conditions are up to scratch
Economical Climate
- Business must manage the economical climate as any crashes could be detrimental to a business’s success.
Cash in a Business
- Cash is money that a business has on its premises or in its bank accounts, All business need access to cash as its a liquidity that they cannot operate without.
Liquidity
- The ability of a business to pay of its short term debts or expenses.
Profit
- Profit is the money earnt after all costs have been considered including fixed costs.
Example - £30 item with a £10 costs would make a £20 Profit.
Cashflow Forecast
A cash flow forecast is a prediction of the expected amount of cash a business will have in the coming months. Its usage is to be used to apply for an overdraft or to make the business minimize spending in its build up. Cashflow forecast is not profit it is purely just the capital available in a Business at a time.
**Positive cash flow **
- suggesting that there will be more cash going into the business than going out, Can be used to suggest weather expansion is applicable,
**Negative Cash flow **
- Suggest that there will be less money going into the business than going out of the business.
IT IS A PREDICTION ONLY!
Break Even
Formula
- Total fixed costs / price - Variable costs per unit
Purpose
The purpose of the break even is so that a business knows how many items it will need to make before it starts making money, a Break even is not making profit or losing capital instead is at a stage of Neutrality.
Usually have an error band above the the break even to account for any unexpected costs of the business. e.g. break even is 15 they will suggest 18.
Uses of breakeven
- Planning the amount of products needed to sell, for example if they require a large quantity they will make a lot.
- Planning the marketing campaign, If they need to sell a small amount there marketing scheme will be different to if they require to sell a large quantity.
- Planning pricing change, shows if the profit margins are too low or not.
Role of Business Enterprise and entrepreneurship
The role of business and enterprise is for several reasons.
Including
- Financial freedom
- Be your own boss
-
Business Planning
Business Planning Requires several elements, It is crucial to a business success as it allows them to follow a trend of where they expect to be in comparison to where they are. A good Business plan can be used to secure loans and overdrafts it also allows for the Business to make there goals Measurable.
Idea
- The idea is Crucial to a business it will allow them to know what they will need to secure the product the resources required and how they relate to aims and objectives
People
- Allows them to know if there is a sufficient amount of staffing and who will be involved in selective projects.
- Help support the HR department what is needed to operate Effectively
Market Research
- Business will need to make sure there is an actual demand for the product or that there isn’t already an established brand they will be competing with.
- Market research also allows them to view who their customer base will be and where they should expect sales to come from.
Finance
- Crucial to know if the business will be expected to make or lose money and if they will need to adapt their aims and objectives of the business.
- Can be presented to investors and to banks to help secure finances
- Allows them to track there proximity to goals and if they are in a stable position
Competitors
- Identify the competition
- Identify how your product is better than theirs and how your product is competitive to theirs.
Deed of Partnership
Outlines the positions titles and roles each member of a Partnership holds.
Should Outline the relevant Finance e.g who takes home what, who owns what and what % of the business is owned by who.
Legally binding document
Might need to be adapted to the relevant change in economic Situations
Business Aims and Objectives
Business Usually have four Aims and Objectives of their Business.
Growth
- Increase Market share or Sales
- Increase Amount of Stock they hold
** Providing A Service**
- Some Owners want the satifistfaction of giving customers a good service (Reliant on profit)
- Can be seen as a way from customer retention as well as by postive reputation and word of mouth marketing.
Survival
- Usually during tough times of the business
- Requires them to cut costs possibly redundancys
- May need to apply for an Overdraft or a loan if longer term
Profit
- As described, only goal is to be profitable
- Repay investment and loans
- Seek to Maximize the Profit
Business Growth
Business Growth can be internal or external dependent on the aims of the business and what suits them.
Internal
- Also Known as Organic growth aims at growing without needing to leave the business to make it happen
- Includes opening new stores
- Increasing output of products leading to more sales and profit if profitable
- Developing New products to enter the market.
- Gaining New customers, Can be through increased Marketing, Positive reputation or even from social Media trends.
- Increasing Market Share
External
- Growing outside the business
- Growing through External Takeovers
- Two types of Takeovers: Merger and Hostile Takeover
- Can buy out smaller or larger business
Mergers and Takeovers
Diversification
- Merging or taking over someone not relative to your business at all e.g. bus company and a kebab shop merging.
- Can reduce risk on the business
** Forward Verticle Merger**
- Takes over a Buisness it supplies goods to e.g supplier buys a shop
** Backwards Verticle Merger**
- Takes over a Buisness which supplies them e.g shop takes over the supplier
** Horizontal Merger**
- Taking over a Business in the same sector as your business e.g. Sofa shop and another Sofa Shop
Role of Marketing
The role of marketing varies from company to company depending on there amount of funds, their intentions and there goals.
Inform Customers
- Marketing aims to inform customers of whatever the marketing campaign is targeting.
Identify and understand the customers
- Businesses use research to find who they are targeting there product to.
Increasing Sales
- Sales can be increased by reducing the price or the introduction of another product
Market Research
Market Research Involves the 4 p’s
Price
- Identify your target price which will be profitable and provide you with an adequate reward
Product
- Identify what you will actually be selling on a day to day basis and where you can get this product from
Business can conduct primary and secondary research methods to get there data
Primary data is collected by the business for there purpose
Questionnaire
Interview
Trialing
Focus Group
Secondary methods are usually sourced via the internet or printed media.
Market Segmentation
Marketing segmentation is when a business will divide its business based on categories to maximize customers in them specfic areas. They may run specialised ads or just have different colour pallets based on it.
e.g Smyths toys segments based of gender and age
Marketing Mix
Role of the HR department
Organizational structures
Ways of Working
Communication in a business
recruitment and selection methods
Motivation and Retention
Training and Development
Production Process
Quality of goods and servies
Sales process and customer services
Pricing strategies
The fo
Working with Suppliers
Role of the Financial Function
A department of a business that deals with the Business money. It manages the cash flow (Finances in and out) and produces financial reports.
Makes crucial business descions to assess the profitability of items and the profitability of the business.
All other functions department rely on the budget set by the financial function. This will help to reduce over spending in a Business
Sources of finance
Sources of finance are where business get their money from. Several Sources of finance , All include several pros and cons.
Loan
- For large purchases, money borrowed from a bank
Pro - Allows a lump sum of money to be paid specifically to the business.
Con - Includes interest on top of paying amount back
Overdraft
- Arranging to go below £0 with banks, Used in short term financial issue, Used to cover downturns on the cashflow forecast.
Pro - Allows a business to gain temporary capital at a short cost to cover a downfall.
Con - Usually scheduled with the bank / Not long term function
Trade Credit
- Supplier delivers goods and requests the payment at a later date.
Pro - Allows you to pay with money made from the sale of the supplies.
Con - If supplies are not sold you have nothing to pay the money back with.
Retained Profit
- When an established business keep profit back to use in the future
Pro - Allows to recycle profit
Con - If there is no profit not an option
Sale of Assets
- Selling business items e.g. tables and chairs
Pro - Allows them to get rid of old items that they no longer use
Con - Limited what they can sell as not unlimited
Owners Capital
- Using the owners money to operate.
Pro - No debt as a result
Con - If it fails the owner has lost money/ Not unlimited.
New partner
- Invite another partner to join for capital
Pro - Allows capital and new ideas
Con - Less Profit and Conflict of interest
Share issue
- Releases more shares
Pro - Means more capital coming in without debt
Con - Shares can be diluted which means that share owners are losing out
Crowdfunding
- Donated money in turn for a discount or gift.
Pro- Debt free financial source
Con - Requires an established or prominent idea worth donating to
Revenue, costs, profit and loss
9 Marker Exam Technique
For Nine Mark Questions, they will either ask for a judgement on something or the effect it has.
Always include a defition of what is asked e.g if asked consumer law then define consumer law as what protects the customer from poor quality of products etc etc.
7 Marker Exam Technique
Quality
Quality refers to the standard of a product, the level of can taken throughout the whole process (Including delivery) can be accounted for.
Business use two methods to achieve quality.
**Quality Assurance **
- Quality assurance refers to the anything a business before the item has been produced, ensuring the quality.
- Checked at each stage of the process of production
- Makes all accountable for the quality of the product
- Can be more costly however means that the product is not rejected at the end of the proccess.
Quality Control
- Checks the quality of the product at the end of the production line.
- Checks the quality of the finished product.
- Cheaper than assurance however will require more products as there is a higher likely hood not all products will be sent.
- Makes it harder to identify at what stage the production went wrong.
- Usually adds a stage to production and a new role leading to higher costs.
Influence of Technology
- Technology is always evolving and this is on a business’s production process.
- Can speed up the production and improve the quality with a more consistent quality.
- Technology can be expensive to incorporate into a business initially.
Automation
- Production lines can be automated to make the system flow better.
- Sales and overall process can be made an automatic flow removing additional staffing costs.
Computers
- Gives business a new way to create, design and manufacture products.
- Creates a new industry of digital products
- Allows a business to effectively advertise there business.
- Reduces waste however requires skilled to operate the business.
AI and Robotics
- Now complete a lot of the human work including, appointment setting, emailing and advertising.
- Can work 24/7 and don’t need to take breaks like employees.
Disadvantages
- High start up cost.
- additional staffing sections (tech divisions) need creating
- Requires higher skilled workers.
- Has monthly costs and may break.
E Commerce
When a business sells their products online.
Business are not adapting to be completely or at least partly ecommerce targeted.
Ecommerce has pros and cons of operating
Advantages
- Sales made 24/7
- Sales can be made world wide (New Markets)
- Less requirements for expensive shop locations and décor.
- Not required to hold stock.
- More payment methods.
Disadvantages
- Cost of website
- Lack of impulse buys
- Greater competition (globally)
- Delivery process needs to be in place costs involved
Procurement
Role of procurement is to source, distribute and receive goods and services for business
Involves
Identifying goods
- Looking for the best suppliers that align with the business ethos
Ordering
- Making sure to find the right amount of stock to meet the needs of the business accounting for any unexpected sales. (Breakeven data)
Receiving deliveries
- Manage the time and place deliveries are made eg. to storage facilities.
Needs for Finance
A business may need money for:
- Setting up the initial business
- Funding expansions and new product development
- to run the business on a daily basis
- for recruitment campaigns
- for marketing in order to increase sales.
Fixed costs and Variable Costs
Fixed costs remain the same throughout and are NOT dependent on output.
Examples
- Rent
- Insurance
- Loan Repayment
- Wages
Variable Costs Changes based on the output of a business.
Examples
- Materials
- Packaging
- **
Gross and Net Profit
Gross Profit is Revenue - Variable costs
Net Profit is Revenue - Total Cost
Gross Profit Margins
Gross Profit/Total Revenue x100 (Percentage)
Net Profit Margin
Net profit / Total Revenue x 100 (Percentage)
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