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business > business theme 2 > Flashcards

business theme 2 Flashcards

1
Q

what are variable costs

A

cost that vary with demand eg cost of supplier

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2
Q

what are fixed costs

A

costs that do not change example rent cost on shop

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3
Q

sales volume formula

A

sales revenue/sales price

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4
Q

total variable cost formula

A

average variable cost x quantity

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5
Q

total cost formula

A

varuable cost + fixed costs

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6
Q

w

what us break even

A

the point where the business makes neither a loss or a profit

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7
Q

what is margin of saftey

A

difference between break even point and actuall sales- shows number of sales that can be lost before making a loss

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8
Q

margin of saftey formula

A

actual sales-break even level of sales

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9
Q

-good-break even analysis

A
  • what if- what happens if prices go up or costs go down
  • used to asses when new business stop making a loss
  • write busniess plan
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10
Q

-bad-bresk even analysis

A
  • tell us eveything msde is sold-not always case
  • doesnt take into accound discounts eg bulk buy
  • only as accurate as data they are based on
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11
Q

what is a budget

A

estimate of income or exenditure for a set p-eriod of time

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12
Q

4 purpose of budgets

A

-motivqation
communication
forecasting
planning

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13
Q

2 types of budgets- historical
zero based budget

A

historical-using current figures and historical performance
zero based- using figures based on potential performance

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14
Q

in relation to budgets

what is variance annalysis

A

analysing budget features against what actually happened
-favourable-underspend depsrtmnt -success
-adverse-overspent-reason maye needed more staff

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15
Q

limitations of budgeting

A

interdepartment tension as some departments may get better spending
make managers short term
can be difficult to plan ahead

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16
Q

profit

A

financial gain from a business through expenditure-income

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17
Q

gross profit-formula

A

sales revenue-cost of sales

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18
Q

operating profit formula

A

gross profit-expenses

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19
Q

net profit formula

A

operating profit-intrest(taxation)

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20
Q

what is a profit margin

A

shows how profit compares to sales tos how how well business manage finances

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21
Q

gross profit margin %

A

gross profit/sales revenue x100

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22
Q

operating profit margin %

A

operating profit/sales x 100

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23
Q

net profit margin

net profit margin %

A

net profit/sales x 100

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24
Q

ways to improve profitablilty

A

increase revenue
reduce costs

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25
Q

whatb is liquidity

A

ability for a company to turn assets into cash quick

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26
Q

how to measure liquidity

A

using statement of financial position using current and acid test ratio

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27
Q

current ratio formula

A

current assets/current liablities

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28
Q

acid test ratio formula

A

current asssets-inventory/current liabilities

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29
Q

hwo to improve liquidity

A

reduce amounts of stock it holds so finished goods despached faster
reeuce credit period- insist customers pay in 30 days not 90

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30
Q

business failure

A

when a business ceases to trade ina profitable way

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31
Q

1 cause of business failure-poor efficiency
use modelzone eg

A

plan to expand too quickyly opening too many shops but not having sales to sustain it
eg modelzone 2013-closed leaving 13bil debt to loyads bank, opened 15 new stores and could keep up with costs

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32
Q

1 cause of business failure- poor marketing
use eg subnny delight

A

fake marketing saying your product is somehting it is not for eg sunny delight said it ws all natural but it was all artificial damaging childrens health

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33
Q

1 cause of business failure-failure to innovate
eg kodak

A

being unable to adapt to and develop into the modern world
fail to ove fat enough
kodak failed to move fast enough, didnt want to expand into digital maket
staff lower dow hierarchy harf to be listend to

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34
Q

1 cause of business failure poor managment of working capital
eg debhenhams

A

insufficency to manage cash flow
debhenams went into business failure as they didnt have eough working capital to meet day to day expenses

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35
Q

extternal cause of business failure-economic recession

A

customers start to save rather than buy
look for cheaper options
shop in poundland and b and m thrive

36
Q

productivity

A

output per unit per hour

37
Q

production

A

total amount of output that is produced in a tim eperiod

38
Q

job production is

A

when items are made by specialsist

39
Q

job poduction ad and disad

A

ad-bespoke and unique quality
motivated workers who are passionate
disad-expensive skilled members
wide range of tools
hard to speed up process

40
Q

batch production

A

make more than one item at a time

41
Q

ad and disad of batc production

A

ad-meet customers needs and demand
be mechanised less staff needed
can adapt to demand changed
low skiled workers cheaper

disad- small batches mean higher average unit costs
less motivated workers
lower quality

42
Q

flow production

A

mass markets, keep products flowing through production process eg pizza frozen

43
Q

ad and disad of flow production

A

ad-large quantities=buy bulk-cheaper
automatic production=improved quality

disad-high cost to buy factory and machinery
low motivated staff due to repetition

44
Q

cell production

A

production is specalised into certain areas for certain parts eg dc martains

45
Q

ad and disad of cell production

A

ad-wastage reduces
time waiting for stock to arrive is reduced
more motivation and commitment
disad- any breakdown of macghiney backlog process
needs more certain staff

46
Q

ways to imporove productivity

A
  1. staff training
  2. productivityv bonuses
  3. new machinery and tech
47
Q

labour intensive

A

alot of workers
mostly human effort
chin and india eg
nature of product determins if this works

48
Q

capital intensive

A

focus on machinery and tech
little workers
more common in western countries eg - uk and europe and less in china an india
for car manufacturing

49
Q

capacity utilitaion

A

how much of a serice or output is being used to maximum capacity

50
Q

eg of capacity utilisation

A

aeroplane flights-filling flights
if not full capacity make flights cheaper
off peak times deals

51
Q

stock control

A

control of flow of stock in a business, ordering managing and cmponents of finished goods

52
Q

4 types of stock

A

raw materials
finished goods
components
work in progress

53
Q

what is buffer stock

A

stock held incase they is a unforseen rise in demand and problem with supply not all goods can hold buffer stock if its obsolete

54
Q

ad and disad of buffer stock

A

ad-deal with changes in demand
if supplier cant supplier wont be affected

disad-
cost of storage high
not possible in dynamic market
tie up capital

55
Q

jit

A

just in time-reduce time between production and deliverey
doesnt keep stock ina warehouse insted they order and deliver same day

56
Q

d

ad and disad of jit

A

ad-close relations with supplier
no stock tied up working capital

disad-if supplier dont suplly can be able to supply
cant deal with unforseen surges
deliverys may not be ontime

57
Q

waste

A

a product or service a customer isnt wiling to pay for

58
Q

waste eg

A

overproduction
waiting time
excess strock
transportation time

59
Q

lean production

A

a japanese method of reducting production times adopted by toyota

60
Q

b

benifitts of lean

A
  • improved customer service
  • improved productivity
  • reduce waste
61
Q

quality

A

how well a product or service does what it is designed to do

62
Q

quality control

A

traditional way of checking work that has already being done and detecting faulty output- very expensive- done at end of production

63
Q

quality assurance

A

done at every stage of production to minimise chang=ces of output not beng good
if rpoduction is reliable less time on inspection
doing job properly at every stage
more time consuming

64
Q

Total qulaity mamanagment (TQM)

A

puts quality at heart of eveything
geting it right first everytime
reduce waste and increse quality
kaizen-japan word- improve everything

65
Q

impact of tqm on quality

A

looks at all aspects such as human resources and production ect to improve process and profits of a business

66
Q

ad and disad of tqm

A

ad-not paying for inspector
empowered emloyeeds motivated

disad-takes time to intro
staff training expensive

67
Q

kaizen aspects

A

into small adjustments to production
small changes
responsiblity of every emplyee

68
Q

economic influences

A

when a business is imoacted anyway by economic factors eg inflation

69
Q

inflation

A

when goods prices increase ir decrease annually decided by bank of england

70
Q

consumer price index CPI

A

looks at prices of things we usually spend money on - and see how prices change over time

71
Q

2 options for businesses and iflation

A

absorb cost or pass onto consumers by increasing prices

72
Q

what doesn it mean when pound strengthend-apprechiation

A

can buy more forign currency but if deprechiate can buy less currency

73
Q

tax rates
lower=

A

lower=more demand in economy to pay national bills

74
Q

sole traders pay what tax

A

income- own at risk

75
Q

larger businesss pay

A

corporation tax- own is secure

76
Q

what if gov cut spending

A

people who work on gov prohjects eg school builders will suffer

77
Q

boom

A

inflation rates low and interest rates low 2%
consumer spending increases

78
Q

recession

A

falling level of demand
higher interest and inflation
low gov spending

79
Q

slump

A

bottom of business cycle where consumer spending is lowest

80
Q

recovery

recovery

A

demand level for goods and services start to improve interst and inflation goes down

81
Q

legislation

A

set of laws set by gov and made legal by parliment

82
Q

consumer protection law

A

right to return if
faulty
unusable
not what averised

83
Q

employee protevtion law

A

minimum wage
working time
equality
pension
maternity and paternity

84
Q

environment protection law

A

control pollutnts from a business

controll

85
Q

competion law

A

cant have companies agreeing to fix price together, to keep wider options

86
Q

health and saftey at work law

A

corrrecrt equiptment
no dangers

87
Q
A

business (1 decks)

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