variabnces-can be adverse or favourable
if revenue 9income) favourbale if acutal is bigge then bigte
adverse for expensdure if actual is bigger tehna budget
changes in profit #
current yeasr profit-previous yeasr profit divided by previous years profut times 100
gross profit=total revenue -cost of sales
operating profit=gross profit-other operating expenses
net profiit=operating pofit-interest
statment of comprehensive inome=shouws how much money coming into busienss and hiw much is coming out
profit margins
gross profit margin=gross profit divided by revenue times 100
operating profit is operating profit divided by revenue tiemes 100
net profit is net profit divided by 1reveue times 100
cash=used fto psy bills
profit=can get moneths latter
so business high in profit can still run out of cash
statment of finalical porsiton-lists of assets and liabilties
showed snapshot of firms finacinaes at fixed point i tiem
current assres-exahcngesd for cash within accounting year
non-curernt assets-kept for longer than accoutnign year
current laibiltit-detbs paid off withing year
non-current laibltiye-non needed to pay back within accounting year
bad bets-when people dont pay
liquidy-how easily asset can turn into cash and used for buying theinsg
curernt ratio=curent laibility divided by cirrent assets
acid teat ratio=current laibilties-inventry divided by current assets
qoeking capital-amount for day to day spednig
current assets-current liability
wroki cpaital cyctle-length oof time it takes between buying off supplier to getting money back agfter finish good
internal finaical resasons for business failure-bad management of working capital
poor efficent-not bein as low cots as can ve
taking care of finaces well e.g reliying too much on overdrafts etc
internal non-finaica factors l-inadequate market research and analysis
poor communication, arent working welel togeterh
extanl finaical factors-finaical factors
ecnomic reseecion
change in exchange rates
extenral non-finaial factors-communcaiton with suppliers
actiosn of competiosn
cahnges in consumer tredns
job rpdoction-making one off items made by skilled workers
adv-people more liekly to pay for highe prices for something unique
adv-USP
dis-high wages for skilled workers
dis-cannot achieve EOS
flow prodcution-making identifical products along an assembly line
adv-reach eos
can operate 24/7
dis-if machine stops, stops whole production process
boring for workers
changes in consumer trends
bacth prodcution-small batches are prodcuted with iddentical procuts within each bacth
tehn cleaned and new batch made
dis-delays due to cleanrig in beterrn
dis-inconveneinee of storing lots of goods
adv-reach EOS
cell procutiob-dividing flow into set taks
adv-can take pridein work as reposnibke for large chunk
dis-delays in prdcution
labour intensive firms-more workers then machines
adv-multiskilled so cany change in alter prodcution, then can easily just switch what doing
machines needd to be fully reprogrammed
dis-unrelaible #
need rest days
have emoitons
may go on materinity leave etc
capital intevsive-more machines then wrkers
adv-can perate 24/7
easier to manage
high quaity
dis-inital high price
dis-reprogrammed
capaicty utlsiation=current ouptut divided by max posttivbel output
under utilation-working below capiatay e.g not using all reosuces
dis-demotiveing for staff/bpring have little to do
highter uit cots so have to charge higher prices
bad repuation e.g empy shelevs
ways to dela with it=
downsixing rationlisaiton
making soem staff reducnyi
selling mahcinery not being sued
promotion to attract more customers
over utliation-workers are stressed
no time for ewuipment maintence so machines dont last as long
turning away potential suctomers
ways to deal with it=
relocate
increase prices to ireduce demand
increase amount of staff
buy new machinery
OUTSOURCE
magign stock=stock=materials needed to make product
want as little stockas posttie
adv-have EOS
mass market whne demand is high
dis-wastage and storeage socts s
lean production-foucies on waste minimiasatin
using as little reosurecs as possible
jit production-type of leasn prodcution methdod
where use as little stock as psoibble
increases cash flow as lress stock is tired up
redcues storage costs
dis-need good relaitonship with supppliers
if dont come in time, bas repuation on business
quality control-checki g goods at end by inspectore
adv-doesnt delay prodction
adv-experienced
dis-have to ay high wages
-ewastes
quality assurance-checking throghout by workers
adv-feel more valued
less wqaster
dis-not much wepeinerc e
total quality managemtn-qulity is the centre of eething
adv-boosts brand image
can change high prices
motivating for staff
dis-can sem like a lot of effort
epnsive to introduce-need training
qulity circles-worers come togetehr to discuss quality issues
adv-valued
adv-can gac good input as know lot about their edpartment
dis-as inexperinced may bing in unrelaiitc ideas, floor workers may b ignored
kaizen approch-imporving work a little each time
adv-workers feel more involved oin quality assurance
dis-not good if busienss needs to urgently imporve their quality
interst rates-cost of borrwing or retunr on savings
if high, hen cots more to bowwor and higher intest needs to be paid, have less dsposbale income to spend, reducing demand on business
can affect busiensses who based on bowrrwin
inflation-increase in price of goods and services within an aeocnomy
demand push inflation
cost puths inflation
can be meaured using consumer price index
business cycle-boom-GDP is high, icnomes are high, confidence is high
recession-conficne is reduced, incomes go down
slump-gdp is at a low, high ratses oof unemployment
recovery-incomes risse again, employment increases
busienss legisaltion-laws placed on businesses
employment legislation-laws placed on employees
empolyee cpntract
REcuritment
pay
promotions and branding
perfect comeption-lots of busiensses compete on an equal basis e.g sell simialr products at simailr prices
opilifoy-smal amount of large firms dominate market
monoply-one firm has full control over market can achnage whatver prices they want
msision stement-precise stament stating purpose of business
adv-staff to feel sharesdpurpose and work towards something
dis-no proff so business cna put what they think cutsomers want to hear, if duscover doesnt reflaect actiosn, dmanage repuation
needs to be precise and claer
copperate obejctive-objectives of business as a whole
departmental objecitves-obejctives in each depatment to reach cooperate obejctive /more precise
SMART
speciifc meaureable agreed realistic timely
streatgies-long term plans of action
tactics-short term plans of action
ansoff matric
makret prenetreiton-increasing markt shre within eisting market
new prodcut development-selling new products to existing market
market development-seling existing products to new market
e.g looking at different segment of market, how to adapt prodyc to meets requiemts
dierrsitifcation-selling new prodict to new makret?most risky
adv-allos manager to think about risk of moving in a certain durection
dis-doesnt take into account what comeptiors are doing
iversimiplifes opetions of growth
porters 3 generic straties
cost leadership
digferentioatn
focus
jas model
ari
archerticute-good relaitonship wth main stakehokder s
reputaiton-customers are satisfied e.g good auality prodcuts, getting good customer service
innovation-USP
boston matrix
quation amkret-low market share, high amket grwoth
cash cow-opposite
starts-both high
dogs-both low, lost cause
capitabiltiy-maintain omeptievadvantge over time
appropriabe-no risk of copyright e.g patents or trademakres
swot analysis-strength
weaknesses
opprtunites
threats
pestile anaylsys
poltical
economcial
social
techological
legal
enviroemental
porters five forces model
barriers to entry-how easily fir can entre makret
patents and tradment scant make simailr poducts
controlling channels of distibution
price
war
predatory pricing-illegal in EU laws
buyer prowe-has more power if littel buyers and oots of sellers
if they buy in larg qunityes then have more power
ways to deal with this-promote to incerease amout of suplliers
difefrentiate prodycts so biyer is less lieky to sty and not chnage to rival
supplier power-supplier wants as high price as possibld
more pwoer when few suppliers and lots of cutsomers buying from eh
2 year contracts
joint venture/so no lomger trying to get profits from us
threats of subetuirs
-how easy it to buy aternaitve
differentiat eporduct
ribarly
customers
big promotionlal cmapigns
organic growth-growing from within business
adv-not risky/doing what know works best
dis-risk pf competiors goring inorganically
adv-easier to manage
dis-long time to grow
inorganic groth-growing form outside busienss e.g as takeover or mergrer
adv-synergy
adv-profits
adv-
investment apprasial-whether investment has high reward ad high risk
oayback period= minus numbers then divied when get toh year
avergae rate of return
add them together minus orignial number divided by amunt of years then divided by orgnial number
net presnt value=times them then add up ow uch then divided that by orgnial number the times that by orgnial number
minus first
then divided
