NCUK BUSINESS

What is gearing?

"Gearing" measures the proportion of a business' capital (finance) provided by debt.

What are the ways a business can improve it's cash flow?

- Appropriate source of finance - Diversifying Income/ products - Cutting down unnecessary costs - Sales promotion - Consider debt factoring for any receivables

What are the ways businesses add value?

- Good after sales - Shorter time period/ Convenience - Better quality - Good branding - Design - Unique selling point - Unique work e.g ( A cake design you can't get anywhere else)

What are the four functional areas of business ?

- Human Resource management - deals with labour - Operations - deals with production - Finance - deals with cash flow - Marketing - deals with trying to promote and achieve objectives.

Why are business objectives important?

- Increases focus - Motivates staff - co- ordinate business activity - They serve as a reminder of what's importance - Gives clear instructions of aims

What are the benefits of training employees for a business ?

- Leads to increased productivity/Efficiency - Leads to specialisation - Could lead to new innovative methods of production - Improves Quality - Competitive advantage - Loyalty of staff - Employee personal growth and development - Motivate staff to work harder - Employee retention/ Loyalty

What are the ways labour productivity can be improved ?

- Offer training - Financial incentives - non financial incentives - Hire expertise - Design new method of production - introduce machinery - motivate employees ( Also note the downsides to each of these) - Evaluation

How does employee motivation influence the following: Productivity, Quality, Customer returns, waste, absenteeism, labour turnover

- Productivity, Quality: Motivation will improve this (and vice versa) - Waste, Absenteeism,: More motivation leads to less of this ( and vice versa ) - Customer returns( customers returning products): There will be less of this if there is a motivated workforce (and vice versa)

What are the methods of improving working capital ?

- Shorten Operating cycle (current assets can easily be considered - Improve Inventory Management - Shorten receivables days - Establish ways for short term finance (overdrafts) - Avoid financing non-current assets with working capital (firm should only use non- current liabilities) - Minimise costs

What are the different ways of measuring business size ?

- Size of Revenue, Capital Employed, Market share, market capitalisation. Note: Profit is not an acceptable measure of business size. Note: Capital employed is the value of assets used to generate earning for a firm.

What are the different types of business objectives.

- Survival, Profit maximisation, Growth, CSR( Corporate Social responsibility) , Improving cash flow, staff retention, increasing share holder value, diversifying product.

What are the factors that affect consumer demand?

- Taste, price, price of other goods, income level, season, speculation, confidence, interest rates.

What is added value? What is the formula for Added value

- The difference between the selling price of a product and the cost of bought in materials and components. - Selling Price - Direct costs - Added value is also the ways in which a company increases the value of a product so as to justify a higher price range. Note: Direct costs are costs that are expressly linked to production.

What is the need for finance in a business?

- To support business planning and decision making, To cover costs

What are the uses of cash flow forecasts?

-For business plan, To attract investors, To plan ahead in order to spot problems with liquidity, To organise operations, Manage surplus cash, Track overdue payments.

Why is profit important to a business?

-To attract shareholders -Its a source of finance -Motivation -For Survival -As a Measure of Success

What are the aims of promotion?

1. Inform 2. Introduce a new product 3. compete 4. improve image 5. increase sales 6. increase brand awareness

What is a business ? What is the purpose of business activity ?

A business is an organisation that provides goods and services. The purposes of businesses are: I) Provide goods and services II) Wealth creation ( Through paying salaries and tax)

Differentiate between niche and mass marketing.

A niche market is a market within a mass market that caters to a specific type of consumer. E.g women's clothing, vegetarian or vegan restaurants. Mass markets- this is a market that caters to many different consumers irrespective of differences. E.g soft drinks, television, cars, supermarkets.

What are some examples of Above the line and below the line?

ATL: Television, Radio, Advertising,Print (Magazines and Newspapers) , Social media, Billboards BTL: Direct marketing,Public Relations (PR), Sales promotion, Branding, Merchandising, Sponsorship, Personal selling, Trade shows.

What is the above the line and below the line method of promotion?

Above-the-line promotion is the use of promotional methods that cannot be directly controlled by the company selling the goods or service, such as television or press advertising. It has a widespread outreach. Non targeted. Below-the-line advertising is an advertising strategy where products are not promoted in mainstream and can be directly controlled by the firm. Below-the-line advertising campaigns include direct mail campaigns, trade shows, catalogs, and targeted search engine marketing.Targeted.

What are the benefits and cost of JIT?

Advantage; Reduces cost, cuts down on wastage, Disadvantage: Over reliance on supplier, scarcity of resources, higher cost of bulk buying, increases waiting time for customers.

What are the advantages and Disadvantages of CSR ?

Advantages -) Attracts new customers -) increases customer retention -) Increases profitability (CSR leads to high pricing) -) Increased Brand Recognition (It's own form of PR) -) Leads to growth of an organisation (tapping into new market e.g Vegan) -) Attracts passionate staff Disadvantages -) It negatively impacts competitiveness (For smaller corporations) -) It's costly to implement -) Contrasting stake holder interest -) Increased scrutiny

What are the advantages and disadvantages of e-commerce to businesses

Advantages: Access to large customer base, consumer insights through CRM, Easy advertising, lower set up costs, business can operate 24/7, Disadvantages: high level competition, lack of personal touch in service, delivery hassles, over reliance on internet, ignores market segment that is not tech savvy.

What are the costs and benefits of total quality management

Advantages: Enhanced market image, increased productivity, reduces waste, enhances quality manufacturing, customer satisfaction, brand distinction, brand loyalty, Increased competitiveness(due to efficiency), Higher expertise, added value Disadvantages: Takes time to implement, Improving quality can be expensive, demands a change in workplace culture which could be difficult, requires training for employees, stifles creativity, needs incentives to work.

What are the advantages and disadvantages of market segmentation?

Advantages: able to identify profitable segments, better market targeting (advertising), higher customer satisfaction, Cost efficient. Disadvantages: Requires intensive marketing research, could lead to price discrimination which puts off consumers, can potentially ignore lucrative segments, Could be costly to differentiate products according to segments.

What are the advantages and disadvantages of e-commerce to consumers

Advantages: convenient, variety, go for lowest prices, high shipping fees Disadvantages: a hassle to send back, Uncertainty of product, non-personalised service, longer waiting period, lack of tactile experience, requires access to internet

What are the advantages and disadvantages of CRM?

Advantages: improves after sales service, helps in personalised ad targeting, increases productivity, Disadvantages: Security breaches, over reliance on software, High initial cost set up, training, third party access

Explain the two types of budget variances: Adverse and favourable

Adverse- Figures are worse than expected (Higher for costs and lower for revenue) Favourable- Figures are better than expected (lower for costs and higher for revenue)

What is PESTLE analysis used for?

Allows us to analyze the external environment of an organization/company/business!. In order to strategise and maximise favourable outcomes.

Explain the following leadership styles: Autocratic, Paternalistic, democratic and laissez faire

Autocratic- One person makes decisions Paternalistic- Leads in the way of a parental guide in (teaching and instructing), in return hoping for loyalty and obedience Democratic- Everyone provides input and majority carries sway Laissez faire- everyone is given i high level of autonomy to implement task the way they see fit

What are the advantages of BTL and ATL methods of promotion ?

BTL: Less cost, Suitable for B2B, Personalised touch, Improved customer insights, Builds customer loyalty, easier market targeting. Disadvantages: One on one selling might irritate consumers, a need for collecting lots of data, requires a lot of market research to determine the right market targeting approach, not suitable for B2C as it has narrow outreach. ATL- widespread outreach, suitable for B2C, does not exclude other market segments, created high brand visibility. Disadvantages: Very costly, nearly impossible to measure return on investment, nearly inaccessible to small businesses, subject to shifting market trends.

Why is branding important to product promotion?

Branding is an important part of promotion because it allows for the build of customer loyalty. Research suggests that retaining existing customers is crucial for business success.

Why would a businesses objective change over time?

Business objectives change mostly according to consumer trends. When consumers change a business will change with it. For example, more consumers are concerned with the environment. A business will have to tailor its objectives to align with that.

What is cash flow? What are cash flow forecast?

Cash - Any legal tender (Coins, bank notes and deposits) Cash flow- Refers to the inflow and outflow of cash in a business A cash flow forecast refers to a prediction in terms of a businesses projected inflow and outflow.

Analyse each component of the Boston matrix

Cash cow- Cash cows are the most profitable as the yield high returns with low costs. These can be used to fund other projects ('milking'). However, it is not advisable for a business to have too many cash cows so as to ensure growth of a firm. Star- Yields high returns but with equally high costs. It benefits a business by giving them an avenue for expansion. Problem child- A problem child has the potential to become a star Dog- Dogs are generally unwanted but can provide a means of passive income.

Distinguish between centralised and decentralised organisational structure

Centralised- all power is concentrated at the head of the organisation Decentralised- subordinates have more freedom and a significant level of autonomy.

The advantages and disadvantages of centralised and decentralised

Centralised: Advantage- Consistency, Clear direction, chain of command is clear/ Disadvantage- Can demotivate employees, Standard approach might not work in all branches, may lower productivity Decentralised: Advantage- Improve motivation, more responsibility for employees, make decisions to suit local areas/ Disadvantage- Lack of consistency, Managers can make ineffective decisions, Managers decision can risk business reputation.

Define co-operatives, Joint ventures and franchises

Co-operative is a jointly owned business which functions in regards to benefiting its members. There are several different kinds of co-ops such producer and consumers. Each member pays a fee to access the benefits of the organisation. Joint ventures- a business arrangement where two independent organisations come together for a temporary period to achieve a goal or task. Franchises- This is a business model in which a franchisor leases out the business name to a franchisee for commercial purposes. The franchisee shares profits from operation with the franchisor. This is also known as Royalty.

What are the features of co-operatives & joint venture's

Co-ops: democratic, market research, limited liability Disadvantage: limits on payments, equal right for unequal investment. Joint ventures: increased access to resources, new supply links in foreign markets, increased expertise, growth and expansion,lower advertising. Disadvantages: trade secrets are compromised , unreliable partner, brand risk, conflicts, requires heavy planning

What is the characteristic of a good leader? What separates a leader from a Boss?

Communication, Empathy, Confidence, Accountability, integrity, Driven and ambitious, disciplined, Inspiring and motivational, Transparency, confidence, decisiveness The difference between a boss and a leader is the way in which their followers respond to them. Individuals follow bosses out of subordinate while leaders are followed out of respect and genuine admiration.

Why is cost information important? (for businesses)

Cost information is important so businesses can accurately assess their risks as well as profit maximise. It is also used for planning in order to avoid loss. Cost information should be accurate so managements can plan out operations effectively.

What are costs ? Explain the following types of costs: Fixed, Variable, semi- variable, direct and indirect. (Give examples), Total, average cost

Costs are regarded as monetary value spent in order to produce a good. Fixed: Remains constants e.g Rent, salaries, utility bills/ Variable: Changes with level of output e.g raw materials cost, direct labour/ Semi- Variable: A mix of both fixed and semi variable e.g electricity, warehousing/ Total- Fixed and variable cost combined/ Average: this is the cost per unit of a good./ Direct cost (Directly linked to production)/ Indirect (Not linked explicitly to production/ Overheads). Note: Know each formula

What business situations will require finance?

Costs, Business plan, repaying loans, paying workers, paying shareholders.

What is liquidity? What is liquidation?

Degree to which asset can be converted to money with low cost. It also refers to the ability of a firm to pay its short term debts. This is the end of a business as when it's unable to pay back its debts all their assets are sold off and distributed to claimants (those they owe).

Explain the following types of market segmentation: Demographic, Geographic and psychographic.

Demographic: according to population structure variants such as age, income(class), education and gender Geographic: According to location Psychographic: according to similar psychological traits such as lifestyle choices : vegan, bodybuilder, values, interests and beliefs.

What are the qualities of Successful entrepreneurs?

Diligence, Innovation, Communication, leadership, Emotional intelligence, Passion. An entrepreneur is a risk taker that manages all factors of production in order to produce goods and services.

What is E-commerce and why is it important?

E- commerce is the exchange of goods and services through the medium of the internet. E-commerce is important in the way it has revolutionised selling by making it more convenient and accessible to both customers and business owners.

How does PED affect pricing strategy?

Elastic demand- Reduce price to increase revenue Inelastic demand- increase price to increase revenue

What causes adverse and favourable variance?

Factors affecting market e.g higher income level or scarcity of resources (driving up sources)

What are financial and non financial methods of motivation?

Financial- Monetary rewards and incentives e.g Bonuses, Increases salary, sales commission, profit sharing , performance related pay Non-financial- Non monetary rewards e.g flexible work schedules, Fringe benefits (Free lunch, staff car, health package) Note: At some point financial Methods of motivation no longer work, Fringe benefits are generally considers non monetary but can sometimes be financial. Note the disadvantage of Sales commission, performance related pay, profit sharing.

What are the benefits and drawbacks for both franchisor and franchisee?

Franchisor - gain money, expansion at lower cost Disadvantage: liable to reputation damage Franchisee- no prior experience needed, reduced risk of business failure, training and tools are given, easier way to secure loans. Disadvantage: costly, share profits, unable to make independent decisions.

Explain the following concepts: Hierarchy, chain of command , span of control, wide and narrow spans of control, delayering

Hierarchy- a system where individual members are ranked in terms of importance with those on top being the most important. Chain of command: the path through which instructions pass through from head authority to subordinates in terms of hierarchy Span of control: The number of subordinates (Narrow meaning smaller number while wide is the opposite ) Delayering: This means removing a layer of management, this could be done to reduce costs. Note: In delayering staff are still expected to produce the same level output) (Note how to draw organisational structure)

What are the problems caused by insufficient liquidity?

Inability to pay creditors Inability to cover operation costs Inability to satisfy stakeholders Inability to attract investors It could lead to insolvency (Bankruptcy) (Analysis is required)

What are the three types of budget

Income, expenditure and profit

What is inelastic and elastic demand?

Inelastic- there is little change in demand as a result of change in price Elastic- there is significant change in demand as a result of change in price.

What are internal and external stakeholders?

Internal stakeholders are stakeholders from within the business- Employees and Employers External stakeholders- these are stakeholders from outside the business- Suppliers, Government, Society, Shareholder, customers, creditors.

What are internal and external sources of finance?

Internal- From within a business External - From outside a business Note: Sources of finance are the medium through which a business receives funding to tackle its various tasks.

What are some factors affecting business ? Both external and internal

Internal- Human Resources, Financing, Technology External - PESTLE (Political, Economic, Social, Technological, Legal, Environmental)

Explain the four states of a product lifecycle: Introduction, Growth, Maturity, decline.

Introduction: This is when a company first launches a product. It is characterised by low level sales and high level investment. Growth- This is when new firms are now entering the market due to high levels of demand. Everyone who wants the product does not yet have access to one. It is characterised by high level sales and high level investment. Maturity- This is the stabilising point of the product life cycle where demand has passed it's peak. It is characterised by slowing sales and low level investment. Decline- This is the point where demand is declining and the product is becoming obsolete to consumers. It is characterised by significantly declining sales and minimum investment.

What is an inventory? What is inventory management?

Inventory refers to the amount of goods and material a firm holds that Is waiting to sold. Inventory management refers the processes by which inventory is stored and sold .

What is advertising/promotional elasticity of demand?

It a tool used to measure the effectiveness of promotional spending in regards to change in sales. (Note the formula) A positive AED coefficient means that increase in Ad spending leads to increase in sales. (And vice versa)

Why is margin of safety important?

It is important because it alerts management about their risk of loss. A high margin is beneficial but a low margin is not. (Note MOS formula )

Why is portfolio analysis important?

It is important becomes it gives firms a sense of direction of where to focus their efforts in order to develop their portfolio. Note: A product portfolio is a collection of all a company's products. Typically used by conglomerates such as Unilever and Johnson & Johnson.

What is liquidity cycle? ( Also known as Cash conversion cycle)

It's a quantitative measure of how long it takes (expressed in days) for a company to convert their current assets into cash.

How do business managers use budget variance?

It's used to determine the performance and factors which contribute to the business operations.

What is JIT? How does it improve stock(inventory) holding?

Just In Time stock control management system is when stock is delivered only when needed by production system. It also refers to 'made to order' sort of production where materials are only produced as they are ordered. It improves stock holding as it cuts down on wastage and significantly reduces the cost of storing inventory. Note: JIT is also synonymous with lean production.

How does labour turnover and absenteeism affect a business

Labour turnover affects a business negatively in terms of productivity because it can be time consuming as well as burdensome to other employees who have to take on additional duties leading to dissatisfaction. It's also expensive to train new employees. (Note Labour turnover rate formula). Absenteeism - Negatively impacts productivity and efficiency therefore not maximising profit and instead increasing profits.

What is limited and unlimited liability ?

Limited liability means an owner is not held personally responsible for a businesses debts. This also means an owner does not have to sell his own personal assets to pay off what the company owes. Unlimited liability- the opposite of limited liability in that an owners personal assets will be used as compensation to repay business debts.

Explain the different types of markets: Local, regional, national and international.

Local- within a small geographical community e.g local farmers market Regional- within a specific region e.g shopping mall National- within a country International- between countries

What are the different channels of distribution.

Manufacturer --> Customer Manufacturer --> Retailer --> Customer Manufacturer --> Wholesalers --> Retailer --> Customer Manufacturer --> Wholesalers --> Customers

Distinguish between market orientation and product orientation?

Market orientation centre's around what consumers want while product orientation centre's around the product itself and it's features. Basically, with MO a company is asking what a consumer wants while PO mainly focuses on creating a want. MO example- Amazon, Food brands PO example - Technology

Explain the following concepts: Market size, market growth , market share

Market size- the size of a market which includes factors such as number of consumers, competitors, value and volume of sales. Market share- the percentage of a market attributed to a firm (can be expressed either in terms of value or volume) Market growth- the increase in the market (calculated through percentage increase formula)

Distinguish between McGregors Theory X and Theory Y leadership style

McGregors theory X - Functions is an autocratic way McGregors theory Y- Functions in a democratic way

What are extension strategies?

Methods used to prolong the life of a product. Usually introduced when a product is in maturity. E.g new slogan, new packaging, increased advertising, creating new flavours, PR, Sponsorship, creating different uses, new sizes

What are the advantages and disadvantages of niche and mass marketing?

Niche- higher profit margin per item, low barriers to entry, easier to personalise service, easier target marketing,less competition, stronger brand distinction, brand loyalty, low advertising costs. Disadvantages: Threat of competitors (low barriers to entry), limited growth, vulnerable to market changes. Mass marketing- large volume of sales, growth potential, price competitive Disadvantage: High barriers to entry, high competition, inability to personalise service, low brand distinction. (In some cases low brand loyalty)e.g sliced bread brands.

Explain the following in a cash flow forecast: Opening balance, Net cash flow, Closing balance flow

Opening balance- The starting sum before any inflow or outflow of cash Net cash flow- The difference between Outflow and Inflow Closing balance= The money left at the end of an operating month/period (Closing balance is the sum of opening balance and net cash flow)

Explain the following internal sources of finance; Owners savings, retained profit, sale of assets,

Owners savings- An owners own personal funds Retained profit- Profit a business has previously made Sale of assets- money gotten from a company's assets

What is the PESTLE model?

P - political E - economic S - social T - technological L - legal E - environmental

What are the features of Partnerships, Sole proprietorship, private limited, public limited.

Partnerships- more expertise, share workload, increased capital, expenses are not made public. Disadvantages: Disagreements, lack of continuity, sharing profits, slow decision making, unlimited liability. Sole proprietorship- set own working hours, keeps all profit, fast decision making, expenses are kept private, easy to establish . Disadvantages: unlimited liability, heavy workload, limited sources of finance. Ltd- limited liability, ownership and control are kept, increased expertise, share capital, access to sources of finance. Disadvantage: expenses are declared to HMRC , limited access to share capital (it is not present on the stock exchange). Plc- present on stock exchange, limited liability, economies of scale, increased expertise, access to sources of finance. Disadvantages: Published accounts, does not keep all profits, expensive to set up, divorce of ownership and control. - Note: also the drawbacks and benefits of a business changing its structure. HMRC- her majesty's revenue and customs. Note: in ltd shares cannot be transferred with shareholders knowledge (subject to approval), ltd shares are issued privately.

What are financial statements? What kind of companies use income statements? What are the three components of financial statements?

Periodic reports that summarize the financial affairs of a business. These reports are used by Corporations (ltd and Plc)z - It is made up of Statement of financial position (Balance sheet), Income statement (Profit and loss account), financial ratios (Note: Financial Statement flash card explaining in detail as well as items on there)

What is the role of management in a business?

Planning- the act of assessing and working towards a company's goals with clear outlined objectives (taking into account long and short term strategy). Organising- Assigning duty's and task Controlling- Overseeing workers are being competent at their work (ensuring quality) Directing- providing feedback and guiding workers through operation processes

Explain the different pricing strategies: Price skimming, loss leader, price penetration, premium pricing, dynamic pricing, mark-up pricing, predatory pricing, competitive pricing, psychological pricing.

Price skimming- Typically used in introduction a product starts of at a high price which gradually reduces over time. Those who purchase these goods are called early adopters e.g Gadgets Price penetration- a good is introduced with a low price which gradually increases. E.g a new flavour of gum Loss leader- sold at loss to attract customers into store| premium pricing- very high prices to enforce exclusivity| Dynamic pricing: Changes according to market conditions of demand(train,bus and air fares)|Predatory pricing- selling at loss to force competitors out and then raising price (illegal)| Competitive pricing- setting the same price as competitors| psychological pricing- setting prices slightly lower than a whole number in order to make a customer believe it's cheaper.

What is primary , secondary and tertiary production

Primary production deals with raw materials Secondary production deals with semi- finished goods Tertiary production - deals with services

Distinguish primary (field) and secondary (Desktop) market research?

Primary- involves collecting firsthand information e.g surveys, questionnaires, forums, interviews Secondary- involves collecting form sources e.g internet sources, newspapers, governments publishes census details, textbooks.

Explain the four marketing mix: Product, price, promotion, place.

Product- this is what is being offered to the consumer either as a tangible good or service. Price- the monetary value of a product Promotion- the strategies in place to attract and retain customers Place- This refers to the distribution channel and location of a product.

What is profit? Explain Operating and Gross Profit?

Profit: The difference between total revenue and costs Operating Profit: This is the difference between revenue and both direct and indirect costs Gross profit: the difference between total revenue and direct costs

Why are small businesses important?

Providing employment, competition for bigger companies and filling needs.

Define the following concepts: Quality control, Quality assurance.

Quality control is a process by which entities review the quality of all factors involved in production Quality assurance is a way of preventing mistakes and defects in manufactured products and avoiding problems when delivering products or services to customers. Note: A key way to distinguish the two is that Quality control is product oriented while quality assurance is process oriented.

Differentiate between quantitative and qualitative market research? Define sampling and state it's purpose?

Quantitative - refers to numerical figures or data of market research e.g pie charts, statistical figures such as bar charts, histogram, No. of people who like a certain product. Qualitative- refers to non numerical factors such as surveys, interviews. It deals with gathering concepts of consumers opinions rather than statistical data. Sampling- this is the selection of a population subset when conducting research. A small group is taken out a larger group in order to represent the overall. The purpose of this is to provide a general outlook of opinions without contacting every single person as that would be tedious and/or tiring.

What are the functions of Human Resource Management?

Recruitment, Sacking, Training, Induction, Advisory role to directors about employment legislation and formulating employment contracts, Planning workforce ), manage employee-employer relations, retention of staff (Look up and note definitions of each function)

Explain the following Acronyms pertaining to Objectives- S.M.A.R.T and M.O.S.T

SMART objectives- Specific, Measurable, Achievable, Realistic, Time-bound. MOST- Mission, Objectives, Strategies and Tactics

Explain the following external sources of finance: sale and leaseback, Hire purchase.

Sale and lease back; a company sells its asset to then rent it with an agreement that they could attempt to buy it back. (E.g football stadium referral) (N: very expensive in the long run) Hire purchase: A hire purchase, also known as an installment plan or the never-never, is an arrangement whereby a customer agrees to a contract to acquire an asset by paying an initial installment and repays the balance of the price of the asset plus interest over a period of time. (N: expensive in Long run)

Explain the following external sources of finance: share issue, Overdrafts, bank loan, venture capitalist , family and friends, leasing,grants, new partner,Debt factoring

Share issue: money derived from sale of shares (Negative: Ownership and control is compromised) Overdrafts: Borrowing more than what is account (Negative: High interest rates charged per day) Bank loan- money borrowed from bank(N:Interest rate) Venture capital:an individual invests in business in return for part ownership (N: control) Leasing : renting out asset to gain revenue Family and friends: borrowed from family and friends (N:interference) New partner: Negative: Control Grants: money given to business by govt (N: not a long term fix) Debt factoring: Debt factoring is when a business sells its accounts receivables to a third party. This third party usually gives a discount of the money owed to the business and takes on the responsibility of extracting the amount owed from the customer. (N: not receiving full money) Note; When explaining debt factoring give examples.

What is the difference between long term and short term finance?

Short term- less than six months e.g Long term- a year

What are the different types of business ownerships?

Sole Proprietorship- owned by one person (Unlimited liability) Partnership- Owned by a minimum of two and a maximum of 20 people (unlimited liability) Ltd - owned by a minimum of two and a maximum of 50 people (limited liability) Plc - owned by by a minimum of two and no maximum Corporation - Private limited companies (Ltd) and Public limited company Note: Corporation is a business that exists as a separate legal entity with limited liability. Note: in the uk plc's can only be established with minimum value of 50000 pounds.

What are stakeholders? Why are they important? What role do they play in strategic management?

Stakeholders are individuals or factors affected by a firms decisions. Stakeholders are the individuals, groups, and organizations that can affect the firm's vision and mission, are affected by the strategic outcomes achieved, and have enforceable claims on the firm's performance. Stakeholders continue to support an organization when its performance meets or exceeds their expectations. Also, research suggests that firms that effectively manage stakeholder relationships outperform those that do not. Stakeholder relationships and the firm's overall reputation among stakeholders can therefore be a source of competitive advantage.

What are the conflicting interests of stakeholders?

Stakeholders often having conflicting interest and this simply means that both goals of respective parties cannot be achieved simultaneously. One has to be sacrificed. Examples Owner Vs Employees: owner wants more profit for himself but employees want higher wages. (Also applicable between owner and supplier) Owner vs Shareholder: owner wants to reinvest profits but shareholders want more dividend.

Explain the three components of financial statements ?

Statement of financial position- Used to compare assets with liabilities Income statement- Used to compare revenue and cost Financial ratios- A quantitative analysis tool used for different purposes to evaluate specific criterias in a company's operation. Note: There are further notes in Business file (Flash card paper)

What are business objectives?

The aims or targets that a business works towards. These are tailored or specific goals of a business. - The difference between business sim and objective is that aims are

What is budget variance ?

The difference between estimated and actual budget figures (Note how to calculate variances)

What is contribution?

The difference between sales and variable costs of production. The money left to cover fixed costs after variable costs have been paid. (Note the formula for Total and per unit).

What is the relationship between market segmentation and marketing mix ?

The marketing mix is tailored to fit each market segments in regards to their taste so as to appeal to them and retain as well as procure consumers.

What is CRM (customer relationship management/marketing)?

The process of carefully managing detailed information about individual customers and all customer "touch points" to maximize loyalty. It is a software that allows a business to better cater to their consumers through collation and review of data. There are various CRM software examples: Keap, Hubspot, pipedrive, sales force.

What is organisational culture?

The system of shared beliefs and values that develops within an organisation and guides the behaviour of its members.

What is Digital marketing?

The use of digital mediums including the Internet and mobile and interactive channels, to develop communication and exchanges with customers.

What are the roles of intermediaries in the channel of distribution?

They help to break the bulk. Offer credit to consumers, finance producers.

How do companies use product differentiation to compete in markets?

They use product differentiation to attract customers increase brand distinction and loyalty as well as justify increased price through added value.

What is a unique selling point (USP)

This is a feature of a product which differentiates it from its competitors and is appealing customers. Examples: Organic produce, Catchy slogan, locally sourced, homegrown etc Apples Operating system is a USP KFC's famous slogan constitutes as a USP

What is margin of safety?

This is the difference between the break-even point and the current level of output. Note the formula

What is (HRM) Human Resource Management?

This is the sector of an organisation, responsible for all factors pertaining to Human Resources in a firm. It is the strategic department that looks into how to efficient manage staff.

What is the dynamic nature of business?

This refers to the ever changing business landscape in regards to the internal and external factors which affect a business.

Explain Total revenue and average revenue

Total revenue = The total amount realised from sales Average revenue= the per unit amount of a good (also known as price) Note: The formula for each

What is the relationship between price and consumer behaviour.

When price increases consumer demand falls (and vice versa)

What is break even? What is break even output?

When the total sales revenue equals total costs of production Break even output is the amount of units that have to be produced before a firm can break even. (Note how to calculate Break even output) : Expressed in Quantity/Units

What is a business plan?

a document that outlines a proposed firm's goals, the strategy for achieving them, and the standards for measuring success. It also comprises of mission statement. - Business plans can be used to secure loans and attract investors

What is the Boston Matrix? Explain the four components of the Boston matrix: Cash cow, Star, Question mark (Problem child), Dog

a product portfolio analysis tool used to plan the development of products. Note: Each component is categorised based on Market growth and market share. Cash cow (Low market growth, High market share)- maturity Dog(Low market growth, low market share)- Decline Star(High market growth, High market share)- Growth Question mark(High market growth, low market share)- Introduction

What is total quality management?

a system of management based on the principle that every staff member must be committed to maintaining high standards of work in every aspect of a company's operations.

What are employment contracts?

agreements between an employer and employee whereby the employer employs the employee in exchange for the employee agreeing to keep confidential information secret and to assign ideas and inventions to the employer. A detailed agreement between employers and employees on the conditions and stipulations that must be met in order to enter a working relationship.

What is a budget?

an estimate of income and expenditure for a set period of time. Note: someone who makes a budget is a budget holder

What is a market? What is market targeting ?

an institution that brings together buyers and sellers. The act of gearing specific marketing ploys towards a specific group of consumers.

What is a shareholder? What is a share?

an owner of shares in a company. Share or stock is a unit of a company. People who own shares are called shareholders and they are referred to as a part owner of a company.

What is a SWOT analysis?

analysis of strengths, weaknesses, opportunities, and threats S( Unique attributes, Things performed well, Internal resources like highly skilled staff, Tangible assets like technology and Intellectual Property) W( Things the firm lack, Things competitors do better, Resource limitation, Lack of USP) O( Growing markets, few competitors, Good PR, Growing demand for your product) T( new competitors, Negative PR, negative reception to company operations, Unfavourable Government policies)

Who are the main users of financial statements (accounting information) ?

investors and creditors, External users: are creditors, investors, government, trading partners, regulatory agencies, international standardization agencies, journalists, Competitors, stakeholders, shareholders internal users : are owners, directors, managers, employees of the company. (be able to explain)

Why is Break Even Analysis important? (4)

it helps marketers understand the relationship between costs and price. 1. Determines activity required to cover all costs 2. Access activity level required to achieve profit targets 3. Access the margin of safety (risk)

What are the four factors of production?

land, labor, capital, enterprise Land- these are natural resources that are used in production e.g farm land, water body: Reward is rent Labour- these are Human Resources : reward is salary/ wage Capital- manufactured resources e.g machinery: reward is interest Enterprise- the factor that organises all other factors and takes risks: reward is profits

What are budgets used for?

planning and control- Role Uses; - To organise staff - To set targets - Assign responsibility for budget holders - Business plan - Motivate staff - Examine performance - Improve efficiency

What are the pricing strategies?

pricing strategy is a model or method used to establish the best price for a product or service.

What is the difference between private and public sector organisations

private sectors are controlled by individuals or groups of people that are separate from the government whereas public sectors organisations are controlled and accounted for by central or local government Further differences pertain financing and objectives. Private - Private sources of finance (retained profits, sale of personal assets, loans) and objective is profit Public- Taxation and sale of public assets as a source of finance. Main objective is mostly welfare

What is the total product concept? Explain the three components of total product concept: Augmented, Actual and Augmented.

refers to the tangible and intangible benefits (attributes) a product possesses. Core product: The benefits the product provides. E.g a watch tells time and that is the core product Actual product- the tangible good itself e.g The watch itself is the actual product. Augmented product: Additional rewards that's come with purchasing a product or service. Usually linked to after sales. E.g extended warranty for watch.

What is market research ?

the action or activity of gathering information about consumers' needs and preferences. As well as trends in a market.

What is working capital?

the difference between current assets and current liabilities. the capital of a business which is used in its day-to-day trading operations, calculated as the current assets minus the current liabilities.

What are distribution channels?

the path through which products or services get to customers.

What is market segmentation?

the process of dividing a market into meaningful, relatively similar, and identifiable segments or groups.

What is productivity? What is labour productivity?

the quantity of goods and services produced from each unit of labor input. An measure of efficiency done by comparing total output with total input. Labour productivity refers to the amount of goods produced on average by each unit of labour. (Not formula in terms of employees and hours worked). Note efficiency is linked to productivity in that it refers to the optimum level of using resources where there is maximum output and minimum waste.

What are marketing objectives?

the things marketing intends to accomplish in its marketing plan. Tailored specific measures goals which a company aims to achieve.

What is quality? Why is quality important

the totality of features and characteristics of a product or service that are able to satisfy a consumer to standard degree.

What is organisational structure?

we can define it as a specification of the jobs to be done within an organization and the ways in which they relate to one another. The levels of management and division of responsibilities within an organisation.