Business Revision

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  • Business Revision
    • Marketing
      • Elasticity of Demand
        • PED = The extent to which the quantity of a product demanded is affectef byt change in price
        • PED= %Change in QUANTITY demanded / %Change in PRICE
        • Price ELASTIC = More than 1
          • Price INELASTIC = less than 1
      • Income Elasticity of Demand
        • YED =  measures the extent to which the quantity of a product demanded is effected by the change in income
        • YED= %Change in QUANTITY demanded / %Change in INCOME
      • Distribution
        • Distribution= Making products available at the right place and right time and in the right quantites
        • Direct Distribution = Where a producer or customer deal directly without the involvement of an intermediary
          • Indirect Distribution = the use of intermediariesbetween the producer and customer
        • Channels of Distibution = Channels in which moves a product through the stages of production to final consumption
          • Multi-Channel Distribution = A business uning one ore more distribution channel
      • DEMAND = The demand for a good or service in the quantity which customers are willing to buy
      • SUPPLY = The quantity of a good producers are willign and able to supply
      • Boston Matrix
        • Tool for portfolio anlysis
        • It can be applied to the portfolio of products produced by a firm or the business owned by a firm
          • Portfolio is the collection of products or services th\at make up a business
    • People
      • Motivation In Theory
        • Taylor
          • Managers should maintain close supervision
          • Autocratic style of management
          • Only motivated by financial incentives
        • Maslow
          • Hierarchy of levels to target stagesin a business
            • 1. Intellectual needs , filfilling potential , achieving targets
            • 2. self-respect, levelof status
            • 3. feeling wanted, sense of belongigng , part of a team
            • 4. Safe working wnvironment , job security
            • 5. basic needs
        • Mayo
          • Workers are not just motivated by money but by having their needs forfilled
          • Motivation comes from :
            • Higher Communication
            • Greater management involvement
            • Woking in groups
        • Herzberg
          • Motivators are from Responsiblity, acgievement and meaning-full work
          • Or from hygenic incentives such as working conditions , appropritate supervision etc
      • Approaches to staffing
        • Staff as a Cost
          • Treat employees simply as a resource
        • Staff as an Asset
          • Treat employees as an important resource
        • Flexi working
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    • Finance
      • Break-Even
        • •Contribution looks at the profit made on individual products
          • It is used in calculating how many items need to be sold to cover all the business' total costs (variable and fixed) Contribution is the difference between sales and variable costs of production
          • Contribution = total sales less total variable costs
          • Contribution per unit = selling price per unit less variable costs per unit
          • Understanding the breakeven position is key to understanding what a business needs to do to operate profitably 
          • Total contribution can also be calculated as:  Contribution per unit x number of units sold
        • The margin of safety is the difference between actual output and the breakeven output.
        • the point or state at which a person or company breaks even.
      • Budgets
        • A financial plan for the future concerning the revenues and costs of a business
        • •Establish priorities & set targets •Turn objectives into practical reality •Provide direction and co-ordination •Assign responsibilities •Allocate resources •Communicate targets
          • •Delegate without loss of control •Motivate staff •Improve efficiency •Forecast outcomes •Monitor performance •Control income and expenditure
        • Historical budgets
          • •Use last year’s figures as the basis for the budget •Realistic in that it is based on actual results •However, circumstances may have changed (e.g. new products, lost customers, credit crunch) •Does not encourage efficiency
        • Zero Based Budgets
          • •Budgeted costs & revenues are set to zero •Budget is based on new proposals for sales and costs – i.e. built from the bottom-up •Makes budgeting more complicated and time-consuming, but potentially more realistic
        • Variance Analysis
          • Calculating and investigating the differences between actual results and the budget
          • •Favourable variances
            • •Actual figures are better than budgeted figure •E.g. costs lower than expected •E.g. revenue/profits higher than expected
          • •Adverse variances
            • •Actual figure worse than budget figure •E.g. costs higher than expected •E.g. revenue/profits lower than expected
      • Business Failure
        • •No demand for the idea
        • •External shocks
        • •Good idea, but poorly executed
        • •Financial Reasons
          • •Poor management of cash flow •Inadequate or inappropriate financing
          • •Non-Financial Reasons
            • •Lack of management control •Significant external shock
      • Liquidity
        • Assess whether a business has sufficient cash or equivalent current assets to be able to pay its debts as they fall due
        • Current Ratio = Current Assets / Current Liabilities
        • Acid Test Ratio
          • Current Ratio = Current Assets less Stocks / Current Liabilities
    • External Influences
    • Resource Management
    • Business decisions and strategy

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