BUSS 3

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  • Created on: 27-11-14 14:02
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  • BUSS 3
    • Corporate and financial objectives
      • Functional Objectives
        • Objectives for departments to aim for which contribute to achieving the corporate objectives.
      • Corporate objectives
        • Objectives for the company to aim for as a whole.
        • Examples
          • To increase profit by 5% in the next two years
          • Survival
          • Growth
          • Customer Loyalty
          • Maximize market growth/share
      • Financial Objectives
        • Refers to the monetary goals a business sets itself to achieve in a given time period, often a financial years.
        • Examples
          • Increase market share
          • Increase profit
          • Reducing costs
          • Shareholders return
          • Cash flow targets
          • ROCE
      • Purpose
        • Provides strategic focus
        • Measures performance of the business as a whole
        • Inform decision making
        • Allows more detailed functional objectives
    • Finance
      • Cost minimisation
        • The process by which businesses attempt to maximize profit by keeping costs low.
        • Benefits
          • Higher ROCE
          • Lower unit costs
          • Higher operating profits
          • Improved cash flow
          • Higher gross profit margins
        • Tactical
          • Cheaper Suppliers
          • Different approach to stock holding
        • Strategic
          • Offshoring
          • Out sourcing
        • Drawbacks
          • Insufficient capacity
        • Profit Centres
          • Is a separately- identifiable part of a business for which it's possible to identify revenue and costs
          • Benefits
            • Identify most successful centres
            • Improve motivation of employees
            • Allows comparisons between centres
            • Improves decision making
            • Finance can be allocated more effectively
          • Drawbacks
            • Time consuming
            • May lead to conflict within a business
            • Demotivating if objectives are too tough
      • Profitability Ratios
        • Sales - costs of sales = GROSS PROFIT
        • Gross profit - costs = OPERATING PROFIT
        • Gross profit margin
          • Gross profit / revenue x 100
        • Operating profit
          • Operating profit is what is left over once all expenses have been removed
        • Net Profit
          • How effectively the business turns sales into profit
          • How effectively the business is being run
        • ROCE
          • Operating profit/ capital employed x100
          • A higher % is better
          • Watch trend over time
      • Shareholders ratios
        • Measure the return shareholders get from their investment
        • Dividend per share
          • Total dividends paid / number of share
        • Dividend yield
          • Dividend per share/ share price
      • Investment Appraisal
        • NPV
          • Calculates the  monetary value now of the project's future cash flow
          • Benefits
            • Takes into account time value of money
          • Disadvantages
            • Time consuming
        • ARR
          • Looks at the total accounting return on a project to see if it meets its return
          • Total net profit / nu. of years / initial investment x100
          • Advantages
            • Looks at the whole profitability of the project
            • Focuses on profitability
          • Disadvantages
            • Ignores Cash flow
        • Payback
          • The period of time that it takes to repay the initial investment
          • Advantages
            • Easy to calculate
            • Emphasis on speed of return
            • Enables comparision
          • Disadvantages
            • Ignores cash flow
            • Ignores qualitative aspects of decision
        • The process of analysising whether investment projects are worthwhile
      • Liquidity ratios
        • Assesses whether a business has sufficient cash to pay their debts.
        • Current ratio
          • current assets / current liabilities
        • Acid test ration
          • Current assets -stocks / current liabilites
          • Removes stock therefore more accurate account of being able to repay debts
        • Gearing
          • Long term liabilities /capital employed x100
          • >50% potential finacial problems
          • How stable the business is
          • How to reduce gearing
            • Cost  minimisation
            • Replay long term debts
            • Issue more shares
      • Financial efficiency ratios
        • Assesses how effectively the business manages it's assets
        • Asset Turnover
          • Revenue / net assets
        • Stock Turnover
          • cost of sales/average stock held
        • Debtors Days
          • trade debtors/revenue x 365
        • Creditors days
          • Trade payables / cost of sales x365
      • Income Statments
        • A historical record of the trading of a business over a specific period
      • Balance sheet
        • Shows the new values of the business
    • Operations
      • Operational targets
        • Cost and Volume
          • Lower unit costs
          • Be cost effective
          • Increase the output
        • Quality
          • Lower defect rates
          • Increase customer satisfaction
          • Increase customer loyalty
        • Efficiency
          • Increase productivity
          • Lower unit costs
          • Maximize capacity utilisation
        • Environmental
          • Sustainable resources
          • Lower carbon footprint
      • Critical path analysis
        • Is a project analysis and management tool that allows a completed project to be done in the shortest amount of time possible.
        • What is the critical path?
          • The sequence of project activities which add  up to the longest time possible. The critical path allows the project to be completed in the shortest amount of time possible.
        • A delay in the critical path means the whole project is delayed.
        • Benefits
          • Reduce risk and costs
          • Encourages careful assessment
          • Better allocation of resources
        • Drawbacks
          • Largely based on previous experience of cpa
          • Does not mean success
          • May get complicated if there are too many activities
      • Economies of scale and resources mix
        • Economies of scale
          • Arises when unit costs decrease but output increases
          • Diseconimies of scale
            • Arise when unit costs start to increase and output is above the optimum output
            • Examples
              • Poor communication
              • More difficult to control
              • Loss of management focus
        • Resources mix
          • Labour intensive
            • More manual labour than machines
            • Hairdressing
            • Farming
            • Higher costs
            • More personal service
          • Capital intensive
            • Machines od majority of the work
            • Car manufacturing
            • Oil extraction
            • Higher initial costs
            • Maintains quality
      • Innovation
        • Is about putting an idea into action.  Normally these are marketable products
        • Types of innovation
          • Product innovation
            • Launching new or improved products onto the market
          • Process innovation
            • Finding a new more efficient way of manufacturing a product
        • Improved qaulity
        • Improved productivity and reduced waste
        • Added value
      • Lean production
        • Cutting down on waste but maintaining or improving the quality of a product or service.
        • Time based management
          • A general approach that recognises the importance of time and seeks to  to reduce the level of wasted time
          • Benefits
            • Quicker response times
            • Faster new product development
            • Reduction in waste
        • Just in time (jit)
          • Aims to ensure that input  of the production process arrive when they are needed.
          • Benefits
            • Lower stock holding
            • Stock only obtained when needed
          • less time psent of checking and re-working production
        • Cell production
          • Cells working together an individual task contributing to a final end project
          • Benefits
            • Improved communication
            • Multi-skilled workers
            • Motivated employees
        • Simultaneous engineering
          • Helps firms develop and launch new products more quickly
          • Benefits
            • New products on the market quickly
            • Charge premium prices
            • Competitive advantage
        • Kaizen
          • Implementing small changes to constantly improve production
      • Location
        • Costs
        • Labour skills
        • Infrastructure
        • Level of unemployment
        • Exchange rate
        • Political stability
        • Customer convience
        • Quality of life
    • Marketing
      • Objectives
        • The process of identifying anticipating  and satisfying customer needs profitability
        • Examples
          • Enter a new market
          • Maintain or increasing market share
      • Marketing plans
        • A detailed description  of the activities that are required to achieve the marketing objectives
        • Main planning stages
          • Mission statement
          • Corporative objectives
          • Marketing audit
          • Market analysis
          • SWOT Analysis
          • Marketing objectives and strategies
          • Marketing budget
          • Action plan
        • Benefits
        • Benefits
          • Clear sense of direction
          • Allocates resources more effectively
          • Encourages departments to work together
        • Drawbacks
          • Time consuming
          • Market is always changing
      • Ansoff's Matrix
        • A marketing model  that helps a business determine  it's key product and marketing strategy
        • Marketing penetration
          • Maintain or increase market share
          • Exsisting market, exsisting products
          • Lower risk
        • Product Development
          • New products, existing markets
        • Market development
          • Existing products, new markets
        • Diversification
          • New market, new products
          • Really high risk

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