BUSS2 Bible

Everything for the AQA BUSS2 exam

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A good budget must be:
Be consistent with the aims of the business.
Be based on the opinions of as many people as possible.
Not decided by someone who has done little research.
Set challenging but realistic targets.
Specific, manageable, achievable, realistic and time-based.
Be monitored at regular intervals.
Be flexible
Variance is the difference between the budgeted figure and the actual outcome. This can be adverse of favourable. It is the process by
which budgeted figures are examined and then compared to actual outcomes.
Cash flow problems:
To much outflow
To little inflow
Inflows come after outflows
Reasons for shortage of cash:
Seasonal demand
Over trading from over expanding
Over investment in fixed assets
Credit sales
Poor stock management
Unforeseen changes e.g. strikes, economic downturn
Low profits
Benefits of budgets:
Set targets
Measure of success
Avoid over spending
Forecast future
Portion spending
Motivate staff
Improve efficiency
Encourage planning
Drawbacks of budgets
Do not count for changes in the economy
Unpredicted variables
Needs skill and large amount of research.
Could be incorrect or unfair
People could make cuts and damage the business.
Difficult to monitor
Revenue and Cash Inflow:
Cash inflow is all money that comes into the business. Revenue is all money made from the sale of their service or product.
Credit sales are just revenue because they have made the money but it has not yet been paid.
There are many sources of cash inflows but only 1 source of revenue, customers.
Costs and Cash Outflows:

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Cash outflow is all money that leaves the business. Costs are the outgoings that are directly involved with the running of the
Credit purchases are costs but not outflows as the money has not yet left the business.
There are many reasons for cash outflows but only one reason for costs, and these relate to the business costs.
Cash Flow:
Cash flow is the short term impact of financial decisions as it displays a monthly figure.…read more

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This is a good indication of the satisfaction at work.
An organisational structure is the formal way in which the management of a business is organised.…read more

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An entrepreneurial structure is found only in small businesses, in very competitive markets, where quick decision-making is important
to maintain and increase market share
Quick decision making is possible
Suits a small business where job roles may be informal and each person takes on a variety of tasks.
Becomes ineffective when a business expands.
Employees may be unmotivated as they can let others do the work for them.…read more

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Formal channels of communication are channels that are established by senior management. Informal channels are where
information is passed outside of the formal channels e.g. gossip.
Vertical communication occurs when information is passed up and down a chain of command. Downward communication is known as
top-down and upward communication is known as bottom-up. Lateral communication is when people of the same level in an
organisation pass information to each other.…read more

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Market research
Feedback forms
Loyalty programmes and cards
Suggestion forms/boxes
Mystery shoppers are often used to monitor customer service.
Factors to consider when a business is choosing a supplier:
Price (value for money)
Payment terms
Suppliers will help a business:
Allow consistent quality
Better customer service
Fewer production delays
Lower costs
More flexible to cope with unusual customer requirements
Improved communication as a result of a similar ICT system.…read more

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Social networking sites.
EDI can be used to automatically reorder stock.
Break down of communication links could be disastrous for the business.
If the wrong people are recruited, the following problems may occur:
Low motivation
Poor productivity
Administration costs of finding new staff if they leave
Having to spend time and money inducting someone else
The recruitment process:
If a job becomes vacant, a job analysis should be conducted. This identifies what skills, training and tasks will needed for the
job.…read more

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Employers will know more about the internal candidates' abilities.
Quicker and less expensive
Limits the number of applicants
External applicants might be more qualified with better ideas
Another vacancy is created
External recruitment is where employees from the outside are hired. Used where internal recruitment is inappropriate because
employees may not possess the necessary skills and the business may not have the time, money or resources to train them.
Commercial recruitment agency
o Matches employees to employers.…read more

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Salaries are payments expressed in annual terms and normally paid monthly.
Makes financial planning clearer.
Overtime not necessarily paid.
Overtime is hours worked that are not specific to the contract.
Can meet the demands of larger customer demand.
Cover sick staff
Difficult to manage
Costs more
Commission is the per cent bonus given to employees of the sales they make.
Encourages staff to work harder and make more sales.
Can make staff competitive and their may be rivalry in the work place.…read more

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Abraham Maslow believed that everyone has the same needs that can be organised into a hierarchy. He identified that people will
strive to reach the next level.
1. Self actualisation
2. Self esteem
3. Social needs
4. Security needs
5. Physiological needs
Frederick Herzberg identified that having certain things wouldn't necessarily motivate staff, but without it they would be demotivated.
For example, lighting would not motivate staff but without it they would be demotivated.…read more


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