BUSS2 Business Unit 2 Revision

This is a BUSS2 revision guide that I used for exam.

Please note this is incomplete as I have not included revision for the 4 Ps and I believe these are the crutial by which you should intensley revise over as this appears in every buss2 exam one way or the other.

Good Luck!

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S. Pash

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Using budgets
A budget is a detailed plan of all the income and expenditures of a business over a period of time.
Three main types of budgets;
-Income budgets; a detailed plan of all the income of a business over a period of time.
-Expenditure budgets; a detailed plan of all the expenses of a business over a period of time.
-Profit budget; a plan of the profits of the business during a specific period of time.…read more

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A variance is the difference between the budgeted figure and the actual figure that has been
achieved by the business.
Variance = budgeted figure ­ actual figure
A favourable variance is when the actual sales revenue is higher than the budgeted figure, and/or
when the actual costs are lower than the budgeted costs.
Why favourable variances occur;
Bad publicity of competitors.…read more

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Management decisions to overcome adverse variances in costs, and their
Use cheaper materials and suppliers; could mean poor quality materials; ruin businesses
brand image. New suppliers may not be as efficient and reliable.
Cut employee wages; could be detrimental for employee motivation and may increase
employee turnover which consequently will disrupt productivity.
Increase labour productivity; may result in new technology which is costly.
S.…read more

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Improving cash flow
Cash flow is the movement of cash coming in and out of a business.
Causes of cash flow problems;
Over investing in assets and machinery which leads to no physical cash to pay bills and
Overtrading by creating too many goods and products which result in no money left over,
further if these products cannot be sold then money is stored as products rather than the
physical source needed.…read more

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Debt factoring is when a business, usually a bank, that buys the customer bills from the
company which also reduces the risks of bad debts. This helps cash flow problems and
administration costs are lower as the factoring company chases up the customers. However,
90-95% of the debt is paid to the company which reduces revenue for the business,
furthermore the company would charge more than a loan would and customers would prefer
dealing with the business directly rather than a third party.…read more

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Measuring and increasing profits
Profits can increase in the following ways;
Increase the amount of units sold with the same price and cost per unit.
Increase the selling price per unit or reduce the costs per units; the profits made from this
way when compared to the original sales are known as the PROFIT MARGIN (the profit made
as a proportion of the sales revenue).…read more

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materials and cut labour costs by relocating, like Dyson did who relocated to Malaysia.
However, the image of quality can be hindered which may lead to a demand in even lower
prices. Furthermore, it can be costly to relocate and will disturb productivity as well as
causing communication issues.
INCREASE NET PROFIT BY INCREASING PRICE; consumers may switch to competitors; if PED is
elastic then consumers will not continue to shop with you.…read more

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Improving organisational structures
Organisational structures refer to the way in which jobs, responsibilities and authority is organised
within a business.
Key elements of organisational structures;
Levels of hierarchy
Refers to the different levels of management and authority within a business.
The more layers within a business, the longer the chain of command.
The bigger the number of layers, the more problematic it can be for the lines of
communication as information may be harder to spread and receive when there are many
layers.…read more

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Less opportunity fir delegation
Supervision and control is tighter
Greater opportunity for promotion
Work load and job allocation
As workload increases, structures begin to change, for example, if the workload increases for a
member of management, then their span of control may become wider so they are able to delegate
jobs to their subordinates. Jobs are allocated in terms of functions for example; employees in HR and
marketing will be allocated jobs specifically for their department.…read more


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