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. Pashá

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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…

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Variances

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…

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Management decisions to overcome adverse variances in costs, and their
limitations;

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…

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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
suppliers.

Overtrading by creating too many goods and products which result in…

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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…

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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…

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INCREASE NET PROFIT MARGIN BY REDUCING VARIABLE COSTS; for example, use cheaper
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…

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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…

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NARROW SPAN OF CONTROL;

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…

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