BUSS3 Bible

Everything for the AQA BUSS3 exam

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Corporate objectives and strategies:
A business will have medium to long term company wide goals known as corporate objectives. These depend on:
· Ownership
· Circumstances
· Personality of CEO
Corporate objectives might be:
· Survival
· Maximising shareholder value
· Profit
· Market standing e.g. high market share
· Growth
· Diversification
· Reputation
· Innovation
Functional objectives are department goals. These will be concordant with the corporate objectives. In order to meet these functional
objectives, strategies are put in place such that:
Strategies meet functional objectives which meet corporate objectives.
Objectives should be SMART, Specific, Manageable, Achievable, Realistic, Time based.
Porter's 5 forces states that a business can analyse five factors within an industry to understand their market place and develop a strategy.
They establish the strengths and weaknesses of a business.
1. The intensity of rivalry with direct competitors.
2. The threat of new entrants
3. The threat of new substitutes to service/product
4. Bargaining power with suppliers
5. Bargaining with customers
Financial strategies and accounts:
Financial objectives might be:
· Cash-flow targets
· Cost minimisation
· High Return on capital employed
· High shareholder returns
Internal influences:
· Operations e.g. cost/quantity of resources, efficiency, cost per unit (economies of scale), automation, capacity utilisation,
· Marketing e.g. budget, cost of market research, launch of new product/service, increase in sales as result of effective marketing
· HR e.g. recruitment, training, salaries/wages, labour turnover, absenteeism.
External influences:
· Local community e.g. demographic, affluence
· Shareholders e.g. investment, dividends.
· Suppliers e.g. flexibility, reliability, location, cost
· Employees e.g. productivity, absenteeism
· Government e.g. fiscal and monetary policies, grants, legislation
· Customers e.g. demand, loyalty, affluence, economy
The balance sheet shows the financial balance of the business in the form of a snapshot.

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Balance Sheet for
"name" as at "date"
Fixed Assets More than one year
Current Assets Less than one year
Stock Ordered in increasing order
of liquidity
Current Liabilities Less than one year
Net current assets Current Assets - Current
Long term liabilities More than one year
Net Assets Fixed Assets + Net current
assets - long term
Share capital These provide the full
funding for the business
and therefore will balance
with the NET ASSETS
Reserves and retained
earnings…read more

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Les Expenses ( )
Operating profit
Les Financing costs ( )
Exceptional items
Net profit before
Les Tax (%) ( )
Net profit after tax
Les Dividends ( )
Retained profit
By law, all limited companies need to file accounts with company's house.
Net profit after tax can only be used through dividends and retained profit.
When looking at financial documents we must asses profit quality. Profit that comes from exceptional items (e.g.…read more

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Ratio analysis is the process of comparing figures in the profit and loss account to give an indication of proportion. It eliminates issues
where figures may be affected by external factors, and allows us to compare.
Liquidity ratios show the firm's ability to pay off it's debts. These include
current ratio and acid test ratio.
· The current ratio shows how assets could pay off liabilities. It should be expressed as a ratio :1. The ideal figure is 1.5:1 as stock is
hard to shift.…read more

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Dividend yield shows the percentage in dividends of the original cost of the share.…read more

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Net present value takes into account the time value of money. It shows the total worth of
the investment, based on the decreased value of cash in the future due to inflation. It is calculate using discount factors given in the exam.…read more

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Tells the firm about market share
Once a business has identified which market it's operating in, it can begin analysing the market. This allows it to set marketing objectives
and strategies and determine the future marketing plan.
Qualitative market analysis:
· Focus groups
· In depth interviews
· Opinion
Quantitative market analysis:
· Questionnaires
· Footfall
· Previous sales data
· etc.
Market mapping Identify gaps and niches in the market that are unfilled e.g.
A business can use trends to make forecasts.…read more

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Ansoff's matrix is a marketing tool used for growth. It shows the options depending on the markets and products.
Existing New Product
Existing Market Market Product
penetration development
New Market Market Diversification
Market penetration is a strategy to increase sales of an existing product.
Product development is where a firm develops new products to existing customers.
Market development involves selling existing products to new customers.
Diversification is where a firm develops new products to sell to new customers.…read more

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Integration is when 2 or more businesses merge/takeover/acquisition.
Vertical integration is where firms of the same industry but in different production stages merge.
· Backward vertical integration is where a firm merges with/takes over its supplier.
· Forward vertical integration is where a firm merges with/takes over its customer.
Conglomerate integration is when there is no clear connection with the line of business. This is known as diversification, and reduces risk.…read more

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· Net Present Value
There are also qualitative factors:
· Suitability of site
· Customers
· Government perks e.g. Brazil offer cheap labour force to TNC Fiat if they located there
· Location of supplier
· Infrastructure
· Labour workforce
The optimal solution takes a balance between quantitative and qualitative factors.
Innovation is where a new invention is put into practice. An invention is a theoretical product. Benefits:
· Monopoly from only producer
· Pice skimming
· Improved reputation e.g.…read more


Matthew Goring

brilliant document that puts everything for BUSS3 together!

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