HideShow resource information



Control finances

Improve staff performance


Conflict arises

Motivating impact of budgets fail to be achieved

1 of 28

Improving Cash Flow

Causes of Cash Flow problems

  • Lack of planning
  • Poor credit rating
  • Allowing customers too long to pay
  • Overtrading
  • Unexpected events
2 of 28

Methods to decrease cash output

Delay payment to creditors- buy on buy now pay later- can only be used to buy certain goods

Delay spending on capital equipment- put off spending on machines- efficiency may be affected

Lease capital equipment- business rents from owner- may be more expensive than buying asset

Improve stock control- only purchase when needed- any delays in delivery affect business

3 of 28

Methods to increase cash inflows

Discount prices- means a lower amount of income per product

Overdraft- interest often charged

Chase debtors- time consuming to arrange

Reduce credit terms to customers- company may offer better payback terms

Selling assets- may sell something they later need

Sale and leaseback- dont own the asset

4 of 28

Measuring profitability

Gross profit- Total revenue- Variable costs

Net profit- Total revenue- Total Costs

Gross profit margin (%)- Gross profit/Sales revenue x100

Net profit margin(%)- Net profit/Sales revenue x100

Return on Capital- Net profit/Capital invested x100

5 of 28


The maximum possible output that can be produced over a period of time

Capacity Utilisation= Current Output/Max Possible Output x100

Problems of over utilisation:

- Customer service may suffer

- product quality may suffer

- A strain on resources

6 of 28


Effective marketing- Achieving the firm's sales and profit targets by convinving customers to buy the firms products.

- as consumer tastes vary over time, the ability to respond to changes in taste is very important

- Firms must be prepared to adapt their business model with this in mind

7 of 28


Quality pruduct- worth its value

Implications of poor product or service quality:

- Loss of sales

- IMpact on other products in range

- Retailers unwilling to stock goods

-Loss of reputation

-Reduce price

8 of 28

Quality inspection

a system that uses inspection as a way to find faults.


-quality improved

- stops faulty products being sold

- can increase productivity


-can be a waste of time

- can be de-motivating

- can end up wasting resources

- lack of consistency

9 of 28

Quality assurance

a syetm that aims to achieve quality by organising every process to get the product 'right first time'.


- stops mistakes occuring at the start and carrying out throughout process

-workers feel trusted

- productivity increases


- Lowering standards can lead to less consistency

- Lowering productivity as time is spent checking products

10 of 28

customer service

range of actions taken when interacting with customers

measuring customer service:

- Mystery shopper

- benchmarking

-feedback forms

11 of 28

choosing suppliers


- cost



- payment terms


benefits of good customer suppliers:

-better customer service

- Lower costs

-more consistant quality

12 of 28

use of technology



-increased productivity

- standardized product

- no breaks


-investment costs

-Inflexible- made for one job

CAD- computer aided design- product can be viewed 3d on cmputer

CAM- computer aided manufactuirng

13 of 28


benefits of DT:

- Lower unit costs

- better communication and management


-staff resistant to change

- training costs

- Maintanence and operating costs

14 of 28

organisation structure

span of control- number of subordinates for whom a manager is directly responsible

line of authority- e.g. managers are in charge of those below them

15 of 28

staff performance

labour productivity=output per period/number of employees at work

improving labour productivity:

- having more staff

- motivate current staff

- improve machinery, technology, etc


- productive workers produce more per worker

- easy to calculate measure

- productivity depends on many factors

16 of 28


Labour turnover=Number of staff leaving during the year/average number of staffx100

Absenteeism= number of staff absent on one day/total number of staffx100

17 of 28


Herzberg-split motivation into two catergories called hygiene factors and motivation factors

Taylor- workers mainly motivatd by their pay

Maslow-pyramid that lists needs that workers require to work efficiently

18 of 28


Internal benefits:




-induction training unecessary

Internal problems:

-skills may not be present

-no new ideas

-leads to a vacancy elsewhere

19 of 28


external benefits:

-allows business to find person with right skills

-wide range of candidates

-new ideas and fresh thinking

external problems:

-more expensive 

-more time consuming

-induction training needed

20 of 28


induction training- makes workers fully productive as soon as possible by familiarising them with the key aspects of the business.

on the job training- employees not required to leave workplace

off the job training- leave workplace in order to receive instruction

Advantages of training:

- increased level of skills available to the business 

- increased the degree of flexibility within a business 

Disadvantages of training:

- can be expensive in terms of providing the training itself and also cost of evaluating its effectiveness 

21 of 28

influences of market mix

finance- size of budget?, how should it be spent?

technology- changes in technology have altered the way we live

market research- varies with size of firm

22 of 28

marketing mix- product


- development- product being created

- launch- ready to come onto market, advertising accompanies it

-growth- when sales increase at fastest rate

-maturity- sales near their highest

-decline- final stage

23 of 28

the boston matrix


-successful products

- high market growth and high relative market share

Cash cows:

-low growth in market, strong market share

problem children:

low market share in fast growing market


Low market share in a low growth market

24 of 28

marketing mix-pricing


price swimming- put prices high then reduce

penetration pricing- start at a low price and increase

price leaders- decides on a price

price taker- copies price of price leader

pricing tactics:

loss leaders- sold for below cost

psychological pricing- make people think they are getting something for a lot less

special offer pricing- BOGOF, BOGOHP

25 of 28


price elasticity of demand:

elasticity represents the extent ot which buyers and sellers respond to changes in the market

PED=percentage change in quantity demanded/percentage change in price

26 of 28

marketing mix-place

ensuring good distribution:

-get to trade buyers

-use direct mail

-make it stand out- point of sale

27 of 28

marketing mix-promotion

branding- creating as distincting and lasting identity that is recognised by consumers

advantages of branding:

-spend less on promotion

-repeat purchase

-help persuade retailers to stock product

Persuasive advertising- designed to create distinctive image, encourage purchase

public relations- affects consumers image of product without spending on media advertising

sales promotion- on pack comeptitions, in store offers,3 for 2
direct sales- door to door, telesales

Merchandising- free sampels, tasters 

28 of 28


No comments have yet been made

Similar Business Studies resources:

See all Business Studies resources »