BUSS2
- Created by: Daniel Wright
- Created on: 04-04-13 12:36
Budgets
Benefits
Control finances
Improve staff performance
Drawbacks
Conflict arises
Motivating impact of budgets fail to be achieved
Improving Cash Flow
Causes of Cash Flow problems
- Lack of planning
- Poor credit rating
- Allowing customers too long to pay
- Overtrading
- Unexpected events
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
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
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
Capacity
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
Marketing
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
Quality
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
Quality inspection
a system that uses inspection as a way to find faults.
Benefits:
-quality improved
- stops faulty products being sold
- can increase productivity
Problems:
-can be a waste of time
- can be de-motivating
- can end up wasting resources
- lack of consistency
Quality assurance
a syetm that aims to achieve quality by organising every process to get the product 'right first time'.
Benefits:
- stops mistakes occuring at the start and carrying out throughout process
-workers feel trusted
- productivity increases
Problems:
- Lowering standards can lead to less consistency
- Lowering productivity as time is spent checking products
customer service
range of actions taken when interacting with customers
measuring customer service:
- Mystery shopper
- benchmarking
-feedback forms
choosing suppliers
factors:
- cost
-quality
-reliability
- payment terms
-flexibility
benefits of good customer suppliers:
-better customer service
- Lower costs
-more consistant quality
use of technology
Robotics:
Benefits:
-increased productivity
- standardized product
- no breaks
Problems:
-investment costs
-Inflexible- made for one job
CAD- computer aided design- product can be viewed 3d on cmputer
CAM- computer aided manufactuirng
-
benefits of DT:
- Lower unit costs
- better communication and management
Problems:
-staff resistant to change
- training costs
- Maintanence and operating costs
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
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
Benefits:
- productive workers produce more per worker
- easy to calculate measure
- productivity depends on many factors
-
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
Theorists
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
Recruitment
Internal benefits:
-cheaper
-faster
-motivating
-induction training unecessary
Internal problems:
-skills may not be present
-no new ideas
-leads to a vacancy elsewhere
-
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
training
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
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
marketing mix- product
stages:
- 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
the boston matrix
stars:
-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
Dog:
Low market share in a low growth market
marketing mix-pricing
strategies:
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
-
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
marketing mix-place
ensuring good distribution:
-get to trade buyers
-use direct mail
-make it stand out- point of sale
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
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