Business Studies Class 11
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Business Studies Class 11
Cash Flow (Not the same as profit)
Selling something on credit counts asprofit now but it wont count as cash flowuntil it enters the account
Improve cash flow by:
Hold less stock
Give customers shortercredit periods
Get suppliers to give youlonger credit periods
Sell equipment and lease/rent it.
Can lead to false assumptions
Machinery can break down
The supply chain
Starts with Raw Materials
Moves to manufactoring
Distribution to shops
Retailers sell to customers
Saves wage cost
Get a share of profits
Can damage reputation
Banks more willing to lend
Pay to use name
Bad reputation spreads
Follow rules of franchisor
Important to have abalance of full/part time.
New starting businesses shouldhave part time staff until demand isstable
Permanent Staff have an ongoingcontractn and garunteed salary.Severence pay
Tempory Fixed period of time (e.g6months) Contracts can berenewed
Business recruitment agencies used toadvertise and find suitable candidates.Charge fee for service
Contractors used when businessesrequire specific specialist skill (shortterm basis) e.g cleaning, accountancyand building.
Some businesses find it difficult to attractthe right candidates as they cannot offerthe salaries larger companies offer.
Can be sued if candidatesdeclined for race,sex ordisabilities
Protecting business models
Patent Protects the product
Trademark Protects theLogo or slogan
Copyrights Copy writtenwork and music.
Sample Represent the market.
Random Sample each member of thetarget population has an equal chance ofbeing chosen.
Quota sample a fixed number of serveral differentsegments each sharing a common feature(e.g age,gender)
Simple Random (namesfrom a hat)
Stratified Split into groups ,random selection from thegroups
Help control income/expenditure
Help deligate authority
Help control/ motivate staff
If budget is wrong actualresults will follow
Lead to false confidence
Doesnt account formachinery break down etc
Legal Structure of a Business
Sole Trader Unlimited Liability
+Freedom (own boss)
+Keep all profit
+No legal costs
Work long hours
No cover if ill
Partnerships e.g Doctorsand Solicitors
More start up capital
Can cover when ill
risk of conflict
liable for decisions madeby partners
Private Ltd ( LTD )
Often Small family businesses
Dont have share prices onstock exchange
Public Ltd (PLC)
Sell shares to public
shares freely transferable
Need over 50k in sharecapital to start
Cost Benefti Analysis Weighing up thecosts of a business against potentialbenefits.
Break even to measure this
Contribution per unit = Sellingprice per unit variable costs perunit
Break even = Fixed costsdivided by contribution perunit
(level of sales to cover costs)
Manufactoring businesses providingbulky finished products need to belocated near to customers.
Manufactoring businesses starting with heavyraw materials producing lightweight endproducts need to be located near rawmaterials.
Good location needs a goodinfrastrucute (motorways, rail links,ports and airports)
required for import of raw materials,transport of finish products and gettingstaff to work
Must be located near support services(banking, IT assistance, engineeringassistance)
Must be near College/Universities,Affordable housing, schools, medical,leisure, room for expansion.
Government provide grants, loans ,equity investment and financial guidanceas incentives for some areas.
Located near owners house
Some areas have betterimage e.g London/Paris forfashion.
However internet madelocations more flexible.
To get financial backing
Banks/Financers ask forone before investing.
Helps entrepeneur assesbusinesses strengths andweaknesses
Comparable to real performance
Areas of a Business Plan
Executive Summary General overview (keypoints)
Business Summary Type ofbusiness/products/serive provided.Future/ Legal.
Production Plan Howmany products produced.
Marketing Plan Defines themarket, market research ,promotions (USP)
Human Resources Qualifications and exp ofentrepeneur.
Operations plan Location,own property/ machinery?
Financial Plan Financialforecasts, break even/cash flowforcast.
Advice on creating abusiness plan
Business link, banks, websites, samplebusiness plans, consultants andaccountants.