Professional Documents
Culture Documents
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1.1.1 Business activity as a means of adding value and meeting customer needs
Adding Value: The difference between the cost to produce and the selling
price as a product moves through chain of production a product is changed
and thereby the price of the product increases e.g. from a stick of wood to
a chair
Scarcity and Choice
All things are scarce (except the air). There is a limit to how much we can
have. As a result people, businesses and consumers must make choices. In
business these choices based on scarcity are called Opportunity Costs.
Opportunity Costs
All people and businesses have wants and needs. A need is something that is
considered essential and a want is something that would be beneficial but we
could do without.
However all goods and services are scarce i.e. There is not an unlimited
supply of everything and as such everyone has to make choices. Making a
good choice will however mean that you will give up one thing in favour of
getting another. This is known as an opportunity cost.
Definition to learn
The opportunity cost is the loss of the good or service forgone
Example
Consider a can of coke and a bar of chocolate. Both are priced at KSh 40.
You want to buy both but you only have 40Ksh in your pocket and so you can
only buy one.
If you decided you buy the can of coke then the opportunity cost would
be the bar of chocolate.
All organisations need to make opportunity cost decisions such as a
government may have to decide whether to improve the infrastructure in a
country or build and run a new hospital. If it chooses to build and run a
hospital then the opportunity cost of the hospital would be improve
infrastructure in the country.
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1.1.2: Classification of local and national firms into primary, secondary and tertiary sectors
Production
Production is all activities that help to provide goods and services that
people want or need.
Factors of Production
These are the resources needed for a business to exist.
Land: This can be rented or bought. It also includes natural resources
such as oil, forests, and rivers.
Labour: This includes all the people who are paid for their services
and also people who offer their services for free (e.g. voluntary
workers or the family of a business owner.)
Capital: These are the physical equipment, tools and machinery
needed to run the business. Capital also includes money that is used to
set the business up.
Entrepreneurial Skills: This is the person who develops the business
idea and runs the business. An entrepreneur takes the risks, has the
ideas and reaps the rewards through profit (or suffers any losses!)
All of the factors of production work together to allow the business
functions to happen. Business functions include
o Production
o Research & Development
o Finance
o Marketing
o Administration
o Human Resources.
When these come together the business is able to produce the goods or
services that it set out to achieve.
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Durable Goods: Goods that are used repeatedly over a period of time.
Although they will eventually need replacing through wear and tear they are
not used up. Examples of durable goods include:
Tables
Computers
Cars
Mobile Phones
Non-Durable Goods: Goods that are used up and need replacing. In the
shops these are known as fast moving consumer goods FMCGs. Examples
include:
Food
Washing powder
Toothpaste
Ink Cartridge
Vehicles
Fixtures & Fittings
Machinery
Premises
Many goods fall into different categories depending on where they are in
the production chain. For example a computer in a home is a consumer
durable but to a computer shop it is a capital good. Shampoo at home is a
consumer non-durable but it is a capital good in a hairdressers.
Services: This is an important sector of production that enables industry to
run efficiently. It includes all businesses providing services to industry such
as selling (a restaurant will buy meat form a butcher), to transport (a
manufacturer needs to get its products to their customers either at home
or abroad), banking and insurance and tourism.
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Sectors of Production
Production is sometimes divided up into: 1) Primary production means work that gets natural resources from
the land or sea.
Primary industry is sometimes known as the extractive industry
o Examples include: - Farming, fishing, mining, oil refinery and forestry
2) Secondary Production means work that turns natural resources
into finished goods
Secondary industry is sometimes called manufacturing and construction
industry
o Examples include: - factory work, building work, baking, tailoring and
making anything
3) Tertiary production means work that provides services rather than
goods.
The tertiary industry can also provide a service to the other twos sectors of
production.
o Examples include: - Teachers, clowns, doctors, beauticians and
transportation
Industrialisation and De-Industrialisation
Industrialisation is when a country experiences an increase in
secondary production.
De-industrialisation is when a country experiences a decline in
secondary production.
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Sectors of Industry
Who carries out business activity? This falls into three main sectors
This includes goods and services provided by businesses that are aimed
mainly at making a profit. The business owners are either individuals (sole
traders), small groups of business people (partners) or business people who
join together to form a joint stock company (i.e. a limited company).
Not for profit public sector goods: Some goods are provided by the
government because they are considered general needs that will benefit
everyone but if left to the private sector they either would not be provided
or would be too expensive for many people to buy. Examples include: o The Armed Forces
o International Consulates
o Infrastructure and road lighting.
o Education
o Health
Sometimes the government has another priority other than profit such as
safety (public transport) or quality (an publicly owned TV station such as the
BBC).
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For profit public sector goods: Sometimes a government will help a business
to become competitive. For profit businesses that are owned by the
government will either be useful to the government because it employs lots
of people and so keeps unemployment down Usually the government will out
such a business that looks like it could go bust and will then sell it back to
the private sector when the business is considered to be a going concern
(i.e. able to survive on its own)
Funding
Taxation
Selling goods and services
Charitable donations
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Economies of scale
Greater market share for horizontal integration, which means the
business can often charge higher prices.
Spreads risks if products different.
Reduces competition if a rival is taken over.
Other businesses can bring new skills and specialist departments to
the business.
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2.
3.
4.
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Population: 40,000
Unemployment: 40%
60% of population are classified employed earning below the poverty
level
Average earnings $1,600 per person which is in the lowest 10% of the
world.
Growth rate 2.6% (2009)
Inflation rate: 10% (2009)
Trends in the Sectors of Production
Country
UK (2006)
Malaysia (2005)
Sudan (1998)
Kenya (2007)
Source CIA
Primary
1.4%
13%
80%
75 %
Secondary
18.2%
36%
7%
8%
Tertiary
80.4%
51%
13%
17%
Note that the higher the level of tertiary activity the higher the
development of the country.
Even though the primary sector is the biggest sector in Kenya it only
amounts to 19% of the countrys income. 17% is secondary whilst 64%
comes from the tertiary sector.
Tourism is Kenyas biggest export.
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Stake
Shareholders /
Owners
Managers
Employees
Financiers (banks,
trade creditors and
other lenders)
Customers
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3. Break even
ethical
Affect on businesses
Economic Growth
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1.3.1 Government influence over decision making by using economic policy measures
Page 15
Businesses can also benefit indirectly because of the huge spending that
governments undertake. For instance the increases in health spending will
benefit businesses that produce medical products or services to hospital
(e.g. cleaning), roads will benefit businesses from better infrastructure,
money spent on police make it safer to trade etc.
Customers with debts have less income to spend because they are paying
more interest to lenders. Sales fall as a result.
Firms with overdrafts will have higher costs because they must now pay
more interest.
The impact of a change in interest rates varies from business to business.
Firms that make luxury goods are hit hardest when interest rates rise.
This is because most customers cut back on non-essentials when their
incomes fall as a result of interest rate rises.
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No two economies are organized in exactly the same way, but all have to
solve three fundamental problems
1. What should be produced in the economy?
2. How should production be organised?
3. For whom should production take place?
Should everybody be entitled to an identical share of production, or should
some receive more than others? The gap between rich and poor has widened
considerably over the last twenty years and different market economies try
to address this
Free Market Economy
Private ownership of all
economic resources
Resources go towards
making what consumers
want to buy
Mixed Economy
Price determined by
market forces
Planned Economy
State owns and or
controls most economic
resources
Central state planning
decides what should be
produced and how it
should be distributed
Consumers have little
choice and prices do not
reflect want customers
want.
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3. Many important services that can benefit society are provided by the
state and private businesses. These are known as Merit goods.
Examples include school, health, broadcasting.
4. The state will monitor private businesses activities through law governing
pollution, health & safety, employment etc.
1.4.2 International trade (access to markets/tariffs)
Kenyan Exports are products made in Kenya and sold overseas, while
Kenyan imports are products made overseas and sold in the Kenya.
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1. Legislation (laws): Businesses may find that the country they want to
enter has many restictive laws. For example some environmental laws may
cause a firm to locate in a country that is less concerned about the
environment.
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The exchange rate is the price of foreign currency one pound can buy. If
the current exchange rate is two dollars to the pound, then one pound is
worth two dollars.
E.g.:
An increase in the value of the Shilling means one hundred shillings buys
more dollars. The pound has appreciated (gone up) in value and become
stronger.
100KSh = $1
Or
100KSh = $1
100 KSh = $1.50
75KSh = $1
On the second example (as exchange rates will be shown to the $1 in your exam)
it now only costs 75KSh to buy a dollar whereas before it cost 100KSh
It is now cheaper to buy imports (maybe a companies raw materials sourced
abroad) but a businesses goods will be more expensive for foreigners to buy (as
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if a product is priced 100KSh the USA firm will need to pay $1.33 to buy the
shillings)
A fall in the value of sterling means one pound buys fewer dollars. This
means the pound has depreciated (fallen) in value and become weaker.
Kenyan exporters benefit from a fall in the value of the shilling. However
Kenyan firms importing raw materials, components or foreign-made goods face
higher costs and must either put up their prices or reduce their profit margin.
Business Ownership
Unlimited Liability: The owner of the business has the same legal identify to
the business and is therefore can lose his/her personal possessions to cover
the debts of the business if it goes into liquidation.
Limited Liability: A person has a separate legal identify to the business and
is therefore only responsible for the amount of money s/he invested in the
business even if the business goes into liquidation.
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1. Sole Trader (Sole Proprietor): A person who owns his or her own
business. This person is responsible for all the decisions within the
business, including employees and s/he is liable for any debts. A
sole trader has unlimited liability and thereby is the same legal
entity as the business
Advantages
Personal control
All profit go to the owner
Direct contact with customers
maintained
Accounts are not published
Disadvantages
Unlimited liability
Difficult to raise capital
Long hours and business worries
Owner is expected
specialist in all areas
to
be
Disadvantages
Unlimited liability
Decisions may be slow as more
people
More opportunities to disagree
are
distributed
(usually)
annually
through
dividends.
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Advantages
Limited liability
Disadvantages
Conflict can arise between owners
and managers
Large scale production is available
Danger of poor communication
Ill health does not affect the By law annual accounts must be
business
produced and published
Easier to raise large amounts of Higher rates of tax than for sole
capital
traders and partnerships
Shareholders cannot be sued
personally
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Franchise
An entrepreneur can opt to set up a new independent business and try to win
customers. An alternative is to buy into an existing business and acquire the
right to use an existing business idea. This is called franchising.
o
Advantages of Franchising
Disadvantages of Franchising
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Joint Venture
A joint venture occurs when two or more businesses agree to run a separate
business or project together. Often the joint venture will be a new company
in which the joint venture partners invest
The pros and cons are similar to that of a partnership
2.1.3 Growth of multinational companies
Drawbacks of MNCs
Employment
Ability to create jobs leads to Unemployment can be created in the
increased GNP & improved standard host country due to increased
of living in the host country
competition.
Technology & Expertise
Multi-nationals may introduce new Some multi-nationals bring trained
technology, production processes and staff with them and do not train
management styles.
staff in the host country and only
using local staff for low paid,
unskilled jobs.
Social Responsibility
Some Multi-nationals so not care Some multi-nationals take their
about the environment of the host social responsibly seriously and help
country and at times flouting the finance projects such as build new
lack of legislation related to health, roads.
safety and the environment and child
labour etc.
Profit
Often a multi-national will not keep If the host country has lower levels
profits in the host national but will of tax than others then tax will be
send them back to the originating declared and paid in their country.
country.
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Chain of Command: The way authority and power are passed down in a
business. The chain of command shows the span of control.
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Types of communication
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Effective communication
Communication makes a big impact on business efficiency. Effective
communication means:
Staff understand their roles and responsibilities, eg tasks and deadlines are
understood and met.
Staff motivation improves when, for instance, managers listen and respond
to suggestions.
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Source of
Finance
Retained Profit
Description
This is when a business decides not to pay all profit after
S/T
L/T
Company
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Share Issue on
the Stock
Exchange.
L/T
Overdraft
S/T
L/T
L/T
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Factoring
S/T
S/T
pay for stock and finished goods at a later date when the
firm has sold the goods or services to the next stage in
the chain of production. Often businesses give a buyer up
to 4 weeks to pay but likewise this business may have been
allowed 4 weeks to pay their supplier.
Sale and Lease
A business may sell assets it owns and use the money from
Back
S/T
1.
2.
3.
4.
5.
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Pros
Cons
Secondary Research
Primary Research
Often obtained without Can aim questions directly at
cost
your research objectives
Good overview of a market
Latest information from the
marketplace
Usually based on actual
Can assess the psychology of
sales figures or research on the customer
large samples
Data may not be updated
regularly
Not tailored to your own
needs
Expensive, but reports on
many different
marketplaces
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Mass marketing is devising product with mass appeal and promoting them
to all types of customer.
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The marketing mix is the mixture of factors through which the firm hopes
to sell its products to its chosen market. These are known as the Four Ps
product, price, place and promotion.
Product
A product is a good or a service that is sold to customers or other
businesses. Customers buy a product to meet a need. This means the firm
must concentrate on making products that best meet customer
requirements. Firms can be market or product orientated.
Market orientation: producing products and services which satisfy eth
want and needs of the market.
Product Orientation: Producing products and services based on
innovation which consumers are then persuaded to buy
A business needs to choose the function, appearance and cost most likely to
make a product appeal to the target market and stand out from the
competition. This is called product differentiation.
How product differentiation is created:
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1.
2.
3.
4.
5.
6.
7.
8.
In the launch and growth stages sales rise. In the maturity stage, revenues
flatten out.
Getting a product known beyond the launch stage usually requires costly
promotion activity.
At some point sales begin to decline and the business has to decide whether
to withdraw the item or use an extension strategy to bolster sales.
Extension strategies include updating packaging, adding extra features or
lowering price.
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Price
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Price Penetration
Method of pricing where the business sets an initial low price to try to
encourage consumers to try the product. The price will eventually rise to a
competitive price.
This pricing strategy is used where there is brand loyalty in the market and
is used to persuade consumers to switch from a competitor. Often identified
as introductory price.
Psychological Pricing
Method of pricing which makes a customer think that the product or service
is a reasonable price e.g. $1.99 instead of $2
Elasticities of Demand
The change in a price of a product or service or the change in the income
levels of a person could influence how much a person buys.
1. Price Elastic Demand
When a change in price results in a more than proportional change in
demand then it is considered to be elastic demand.
If the price of beef goes down then people will start eating more beef
and less non-meat meals
2. Price Inelastic Demand
When a change in price results in a less than proportional change in
demand then it is considered to be elastic demand.
If the price of cigarettes goes up people will still buy cigarettes as they
are addictive. Likewise if the price of electricity goes up we may try and
use less but we will still use a lot.
Income elasticity works the same way but based not just on price but also on
income. Some goods we will continue to buy as we see them as essential such
as private education even if the price goes up. We will spend less on
something else rather than something we value. But if our income goes down
then we will spend less on what we consider to be luxury goods such as
holidays to the UK wed go to Mombasa instead.
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Place
A channel of distribution is the route taken by a product as it passes from
the producer to the consumer. This can be
Directly to the consumer
Through a retail outlet
Through a wholesaler
Using an agent
Directly to the consumer this can have problems in terms of the buyer
and seller identifying themselves to each other. However the Internet is
being used and also telesales can be effective.
Retail outlets have a major role as they have the ability to reach the huge
numbers of customers. Retailers are able to influence manufacturers to
produce products that their customers want. As such a customer orientated
markets exist. Quality also tends to be an issue in the distribution channel
as the retailers reputation is at stake.
Wholesalers act as links between producers and retailers. They buy large
quantities from the producers and then break them down into smaller
quantities suitable for the target market. E.g. 100 Kilo sacks of maize will be
bagged up into 1-kilo bags.
Agents negotiate the sale on behalf of a seller. Examples include ticket
agencies. The agency will take a commission and return unsold items to the
seller.
Internet selling or e-commerce. Online selling is an increasingly popular
method of distribution and allows small firms a low cost method of
marketing their products overseas. A business website can be both a method
of distribution and promotion.
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Promotion
Below the line: This is promotion that is not undertaken by paidfor media to advertise a product or service for sale.
1. Publicity: This is promotion via press releases to news media. Press
releases are issued in the expectation that they will be given editorial
mention at no charge.
2. Direct mail: This involves direct communication with customers, either in
the form of a letter addressed to the recipient (a mail shot) or
unaddressed (a mail drop.)
3. Packaging: This is a promotion by means of design and display. The
intention is to create an impact at the point of sale.
4. Sales Promotions: This covers a range of activities such as competitions,
gifts, point-of-sale displays, leaflets and sponsorship.
5. Personal Selling: A promotional presentation made on a person-to-person
basis. This is a two-way discussion between salesperson and buyer.
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3.2
Inputs include
2. Wages
3. Raw Materials
4. Overheads
Outputs include
2. Quantity Produced
3. Sales
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Job Production:
Batch
Production:
Advantages
High quality work
Highly motivated staff
Orders can be made to
customer specifications
Flow Production:
Disadvantages
Expensive.
High waged labour
Tend to be labour
intensive (i.e. lots of
workers needed)
Goods have to be stored
and held in stock (such as
body panels for cars)
Specialist machinery may
have to be cleaned etc
when batch changed.
Factory needs to be laid
out in sections.
Workers tend to be
bored.
Large amount of capital
(money to buy equipment)
needed.
Once built it is difficult
to adjust.
Workers tend to be
bored.
Breakdowns affect other
stages.
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Rearranging the layout of the factory floor so that workers are not
wasting time through moving stock etc from one area to another.
New ideas come from the workers who will feel empowered and come
up with good ideas from research and development to after sales
service.
Cell production
Cell production has the flow production line split into a number of selfcontained units. Each team or cell is responsible for a significant part of
the finished article and, rather than each person only carrying out only one
very specific task, team members are skilled at a number of roles, so it
provides a means for job rotation.
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Increased technology
IT could be used for
Design work - CAD
Planning & budgeting - spreadsheets
Creating & using databases
E-mail communication
Stock control through EPOS (electronic point of sale i.e. bar codes)
EFTPOS (electronic funds transfer at point of sale)
Teleworking
JIT
ordering
and
administration costs
to
cope
with
sharp
increases in demand
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Variable costs are costs that change directly in proportion with output.
Examples include raw materials and piece rate labour.
Fixed Costs are costs that, in the short run, do not vary with output.
Examples include rent, salaries, and insurance.
Direct Costs are costs which can be directly allocated to a specific area of
production. Examples include the wages of a Physics teacher can be allocated
to the science department.
Indirect Costs are costs that cannot be directly allocated to a specific area
of production and thereby must be shared out between all areas of
production. Examples include electricity which wages must be shared out as
an overall running cost as it cannot be allocated to a specific department.
3.2.6 Break-even analysis and simple cost based decision making
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Prevention
Zero defects
Getting
defective
everyone
Continuous
improvement
Employee
involvement
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Manager preference
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Jan
Feb
$2,000 $1,000
$1,250
$500
$5,000
$750
Mar
$2,000
If a business is unable to meet its short term debts it may go into liquidation
and so a business should ensure that timings of inflow and outflows an
carefully managed to avoid unauthorized overdrafts which may result in
bounced cheques.
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A Trading profit & Loss Account shows Gross Profit and Net profit
Cost of Goods Sold = Opening Stock plus Purchases minus Closing Stock
Profit after tax can be retained in the business for future projects or
distributed to shareholders. A sensible company will give the shareholders a
reasonable dividend to keep them happy and keep some profit back in the
business as Retained Profit.
Sales
10,000
1,000
+ Purchases
5,000
- Closing Stock
2,000
GROSS PROFIT
4,000
6,000
Less Overheads
Electricity
Bills
500
1000
1,500
4,500
TAXATION
2,000
2,500
DIVIDENDS
1,500
RETAINED PROFIT
1,000
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Liquidity is the ability to turn an asset into cash with the least loss of
time, capital or interest.
If a business has liquidity problems it could find itself unable to meet debts
as and when they become due i.e. insolvent
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Profitability Ratios
Ratio
Calculation
Comments
Return on capital
employed ("ROCE")
Calculation
Comments
Current Ratio
Current Assets /
Current Liabilities
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Stocks
Trade debtors
Bank Balance
Trade creditors
Taxation payable
Dividends payable
Every business needs adequate liquid resources in order to maintain day-today cash flow. It needs enough cash to pay wages and salaries as they fall
due and to pay creditors if it is to keep its workforce and ensure its
supplies.
Maintaining adequate working capital is not just important in the short-term.
Sufficient liquidity must be maintained in order to ensure the survival of the
business in the long-term as well.
3.3.7 Financial budgets
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Advantages of budgeting
1. Helps to make sure that all resources are used efficiently.
2. Helps to monitor cash flow.
3. Helps to create a focus and discipline for managers responsible for
money in the business.
4. Motivating for budget holders (Herzberg)
Types of Budget
1. Flexible Budgets budgets that change with the amount of output.
2. Objective Based Budgets based on the objectives of the business .e.g a marketing budget may be created to introduce new products in
order to increase market share.
3. Fixed Budget budgets set based on how much the business can
afford and allocated amongst departments.
3.3.8
Users of accounts
Internal Users
Owners
Employees
Managers
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External Users
Tax
1. Tax is paid after profit
Authority
Registrar Of 1. All limited companies must submit accounts to a central
Companies
authority so that anyone can look at them. (Limited Liability)
(Companies
House)
Bankers
or 1. Banks will look at the firms working capital to see whether
lenders
they are solvent enough to repay existing debts or new
lending.
2. Banks will look at the Net Capital Employed to check whether
the business has borrowed too much. A business should not
borrow more than it has invested in itself as share capital or
owners capital. (If they do, then the lenders are taking more
risk that the owners!)
Suppliers
1. Suppliers will want to check that the business can pay them
back if they are offering trade credit.
Competitors 1. Competitors will check to see what new direction the business
might be going into or compare market share.
Future
1. Future investors will look at Gross and Net profit Margins,
Investors
ROCE and dividends to see if the business looks like a good
investment.
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Payment methods
Managers can motivate staff by paying a fair wage. Payment methods
include:
1. Time rate: staff are paid for the number of hours worked.
2. Overtime: staff are paid extra for working beyond normal hours.
3. Piece rate: staff are paid for the number of items produced.
4. Commission: staff are paid for the number of items they sell.
5. Performance related pay: staff get a bonus for meeting a target set
by their manager.
6. Profit sharing: staff receive a part of any profits made by the
business.
7. Salary: staff are paid monthly no matter how many hours they work.
What is motivation?
Motivation is about the ways a business can encourage staff to give their
best. Motivated staff care about the success of the business and work
better.
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Maslow
1. Physiological / Basic needs: Basic acceptable salary for the job, good
working conditions.
2. Safety / Security Needs: Feeling safe in eth work place and feeling
secure in the job that you will not be fired or made redundant and
that you have a permanent job.
3. Love & Belonging: Feeling happy with the people you work with.
4. Self Esteem: Feeling a sense of achievement, being recognised for
the good job you do, being promoted.
5. Self-Actualisation: Feeling in control and be able to make decisions.
Being allowed to be creative and do things your way.
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Herzberg
1. Motivators:
Sense of achievement
Chance of promotion
Chance of improvement
Recognition of effort
Responsibility
Nature of the job itself
Work
Hygiene
Factors which
need to be met
to stop
dissatisfaction
Pay
Conditions
Company Policy
Treatment by management
Inability to develop
feelings of inadequacy
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Disadvantages
Existing staff do not bring new ideas
into the firm.
Staff have to be recruited to
replace the promoted member of
staff
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Training methods
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Off-the-Job Training
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4.2.3
Redundancy
Redundancy is when a business can no longer employ you because your job no
longer exists this might be through
Falling sales means that a business needs fewer staff and some posts
are no longer required.
Redundancy procedures must be fair, for example firms can use a last-infirst-out method to shed staff.
Redundant workers receive compensation according to the number of years
with the firm.
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Dismissal
Dismissal is when a worked
unsatisfactory work or action.
is
asked
to
leave
firm
due
to
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Merit Goods
Merit Goods are those goods and services that the government feels that
people left to themselves will under-consume and which therefore ought to
be subsidised or provided free at the point of use.
Both the public and private sector of the economy can provide merit goods &
services. Consumption of merit goods is thought to generate positive
externality effects where the social benefit from consumption exceeds the
private benefit.
Examples: Health services, Education, Work Training, Public Libraries,
Citizen's Advice, Inoculations
Monopoly a monopoly exists when a business controls at least 25% of the
market and competitors are all very small. A monopoly can charge a high
price, provide poor quality and little choice. A government will avoid this by
setting laws limiting the size of a large business.
Legislation
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Employment law
Consumer protection
Competition law
Most countries in a mixed economy have the following laws which the
government use to intervene to avoid the public or employers being exploited
by businesses. You do not need to know specific laws but read through the
following list to get an idea of how legislation helps employees, customers
and the local environment avoid employment laws that a business needs to
consider are:
Costs and Benefits of Business Legislation
Costs
Benefits
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Planning Permission
Business could find themselves going Local
environment
and
local
through lots of paperwork to expand community rights protected against
or develop a business
businesses opening up on Greenfield
sites or polluting businesses opening
up nearby
Trade Unions and Pressure groups will generally ensure that workers, social
and environmental rights are represented and upheld.
Benefits
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Incentives: Various organisations offer incentives. E.g. EU, National & Local
Government etc. Incentives include low rental sites, purpose built factories,
re-settlement of key workers, tax allowances, advice & consultancy etc.
Constraints: Planning permission often stops some building in certain areas
(e.g. Uhuru Park) etc.
Social Influences: Pressure groups occasionally get involved in stopping
industry from moving to a particular area
5.2.2 Workforce and the working environment (health and safety, employment protection)
Trade Unions
Trade Unions are organisations representing workers who join together to
further their own interests.
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Work to rule where workers will read rule books before working and
not do anything that is not in their job description.
Employment rights
Staff are protected against age, sex, race or disability discrimination
To prevent exploitation, many governments pass laws that safeguard staff:
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Health and safety procedures are put in place to prevent staff from being
harmed or becoming ill due to work.
The Health and Safety at Work Act is a primary piece of legislation
covering occupational health and safety in many countries.
Examples of when health and safety procedures need to be in place
Food processing
Costs
Benefits
Cost of implementing the laws Less accidents and less illness due to
making sure fire alarms are poor working conditions
appropriate,
fire
drills,
safe
equipment, hard hats etc.
Costs of someone monitoring the Workers are happier as they have
safety of workers and visitors
better working conditions (Maslow
basic needs)
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Discrimination
Discrimination in the workplace means treating one person unfairly in
recruitment, promotion, job assignment or termination (dismissal or
redundancy) due to their race, sex (including pregnancy and maternity),
martial status, disability or religious belief
Employees are usually protected under law for most of the above. These laws
vary from country to country e.g. maternity leave in some countries differ,
and not all country have strong enough representation through trade unions
or lawyers or through local governance to properly protect the workers and
stand up for their right.
Examples of Discrimination
Employing a man rather than a woman even though the woman can equally
do the job.
Paying a man more than a woman for doing the same job.
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Resources such as timber, oil and metals are used to manufacture goods.
Manufacturing can have unintended spill over effects on others in the form
of noise and pollution.
Land is lost to future generations when new houses or roads are built on
Greenfield sites.
The production process can often create air pollution
The unintended negative effects of business activity on people and places
are called social costs and include:
noise
pollution
visual blight
congestion
Ethical businesses are careful to minimise the impact of their behaviour on
the environment.
Government laws are used to protect the environment. For example, firms
must apply for planning permission before building factories or offices on
Greenfield sites. Grants are available to encourage firms to locate on
Brownfield sites, run down areas in need of regeneration.
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Social benefits
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Recovery
When it comes recovery is rather halting.
Boom
As recovery turns into boom the following features emerge:
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