Flashcards
Business Studies Component 2 flashcards
Cards in this deck (54)
- 1Equation for Special Orders ContributionSelling price- Variable cost = contribution
(x quantity= total contribution) - 2The non financial factors with special orders- spare capacity to produce
- available resources
- will it affect other customers?
-will it lead to repeat customers?
- does it lead into new markets?
- do you need new resources to produce? - 3definition of a special orderan order that is either at a lower price, or
a different product sold to the mass market - 4The two types of decision making methods-scientific decision making
- intuitive decision making - 5The factors of scientific decision making- based off calculated facts and figures
-better for inexperienced managers
-more risk assessed
- doesn't take into account what the market wants necessarily
-doesn't necessarily take into account creative idea's - 6The factors of intuitive decision making- doesn't take facts and figures into account
- based on a 'hunch'
- needs an experienced manager with knowledge about the market
-uncalculated risk
- creative idea's - 7the three levels on the decision making hierarchyOperational- everyday staff making decisions about the everyday running of the business
tactical- middle managers making moderately risky decisions such as marketing
strategic- senior management making high risk decisions about the business - 8what is a critical path analysis?A project management method of organising which jobs within a project need to be completed and at what time, ensuring that the project is completed on time and effectively
- 9Benefits of critical path analysisBenefits:
- Motivates staff, encourages team work
-allows more effective cash flow and stock management- JIT stock control
- ensures that productivity/ efficiency is high through staff
-promotes good relationships with subcontractors- organised workplace gains a good reputation, building relationships with outside companies
- ensures that all stakeholders are happy- e.g. local community and shareholders - 10Limitations of Critical path analysis- can demotivate those not involved in the process
-can be biased
-needs to be carefully researched and analysed
-can push subcontractors out of control, meaning that the working relationship could suffer
- doesn't ensure quality - 11Definition of decision treesA quantifiable method of analysing the benefits and costs of a decision
- 12Method of decision tree'sOutcome of success/fail x probability of success or fail to find EV (estimated value)
Estimated value- cost= net gain
the decision with the highest net gain is the preferred decision- mark EVERYTHING BUT the decision with two lines - 13Method of critical path analysis- Name and number each activity with the duration
- go along each branch adding up the durations to get the EST on the bottom right of the circle
- once gone along the branches- do the opposite the other way round to get the LFT
- The path with no float time is the critical path- mark this with 2 lines
- to find the float time of an activity, take the EST from the LFT - 14Benefits of decision tree's-quantifiable- will always have an answer+ is good for new managers
-clearly laid out- meaning that managers can quickly and easily see the right decision
-allows managers to clearly analyse situation - 15Limitations of decision tree's- Doesn't take into factor any qualitative factors
- can be biased
-needs to be accurate- probabilities based off past ventures
- can be time consuming
- can oversimplify a complex decision - 16what is a cost benefit analysis?A way of analysing the benefits and limitations of a project whilst evaluating and taking into account external factors
- 17What is a Private costa private cost is the cost to the business of making that investment such as:
- the financial loss of making the investment e.g. training, recruitment, building and utilities for start up - 18What is a private benefitThe gain a business recieves from making the investment such as:
-increased profit
-increased market share
- increased revenue - 19What is a public costThe costs to anyone outside of the business such as:
- consequential loss of land
-environmental issues e.g. waste, pollution, noise to the local community - 20What is a public benefitThe benefit anyone external to the business gets as a result of the investment being made such as:
- impact on social problems
- employment benefits
-benefits on local and national tax - 21Benefits of conducting a Cost Benefit Analysis-puts a value on the external factors that would usually be ignored
- analyses a wide variety of costs and benefits before a project takes place
-puts project idea's into an order
- impacts on society are included - 22Limitations of conducting a Cost Benefit Analysis- valuations of external factors are intangible meaning that they're difficult to value
-not all stakeholders will be included in decision making process
- valuations are based on judgements
- bad valuations can lead to the wrong decision being made - 23The equation for Cost Benefit AnalysisSocial benefit (public + private benefits) - Social cost (Public +private costs)
- 24Non financial ways to analyse performance-productivity/ capacity utilisation
-staff turnover
-customer satisfaction
-repeat sales
-market share
- dividends - 25Gearing ratio equationLong term liabilities
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Capital employed x100 - 26What is a gearing ratio and what is the ideal gearing ratio?It shows the proportion of your long term liabilities that are debts to debtors, the lower gearing ratio the better.
50% ^ is highly geared and anything lower is low, but you should analyse the 2 gearing ratios between years - 27Equation for capital employedGross profit
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shareholders funds - 28Equation for current test ratiocurrent assets
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current liabilities - 29what are the quantitative methods of sale forecasting?- market research
-time series analysis - 30what are the qualitative methods of sale forecasting?-delphi method
-expert opinion
-brain storming
-intuition - 31benefits of time series analysisbenefits:
-helps predict cash flow management
-helps predict supply
-helps predict human resources
-smooths out seasonal variation
-gives an idea of future sales- investments to be made
-no surprises (reduces risk) - 32limitations of time series analysislimitations:
- never 100% accurate
-not easy to predict future sales
- doesn't take into account the seasonal variations
-doesn't guarantee success - 33the process of the Delphi method-send out questionnaire to panel of experts
-they answer and send back
- questionnaire is analysed and the new questionnaire is sent out + the experts consult and rank in order of importance - 34benefits of Delphi method-expert opinion
-gives experts enough time to think through answers
-flexible enough to fit complex situations - 35limitations of Delphi method-experts may not agree
-costly
-could be biased as experts are paid to answer
-time consuming
-somewhat outdates - 36when was the Delphi method designed?1950's
- 37different ways of collecting market research data-surveys of consumer intentions
-test marketing
-direct sales information - 38external factors that can affect sales forecasting-consumer trends and habits
-economic factors
-competition factors
-competitors actions - 39characteristics of brain storming-no idea's are shamed, all are valued
-for about 6-12 people
-employees from all functional area's should be included
-idea's are discussed and evaluated - 40characteristics of intuitive sales forecasting-completed by experienced manager
-needs experience
-needs team to trust them as a manager
-forecasted by a 'gut feeling' - 41characteristics of expert opinion sales forecasting-respected and trusted experts
-they have pre-existing knowledge
-can be biased - 42the 3 types of goods-normal
-luxury
-inferior - 43the equation for price elasticitydemand % change
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price % change - 44equation for income elasticitydemand % change
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income % change - 45how to calculate % changedifference
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original - 46how to make products more price inelasticstronger branding- the fewer substitutes the more inelastic the product is
- 47examples of price inelastic products-addictive products such as cigarettes
-basic foods
-branded foods - 48if the price elasticity is greater than 1 what elasticity is it?elastic- occurs in luxury products
- 49if the price elasticity is less than 1 what elasticity is it?inelastic- occurs in branded products
- 50if the price elasticity is 0 what elasticity is it?unitary
- 51if the income elasticity is greater than 1 what elasticity is it?elastic- occurs in luxury goods
- 52if the income elasticity is less than 1 what elasticity is it?inelastic- occurs in normal goods
- 53if the income elasticity is less than 0 what elasticity is it?negative, occurs in inferior goods
- 54what is an inferior good?a product that demand increases when income decreases
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- need to do: sales forecasting market analysis data analysis investment appraisal analysis financial performance aims and objectives strategy and implementation
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