"The governor of the Bank of England, Mervyn King, has warned that the UK is "in a deep recession" in 2009 and said rate cuts may no longer work"
Internal sources of finance are ones which come from owners of the business.
EX:Owner’s personal funds
income from a sale of the company assets
AD:
No cost to using this money
Doesn`t worry about the money being withdrawn.
No risk of interference in decision making by a lender
Doesn`t have to pay anything from profit which they don`t want to pay
Borrowing from friends or family rarely means interest has to be paid
Friends and family may be more willing to lend
DA:
Have limited finance to start, limited which business can purchase
New business has risk. Entrepreneur could lose everything
If business doesn`t run well, may have argument
DA:
loan:
AD:
DA:
Analyse
Here you are being asked to provide a comparison in detail of the causes and any possible effects of how the thing under consideration has developed or happened. Wherever it is possible ,try to give examples, this is especially true if the material offered has examples within it. If the term “critically" is prior to the term analyse. This is telling you that you need to make suggestions as to possibly why or why not something may or may not, in your own opinion, be appropriate considering the issue or event being analysed. Always try to offer support to your findings and/or opinions. For example: Analyse the extent to which foreign aid promotes economic development
DISTRIBUTION CHANNELS:the stage of ownership that take place as a product moves from the manufacture to the consumer
EXTENSION STRATEGY:a medium-to large-term plan for lengthening the life cycle of the a product or brand
INCOME ELASTICITY:measures the way in which demand changes when consumer`s real income change
MARKET MIX:the main variables through which a firm carries out its marketing strategy(4P)
MARKET OBJECTIVES:marketing department must achieve in order to help the company achieve its overall objectives
MARKETING STRATEGY:a medium-to long-term plan for meeting marketing objectives
MARKET RESEARCH:the process of gathering primary and secondary data on the consumer
MARKET SEGMENTATION:analysing a market to identify the different types of the consumer
MARKET SHARE:the percentage of all the sales within a market that are held by one brand or company
MARKET SIZE:the total sales of the producer within a market-place
MASS MARKETING:target the firm`s advertising and promotional spending an the whole market
NICHE MARKETING:a small range of market
Delayering:reduction of the length of a chain of command by the removal of one or more "layers" of a hierarchy.
Advantage:
drawback:
LEADERSHIP STYLES
STOCK:
STOCK CONTROL:
JUST IN TIME(JAPAN)
ADVANTAGES:
DISADVANTAGES:
When you explore the website,have you ever typed "www.google.co.uk"?If you have,and did you use the button which is next to the "Google search"called "I`m felling lucky"?I don`t think so....MARKET STRATEGY
Objectives: what you want to achieve.
Strategy: how you achieve.
Niche market: focus on a specific segment of the market.
Mass market: much bigger market.
Introduction:
Decline :( Product start to fall)
MARKET PLANNING
4PS:
1.above the line(advertising):TV,RADIO MAGAZINE
2.below the line:
a.sales promotion:BOGOF,25%extra free
b.personal selling:face-to-face selling
c.direct marketing:mailshots
pricing strategies:
pricing:
cost-plus:a amount of profit is added on the unit cost
contribution
discrimination:setting different prices for the same product/service at different times
loss leaders:very low prices to attract customers
psychological:3.99
There are three parts to a balance sheet.Each is linked to the others
ASSET
Items,are only assets if they can be valued."Reputation",for example,does not appear in a balance sheet.Assets are either fixed(e.g buildings and machinery used in production)or current (e.g stocks of finished product that could be easily turned into cash,or money that is owed to the business by debtors)
LIABILITIES
Items are only liabilities if they can be valued.Liabilities are either current (debts that must be paid back within a year,such as bank overdraft and debts owed to creditors)or long term(debts that the business has more that a year to repay,such as long-term loans and mortgages)
CAPITAL
The final part of the account shows how the money for these net assets employed was raised.This could be via shares,though profit,or from profit made in previous period.Capital must balance with net current assets.
KEY POINT!
fixed assets +current assets =total assets
current liabilities+long-term liabilities=total liabilities
total assets -total liabilities=net assets employed
PROFIT AND LOSS ACCOUNT
THE ACCOUNT
3 parts to the profit and loss account
INCOME
The account shows that what the business has earn.This is called its income.The biggest source of income for most business is sales revenue.However,the cost of buying or marketing the items sold has to be deducted from this total.
STOCK
The only time this is different is if you have stock left over.This is our "opening stock"for the next year.
EXPENSES
Buying and selling the pencils will have taken you time,you may also need somewhere to sell them from .These are all expenses.A bigger business will have to pay items like wages,rent on premises,power bills and equipment costs.
GROSS AND NET PROFIT
Gross profit is the amount that you have made before expenses are taken into account .Net profit is the amount after expenses are deducted.
Appropriation account
What happens to the gross profit.Some of it goes in taxes,some may be given to shareholders in the forms of dividends and some may be kept to help the finances of the business.
KEY POINT!
trading account :
sales revenue-costs of sales=gross profit
profit and loss account:
gross profit -expenses=net profit
appropriation account:
profit after tax-dividends=retained profit
CASH AND CASH FLOW
SOME DEFINITIONS:
budget-a plan of future expenditure
cash-flow crisis-when a business cannot pay its immediate debts
forecast -an estimate;trying to look into the future
CASH FLOW
If there is more cash coming into in than the business needs ,this is called cash surplus,If there is less cash coming than the business needs,it is called cash shortage.Remember that it can be just as bad to have too much cash as to have too little.It is inefficient to have too much.It is better to turn an excess of cash into assets that can earn more money
KEY POINT!
If a business knows when it is going to need cash it can plan to do something about it
THE NEXT BOOKHOLDER IS NARA!!!!!!
The all transactions ,there are 3 parts:
owners` funds
one of the main sources of finance for starting a business is the money that the owners already have.they can risk this in the business in the hope that the business will be profitable.sole traders may use their own funds.partnerships will share resources.limited companies can rise funds by selling shares to the owners(the shareholders).once a business is a success and profitable,it may keep some of its profit for future finance.this is called retained profit.
Borrowing
if business owners do not already have the funds,then they need to borrow them.usually businesses borrow from lending institutions such as banks.the most common forms of business borrowing are shown in the table below.there is a cost to borrowing.usually this takes the form of interest.generally,the riskier the loan and the longer the period of borrowing,the more interest will need to be paid.
short term:(from a few days up to 3 years)
overdrafts
loans
trade credit
factoring
medium-term:(from 3 years to 10 years)
hire purchase
loans
debentures
long-term:(10 years +)
loans
mortgages
the types of borrowing can be described as follows:
trade credit--a business promises to pay in the future for goods that is has received (hopefully,it will pay for the goods that it has sold them).the period of trade credit can be up to 90 days but is often less.unusually,interest is seldom charged-but there will be penalties if payment is not made and there could be discount for early payment.
overdrafts--a bank allows a business to take more out of its account than it has in,up to an agreed limit.this is very flexible and interest is only charged on what is actually owed,for the time that it is owed.
loans--borrowing a fixed amount,for a fixed term.the business makes regular repayments and is charged interest on the full amount for the term of the loan.
factoring--selling debts to a specialist firm,which then collects the money owed.the factoring firm makes its money by paying less for the debt than it actually collects.
hire purchase--paying for a piece of plant or equipment in instalments.the business can use the item while it is still paying for it.
mortgages--long-term loans used to buy expensive items such as land or buildings.
debentures--guarantees to pay at a time in the future,which may offer low risk but good interest rates for investors.they can be issued by large businesses.
Secured and unsecured borrowing
a mortgage is a secured loan,an overdraft is likely to be unsecured.but what does this mean?in the case of the mortgages,if it is not paid,the lending institution may be able to retrieve its money by seizing and selling the asset(a house or factory,for instance).if the loan is unsecured,the lender has no security of this type.
Grants
sometimes businesses do not have to use their own funds or borrow them,because there are grants available.a grant is sum of money made available to a business by a body such as central government,the European union or a local council.charities may also provide grants.the prince`s youth business trust,for example,provide start-up grants for businesses set up by young people.
key points!
three main sources where come from
COST AND REVENUE
businesses produce either a good for sale or a service.if it is a good,there are raw materials and other inputs to pay for.if it is a service,the business needs to let people know that it exists. in either case,therefore,there are costs.the money that the businesses received for its sales is called revenue.business costs are divided into fixed costs -also called indirect costs or overheads-and variable costs .
Fixed costs
Fixed costs do not vary with output-that is, with the amount produced.Example are rent,interest payments and rates.They have to be paid whether or not a business is producing.
Variable costs
Variable costs are those costs that vary with output,such as raw materials.packaging,parts and components,ingredients,power and labour charges.Total cost is fixed cost plus variable cost.Sometimes it is difficult to decide whether a cost is fixed or variable,as it may have elements of both within it.Utilities are a case in point .A power or telecommunications bill,for example,has a fixed element for the supply of the service,plus a variable element for the amount of the service used.
Semi-variable costs
These are costs that do vary with output,but not directly.For example,a business may need to pay overtime,or a shop may need to open for longer hours.
Other definitions
Costs can be divided into start-up costs and running costs.Start-up costs are only paid when setting up a business.Financing this may become part of a business`s fixed costs.Running or operational costs have to be paid to keep the business going.These may be fixed costs such as rent,or variable costs such as wages.
KEY POINT!
some definitions:
