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Business revision (Stakeholders (government impacts businesses by...…
Business revision
Market Segmentation
Markets are segmented into different groups of people.
Businesses map the market to find information
A market can be segmented by its demographics
Age
The teenage market
Income
How much different people earn will affect what they are willing to buy
Location
Try selling stottie cakes outside the north east, or jellied eels outside London
lifestyle
Whether or not people enjoy certain activities, e.g. walking, cycling or reading
Competitive Environment
Market
2) Trade in a particular product
3) The potential customers for a product
1) A place where goods are traded
Competition affects how businesses make decisions
Look at strengths/weaknesses of competitors to make decisions
Price
Customer Service
Quality
Product Range
Location
Formulae
Profit
Net
Net Profit = Gross Profit - Other operating expenses and interest
Net Profit Margin (%) = (Net Profit / Sales Revenue) x 100
Gross
Gross Profit = Sales Revenue - Cost of Sales
Gross Profit Margin (%) = (Gross Profit / Sales Revenue) x 100
Break Even
Break Even Point
In Units) = Fixed Cost / (Sales Price - Variable Cost)
(In Costs/Revenue) = Break Even in Units x Sales Price
Margin of Safety
Actual or budgeted sales - break even sales
Total costs
Total fixed costs + total variable cost
Revenue
Price x Quantity
Interest
(On Loans) (%) = ((Total Repayment - Borrowed Amount) / Borrowed Amount) x 100
Average Rate of Return
(Average Annual Profit (Total Profit / No. of Year) / Cost of Investment) x 100
Changes in aims & objectives
Globalisation
Customer needs
Price
Quality
Convenience
Choice
Business growth
Recruitment
Organisational structure
Tech & business
External influences
Stakeholders
Pressure groups
Managers
suppliers
customers
shareholders
Two types of businesses can have shareholders:
Private limited company
Public limited company
The London stock exchange is called FTSE 100
employees
government impacts businesses by...
Legislation
Environmental
Regulations
Law
Employments
Corporation tax
community
Business plans
Business location
Convenience goods
Milk
Bread
Petrol
Shopping goods
clothing
Technology
Cars
New business ideas
Create a whole new idea
Adapt old ideas (Make them better)
Risk & reward
Entrepreneurs take risks to succeed in the business world
Aims & objectives
Business types
PLC
Sole Trader
Partnership
LTD
Franchise
Legislation
Laws considered collectively
Money
Cash Flow
Net cash flow = Cash inflows - cash outflows for a given period of time
Credit terms tell you how long after agreeing to buy a product the customer has to pay.
Cash flow Forecasts
Help firms to anticipate problems
Show inflows and outflows
Balances
Opening Balance = Closing Balance of the Previous Period
Closing Balance = Opening Balance + Net Cash Flow
Credit Terms
Tell you how long after agreeing to buy a product the customer has to pay
Can affect cash flow
Cash is not the same thing as profit
Sources of Finance
Short-term
Overdrafts
Trade Credit
Long-term
Crowd Funding
Retained Profit
Venture Capital
Share Capital
Personal Savings
Loans
Revenue and costs
Revenue
Revenue is the income earned by a business
Calculated by multiplying quantity of units sold and the price of each unit
Costs
The total costs for a firm is variable costs + fixed costs
Costs are the expenses paid to run the business
Paper 2
Formulae
Paper 1