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28 Cards in this Set
- Front
- Back
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Budget |
A financial plan for the future concerning the revenues and costs of a business. |
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Measuring and Increasing Profit |
Try to sell more volume - E.g. higher volume means higher revenues, selling more may result in a higher market share. This method may fail as competitors may try to respond. Increasing selling price - E.g. higher price means higher sales as customers may think the product is of high quality, however this all depends on the price elasticity of demand. This method will work if customers stay loyal. Increase production output - E.g. this will provide more products to be sold. This method will work if the extra output can be sold. Reduce fixed costs and overheads - E.g. a drop in fixed costs will feed directly into higher profits. This method will work if the cost cutting does not affect the quality of the product. |
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Cash Inflows |
These are likely to come from: - Cash sales - Sale of fixed assets - A loan from the bank |
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Cash Outflows |
These are likely to come from: - Payments to suppliers - Wages - Repayments on loans |
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Causes of Cash Flow Problems |
The main causes of cash flow problems: - Low profits or losses - Too much production capacity - Allowing customers too much credit - Seasonal demand |
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Ways to Improve Cash Flow |
Short term - cut costs, reduce current assets, increase current liabilities, sell surplus fixed assets. Medium to long-term - improve efficiency and productivity, increase long-term liabilities, rescue spending on fixed assets. Debt factoring - A firm buys amounts outstanding from customers, factoring firm chases the debts, gives the benefit of a short-term cash inflow. Sale of assets - converting fixed assets into cash, can only be done once. |
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Delegation |
The assignment to others of the authority for particular functions, tasks and decisions. |
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Structure |
Factors that determine organisational structure - Size of the business - Type of business - Management and leadership style - The competitive environment |
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Ways to Improve Staff Turnover, Labour Productivity and Absenteeism |
Staff Turnover - Effective recruitment and training, provide competitive pay, reward staff loyalty (long service rewards). Labour Productivity - Measure performance and set targets, streamline production process, invest in technology. Absenteeism - Understand the causes, have a clear sickness and absence policy, provide awards for good attendance. |
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Internal Recruitment |
Jobs given to staff who are already employed by the business. Benefits - Cheaper and quicker to recruit, people will already be familiar with the business. Drawbacks - Limits number of potential applicants, may cause resentment amongst applicants who are not appointed. |
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External Recruitment |
Jobs that are advertised or that can be gained through job centres. Benefits - outside people can bring in new ideas, larger pool of workers from which you can find the best candidate for the job. Drawbacks - Longer process, more expensive due to the advertisement and interviews required. |
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On the Job Training |
Where an employee receives training whilst remaining in the workplace. Benefits - Learning whilst doing, cost effective. Drawbacks - There may not be enough time available, managers may not be very good at training other staff. |
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Off the Job Training |
An employee receives training away from the workplace. Benefits - A wider range of skills and qualifications can be obtained, can learn from outside specialists. Drawbacks - More expensive, lost working time and potential output. |
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Advantages of a Well Motivated Workforce |
Better productivity Better quality and customer service Lower levels of staff turnover |
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Motivating Employees (1) |
Financial Intensives Wages - paid per hour worked. Salaries - annual salary which is paid at the end of each month. Bonus System - paid when certain targets have been met. Commission - pay based according to value or volume of sales. Profit sharing - employees receive a portion of the company's profits. |
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Motivating Employees (2) |
Empowerment - delegate power to employees so that they can make their own decisions. Praise - recognition for good work. Promotion - employees given a position of higher responsibility. Job enrichment - give employees more challenging and interesting tasks. Working environment - providing a safer, cleaner, more comfortable environment to work in, |
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Motivational Theorists |
Taylor - scientific management. Mayo - Human relations management. Maslow - Hierarchy of needs. Peters - Involving employees and recognizing champions. |
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Ways to Measure Production Efficiency |
Productivity Measures areas such as output per worker or output per hour/day/week. Unit Cost Divide total cost by the number of units produced. A falling ratio would indicate that efficiency was improving. Ways to Improve Productivity More training, improve motivation of the employees, improved organisation of production. |
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Quality |
A product or service which meets the needs and expectations of customers and which achieves a desired minimum standard. |
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Quality Control |
The process of inspecting products to ensure that they meet the required quality standard. |
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Quality Assurance |
The process that ensures production quality meets the requirements of customers. |
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Customer Service |
Any dealings that a customer has with a business before, during or after the purchase of a product. |
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Supplier |
A supplier is a business or individual that provides goods and services to another business. A firm should consider the following when choosing a new supplier: Costs, quality, customer service, productivity, flexible capacity. |
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Automated Production |
Production process that is performed by machines. E.g. car manufacturing. |
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Marketing |
The process of identifying , anticipating and satisfying customer needs profitably. |
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Marketing Mix |
A planned mix of the controllable elements of a product's marketing plan commonly termed as 4Ps: product, price, place, and promotion.
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Competitiveness |
The ability of a business to deliver better value to customers than competitors. E.g. lower prices, higher quality. |
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Unique Selling Point (USP) |
This is something that sets a product apart from its competitors in the eyes of the customer, both new and existing. |
