Pearson-Edexcel-Business-IAS Complete-Revision-Notes Unit-2=Managing-Business Activities=(-Paper-Unit-code= WBS12-) 2

Pearson-Edexcel-Business-IAS Complete-Revision-Notes Unit-2=Managing-Business Activities=(-Paper-Unit-code= WBS12-) 2 This means important key points which can be helpful for the exams. This means definitions of terms. Additional information/explanation. Course Structure CHAPTER= 23- Planning .................................................................................................. 3 24- Internal Finance........................................................................................ 4 25- External Finance .......................................................................................6 26- Forms of Business ................................................................................... 10 27- Forms of Business: PLCs .................................................................................14 28- Liability ................................................................................................. 16 29- Sales, Revenue & Costs............................................................................ 19 30- Sales Forecasting....................................................................................21 31- Break-even ............................................................................................ 24 32- Cash-flow .............................................................................................. 27 33- Budgets................................................................................................. 29 34- Profit..................................................................................................... 32 35- Liquidity ................................................................................................ 34 36- Business Failure...................................................................................... 38 37- Production, Productivity & Efficiency .................................................................40 38- Capacity Utilisation .................................................................................44 39- Inventory Control....................................................................................46 40- Quality Management ............................................................................... 49 41- Economic Influences ................................................................................ 51 42- Legislation .............................................................................................55 43- The Competitive Environment.......................................................................... 58 Business Terminologies................................................................................ 60 (These boxes may be seen throughout the revision notes.) 3 CHAPTER 23: PLANNING I. Business plan → A plan for the development of a business, giving details such as the products to be made, resources needed & forecasts such as costs, revenues & cash flow. → Initially, new businesses will create a plan to follow but changes in external factors will lead to changes in business plans. → Business plan is a written document by the business regarding its operations. II. Relevance of a Business Plan → A business plan is needed to support applications for finance, both at the startup stage & in the future. Lenders & other investors are not likely to put money into a business unless the owners can provide a clear, concise vision of future progress & profitability. → In particular, investors will want to know how their money is going to be spent & when & how they are going to benefit from their investment. III. Uses of a business plan 1. To show a clear direction for the development of a business. 2. Help show lenders & investors that the owner is cautious, responsible, serious & credible. 3. To flag up potential problems in advance so that investors are aware & solutions can be found. When the business creates a business plan, they can see the potential problem in advance & find solution. e.g., If the business decided to expand in the future, then they will have to increase their production. The problem is the source of finance. As a result, they can think of in advance where they will get the finance. IV. Contents of a Business Plan 1. An executive summary-usually business plan is very lengthy. So, there should be a summary of the whole business plan included on the business plan itself. 2. The business opportunity-a description of the product/ range of products to be made, the quantity to be sold & the estimated price. 3. Financial forecasts-It must be written in the business plan the cash outflows & inflows. e.g., sales forecast, cash flow forecast 4. The business & its objectives-the name of the business, its address, its legal structure & its aims & objectives. 5. Personnel-who will run the business, how many employees. 6. Finance-where the finance to start up & run the business will come from. 7. Premises & equipment-premises to be used, equipment which needs to be obtained & financed. Business plan is: o Mainly created by the owner o For future use 4 Internal Finance-money generated by the business/its current owners. Retained profit-is the profit after tax (corporation tax) that is put back into business & not returned to the owners. CHAPTER 24: INTERNA