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Aqa~Unit 6~Business Studies~Official

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Reply 280

helentate

netuser07

wat are the factors that influence the most appropriate source of finance? anyone

Think its things like:
1. how much finance you need,
2. how long you need it for,
3. if you have any or many current assets (because you could sell these)
4. what options of finance you have available,
5. what are the impacts of the different sources for example if you will be charge a lot of interest then you may not choose that option
x

Reply 281

nick-nackz-x

netuser07

wat are the factors that influence the most appropriate source of finance? anyone

External sources of finance are good for a company that wants quick capital for investment. Examples being loans and shareholder funds. External sources of finance are much more quick and easy to get hold of, allowing the firm rapid growth. Also, they are risking someone elses money rather than their own. However, internal sources of finance although much slower, allow the company more control over the business. Shareholders might put pressure on the firm to make quick, short-term profit, whilst the managers are interested in re-investing in order to grow. Also, won't be hit by interest rates increasing, so risk of insolvency is reduced! x

Reply 282

smithywill

Is it just me or do you find it hard revsing for business studies, i mean there is not really many facts that you just revise. I think it depends on the day of the exam of how well you do. The only thing i can mange to secure in my head is the advantages and disadvantages of different techniques etc. Anyone agree?

Reply 283

netuser07

Corporate planning :s-smilie:

can't get my head around it ..

Reply 284

Laurenxx

Exchange rate = the price of one countries currency in terms of another
INCREASE in exchange rates:
• If price elasticity of demand for exports is inelastic, an increase in price will have little effect on sales
• If price elasticity of demand is elastic, an increase in export prices is likely to lead to significant fall in sales volume and sales revenue.

Problems of fluctuating exchange rates:
• Firms exporting and importing on a regular basis find it difficult to predict the volume of overseas sales or prices they will reciive from them
• Affects the ability to plan ahead effectively
• May even stop firms developing export markets

Reply 285

Jrizzle1

Corprate planning is basically getting managers to look at the current situation, set objectives which are obtanable (SMART) and this gives them direction for the future to stop them drifting. This may be an overall plan or plans for each department, and can consist of many different elements. Workforce planning is done by HRM to plan for workforce needs in future growth, retrenchment of market conditions.

Corprate plans also show to stakeholder ssuch as suppliers and banks that the busines sis moving, giving them more motivation to give loans/business to them. This works the same for shareholder investment. Withut plans business usaully find it hard to find direction and end up deviating from there goals and result in financial and managerial difficulties.

Reply 286

nick-nackz-x

helentate

Is a business plan and corporate plan the same thing?
and are the advantages and disadvantages similar to them of a mission statement? x

I would say a business plan is what a company creates before they set about creating a corporate plan. A business plan is when a firm assess where they are at, the difficulties and where they plan to go. The corporate plan outlines HOW they will achieve that outlined in the business, in terms of objectives and the overall strategy that will be used to achieve this. A mission statement is more of an overall statement to it's stakeholders and it's main aims, usually about how they aim to treat stakeholders and so on. Not really a plan of how they will improve, just really there to encourage stakeholders that they are a worthy company. So basically bigging up the company! Advantages of a corporate plan would be that they have an overall guide to where they want to go and how to achieve it. Laying out objectives are motivating for staff members too, as they have something to work towards. Disadvantages are that they are time-consuming and that objectives set might be too optimistic, so managers must be realistic! I hope that helped? Looooool

Reply 287

Laurenxx

Inflation = an increase in general level of prices and goods and services within an economy which means a fall in the purchasing power of money

Positive effects:
• Tends to encourage borrowing if interest rates are less than the rate of inflation. Good for highly geared firms as inflation reduces the real value of the sum of money they owe making it easier to repay the loan at the end of its life.
• As inflation rises so do property prices and prices of stock thus balance sheets look healthier.
• Consumers become more aware of price differences which may benefit lower priced firms
• Firm will find it easier to increase price of their own products if prices are rising generally meaning that cost increases can be passed onto the customer more easily.

Negative effects:
• High prices may mean lower sales
• Firms that sell at premium prices may suffer as inflation makes customers more aware of price differences
• Workers become more concerned about their rates of pay, may negotiate for pay increase
• Suppliers may demand more for the goods/services they supply
• Forecasting sales and revenue may be difficult
• When prices change quickly it can be hard to keep track of competitors prices

Reply 288

Jrizzle1

Do you think its almost a given that their going to include some kind of macro economic figures, as they do nearly every year, and this year it is especially topical?

Reply 289

Frazer435

Hi just revising macro economic factors read over several point in topic but talking a step back not to get to caught up with things. Just having a slight problem,

Can anyone tell me if this is correct just read it in a revision guide cant make hens meat of it atm.

High UK Interest rates will encourage more investment in the uk, hence inceasing the demand for pounds and thus the exchange rate of the pound.

I thought it was that a lower interest rate was better for firms especially highly geared ones, as investment looks more attractive because loans are easier to pay back and peoples spenditureis higher and saving looks less attractive correct me if im wrong just confused with the above in bold.

Reply 290

Laurenxx

Implications for business strategy of the business cycle
Business cycle = the regular pattern of ups and downs in demand and output
Boom = a period characterised by high levels of consumer demand
• Demand is likely to be greater than supply creating excess demand which is likely to increase the price of goods
• Shortage of resources relative to demand means costs are likely to rise.
• Increasing demand may mean firms utilise their capacity to full and they may consider expansion to increase output to meet demand
• Increased demand and high prices may result in an overall increase in profits
Recession = falling levels of consumer demand, output, profit and business confidence
• May result in excess stock and a need to reduce prices to sell
• May lead to low profits and even losses and workers being made redundant
• Liquidation or business closures
Slump = very low levels of consumer demand, investment and business confidence
• Firms may be content to change low prices, concentrating on sales volume rather than sales revenue
• Factories are likely to close leading to large scale redundancies and unemployment
Recovery = slowly rising levels of consumer demand and investment and falling levels of unemployment
• May lead to increase in profits
• May encourage new businesses to be set up
• Existing spare capacity may be used

Reply 291

nick-nackz-x

Jrizzle1

Do you think its almost a given that their going to include some kind of macro economic figures, as they do nearly every year, and this year it is especially topical?

They will have created this exam a couple of years ago. I'm not sure whether it's 2 or 3 years. Anyone know? Then think of businesses which were of great debate or discussion back then, which could come up as a question x

Reply 292

Laurenxx

Frazer435

A high intrest rate will be good for investing as they will earn more for their money. Lower intrest rates are good if they are highly geared as te value of the money they owe will be reduced and so it will be easier to pay back loans at the end of their life (eg £10, 10 years ago could be £50 now)

Reply 293

Frazer435

Excellent cleared that up are you currently writing pro's and cons for all topics or just some seems like your doingquite a bit of posting, if you are I will be watching this space to make notes :smile:

Reply 294

Laurenxx

Frazer435

Pretty much yeah, Im finding it a useful way for myself to revise all the topics so I thought I may aswell share with everyone else as it doesnt take much to copy and paste. I'm gonna go through pretty much everything in the unit 6 spec

Reply 295

helentate

nick-nackz-x

thanks

i understand now so they're kinda connected but not the same :smile:

Reply 296

Frazer435

Nice we'll my revision is still in the process okay, ive only started today mainly but because focus was on other exams im quietly confident about unit 6 anyway but yeah i'll be putting some hard hours in tonight and tomorrow and your write ups wont go a miss :smile:

Reply 297

Laurenxx

Implications of the EU for business
• Depends on the extent to which the firms trades with other member countries

Benefits:
• Access to a market of over 450 million people which is bigger than Japan and the USA together
• Opportunities for economies of scale because of the large market
• More competition may mean improved efficiency to compete and thus lower costs
• Opportunities for European merges and joint ventures = synergies and improved efficiency
• Encouragement for inward investment from non EU countries which increased employment, income and opportunities for supplier industries (eg Nissan setting up in Sunderland)
• Wider labour force to draw on
• Firms are able to invest anywhere in the EU so greater mobility of capital

Disadvantages:
• Increase in legislation and need to meet common standards
• Increased competition in both Europe and the domestic market
• Labour/capital may be attracted to other EU countries (Countries such as Poland who offer lower wages may find it hard to compete for labour.