Avtar case study

2 features of a private sector business

1. Profit is the motive

2. Owned by individuals

2 reasons why a business might remail small

1. Owners choice

2. Market size

One reason why a business needs short term finance

To pay day to day expenses

One reason why a business needs long term finance

To invest in major assets or expansion in the future.

2 ways an economic recession migth affect a business

1. Lower demand – people will not want to spend on non-essential goods, leading to reduced sales.

2. Attract more employees – people might be looking for a job.

Two ways a business can increase added value. Which is the best? Justify.

Improve product quality – enhance features, customers that might want to pay higher prices and buy cheaper raw materials, leading to reduced material costs.

It is the most suitable because cheaper materials could damage the reputation. Leading to fewer sales while improving quality could help attract new customers

Licensing

When a gives the right to sell their products overseas

2 factors that affect how much an inventory should hold

1. Demand for product

2. Space available

2 benefits of using batch production

1. Motivate workers

2. Production will not be affected if there is the use of machinery.

One advantage of forming joint venture

An increase in capital~ this will help the business in not taking loans.

Disadvantage of forming a joint venture

Disagreements might be conflict within the workplace. slows down decisions making.

Advantages of being ethical

~ good reputation so the business is able to charge higher prices
~ increases demand which will increase revenue

Disadvantages of being ethical

~fewer materials available, leading to less demand

~higher costs could lead to higher prices

Non current assets

items owned by a business for more than a year

Current ration formula

Current assets divided by Current liabilites

Which is a current asset or liability?

1. Trade receivables

2. Trade payables

3. Overdraft

4. Inventory

1. Current asset

2. Current liability

3. Current liability

4. Current asset

One objective is to increase profit, which might conflict the objective of customers

Better quality products – customers may want better products, which may increase costs of HRO.

One objective is to increase profit, which might conflict the objective of Suppliers

Increase prices – the business might want to keep a low cost so they have more funds for other costs.

One advantage and one disadvantage to employees being in a trade union

1. Protect job security

2. Expensive

Why is having a job description and advertisement important?

1. A clear view of what the job is

2. Attract a range of applicants

2 diseconomies of scale

1. Poor communication

2. Weak-coordiantion

Advantages and disadvantages of using the democratic leadership style.

~ gain ideas which may increase sales

~ Take time to consult, which slows down decision-making.

~if ideas are good it will increase sales