NEW SYLLABUS BUSINESS TOPICS.docx

8/16/2019 NEW SYLLABUS BUSINESS TOPICS.docx

1/13

NEW SYLLABUS BUSINESS TOPICS

Advantages and disadvantages of privatisation in a given situation:

Advantages Disadvantages

1. Improved Ei!ien!".

I "o# $or% or a government r#n ind#str"&

managers do not #s#a''" s(are in an" proits.

)o$ever& a private irm is interested in ma%ing

proit and so it is more 'i%e'" to !#t !osts and

*e ei!ient.

1. S(ort+Termism o ,irms.

To p'ease s(are(o'ders private irms ma" see%

to in!rease s(ort term proits and avoid

investing in 'ong term pro-e!ts.

. La!% o Po'iti!a' Intereren!e.

It is arg#ed governments ma%e poor e!onomi!

managers. T(e" are motivated *" po'iti!a'

press#res rat(er t(an so#nd e!onomi! and*#siness sense. Eg/ a state enterprise ma"

emp'o" s#rp'#s $or%ers $(i!( is inei!ient.

. Pro*'em o reg#'ating private monopo'ies.

Privatisation !reates private monopo'ies& s#!(

as t(e $ater !ompanies and rai' !ompanies.

T(ese need reg#'ating to prevent a*#se omonopo'" po$er.

0. S(are(o'ders

Private irms (ave press#re rom s(are(o'ders

to perorm ei!ient'". I t(e irm is inei!ient

t(en t(e irm !o#'d *e s#*-e!t to a ta%eover. A

state o$ned irm doesnt (ave t(is press#re

and so it is easier or t(em to *e inei!ient.

0. 2overnment 'oses o#t on potentia'

dividends.

3an" o t(e privatised !ompanies in t(e U4

are 5#ite proita*'e. T(is means t(e

government misses o#t on t(eir dividends&

instead going to $ea't(" s(are(o'ders.Eva'#ation

+It depends on t(e ind#str" in 5#estion. Te'e!om ind#str" is a t"pi!a' ind#str" $(ere t(ein!entive o proit !an (e'p in!rease ei!ien!". )o$ever& in (ea't( !are or p#*'i! transport

ind#stries t(e proit motive is 'ess important.

+Is t(e mar%et !ontesta*'e and !ompetitive6 Creating a private monopo'" ma" (arm !ons#mer

interests& *#t i t(e mar%et is (ig('" !ompetitive& t(ere is greater s!ope or ei!ien!" savings.


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Impact of a merger/takeover on the various stakeholders

Negative impa!t/

1.7o* 'osses in t(e a!5#ired *#siness 8a dire!t res#'t o !ost s"nergies9

. Un!ertaint" : more -o* inse!#rit" ; parti!#'ar'" as organisationa' str#!t#res : s"stems areintegrated.

0. Potentia' !'os#re and < or transer o !apa!it" to ot(er internationa' 'o!ations 8e.g. to emergingmar%ets9

Positive impa!t/

1. =ed#!ed !ompetition *ot( *#"er and target 8mar%et more attra!tive9

. Better mar%et a!!ess.

0. Improve proits

Eva'#ation/

+W(i!( sta%e(o'der gro#ps a!t#a''" (ave t(e po$er to impa!t t(e event#a' s#!!ess or ai'#re oa ta%eover6 W(i'st t(ere mig(t *e $idespread opposition rom media : 'o!a' !omm#nit" ; areot(er sta%e(o'der gro#ps 8!#stomers& emp'o"ees9 m#!( more important6

+Too eas" to ass#me t(at a ta%eover $i'' (ave a negative ee!t on interna' sta%e(o'ders 'i%eemp'o"ees. T(e transa!tion mig(t a!t#a''" *eneit t(em in t(e 'ong+r#n i t(eir *#siness is

stronger as a res#'t.

Why a takeover may or may not achieve objectives (e.g synergy

1. T(e 5#a'it" o t(e d#e di'igen!e perormed/ did it (ig('ig(t t(e %e" ris%s invo'ved : s#pport t(e

initia' investment !ase or t(e transa!tion6

. T(e !omp'e>it" o t(e transa!tion/ a more !omp'e> integration pro!ess oten ma%es s#!!ess

(arder to a!(ieve.

1. Cost synergies: cost savings that arise as a direct result of the transaction (in both the target and

buying business)

2. Revenue synergies: increased revenues (for both businesses) arising from the transaction

3. Due diligence: verifying the financial, legal and commercial osition of the target business!


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0 .T(e e>terna' environment/ e.g. an adverse !(ange in t(e e!onomi! environment !an damage

t(e perorman!e o t(e *#siness ta%en over? !ompetitor response is a'so dii!#'t to anti!ipate

8t(e" ma" see a ta%eover as a great opport#nit"9

!he impact of and issues associated "ith #$% (e.g. accounting

practices& paying incentives for the a"ard of contracts& socialauditing

"ocial audit: # reort on the imact a business has on society $ this can cover ollution levels,

health and safety record, sources of sulies, customer satisfaction and contribution to the

community.

O#t!ome/ Identi" and remove anti+so!ia' *e(avio#r& *etter p#*'i! image& in!rease !#stomer'o"a't"& !'ear dire!tion and #t#re improvements

Beneits/ Identiies $(at so!ia' responsi*i'ities are met and $(at need to *e improved& set

targets or improvement *" !omparing a#dits res#'ts $it( t(e *est+perorming irms& improve!ompan" image 8(e'p mar%eting9

Limitations/ Not independent'" a#dited& time and mone" needed& most !ons#mers are %een on!(eap goods and do not *ot(er is t(e irm so!ia''" responsi*'e.

!he difference bet"een 'hard and 'soft )%*


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+le,ibility e.g. advantages and disadvantages of temporarycontracts or fle,ible contracts& e.g. -ero hours contracts and parttime

against fulltime "orkers

%ero hours contracts: no minimum hours of &or' are offered and &or'ers are called in and aid

&hen &or' is available.

Advantages o a part+time and 'e>i*'e emp'o"ment !ontra!ts or t(e *#siness

1. Emp'o"ees to $or% on'" at *#s" periods o t(e da". =ed#!e over(ead and t(e 'e>i*i'it" oers!ompetitive advantage

. 3ore stas are avai'a*'e in !ase o si!%ness or a*senteeism

0. Emp'o"ee ei!ien!" !an *e assessed *eore oer #'' time !ontra!t

@. Te'e$or%ing 8sta $or%ing rom (ome *#t %eep !onta!t $it( t(e oi!e *" means o modern IT!omm#ni!ations9

. Save !osts. A *#siness !an ma%e s#*stantia' savings on over(eads i it does not (ave toprovide oi!e or so man" $or%ers


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Disadvantages o a part+time and 'e>i*'e emp'o"ment !ontra!ts or t(e *#siness

1. 3ore emp'o"ees to manage

. Comm#ni!ation dii!#'t"

0. Lo$er motivation 'eve's&

@. La!% o team $or% !#'t#re

W(" ero !ontra!ts6

1. Demands o t(e -o*/ $(ere $or% is errati! and (ig('" #npredi!ta*'e& var"ing rom da"+to+da"and $ee%+to+$ee%& t(e" !an *e t(e most ee!tive and !ost ei!ient $a" o mat!(ing 'a*o#rdemand and s#pp'"?

. Evading emp'o"ment rig(ts/ irms ma" designate individ#a's as $or%ers rat(er t(anemp'o"ees/ $or%ers are not entit'ed to prote!tion against #nair dismissa'& maternit" rig(ts&red#ndan!" rig(ts?

0. 3eeting individ#a' 'e>i*i'it"/ or some emp'o"ees& a )C ma" *e attra!tive in t(at t(e" !(ose$(en and $(ere t(e" $or%& or it is a s#pp'ement to a main -o*& or t(e potentia' inse!#rit" oin!ome is not a ma-or !on!ern ; or e>amp'e& a retired person $(o $ants to do some o!!asiona'$or%

!he benefits to employers and employees of trade union

involvement in the "orkplace including their role in collectivebargaining

1. Trade Union Recognition: When an employee formally agrees to negotiation on

pay

2. Collective Bargaining: The process of negotiating for the terms of employment

between an employer and a grop of wor!ers who are sally represented by trade

nion o"cial.

Beneits o trade #nion invo'vement in t(e $or%p'a!e to

E3PLOYEES E3PLOYE=S1. Collective bargaining for pay rises,

power through solidarity.

2. Collective industrial actions are more

inuential 3. To protect and enforce

workers legal rights.

. !mproved working conditions

1. "aves time as management have only

to deal with trade union instead of all

workers.

2. #dditional useful communication

channels on workers problems and

management plans.


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$. To protect against unfair dismissal

%. To pressurise employers to legal

re&uirements

3. 'nions can impose discipline action on

members hasty industrial action

. (rowth of responsible partnership

unionism

$. )anagers also need to work harder

due to the pressure of trade unions.%. *orkers work harder + more

motivated.

!he reasons and "ays structures change e.g. "ith gro"th ordelayering.

Organisationa' str#!t#re !(ange $it( gro"th:

+ 3#'tip'e 'eve's o a#t(orit"

T(e str#!t#re is designed so t(at sta !an i'' m#'tip'e ro'es.

+ =eso#r!es ma" a'so not *e ade5#ate&

+ 3ost data !o''e!tion or reporting is designed to satis" !#stomer or nationa' re5#irements.

Organisationa' str#!t#re !(ange $it( delayering:

+ In!reasing t(e average span o !ontro' o senior managers $it(in t(e *#siness

+ ,re5#ent'"& 'a"ers removed are t(ose !ontaining midd'e managers.

+ Seen as a $a" o red#!ing operating !osts 8 response to t(e e!onomi! do$nt#rn9

Advantages o de'a"ering Disadvantages o de'a"ering

1. Opport#nities or *etter de'egation&

empo$erment and motivation as a#t(orit"

passed do$n t(e (ierar!("

. Improve !omm#ni!ation $it(in t(e *#siness

+ e$er 'eve's o (ierar!("

0. =emove departmenta' riva'r" i department

(eads are removed and t(e $or%or!e is

1. Not a'' organisations are s#ited to 'atter

organisationa' str#!t#res + mass prod#!tion

ind#stries $it( 'o$+s%i''ed emp'o"ees ma" notadapt easi'"

. A negative impa!t on motivation d#e to -o*

'osses

0. Disr#ption as peop'e ta%e on ne$


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organised in teams

@. =ed#!e !osts as e$er managers are

re5#ired

. It !an en!o#rage innovation

. C'oser !onta!t $it( t(e *#siness

!#stomers+ res#'t in *etter !#stomer servi!e

responsi*i'ities and #'i'' ne$ ro'es

@. Wider span o !ontro' $(i!(& i too $ide& !an

damage !omm#ni!ation $it(in t(e *#siness.

. In!reasing $or%'oad.

. S%i''s s(ortages $it(in t(e *#siness


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!he implications for marketing of increased globalisation andeconomic collaboration& e.g. %I#$

RC: *he acronym for five raidly develoing economies &ith great mar'et oortunities $

ra+il, Russia, ndia, China and "outh #frica.*he raid develoment of maor develoing countries $ the RC" $ is leading to huge

mar'eting oortunities.

Advantages and Disadvantages o In!reased 2'o*a'isation/

ADFANTA2ES DISADFANTA2ESi. 2reater opport#nities se''ing in ot(er

!o#ntries? ne$ mar%ets or (ig(er sa'es&

e!onomies o s!a'es and improved proita*i'it"

ii. In!reased !ompetition ma%es t(e irm more

g'o*a''" !ompetitive. Proton (iding *e(ind

trade *arriers *reeds inei!ien!".

iii. Create g'o*a' *rand t(ro#g( pan+g'o*a'

mar%eting strategies

iv. Wider !(oi!e o 'o!ation. Provides 'o$er

!osts& dire!t 'o!a' mar%et assess or *etter

mar%et inormation

v. 2reater reedom or mergers and ta%e overs

i. In!reased domesti! !ompetition. Non

!ompetitive 'o!a' irms ma" or!e to !'ose

do$n.

ii. 3ore ei!ient !ompetitors irms d#e to

g'o*a' !ompetition

iii. C#'t#ra' and taste dieren!es in dierent

!o#ntries. Need to t(in% 'o!a' and a!t 'o!a' ;

g'o*a' 'o!a'isation

iv. Signii!ant transport : !omm#ni!ation

pro*'ems. =is% o #net(i!a' pra!ti!es d#e to

de!entra'isation.

v. =is%s o oreign ta%eovers.

vi. Anti+g'o*a'isation press#re gro#ps on

environment impa!t on emerging e!onomies

vii. 2overnment (as 'ess in'#en!e on

*#siness de!isions on a!tories !'os#re or

re'o!ation


9/13

0ifferences bet"een full and contribution costing

3argina' !osting

8Contri*#tion !osting9

A*sorption !osting

8,#'' !osting93ain Use To help with shortterm

decisionmaking in theforms of-

breakeven analysis

margin of safety

target prot

contribution sales ratio

limiting factors

special order pricing

calculating prot

calculating inventoryvalues valuation for

nancial statements

)o$ does it $or%6 • costs are classied as

either /ed or variable

• contribution to /ed

costs is calculated as

selling priceless variable

costs

• overheads are charged

to output through an

overhead absorption rate,

often on the basis of direct

labour hours or machine

hours

3ain o!#s • marginal cost

• contribution

• all overheads charged to

output

• calculating prot

• calculating inventory

values

Use#'ness • concept of contribution

is easy to understand

• useful for shortterm

decisionmaking, but no

consideration of

overheads

appropriate for traditional

industries where

overheads are charged tooutput on the basis of

direct labour hours or

machine hours

Limitations • costs have to be

identied as either /ed

or variable

• all overheads have to be

recovered, otherwise a

loss will be made

• calculation of sellingprices may be less

accurate than other

costing methods

• not as useful in short

term decisionmaking as

marginal costing

• may provide less

accurate basis for

calculation of selling

prices where overheadsare high and comple/ in

nature


10/13

*easuring performance (udgets

Perorman!e B#dgets

De!isions made on t(ese t"pes o *#dgets o!#s more on o#tp#ts or o#t!omes o servi!es t(anon de!isions made *ased on inp#ts. In ot(er $ords& a''o!ation o #nds and reso#r!es are *ased

on t(eir potentia' res#'ts. Perorman!e *#dgets p'a!e priorit" on emp'o"eesG !ommitment toprod#!e positive res#'ts& parti!#'ar'" in t(e p#*'i! se!tor.

Amendment of a statement of financial position from given data


11/13

!he relationships bet"een items in the income statement and thestatement of financial position

In inan!ia' a!!o#nting& t(e statement o inan!ia' position and in!ome statement are t(e t$omost important t"pes o inan!ia' statements.

# statement of financial osition lists assets and liabilities of the organisation as of a secific

moment in time, i.e. as of a certain date.

#n income statement - also called a rofit and loss account or /0 statement is a reort for

income and eenses over a secific time eriod, usually a uarter or year. # comany &ith

strong income statements year over year &ill generally build a healthy statement of financial

osition.

T(e in!ome statement reports a !ompan"Gs inan!ia' perorman!e $(i'e t(e statement o

inan!ia' position reports its inan!ia' (ea't(.

A !ompan"Gs inan!ia' perorman!e reg#'ates its inan!ia' (ea't(. Perorman!e and (ea't( are'in%ed t(ro#g( t(e net in!ome a!!o#nt on t(e in!ome statement and t(e e5#it" a!!o#nt on t(estatement o inan!ia' position.

T(e statement o inan!ia' position reports inan!ia' (ea't( o a !ompan" on a spe!ii! date intime H as o De!. 01& J1& or e>amp'e. T(e *asi! a!!o#nting e5#ation inorms t(at assets&t(e reso#r!es emp'o"ed to !ond#!t *#siness operations& are a!5#ired t(ro#g( eit(er *orro$ingor t(ro#g( o$nerGs e5#it" H Assets K Lia*i'ities O$nerGs E5#it".

C(ange in t(e o$nerGs e5#it" a!!o#nt rom t(e previo#s period is t(e prin!ipa' mar%er o t(e

!ompan"Gs inan!ia' (ea't(. An in!rease in o$nerGs e5#it" is a sign o good (ea't(. It s(o$s t(att(e !ompan" is re'"ing 'ess on de*t to its #nd operations. Converse'"& a de!rease in o$nerGse5#it" s(o$s t(e opposite. T(e statement o inan!ia' position reports t(e inan!ia' (ea't( o a!ompan" as o a spe!ii! date? t(e in!ome statement reports in!ome and e>pense a!tivit" or aspe!ii! period o time. It s(o$s (o$ m#!( mone" t(e !ompan" made ater a!!o#nting or a''e>penses. T(e *ottom 'ine ig#re represents its proit or its 'oss.

T(e !ompan" !an eit(er distri*#te t(e proit dire!t'" to t(e o$ner as an o$nerGs dra$& or it !anreinvest t(e proit in t(e *#siness. In eit(er !ase& t(e proit is re'e!ted in t(e o$nerGs e5#it"se!tion o t(e statement o inan!ia' position *" #sing t(e e>panded a!!o#nting e5#ation. T(ee>panded a!!o#nting e5#ation is an airmation o t(e interre'ations(ip *et$een t(e in!omestatement and t(e statement o inan!ia' position.


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!he impact on the statement of financial position of a givenchange in valuing noncurrent assets or inventories

4oncurrent assets are comany5s longterm investments, in the case that the full value &ill not

be realised &ithin the accounting year.

4oncurrent assets are caitali+ed rather than eensed, meaning that the comany allocates

the cost of the asset over the number of years for &hich the asset &ill be in use, instead of

allocating the entire cost to the accounting year in &hich the asset &as urchased.

4oncurrent assets aear on the comany5s statement of financial osition

6amles: investments in another comany, intangible assets such as good&ill, brand

recognition and intellectual roerty, and roerty, lant and euiment.

,#rt(er Amendments To T(e P#*'is(ed A!!o#nts

1& 2ood$i''

;arises $(en a *#siness is va'#ed at or so'd or more t(an t(e statement o inan!ia' positionva'#e o its assets

+Wi'' appear on statement o inan!ia' position on'" $(en t(e *#siness is prepared or sa'e or -#st ater t(e irm (as *een p#r!(ased

+It is $ritten o 8get rid o9 ASAP *e!a#se it is dii!#'t to va'#e and !an !(ange or disappearrapid'"

+It $i'' appear on t(e *#siness t(at (as *o#g(t anot(er irm and (as paid or good$i'' #nder non+!#rrent intangi*'e asset and $i'' *e ta%en o ASAP

. Intangi*'e Assets

E>amp'es o intangi*'e assets& good$i''& !op"rig(ts& *rand names and !apita' spent on = : D )o$ Intangi*'e Assets are treated in t(e Statement o inan!ia' position

+ Intangi*'e assets are dii!#'t to p'a!e a va'#e on it

+Statement o inan!ia' positions does not re!ord t(ese assets

+So#r!e o #t#re earnings ; %no$'edge+*ased e!onom"

+3ar%et va'#e 8t(e estimated tota' va'#e o a !ompan" i it $ere ta%en over9 is (ig(er t(an t(estatement o inan!ia' position or *oo% va'#e


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NEW SYLLABUS BUSINESS TOPICS.docx