Business Studies Class 11

Business Studies Class 11
Cash Flow (Not the same as profit)
Selling something on credit counts as
profit now but it wont count as cash flow
until it enters the account
Improve cash flow by:
Hold less stock
Give customers shorter
credit periods
Get suppliers to give you
longer credit periods
Sell equipment and lease/rent it.
Can lead to false assumptions
Machinery can break down
Sample Represent the market.
Random Sample each member of the
target population has an equal chance of
being chosen.
Quota sample a fixed number of serveral different
segments each sharing a common feature(e.g age,gender)
Simple Random (names
from a hat)
Stratified Split into groups ,
random selection from the
The supply chain
Starts with Raw Materials
Moves to manufactoring
Distribution to shops
Retailers sell to customers
Protecting business models
Patent Protects the product
Trademark Protects the
Logo or slogan
Copyrights Copy written
work and music.
Business Plans
To get financial backing
Banks/Financers ask for
one before investing.
Helps entrepeneur asses
businesses strengths and
Comparable to real performance
Areas of a Business Plan
Executive Summary
General overview (key
Business Summary Type of
business/products/serive provided.
Future/ Legal.
Production Plan How
many products produced.
Marketing Plan Defines the
market, market research ,
promotions (USP)
Human Resources
Qualifications and exp of
Operations plan Location,
own property/ machinery?
Financial Plan Financial
forecasts, break even/cash flow
Advice on creating a
business plan
Business link, banks, websites, sample
business plans, consultants and
Help control income/expenditure
Help deligate authority
Help control/ motivate staff
If budget is wrong actual
results will follow
Lead to false confidence
Doesnt account for
machinery break down etc
Legal Structure of a Business
Sole Trader Unlimited Liability
+Freedom (own boss)
+Keep all profit
+Less Paperwork
+No legal costs
Work long hours
Limited Skills
No cover if ill
Unlimited Liablitiy
Partnerships e.g Doctors
and Solicitors
More start up capital
More ideas
More skills
Can cover when ill
Unlimited Liablility
risk of conflict
liable for decisions made
by partners
Private Ltd ( LTD )
Often Small family businesses
Dont have share prices on
stock exchange
Public Ltd (PLC)
Sell shares to public
shares freely transferable
Need over 50k in share
capital to start
Saves wage cost
Get a share of profits
Fast growth
Reduced risk
Share Rewards
Can damage reputation
Reputation Name/Idea
done nationally
Training provided
Leese machinery/equipment
Banks more willing to lend
Pay to use name
Share Profits
Bad reputation spreads
Follow rules of franchisor
Important to have a
balance of full/part time.
New starting businesses should
have part time staff until demand is
Permanent Staff have an ongoing
contractn and garunteed salary.
Severence pay
Tempory Fixed period of time (e.g
6months) Contracts can be
Business recruitment agencies used to
advertise and find suitable candidates.
Charge fee for service
Contractors used when businesses
require specific specialist skill (short
term basis) e.g cleaning, accountancy
and building.
Some businesses find it difficult to attract
the right candidates as they cannot offer
the salaries larger companies offer.
Can be sued if candidates
declined for race,sex or
Cost Benefti Analysis Weighing up the
costs of a business against potential
Break even to measure this
Contribution per unit = Selling
price per unit variable costs per
Break even = Fixed costs
divided by contribution per
(level of sales to cover costs)
Manufactoring businesses providing
bulky finished products need to be
located near to customers.
Manufactoring businesses starting with heavy
raw materials producing lightweight end
products need to be located near raw
Good location needs a good
infrastrucute (motorways, rail links,
ports and airports)
required for import of raw materials,
transport of finish products and getting
staff to work
Must be located near support services
(banking, IT assistance, engineering
Must be near College/Universities,
Affordable housing, schools, medical,
leisure, room for expansion.
Government provide grants, loans ,
equity investment and financial guidance
as incentives for some areas.
Located near owners house
Some areas have better
image e.g London/Paris for
However internet made
locations more flexible.