Business Planning
Name 3 things that a business plan helps identify, besides its goals?
Strategies to achieve those goals / its competitive advantage / SWOT analysis / financial circumstances etc
In a bureaucratic staffing system, who makes most of the decisions and what is a feature of it?
Answer: Management/the boss — top-down, staff are directed
Name the one competitive advantage strategy covered in class.
BONUS: 200
What does the strategy you've said mean?
Cost leadership or differentiation leadership
Name two tools businesses use to monitor their performance.
BONUS 100: What does monitoring allow businesses to do?
Answer: Sales revenue / budgets / profit measures
What does technology like accounting software help a business owner do weekly?
Track cash flow, profitability and expenses / generate an income statement and variance report)
Name two of the five key factors affecting business surviva
poor cash flow/finance control, undercapitalisation, lack of industry experience, inadequate business plan, ineffective marketing
Give two non-monetary benefit a business might offer staff.
BONUS 100: How can these rewards help a business?
Employee discounts / flexible working hours / gym memberships)
What are economies of scale?
As production volume increases, the average cost per unit falls
Explain the difference between monitoring and evaluation.
Answer:
Monitoring = collecting the data
Evaluation = interpreting the gap between actual and target performance
Explain what a variance report actually shows a business owner.
Answer: A comparison between actual figures and the budgeted/forecast figures, highlighting where performance differs from expectations
SWOT stands for strengths, weaknesses, opportunities and threats. It allows for the business to reflect on its goals so they can make smarter strategic decisions.
Name one type of work team and what it is.
Quality circles / team building / employee involvement
Explain why a low defect rate supports cost leadership.
Answer: Fewer faulty products means less waste, rework, and returns which directly lowers production costs
Explain why a business could have rising Gross Profit but falling Net Profit.
Expenses such as rent, wages, or marketing are rising faster than Gross Profit.
Explain why economic conditions "rarely cause failure alone."
Answer: They typically expose or worsen existing weaknesses such as low capital or poor business skills.
Explain how an inadequate business plan could indirectly cause ineffective marketing. Name ONE stakeholders that could look at your plan.
Without clear goals/target market analysis in the plan, marketing efforts lack direction and may fail to reach or persuade the right customers.
Stakeholders include : investors, banks, suppliers, landlords
Give TWO reasons why participative management often takes longer to reach a decision than bureaucratic management, and why this delay can still be worthwhile.
More discussion/consensus needed, but decisions gain wider buy-in, better ideas surface, and staff take more accountability for outcomes
Explain what it means for a business to be "over-extended. List two things that a business can over-extend.
Using more debt/finance or resources than it can realistically repay or manage. Overextension of, staffing, stock, warehousing etc.
Explain why a business would use a budget as a monitoring tool, not just an income statement.
A budget sets a target/plan in advance, allowing actual performance to be compared against it
Explain why keeping a cash reserve is particularly important for a business exposed to seasonal economic conditions.
BONUS 200: Provide an example of a seasonal economic condition
Answer: A cash reserve provides a buffer during the low-income period, allowing the business to cover fixed costs like rent and wages until conditions improve)
Explain why poor cash flow control can cause a business to fail even if it is profitable on paper.
A business can show a profit on its income statement but still run out of cash if money isn't coming in fast enough to cover expenses like wages and rent when they're due
Explain why a business might struggle to implement self-managed work groups if it has always operated bureaucratically.
BONUS 100: What video did we watch after building the spaghetti towers and what was it about?
Answer: Staff may be used to being directed and lack experience making independent decisions, and management may find it hard to give up control.
Explain why differentiation leadership often requires heavier investment in marketing than cost leadership.
Differentiation relies on building brand loyalty and justifying a premium price, which requires ongoing promotion; cost leadership competes mainly on price, requiring less brand-building spend
A business has Sales Revenue of $80,000, COGS of $30,000, and Expenses of $35,000. Calculate the Net Profit AND Net Profit margin.
Answer:
Gross Profit = $50,000
Net Profit = $15,000
Net Profit margin = 15,000/80,000 × 100 = 18.75%
Explain what happens to government spending and taxation under an expansionary stance, and what effect this has on overall demand in the economy.
Government spending increases and/or taxation is lowered, which increases the amount of money available to consumers and businesses hence, stimulating demand in the economy