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Unit 2: Managing Business Activities

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  1. 2.3.1 - Planning a business and raising finance

    1. Explain the content of a business plan.

    2. Evaluate the relevance and uses of a business plan.

    3. Explain owner capital through personal savings.

    4. Explain retained profit as internal finance.

    5. Explain sale of assets as internal finance.

    6. Assess suitability of sources such as family and friends, banks, peer-to-peer funding, business angels, crowdfunding and other businesses.

    7. Assess suitability of loans, share capital, venture capital, overdrafts, leasing, trade credit and grants.

    8. Compare sole traders, partnerships and private limited companies.

    9. Explain franchising, social enterprise, lifestyle businesses and online businesses.

    10. Explain growth to public limited company status and stock market flotation.

    11. Analyse implications, advantages and disadvantages of limited and unlimited liability.

    12. Choose finance appropriate for limited and unlimited liability businesses.

  2. 2.3.2 - Financial planning

    1. Calculate sales volume and sales revenue.

    2. Calculate fixed costs, variable costs, total costs and average costs.

    3. Explain ways to improve sales volumes and sales revenues.

    4. Explain the purpose of sales forecasts.

    5. Analyse consumer trends, economic variables and competitor actions as influences on sales forecasts.

    6. Evaluate difficulties of sales forecasting.

    7. Calculate contribution as selling price minus variable cost per unit.

    8. Calculate break-even where total costs equal total revenue.

    9. Use contribution to calculate the break-even point.

    10. Calculate and interpret margin of safety.

    11. Interpret break-even charts.

    12. Evaluate limitations of break-even analysis.

    13. Construct and interpret simple cash-flow forecasts.

    14. Evaluate the use and limitations of cash-flow forecasts.

    15. Explain purposes of budgets.

    16. Compare budgets based on historical figures with zero-based budgets.

    17. Apply variance analysis.

    18. Evaluate difficulties of budgeting.

  3. 2.3.3 - Managing finance

    1. Calculate gross profit, operating profit and profit for the year.

    2. Explain ways to increase profits.

    3. Use statements of comprehensive income to calculate profitability margins and explain ways to improve profitability.

    4. Distinguish profit from cash.

    5. Use statements of financial position to calculate current ratio = current assets/current liabilities and acid-test ratio = (current assets − inventory)/current liabilities, interpret liquidity, and recommend ways to improve it.

    6. Explain working capital management and the importance of cash.

    7. Analyse internal causes such as poor cash-flow management, sales overestimation, overtrading, poor inventory control, poor marketing and poor quality.

    8. Analyse external causes such as market conditions, competition, economic conditions, exchange rates, interest rates, regulations, suppliers and natural events.

  4. 2.3.4 - Resource management

    1. Compare job, batch, flow and cell production.

    2. Calculate productivity and analyse factors affecting it, its link with competitiveness and ways to improve it.

    3. Explain production at minimum average cost, factors affecting efficiency and ways to improve it.

    4. Distinguish labour-intensive from capital-intensive production.

    5. Explain competitive advantage from short product lead-in times.

    6. Calculate capacity utilisation as current output divided by maximum possible output times 100.

    7. Analyse implications of under-utilisation and over-utilisation of capacity.

    8. Evaluate ways of improving capacity utilisation.

    9. Interpret inventory control diagrams.

    10. Explain buffer inventory.

    11. Analyse implications of poor inventory control.

    12. Explain just in time inventory management.

    13. Explain waste minimisation.

    14. Explain competitive advantage from lean production.

    15. Compare quality control, quality assurance and quality circles.

    16. Explain Total Quality Management.

    17. Explain continuous improvement through Kaizen.

    18. Explain competitive advantage from quality management.

  5. 2.3.5 - External influences

    1. 2.3.5.1aEconomic influences

      Analyse business effects of inflation, exchange rates, interest rates, taxation, government spending and the business cycle.

    2. 2.3.5.2aLegislation

      Analyse effects of consumer protection, employee protection, environmental protection, competition policy, health and safety and intellectual property rights.

    3. 2.3.5.3aCompetition effects

      Analyse effects of competitor numbers, size and behaviour.

    4. 2.3.5.3bSmall business competition

      Evaluate ways for a small business to compete in a competitive market.