Unit 2: Managing Business Activities
Start with Concept to understand a topic, then use Question Bank to check what you know.
Your progress
Sign in to see your mastery and mistakes.
2.3.1 - Planning a business and raising finance
2.3.1.1aBusiness plan content
Explain the content of a business plan.
2.3.1.1bBusiness plan uses
Evaluate the relevance and uses of a business plan.
2.3.1.2aOwner capital
Explain owner capital through personal savings.
2.3.1.2bRetained profit
Explain retained profit as internal finance.
2.3.1.2cSale of assets
Explain sale of assets as internal finance.
2.3.1.3aSources of finance
Assess suitability of sources such as family and friends, banks, peer-to-peer funding, business angels, crowdfunding and other businesses.
2.3.1.3bMethods of finance
Assess suitability of loans, share capital, venture capital, overdrafts, leasing, trade credit and grants.
2.3.1.4aMain business forms
Compare sole traders, partnerships and private limited companies.
2.3.1.4bAlternative business forms
Explain franchising, social enterprise, lifestyle businesses and online businesses.
2.3.1.4cGrowth to plc
Explain growth to public limited company status and stock market flotation.
2.3.1.5aLimited and unlimited liability
Analyse implications, advantages and disadvantages of limited and unlimited liability.
2.3.1.5bFinance and liability
Choose finance appropriate for limited and unlimited liability businesses.
2.3.2 - Financial planning
2.3.2.1aSales volume and revenue
Calculate sales volume and sales revenue.
2.3.2.1bCosts
Calculate fixed costs, variable costs, total costs and average costs.
2.3.2.1cImproving sales
Explain ways to improve sales volumes and sales revenues.
2.3.2.2aPurpose of sales forecasts
Explain the purpose of sales forecasts.
2.3.2.2bFactors affecting sales forecasts
Analyse consumer trends, economic variables and competitor actions as influences on sales forecasts.
2.3.2.2cSales forecasting difficulties
Evaluate difficulties of sales forecasting.
2.3.2.3aContribution
Calculate contribution as selling price minus variable cost per unit.
2.3.2.3bBreak-even point
Calculate break-even where total costs equal total revenue.
2.3.2.3cContribution and break-even
Use contribution to calculate the break-even point.
2.3.2.3dMargin of safety
Calculate and interpret margin of safety.
2.3.2.3eBreak-even charts
Interpret break-even charts.
2.3.2.3fBreak-even limitations
Evaluate limitations of break-even analysis.
2.3.2.4aCash-flow forecasts
Construct and interpret simple cash-flow forecasts.
2.3.2.4bCash-flow forecast uses and limits
Evaluate the use and limitations of cash-flow forecasts.
2.3.2.5aBudget purposes
Explain purposes of budgets.
2.3.2.5bBudget types
Compare budgets based on historical figures with zero-based budgets.
2.3.2.5cVariance analysis
Apply variance analysis.
2.3.2.5dBudgeting difficulties
Evaluate difficulties of budgeting.
2.3.3 - Managing finance
2.3.3.1aProfit calculations
Calculate gross profit, operating profit and profit for the year.
2.3.3.1bIncreasing profits
Explain ways to increase profits.
2.3.3.1cProfitability statements and margins
Use statements of comprehensive income to calculate profitability margins and explain ways to improve profitability.
2.3.3.2aProfit and cash
Distinguish profit from cash.
2.3.3.2bLiquidity ratios and improvement
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.
2.3.3.2cWorking capital
Explain working capital management and the importance of cash.
2.3.3.3aInternal causes of business failure
Analyse internal causes such as poor cash-flow management, sales overestimation, overtrading, poor inventory control, poor marketing and poor quality.
2.3.3.3bExternal causes of business failure
Analyse external causes such as market conditions, competition, economic conditions, exchange rates, interest rates, regulations, suppliers and natural events.
2.3.4 - Resource management
2.3.4.1aMethods of production
Compare job, batch, flow and cell production.
2.3.4.1bProductivity
Calculate productivity and analyse factors affecting it, its link with competitiveness and ways to improve it.
2.3.4.1cEfficiency
Explain production at minimum average cost, factors affecting efficiency and ways to improve it.
2.3.4.1dLabour and capital intensity
Distinguish labour-intensive from capital-intensive production.
2.3.4.1eProduct lead-in times
Explain competitive advantage from short product lead-in times.
2.3.4.2aCapacity utilisation calculation
Calculate capacity utilisation as current output divided by maximum possible output times 100.
2.3.4.2bCapacity under- and over-utilisation
Analyse implications of under-utilisation and over-utilisation of capacity.
2.3.4.2cImproving capacity utilisation
Evaluate ways of improving capacity utilisation.
2.3.4.3aInventory control diagrams
Interpret inventory control diagrams.
2.3.4.3bBuffer inventory
Explain buffer inventory.
2.3.4.3cPoor inventory control
Analyse implications of poor inventory control.
2.3.4.3dJust in time
Explain just in time inventory management.
2.3.4.3eWaste minimisation
Explain waste minimisation.
2.3.4.3fLean production advantage
Explain competitive advantage from lean production.
2.3.4.4aQuality methods
Compare quality control, quality assurance and quality circles.
2.3.4.4bTotal Quality Management
Explain Total Quality Management.
2.3.4.4cKaizen
Explain continuous improvement through Kaizen.
2.3.4.4dQuality management advantage
Explain competitive advantage from quality management.
2.3.5 - External influences
2.3.5.1aEconomic influences
Analyse business effects of inflation, exchange rates, interest rates, taxation, government spending and the business cycle.
2.3.5.2aLegislation
Analyse effects of consumer protection, employee protection, environmental protection, competition policy, health and safety and intellectual property rights.
2.3.5.3aCompetition effects
Analyse effects of competitor numbers, size and behaviour.
2.3.5.3bSmall business competition
Evaluate ways for a small business to compete in a competitive market.