Process
AQA A-Level Business 7132
What Is Business?
Topic overviewWhy businesses exist and their objectivesRevenue, costs and profitCalculating and presenting business dataBusiness forms, sectors and liabilityShare capital, market capitalisation and dividendsWhat moves a share price, and how ownership shapes objectivesCompetition, market conditions and incomesInterest rates, demographics and environmental issues
Managers, Leadership and Decision Making
Topic overviewManagement, leadership and the four leadership stylesThe Tannenbaum Schmidt continuumChoosing a leadership style and its limitationsScientific and intuitive decision making, and expected valueReading a decision treeRisk, uncertainty and opportunity costWhat influences a management decisionStakeholders and stakeholder mappingStakeholder needs and managing the relationship
Marketing Management
Topic overviewWhy businesses set marketing objectivesBrand loyalty and calculating the marketing measuresPrimary and secondary market researchSampling methodsCorrelation, confidence intervals and extrapolationPrice and income elasticity of demandCalculating market share, market growth and sales growthSegmentation and the bases for itNiche and mass marketing, targeting and market mappingThe elements of the marketing mixProduct portfolio analysis and the Boston MatrixThe product life cycle and extension strategiesPricing, branding, place and the influences on the mix
Operational Management
Topic overviewOperational objectives: cost and qualitySpeed, flexibility and environmental objectivesAdded value and the trade-offs between objectivesLabour productivity and unit costsCapacity and capacity utilisationImproving capacity utilisationRaising labour productivity, and the obstaclesLean production and Just in TimeLabour-intensive and capital-intensive productionTechnology in operationsQuality control and quality assuranceThe benefits and costs of improving qualityMatching supply to demandThe inventory control chartInfluences on inventory and choosing a supplierSupply chain managementOutsourcing: benefits and drawbacks
Financial Management
Topic overviewFinancial objectives and return on investmentGross profit, operating profit and profit for the yearBudgets and variance analysisCash flow forecastsBreak-even, contribution and the margin of safetyBreak-even charts and how they shiftThe uses and limits of break-even analysisProfit margins, payables and receivablesInternal sources of financeShort-term external financeShare capital, loans, venture capital and crowd fundingChoosing a source of financeMethods of improving cash flowMethods of improving profitsThe difficulties and trade-offs in improving cash flow and profit
Human Resource Management
Topic overviewHuman resource objectives and their valueHard and soft human resource managementCalculating labour turnover and labour productivityEmployee costs as a percentage of turnover, and labour cost per unitUsing and interpreting human resource dataTypes of organisational structureSpan of control, hierarchy and delegationHuman resource flowThe value of a motivated workforce, and TaylorMaslow's hierarchy of needsHerzberg's two-factor theoryFinancial methods of motivationNon-financial methods of motivationChoosing and assessing methods of motivationEmployee involvement and the influences on itTrade unions, works councils and communication channelsThe value of good employer-employee relations
Analysing the Strategic Position of a Business
Topic overviewInfluences on the mission and corporate objectivesMission, objectives, strategy and tacticsFunctional objectives and their influencesSWOT analysis and its limitationsReturn on capital employed and the current ratioGearing and the ratios of working capitalFinancial statements and the categories of ratioUsing ratio analysis, and its limitsNon-financial measures of performanceBenchmarking and core competencesThe Triple Bottom LineCompetition law and labour market legislationEnvironmental legislation and government supportRegulators, infrastructure and environmental incentivesTrade policy and responding to political changeGDP, taxation and exchange ratesInflation, fiscal policy and monetary policyTrade, protectionism and responding to economic changeDemographic and social changeCorporate social responsibility and its criticsCarroll's pyramid and technological changePorter's five forces: entry and buyer powerSupplier power, rivalry and substitutesUsing five forces to shape strategyPayback period and average rate of returnNet present value and the time value of moneyInvestment criteria, risk and sensitivity analysis
Choosing Strategic Direction
Strategic Methods: How to Pursue Strategies
Topic overviewOrganic growth, external growth and retrenchmentEconomies and diseconomies of scale, synergy and overtradingMethods of external growthThe advantages and disadvantages of organic and external growthProduct and process innovation and its driversKaizen, research and development, and intellectual propertyThe causes of globalisation and its opportunitiesMethods of entering international marketsChoosing a country to trade with or invest inOff-shoring, re-shoring and multinationalsGlobal, multi-domestic and transnational strategiesDigital technology and the pressure to adopt itThe value and the limits of digital technology
Managing Strategic Change
Topic overviewTypes of change and Lewin's force field analysisFlexible organisations, restructuring and delayeringReasons for resistance and overcoming it through education, participation and supportOvercoming resistance: negotiation, manipulation and coercionOrganisational culture and Handy's four typesRecognising cultures and what shapes themChanging organisational culture and the difficultiesLeadership, communication and structure in implementationNetwork analysis and reading a network diagramFloat, the critical path and the value of network analysis
Problems with Strategy and Why Strategies Fail
Topic overviewUncertainty and cognitive bias in strategic decisionsResource and organisational barriers to implementationPlanned and emergent strategyReasons for strategic driftFinancial and non-financial measures of strategic performanceThe balanced scorecard, KPIs and the limits of evaluationThe value of strategic planningContingency planning and crisis management
Financial Management
Cash flow forecasts
- 3 things to know
- Papers 1, 2 and 3
Overview
Cash inflows and outflows, net cash flow and opening and closing balances, worked forecasts, what a negative balance signals, and why forecasts are useful to lenders but only as good as their estimates.
What you need to know
Answer each one before you reveal it.
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Process
A business has an opening balance of −£1,200, cash inflows of £9,000 and cash outflows of £7,300. Calculate its closing balance.
Process
How is the closing balance calculated in a cash flow forecast?
Questions from this subtopic
Each one with the model answer underneath.
- 1
What are cash inflows in a cash flow forecast?
Model answer
Money coming into the business, such as cash sales, payments received from customers who bought on credit, loans and capital put in by the owners.
- 2
What are cash outflows in a cash flow forecast?
Model answer
Money leaving the business, such as payments to suppliers, wages, rent, loan repayments and the purchase of equipment.
- 3
How is net cash flow calculated in a cash flow forecast?
Model answer
Net cash flow = total cash inflows − total cash outflows for the period.
- 4
How is the closing balance calculated in a cash flow forecast?
Model answer
Closing balance = opening balance + net cash flow.
- 5
Where does the opening balance for each month of a cash flow forecast come from?
Model answer
It is the closing balance of the previous month.
- 6
A business starts a month with £4,000 in the bank, expects cash inflows of £12,500 and cash outflows of £15,000. Calculate its net cash flow and closing balance.
Model answer
Net cash flow = 12,500 − 15,000 = −£2,500; closing balance = 4,000 − 2,500 = £1,500.
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