Edexcel Business A Level Revision

SWOT analysis - An investigation conducted by a business to identify internal strengths and weaknesses and external opportunities and threats within the business, its resources and its environment. S trengths W eaknesses O pportunities T hreats AIM = to discover what the business does better than the competition, what competitors do better, whether the business makes the most of opportunities available and how the business should respond to changes in the external environment. Internal strengths and weaknesses   The business must prioritise those that are important to success. For example, brand image, sales and revenue, market shares and capacity utilisation. They are internal so are within the control of the business They relate to the present situation Strengths = Things the business is good at, giving them a clear advantage over rivals. Distinctive capabilities and resources are also strengths which will help the business achieve its objectives. They also help to ...

Variance analysis - Calculating and investigating the difference between actual results and the budget. Variance - arises when there is a difference between actual and budget figures. Management by exception - the process of focusing on activities that require attention and ignoring those that appear to be running smoothly Variances can be either: Positive/favourable (better than expected) Adverse/unfavourable ( worse than expected) A favourable variance might mean that: Expenditure was lower than expected in the budget Profits were higher than expected Income was higher than expected By contrast, an adverse variance might arise because: Expenditure was higher than expected in the budget Profits were lower than expected Income was lower than expected Looking at the sales revenue section, you can see that actual sales of standard product were £15k higher than budget – this is a positive (favourable) variance. Turning to the costs section, act...

Business plan - is a document that sets out what the business is, what it does, what it wants to achieve and how it is going to do it. It is normally used as part of an attempt to gain financial backing for the business. All businesses should have a business plan; it is both essential in helping to raise finance and an effective way for a manger to think about the business and how best to move it forward. A business plan informs potential investors or lenders about the business. It is used both internally by the entrepreneur and externally by banks, external investors or those willing to provide grants. It contains useful evidence of the viability of the business and how it will use any finance available. In particular it will show how the business plans to achieve a competitive advantage. An investor will want to know that the business is on a sound financial foundation and that future plans are likely to generate sufficient cash flows to meet debt obligations. The purpose o...

Product Portfolio analysis - assesses the position of each product or brand in a firm's portfolio to help determine the right marketing strategy for each. Product Portfolio - range of items sold by a business. It can be analysed using the Boston Matrix. Boston Matrix - A model used to analyse the strategic position of product and brand portfolios. The Boston Matrix categorises the products into one of four different areas, based on: ▪ Market Share - does the product being sold have a low or high market share? ▪ Market Growth - are the numbers of potential customers in the market growing or not? One product is too big a risk, product portfolio is less risky as there is various products in which to receive financial gain. The four categories can be described as followed: 1) STARS ( HIGH MARKET SHARE AND HIGH GROWTH RATE) Strategy : ▪Invest to sustain growth ▪Maintain or build market share ▪Repel challenges from competitors ▪Create barriers to entry ...