Edexcel Business A Level Revision

A strong culture - is one which is deeply embedded into the ways a business or organisation does things. With a strong culture, employees and management understand what is required of them and they will try to act in accordance with the core values. A weak culture - can arise when the core values are not clearly defined, communicated or widely accepted by those working for the organisation.  It can also occur if there is little alignment between the way things are done and the espoused values. This can lead to inconsistent behaviour of people in the organisation which in turn results in inconsistent customer experiences! Strong Culture Weak Culture Staff respond positively to culture values Little alignment with culture values Shared sense of responsibility towards vision, mission and objectives Employees have to be forced to perform duties Motivated and loyal workforce Greater management control...

High failure rate of new business The highest rate of business failure is amongst new businesses (start-ups). It should be pretty obvious why this is the case: Difficult to test a business model without trading  Easy to be over-optimistic in the business plan Competitor response is often aggressive Management may lack experience Among the most common reasons why new businesses fail so frequently are: 1. No demand for the business idea Poor market research and unrealistic plan Competitor response Just a bad idea - was doomed to fail 2. Good idea, but poorly executed Wrong people; poor management Growth is too quick (over trading) or too slow Failure to manage cash flow A competitor grabs the good idea and does it better 3. External shocks Economic change e.g. sudden decline in market decline due to recession Legal and social change e.g. change in legislation impacting demand or increasing costs Why do Established Businesses fail? Interna...

Working capital - provides a strong indication of a business' ability to pay is debts. By adding together the totals for current assets and current liabilities in the balance sheet, a very important figure can be calculated – working capital. Working capital = current assets - current liabilities   Every business needs to be able to maintain day-to-day cash flow. It needs enough to pay staff wages when they are due, and to pay suppliers when invoice payment terms are reached. Maintaining adequate working capital is important both in the short-term (day-to-day) and the long-term. The challenge is to maintain sufficient liquidity in the business to ensure the business can survive and grow in the long-term. The current liabilities show the amounts that need to be paid in the next twelve months. Current assets show the cash and other assets that are available to settle those current liabilities. Of course the balance sheet is just a snapshot...