Edexcel Business A Level Revision

Growth - A common corporate objective which means expanding the sales revenue of a business, probably in the hope that profits will increase too. Increasing profitability and providing a better return for investors and shareholders are particularly important for companies quoted on the stock exchange as shareholders may have purchased shares with an expectation that they will receive a certain annual return on their shares, known as dividends. This is normally achieved by increasing revenue and lowering cost per unit, resulting in increased profit margins. A benefit of increasing profits as a growth objective is that besides the fact the business is making more money, it is more likely to encourage further investors and insulate the business from competition from current or new rivals However, increasing profits may not be possible for a number of reasons, including an already saturated market and fierce competition from rivals who have either better products or a better br...

Increasing profitability is often a major aim for growing businesses. There are several ways in which this can be achieved. Businesses are not limited to one of these options but must realise each option has knock on implications. 1) SELL THE SAME AMOUNT AT HIGHER PRICE This will hopefully increase your revenue... HOWEVER , Will you lose customers if prices are raised? What prices do competitors charge? because if you're too high then customers could just go to your competitors as some believe more in a bargain than brand loyalty, so how loyal are your customers? Will you have to spend more on maintaining brand image? Higher prices drives customers away, leaving a bad reputation on the brand so the business may have to maintain its brand image to keep a customer base. This option is only good if the product is price inelastic such as gasoline because the business has a necessity good that consumers don't mind if prices go up a little bit, meaning demand doesn't fall rap...

Profit - surplus of revenue when costs are covered Gross profit -  Gross profit is the profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. Operating profit -  Records how much profit has been made in total from the trading activities of the business before any account is taken of how the business is financed. Statement of comprehensive income - A formal financial document that summarises a business' trading activities and expenses to show whether it has made a profit or loss. Profit margin - tells the business just what percentage of its turnover is actually profit. It is the ratio of profit to sales revenue as a percentage PROFIT = TOTAL REVENUE - TOTAL COSTS There are 3 types of profit; Gro...