Edexcel Business A Level Revision

Porter's Five Force analysis - A tool to analyse five competitive forces that affect a market and the intensity of competition within a industry or market. Barriers to entry - The obstacles that a business has to face when it is considering competing in an exisiting market It considers the threat of new entrants to a market the bargaining power of suppliers the bargaining power of customers the threat of substitute products the degree of competitive rivalry amongst exisiting competitors. It attempts to provide a simple way to look at all the relevant issues related to the changing competitive environment in which a business operates. Five Forces can be used by a business currently in a market to assess the security of its market position. Or it can be used by a business thinking of entering a market. THREAT OF NEW ENTRANTS Refers to the potential effect of a new business entering the market, presuming that it will gain market share and rivalry will increase. T...

Growth - A common corporate objective which means expanding the sales revenue of a business, probably in the hope that profits will increase too. A business will aim to achieve greater market power, which gives it more control over its future, including a greater ability to increase prices. Greater dominance over customers means pricing control ; greater dominance over suppliers gives increasing power to keep purchasing costs down. This allows the business to gain a competitive advantage.

Stakeholder - is any individual or group with an interest in the actions and decision making of the business. A SHAREHOLDER IS A STAKEHOLDER INTERNAL STAKEHOLDER EXTERNAL STAKEHOLDER Employees Customers Managers Suppliers Owners Shareholders Shareholders Government Local community Society Creditors (owes money to a business) STAKEHOLDER MAIN INTERESTS Shareholders/owners Return on investment and profits and dividends Success and growth of the business Proper running of the business Managers/employees Rewards, including basic pay and other financial incentives Job security and working conditions Promotion opportunities and job satisfaction and status – motivation, roles and responsibilities Customers Value for money Product quality and customer service Suppliers Continued, profitable trade with th...

Just-in time  management of stock - a technique used to minimize stock holdings at each stage of the production process, helping to minimise costs - minimal to no buffer stock JIT is a ‘pull’ system of production, so actual orders provide a signal for when a product should be manufactured. Demand-pull enables a firm to produce only what is required, in the correct quantity and at the correct time. This means that stock levels of raw materials, components, work in progress and finished goods can be kept to a minimum. This requires a carefully planned scheduling and flow of resources through the production process. Modern manufacturing firms use sophisticated production scheduling software to plan production for each period of time, which includes ordering the correct stock. Supplies are delivered right to the production line only when they are needed. For example, a car manufacturing plant might receive exactly the right number and type of tyres for one day’s production, and t...

Liquidity - means the ease and cost with which assets can be turned into cash and used immediately as a means of exchange. Statement of financial position (balance sheet) - A formal financial document that summarises the net worth of a business at a given point in time. It balances net assets (what you spent the money on?) with total equity (where you got the money from?) Assets - include all things that could be of benefit to the organisation. Those that appear on the statement of financial position are the ones that can be given a money value Liabilities - includes all debts that must be repaid at some point in the future. Assets are items of value owned by a business Liabilities are the money a business owes i.e. debts Non – current (fixed) assets Likely to be kept by the business for more than one year Current assets Likely to be turned into cash within a year Non – current liabilities Debts that the ...