Senior 5 Financial Statements: Balance sheet

Balance sheet (The account records all business assets and liabilities and the value of shareholders’ funds.)

1 Assets (everything that the business has a right to use and sell, owned by it)

1.1 Current assets (Assets that the business will use up or turn into cash within one year.)

1.1.1 cash (notes and coins + current account in bank)

1.1.2 debtors, trade receivables (sales done not cashed yet, since you´ve provided credit to your customers)

1.1.3 Stocks, inventories (could be finished products or work in progress)

1.2 non current assets (Fixed assets) (Assets owned by a business that it expects to keep and use for more than one year.)

1.2.1 vehicles

1.2.2 equipment, machinery, tools, furniture, electronic devices

1.2.3 property, buildings, premises, factories, offices, shops, warehouses, garage, workshop, land, real state property

1.2.4 intangible assets (since it can neither be seen nor touched): like intelectual property, trademarks, patents, copyrights, goodwill

2 liabilities (is the legal bound obligation the company has to pay debts)

2.1 Current liabilities (Loans and debts of the business that will be repaid within one 1 year.)

2.1.1 Bank overdraft ( occurs when money is withdrawn from a bank current account and the available balance goes below zero)

2.1.2 creditors/account payables (value of goods and services bought on credit to your suppliers)

2.1.3 provision to pay tax (that you will pay in the short term because of transactions that have been done already)

2.2 non Current liabilities / long term liabilities (The money value of debts that do not have to be repaid in one year.)

2.2.1 Long-term loans (from different financial institutions like banks)

2.2.2 debentures (medium to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest)

3 Shareholders’ funds / equity (Finance provided by owners – share capital or retained profits.

Share capital is from sale of shares after issuing them

Retained profits/earnings are called reserves. (Profit made after payment of tax and dividends. It is reinvested back into the business. It´s accumulated every year)

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Unit 11 Exam style paper 1 page 155

1- T&T is a small business wich sells many different types of garden tools. Sales of its products are growing very quickly. Its Managing Director (MD) feels that market research isn´t the most important factor contributing to the success of the business. However, the MD does want primary market research to be carried out before developing a new type of garden tool.

a) What is meant by ´primary research´? [2]

Is the collection (when you find out) and collation (writing the results in a tidy way, systematic way and in order) of original data/figures/information regarding potential or current customers via direct contact (in the field) with them.

b) Identify 2 methods of primary market research.[2]

Any 2 among these: questionnaires, interviews, focus group, observation.

c) Identify and explain 2 ways of presenting market research data on existing products that T&T could use.[4]

Pie chart: could be one way of presenting data showing an area with different colours for sales for different tools for 2014. So the whole pie will be 100% of sales for that year and then each shaded portion would represent a percentage for each tool.

Line graph: could be another way of presenting data using 2 axis in the x-axis you could have the date within 2014 for example, and then in the y-axis you would have sales of shovels, then you could see quickly if there is any seasonal behaviour on average on customers buying shovels.

d) Identify and explain 2 factors which should be taken into account by T&T when trying to ensure the research information is accurate.[6]

-They will have to be very careful when choosing the elements inside the sample. Not so many because of the increase in cost, not so few because it is not going to represent the universe of study (all potential customers for the new tool). At the same time is important to have all the most trustable information about the universe, in order to make a decision, however the ramdom criteria will be above all, to avoid bias results.

-The questions or requests of information must be phrased in a way that you avoid lies, misinterpretation, a good idea is to test the questions first with a small group, even smaller than the sample.

e) Do you think market research is necessary before T&T develop a new product? Justify your answer. [6]

On the one hand, I would say that allways is necessary only if the cost of producing the information is lower than the value of that information that will help T&T to develop a new and succesful product.

On the other hand, I could say that if T&T want to make an improvement of an existing product could be useful to be guided by the results of primary research. Since T&T wants to develop a new product they have to identify with its market research the unsatisfied wants of the potential customers. In case they have already an idea for a new product they could use the market research to check if that new product could be succesful in terms of satisfying customers neeeds which will be translated into more sales.

2- H&H have recently designed a new app for the iphone. People in many different countries will be likely to want to download this app. The MD wants the marketing department to carry out secondary research rather than primary research before launching this new app.

a) What is meant by secondary research?[2]

Is whenever you process information/data/figures that have been previously the result of a primary market research, or results of any statistical source for any other purpose different from yours.

b) Identify 2 examples of secondary market research data which could be used by H&H.[2]

Their own database with information about customers downloading their other applications for IPhone. Other companies database with their information about their customers downloading applications for IPhone. In the second case these companies don´t have to be competitors.

c) Identify and explain 2 advantages to H&H of using secondary market research.[4]

-First one is that the time it takes to work with that information is less compared with waiting first for the collection and collation of data from a primary research.

-The second one is that is cheaper to find this info or to buy it than to prepare the whole primary research inside the company or hiring the services of another company.

d) Identify and explain 2 reason why accurate market research information is important to H&H.[6]

-The first one is that accurate information will lead to good and profitable decisions in the future.

-The second one is that accuracy in the info/data is basically what makes this info worthy and the reason of investing all the money spent in the research.

It should never be assumed straight that the info is objective and correct. That´s why specially if you are doing the secondary research the moment of choosing the source of the information and reading how they reach the results is an esential part of the process of desk research.

e) Do you think the MD is right to want to only carry out secondary research? Justify your answer.[6]

Specially in the case of digital application for electronic devices which use internet the digital information available by Apple or any of the app developers is reliable and it is not necessary to carry any primary research. However, if they are going to develop a new application that is “revolutionary” in any sense may be it could be a good idea to invest in a primary market research.

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Unit 10 Exam style paper 1 page 141

Question 1)

a) The needs being satisfied by D&F Ltd are supply in bulk of fruits and coffee for retailers which then will sell that for mass consumers.

b) Falling price of coffee.

Reason 1: excess supply because of a decrease in demand since it´s not a healthy beverage

Reason 2: excess supply because of a an increase in the world supply since it might have been a record harvest because of better weather conditions than usual.

c) Reason 1: their customers are demanding more fruit which is a key component of a healthy diet which is a growing trend even promoted by the government with specific policies.

Reason 2: since globally the demand is increasing specially from developing countries with higher incomes, now the supermarkets will be facing more competition when they purchase to the farmers. Therefore increasing demand speculating in further increases in prices is a sensible decision for them.

d) Option 1: specializing themselves in the production of the most demanded fruit or the most expensive one, finding new niches in this big market. So that its revenue will increase together with its marketshare.

Option 2: adding value by packaging with extra information about the better processes of D&F compared with competitors in terms of environment care, biochemicals used, how fresh are their fruits. So that they could increase their prices, because now they are selling a higher quality diferenciated product focusing on that segment. At the same time they could keep on selling to the mass market segment the fruit which may be is not aestetichaly the best like before.

e) D&F Ltd specializing in the production of more fruit and no coffee:

Advantages:

-Since they will be focusing in this market only, now their accuracy in terms of decisions on which fruits to grow, which techniques to improve (when harvesting, managing pests, irrigating plants, managing weeds,etc.) will decrease more the costs of production and will improve the yield of their fruits.

-The trend of healthier diets for higher income households both in the developed and developing countries could easily continue and even increase, therefore the long term price should be increasing.

-Another trend that could continue is that the harvest of these fruits is seasonal and labour intensive, plus the fact that the world population is growing together with more capital intensive production in extensive agriculture and manufacturing industry, then the labour cost for D&F will keep in the long run not increasing.

Disadvantages:

-They will face more risk because usually the changes in prices in both markets depend on different factors (changes in income, in trend, in technology, in climate), so taking world prices for both markets usually spread the risk. Usually the bad years of coffee will alternate with the fruits ones.

-Another fact is that coffee consumption is connected with wants, cultural and social reasons plus its addictive consumption, therefore is highly probable that its demand will increase in the long run. So sales will never shrink in the long run.

-Something else wich make coffee production more interesting than fruit is that its storage cost is lower and is cheaper to keep it safe and fresh without selling it. Therefore is easier to wait to sell always that you face lower prices than expected.

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Section 2 people in business Solved Paper 2 style (page 128)

Paper 2 style 1 hour and 45 minutes.5 questions20 min each plus 5 min of reading case study

1 a) Identify and explain 2 reasons why well motivated employees are important for the restaurant.[8] 2 marks for knowledge; 2 marks for application and 4 marks for explanation/analysis.

With motivation they will be more productive since they will work harder and with better commitment. This will generate better quality in the meals and room service, leading to more customer satisfaction, meaning more sales, revenue and profits for the restaurant. On the other hand, the company could decrease its cost by less amount of mistakes made by the motivated employees with carefuly managing better the food, and improving the cooking process.

b) Chris and Abdul have advertised a job vacancy for a restaurant manager. Look at Appendix 2, compare the 2 job applicants and decide who you would choose to employ. Justify the reasons for your choice.[12]

Application: Well applied to case. At least two examples of reference to, or use of, the case.

Knowledge/Analysis/ Evaluation: Good discussion of advantages/disadvantages of each
option AND balanced argument. Good judgement shown in recommendation
about the best option to choose compared to the other options.

I would choose Mr N Guitano since C. and A. are looking for someone who could motivate employees and Mr G. likes managing with a democratic style and has greater experience managing, therefore he will empower the employees generating a better environment for them to work. Also we could say the Mr G has a vocational attitude towards looking after the accounts and being tidy with money not only because he has been managing restaurants during the last 20 years but also because he does help keeping the accounts for a NGO during his spare time. Regarding how he would increase the amount of customers on weekends and the quality of the service, I could say that since he doesn´t have family he could spend the weekends specially working harder than the previous manager or the other applicant Mr Patel who has children and loves sports which tipically are played during weekends.

2 a) The Lakeview Restaurant is expanding. Identify and explain 2 reasons why an organization chart would be helpful to the management of the restaurant. [8]

Because it will quickly show how any employee inside the restaurant is linked with the others, as an example which kitchen hand will receive orders from which cooker,. We could also name its importance regarding flow of communication, orders and sense of belonging, for example which waiter will serve which group of customers and how to avoid overlapping tasks with the sommelier for the same tables.

b) The restaurant needs to communicate with its suppliers to order its weekly food ingredients. Consider the advantages and disadvantages of using email, letter or telephone. Recommend which is the best method for C & A to use. Justify your answer. [12]

I would recommend the email because of its advantages in comparison with the other two methods. Since it is a written and electronic mean of communication will be more effective, precise, ordered, stable, structured and brief compared with telephone and will be delivered and replied faster than letter. Also comparing with letter we could say that is saving paper, ink and time. The last idea is because you will be sending a similar spreadsheet weekly and the purchase manager will only change the quantity,and the supplier could use the same electronic file to quickly show the lack of any specific ingredient or a change in price or specifications connected with delivery. One disadvantage of the email is that if its the only way of communicating with the supplier,this relationship will get colder, not familiar, not intimate, it could decrease a trustable supplier client relationship with the lack of voice and body language communication.

3 a) The Lakeview Restaurant is located near several restaurants which are competitors. Explain 1 advantage and 1 disadvantage to the business of being located near to competitors.

Adv: the proximity will make clearer the differences in service, and will help managers to pay more attention on how to diferenciate the product from its rival.

Disadv: the competitor could start competing by decreasing the price of similar meals therefore a price war could start with the market loosing quality and profits, and may be customers deciding on eating at home instead of dine out.

b) Consider the advantages and disadvantages of the two options for the restaurant business to expand. Recommend which option C&A should choose. Justify your choice.

I would recommend the buying ship option. Firstly I could say that because they want to hire new employees and unemployment is higher in the current location than in the city centre they will be able to choose the best among the applicants for the different positions. Secondly, in just five years you could pay off the investment compared with the other project that will take ten years. Another reason could be that current customers will be maintained so the risk of the project is lower compared with one that would face a totally new demand that is unknown. Finally, if with the boat they are expecting to move the current family dining area, the business customer area could be expanded which not only will increase the amount of these kind of customers but also the average price of the meal served weekly since it says that they serve more expensive meal to them.

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Business Studies for IGCSE code 0450

business-2015-syllabus

Hello students I´ve uploaded the complete 2015 syllabus. I strongly recommend that you pay attention to Assessment Objectives (page 9)

The four assessment objectives in Cambridge IGCSE Business Studies are:

Candidates should be able to:

AO1: Knowledge and understanding

• demonstrate knowledge and understanding of facts, terms, concepts, conventions, theories and techniques commonly applied to or used as part of business behaviour.

AO2: Application
• apply their knowledge and understanding of facts, terms, concepts, conventions, theories and techniques.
AO3: Analysis
• distinguish between evidence and opinion in a business context
• order, analyse and interpret information in narrative, numerical and graphical forms, using appropriate techniques.
AO4: Evaluation
• present reasoned explanations, develop arguments, understand implications and draw inferences
• make judgements, recommendations and decisions.

I paste here what candidate should demonstrate in the papers regarding Assessment Objectives (page 10):
Knowledge and understanding
• an excellent ability to identify detailed facts, conventions and techniques in relation to the content of the syllabus
• an excellent ability to define the concepts and ideas of the syllabus.
Application
• a thorough ability to apply knowledge and understanding, using terms, concepts, theories and methods effectively to address business problems and issues
• a thorough ability to form conclusions from this information and to demonstrate these conclusions clearly and logically.
Analysis
• an excellent ability to classify and comment on information presented in various forms
• an excellent ability to distinguish between evidence and opinion.
Evaluation
• an excellent ability to make clear, reasoned judgements and communicate them in an accurate and logical manner.

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