Paper 1 practice

A company that is publicly owned and and has many shareholders who can buy and sell their shares through a stock exchange.

• finances can be raised through the sale of shares

• risks can be spread out among a large number of stakeholders.

• limited liability: if a business fails/incurs losses, personal assets of the shareholders are not at risk.

• shared profits between shareholders

• high costs; time consuming to set up publicly held company.

• loss of control; to the largest shareholder

Break-even point is the level of sales at which total revenue equals total costs, resulting in neither profit nor loss. It is where the company covers all its expenses.

the difference between the selling price and variable cost of a product

Outsourcing is the practice of contracting out certain business functions or processes to third-party providers, often located in other countries, to reduce costs or improve efficiency.

Offshoring is the practice of moving a company's business processes, such as manufacturing or services, to another country to take advantage of lower costs or other benefits.

Insourcing is the practice of performing tasks internally within a company that could be outsourced to an external provider. It involves using the company's own resources and employees to complete the work.

A company may choose to insource due to factors like cost savings, quality control, confidentiality concerns, or strategic alignment with core competencies.

A company may outsource due to cost savings, access to specialized skills, focus on core activities, increased efficiency, and global expansion opportunities.

• Offshoring can lead to cost savings due to lower labor costs in other countries.

• It can provide access to a larger talent pool and specialized skills.

• Offshoring can help companies operate 24/7 due to time zone differences.

• It may also reduce the time to market for products and services.

• Offshoring can lead to job losses in the home country.

• Quality control issues may arise due to distance and communication barriers.

• Cultural differences can impact productivity and collaboration.

• Offshoring may result in data security risks.

• Reshoring can lead to reduced transportation costs.

• It can improve quality control and communication.

• Reshoring can create jobs and boost the local economy.

cost per unit of production.

TC of production

number of units produced

factor that hinders the operations/profitability

a business owned by shareholders (have limited liability). legal separate entities.

legally binding agreement between two parties. sets out certain terms and conditions.

expenditure of a business when producing goods/services

senior executives in an organization. they hold autonomous, decision-making, responsibility and power.

internal stakeholder

the ability for the business to maintain the use of its resources for future generations. meeting the needs of today without jeopardizing the needs of future generations.

the growth of a business due to increased size/growth in the market. measured by increase: sales revenue, market share, profits.

funds needed for business activities.

The location of a business can impact profitability through factors like access to customers, labor availability, competition, costs, and regulations.

• Convenience: Credit cards offer quick and easy payment options.

• Cash Flow Management: Helps businesses manage cash flow effectively.

• Rewards and Perks: Earn rewards and benefits on purchases.

• Build Credit: Establish and improve business credit history.

• Security: Offers fraud protection and dispute resolution.

A cash flow forecast is a financial document that predicts the inflows and outflows of cash in a business over a specific period, helping to manage liquidity and make informed financial decisions.

• Benefits of a Cash Flow Forecast:

  • Helps in managing liquidity

  • Assists in planning for future financial needs

  • Enables better decision-making

  • Identifies potential cash shortages

  • Aids in setting realistic financial goals

A freelancer is a self-employed individual who offers services to clients on a project basis, without being bound to a single employer.

• Segmentation helps target specific customer groups

• Allows for personalized marketing strategies

• Enhances customer satisfaction and loyalty

• Improves product development and innovation

• Increases overall profitability and competitiveness

Unique selling points (USPs) are important because they differentiate a product or service from competitors, attract customers, and create a competitive advantage.