AQA A Level Business formulas

Total=fixed costs + variable cost

profit=total revenue - total costs

Variable cost per unit x Nr of units sold

Sales revenue = selling price per unit x Nr of units sold

Nr of shares issues x current share price

EV= pay-off x probability

NG= EV- initial cost of decision

Volume= quantity of goods & services produced in a market in a given time period

Total market sales revenue over a given period of time within a market

Quantity of goods and services sold by a business over a period of time

MG= new size-old size / old size x 100

Sales of brand/business / total market sales

Sales revenue - cost of bought /materials

LP= output per time period / Nr of employees

Total production cost / Nr of units

Actual output / maximum possible output x 100

ROI = return on investment / cost of investment x 100

GP = sales revenue - cost of sales

OP = sales revenue - cost of sales - operating expenses

PfY= operating profit + other profit - net finance costs - tax

Difference between actual and budgeted figure

CpU = selling price - variable costs per unit, It focuses on the returns (contribution) a business makes from each unit of product sold and whether that return is enough to allow the business to make money overall after taking account of its fixed costs.

TC = contribution per unit x units sold

TC = total revenue - total variable costs

BE output = fixed costs / contributions per units

When total revenue = total cost

MoS = actual level of output- break even level

GpM = gross profit / sales revenue x 100

Margin % = ANY profit / sales revenue x 100

= Nr of staff leaving / average Nr staff employed x 100

Nr of staff staying / average Nr staff employed x 100

Employee costs / sales revenue x 100

Labour costs / units of output

ROCE = operating profit / (total equity + non-current liabilities) x 100

Current assets / current liabilities, Current ratio is a financial metric used to evaluate a company's ability to pay its short-term liabilities with its short-term assets.

Gearing = non-current liabilities/ ( total equity + non current liabilities) x100, measures how much a company's operations are funded by a form of equity versus debt.

Payables / cost of sales x 365

Receivables / sales revenue x 365

IT = cost of goods sold / average inventory held

ARR = (net return from project / nr of years) / initial cost

Application,

S = size & sector

C = costs, customers, & competition

O = ownership & objectives

R = resources

E = external environment

Analysis,

H = how X could lead to this initial effect Y

W = why initial effect Y leads to Z

H = how Z impacts the business

Evaluation,

A = answer the question

J = justify judgment

I = it depends on

M = most important reason leading to judgement

4 marketing strategies depending on the relative risk of the respective market and product

Options to manage international operations based on local responsiveness & global integration

5 management styles based on concern for task & people

Product positioning based on relative market growth and market share

8 product positions based on price an perceived value

6,7,8 = strategic failure (risky high margins, monopoly pricing, loss of market share)

3,4,5 = best strategy as profit & perceived value are highest (hybrid, differentiation, focused differentiation)

Phases of expansion and contraction of the economy

Economic - Legal - Ethical - Philanthropic

Profit, People, Planet

The model highlights that business performance may be measured in a number of ways: in relation to its finances, its environmental impact and how socially responsible it is in relation to employees.

Elkington argued that only a company that was measuring performance in all three areas was measuring the full costs of its activities. The significance of this is that if you measure all these areas employees are likely to pay attention to them and change their behavior accordingly (rather than just focusing on profit).

Unit costs fall as cumulative production increases

• more experience = less mistake = lower costs

6 phases & 5 crisis

• creativity & leadership

• Direction & autonomy

• Delegation & control

• Coordination & red tape

• Collaboration & growth

• Alliances

4 types of cultures

• power based (few have power, few rules, intuition based)

• Role based (role derived power, little scope, bureaucracy)

• Task based (Teams for particular projects, Power derives from expertise, Matrix organisation)

• Person based (ability based power, person before business, very similar training/expertise)

6 ways culture varies in different countries

• individual vs collective

• Power distance

• Short vs long-termism

• Masculinity vs femininity

• Uncertainty avoidance

• Indulgence vs restraint

4 perspectives that give management a broader view of business performance

• vision & strategy

• Financial

• Internal processes

• Organisational capacity

• Customer

4 causes and 6 solutions to resistance to change

Causes:

• Self-interest

• Disagree with the situation/method

• Low tolerance for change

• Misinformation/misunderstanding

Solutions:

• education & communication

• Participation & involvement

• Support

• Manipulation & co-option

• Negotiations & bargaining

• Explicit & implicit coercion

Driving forces vs restraining forces to determine/calculate wether change is viable

• simplistic

• Doesn’t quantify each force

Mapping to determine competitive position regarding price and quality

Utilises a x & y axis, where the x-axis = quality, and the y-axis = price

• Price

• Promotion

• Place

• Physical environment

• People

• Process

• Product

Physiological - safety - social - esteem - self actualisation

External influences that affect strategy

• Political

• Economic

• Social

• Technological

• Legal

• Ethical/Environmental

5 forces which analyse the nature of the competitive environment

• rivalrous intensity

• Threat of substitutes

• Threat of new entrants

• Bargaining power of suppliers

• Bargaining power of customers

Generic strategies to utilise/create a competitive advantage based upon the nature of this advantage (cost or differentiation) and the nature of the market (broad or narrow)

• cost leadership (cost & broad)

• Cost focus (cost & narrow)

• Differentiation leadership (differentiation & broad)

• Differentiation focus (differentiation & narrow)

• research & development

• Introduction

• Growth

• Maturity

• Decline/extension

set objectives - gather data - analyse data - select - implement - review

3 marketing strategy choices

Segmentation:

• demographic, geographic, income, behaviour

Targeting:

• mass (mass), segmented (differentiated), concentrated (niche)

Positioning:

• place a product occupies in the consumers mind relative to competing products

Stakeholder approach based upon stakeholder interest & power

• low & low = monitor

• Low interest & high power = keep satisfied

• High interest & low power = keep informed

• High & high = manage closely

When strategy diverts from the change that is needed to adapt to its external environment

1. incremental change

2. Strategic drift

3. Flux

4. Step transformation or death

Analysis of internal & external pressures affecting a business

• Strenght

• Weaknesses

• Opportunities

• Threats

Managerial positioning based upon how much freedom they allow subordinates (from autocratic to democratic) (from authoritarian to laissez-faire)

Tell - Sell - Consult - Join

Actual - Budget

Statement recording all inflows & outflows of cash, revenue (+other incomes) and expenditures

Statement recording all assists and liabilities a firm has