TASC Business Studies Level 3 cheat sheet

Primary sector extracts raw materials (farming, mining); secondary sector manufactures and processes; tertiary sector provides services; quaternary sector handles knowledge and information activities.

Public sector organisations are owned or funded by government and aim at service provision; private sector organisations are owned by individuals or shareholders and typically pursue profit.

A sole trader is unincorporated, has unlimited liability, keeps all profit, and is taxed through the owner's personal income; a private limited company is incorporated with limited liability and shares that cannot be sold publicly.

Unlimited liability means business debts can be recovered from the owner's personal assets; limited liability caps an owner's loss at the amount invested or guaranteed.

PESTLE analysis scans Political, Economic, Social, Technological, Legal and Environmental influences; a factor only belongs in the analysis if it changes decisions or performance.

A monopoly exists where one firm holds a dominant market share; in the UK a share of 25% or more is the threshold used for market investigation references.

Market segmentation divides customers by demographics, geography, income, lifestyle or behaviour so that offers and marketing can be tailored to distinct groups.

Stakeholders include owners, employees, customers, suppliers, lenders, local communities and government; each has different objectives, so conflicts of interest are normal and must be managed.

Marketing mix: Product, Price, Place, Promotion (the 4Ps); service businesses add People, Process and Physical evidence to form the 7Ps.

Price elasticity of demand = % change in quantity demanded ÷ % change in price; demand is elastic when the value exceeds 1 and inelastic when it is below 1.

Break-even output in units = fixed costs ÷ (selling price per unit − variable cost per unit); the denominator is the unit contribution.

Margin of safety = actual or planned output − break-even output; it measures how far sales can fall before a loss is made.

Product life cycle stages are development, introduction, growth, maturity and decline; extension strategies include redesign, new markets and new uses.

Market share = firm's sales ÷ total market sales × 100; market growth = (current market size − previous market size) ÷ previous market size × 100.

Capacity utilisation = actual output ÷ maximum possible output × 100; low utilisation raises unit fixed costs, while very high utilisation removes slack for maintenance and demand spikes.

Quality approaches: quality control inspects output after production, whereas quality assurance builds standards into every process; lean production targets the seven wastes, including overproduction, waiting and defects.

Cash flow forecast: net cash flow = total inflows − total outflows; closing balance = opening balance + net cash flow for the period.

Profit is revenue minus total costs over a period; cash flow is the timing of money in and out. A profitable business can still fail if it runs out of cash.

Gross profit = revenue − cost of sales; operating profit = gross profit − operating expenses; net profit = operating profit − interest and tax.

Gross profit margin = gross profit ÷ revenue × 100; net profit margin = net profit ÷ revenue × 100; return on capital employed = operating profit ÷ capital employed × 100.

Contribution per unit = selling price − variable cost per unit; total contribution = contribution per unit × units sold; profit = total contribution − fixed costs.

Sources of finance split into internal (retained profit, sale of assets, working capital reduction) and external (bank loan, overdraft, share issue, debenture, leasing, trade credit, grant).

Payback period is the time taken for cumulative net cash inflows to recover the initial investment; it ignores cash flows after payback and the time value of money.

Average rate of return = average annual net return ÷ initial investment × 100; net present value discounts each year's cash flow and accepts projects with a positive NPV.

A business plan typically contains the business idea and objectives, market research and target market, marketing plan, operations plan, management team, financial forecasts and funding requirement.

SMART objectives are Specific, Measurable, Achievable, Relevant and Time-bound; they convert a broad aim into a target that can be monitored.

Organisational structures: tall hierarchies have many layers and narrow spans of control; flat structures have few layers and wider spans, giving faster communication but heavier managerial load.

Functions of management are commonly grouped as planning, organising, directing or leading, and controlling; each links objectives to resources and performance review.

Leadership styles include autocratic, democratic, laissez-faire and paternalistic; the appropriate style depends on task urgency, staff skill and organisational culture.

Motivation theory: Maslow ranks needs from physiological to self-actualisation; Herzberg separates hygiene factors (pay, conditions) from motivators (achievement, responsibility); Taylor links pay to output.

Financial and non-financial motivation methods: piece rate, commission, bonus, profit sharing, fringe benefits versus job rotation, job enrichment, team working and empowerment.

Management control cycle: set a standard or budget, measure actual performance, calculate the variance, investigate its cause, then take corrective action.