A293 Production Finance and the External Business Environment

1. A293 Production Finance and the External Business Environment Your final exam Summer 2011

2. Objectives • To be able to list the 4 areas of study for the A293 exam in June 2011 • To be able to identify the format of the exam • To be able to discuss the answers to some tough business questions

3. What’s this Unit all about? • Compulsory (means you have to do it) • 90 minute paper (over in a flash) • Short answers (great) • Based on a case study • You get the case study 8 weeks before the exam (Early April)

4. 4 areas of study • Using and managing resources • Financial information and decision making • Business issues and influences • The wider business world

5. 1. Using and managing resources(Resources are things that you use in business e.g. people, premises and raw materials) • Methods of production (Wedding cakes are not made mass production, can you think of other things that might be a “one off”?) • How business can add value (take some leather and turn it into shoes or belts etc. Can you think of other examples? ) • Quality of products (e.g. you see a t-shirt in a shop that has a hole in it, would you buy the t-shirt and what do you now think of the shop?) • How businesses cost production (If you make one tray of cakes to sell it costs you £10, how much would it cost to produce £10,000 cakes?) • How businesses can get benefits from getting larger (If you buy animal feed in bulk do you think it would be cheaper or more expensive than buying small quantities?)

6. 2. Financial information and decision making(or thinking about how to make and spend money) • How to raise finance (e.g. You could go to a bank for a loan because you want to expand but what are your other options?) • Cash flow forecasting (you need money to buy stock and pay bills, can you keep track of your money go round?) • Profitability (It’s Ok being in business BUT is it making any money? If it is how much of that money is profit? Could you improve how profitable you are? How would you do this?)

7. 3. Business issues and influences(or all the other stuff outside of your business that might affect your profit) • Environment issues (e.g. You own a factory that is very noisy, you want to expand in a built up area, what kind of problems might you have?) • Ethical issues (e.g. you buy and sell coffee from farmers in Africa but you like to make a large profit so you don’t pay them the going rate. You are the only buyer in the region, is this unfair or is it just business?) • Market structures (e.g. You are one of only 3 companies who produce a flibberdyjibbert for the UK market. Would you have a secret meeting with the other two company managers to fixe the price so you make a nice fat profit?) • Business cycle (It is a recession – again – do you think producers of everyday goods or luxury goods are going to suffer most, and why?)

8. 4. The wider world(or All the stuff that affects business over which they have no control) • Government and its influence on demand (e.g the rate of VAT charged will have an impact on your profit. What is the current rate of VAT ? And what do they spend your tax on?) • Globalisation (e.g. Companies trading worldwide, name three global brands) • Exchange rates (all about import and export of goods and changing currency, have you been on holiday and had to convert money? Great, where di you go and can you do this again in the exam?) • The EU (how many member states does it have and what influence do you think it has on business?)

9. Examiner tips • Its important to know all the theory stuff • Its ace to know all the calcs and how to do them • A few keywords to show your level of understanding would be just peachy • NOW FOR THE GOOD BIT..... • Always put conclusions / summaries in your answers (so practice that) • Learn to choose an option but say why not the other (I like butter because it tastes so creamy, however marg spreads straight from the fridge and has a buttery taste.) • Learn to see the pros and cons in everything