Sources of Finance - 7811 Words

Introduction - Sources of Finance Introduction to the Sources of Finance resource. Sources of Finance Introduction This resource is designed for use with Accounting courses at A level. This resource is relevant to the following: * AQA Module 5, Section 14.5: Types of Business Organisation, Sources of Finance * OCR Module 2505, Sections 5.3.2 and 5.6.2 For many businesses, the issue about where to get funds from for starting up, development and expansion can be crucial for the success of the business. It is important, therefore, that you understand the various sources of finance open to a business and are able to assess how appropriate these sources are in relation to the needs of the business. The latter point regarding†¦show more content†¦A good and very public example here is Jamie Oliver, the television chef. Jamie financed his new restaurant, Fifteen , using fifteen raw recruits to the catering trade and a large amount ( £500,000) of his own cash. | Index | Previous | Next | Sources of Finance Retained Profit This is often a very difficult idea to understand but, in reality, it is very simple. When a business makes a profit and it does not spend it, it keeps it - and accountants call profits that are kept and not spent retained profits. That s all. The retained profit is then available to use within the business to help with buying new machinery, vehicles, computers and so on or developing the business in any other way. Retained profits are also kept if the owners think that they may have difficulties in the future so they save them for a rainy day! | Index | Previous | Next | Sources of Finance Working Capital This is the short-term capital or finance that a business keeps. Working capital is the money used to pay for the everyday trading activities carried out by the business - stationery needs, staff salaries and wages, rent, energy bills, payments for supplies and so on. Working capital is defined as: Working capital = current assets - current liabilities Where: current assets are short term sources of finance such as stocks, debtors and cash - theShow MoreRelatedsources of finance1286 Words   |  6 Pagesï » ¿Sources of finance Some sources of finance are short term and must be paid back within a year. Other sources of finance are long term and can be paid back over many years. Internal sources of finance are funds found inside the business. For example, profits can be kept back to finance expansion. Alternatively the business can sell assets that are no longer really needed to free up cash. External sources of finance are found outside the business. For example from creditors or banks. InternalRead MoreSources of Finance1496 Words   |  6 PagesP3 Introduction For this task I will be considering the sources of finance I will need for my company. Why might a business require finance? A business may require finance because they can either: †¢ Be setting up a new business and they do not have enough money to start up. †¢ They may need new equipment to help make the business expand and make more profit. †¢ Or they may even want to replace old machinery. †¢ They may want to move there store to a better location that might benefit thereRead MoreSources of Finance1111 Words   |  5 PagesIntroduction In this essay we will be looking at different sources of finance available for different type of business. Also will be looking at the definitions of different type of sources of finance, the advantages, disadvantages and also giving reasons to why different sources of finance was chosen for the given case studies. Types of sources of finance Bank Loan – is a long term loan and will often be for large amount of money for starting up a business or to expanding. Business will agreeRead MoreSources of Finance972 Words   |  4 PagesSources of finance What are the main sources and finance for UK firms and why? All firms need some kind of financing. Access to finance may differ considerably from firm to firm depending on what type of business they are and how big/known they are; Sole Trader, Public Limited or Private Limited Company. There are both INTERNAL and EXTERNAL sources of finance. Finance can be short, medium or long term. Internal sources of Finance: 2 main types 1) Funds from the owner(s) and the familyRead MoreSources of Finance1627 Words   |  7 PagesUnit 2: Business Resources Assignment 4:P4 Sources of Finance Internal Sources of finance Owners’ savings- the owner of a business often has to use their own personal savings to start a business, particularly if they are a sole trader. This is because banks may not be willing to take a risk and invest in them. Savings are a good source of finance for a business, as interest does not need to be paid to someone else while the money is being used, and the business remains totally in theRead Moresources of finance2021 Words   |  9 Pagesï » ¿Question:   IDENTIFY THE SOURCES OF FINANCE AVAILABLE TO A BUSINESS Answer: There are a number of ways of raising finance for a business. The type of finance chosen depends on the nature of the business. Large organisations are able to use a wider variety of finance sources than are smaller ones. Finance is not just needed when starting a new business, but you may be required to seek further finance even if you’re business is well established i-e further expansion, RD, new product launchRead MoreSource of Finance3105 Words   |  13 Pages1. Identify and describe the various sources of finance 1.1 Internal source 1.2 External sources 2. Assess the implication of the difference sources of finance related to risk, legal, financial and dilution of control and bankruptcy 2.1 Issue debt 2.2 Issue equity 3. Select appropriate sources of finance and make recommendations on the best ways of raising finance TASK 2: Part 1: Assess and compare various costs involve with each source of finance to Vale filters Limited Part 2: PrepareRead MoreSources of Finance1934 Words   |  8 PagesSources of Finance The financing of every business is the most fundamental aspect of its management. Get the financing right and the company will have a healthy business, positive cash flows and ultimately a profitable enterprise. The financing can happen at any stage of a business s development. On commencement of your enterprise the business entity will need finance to start up and, later on, finance to expand. Finance sources may be internal or external but they may also be short, medium orRead MoreSources of Finance4664 Words   |  19 PagesSection 1 – Sources of Finance There are 4 main types of business ownership: †¢ Sole trader †¢ Partnership †¢ Private limited company (Ltd) †¢ Public limited company (Plc) Each of these types of business needs to raise finance for capital investment Sole Trader This is a business that is owned by one person. Sole Traders are responsible for raising all the finance to set up and run the business. Usually a sole trader would be for a small business/ (businesses with a flatRead MoreInternal Sources Of Finance And Finance Essay2349 Words   |  10 PagesInternal sources of finance: Internal sources of finance are funds that arise from within the business such as profits as they can be retained to grow the finance and selling assets. Retained profit Retained profit is the money kept in the company after paying dividends. It is used to reinvest in the business or to pay debt. It comes by a business after it makes profit and is kept separate to use in other ways such as expanding the business by developing new buildings or certain areas, buying new

Ecn 3000 Homework Free Essays

Harris ECN 3000 Homework #1b. Use the following information to answer questions 1-13 below. Two countries, Athens and Troy, produce two goods, ships and food, according to the following production functions: 1 ship = 4 capital + 2 labor 1 food = 1 capital + 3 labor. We will write a custom essay sample on Ecn 3000 Homework or any similar topic only for you Order Now Athens has 200 units of capital and 100 units of labor available to produce ships and food. Troy has 100 units of capital and 150 units of labor available to produce ships and food. 1. Which good is capital intensive in production? Ship 2. Which good is labor intensive in production? Food 3. In which country is capital relatively abundant? Athens 4. In which country is labor relatively abundant? Tory 5. Based on your answers to 1 – 4 and using the Heckscher-Ohlin hypothesis, which country should specialize in the production of which good? Why? According to Heckscher-Ohlin hypothesis, countries will export products that utilize their abundant and cheap factors of production and import products that utilize the countries’ scarce factors. As I said before, Athens is capital relatively abundant, Tory is labor relatively abundant. When a thing is abundant, it becomes cheap. Thus, Athens should specialize in the production of ship, and Troy should specialize in the production of food. 6. Calculate the limits of production for Athens and Troy. The limits of production for Athens: 200/4=50 ships or 100/3=33 foods. The limits of production for Troy: 100/4=25 ships or 150/3=50 foods. 7. Calculate the domestic terms of trade for Athens and Troy in terms of 1 ship. . 8. Based on your answer to question 7, which country should specialize in the production of which good? Why? Athens’ MRT=0. 66 and Troy’s MRT=2. So we can know Athens has comparative advantage in ship, and Troy has comparative advantage in food. Thus, Athens should specialize in the production of ship, and Troy should specialize in the production of food. 9. Draw the production possibilities curves for each country based on your answers to questions 6 and 7. Athens 42 33 PPC CPC 0 25 50 Ships Tory 50 25 CPC PPC 0 25 38 50 Ships 10. Supposing that Athens and Troy agree to trade ships and food at an international terms of trade of 1, what observation can you make about their relative demands for ships and food? Which country experiences the greater gains from trade? 1 ship is exchanged 1 food on condition that they agree to trade ships and food at an international term of trade of 1. Athens should trade 12. 5 ships to Troy, and Troy should trade 8. 5 foods to Athens. Troy will experience the greater gains from trade. 11. Draw the consumption possibilities curve for each country on the same graph you drew for question 9. 12. Suppose Athens wants to consume only 25 ships. How many food will it be able to consume? How many ships and how many food would Troy be able to consume? If Athens wants to consume only 25 ships, 58 foods will it be able to consume. 50 ships, 25 foods should Troy be able to consume. 13. Now, assume that only Athens discovers a new technology that allows it to produce ships using 1. 5 capital and 1 labor. What would be the effect on the pattern of trade between the two countries? Explain. Based on your assumption, Athens will decrease the cost of the ships. Then, the limits of production for Athens: 100/1=100 ships or 100/3=33 foods. Athens maybe experiences the greater gains from trade. However, the demand of Troy cannot be ignored. Troy may not consume that many ships. 14. Suppose that instead of trading goods, Athens and Troy decide to trade 50 units of Athens capital for 25 units of Troy’s labor. How would the countries’ relative welfare be affected? If this supposition were true, after Athens and Troy trade capital and labor, they will have same number of capital and labor. Then, the trades between these two countries are unnecessary. They can produce their own goods. ———————– Foods Foods How to cite Ecn 3000 Homework, Papers

Marketing Evaluation PEST Analysis

Question: Explain Marketing Evaluation Using PEST Analysis? Answer: SWOT Analysis One of the biggest leaps Andrew Ramroop, the owner of Maurice Sedwell made was entering a new market in the US. Maurice Sedwell, originally based in UK experienced a huge business growth in UK and all over the world, which helped the business develop and improve worldwide. From the inputs received from Andrew Ramroop we thought of starting our own business on luxurious fashion accessories in UK. In this context, SWOT analysis of the business is done that is defined as analyzing the internal and external market factors of the company. It is used to analyze the internal market factors of Maurice Sedwell, which involves its weakness and strength. In addition, the external market factors involve the threats and opportunities of the tailoring industry of UK (Campbell, Edgar and Stonehouse, 2011). Weaknesses- Poor RD- The thing that the business lacks is proper research and development, which may result in growth of its competitors by better and innovative marketing techniques. Increasing staff turnover- The tailoring business does encounter a high employee turnover and our company is no exception. Online reach- Being a new company we are still waiting to enter the online market. Thus, it is needed for us to develop our online presence and develop entitys value (Chevalier-Roignant and Trigeorgis, 2011). Strengths- Company Size- Our company, is able to become a strong brand globally within a short period of time, so our company size is quite large. This will help the company get more resources and use it explore new and potential markets, overcome stiff competition and maintain long term sustainability. Cost Benefits- We are successful in cutting down its costs, which helps the company in maintaining higher profits. Low cost approach will help us cut down its price and get an edge over our rivals. Customer Loyalty- Our company, is successful in maintaining a steady and healthy relationship with its customers and also keeps on targeting newer customer bases which helps in improving the customer loyalty (Createadvantage.com, 2015). Threats- Economic Vulnerability- The global economy is quite vulnerable, which means that poor economy can hurt the fashion clothing industry and affect its potential customer base adversely. This could make a short run negative impact on our business and subtract our market value. Currency Volatility- The revenues and costs of the business changes rapidly due to the sudden change in the foreign exchange rate or change in currencies. Rising Competition- The level of competition in the fashion industry of UK is getting intense since 2014, this may affect our business because in a highly competitive market competitors are always introducing superior products (Laursen, 2011). Opportunities- Market Segments- The market of the fashion industry in UK is fragmented into different market segments as per the demographic and geographic factors. This will help us expand our business and improve our market share. Since we enjoy certain cost benefits over our competitors so it will help us explore the segmented UK market better. Online marketability- At present we lack proper reach in the online fashion market but our expertise and skills will help us expand our business in the online market in coming years. Using the online market will help us reach more to a wider audience at a comparatively low expense. Financial Advantage- The financial advantage of our company is measured from its financial statements. This will help us analyze our leverage position and expand our business in new markets. Innovative methods- With the change in technology we will use more innovative ways to produce the best product for our customers at the most affordable prices (Luther, 2011). Market Evaluation Using PEST Analysis In order to evaluate the UK market potential this includes an identified shortlist of markets and selecting the best market. The market analysis of UK fashion industry is done by using the PEST analysis, which are- Political Factors- The political factors in UK is quite stable but there is certain political concern, which may affect the fashion industry. The political concerns mainly include the exploitation of labour, which is mainly available to the country from the developing countries. Moreover, the globalized trading policies, increase in price competition between companies and between countries have adversely affected the labour chain. Due to which several labour and trade unions are restricting the operations of the fashion companies. However, in recent times this issue has been overcome largely but not completely (Reuvid, 2011). Economic Factors- Due to the increase in VAT and customers inclination more to the cheap imported products, the domestic companies have suffered a decline in their business. This impact the UK economy negatively, which has been resulted from the customer shift in choice more towards imported products which are cheaper in price as compared to the domestic products. However, with customer awareness programs the fashion clothing company are able to maintain strong customer base and long-term sustainability. In coming years it is believed that the fashion industry in UK will flourish and with new legal rules and regulations the domestic company will get a safer environment to trade their products (Vitale, Giglierano and Pfoertsch, 2011). Social Factors- The dress code in UK varies with its style and diverse population which includes vintage looks, night dressing, office style and casual style. This will help in encouraging the consumption of the fashion products and help the companies, wholesalers and retailers to determine the apparel types. Moreover people belonging to different age, gender and culture are also influenced and based on their choice and preference are provided with apparels and clothing within their budget. Technological Factors- The country being a developed one enjoys certain technological advantage, which will help the fashion industry to improve their production process. This will help our company use the technology, use it to our benefits, and provide a new and developed service to our customers through our retailers. In this context, we need to improve our RD department and undertake detailed market research and understand all the market factors and avail the benefits of the UK fashion market (Winer and Dhar, 2011). Recommendation for market entry: Analysis on the international luxury product market indicates that the sector is experiencing high growth. The market trend indicates that Chinese luxury product market is growing at a rapid rate. As stated by Atsmon, Dixit Wu, (2015) the Chinese luxury market accounts for almost 20% of the whole industry (Wu and Lin, 2014; Mckinsey.com, 2015). It is evident that entering into Chinese market will enable the organization to enhance its profitability. It is recommended that at the first stage of overseas expansion, the new organization should enter into Chinese market. Justification: As stated by Al Badi,( 2014) profitability of an organization is dependent on the condition of market. Analysis on the condition of Chinese market indicates that customers of the country show interest to purchase luxurious products. Income of Chinese people is increasing significantly. As an impact, the customers are also tending to spend more on luxurious products. Cain, (2014) stated that the consumers are showing a change in their attitude. As more people are becoming interested to lead luxurious lives, their spending on such products is also increasing. Discussion on the economical condition of Chinese population indicates that the people who belong to the upper middle class are increasing their expenses on luxurious products. As availability of luxurious products in Chinese markets is increasing, rate of consumption is also increasing. Dasic, (2014) opined that changes in nature of Chinese consumers is creating new opportunities for the organizations which operate in Chinese mar ket. Analysis on the choice of customers also indicates that the consumers prefer to buy products offered by internationally known brands. However the design and craftsman ship of the products is also emphasized equally. As the new organization is going to sell luxurious products of good quality , expanding business in China will be profitable for the organization. (Refer to appendix 4) Market Evaluation using Porters Five Forces: Figure 1: Porters five forces for Chinese retail market Analysis on the Chinese retail market indicates that the market is highly competitive. As growth rate of the market is quite high , several organizations are giving importance to enter into the market. It indicates that several new entrants may be present in Chinese luxurious product market. However the Government gives importance of growth of local industry. As an impact, entering into Chinese market is more difficult than other markets. Strict government policies also may reduce threats of new entrants in this market. The Chinese fashion industry is already occupied by several large multinational brands such as Zara, HM, Holister along with the Chinese clothing brands such as Boseidang, Trand and Youngor Group (Ferrell, 2014). Being new the market, Maurice Sedwell may face difficulties for attracting the potential customers. As several multinational as well as local brands are present in Chinese fashion market, bargaining power of consumers is also high. The organizations operating in this market faces difficulties to retain customers. Due to presence of lots of substitutes power of suppliers in this market is also high. The analysis indicates that competitive rivalry is quite high in fashion market of China. However demand of European fashion products is also increasing in the country. It reflects that Maurice Sedwell can get new business opportunities after entering China. Segmentation, targeting and positioning strategy: As the size of luxury fashion accessories market is increasing worldwide, expanding business activities outside UK will be effective to enhance profit of the organization. However needs of the customers can vary according to their cultural background (Ferrell, 2014).It is evident that requirements of customers need to be analyzed before development of marketing strategies. It is planned that at primary stage of business expansion, the products will be launched in markets of China. Segmentation- Customer analysis: Analysis on the luxury fashion accessories market of China indicates that it can be considered as one of the largest markets of such products. However the market is also experiencing high growth rate. Analysis on activities of customers in Chinese fashion accessories market also reflects that consumption of such products is dependent on the income of consumers. From the analysis it is evident that the consumers with high economic level and lower middle class are showing less interest to purchase luxurious products. However it is also evident that consumption of luxury products has been increased significantly in last few years. It is expected that the growth rate will continue in 2015 also. (Refer to Appendix 1). Targeting: As stated by (Hanic and Domazet, 2012) the organizations need to identify the most profitable group of consumers in order to enhance growth of business. Analysis on the Chinese consumers indicates that the number of people in upper middles class is increasing. These people are also showing interest to increase consumption of luxurious products. Apart from this, the wealthy people also account for significant portion of the total population It is evident that launching products for consumers of upper middle class and high income group will be beneficial for enhancing profit.( Refer to Appendix 2) Positioning: The organizations need to adopt suitable strategies as per requirements of the consumer (Teimourpour and Heidarzadeh Hanzaee, 2014). In case of the new luxury -product business, the expansion strategies need to be developed in such way so that number of customers can be increased effectively. The decision for positioning in market is developed using Bowmans strategy clock. It is decided that the organization will follow increased price/ standard product strategy for expending their business in China. As the organization is comparatively new, perceived value of the products to consumers may not be high. However the consumers will be provided with products of high standard. Price of the products can be increased later to increase profitability. Recommended marketing mix for proposed market: As the nature of consumers of UK and China is highly different, management of the new organization needs to develop new strategies for marketing mix for consumers of China (Tracy, 2014). Changes in marketing mix strategies will enable the management to meet requirements of consumers more effectively (Wood, 2012). Product: Analysis on the nature of consumers in China indicates that demand of the products such as accessories, hand bags and womens clothes is high. It indicates that selling such products in China will be profitable for the organization. Analysis on the nature of consumers in China also indicates that the customers tend to buy products from internationally known brands. However the customers are also attracted by innovative designs of products. On basis of the analysis , it is evident that we need to sell trendy products of good quality to consumers of China. Price: As our organization is comparatively new to market, it is expected that perceived value of the products offered by our organization will be less. Initially price of the products will be kept low to attract consumers. Later the prices will be increased. Place and process: At the first stage of business expansion, we are planning to sell our products using online shopping portals. As availability of internet is increasing in China, the strategy of online selling will enable the organization to reach the large number of consumers in urban areas. If the products are accepted by consumers, then new stores will be opened in the country. Promotion: In case of promotion also, online media will be used extensively. The social networking sites will be used for informing customers about the products offered by our organization. Using social networking sites will also be effective to get feedback on our new products (Wu and Chen, 2014). However the traditional marketing channels such as advertisements on TV and magazine will also be used. People: Apart from offering customers with standard products, we will also ensure that people who are responsible for delivery of products and services are able to meet requirements of consumers. We will give importance on hiring local people for product and service delivery in China. Physical Evidence: In China, we will give importance on providing promotional offers for the new products. It will enable us to inform consumers about new products introduced by us. It will also be effective to get feedback on our new products. Conclusion: Analysis made in this report on the condition of Chinese market of luxurious indicates that people of are showing interest to purchase luxurious products. As income of Chinese people is increasing significantly, the customers are also showing interest to spend more on luxurious products. Analysis on the economical condition of Chinese society reflects that the people who are belonging to the upper middle class are giving importance on increasing their expenses on luxurious products. As availability of luxurious products in Chinese markets is increasing, rate of consumption is also increasing. On basis of the findings obtained from the report it is evident that launching products for consumers of upper middle class and high income group will be beneficial for enhancing profit. In China the organization is going to follow increased price/ standard product strategy to expend their business. As the organization is comparatively new, perceived value of the products to consumers may not be high. As the nature of consumers of UK and China is highly different, management of the new organization needs to develop new strategies for marketing mix for consumers of China. From the analysis made in this report , it is reflected that management needs to offer trendy products of good quality to consumers of China. Discussion on the pricing strategy indicates that initially price of the products will be kept low but later prices will be increased. Implementation of the strategy of online selling will be beneficial for the organization for selling products to the large number of consumers in urban areas. References Al Badi, K. (2014). The Dimensions of Marketing Mix. Management and Organizational Studies, 2(1). Atsmon, Y., Dixit, V. and Wu, C. (2015). Tapping Chinas luxury-goods market. [online] Mckinsey.com. Available at: https://www.mckinsey.com/insights/marketing_sales/tapping_chinas_luxury-goods_market [Accessed 14 Jul. 2015]. Cain, P. (2014). Brand management and the marketing mix model. J Market Anal, 2(1), pp.33-42. Campbell, D., Edgar, D. and Stonehouse, G. (2011).Business strategy. Houndsmills, Basingstoke, Hampshire: Palgrave Macmillan. Chevalier-Roignant, B. and Trigeorgis, L. (2011).Competitive strategy. Cambridge, Mass.: MIT Press. Createadvantage.com, (2015).Create Advantage | Home. [online] Available at: https://createadvantage.com [Accessed 14 Jul. 2015]. Dasic, D. (2014). Ethical aspects of marketing mix by nonprofit organizations. Posl ekonom, 8(2), pp.315-330. Ferrell, O. (2014). Marketing. South Western Cengage Learning. Hanic, H. and Domazet, I. (2012). Marketing particularities in financial organizations. Marketing, 43(1), pp.3-14. Laursen, G. (2011).Business analytics for Sales and Marketing Managers. Hoboken, N.Y.: John Wiley Sons. Luther, W. (2011).The marketing plan. New York: AMACOM. Mckinsey.com, (2015). Understanding Chinas wealthy. [online] Available at: https://www.mckinsey.com/insights/marketing_sales/understanding_chinas_wealthy [Accessed 14 Jul. 2015]. Reuvid, J. (2011).Business insights. London: Kogan Page. Teimourpour, B. and Heidarzadeh Hanzaee, K. (2014). An analysis of Muslims luxury market in Iran. Journal of Islamic Marketing, 5(2), pp.198-209. Tracy, B. (2014). Marketing. AMACOM. Vitale, R., Giglierano, J. and Pfoertsch, W. (2011).Business-to-business marketing. Boston: Prentice Hall. Winer, R. and Dhar, R. (2011).Marketing management. Boston: Prentice Hall. Wood, M. (2012). Marketing social marketing. Journal of Social Marketing, 2(2), pp.94-102. Wu, S. and Chen, Y. (2014). The Impact of Green Marketing and Perceived Innovation on Purchase Intention for Green Products. IJMS, 6(5). Wu, S. and Lin, S. (2014). The effect of green marketing strategy on business performance: a study of organic farms in Taiwan. Total Quality Management Business Excellence, pp.1-16.