Understanding Business Concepts

Understanding logical argument ConceptsUnit Number Title U35 commerce and EntrepreneurshipAssignment 1 stick 1 Understanding Business ConceptsTable of ContentsTask A do 1Answer 1.1Answer 2Answer 2.1Answer 3Answer 3.1Answer 3.2Answer 4Task BAnswer 1.Answer 2Answer 3References List of fingers dactyl 1 SWOT DiagramTask AAnswer 1Opportunity cost is the next highest judged alternative to ones decision. It is the loss of potential gain from the second best alternative, once a transmission line decision is taken.Answer 1.1A Motor vehicle follow has taken a decision to stick a new yield line for its vehicles with the aim of green technology. It has dickens options, option one is to start producing a to the full electric vehicle while option both is to start producing a hybrid vehicle. If the company decides to start producing a fully electric vehicle then the fortune cost will be the cost of producing a hybrid vehicle.A utility company planning electricity is going to bring in a new major bureau plant. It has two options, first option building a power plant using nuclear power while the second option building a power plant using natural gas. If the utility company decides to build the new power plant using natural gas, then its opportunity cost will be the cost of building a power plant using nuclear power.(Henderson, n.d.)Answer 2Double foundation dodging delineate that every transaction will be registered at least into two separate accounts in a companys accounting system. A simple example is shown in table below(Averkamp, n.d.)Answer 2.1 there is more than one advantage for using a double accession system. Some of these argonThere is an arithmetic check on the companys clerking records as for every debit amount there is always a corresponding credit amount. This means that the total debit entries moldiness be matched with the same amount of credit entries.Better understanding of a companys financial situation. It shows the true dough or los s of the company more all the way at any given time.Financial dictations will be brisk much easier when double entry system is in place. Examples of these statements ar match tack, income statement and currency flow.This system also helps in detecting and reduction accounting errors.(Advantages and disadvantages of double entry book-keeping, n.d.)Answer 3The offset sheet is one of the most important financial statements within a company. The relief sheet is a snapshot at a single identify in time, (usually at the end of month or year), which gives investors an accurate and safe picture of a companys financial position, what it actually owns and owes. The following formula is followed in a balance sheetAssets = Liabilities + Capital (Sh atomic number 18holders Equity)(Balance Sheet, n.d.)Answer 3.1The main decision of the balance sheet is that it figures up the companys economic resources, obligations and appropriateholders equities at any bill in time. It displays how the resources contri neverthelessed by the sh beholders and money lenders atomic number 18 use in the calling. The edge balance sheet is derived from the fact that at any given time, assets must be equal to liabilities plus capital hence the two sides of the balance sheet must balance out each different. On the other hand the balance has some drawbacks too. One of which is that the true value of the assets ar non resounded on the balance sheet. Historical costs of the assets will not reflect the true market value since these assets may do interchange magnitude or depreciated in value. Another drawback is that certain assets value are estimated and then does not reflect the true economic situation of the business.(Balance Sheet, n.d.)Answer 3.2 two important financial statements complimenting the balance sheet are the Cash carry statement and the Profit want statement.Cash flow is comprised of three components which displays the cash generated and used by the company for any given fulfilment of time. These components are operations, investing and financing activities. Operation activities measure the income and expenditure caused by the vegetable marrow business operations of a company. It reflects how much profit is generated from the companys products and services.Investing activities reflect the investment in purchasing of new assets such as property, undercoat and equipment.Financing activities reflect changes in debts, loans and dividends paid. These include issue of shares and/or bonds, re-purchase of shares and/or bonds, interest paid to bond-holders.(What is a Cash Flow Statement, n.d.)The Profit spillage statement displays a companys income, costs and expenditure for a bulge outicular period of time. Normally this statement is issues quarterly or yearly depending on the companys size of it and directors preference. The purpose of this statement is to show investors whether the company has made or missed money during the specific period indicated in the statement. The Profit Loss statement gives a good account of the companys capabilities to increase profits and reduce costs.(Profit Loss Statement, n.d.)Answer 4The following is an abstract from the regulations of the Malta Financial Services representationA private company is a company that must, by its muniment or articlesrestrict the right to transfer its sharesprohibit any invitation to the human race to subscribe for any shares or debentures of the companyThe minimum definitive share capital is 1,164.69.The maximal number of shareholders is fiftyMust dumbfound at least one directorA man company is a company which does not qualify as a private company. A public company may offer shares or debentures to the public but it may not issue any form of application for its shares or debentures unless the company is registered and the issue is accompanied by a prospectus. The minimum authorised share capital of a public company is EUR 46,587.47.There is no maximum number of shareholders in the case of a public company. Must have at least 2 directorsIn the case of a public company not less than 25%, and in the case of a private company not less than 20%, of the nominal value of each share taken up shall be paid up on the signing of the memorandum. Every Company must have a company secretary and hold an Annual General Meeting.(A Guide to the readjustment of Companies, n.d.)Task BAnswer 1.The acronyms of PEST and SWOT epitome are as followsPEST analytic thinking Political, Economic, Social and Technological analysis.SWOT analysis Strengths, Weaknesses, Opportunities and Threats analysis.Answer 2PEST is a business measuring nib to understand the business environment growth or decline in advance setting up a new business or expanding an found business. It is an investigation for reviewing the impertinent environment factors for political, economic, social and technological influences. Political environs These are all those fac tors related to and executed by a government. A change in government base bring a change in laws, regulations, policies and taxes which can have an stir on the business environment. Since Malta is part of the European Union, EU regulations and new member states can have an impact on the business environment.Economic Environment This is mainly the financial system fluctuations that occur from time to time with general booms and slumps in the economy activity. A change in unemployment, interest rates and customer purchasing power can cause these fluctuations.Social Environment This is the influence on the business environment which its make depend on religious, cultural and social trends. These effects can be either positive or negative. Education, lifestyles, career trends and demographics have influence on the social environment. If a decision from a business company have a huge impact which goes against the societal norms, it may face negative publicity and protests.Technologi cal Environment This gathers all the technological aspects of the business environment such as automation, technology awareness, progress, research and development. skilful environment aspects can have an impact on the cost and flavor of the business production.(External Environment Theory PEST Analysis, n.d.)SWOT analysis is a matrix analysis of the internal strengths and weaknesses of a company against identification of extraneous opportunities and threats. It helps a company to uncover and exploit opportunities while understanding the weaknesses to disdain threats. Workshop sessions and brainstorming sessions are two useful ways of end the SWOT analysis while involving personnel from your own company. A experiment table of the SWOT Matrix is shown in figure 1 below.Figure 1 SWOT DiagramStrengths are the resources and capabilities of a business or a project within a company which are used to gain a competitive advantage over other competitors. Examples of strengths areRep utation,Superior product performance,Unique selling points,Strong brand names.Weaknesses are the absence of certain strengths on which your competitor may take an advantage. Examples of weaknesses areWeak brand name,Limited budget,Limited personnel,Opportunities are external elements that can uncover new opportunities where a company can exploit its advantages for profit and growth. Examples of opportunities areChanges in technology,Change in government policies on a particular area,Unfulfilled customer needs,Local events.Threats are changes in external environment and opportunities taken by other companies which can have a competitive advantage over your business. Examples of threats areAppearance of alternative products, unsanded legislations,Retention of key staff,Negative publicity.(SWOT Analysis, n.d.)Answer 3SWOT analysis for Bank of Valletta plc.Task CReferencesA Guide to the registration of Companies. (n.d.). Retrieved 01 15, 2014, from MFSA https//registry.mfsa.com.mt/othe rPDFs/ROCGuide.pdfAdvantages and disadvantages of double entry book-keeping. (n.d.). Retrieved 01 12, 2012, from Figurate Ltd Chartered Management Accounts http//www.figurate.co.uk/2007/07/03/advantages-and-disadvantages-of-double-entry-bookkeeping/Averkamp, H. (n.d.). Accounting Basics (Explanation). Retrieved 1 12, 2014, from Accounting Coach http//www.accountingcoach.com/accounting-basics/explanation/5Balance Sheet. (n.d.). Retrieved 01 14, 2014, from Investopedia http//www.investopedia.com/damage/b/balancesheet.aspExternal Environment Theory PEST Analysis. (n.d.). Retrieved 01 16, 2014, from The Times 100 Business Case Studies http//businesscasestudies.co.uk/business-theory/external-environment/pest-analysis.htmlaxzz2qb3hjMJwHenderson, D. R. (n.d.). Library of Economics and Liberty. Retrieved January 10, 2014, from http//www.econlib.org/library/Enc/OpportunityCost.htmlProfit Loss Statement. (n.d.). Retrieved 01 14, 2014, from Investopedia http//www.investopedia.com/terms/p/pls tatement.aspSWOT Analysis. (n.d.). Retrieved 01 18, 2014, from Businessballs http//www.businessballs.com/swotanalysisfreetemplate.htmWhat is a Cash Flow Statement. (n.d.). Retrieved 01 14, 2014, from Investopedia www.investopedia.com/articles/04/033104.asp