Scarcity

The Consumer Rights Act 2015 The Consumer Rights Act 2015 became law on 1 October 2015, replacing three major pieces of consumer legislation - the Sale of Goods Act, Unfair Terms in Consumer Contracts Regulations, and the Supply of Goods and Services Act. It was introduced to simplify, strengthen and modernise the law, giving you clearer shopping rights. Product quality - what should you expect? As with the Sale of Goods Act, under the Consumer Rights Act all products must be of satisfactory quality, fit for purpose and as described.   The rules also include digital content in this definition. So all products - whether physical or digital - must meet the following standards:   Satisfactory quality   Goods shouldn't be faulty or damaged when you receive them. You should ask what a reasonable person would consider satisfactory for the goods in question. For example, bargain-bucket products won’t be held to as high standards as luxury goods....

External costs An external cost occurs when producing or consuming a good or service imposes a cost (negative effect) upon a third party. If there are external costs in consuming a good (negative externalities), the  social costs  will be greater than the private cost. The existence of external costs can lead to market failure. This is because the free market generally ignores the existence of external costs. External marginal cost (XMC)  the cost to a third party from the consumption/production of one extra unit. Example of External Cost Driving a car imposes a private cost on the driver (cost of petrol, tax and buying car). However, driving a car creates costs to other people in society. These can include: Greater congestion and slower journey times for other drivers. Cause of death for pedestrians, cyclists and other road users. Pollution, health-related problems. Noise pollution. Example of Production External Cost Producing electricity from burning coal leads to air ...

Describe How and Why Managers Use Budgets Implementation of a company’s strategic plan often begins by determining management’s basic expectations about future economic, competitive, and technological conditions, and their effects on anticipated goals, both long-term and short-term. Many firms at this stage conduct a situational analysis that involves examining their  strengths  and  weaknesses  and the external  opportunities  available and the  threats  that they might face from competitors. This common analysis is often labeled as SWOT. After performing the situational analysis, the organization identifies potential strategies that could enable achievement of its goals. Finally, the company will create, initiate, and monitor both long-term and short-term plans. An important step in the initiation of the company’s strategic plan is the creation of a budget. A good budgeting system will help a company reach its strategic goals by allowing managem...

WHAT IS A PROFIT? Profit is the surplus revenue after a firm has paid all its costs. Profit can be seen as the monetary reward to shareholders and owners of a business. In a capitalist economy, profit plays an important role in creating incentives for business and entrepreneurs. For an incumbent firm, the reward of higher profit will encourage them to try and cut costs and develop new products. If an industry is profitable, it will encourage new firms to enter. If a firm becomes unprofitable, it will either have to adapt and change or close down. This profit motive can help increase efficiency, provide greater choice for consumers and allocate resources according to consumer preferences. However, profit can have a downside. To increase profits, firms may take action which cause  market failure . For example, an asset stripper could buy a failing firm – selling off its assets and then make workers redundant. Alternatively, a firm may increase profits by finding ways around environme...

How to Solve Company Cash Flow Problems Almost all businesses, even those that are profitable, will experience cash flow problems at one time or another. Credit facilities such as overdrafts and company credit cards can help businesses overcome a short-term cash flow imbalance. Without planning, however, many companies that struggle to maintain a healthy cash flow over the longer term will come to a shuddering halt. In fact, cash flow problems are the leading cause of business failure in the UK, which is why it’s so important that you work to resolve cash flow problems as soon as they are recognised.  How Do You Solve Company Cash Flow Problems? A lack of cash flow can be indicative of a real problem in your business, that if not resolved, could lead to its collapse. Equally, a cash flow shortfall can be a temporary blip that has no lasting impact on the long-term profitability or viability of your business. Whatever the cause, the key is to act quickly to regain control of the sit...

One of the questions we’re often asked by small business owners is, “how do I prepare a cash flow forecast?” This is no surprise. It’s an important part of financial planning for any business. But, if you’re an entrepreneur or founder, there’s a good chance you don’t have an accounting or finance background. The good news? It’s really simple to create your own forecast. And once you know how, it will become one of the most important pieces of insight you have. Why is a cash flow forecast important? Cash flow planning is essential: you need cash in the bank to pay your bills. Staying on top of your cash flow will help you see if you’re going to run out of money - and when - so you can prepare ahead of time. Perhaps it will show you that you need to cut overheads, find new investment, or spend time generating sales. On the flip side, you might be doing well, and you’re considering expanding into new markets, investing in new products, taking on bigger premises, or recruiting new staff. H...