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Questions and Answers
What is the primary purpose of the copyright permission form?
What is the primary purpose of the copyright permission form?
Which of the following is a requirement for using the content under the emergency license?
Which of the following is a requirement for using the content under the emergency license?
Who is the lecturer associated with the permission form?
Who is the lecturer associated with the permission form?
What is the significance of the 'time-limited emergency license' mentioned in the form?
What is the significance of the 'time-limited emergency license' mentioned in the form?
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Which titles are permitted for use according to the copyright permission form?
Which titles are permitted for use according to the copyright permission form?
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What is essential for managing daily business operations besides sustaining profits?
What is essential for managing daily business operations besides sustaining profits?
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What does a cash budget primarily help a business owner to establish?
What does a cash budget primarily help a business owner to establish?
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What important aspect does cash budgeting help identify regarding cash flow?
What important aspect does cash budgeting help identify regarding cash flow?
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Why is it important to perform a viability study during the business planning phase?
Why is it important to perform a viability study during the business planning phase?
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Which of the following is NOT a component of determining market potential in a viability study?
Which of the following is NOT a component of determining market potential in a viability study?
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What does consistent cash budgeting allow a business owner to do?
What does consistent cash budgeting allow a business owner to do?
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What can a cash budget be presented for to demonstrate proper financial planning?
What can a cash budget be presented for to demonstrate proper financial planning?
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When does a business become technically bankrupt?
When does a business become technically bankrupt?
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What is a Statement of Comprehensive Income?
What is a Statement of Comprehensive Income?
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How is profitability calculated?
How is profitability calculated?
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What does the break-even point represent?
What does the break-even point represent?
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Which of the following methods does NOT help lower the break-even volume?
Which of the following methods does NOT help lower the break-even volume?
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What is the primary goal of a business according to the content?
What is the primary goal of a business according to the content?
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What is a cash budget?
What is a cash budget?
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Why is it important to recalculate the break-even number regularly?
Why is it important to recalculate the break-even number regularly?
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What benefit does understanding the break-even figure provide a business?
What benefit does understanding the break-even figure provide a business?
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How can raising prices impact the break-even volume?
How can raising prices impact the break-even volume?
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What does it indicate when income exceeds expenses?
What does it indicate when income exceeds expenses?
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What is the primary purpose of a mission statement in a business?
What is the primary purpose of a mission statement in a business?
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Which component is NOT part of the SMART framework?
Which component is NOT part of the SMART framework?
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Why are objectives essential for a business?
Why are objectives essential for a business?
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What is the first step in establishing your target market?
What is the first step in establishing your target market?
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What does calculating total market potential require?
What does calculating total market potential require?
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How should objectives be treated over time?
How should objectives be treated over time?
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What characteristic ensures that objectives are feasible according to the SMART framework?
What characteristic ensures that objectives are feasible according to the SMART framework?
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What should NOT be overestimated when calculating total market potential?
What should NOT be overestimated when calculating total market potential?
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Which of the following describes market segmentation?
Which of the following describes market segmentation?
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What should a mission statement clarify for a business?
What should a mission statement clarify for a business?
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Which factor should be considered when choosing a target market segment?
Which factor should be considered when choosing a target market segment?
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What is the primary purpose of a target market?
What is the primary purpose of a target market?
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What does a SWOT analysis primarily identify?
What does a SWOT analysis primarily identify?
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What component is NOT included in the traditional method for estimating market size?
What component is NOT included in the traditional method for estimating market size?
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Which aspect influences the expected market share calculation?
Which aspect influences the expected market share calculation?
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Which type of costs remains constant regardless of the number of units produced?
Which type of costs remains constant regardless of the number of units produced?
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What is essential when determining the selling price of a product?
What is essential when determining the selling price of a product?
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Which of the following best describes variable costs?
Which of the following best describes variable costs?
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To effectively charge more than competitors, a business must offer:
To effectively charge more than competitors, a business must offer:
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What does calculating the total income for an area involve?
What does calculating the total income for an area involve?
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If a business decides to target multiple segments, what must it do?
If a business decides to target multiple segments, what must it do?
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What does indirect cost refer to?
What does indirect cost refer to?
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What is usually required to estimate the expected market share?
What is usually required to estimate the expected market share?
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To calculate potential rand value for an item, which calculations are necessary?
To calculate potential rand value for an item, which calculations are necessary?
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Study Notes
Copyright Permission
- Course: KCN 400, taught by Mrs. C. Bezuidenhout in the Building & HSD Department.
- 100 electronic copies permitted.
- Titles: Entrepreneurship and How to Establish your own Business, 7th Ed (JUTA) and Business Management for Entrepreneurs 5th Ed (JUTA).
- Permission restricted to unadjusted PowerPoint slides included by the publisher.
- Non-commercial use, distribution, and reproduction allowed under a time-limited emergency license (COVID-19), provided sources are credited and reused snippets link back to the original publisher.
Mission Statement and Objectives
- A mission statement defines a business's unique process, products/services, and customers, focusing on customer satisfaction.
- Developing a mission statement requires answering key questions about customer needs and how the business will meet them.
- Business objectives are goals to be achieved within a set timeframe, serving as progress measurement tools and adjusted based on industry changes.
- The SMART framework guides objective setting: Specific, Measurable, Attainable, Relevant, and Time-bound.
Market Analysis
- Total market potential calculation is crucial for estimating business income, requiring careful estimation to avoid overestimation.
- This involves estimating the total market, competitor market share, and the business's expected share.
- Market segmentation divides the market into demographic, geographic, psychographic, and behavioristic segments.
- Target market selection involves three steps: segmentation, evaluation and decision, and market positioning.
- Market positioning necessitates tailored marketing strategies when targeting multiple segments.
- Calculating market size uses a traditional method, factoring in customer units, average income per unit, income spent on the item and realistic market share percentage.
- A SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) is used to identify internal and external factors affecting the business.
Calculating Income
- Selling price calculation involves identifying manufacturing and sales costs, followed by adding a markup percentage.
- Cost calculation differentiates between variable (fixed per unit, varying in total) and fixed costs (fixed in total, varying per unit).
- It also distinguishes between direct (directly allocatable to product manufacture) and indirect costs.
- Selling price is influenced by competitor pricing, with higher prices justified only by offering superior benefits.
Calculating Expected Net Profit
- A Statement of Comprehensive Income summarizes income and expenditure over a specific period.
- Pro forma statements use estimated figures for financial projections.
- Profitability is determined by subtracting expected costs from (expected sales multiplied by expected selling price). Profit occurs when income exceeds expenses.
Calculating the Break-Even Point
- The break-even point is when all fixed expenses are covered.
- It involves identifying monthly/quarterly/yearly fixed expenses.
- Regular review (e.g., semi-annually) and recalculation are recommended.
- Lowering the break-even volume can be done by lowering direct costs (raising gross margin), controlling fixed expenses, or raising prices.
- The ultimate business aim is profit generation, not merely break-even. Understanding the break-even point aids better resource allocation, cost control, and profit maximization.
Cash Planning: The Cash Budget (Cash Forecast)
- A cash budget forecasts future cash receipts and payments over a specific period (month, quarter, or year).
- Sustained profitability alone is insufficient; consistent cash flow for daily business operations is essential.
- Cash budgeting helps plan short-term credit needs, present financial planning to banks, predict potential cash shortfalls, and identify payment schedule issues.
- Consistent budget checks involve comparing budgeted to actual figures using ratios or financial statements.
Summary
- The viability study is a crucial first phase in business planning.
- Market potential analysis involves market research to identify customers, determine customer needs satisfaction, analyze competitors, and establish business mission and objectives. Also includes conducting a market analysis.
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Description
This quiz covers the fundamentals of crafting mission statements and setting business objectives. It highlights the importance of customer satisfaction and the strategic process of aligning business goals with customer needs. Test your knowledge on the unique processes and products that define successful businesses.