Business Plan Assignment-Yuval & Christine
Business Test Review Notes
The concepts of supply and demand
Price fixing
Unemployment Rate
Why governments distribute subsidies
What inflation/deflation is and it’s consequences
Taxes and customs duty
Marketing Boards
Anti-Trust Legislation
Money Supply
Health and Safety regulations
Ethical Business Practices
Why do business fail? Lack of skill/knowledge, expanding too quickly, lack of capital, inability to stay competitive
What Makes a Successful Business?
Profit is the main metric with which we measure business success.
Profit = Selling Price – Cost of Goods Sold – Expenses
Expenses can be divided into 2 main categories:
Variable Expenses/Costs: These change with the amount of good/service that is produced. For example, variable expenses can include Pepperoni, cheese, flour, tomato sauce.
Fixed Expenses/Costs: These costs don’t change with the quantity produced. In our pizza parlour fixed costs can include electricity, rent, insurance, etc. Economies of Scale: The more units you produce, the cheaper the cost is per unit.
For example, the first Toyota Camry costs $800 million.
Research and Development Costs: This includes prototypes, we have to perform crash tests. Each prototype takes a lot of time and money to design and produce.
We then have to purchase warehouse and factories
We have to set up the assembly line, robotics, equipment tools.
Hire employees to work the assembly line, hire managers, supervisors, etc.
We then have to train the employees and pay them.
The second Camry costs us $400 million, the third one costs us about $266 million, every Camry produced costs us less. Several million units later, the cost is $20,000.
Not all industries require economies of scale. Our pizza parlour doesn’t really require economies of scale.
Does the cellular phone service industry need economies of scale? (Rogers) Yes. The first subscriber costs Rogers $500 million.
Communication Towers-Rental and leasing costs.
The concepts of supply and demand
Price fixing
Unemployment Rate
Why governments distribute subsidies
What inflation/deflation is and it’s consequences
Taxes and customs duty
Marketing Boards
Anti-Trust Legislation
Money Supply
Health and Safety regulations
Ethical Business Practices
Why do business fail? Lack of skill/knowledge, expanding too quickly, lack of capital, inability to stay competitive
What Makes a Successful Business?
Profit is the main metric with which we measure business success.
Profit = Selling Price – Cost of Goods Sold – Expenses
Expenses can be divided into 2 main categories:
Variable Expenses/Costs: These change with the amount of good/service that is produced. For example, variable expenses can include Pepperoni, cheese, flour, tomato sauce.
Fixed Expenses/Costs: These costs don’t change with the quantity produced. In our pizza parlour fixed costs can include electricity, rent, insurance, etc. Economies of Scale: The more units you produce, the cheaper the cost is per unit.
For example, the first Toyota Camry costs $800 million.
Research and Development Costs: This includes prototypes, we have to perform crash tests. Each prototype takes a lot of time and money to design and produce.
We then have to purchase warehouse and factories
We have to set up the assembly line, robotics, equipment tools.
Hire employees to work the assembly line, hire managers, supervisors, etc.
We then have to train the employees and pay them.
The second Camry costs us $400 million, the third one costs us about $266 million, every Camry produced costs us less. Several million units later, the cost is $20,000.
Not all industries require economies of scale. Our pizza parlour doesn’t really require economies of scale.
Does the cellular phone service industry need economies of scale? (Rogers) Yes. The first subscriber costs Rogers $500 million.
Communication Towers-Rental and leasing costs.