Revision sheet: Business Enterprise Skills

📋 Course Outline

1. Enterprise Forms and Economic Systems
2. Motivation Human Resources and Disputes
3. Depreciation and Cash Flow
4. Markets Production and Planning
5. Training Safety and Location
6. Macroeconomy Globalisation and Environment
7. Liquidity Finance and Technology

📖 1. Enterprise Forms and Economic Systems

🔑 Key Concepts & Definitions

• Franchise enterprise : Operates using an established business model and brand under an agreement with the franchise owner.

★ Must-know

• An economic system describes how a country organises the ownership, production and distribution of goods and services.

Further detail

• The examination requires a practical example to support the description of a franchise enterprise.

💡 Memory Hook

Private enterprise choices versus national economic systems

📖 2. Motivation Human Resources and Disputes

★ Must-know

• Motivation is examined as a factor that can produce benefits for a business enterprise.

• A Human Resource Manager performs functions concerned with managing employees in a business enterprise.

Further detail

• Disputes in a business enterprise can be addressed through different resolution methods, of which the examination requires three.

📖 3. Depreciation and Cash Flow

🔑 Key Concepts & Definitions

• Debt factoring : A method of improving business cash flow examined through its advantages and disadvantages.

★ Must-know

• For the motor van bought for $\$24{,}000$, used for five years and disposed of at a $\$4{,}000$ scrap value, straight-line depreciation is $\frac{24{,}**000-4**{,}000}{5}=\$4{,}000$ per year.

• Using reducing-balance depreciation at 20% per annum, the motor van's depreciation for 2017 is $20\%\times\$15{,}360=\$3{,}072$ after depreciation for 2015 and 2016.

Further detail

• The motor van was bought on credit from Euro Motors in 2015 and was expected to be used for five years.

💡 Memory Hook

Straight-line stability versus reducing-balance decline

📖 4. Markets Production and Planning

🔑 Key Concepts & Definitions

• Decision tree : A planning tool whose importance is assessed when a business enterprise evaluates decisions and their possible outcomes.

★ Must-know

📌 A virtual market conducts transactions through electronic or online channels, whereas a physical market involves transactions at a tangible location.

📌 Labour intensity means relying relatively heavily on labour, whereas capital intensity means relying relatively heavily on capital equipment and assets.

Further detail

• The examination asks candidates to discuss the importance of decision trees in business-enterprise planning.

💡 Memory Hook

Virtual versus physical; labour versus capital

📖 5. Training Safety and Location

★ Must-know

• Chikoti (Pvt) Ltd manufactures agricultural and industrial chemicals that may harm human health.

• Chikoti protects workers with goggles, masks and safety shoes, provides continuous intensive safety training and encourages accident reporting.

• The case requires evaluating factors that could influence the decision to develop a new plant near Rusape Dam or contract out production.

Further detail

📌 Chikoti must comply with government environmental regulations when considering the environmental effects of locating a plant near a water source.

📖 6. Macroeconomy Globalisation and Environment

🔑 Key Concepts & Definitions

• Globalisation : Represented in the case by the removal of trade barriers among nations and the resulting opportunity to enter foreign markets.

★ Must-know

• Chikoti started operations in 2014, experienced sales plunging to a low record in 2015, and registered rising demand in 2016 after positive macroeconomic developments.

• Unemployment, inflation and cash-flow shortages are identified as negative economic conditions that contributed to Chikoti's sales decline.

Further detail

• Command Agriculture, ZIMASSET and industrial recapitalisation are identified as government policies associated with rising demand for Chikoti's chemicals.

📖 7. Liquidity Finance and Technology

★ Must-know

• From the statement of financial position, the current ratio is $\frac{\$10{,}000}{\$5{,}000}=2:1$.

• From the statement of financial position, the acid-test ratio is $\frac{\$10{,}000-\$5{,}000}{\$5{,}000}=1:1$.

• Taftan faced intensified competition in 2016 and needed adequate finance to invest in new technology and recover lost market share.

Further detail

• Taftan Wedding Specialists had current assets of $10,000, inventory of $5,000 and current liabilities of $5,000 at 30 June 2016.

• The examination requires assessing benefits of introducing new technology and explaining benefits of three possible external-finance sources.

📊 Synthesis Tables

Liquidity Ratios

Ratio	Calculation	Result
Current ratio	Current assets ÷ current liabilities	2:1
Acid-test ratio	(Current assets − inventory) ÷ current liabilities	1:1