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Business studies case study - generating revenue through selling ice lollies.

Extracts from this document...

Introduction

Task 3 In task 3 I have been asked to define what revenue is and how businesses can generate revenue. When a business receives money from sales, this is called revenue. Businesses can also receive money from other things, not just sales, they can receive money from renting out asserts an example of this is renting out a building to another business. There are many ways in which businesses can generate revenue. One way in which they can generate revenue is by renting out assets. Businesses can rent out their equipment such as machinery. This can help both the businesses, as the business renting out the equipment will gain money on a monthly basis and the business that gained the equipment will be saving money instead of buying out the equipment fully. Another way they could generate revenue is renting out their premises to other businesses. ...read more.

Middle

375x50=18750p �187.50 per day C. 25 boxes sold a day for 75p for each lolly 25x25=625 (how many lollies sold) 625x75=46875p �468.75 per day Now I have been asked to work out how much money delight lollies make every week in terms of scenario A and B above. A. If they sell 10 boxes of ice lollies a day at 50p each lolly: 25 ice lollies per box 10 boxes are sold at 50p each lolly 25x 10=250 (how many sold) 250x50=12500p They will earn �125 per day x 5 = �625 (per week) B. If they sell 15 boxes of ice lollies a day at 50p each lolly 25x15=375 (how many sold) 375x50=18750p �187.50 per day x 5 = �937.50 (per week) Task 4 In task 4 I have been asked to explain what is meant by profit and also distinguish what is meant by gross and net profit. ...read more.

Conclusion

375x50=18750p �187.50 per day x 5 = �937.50 (per week) �937 = Gross Profit �124(weekly) + �82.50 (daily) �124 + 412.50 = �536.50 �937.50 - �536.50 = �401= Net Profit The importance of costs, profit and revenue are important to delight lollies. The reason why they are important is because the amount of money coming in which is the revenue minus the costs gives you the profit. Revenue is important to them because then they can see how many lollies they have sold over a certain period of time, the more sales that they make the more revenue they are making. If they are gaining more sales then they know they are doing well in the business, but if they do much worse in the next week then they can figure out what went wrong and why they aren't producing as much sales. Also profit is important to delight lollies because the money that they gain could be invested into the business, they could do many things such as expanding the business. ?? ?? ?? ?? ...read more.

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Response to the question

In summary, the report is OK. The report states what revenue is and how the buisness can increase the amount of money recived. In addition, the report states how profit is generated though a business, and the difference between gross ...

Response to the question

In summary, the report is OK. The report states what revenue is and how the buisness can increase the amount of money recived. In addition, the report states how profit is generated though a business, and the difference between gross profit and net profit. However the examples used, could be made more clear within the report as there are slightly messy. The student also should consider some drawbacks of the methods suggested when a business tries to increase their revenue. The report states that the buisness (Delight Lollies) can increase their sales though word of mouth. Although this is false. The customers who has purchased their products may already do this, and there isn't really a method for making people recommend their buisness. It's important that the student understands that this method ins't an effective method for increasing a businesses revenue, as there cannot control this aspect. In addition, their second suggestion was to use a number of offers to attract additional sales. This is good, however the student hasn't considered that the buisness may have to lower the amount of profit there generate due to the promotion. The majority of buisness will be focused upon profit, and revenue is only the amount of money that the buisness receives, and not profit. The student should consider this.

Level of analysis

The student states that businesses can gain revenue by allowing their assets to be used by either a person or buisness. This would generate revenue, however the student hasn't considered if the buisness needs the asset. Could the buisness make more money by using the asset, rather than letting others use the asset? The report has used five examples, to show how the buisness may increase their revenue. This is quite good, although this could be made clearer within the report. The report includes another two examples, of how the buisness may increase their revenue and what this does to their gross profit and net profit of the buisness.

Quality of writing

The report states the term 'revenue', which is well explained within the report. The report states that revenue is from sales, although this can also include other types of income from rent or other similar ventures. This is quite good, and the exmainer will understand this with ease. In addition, the student states the terms 'Profit' and the difference between 'Net Profit' and 'Gross Profit'. This is quite good, and the exmainer will understand this with ease.

Reviewed by danielbeal 04/04/2012

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