HSC Business Studies Question Thread

[MisterNeo]

I have a gap in my understanding of costs vs expenses that I need to fill.

COGS is costs related to the purchase and transformation of inputs into outputs.

Expenses are other costs (typically fixed) - selling, administrative and financial.

The question I have is, where exactly is the line drawn? For example, if a business employed a ton of casual staff (pretty much a variable cost), this is still counted as a selling expense, right? Also, would say rental fees for a factory or a warehouse be counted as a selling expense or included in the COGS because it's directly related to transforming inputs? Apart from the purchase of inputs and perhaps logistics, what else would be included in the COGS?

COGS does not include expenses such as labour.
The only thing included in COGS is the cost to purchase raw materials used to make the goods.
This is why there are two sections on the P/L statement to state COGS and Expenses separately.

For example:
-I receive $500000 in total sales (Price*Quantity) after selling 1000 units for $500 each.
-Those 1000 units cost $200 in raw materials to make each unit.
Gross Profit is Sales minus COGS
$500000-$200000=$300000
-It cost me $150000 to employ all the labour, pay rent, have insurance, etc. This is the expenses section.
Net Profit is Gross Profit minus Expenses
$300000-$150000=$150000
-Net Profit is $150000 after COGS and Expenses are subtracted.

Hope this helps COGS only relates to the cost of raw materials.

[_____]

COGS does not include expenses such as labour.
The only thing included in COGS is the cost to purchase raw materials used to make the goods.
This is why there are two sections on the P/L statement to state COGS and Expenses separately.

For example:
-I receive $500000 in total sales (Price*Quantity) after selling 1000 units for $500 each.
-Those 1000 units cost $200 in raw materials to make each unit.
Gross Profit is Sales minus COGS
$500000-$200000=$300000
-It cost me $150000 to employ all the labour, pay rent, have insurance, etc. This is the expenses section.
Net Profit is Gross Profit minus Expenses
$300000-$150000=$150000
-Net Profit is $150000 after COGS and Expenses are subtracted.

Hope this helps COGS only relates to the cost of raw materials.

I was wondering where I got the idea it included labour so I looked at my year 11 notes and they had the following;

"COGS are only the expenses incurred during the production process, such as raw materials and labour. They are related to the cost of goods already sold. Other costs such as marketing are not included in the COGS."

I blame the BSIA textbook lol. Thanks for the clarification.

Edit: just looked in the Creative Business Studies textbook and it says labour is included with COGS: "Specifically, this [COGS] refers to the money it [the business] spent on the raw materials and labour to make the goods."

I think you're probably right, as labour is included in expenses on a few of the revenue statements from past exams. So annoying how there's different definitions for different stuff depending on who you ask in this course. Why don't we have a specifications document like for IPT?

[_____]

I think the labour expense is referring to services maybe? There are some services like lawyers and analysts where the labour is the only COGS since you're selling expertise.

Here's what I got from my teacher.

Basically COGS is what is involved directly in producing outputs. This does include labour IF the labour is actually involved in producing the output (like a factory worker). It is not included if the employee is for example selling the products, like a Harvey Norman employee. Based on this I probably wouldn't include it for say a lawyer but I would include office supplies. Glad that the papers seem to focus on ratios and don't tell you to actually calculate the COGS itself   

[Lachlan Morley]

Can someone explain the financial limitation of normalised earnings

[Angela Karanikolas]

Hi Guys,
My friend (she is yet to get ATAR Notes) was wondering if anyone has any recent statistics about the amount McDonalds puts towards advertising ?

Anything would be helpful.
Thank you all
 

[Angela Karanikolas]

Hi! I did a quick google search and found some stats on McDonald's ad spending in the US and in Australia.

US:
-$98.7 million on ads (2014)
-$113.8 million on ads (2015)
-$88.8 million on ads (2016)
Source here!
Aus: $55 million on ads
(Date unknown)

Different websites show very different monetary values because some say 1 billion whereas others say ~100mil for the same year.
Hope this helps your friend 

Thank you so much. My friend Katie is literally about to cry, you've saved her assignment.
Thank you again.

[Lachlan Morley]

Could someone explain the financial report limitation of Normalised earnings

[CaitlinSavins]

What's a good way of remembering the differences between marketing approaches and marketing strategies?

I know approaches is mass market, market segmentation and niche march approaches, but how can I remember that this doesn't refer to marketing strategies?

[rodero]

What's a good way of remembering the differences between marketing approaches and marketing strategies?

I know approaches is mass market, market segmentation and niche march approaches, but how can I remember that this doesn't refer to marketing strategies?

Hey Caitlin,
I'm a little bit confused here. According to the business studies syllabus, the approaches to marketing are:
-Production
-Selling
-Marketing

I would expect to see mass, segment and niche markets under types of markets.

Regardless, in order to memorise the difference, remember that marketing strategies is its own section. It's an umbrella heading for the dot points of market segmentation, the 7 P's etc. Meanwhile, approaches to marketing is WITHIN a section (role of marketing).

Try to keep in mind that every topic in business studies follows the same syllabus structure: role, influence, process, strategies and, in human resources, effectiveness. Within those key headings are dot points (such as marketing approaches / types of markets).

Hope this helps, feel free to ask for clarification with anything, or if I've been mistaken somewhere.

[jingyi.ren1999]

Hi! I was wondering if you can mark this business essay for me? thank you so much!

Assess the strategies that management of a business may use to respond to influences on operations
Plan; cost minimisation-variable cost( outsourcing)
Quality management; quality control, assurance, improvement –
Technology leading edge, developed
Need adv and disadv
Due to the competitive environment of businesses. Operations management is influenced by factors which are outside of business’s control such as globalisation, technology and quality expectations. Business can incorporate outsourcing, global outsourcing or development of performance strategy to deal with this influence. The Pas Group, McDonalds and Orton have had to respond to these influences in their operation management in an effective manner to maintain or increase profitability.

Globalisation
Globalisation refers to the break down of trade barriers between nations, this could benefit the business in that they are exposed to cheaper labour, lenient regulatory standards in other countries and different level of professionalism. However it is particularly disadvantage to business whom are cost leaders in the market exposing them to the threat of overseas businesses undercutting the market and re-establish the lowest cost. Management can take advantage of the greater contact towards global markets by outsourcing productions or inputs to reduce cost, much like The Pas group whom sources most of their inputs from China and Bangladesh allowing them to reduce cost of products in Review, White Runway and Jet Swimwear.  Through outsourcing, businesses may have to make employees redundant which results in redundancy payments. This is particularly beneficial for The Pas Group as their employee benefit well exceeds other costs with $900,000. Netherless, due to the outsourcing of The Pas Group, they would increase profitability of business as well as the efficiency. Another influence that impacts business is technology

Technology
Development of technology results in the increase of efficiency as well as productivity by exposes businesses to cutting edge technology. Technology allow for the innovation of existing products as well as the invention of new products. The adoption of Technology inherently influenced McDonalds productivity in maintaining a competitive advantage and to maintain its reputation as a fast food chain. McDonals had introduced the option for customers to order on the ‘design your own taste’ menu smart screen. This not only reduced the wait time of consumers whom would like to order at the register and receive their food in a short period of time but also allows individual customisation for consumers, the ‘design your own menu’ icon in that machinery allows consumers to pick their own ingredients for their personalised burger. This increases McDonals level of competition as their competitor Dominos do not offer customisable menus. Although the advanced technology has increased McDonalds productivity and efficiency, the adoption of new technology results in the reorganisation and retraining of staff. With McDonalds customer visits throughout the day, additional staff in the kitchen is needed therefore McDonalds had to retrain certain register employees to work in the kitchen to meet customer demands. Thus, due to the adoption of new technology in McDonalds, they have increase their level of efficiency and productivity leading to a larger market share and a reduced wait time for consumers.

Quality expectation
Customers would have pre conceived ideas about the quality of a product thus it is important for management to put in place certain strategies to maintain product and service quality. Oroton an Australian company that manufactures accessories and leather goods realised the importance of providing high quality products. Due to high costs in Australia Boyd Lane, the CEO of Oroton globally sourced high quality products from Asia and distributed them through Sydney to reduce costs. Oroton’s leather accessories were produced in Melbourne, primarily from high quality Italian leather. This resulted in delays and the performance objective of speed was not being achieved. In order to reduce lead times and wait times Oroton decided outsource its production to a closer location reducing lead times and customer dissatisfaction. This allowed Oroton to become more responsive to customer demands and they were able to increase their sales. Hence the strategies adopted by Oroton have been successful as it increased its market share and revenue

Ultimately, operations management are influenced by external factors such as globalisation, technology and quality expectations, The Pas Group, McDonalds and Orton are three businesses that have responded effectively to external influenced by employing a range of strategies such as outsourcing, global outsourcing. The adoption of these techniques has allowed business to remain their competitiveness as well as increase their efficiency and market share.

[julia_warren13]

Hey!! I'm just having a bit of trouble interpreting this question from the CSSA 2016 trial paper:

Discuss one marketing strategy that a business can use to differentiate its products. Support your answer with an example

So would promotion be considered a marketing strategy? Also, when a question asks for an example, do you have to refer to a specific case study (e.g. McDonalds uses social media marketing...) or just use social media marketing as the example?
Thank you!

[_____]

Hey!! I'm just having a bit of trouble interpreting this question from the CSSA 2016 trial paper:

Discuss one marketing strategy that a business can use to differentiate its products. Support your answer with an example

So would promotion be considered a marketing strategy? Also, when a question asks for an example, do you have to refer to a specific case study (e.g. McDonalds uses social media marketing...) or just use social media marketing as the example?
Thank you!

How many marks was it? I'd say yes, provide a case study as that's what the syllabus mandates. Like it's saying to refer to a strategy (SMA) and then provide an example (McDonalds). I don't think it means to simply give the broad strategy and then a specific strategy.

I get what you mean about referring to a dot point or a - point. I think it needs to be a - point, like "In promotion, SMA means does xxx. McD uses SMA because yyy." This shows that you know the syllabus in depth.

[julia_warren13]

How many marks was it? I'd say yes, provide a case study as that's what the syllabus mandates. Like it's saying to refer to a strategy (SMA) and then provide an example (McDonalds). I don't think it means to simply give the broad strategy and then a specific strategy.

I get what you mean about referring to a dot point or a - point. I think it needs to be a - point, like "In promotion, SMA means does xxx. McD uses SMA because yyy." This shows that you know the syllabus in depth.

Thank you!! It is a 4 marker so I guess a more specific example would be better

[_____]

Thank you!! It is a 4 marker so I guess a more specific example would be better

Yeah that's like the "specific example but not heaps of detail" range imo. Have a look at the marking guidelines if you've got them (if you haven't already), that might give you a clue about what they're looking for.

[TheFreeMarketeer]

Explain how profitability management strategies contribute to the objectives of financial management?

This is for an assessment task, can anyone suggest how to approach the question?