HSC Business Studies Question Thread

[fantasticbeasts3]

Is it okay to only use one case study in the extended response? I would use IKEA if it was ok - thoughts or suggestions? Thanks.

there's no specified number of case studies to use in your essay :-) 1, 10, 2 - it really doesn't matter as long as they're relevant and support whatever you're talking about.

best of luck for your hsc,
fantasticbeasts

[kevin217]

Is it okay to only use one case study in the extended response? I would use IKEA if it was ok - thoughts or suggestions? Thanks.

I think it's best if you can incorporate at least one more case study. If you solely focus IKEA, I don't think it shows the marker that you have a wide understanding of the concepts since you will be basically writing a response that shows "How IKEA responds to influences" or "How IKEA incorporates business strategies".

[GraceR99]

Okay thanks Fantasticbeasts and Kevin, will keep that in mind while studying for the exam.

[HSCNewcastle2017]

Is it okay to only use one case study in the extended response? I would use IKEA if it was ok - thoughts or suggestions? Thanks.

Fine as long as you can relate it to each dot point of the syllabus. Good to know a range though, e.g. McDonald's, Apple, QANTAS and even some contemporary media articles.

[JoyMaalouf]

Hey guys! Could somebody please explain hedging and derivatives to me? I get that it's to reduce risks of exchange rates changing but I don't really understand how

[isaacdelatorre]

Hey guys! Could somebody please explain hedging and derivatives to me? I get that it's to reduce risks of exchange rates changing but I don't really understand how

Hi there,

So hedging is any method to minimise the risks of exchange rate fluctuations - these occur because if I try to change $100 Australian dollars into American dollars to buy something; the exchange rate that day might be particularly low and then I'd only get around $70 American dollars. This can be problematic if the good I am buying costs $80 and the day I first decided to buy it, I could exchange the same $100 Australian for $80 American.

So how can we minimise these fluctuation risks?
Hedging!!
THis can mean a few things - natural hedging which includes things like denominating all transactions into one currency --> E.g. Australian dollars so that you only have to give that same amount each time. You dont have to spend more Australian dollars to exchange it for US dollars.
Another way you can natural hedge is by having foreign subsidiaries in foreign countries who can use funds they earn in that currency to pay for products.

Instead of natural hedging, businesses can use financial instruments known as derivatives. These are just ways to minimise the risk of fluctuations and come in three forms: forward exchange, options and swap contracts.

Forward exchange is when you agree to exchange currencies at a later date with the current spot rate. It doesnt matter what the rate is on the day of exchange you just take the current on the spot rate.

An option contract gives the buyer (option holder) the right, but not the obligation, to buy or sell foreign currency at some time in the future

A currency swap is an agreement to exchange currency in the spot market with an agreement to reverse the transaction in the future. It involves a spot sale of one currency together with a forward repurchase of the currency at a specified date in the future;

Hope these help

[austv99]

Can someone clarify the strategic role for all 4 key business functions? Every source if find gives a different explanation.

[fantasticbeasts3]

Can someone clarify the strategic role for all 4 key business functions? Every source if find gives a different explanation.

hey!

operations: productivity, efficiency and/or quality. pretty much how to produce as best as possible while maintaining cost advantages.

marketing: increase market share. this is done by bring the buyer and seller together and meeting customer needs, increasing sales.

finance: analysis, interpretation and evaluation of financial records to ensure the business is working efficiently, meeting goals, etc.

human resources: manage the relationship between employee and employer to ensure efficiency in the business.

hope this helps - best of luck with the hsc,
fantasticbeasts

[Juliesokha]

Hello, Can someone please explain CSR in Operations, HR and Marketing? I understand that CSR is about the business strives to achieve the triple bottom line but don't you need to be able to differentiate/focus on something more important than the other when it comes to a particular topic?

[rodero]

Hello, Can someone please explain CSR in Operations, HR and Marketing? I understand that CSR is about the business strives to achieve the triple bottom line but don't you need to be able to differentiate/focus on something more important than the other when it comes to a particular topic?

Operations - focus would be on being environmentally sustainable during the manufacturing of goods and services. This could mean minimising waste, using biodegradable materials etc.

Marketing - This relates mainly to the 'Ethics' part of the syllabus. So things like advertising the product as truthfully and accurate as possible, being conscience of products that may damage health (ie, following health regulations when advertising fast food), engaging in fair competition (promoting ethical competition, not engaging in agreements that may detriment another business) and sugging.

HR - Like all elements of CSR, this relates to going beyond legal regulations. So minimum legal requirements are set under the National Employment Standards. By adopting CSR, the HR department would be promoting things like flexible hours to allow for a work life balance, paying above the minimum wage to increase the employees standard of living, ect.

[Juliesokha]

Also, can someone please explain ... in any methods that you possibly can to make me understand about the limitations of financial reports? I've asked soooo many people and read so many textbooks too but still 

[MisterNeo]

Also, can someone please explain ... in any methods that you possibly can to make me understand about the limitations of financial reports? I've asked soooo many people and read so many textbooks too but still 

Hey
Limitations of financial reports are misleading elements of financial reports that are used to improve the business' image to the public and shareholders, or to reduce tax liability.
These notes have the best explanation of the limitations. Go to Page 25.

[Opengangs]

Limitations of financial statements
Ultimately, the number one reason why financial statements are limited by nature is to do with the timing. Financial statements record activity of the business during that period, so this makes it difficult for shareholders to determine if the current period within the business is worth investing. Among this idea of timing, we have the issue of fluctuations of sales within a period of time.

Let's assume that the period at this current point is: the Olympic season. Stores selling Olympic merchandises will boom in sales, but only during that period. This, as a result, becomes problematic for owners and shareholders to determine the true earnings from its day-to-day, normal operations. The idea of omitting this activity is called: normalised earnings, stemming from the notion that the sales as seen from the financial statements should reflect the sales from the normal operations.

We can then extend to how the business uses the financial statement, from its external factor. We can split it into two categories:
Asset-related
Non asset-related

Assets
An asset is an item of property owned by the owner that is valued at a certain price. So, if owners want to maximise their profits and net value, a strategy they can use is asset valuation, whereby market values of the particular assets are estimated. When we buy a house at a particular price (ie $1.8m), the amount we buy remains static. However, changes in the market can mean that the actual price of the house at another instance of time is changed. Businesses cannot predict how much the asset will be worth in a few years or a few periods, and so they decide to estimate the worth of the asset based solely on the market value. This is problematic, once again, as it doesn't determine the true representation of such an asset.

Furthermore, expenses can also be capitalised in order to delay the recognition of it being recorded as an expense. Expenses are normally found on the income statement, however, when a business capitalises this expense, we call it a capitalised expense, which is then recorded on the balance sheet. The whole point of it is so that we are able to use it as an asset straight away, and this directly influences the cash flow of the business; the value of the expense is then depreciated over time. However, this is problematic as the misuse of capitalising expenses may mean that investors can see that a business will have an abnormally higher profit margin than they really do. In the long run, this creates problems with the cash flow, and inefficient growing asset.

TO NOTE: Don't get confused between an expense and a cost. If a business is buying resources, such as plants and inventory, they are NOT capitalised expenses. A cost refers to the exchange of money for an asset, while an expense is any monetary value that is leaving the business, such as bills and rent on a building.

Non-asset related
For a shareholder or investor, it is crucial to determine how effective and how productive a particular business is running. Thus, information such as profitability, solvency, and liquidity remain as crucial elements to determining whether or not shareholders should invest their shares into the business. Another key element that shareholders note is its debt repayment; financial statements do not provide this to the investors, which means investors cannot predict how well the business is actually going in terms of paying back to its lenders.

Businesses could be making profit in sales, but they are still unable to pay back the debt. Or, they have overdue debts. The business could potentially be close to bankruptcy. So, this omission from the financial statements could highlight possible implications if investors did decide to invest money into the business.

Notes are written by the owners of the financial statements, highlighting methods and additional information on top of the financial statement. This may mean that the financial notes from owners are subjective by nature, and may distort some information about the financial statement.

[yopenelope]

What are four aspects of the operations strategies syllabus that I can talk about that is impacted by globalisation? - all i have is economies of scale & global sourcing that really work.

Thanks!!!

[isaacdelatorre]

What are four aspects of the operations strategies syllabus that I can talk about that is impacted by globalisation? - all i have is economies of scale & global sourcing that really work.

Thanks!!!

Hi there,

For operations strategies you could definitely talk about supply chain management and that closely links with the other strategy of outsourcing. This is because globalisation allows us to source inputs from overseas as well as use labour overseas to make products. In turn supply chain management must be used to control quality and ensure goods are made and distributed efficiently.

Then you could use the 4 global factors strategies: global sourcing, economies of scale, scanning and learning, research and development - which all are impacted by globalisation.

Let me know if you need any more info
Isaac