Fundamentals of Business

Economics
Mind maps 02 - Micro Economics 02

BA1 – Microeconomic and Organisational Context of Business 1

BA1 2021 – Mind Maps 02 - Tharindu Ameresekere
 Micro Economics

Market System
Basics of Organisational Demand & Supply Management and
Management Management Regulations

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BA1 2021 – Mind Maps 02 - Tharindu Ameresekere
 Performance
Measurement

Short Term Long Term

* Higher the ROCE or
RONA it is better
since it shows good
performance.
RONA ROCE

Return On = Net Assets Return On Profit before

Net Assets Fixed assets + Net Capital = interest and tax
working Employed Average capital
Capital employed Share Value

This is the price paid to buy a share

EPS Internal Reasons External Reasons

Profits Forecast Industry Situation

Earnings Per Total Earnings
Share =
Outstanding Shares New Products Weather

New Director Competitors Actions

appointments
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BA1 2021 – Mind Maps 02 - Tharindu Ameresekere
 Stakeholder Conflicts Different stakeholders will have different requirements. When their requirements block other stakeholders
getting their requirements fulfilled, that is when the conflicts and problems will arise.

Principal Agent Corporate A system of principles for the

Problem Solution way in which a company is
Governance directed and controlled

This is the conflict between the principal

owners(shareholders), and the agents in
charge (Directors) of governance of a Main Objectives
company.
• To control the managers/directors by increasing the amount of
reporting and disclosure
Role of • To increase level of confidence and transparency in company
Non-Executive Directors activities for all investors
• To ensure that the company is run in a legal and ethical manner
NEDs are mainly appointed to make • To build in control at the top that will ‘cascade’ down the
sure the directors of the business run it organisation.
in a manner that protects the nearest
of the shareholders and does not try to
just improve their rewards and other
benefits.
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BA1 2021 – Mind Maps 02 - Tharindu Ameresekere