BUSINESS A LEVEL WHOLE SPEC NOTES
Table of Contents
3.1- What is a business?....................................................................................... 3
3.1.2 Different business forms: ............................................................................ 4
3.1.3 Understanding that business operate within an external environment ........... 5
3.2.1 Understanding management, leadership and decision making...................... 6
3.2.2 Understanding management: decision making ............................................. 9
3.2.3 Understanding the role and importance of stakeholders ............................. 11
3.3.1 Setting marketing objectives ..................................................................... 12
3.3.2a Understanding markets and customers – market research and data .......... 14
3.3.2b Understanding market and customers: PED AND YED ............................... 15
3.3.3 making marketing decisions : segmentation, targeting, positioning ............. 18
3.3.4a: making market decisions – using the marketing mix ................................. 20
3.3.4b : Making marketing decisions: using the marketing mix – product decisions20
3.3.4c Making marketing decisions: using the marketing mix – Pricing decisions. . 22
3.3.4d Making marketing decisions: using the marketing mix- Promotional mix .... 23
3.3.4e using the marketing mix- Distribution (place) decisions ............................ 25
3.3.4f using the marketing mix – people, processes and physical environment ..... 26
3.3.4g using the marketing mix – the importance of and influences on an integrated
marketing mix ................................................................................................... 26
3.4 Decision making to improve operational performance ................................... 27
3.4.2 Analysing operational performance; .......................................................... 28
3.4.3 Increasing efficiency and productivity; ....................................................... 29
3.4.3 Operations management; .......................................................................... 31
3.4.4 Making operational decisions to improve performance; improving quality. .. 32
3.4.5 Making operational decisions to improve performance; managing inventory
and supply chain. .............................................................................................. 34
3.5 Setting financial objectives .......................................................................... 36
3.5.1 Setting financial objectives ....................................................................... 38
3.5.2a Analysing financial performance ; maps and cash flow ............................. 38
3.5.2b Analysing financial performance: Break even ........................................... 42
3.5.2C Analysing financial performance : profitability ......................................... 44
1
,3.5.3 Making financial decisions : sources of finance .......................................... 45
3.5.4 Making financial decisions : improving cash flow and profits ....................... 47
3.6 Decision making to improve Human resources performance ......................... 47
3.6.1 Setting HR objectives: ............................................................................... 48
3.6.2 Analysing human resource performance .................................................... 49
3.6.3 Making HR decisions : improving organisational design and managing the HR
flow .................................................................................................................. 50
3.6.4 Making Hr decisions: improving motivation and engagement: ..................... 53
3.6.5 making HR decisions: improving employer-employee relations ............. 55
3.7.1 Mission , corporate objectives and strategy ................................................ 56
3.7.2 analysing the existing internal position of a business to assess strengths and
weaknesses: FINANCIAL RATIO ANAYLSIS .......................................................... 60
3.7.3 analysing the existing internal position of a business to assess strengths and
weaknesses : overall performance ..................................................................... 63
3.7.4 Analysing the external environment to assess opportunities and threats:
political and legal change .................................................................................. 65
3.7.5 Analysing the external environment to assess environment opportunities and
threats: economic change ................................................................................. 68
3.7.6 Analysing the external environment to assess opportunities and threats:
social and technological.................................................................................... 74
3.7.7 analysing the external environment to assess opportunities and threats: the
competitive environment .................................................................................. 76
3.7.8 Analysing strategies options: investment appraisal .................................... 77
3.7 Choosing strategic direction .................................................................... 80
3.8.1 strategic direction: choosing which markets to compete in and what products
to offer .............................................................................................................. 80
3.8.2 strategic positioning: choosing how to compete ......................................... 82
3.9 strategic methods: how to pursue strategies ............................................ 85
3.9.1 Assessing change in scale .................................................................... 85
3.9.2 Assessing innovation ................................................................................. 88
3.9.3 Assessing globalisation and internationalisation ........................................ 90
3.9.4 assessing greater use of digital technology................................................. 91
3.10.1 Managing change .................................................................................... 91
3.10.2 Managing organisational culture .............................................................. 94
3.10.3 Managing strategic implementation ......................................................... 97
2
,3.1- What is a business?
Why do they exist? Objectives; profit, growth, survival , cash flow, social and ethical
objectives
Businesses exist to achieve objectives; profit, growth,survival,cash flow, social, ethical
Business objectives: Quantifiable targets or goals to be achieved within a given time
frame;
- Other objectives include; cost efficiency , sales maximisation,
employee welfare, customer satisfaction
Nature and purpose of a business
1) Mission statement: A formal statement that sets out a what a business wants to
achieve in an aspirational manner
2) Revenue: The total amount of money coming into a business from the sales of a
good/service sales volume X sales price
3) Fixed costs: costs to a business that stays the same regardless of output
(rent/salaries)
4) Variable costs : costs to a business that change in relation to output (raw
materials)
3
, 3.1.2 Different business forms:
• Sole trader
o A person who owns and runs their own business. They therefore have
unlimited liability
▪ This means that they are personally responsible for all debts made
by the business.
▪ Therefore, their home and all their assets might be used to pay off
any debts that may be unable to pay
o A sole trader is unincorperated – meaning the sole trader and the
business have the same legal identity
Advantages of sole trader Disadvantages of sole trader
• Cheap and easy to set up • Unlimited liability
• All profits go to sole trader (after • Limited capital for investment
tax)
• Full control financial records
remain private
• Private Limited companies (LTD)
o The owners and company are separate legal identities, this means they
also have limited liability
▪ Owners are not responsible for the company debts (their personal
assets will not be seized)
Advantages of LTD Disadvantages of LTD
• Limited liability – protects • Financial records are public
shareholders • Greater regulatory requirements
• Easier to raise finance (compared • Pay accountant
to Sole traders)
- Can sell shares
- Easier to take out loans
• Less tax
• Up to 50 invited shareholders (can
maintain control on who invests)
• Public limited companies
o Are businesses owned by shareholders who have limited liability
o Must have atleast 7 shareholders but no maximum amount
o Shares often sold on the stock exchange
o Shareholders and directors are often different
4
Table of Contents
3.1- What is a business?....................................................................................... 3
3.1.2 Different business forms: ............................................................................ 4
3.1.3 Understanding that business operate within an external environment ........... 5
3.2.1 Understanding management, leadership and decision making...................... 6
3.2.2 Understanding management: decision making ............................................. 9
3.2.3 Understanding the role and importance of stakeholders ............................. 11
3.3.1 Setting marketing objectives ..................................................................... 12
3.3.2a Understanding markets and customers – market research and data .......... 14
3.3.2b Understanding market and customers: PED AND YED ............................... 15
3.3.3 making marketing decisions : segmentation, targeting, positioning ............. 18
3.3.4a: making market decisions – using the marketing mix ................................. 20
3.3.4b : Making marketing decisions: using the marketing mix – product decisions20
3.3.4c Making marketing decisions: using the marketing mix – Pricing decisions. . 22
3.3.4d Making marketing decisions: using the marketing mix- Promotional mix .... 23
3.3.4e using the marketing mix- Distribution (place) decisions ............................ 25
3.3.4f using the marketing mix – people, processes and physical environment ..... 26
3.3.4g using the marketing mix – the importance of and influences on an integrated
marketing mix ................................................................................................... 26
3.4 Decision making to improve operational performance ................................... 27
3.4.2 Analysing operational performance; .......................................................... 28
3.4.3 Increasing efficiency and productivity; ....................................................... 29
3.4.3 Operations management; .......................................................................... 31
3.4.4 Making operational decisions to improve performance; improving quality. .. 32
3.4.5 Making operational decisions to improve performance; managing inventory
and supply chain. .............................................................................................. 34
3.5 Setting financial objectives .......................................................................... 36
3.5.1 Setting financial objectives ....................................................................... 38
3.5.2a Analysing financial performance ; maps and cash flow ............................. 38
3.5.2b Analysing financial performance: Break even ........................................... 42
3.5.2C Analysing financial performance : profitability ......................................... 44
1
,3.5.3 Making financial decisions : sources of finance .......................................... 45
3.5.4 Making financial decisions : improving cash flow and profits ....................... 47
3.6 Decision making to improve Human resources performance ......................... 47
3.6.1 Setting HR objectives: ............................................................................... 48
3.6.2 Analysing human resource performance .................................................... 49
3.6.3 Making HR decisions : improving organisational design and managing the HR
flow .................................................................................................................. 50
3.6.4 Making Hr decisions: improving motivation and engagement: ..................... 53
3.6.5 making HR decisions: improving employer-employee relations ............. 55
3.7.1 Mission , corporate objectives and strategy ................................................ 56
3.7.2 analysing the existing internal position of a business to assess strengths and
weaknesses: FINANCIAL RATIO ANAYLSIS .......................................................... 60
3.7.3 analysing the existing internal position of a business to assess strengths and
weaknesses : overall performance ..................................................................... 63
3.7.4 Analysing the external environment to assess opportunities and threats:
political and legal change .................................................................................. 65
3.7.5 Analysing the external environment to assess environment opportunities and
threats: economic change ................................................................................. 68
3.7.6 Analysing the external environment to assess opportunities and threats:
social and technological.................................................................................... 74
3.7.7 analysing the external environment to assess opportunities and threats: the
competitive environment .................................................................................. 76
3.7.8 Analysing strategies options: investment appraisal .................................... 77
3.7 Choosing strategic direction .................................................................... 80
3.8.1 strategic direction: choosing which markets to compete in and what products
to offer .............................................................................................................. 80
3.8.2 strategic positioning: choosing how to compete ......................................... 82
3.9 strategic methods: how to pursue strategies ............................................ 85
3.9.1 Assessing change in scale .................................................................... 85
3.9.2 Assessing innovation ................................................................................. 88
3.9.3 Assessing globalisation and internationalisation ........................................ 90
3.9.4 assessing greater use of digital technology................................................. 91
3.10.1 Managing change .................................................................................... 91
3.10.2 Managing organisational culture .............................................................. 94
3.10.3 Managing strategic implementation ......................................................... 97
2
,3.1- What is a business?
Why do they exist? Objectives; profit, growth, survival , cash flow, social and ethical
objectives
Businesses exist to achieve objectives; profit, growth,survival,cash flow, social, ethical
Business objectives: Quantifiable targets or goals to be achieved within a given time
frame;
- Other objectives include; cost efficiency , sales maximisation,
employee welfare, customer satisfaction
Nature and purpose of a business
1) Mission statement: A formal statement that sets out a what a business wants to
achieve in an aspirational manner
2) Revenue: The total amount of money coming into a business from the sales of a
good/service sales volume X sales price
3) Fixed costs: costs to a business that stays the same regardless of output
(rent/salaries)
4) Variable costs : costs to a business that change in relation to output (raw
materials)
3
, 3.1.2 Different business forms:
• Sole trader
o A person who owns and runs their own business. They therefore have
unlimited liability
▪ This means that they are personally responsible for all debts made
by the business.
▪ Therefore, their home and all their assets might be used to pay off
any debts that may be unable to pay
o A sole trader is unincorperated – meaning the sole trader and the
business have the same legal identity
Advantages of sole trader Disadvantages of sole trader
• Cheap and easy to set up • Unlimited liability
• All profits go to sole trader (after • Limited capital for investment
tax)
• Full control financial records
remain private
• Private Limited companies (LTD)
o The owners and company are separate legal identities, this means they
also have limited liability
▪ Owners are not responsible for the company debts (their personal
assets will not be seized)
Advantages of LTD Disadvantages of LTD
• Limited liability – protects • Financial records are public
shareholders • Greater regulatory requirements
• Easier to raise finance (compared • Pay accountant
to Sole traders)
- Can sell shares
- Easier to take out loans
• Less tax
• Up to 50 invited shareholders (can
maintain control on who invests)
• Public limited companies
o Are businesses owned by shareholders who have limited liability
o Must have atleast 7 shareholders but no maximum amount
o Shares often sold on the stock exchange
o Shareholders and directors are often different
4
