aqa as business studies unit 2...

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AQA AS BusinessStudies Unit 2 (BUSS2)Managing a BusinessRevision Workshop 2013

Student Name

Session 1Marketing ManiaThis session looks at price, price elasticity of demand, distribution,product development and influences on the marketing mix.

Q1: 3 influences on a firm’s choice of price

2 AQA BUSS2 Revision Workshop

Activity 1: Quick Fire: Give Me Three!!

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Boys Girls

Q2: Boys V Girls3 problems and 3 benefits of a business operating in a niche market moving into the mass market.

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Activity 2: The BUSS2 Fortune Teller

Activity 3: What’s the Connection?

Examiners tip - In your exam you are trying to demonstrate GOOD ANALYSIS.One way of showing the examiner GOOD ANALYSIS is to develop a logical chain of argument which shows GOOD CONNECTIONS.

Examiners tip - Price elasticity of demand measures how responsive the demandis for a product or service is, in relation to a change in its price. For BUSS2, you need tobe aware of its meaning, its significance and also the problems associated with measuringprice elasticity of demand.

Price Elasticity of Demand and Profit (try and show a number of ‘connections’)

The BUSS2 Fortune Teller is thinking of 3 things that might influence a business’s choice of distribution channel.

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Shakeaway is the world’s largest milkshake company and was formed in 1999 when theowners decided to make milkshakes more interesting and blended together a packet ofRolo’s, milk and ice cream together. Shakeaway now consists of 35 stores nationwide and each store has over 180 different flavours with millions of possible combinations. Shakeaways core customers are 10-20 year olds and Shakeaway relies heavily on TV advertising to promote its products.

Shakeaway has recently introduced a new curry flavoured Milkshake as well as the ‘Millionaire’ Milkshake. Priced at £10.00 it includes real 23 carat edible gold and the finestquality ingredients! Shakeaway sells (on average) 350 Millionaire Milkshakes per week.

Shakeaway have estimated that the price elasticity of demand for the Millionaire Milkshakeis -0.3 and are considering increasing the price of the Millionaire Milkshake to £12.00.

Activity 4: Marketing Maths!!

Question 1 – Outline ONE reason why you think that the Millionaire Milkshake has a priceelasticity of demand of -0.3

Question 2 – Calculate how much MORE revenue would be generated by the Millionaire Milkshake if the price was increased to £12.00

Exam Gold! - Always show your working out when completingcalculations. This way, even if you get the answer wrong you may stillbe awarded some marks if the examiner can see some evidence ofunderstanding.

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Activity 5: The True or False Challenge!!

Activity 6: Taking the Biscuit

The most important element of the marketing mix depends on the business

The Boston Matrix compares market size with market share

A PED of -4 means the product is inelastic

Loss leader is a pricing strategy

An Oligopoly is a market dominated by several large businesses

True False

Biscuiteers was founded in 2007 by Harriet Hastings and her husband Stevie who noticedthat there was an opportunity to set up a biscuits gift business online that was completelydifferent from anything else that was on the market – biscuits that would look as beautifulas they tasted. From this, Biscuiteers was born.

The business specialises in quality, handmade biscuits and regularly launch biscuit ‘collections’, just like fashion collections in order to keep their range fresh and innovative as well as making their biscuits instantly recognisable. Biscuiteers use only the very best natural ingredients in order to get the perfect flavour for their biscuits and pays a premium price for their supplies.

Over the past 5 years the business has grown enormously but Harriet insists that the biscuits are still made exactly the same way; handmade using old fashioned techniques with every biscuit being lovingly made from start to finish making each biscuit totally individual. The average cost of a ‘mini-tin’ of biscuits, which contains 12 handmade biscuits is £30 with a large tin costing upwards of £38.50. The price the business sets adds to the exclusivity of the product. Biscuiteers have also been commissioned to make biscuits exclusively for a number of exclusive retailers including Selfridges 100th birthday and bespoke biscuits for Harvey Nichols, Mulberry, Swatch and Burberry. Biscuiteers focuses heavily on business to business marketing as well as advertising in exclusive magazines such as GQ, Vogue and Elle.

Biscuiteers are keen to expand the business and have a policy of continual product development as well as enteringnew markets. Recently, as a result of market research, the business has opened up an exclusive shop in Knightsbridge to expand its customer base and is also looking at further exclusive locations nationwide. Biscuiteers has also widened its product portfolio, launching a range of chocolates, cakes and greetings cards.

Why send flowers why you can send biscuits?


Examiners tip - Application. Application is all about answering questions in CONTEXT. This basically means that the answer needs to relate to the scenario in theexam paper or any particular problems or issues that the business in the case study isfacing. ONE way of achieving GOOD application is to ensure that your answer is wellapplied to the business within the case study. Question 1 below will help you developthis important skill.

Watch this short video clip which shows Biscuiteers making biscuits forthe recent Diamond Jubilee

Question 1 – Explain ONE influence on Biscuiteers pricing decisions

Examiners tip - Analysis. Analysis is about developing your points and following a logical chain of argument. Using words like because, therefore, this means that in youranswer encourage you to be more analytical and move up the levels allowing you toachieve higher marks. Another useful technique to help you build GOOD ANALYSIS is STEPPING STONES, this is outlined below.

Stepping Stones is a useful technique that can help you develop good chains of argument.Imagine stepping stones across a river. To get across you could LEAP across or you could take a number of STEPS across.

Many students make LEAPS in their answer rather than taking logical STEPS. Making leaps oftenresults in students only being awarded REASONABLE analysis. Look at the question and answeropposite.

Activity 7: Stepping Stones: Step your way to success!

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Now, have a go at developing ONE solid argument using the stepping stones approach forthe question below.

Analyse TWO reasons why Shakeaway uses TV advertising as its mainform of promotion

One reason why I believe Shakeaway uses TV advertising as one of its main methods of promotion is:

Step 1 because Shakeaway is the world’s largest milkshake company meaning it wouldhave a budget large enough to afford TV advertising which is very expensive. In addition,

Step 2 Shakeaway consists of 35 stores and is therefore a national business. This meansthat

Step 3 television advertising would allow Shakeaway to promote its products and servicesto a national audience. Also,

Step 4 because Shakeaways target market is 10-20 year olds Shakeaway can target theircustomers by advertising in between children’s TV shows meaning that

Step 5 there is a far greater chance that their target audience will see the TV advert whichcould increase the effectiveness of this method of promotion leading to increasedcustomer footfall for the business.

Question 1 – Analyse TWO reasons why Biscuiteers has a policy of continual product development within its business (8 marks)

One reason why I think that Biscuiteers has a policy of continual product developmentwithin its business is:

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Step 2

Step 3

Step 4

Step 5

Exam Gold! - Using the key words at the start of each paragraph can help keep your answer focused on the actual question that you have been asked.


Further Exam Style Questions1 Analyse TWO influences on the marketing mix of Shakeaway. (8 marks)2 Evaluate the possible extension strategies that Biscuiteers could use in order to

improve its long term competiveness. (15 marks)3 Analyse TWO influences that might influence the promotional mix of Biscuiteers.

(8 marks)4 Explain why is important for Shakeaway to have a balanced portfolio of products.

(6 marks)

Exam Style QuestionTo what extent has the products of Biscuiteers been the most important element of its marketing mix? Justify your view (15 marks)

Hints and Tips - When looking at why the product might not be the most importantinfluence on their marketing mix, look at the other elements of the marketing mix to developyour point. Has price perhaps been a key element? What about promotion or place? Remember to DEVELOP your points fully.

Definition of Marketing Mix

One reason why I believe thatproduct is the most important element of Biscuiteers marketing mix is

However, a reason why product might not be the most important element of the marketing mix for Biscuiteers is

Overall, I feel that product (delete as appropriate) is/ is not the most important element of the marketing mix because

Exam Gold! - Recent examiners reports have highlighted that the best strategy to ensure you reach the higher marks is to choose TWO or THREE arguments and DEVELOP your points FULLY rather than choosing several points and failing to develop them.

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Activity 1: Finance Countdown

Session 2Funky Finance

Activity 2: Cash Flow Bingo

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You will be shown 3 BUSS2 style calculation questions on the screen.Can you complete them before the Countdown music stops?

Examiners tip - In your exam, you need to know the causes of cash flow problemsas well as being familiar with a range of techniques that a business can use to improveits cash flow position.

Cash flow and methods of improving cash flow are a key part of BUSS2. Complete the bingogrid below with the KEY words you associate with cash flow and any ways of improving cashflow that you are familiar with.


Activity 3: You Choose!

Activity 4: Calzone Calculations

Choose ONE method of improving cash flow that you identified in the previous activity and EXPLAIN ONE drawback of using this method of improving cash flow.

January FebruaryBudget £ Actual £ Budget £ Actual £

IncomeRestaurant (Food) 2000 3000 3250 4000Restaurant (Bar) 1200 2100 2350 2750Takeaway 1100 2000 1800 1900Total Income/ Revenue 4300 7100 7400 8650

ExpenditureFood 1400 1500 1600 2200Drinks 700 1000 1200 1800Utility Bills 800 850 800 870Reants and Rates 1000 1000 1000 1000Other 600 600 600 600Total Expenditure 4500 4950 5200

Ital ian Restaurant

Calzones‘Calzone’s is a medium sized chain of Italian Restaurants located in and around London. Each restaurant (which also includes a small takeaway operation) has a restaurant manager who has overall responsibility for the running of the restaurant. Recently the owners of the business have increased the responsibility of each restaurant manager by delegating the budgets to each restaurant manager.

Look at the table below which shows the budgeted and actual income and expenditure for one of their restaurants.

Question 1 – Calculate the total actual expenditure for February (2 marks)

Question 2 – Calculate the TOTAL profit variance for January and February (6 marks)

Question 3 – Examine ONE consequence for Calzone’s of delegating budget responsibility to the restaurant managers

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Examiners tip - In the questionabove there were TWO key terms(delegation and budget). There is NO need to define BOTH at the start of your answer as key terms only account for knowledge. Youtherefore only need to define ONE key term.


Activity 5: Cash Flow and Profit = Cats and Dogs

Exam Gold! - Cash Flow and Profit are COMPLETELY different yet this is one area that many students struggle to get to grips with. Many profitable businesses cango under because they run out of cash. It is vital that you have a good understanding of the difference between cash flow and profit.

In order to develop your understanding further of the difference between cash flow and profit,have a go at the question below.

Quick Case Study:ACT Construction Ltd is one of the North Easts leading construction companies specialising in buildings, maintenance and repair. The owner of the business, Alan Thompson has quoted a customer £36,000 for a large house extension and conservatory. The cost of materials and labour are estimated to be £18,000 and the building work will take 7 months to complete. ACT insist on a 10% deposit before work starts and final payment on completion.

Question 1 – Quick Calculation – How profitable is the house extension and conservatory?

Question 2 – Using the example above, BRIEFLY explain how ACT could encounter cash flow problems

Question 3 – What method(s) could ACT use to manage its cash flow during the 7 monthbuilding period? Briefly explain why

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Activity 6: Greggs

Greggs Summarised Financial Data (2010 – 2011)Figures in £millions 2012 2011Turnover 681 701.1Net Profit 41 44.5ROCE 16% 29%

Exam tip - Remember, always show your working out when performing a calculation

The Net Profit Margin for 2012

Question 1 – Assessing the Financial Performance of GreggsUsing the financial data provided, calculate the following:

Greggs was founded in 1939 by John Gregg and was originally a Tyneside bakery. The first Greggs shop opened in Gosforth, Newcastle upon Tyne in 1951 and has grown to be the leading bakery retailer in the UK with over 1,500 shops nationwide, employing 20,000 people. Greggs main unique selling point is their ‘wheat to eat’ proposition whereby they ‘make and bake’ most of their food from scratchwhich Greggs believes makes their products relatively price inelastic.

Despite their position as the UK’s leading bakery retailer, the business has reported a sharp fall in sales and profitswhich it attributes to a number of factors including the economic environment, the recent poor weather and aggressiveexpansion (Greggs opened 100 new stores in 2012) . In addition to this, recent publicity surrounding an ‘obesity’epidemic has also affected sales of some of their core product range such as pies and pasties.

To combat the recent fall in sales and profitability, Greggs have adopted a number of new strategies. Market researchcarried out by Greggs has revealed that approximately 50% of the UK population still does not have access to aGreggs shop and they believe that there is the potential for a further 600 stores within the UK. Based on this information they have launched the ‘Growing Greggs’ campaign on their website which asks customers to identifypotential locations for new shops. However, Greggs are scaling back their expansion plans with only 50 new shopsplanned for 2013 due to their recent performance.

Greggs have also entered the coffee shop market, launching 5 Greggs Moments Coffee Shops which have seen‘encouraging’ sales. Another new strategy that Greggs have adopted is selling their products through another retailer, Iceland. In 2011, Greggs agreed to a 12 month contract to sell their frozen sausage rolls in 700 Icelandstores. The partnership has been so successful that Iceland has agreed to sell a further 8 new lines from Greggs aswell as increasing the Greggs branding within its stores. Greggs is also looking at the possibility of selling some oftheir products through other retailers.Could Greggs be ‘on a roll’ once more?

The percentage difference in turnover between 2011 and 2012

The percentage difference in net profit between 2011 and 2012

The Net Profit Margin for 2011


Definition of Profitability

One reason why I think that Greggs selling theirproducts through retailers is a good way to improve profitability is

However, another way in which Greggs could improve their profitability is

Overall, I feel that (delete as appropriate) sellingtheir products through retailers is/ is not the bestway to improve profitably because

Exam Style Questions1 Analyse TWO methods that ACT Construction Ltd could use to manage its cash flow

(8 marks)

2 Evaluate the ways in which Greggs could improve its profitability (15 marks)

Profitability is the ability of a business to generateprofits from its activities

Exam Gold! - The case study is a gift from the examiner. Make sure that you readthe case study carefully as it contains vital information to help you answer the questionin the exam.

Exam Style QuestionTo what extent do you believe that the best way for Greggs to improve its profitability is to extend the sale of its products through retailers? Justify your view (15 marks)

Question 2 – Explain ONE reason why Greggs has suffered a fall in their return on capital employed

Hints and tips - When answering this question look at OTHER ways that Greggscould improve its profitability other than selling through retailers. Remember, the informationyou need is contained within the case study.

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Session 3Awesome OpsActivity 1: A Quality Game of Wipeout!

Which of the following are features of Total Quality Management?

Right first time Uses inspectors at the end of the process

Takes responsibility awayfrom the workers

Empowers employees Increases a firms labourcosts

Quality standards need tobe agreed

Everyone responsible for quality

Workers may not welcomeextra responsibility

Can meet workers esteemneeds

Quality checked at the endof the process

Need to spend money onstaff training

May slow down productionwhen first implemented

Possible staff resistance Can improve staff motivation

Increases workers responsibility

Activity 2: Quick Calculations

Question 1 – In 2002, Sunderland Football Club achieved 98.6428% capacity utilisationwhen 48,335 supporters attended for the visit of Liverpool. What isSunderland Football Club’s total capacity?

Question 2 – Using the answer to Q1, if, in Sunderland’s next home game, 41,000 fans attended, what would be the capacity utilisation?


Activity 3: Can you Connect?

Activity 4: The Answer Doctor!Look at the extract from a candidate response below which relates tothe question, ‘Analyse the benefits to Calzones restaurant of havinghigh capacity utilisation’ (8 marks)

Labour Productivity (People)Unit Costs (Operations Management)

Price (Marketing)Price Elasticity of Demand (Marketing)

Write a ‘prescription’ to make the above answer ‘better’. What would you prescribe?

Exam Gold! - A way to help you to develop GOOD analysis is to think ‘HOW’ and ‘WHY’. Rather than just saying, ‘increasing technology in the business will improveproductivity’ you need to explain ‘HOW’ or ‘WHY’ it will improve productivity.

One benefit of high capacity utilisation in Calzones restaurant is that it can help increase unit costs. Another benefit of high capacity utilisation is that it can help motivate the staff in the business. Also, high capacity utilisation can give help give abetter impression of the business. However, high capacity utilisation can make it hardto do staff training and clean the machinery as the business will be really busy.

Can you connect the following 4 key concepts? Aim to write a short paragraph that connects them all. Remember to explain ‘how’ and ‘why’

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Activity 5:

Case Study

Question 1 – Analyse TWO factors that may influence the level of customer service offered by the staff at Ryanair (8 marks)

Ryanair was set up by the Ryan family in 1985 with just 25 staff and one 15-seater aircraft. In its first year, Ryanair carried just 5,000 passengers. Compare this to 2011 when the total number of passengers carried by Ryanair was a staggering 76 million. In 2010, theIATA crowned Ryanair the ‘world’s favourite airline’ after statistics showed that it carried more international passengers than any other airline, passengers who are attracted to the firm’s majorselling point of the cheapest air fares in a highly competitive market. In order to keep fares to aminimum, the airline strives to keep its unit costs down using a variety of innovative and sometimescontroversial measures. Recently, Ryanair revealed that staff had been asked to consider theirown body weight in a bid to reduce aircraft weight and therefore fuel costs. For female staff, the incentive for this would be the chance to appear in the Ryanair calendar. Other cost savingmeasures will see the in-flight magazine being reduced from A4 to an A5 format as well as it doubling up as a menu. It is estimated that this will save more than £400,000 a year in printingcosts. Other measures include cutting the amount of ice taken on board each flight as well as reducing the weight of trolleys and seats. The logic behind this is that Ryanair believe that theirair fares are highly price elastic and therefore cutting costs and therefore prices is the key way to increase passenger numbers, revenue and profitability.

However, despite record passenger numbers, Ryanair is not without its critics, being consistentlyvoted the worlds ‘least liked’ airline in passenger surveys because of its cramped seating, unfriendly staff and the poor quality of some of its older aircraft. Staff have also complained

about low wages, overwork and having to pay for theirown uniforms. The training budget per member ofcabin crew is £800 per year compared to an industry average of £1300 and cabin crew labour turnover increased by 18% between 2010 and 2011.

Many critics argue that if Ryanair is to maintain itsrecord growth in such a highly competitive marketthen it needs to focus on other operational targetsother than its relentless drive to reduce unit costs.


One factor that may influence the level of customer service offered by the staff at Ryanair is...

This will influence the level of customer service because

Another factor that may influence the level of customer service offered by the staff at Ryanair is...

This will influence the level of customer service because

Question 2 – In 1985, Ryanair carried just 5,000 passengers compared to 76 million in 2011.What was the percentage increase in passenger growth?

Question 3 – Ryanair operates at very high levels of capacity utilisation. Outline two consequences of operating at very high levels of capacity utilisation to Ryanair.

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Exam Gold! - Manipulating data and using this to support your arguments can helpcontribute towards GOOD application even if you have not been specifically asked toperform a calculation.

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Exam Style QuestionDo you think that reducing unit costs should continue to be Ryanair’s main operational target to maintain passenger growth or should it focus on other operational targets suchas customer service and quality? (15 marks)

Definition

One reason why I believe that Ryanair should continue to focus on unit costs as their main operational target is

However, a reason for focusing on other operational targets such as ____________is

Overall, I would say that Ryanair (delete as appropriate) should/ should not focus on unit costs as their main operational target because

Operational targets are the key objectives ofthe operations function of a business

Exam Gold! - Evaluation: A key concern with many students is that they find it hard to evaluate and feel that they are simply ‘repeating’ their previous arguments.In order to achieve GOOD evaluation, you need to provide a WELL SUPPORTEDand CLEAR judgement that relates to the question. Your judgement should bebased on prior analysis. When weighing up your argument, try and find the mostSIGNIFICANT point which you can then draw upon.


Session 4Effective PeopleActivity 1: Beat the Parachutes

Activity 2: Countdown Conundrums

On the back pages of your booklet you have 4 A, B, C and D voting cards. Use these to show which answer you think is correct.

Can you work out the 3 People Countdown Conundrums?

Activity 3: Odd One OutCircle the Odd One Out and briefly note down why you have chosen that one

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InductionTraining

On The JobTraining

Off The JobTraining

Activity 4: Tall or Flat?Match the statement with the correct organisational structure by ticking the correct box.

Tall FlatIncreased empowerment/ delegationFewer layers of hierarchy make it easier and quicker to respond to changes within the market and meet customer needsHigher management costsReduced horizontal communication within the businessIncreased opportunities for promotion Wide span of controlLonger chain of command can result in worsening communication between senior management and staffNarrow span of control means it is easier to co-ordinate staff within the businessIncreased workload for line managers can result in increased stress and potentially lower moraleImproved motivation within the business

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Activity 5: At Twitter The Future Is You!

Watch the Twitter recruitment video

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Twitter was launched in 2006 and by 2007 it had 150,000 users. Fast forward to 2012 and Twitter now has over 500 million registered users generating 340 million tweets per day and twitter is currently the fastest growing social media network in the world. Twitter has a policy of external recruitment and last year launched an ‘intentionally bad’ recruitment video to try and attract new staff. Their core workforce consists of software engineers who have found themselves in high demand due to the huge growth in social media and the CEO of Twitter believes that effective recruitment is the most important factorto improve the workforce and competitiveness of Twitter.

Question 1 – The CEO of Twitter believes that effective recruitment is the most important factor to improve the workforce and competitiveness of Twitter. Apart from effective recruitment, what other factors will be important when trying to build an effective workforce?Outline 3 in the boxes below.

Question 2 – Examine TWO reasons why Twitter has a policy of external recruitment (8 marks)

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One reason why Twitter have a policy of external recruitment is because

Another reason why Twitter have a policy of external recruitment is because


Examiners tip - Competitiveness is a key element of BUSS2 and you need to beable to explain how the various functions of a business can help a business to be morecompetitive. We will be looking at competitiveness in detail in the final session.

Question 3 – How will effective recruitment enable twitter to be more competitive? Outline two ways.

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DOYLESf ash ion

Doyles core market is men and women in the 16 – 35 year age bracket and its productrange is positioned towards the budget end of the fashion market. Doyles operatesin a highly competitive market with its main competitors being Primark, New Lookand more recently, Zara’s. Doyles products are relatively price elastic.

As the business has expanded, so has the firm’s organisational structure. Doyles operates a tall and fairly traditional structure with each store having a number of different departments. Each department has a department manager, two assistantmanagers and 4 sales staff which has created several layers of hierarchy withineach individual store. When Doyles was first established this structure worked well,however, as the business has expanded labour costs have risen dramatically andregularly exceed budget. In addition to this, many of the sales staff have becomingincreasingly frustrated by the lack of responsibility within the stores resulting in anincrease in absenteeism and labour turnover which now exceeds the industry average. Adding further pressure to the business is Zara who have opened up several stores in close proximity to Doyles which has impacted on their sales.Zara’s operates a flat structure which allows Zara to react quickly to changeswithin the market. Zara’s can therefore produce clothes cheaper and get them into stores far quicker than Doyles. Falling sales and increasing costs have reduced Doyles profitability leading John to consider restructuring the business.

John intends to reduce the amount of departments within each store as well asthe number of managers. John feels that each store is ‘top heavy’ with managementand that in order to improve profitability the business needs to be more streamlined. John has also proposed that as part of the restructuring processsales staff will receive financial incentives based on customer service and salestargets. Despite needing to improve profitability John has reservations about sucha dramatic restructuring as it will require changing the design of most jobs withinthe stores as well as significant amounts of training. John explained at a recentboard meeting that he knows that in the short term there will be problemscaused by the restructuring and the benefits will only be realised in the longterm.

Doyles is a chain of high street fashion stores which was founded in 2002 by John Doyle and his wifeLouise. Since then the company has expanded rapidly, operating 24stores with over 2000 employees.

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Examiners tip - You can achieve GOOD application if your answer is completelyin CONTEXT. So, in the example above, the significance of an increase in absenteeismin a fashion retailer will be different to an increase in absenteeism in a car manufacturer.The next activity will demonstrate this

Key Data 2011 2012Number of Staff 2100 2156Number of absences 263 302Number of staff leaving 84 131Number of customer complaints 24 46

Activity 6: Quick Calculations

The % difference in absenteeism between 2011 and 2012

The % difference in customer complaints between 2011 and 2012

Developing Application and AnalysisWhat is the significance to Doyles of the above calculations?

Developing Application further

Significance to DoylesCalculation

Absenteeism

Customer Complaints

Honda has noticed an increase in absenteeism within one of its factories. How will this affect Honda? (This willdemonstrate how business concepts can be applied DIFFERENTLY to different businesses and industries).


Activity 8: Short Term V Long Term

Exam Style QuestionDo you believe that John Doyle is right when he claims that the benefits of restructuring willonly be realised in the long term? Justify your view (15 marks)

Examiners tip - Cracking the code: To achieve success in BUSS2 you need tofully understand what the examiner is asking. In the question above, you need to develop a strong argument to explain why the benefits might only be realised in the long term aswell as developing a strong argument to explain why there may actually be some short-termbenefits. In your final evaluation you need to weigh up whether, on the whole, the benefitswill be realised in the long term or in the short term.

One reason why I agree with John that the benefitsof restructuring will only be realised in the longterm is

However, an argument against Johns view that thebenefits will only be realised in the long term is

Overall, I believe that (delete as appropriate) Johnis correct/ incorrect when he says that the benefitsof restructuring will only be realised in the longterm because

Plan your answer using the template below:

Exam Style Questions1 Analyse TWO possible consequences of using financial incentives to motivate the

sales staff within Doyles (8 marks)2 To what extent do you agree that restructuring the business is the best way to improve

Doyles profitability? (8 marks)

Activity 7: Boys V Girls!!Examine TWO possible consequences for Doyles of the high level of labour turnover of salesstaff within the stores

BOYS (Positive Consequence) GIRLS (Negative Consequence)

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Session 5Cool Competitiveness andExam Skills

1 Minutes

2 Marks

3 Weighing

4 Skills

5 Section A

6 Section B

Activity 1: BUSS2 Basics – Test your Knowledge

Activity 2: True or False

Examiners tip - BUSS2 consists of two different case studies looking at two completely different businesses. Time management is crucial as you need to switch yourthoughts from one business to a completely new one.

Examiners tip - Know your trigger words and mark allocation. This will guide you on how you should answer the question and how long you should spend answering it.

In this session we are going to examine the concept of competitiveness and look at the ways in which a business can improve its ability to compete.Before that, some BUSS2 Exam Basics and an activity to further develop essential exam skills.

1 A question worth 11 marks or more requires you to evaluate?

2 A question with the word, examine in it requires you to analyse?

3 A question with the word, explain in requires you to analyse?

4 In the extended questions 5 marks are available for evaluation?

True False


Examiners tip - A key theme running through BUSS2 is the concept of competitiveness.There have been several questions in the past specifically relating to this concept. In your exam,you may be asked to suggest ways in which a business can become more competitive. You mayalso be asked to judge whether or not you feel a business has improved its competitiveness over time as well as looking at the factors that influence a firm’s competitiveness.

Let’s look at a BUSS2 style question relatingto Doyles from the last session.Analyse TWO consequences of using financialincentives to motivate the sales staff withinDoyles (8 marks)

Use the stepping stones template below todevelop an argument with GOOD analysis. We will then ask volunteers to read out theirresponses with the best answer winning aprize!

Exam Gold! - HOW and WHY: Another technique to help you develop GOODanalysis is to ask yourself HOW and WHY after you have made a point. For example,if you say that investing in training will motivate staff, ask yourself HOW investing intraining will motivate the staff. If you say that this will result in better customer service,ask yourself WHY this will lead to better service. Then, explain HOW this will benefitthe business.

Activity 4: Competitiveness

Step 1

Step 2

Step 3

Step 4

Step 5

One consequence to Doyles of using financial incentives to motivate the sales staff is:

Activity 3: Developing Analysis - Stepping Stones School Challenge!!

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Developing ApplicationQuestion 1 – Outline how we can JUDGE how competitive Sunderland Football Club is?

How could you measure their competitiveness? What would you look at?

Question 3 – Choose ONE of your suggestions. Explain HOW/ WHY this would improve thecompetitiveness of Sunderland Football Club

Question 2 – Outline 3 different ways in which Sunderland Football Club could improve itscompetitiveness


For our final activity we are going to look at a video case study that looks at the strategiesthat McVities have employed to increase the competitiveness of Jaffa Cakes.

Activity 5: Video Case Study

Exam Style QuestionQuestion 1 – Examine TWO factors that have influenced the competitiveness of McVities

Jaffa Cakes (8 marks)

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Question 2 – Outline and explain ONE further strategy that McVities could employ to increase the competiveness of its Jaffa Cakes

Exam Style Questions1 To what extent do you think that aggressive marketing has been the key influence in

increasing the competitiveness of Jaffa Cakes? (15 marks)

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Achieving Excellence in Evaluation for BUSS2In BUSS2 there are 17 marks out of the 80 total available for “evaluation” (inc QoL).

The skill of evaluation is demonstrated when you show the examiner that you canexpress a judgement on a situation or issue, after weighing up the balance of theevidence presented to you. This is a difficult skill to develop – but well worth practising as you prepare to take BUSS2 (it will be even more important whenyou go on to take A2 Business Studies.

In BUSS2, questions requiring evaluation will have a higher mark allocation – typically 10-15 marks. The trigger word at the start of a question will also signalwhen evaluation is required. These include:

• “Justify”• “To what extent?”• “In your opinion…”• “Discuss”• “Evaluate”

Evaluation is all about showing judgement and reaching a reasoned conclusion.You need to show the examiner that you are weighing up the evidence and options before opting for a conclusion.

In business studies exam questions there are rarely right or wrong answers – all business problems can be approached in a variety of ways. Your challenge is to show that you can address the issues (e.g. advantages and disadvantages) and strike a balanced conclusion.

If you find yourself answering using the words “because” or “it depends on” thenyou are probably well on the way to earning good evaluation marks.

In BUSS2 there are several potential areas where the examiner may look to testevaluation skills. It might be on one particular area (e.g. operations: capacity utilisation) or combining two areas (e.g. marketing and finance).

Nearly all business decisions have implications for other functional areas. For example, a business decision to invest in training has implications for operationsand finance.

The quality of your evaluation in answers can often be improved by referring tothese implications. You should bear these in mind when you develop your “it depends on” sentence or paragraph.

On the following pages, we have outlined some of the main topic areas where you might be asked to demonstrate evaluation. This is not meant to be a completelist of all possible topics, but you should find it helpful in shaping your BUSS2 revision.


Buss 2 Evaluation Guided Revision Questions

MarketingAdvantages / disadvantages of targeting a niche market segment (compared with alternative of targetinga larger mass market).

Usefulness and limitations of using the Boston Matrix or Product Life Cycle model to make marketingdecisions.

Whether an extension strategy should be implemented for a mature product.

The merits and demerits of making changes to individual elements of the marketing mix.

Whether the business has sufficient information (market research) to make reasoned marketing decisions.

Application of price elasticity of demand to a business decision.

The effect of the competitive structure of a market on a business’ ability to make marketing decisions(e.g. control over pricing for a business with a very small market share).

Whether a marketing decision helps a business differentiate itself against competitors.

Factors that will determine the success or otherwise of a new product.

The relative merits and demerits of different promotional strategies and tactics for a given marketingproblem.

Relative importance of factors (including price) that will affect the demand for a product.

Evaluating the effect of a marketing decision (e.g. a price cut to boost demand) on operations (e.g. iscapacity sufficient?).

Evaluating the extent to which a business has control over its marketing mix.

Assessing the importance of non-marketing activities on competitiveness – particularly the importanceof customer service, quality and productivity.

The likely competitor response to a marketing decision (e.g. lower price, new product development).

FinanceThe usefulness of budgets in controlling and allocation resources

The relative significance and implications of budget variances

Whether the benefits of budgeting outweigh the disadvantages

The main causes of cash flow problems

Merits and demerits of using bank finance to address cash flow issues

Discussing the importance of improving profit as a way of increasing cash flow

Discussing the implications of rapid growth on cash flow and operations

Assessing the merits and demerits of short-term measures to improve cash flow (e.g. encouraging cashsales, reducing customer payment terms, extending supplier payment periods)

Evaluating the implications of cost-cutting as a means of improving net profit margin

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People in BusinessJudgement of the appropriate structure of an organisational hierarchy

Assessing the implications of the span of control for decision-making

Relative advantages and disadvantages of different methods of motivation

Evaluating the importance of non-financial methods of motivation compared with financial methods in a given situation

Merits and demerits of measures to assess employ productivity

Assessment of the role of delegation as a business grows in size and complexity

Evaluation of the role of empowerment in improving employee motivation

Relevance and effectiveness of different methods of recruitment

Advantages and disadvantages of on-the-job and off-the-job training

Evaluating the importance of training to delivering the right level of customer service

Assessment of the link between training and product quality for a given business

Evaluation of the potential impact of delayering on improved business performance and employee motivation

Discussing the importance of labour productivity for the competitiveness of a business

Assessing the impact of high rates of absenteeism or labour turnover on business performance (e.g. quality, customer service)

OperationsThe advantages and disadvantages of operating at full capacity / with spare capacity, given the circumstances of the business

Evaluating the relative merits of ways to increase capacity

Assessing the problems of operating a very high capacity utilisation compared with the benefits oflower unit costs

The relative merits and demerits of different approaches to managing quality (particularly quality control v quality assurance)

Discussing whether an improvement in quality will enable a business to become more competitive

Examining the link between improved quality and better customer service – is it worth the cost or investment?

Evaluating the role of employee training in achieving customer service improvements

Assessing how better management of supplier relationships can result in improved business competitiveness

Discussing the merits and demerits of working with a smaller number of key suppliers

Evaluating the importance of suppliers to a business compared with other stakeholders, including customers and employees

Discussing the link between increased use of technology and better productivity

Evaluating the impact of technology on customer service or employee management


BUSS2Revision ChecklistThere is a lot of material to cover in the BUSS2 specification. Use this checklist as part of your revision to ensure that you have covered all the key topics:

Notes /Covered

Topic Happy /Done

FinanceUsing BudgetsBenefits and drawbacks of using budgetsCalculation of variancesUsing variances to help decision-makingImproving Cash FlowCauses of cash flow problemsMethods of improving cash flowMeasuring and increasing profitCalculation & understanding net profit marginsCalculation & understanding return on capitalMethods of improving profits / profitabilityDistinction between cash and profit

People in BusinessImproving organisational structures & workforce effectivenessKey elements of organisational structureWorkforce rolesHow organisational structure affects business performanceMethods of measuring workforce performanceDeveloping an effective workforceThe recruitment processInternal & external recruitmentSelecting the best employeesHow recruitment & selection can improve a workforceMethods of trainingMotivating employeesFinancial methods of motivationImproving job designEmpowering employeesWorking in teamsTheories of motivation

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Notes /Covered

Topic Happy /Done

Operations ManagementMaking operational decisionsOperational targetsCalculating and managing capacity utilisationNon-standard orders & matching production and demandQuality & working with suppliersMeaning of qualityQuality control v quality assuranceSystems of quality assurance & quality standardsChoosing effective suppliers + role of suppliers in improving operationsCustomer service & technologyMethods of meeting customer expectationsMonitoring and improving customer serviceBenefits of high levels of customer serviceTypes of technology in operations managementIssues in introducing and updating technology

Marketing and Competitive EnvironmentIntroduction to MarketingPurpose of marketingNiche and mass marketingInfluences on the marketing mixProductInfluences on development of new goods and servicesUnique selling pointsProduct portfolio analysisProduct life cyclePromotionElements of promotional mix + influences on the choicePricingPricing strategies & tacticsInfluences on pricing decisionsPlaceChoosing appropriate outlets / distributorsTypes of distribution channelsMarketing and CompetitivenessImpacts of market conditions and degree of competitionDeterminants of competitivenessMethods of improving competitiveness


BUSS2Calculations and FormulasProfit and Cash Flow

How to improve profit

Net profitmargin =

Net profit (before tax)

Salesx 100

Return oncapital =

Net profit (before tax)

Capital Investedx 100

Sales

Variable Costs

Fixed Costs

Net Profit

Increase quantity sold

Increase selling price

Reduce VC per unit

Increase output

Reduced fixed costs

less

less

=

Difference between profit and cash flow

Sales

Variable Costs

Fixed Costs

Net Profit

less

less

=

Cash Inflows

Cash Outflows

Net Cash Flow

less

=

What is Profit? What is Cash Flow?

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Operations Management

Labour productivity

Output per period (units)

Number of employees at work

Labour turnover

Number of employees leaving during period

Average number employed during periodx 100

Capacity utilisation

Actual level of output

Maximum possible outputx 100

Absenteeism

Number of days taken off forunauthorised absence (during period)

Total days worked by workforceover the period

x 100


BUSS2 Key Term GlossaryAdverse variance A difference between actual and budgeted amounts which is bad news – e.g.

higher than budgeted costsAdvertising Paid-for communication, aimed at informing or persuadingAssessment centres Where a recruiting firm runs a series of extended selection procedures, each

lasting one or two days or sometimes longerAutomation The replacement of workers with machines to perform task in productionBoston Matrix A model which analyses the product portfolio of a business into four categories

categories (stars, cash cows, problem children and dogs)Branding The use of a trade name, symbol, logo or other device to differentiate a

product or serviceBudget A detailed plan of income and expenses expected over a certain period of timeBusiness to business Abbreviated to B2B, business-to-business involves the selling or

products and services by one business directly to anotherCapacity utilisation The proportion of total capacity that is used (expressed as a percentage)Communication The process of exchanging information or ideas between individuals or groupsCompetition The businesses that compete for a share of a marketCompetitiveness The ability of a business to offer a better product than competitors (as

measured by customers)Cost reduction Actions taken by a business aimed at reducing total costs, or lowering

average unit costsCustomer What customers expect to receive as a result of buying a good or service;expectations influenced by perceptions of factors such as quality and priceCustomer service The ways in which a business meets the needs and wants of its customersDelegation Where responsibility for carrying out a task or role is passed onto someone

else in the business.Direct selling A method of distribution which involves a business transacting with a

customer without the use of intermediariesDistribution channel How a business gets its products to the end consumer (with or without the use

of intermediaries)Empowerment Delegating power to employees so that they can make their own decisionsExternal recruitment Where candidates for a job vacancy come from outside the organisationFactoring A source of finance where a business receives a proportion of the amount

owned by trade debtors from a specialist finance-providerFavourable variance A difference between actual and budgeted results which is good news.

E.g. higher than budgeted revenueFlexible working Where a business uses a number of different working practices in order to suit

the job in hand and the needs of employeesHierarchy The structure and number of layers of management and supervision in an

organisationInduction training Training aimed at introducing new employees to a business and its procedures Internal recruitment Where candidates for a job vacancy come from within the organisationInterview Part of the recruitment process where a candidate is met face-to-faceJob description A summary of the main duties and responsibilities of a jobJob design The way in which tasks are combined to form a jobJob enlargement Giving employees more tasks of a similar level of complexity. Job enlargement

expands the number of tasks completed by an employeeJob enrichment Making a job more interesting or varied so that is more rewardingLabour productivity The output produced per employee over a given time periodLoss leader Where a price is set deliberately below the cost of production in order to

attract customers who will buy other, more profitable productsMarket research The process of planning, collecting, and analysing data relevant to help make

marketing decisions.

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Marketing mix The set of marketing tools that the firm uses to pursue its marketing objectives objectives. Commonly taken to comprise product, price, promotion and place

Mass market Describes the largest group of customers with specific needs and wants inan industry

Merchandising Promotion of a product at the point-of-sale, usually in a retail environmentNet profit Profit that remains after all operating costs are taken away from sales revenue

Net profit is usually stated before any deductions for tax.Net profit margin A measure of profitability. Net profit margin is calculated as net profit divided

by sales revenue. The resulting figure is shown as a percentageNiche market A niche market is a focused segment of a larger market sector which is

possible to targetOff-the-job Training that takes place away from the workplace (e.g. on a course)On-the-job Training that takes place at the workplace (e.g. being supervised and coached

whilst working)Organisational The way that the roles and responsibilities within an organisation are structured structureOutput The finished products (goods and services) that result from the production

(or "transformation") process.Overtime Staff who work for less than a standard working week or dayPayment terms The period of time that a supplier allows for an invoice to be settledPenetration pricing Pricing strategy that involves the setting of lower, rather than higher prices in

order to achieve a large market sharePermanent employee An employee who has a permanent position (i.e. not temporary) in a businessPerson specification A description which identifies the skills and experience that are likely to be held

be held by a successful applicant for a job vacancyPrice elasticity of The responsiveness of demand to a change in the price of a productdemandPrice leader A market leader business whose price changes are followed by rivalsPrice skimming Pricing strategy where a higher price is charged for new product to take

advantage of customers prepared to pay for innovationPrice taker A business that has no option but to charge the ruling market pricePricing decisions The decisions taken about how to price a productPricing strategies The overall strategic approach to pricing over the medium-to-long term, often

based on the market positioning of a productPricing tactics The short-term pricing decisions and approaches taken - e.g. the temporary

use of sales promotions or a short price warProduct life cycle A theory which predicts the stages a product goes through from introduction

to withdrawal from a marketProduct portfolio The collection of products and brands owned and operated by a firmProductivity Measures of output per worker over a given time periodProfitability The ability of a business to generate profits from its activities. Profitability is often

measured in terms of the return on sales (net profit margin) or return oninvestment (return on capital)

Promotional mix The mix of activities and approaches taken to promoting a product, including advertising, direct selling etc

Psychological pricing Using price as a way of influencing a consumer's behaviour or perceptions, for example using high prices to reinforce a quality image

Public relations The promotion of a business through news stories, sponsorship and similaractivities. Usually shortened to PR.

Quality Where a product meets a customer’s requirementsQuality assurance Organising every process to get the product 'right first time' and prevent

mistakes ever happeningQuality control The inspection of products as part of a sampling process to ensure that the

right production standards have been achievedRationalisation Reorganising production in order to increase productivity and efficiency. Often

involves closure or relocation of production capacity.


Return on capital A measure of the return made by investing in a business or business projectReturn on capital is calculated as: (Net profit / Capital Invested) x 100[shown as a percentage)

Robotics The science and technology of robots, and their design, manufacture,and application

Sale & leaseback A method of raising finance. Sale and leaseback involves a business sellinga major asset (e.g. land & buildings) and then leasing the same asset backfrom the new owner.

Sales promotion Tactical, point of sale material or other incentives designed to stimulate purchasesSelection The process of deciding which applicant for a job a business should accept Span of control The number of employees who are directly supervised by a managerSpare capacity When a business is able to produce more with existing resources (also known

as excess capacity)Stock control The processes and controls used by a business to ensure that it has sufficient

(but not too much) stock for its purposesStocks Raw materials, work-in-progress and finished goods held for resale. Stocks are

sometimes also referred to as "inventories"Sub-contracting Delegation by one firm of a portion of its production process, under contract,

to another firm, including in another countrySupplier An individual, business or other organisation which provides goods or services

to a customer or consumerTQM Total Quality Management. An attitude to quality where the aims are zero

defects and total customer satisfactionTraining The provision of work-related education or skills developmentUnit cost The average production cost per unitUSP USP is an acronym for "Unique Selling Point". A USP is a feature of a product

or service that makes it stand out compared with the competition. If a USP is sustainable, then it can be a source of significant competitive advantagefor a business.

Variance The difference between the budgeted amount and what actually happens. A variance can be "positive" (favourable) or "negative" (adverse)

Waste A cost of production. Sub-standard completed output or raw materials whichare not retained in the production process

Workforce role The tasks involved in a particular level or grade of jobWorkload The amount of work assigned to a particular worker, normally in a specified

time period

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Notes


Notes

A

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B


Notes

C

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D

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