the business environment & managing...

aims and objectives

eco

nom

ic enviro

nm

ent

social e

nviro

nm

ent

legal environ

men

t

causes of change

leadersh

ipim

plem

enting and

man

aging ch

ange

strategic decisions

influencesenviro

nm

ent

missio

nplanning for change

change process

leadership

cultu

re

environm

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socialinterest rates

objectives

emerging m

arkets

infl

ation

exchange rates

dem

ograp

hic facto

rs

political d

ecisio

ns

unemploym

ent

environmental protection

health

and safe

ty

taxationsu

bsid

y

Managing change

Corpora

te a

ims

and o

bject

ives

social environment

planning for change

making strategic decisions

managing changeculture

mission, aims and objectives

environmentsocial environment

leadershipplanning for change

technologicaleconomic environment

change processlegal environment

strategic decisions

social environment

technologicallegal internal causesstrategic decisionsinfluencesleadership

fiscal policyinflationunemployment

subsidygovernment regulation

buying power

public relationsenvironmental issues

freedom of tradeinflation

Assessing change

freedom of trade

cons

umer

protectio

n

inflat

ion

econ

omic

grow

th

moneta

ry polic

yemerging m

arkets emerging m

arkets

corporate strategies

mission statem

ents

inflation

legislation

economic trends

the business cycle

European Union

fiscal policy

unemploym

ent

inflationlegislation

mergers

stak

eholder p

erspect

ives

unemployment

taxa

tion

subsid

y

interest rates

takeovers

law

trade

demograp

hic

public re

lation

s

healt

h

selling

power

monetary

policy

subsidy

taxation

AQA A2 Business Studies Unit 4

crossAcademe

Bare Bones ReviSion GUide

The Business Environment & Managing Change

1 About the exam 2 Notes: Corporate aims and

objectives Understanding mission, aims and objectives � � � � � � � � � � � � 2

3 Notes: Assessing changes in the business environment

The relationship between businesses and the economic environment � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 3

The relationship between businesses and the political and legal environment � � � � � � � � � � � � � � � � � � � � � � � 6

The relationship between businesses and the social environment � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 8

The relationship between businesses and the technological environment � � � � � � � � � � � � � � � � � � � � � � � � � � 9

The relationship between businesses and the competitive environment� � � � � � � � � � � � � � � � � � � � � � � � � � � � 9

10 Notes: Managing change Internal causes of change� � � � � � � � � � � � � � � � � � � � � � � � � � 10 Planning for change � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 12 Key influences on the change process: leadership � � � � � � 12 Key influences on the change process: culture � � � � � � � � � 13 Making strategic decisions � � � � � � � � � � � � � � � � � � � � � � � � � 14 Implementing and managing change � � � � � � � � � � � � � � � � � 14

15 Exam practice Section B essay questions � � � � � � � � � � � � � � � � � � � � � � � � � 15

This Bare Bones Revision Guide:

provides the essential content you need

to succeed in the AQA Unit 4 exam;

presents this information simply and

effectively;

illustrates the higher lever skills of

analysis and evaluation;

includes invaluable exam tips to help

maximise your performance;

concludes with a series of essay

questions for exam practice.

The superfluous bumpf that comes with

other guides has been stripped away in

order to leave you with the key to effective

revision and exam success – clear,

concise revision notes!

Time constraints make it impossible

for you to revisit all the material studied

during your course. Instead, you need

to consolidate your knowledge and

understanding by focusing on the central

terms and concepts provided here. Use

these as the framework for recalling

other content before going on to read the

exam-style essay questions on pages

15–21. You should tackle these under

timed conditions. The A-grade responses

are provided so that you can assess the

quality of your own answers, identifying

any weaknesses. You can then review

these topic areas.

The structure of the revision notes follows

the order of the AQA specification.

The A-Grade Analysis/Evaluation

Examples are designed to help you

develop these higher level skills, and the

essay questions will test not only these

skills but also the skill of application.


Contents

© Cross Academe Ltd 2013

All rights reserved; no part

of this publication may

be reproduced, stored

in a retrieval system, or

transmitted, in any form or

by any means, electronic,

mechanical, photocopying,

recording or otherwise without either a licence from Cross Academe or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Limited, Saffron House, 6–10 Kirby Street, London EC1N 8TS.

ISBN 978-1-909592-18-6

Design by: Oxford Designers & Illustrators

Published by: Cross Academe Limited St John’s House 5 South Parade Oxford OX2 7JL



Phil Waterhouse

market research

employing people

understanding markets

cash flow forecast

setting budgets

sources of finance

breakeven analysis

cash flow forecasting

transforming resources

consultants and advisers

public limited com

panies

researchbusiness plans

enterpriseentrepreneur

business ideas

adding value

private limited

companies

costs, revenues and profits


cash flow forecast

setting budgets

legal structurefinancesm

arket segmentation

fixed variable and total cost

startupstradem

arkadding valuem

arket size

market grow

th

sole traders

opportunity cost

price, total revenue and profit


patentrew

ards

Starting a business Financial planning

business ideas

cash flow forecast


business ideas

enterprise

strengths and weaknesses

entrepreneur

breakeven analysis

business plans


market research

employing people

sources of finance

breakeven analysis



market grow

th

public

limited com

panies

private limited com

panies


costsrevenues

startups

riskstradem

ark

conribution

adding value


cash flow forecast

setting budgets

legal structure


market share

risks

business ideas

Starting

a businessentre

pre

neur

legal structure

plan

cash flowforecasting

busin

ess id

eas

raising financem

ark

et re

searc

h

breakeven analysis

patenttradem

arkse

tting b

udgets

strengths and

weaknesses

cop

yright

sole trad

ersbud

gets

analysisrisk

srew

ards

opportunity costsetting budgets

risksrewards

trademark

pate

nt

budgets

riskcontribution

partnerships

cost

bud

gets

risk

cashcopyright

pla

ncash

The Heathland School

The Unit 4 exam is synoptic in nature� This means that in your

responses you will be rewarded for displaying knowledge of

the content covered in the other units� Unit 4 also introduces

new material and this content is covered in these pages�

In the Unit 4 exam you must complete two 40-mark essays

in 1 hour 45 minutes, choosing one essay from Section A

and one from Section B� In Section A you have a choice of

two essays based on a pre-release task (announced in early

February) and in Section B you have a choice of three essays

based on a specific part of the Unit 4 specification� This

guide focuses on the key content required for the Section B

essays�

Unit 4 can appear daunting because you are required to write

two detailed essays� However, the skills required are the same

as those you have developed when studying earlier units�

The key to success is your ability to build chains of argument

(analysis) based on the context (application) so that you can

draw a conclusion (evaluation)�

Each essay has the same allocation of marks and is

marked according to the level of response� Each skill is

judged on whether you show Good, Reasonable or Limited

understanding, and to achieve an A-grade you will need

around 28+ marks per essay�

The process required in order to achieve this is the same for

each section� Four to five detailed paragraphs that show good

knowledge, using good examples for application and then a

line of argument developed, should get you into the top band

for Application and Analysis� Using examples from your own

research is vital for both sections of the paper�

For Evaluation you need to make a justified judgement, stating

what you think and then supporting this judgement� The

concept of PEE-ing throughout is a good one: each paragraph

should make a point, explain it and then back it up with

examples and analysis� It is also useful to make a judgement

at the end of each paragraph� You should then bring your

essay to an end with a concluding paragraph or two, stating

which are the most important factors and why� If you do this

– and provided you have answered the question set – you

should access the very highest grades�

On Section B you do not have to use the businesses

mentioned in the question� The way the question is worded is

vital� It will ask you to ‘Justify your answer with reference to

the business and/or organisations that you know’� Therefore,

do not be put off a particular question if you think it is about a

company/industry that you do not know much about� Similarly

do not choose a question because it gives an example that

you know lots about!

Sometimes the best questions are the ones that give you

an opportunity to make a clear judgement� The examiner

may also use key phrases such as ‘Ultimately doomed’ or

‘Guaranteed future success’ in relation to a business� These

are known as the ‘hooks’, and students that discuss this use

of language in their response to the question tend to perform

particularly well�

Exam tipMake sure that you answer the question set� Reread it after

every paragraph to make sure that you are not drifting off at

a tangent� The examiners want to reward you with marks, but

they cannot do this if you do not answer the question� You must

remain focused throughout�

The key notes that follow provide the building blocks for your

responses, but the most important feature of this guide is the

way it demonstrates how effective lines of argument (analysis)

can be constructed from this information and then how the

significance of the data can be evaluated�

Exam practiceIn addition to tackling the essay questions provided on pages

15-21, you should gain exam practice by working through

past papers� These are readily available on the AQA website

(www�aqa�org�uk) along with the associated mark schemes�

Try to tackle these under the same time constraints that you

will have in the exam itself� You have 1 hour and 45 minutes to

complete the exam, so practise!

Throughout this guide look out for the A-Grade Analysis/

Evaluation Examples in order to see how to turn your

responses into A-grade answers�

About the exam


market research

employing people


cash flow forecast

setting budgets

sources of finance

breakeven analysis




public limited com

panies



business ideas

adding value

private limited

companies



cash flow forecast

setting budgets


arket segmentation


startupstradem

arkadding valuem

arket size

market grow

th

sole traders

opportunity cost



patentrew

ards


business ideas

cash flow forecast


business ideas

enterprise


entrepreneur

breakeven analysis

business plans


market research

employing people

sources of finance

breakeven analysis



market grow

th

public

limited com

panies

private limited com

panies


costsrevenues

startups

riskstradem

ark

conribution

adding value


cash flow forecast

setting budgets

legal structure


market share

risks

business ideas

Starting

a businessentre

pre

neur

legal structure

plan


busin

ess id

eas

raising financem

ark

et re

searc

h

breakeven analysis

patenttradem

arkse

tting b

udgets

strengths and

weaknesses

cop

yright

sole trad

ersbud

gets

analysisrisk

srew

ards


risksrewards

trademark

pate

nt

budgets

riskcontribution

partnerships

cost

bud

gets

risk

cashcopyright

pla

ncash

1111The Heathland School

Corporate aims and objectivesUnderstanding mission, aims and objectivesDefinition: A mission statement is a declaration of an

organisation’s purpose, principal aims, identity, policy and

values�

Definition: A corporate aim is a long-term target that enables

the business to fulfil its mission statement�

Definition: A corporate objective is a long-term goal

established to coordinate the business�

In order to be effective, objectives should be SMART:

Specific

Measurable

Agreed

Realistic

Time specific

Key corporate objectives can be remembered using the

acronym PIGSS:

Profit

Image

Growth

Survival

Service

Corporate strategiesDefinition: A corporate strategy is a long-term plan to

achieve the business’s corporate objectives�

A corporate strategy informs strategies across all of the

functional areas of the business and involves a significant

investment in terms of time and resources� This makes it

difficult to reverse�

Definition: Tactics are the decisions made by the business to

support its strategy – the means by which it is carried out�

Examples of corporate strategies

Global strategies

Generic strategies – Porter

Operational strategies – Ansoff

Features of global strategies

Worldwide in scope

Being competitive in all markets across the globe

Producing a standardised product to benefit from

economies of scale

Coordinating activities from the central location

Minimising costs and increased efficiency

Features of generic strategies (PORTER)

Cost leadership

Differentiation

Focus

Features of operational strategies (ANSOFF)

Market penetration

Market development

Product development

Diversification

eXAM TiP

The key point is that you are aware of the short-term, medium-

term and long-term plans of the business and that you have an

appreciation of where it is heading�

StakeholdersDefinition: A stakeholder is any individual or group that has

an interest in the way that a business is run�

Examples of stakeholders include:

Customers

Employees

Shareholders

Suppliers

Government

Local community

Competitors

noTeS


market research

employing people


cash flow forecast

setting budgets

sources of finance

breakeven analysis




public limited com

panies



business ideas

adding value

private limited

companies



cash flow forecast

setting budgets


arket segmentation


startupstradem

arkadding valuem

arket size

market grow

th

sole traders

opportunity cost



patentrew

ards


business ideas

cash flow forecast


business ideas

enterprise


entrepreneur

breakeven analysis

business plans


market research

employing people

sources of finance

breakeven analysis



market grow

th

public

limited com

panies

private limited com

panies


costsrevenues

startups

riskstradem

ark

conribution

adding value


cash flow forecast

setting budgets

legal structure


market share

risks

business ideas

Starting

a businessentre

pre

neur

legal structure

plan


busin

ess id

eas

raising financem

ark

et re

searc

h

breakeven analysis

patenttradem

arkse

tting b

udgets

strengths and

weaknesses

cop

yright

sole trad

ersbud

gets

analysisrisk

srew

ards


risksrewards

trademark

pate

nt

budgets

riskcontribution

partnerships

cost

bud

gets

risk

cashcopyright

pla

ncash


Stakeholder perspectives

Stakeholder Nature of interest

Customers • Reliable supply of goods and services • Products produced to a high standard, reliable

and a decent price

Employees • Steady and reliable income • Healthy and safe working conditions • Job security • Possible promotions

Shareholders • Regular dividends and healthy profits • Rising share prices

Suppliers • Frequent and regular orders • Regular payment

Government • Employment • Profitability to create wealth and tax revenues

Local community

• Employment • Minimal pollution and noise• Provision of facilities for local community

Competitors • Understanding of the range of products offered• Financial performance

In recent years, businesses have shifted away from the

traditional shareholder approach to more of a stakeholder

approach�

Firms used to focus heavily on providing returns to

shareholders, but there is an increasing emphasis today on

making sure that the views of the various stakeholders in the

business are taken into account, since they are all crucial to its

long-term success�

eXAM TiP

You should think about the relative importance of stakeholder

groups� Too often students just list the impact of a business

on stakeholders and fail to come to a conclusion about which

stakeholder group is most affected� As Unit 4 focuses on large

PLCs, you should remember that it is the shareholders that are

invariably the most significant group and this should come out

in your evaluation�

Assessing changes in the business environmentThe relationship between businesses and the economic environment

Businesses need to adopt different strategies according to the

dynamic macroeconomic business environment�

The business cycleAll countries suffer fluctuations in the level of activity within

their economies�

The business cycle describes how this economic activity

passes through four different stages over a period of time�

The four stages of the business cycle are:

1 Boom A period of very fast economic growth, with

rising incomes and profits� Inflation will rise and there

will be shortages of key skilled workers, leading to high

wage increases� High inflation will make the country less

competitive, and business confidence will eventually fall

due to rising costs� Interest rates are increased to slow

down growth�

noTeS

Business cycle• Boom• Recession• Slump• Recovery

Inflation• Rate of price increase• Trends in price change• Rate compared to

other countries

Unemployment• Type (frictional)• Location

Interest rates• Relative levels• Trend: rising/

falling

Business strategy, e�g�• Growth• Market dominance• Rationalisation

• Diversification• Cost leadership• Globalisation

State of the labour market• Skill surpluses• Skill shortages

Exchange rates• Level and trends • Affect all firms, but

especially those trading overseas


market research

employing people


cash flow forecast

setting budgets

sources of finance

breakeven analysis




public limited com

panies



business ideas

adding value

private limited

companies



cash flow forecast

setting budgets


arket segmentation


startupstradem

arkadding valuem

arket size

market grow

th

sole traders

opportunity cost



patentrew

ards


business ideas

cash flow forecast


business ideas

enterprise


entrepreneur

breakeven analysis

business plans


market research

employing people

sources of finance

breakeven analysis



market grow

th

public

limited com

panies

private limited com

panies


costsrevenues

startups

riskstradem

ark

conribution

adding value


cash flow forecast

setting budgets

legal structure


market share

risks

business ideas

Starting

a businessentre

pre

neur

legal structure

plan


busin

ess id

eas

raising financem

ark

et re

searc

h

breakeven analysis

patenttradem

arkse

tting b

udgets

strengths and

weaknesses

cop

yright

sole trad

ersbud

gets

analysisrisk

srew

ards


risksrewards

trademark

pate

nt

budgets

riskcontribution

partnerships

cost

bud

gets

risk

cashcopyright

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ncash


2 Recession/downturn Demand starts to fall as interest

rates rise� Real GDP starts to slow and will eventually fall�

Incomes and demand fall, as do profits� Some firms will be

forced out of business�

3 Slump/trough Real GDP falls substantially, which leads

to higher unemployment and further failure of businesses�

Confidence is low and interest rates are reduced to try and

stimulate new demand in the economy�

4 Recovery/upswing The low interest and inflation rates will

start to encourage new spending in the economy� Real GDP

will begin to increase and the country will start to employ

more workers and become competitive once more�

Definition: Gross domestic product (GDP) represents the

value of a country’s national income in one year� It is usually

adjusted for inflation (producing ‘real GDP’)�

An increase in real GDP means that the standard of living

within a country is increasing� It is therefore used as a way of

measuring a country’s economic growth�

eXAM TiP

You need to be able to recognise the current situation of

the economy and how this impacts on the performance of a

business and the different strategies that it can adopt�

Possible strategies during a recession (or economic

downturn) include the following:

Close down parts of the business and make redundancies

Develop new products that appeal to customers as

incomes fall

Lower prices to maintain sales

Look to expand, as prices will be much lower than during a

boom

Target growth markets overseas

Possible strategies during a recovery (upturn or growth

phase) include the following:

Expand production capacity

Develop new products that will be in greater demand as

incomes rise

Increase employment and open up new locations

A-GRAde AnALYSiS eXAMPLe

During the recent economic downturn, the major supermarkets

have adopted a range of strategies to combat the slowdown

in sales growth� Waitrose, for example, has developed its

‘Essentials’ range of products that are lower-priced versions

of its main stock� The company recognises that, with less

disposable income, customers are likely to be more sensitive to

price (price elastic) and will be more selective in their choice of

products� The supermarkets also compete more aggressively on

price� M&S’s ‘Dine in for £10’ promotion has helped it maintain

sales during these difficult economic times� Tesco has looked

to develop a much wider range of products and services� This

strategy is about making Tesco a one-stop shop, where all the

needs of the average household can be met� It has also tried

to develop a market development strategy (Ansoff), opening up

new Tesco operations internationally� Its strategic move into

China and Thailand has been particularly astute, given the rising

incomes and economic growth of these countries� This means

that while Tesco, like the other supermarkets, has faced difficult

trading conditions in the UK, the company has continued to

grow in value as a result of its new operations overseas�

eXAM TiP

The variables that affect the business cycle tend to be

interlinked and it is vital that you know how they also affect

individual businesses�

Interest ratesDefinition: The interest rate is the cost or price of borrowing

money�

Interest rates affect the level of spending within an economy�

When rates are high, consumers borrow less and save more�

When rates are low, consumers borrow more and save less�

Interest rate rise

1 UK becomes more attractive for foreign investors

2 Foreign investors purchase pounds to invest in UK financial

institutions

3 Demand for pounds increases, causing the exchange rate

to increase in value

Interest rate fall

1 UK becomes less attractive for foreign investors

2 Foreign investors sell pounds to purchase other currencies

that have a higher return

3 Demand for pounds falls, causing the exchange rate to fall

in value

Effects of an interest rate rise

Investment and expansion plans will become more

expensive and possibly delayed

Customers will spend less, especially on ‘big ticket’ items

such as cars

Exchange rates will rise, reducing export opportunities

Mortgage repayments will increase, causing disposable

incomes to fall

Effects of an interest rate fall

Greater incentive to expand and borrow money to finance

this


market research

employing people


cash flow forecast

setting budgets

sources of finance

breakeven analysis




public limited com

panies



business ideas

adding value

private limited

companies



cash flow forecast

setting budgets


arket segmentation


startupstradem

arkadding valuem

arket size

market grow

th

sole traders

opportunity cost



patentrew

ards


business ideas

cash flow forecast


business ideas

enterprise


entrepreneur

breakeven analysis

business plans


market research

employing people

sources of finance

breakeven analysis



market grow

th

public

limited com

panies

private limited com

panies


costsrevenues

startups

riskstradem

ark

conribution

adding value


cash flow forecast

setting budgets

legal structure


market share

risks

business ideas

Starting

a businessentre

pre

neur

legal structure

plan


busin

ess id

eas

raising financem

ark

et re

searc

h

breakeven analysis

patenttradem

arkse

tting b

udgets

strengths and

weaknesses

cop

yright

sole trad

ersbud

gets

analysisrisk

srew

ards


risksrewards

trademark

pate

nt

budgets

riskcontribution

partnerships

cost

bud

gets

risk

cashcopyright

pla

ncash


Customers will spend more

Exchange rates will fall, increasing export opportunities

Mortgage repayments will fall, causing disposable incomes

to rise

Exchange ratesDefinition: The exchange rate is simply the price of one

currency expressed in terms of another�

A currency appreciates or becomes stronger when its value

rises against other currencies�

For example, the exchange rate for the pound may increase

from £1:$1�50 to £1:$1�60�

A currency depreciates or becomes weaker when its value

falls against other currencies�

For example, the exchange rate for the pound may decrease

from £1:$1�60 to £1:$1�50�

The impact of a currency appreciation or depreciation on trade

can be remembered using the following acronyms:

SPICED WPIDEC

Strong Weak

Pound Pound

Imports Imports

Cheaper Dearer

Exports Exports

Dearer Cheaper


Firms such as Jaguar Land Rover are particularly affected by

changes in interest and exchange rates� As producers of luxury

items that sell for a high price, they are likely to see a fall in

demand for their products if interest rates rise� Even though their

products are likely to be comparatively price inelastic because

of their focus on the premium end of the market, the rise in

interest rates will encourage greater saving and a reduction in

borrowing, which will lead to a fall in spending and therefore a

fall in car sales� Higher interest rates will increase the demand

for pounds, which will strengthen its value� This means that cars

sold to overseas markets will become relatively more expensive

and so luxury car manufacturers are likely to suffer greatly�

Indeed, any business that sells expensive products is more

vulnerable to interest rate rises than a producer of essential

items� However, such businesses are likely to benefit greatly

when interest rates fall, as this will allow them to be more

competitive in overseas markets�

InflationDefinition: Inflation is a general rise in prices�

Inflation is measured using the Retail Price Index (RPI) as well

as the Consumer Price Index (CPI)� Each month the prices

of more than 650 goods and services are measured and the

percentage change in prices is calculated and recorded�

The CPI index is more commonly used and it differs from the

RPI, as it does not include the costs of housing (mortgage

interest and council tax, for example)�

Causes of inflation

Demand-pull inflation occurs when the demand for goods

and services is greater than the supply, causing prices to rise�

Cost-push inflation occurs when prices rise as a result of

wage or raw material cost increases�

Inflation and interest rates

If prices increase (inflation), then it is likely that interest rates

will be increased to control the amount of borrowing and

spending and to encourage saving in order to slow down the

economic growth of the economy�

During a boom, inflation and interest rates are likely to be

high

During a recession, inflation and interest rates are likely to

be low


Rising inflation may be a sign of a booming economy, which

means that a business may more easily raise its prices to

increase its profit margins� However, this may lead to even

greater price inflation, which can make it harder for a firm to

maintain international competitiveness� The pressure of cost-

push inflation might further reduce the competitive advantage

of the business� In addition, the threat of rising inflation can

actually lead to lower sales� Although prices have increased, the

interest rate is also likely to have risen, encouraging consumers

to increase their savings� If businesses do not account for this,

they may be left with cash flow problems�

UnemploymentThere are three main types of unemployment:

Structural unemployment, which occurs due to

fundamental changes in the economy, e�g� the move from

manufacturing to service industries within the UK

Cyclical unemployment, which is caused by the operation

of the business cycle – unemployment will rise during

slumps and fall during booms

Frictional unemployment, which exists because people

may be temporarily out of work between leaving one job

and starting another


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An increase in unemployment has a negative multiplier effect�

Demand for most goods falls as average incomes fall, and

average incomes fall when more people are out of work� This

can lead to further rationalisation and more redundancies,

affecting business confidence in the economy as a whole and

leading to social problems in particular areas, as unemployment

is often regionalised� On the other hand, businesses may

benefit because they will face less pressure for higher wages�

Workers are likely to be more reluctant to take industrial action

for fear of losing their jobs, since they would find it harder to

gain alternative employment�

Economic growthDefinition: Economic growth is an increase in the value of

goods and services produced by a nation’s economy�

Linked closely to the business cycle, economic growth is

measured by the increase in gross domestic product (GDP)�

Advantages

Consumers have higher living standards, increasing

demand for income-elastic products

Business investment in expansion projects is likely to be

more profitable

Higher sales and profits for businesses

Greater chance of success for new business start-ups

Government tax revenue increases, allowing further

spending in the economy and increasing future economic

growth

Disadvantages

Rapid growth can lead to shortages of labour

Rising incomes can lead to inflation

Can cause greater inequality

Interest rates likely to rise as prices and spending increase

Governments aim to maintain steady and sustained economic

growth over a period of time� This is difficult to achieve and

most economies tend to follow the business cycle�

GlobalisationGlobalisation is not a new process but it has accelerated in

recent years with the rapid growth of multinational companies,

fewer tariffs and quotas on imports, and the expansion of free

trade areas such as the EU�

Potential advantages of a globalised business

Increased sales, revenues and profits

Cheaper resources

Economies of scale

Development of different products for different markets

Spread of risk

Development of a worldwide reputation

Potential disadvantages of a globalised business

Reduced choice and fewer individual products

Downward pressure on prices

Exploitation of workers

Increased competition

Communication and coordination issues

Unpopular with certain pressure groups

Emerging marketsDefinition: An emerging market is a country with relatively

low income per head, but one that is enjoying high rates of

economic growth�

The BRIC countries are Brazil, Russia, India and China and

are seen as the major emerging markets�

Advantages of emerging markets

Huge population levels – in terms of potential customers

and workforce

Rapid growth rates

Access to natural resources and raw materials

Disadvantages of emerging markets

Poor transport infrastructures

Political uncertainty and instability

Environmental and ethical issues

Lack of appropriate technology and skills

Inflation levels – rapid economic growth leads to rising

prices

Less legal protection, i�e� patents and copyright laws

The relationship between businesses and the political and legal environment

Government interventionThe UK government has four main economic objectives:

Continuous and stable economic growth

Low inflation

Low unemployment

Balance of payments equilibrium – the value of imports

should equal the value of exports


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In order to achieve these objectives there are three main types

of policy:

Monetary policy

Fiscal policy

Supply-side policy

Monetary policy

The government (or the Bank of England acting on its behalf

via the Monetary Policy Committee) controls the amount of

money in the economy and the interest rates�


New firms with debts will typically struggle in terms of cash

flow and, if the interest rate increases, this will increase the

amount of cash leaving the business each month and worsen

the current ratio of the firm� Businesses that sell income-elastic

products or that trade overseas will also tend to be affected

more substantially, as rising interest rates reduce customers’

disposable incomes and lead to an appreciation of the pound�

This will mean that the firm is less competitive in international

markets� The increase in interest rates will have a significant

impact too on firms that are already highly geared� The higher

cost of loans could mean that they struggle to pay back their

loans and that they find it harder to attract additional finance�

Fiscal policy

The government uses taxation and public spending to affect

the level of activity within the economy�

Supply-side policies

The government regularly launches new policies to try and

increase the amount of economic growth in the country�

Typical examples of such policies might be:

To encourage new business start-ups to create new

enterprise

To increase the number of university places to improve the

skills of the workforce

To encourage multinational investment into the UK

To invest in training schemes for unemployed workers

Political decisionsThe business world has been affected by the decisions made

by governments across the world�

The enlargement of the EU

The UK is part of the EU and there are substantial differences

in the way that the main political parties view its role in Europe�

From a business perspective, the recent EU enlargement

has created a massive market of over 475 million people,

presenting firms with both opportunities and threats�

Greater freedom of trade

The World Trade Organisation (WTO) was established in

1995 with the aim of protecting free trade between member

countries and reducing protectionism in certain markets�

Political decisions about trade areas have a significant impact

on businesses and have led to the increased globalisation

mentioned above�

eXAM TiP

It is very important that you have an understanding of recent

political developments� Do not be afraid to express your own

views on certain issues� This is likely to lead to good marks

for evaluation� Typically right-wing parties across the world

favour lower levels of government intervention, preferring to

leave markets alone, and lower taxes� Left-wing parties prefer

more intervention, looking to correct market failures where they

occur, and higher taxes� It is likely that you will have your own

views about EU membership, the political leaders and parties –

feel free to make a judgement about present situations�

LegislationThe specification clearly states that you are only expected to

have a broad understanding of the scope of legislation and the

impact that changes in legislation have on a business� Detailed

knowledge of individual sections of legislation is not required�

The following notes outline key pieces of legislation, but

remember that it is the way in which you use this information

that is important�

Employment law

The Equal Pay Act 1970

Both sexes should be treated equally in all matters relating to

employment

The Sex Discrimination Act 1974

Discrimination on the grounds of sex or marital status is illegal

The Race Relations Act 1976

Discrimination on the grounds of race or nationality is illegal

The Trade Union Reform Act 1993

Unions must give a minimum of 7 days’ notice before taking

industrial action; a secret ballot of employees must be

conducted before industrial action is lawful

The Disability Discrimination Act 1994

It is illegal for employers to treat a disabled person less

favourably than others

The Working Time Regulations 1998

Sets a limit of 48 working hours a week


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The National Minimum Wage Act 1998

Sets a minimum wage for all workers according to age

The Employment Relations Act 2000

If more than 50% of employees are union members, the union

can demand recognition and the right to collective bargaining

Consumer protection

The Sale of Goods Act 1979

All goods sold should be of merchantable quality, fit for

purpose and as described

The Trade Descriptions Act 1968

It is an offence to make misleading claims about a product

The Consumer Protection Act 1987

This law has banned a number of practices that have been

deemed to be unfair to the consumer, e�g� aggressive sales

methods

Environmental protection

The Environmental Protection Act 1991

This act requires businesses to minimise pollution as a whole

The Environment Act 1995

This act looks to coordinate and oversee environmental

protection

Health and safety laws

The Health and Safety at Work Act 1974

This legislation is designed to prevent accidents in the

workplace and imposes a legal obligation on employers to

ensure that they safeguard all their employees’ health, safety

and welfare at work

Impact of legislation

Can add to a firm’s costs

Greater rights for workers and may lead to increased

motivation

Greater protection and rights for consumers

Greater awareness of environmental issues

Encourages a stakeholder approach

A-GRAde evALUATion eXAMPLe

In my opinion, legislation provides a necessary framework for

business� While firms are likely to be frustrated by excessive

amounts of legislation and the inflexibility of certain aspects of

certain laws, such as the HASAW Act 1974, these guidelines are

put in place to benefit not just the workers but all stakeholders

in a business� While aspects of the legislation might add to the

costs of the firm, the employment laws are there to assist both

the firm and the employees� The National Minimum Wage Act

is likely to have affected firms negatively, as they are no longer

able to pay low wages� This will add to their employment costs

and this will affect their overall profitability� However, many firms

are able to pass these extra costs on to consumers in the form

of higher prices and therefore maintain their profit margins�

The development of trade union law means that firms actually

have greater power and are less likely to be hit with industrial

action because the law makes it harder for unions to strike�

Firms have more time to prepare for industrial action and draw

up contingency plans, such as when the BA staff took action�

These laws also allow firms to look for ways to avoid such action�

While excessive legislation might lead to the relocation of firms

overseas where there may be less stringent laws, the fact of the

matter is that some kind of legal framework is vital in order to

protect and balance the interests of all business stakeholders�

The relationship between businesses and the social environmentThe social environment is influenced by the demographics of

the population, societal behaviour and attitudes� It includes

the environmental and ethical concerns of consumers and

businesses�

Corporate social responsibility (CSR)Corporate social responsibility is a business philosophy that

focuses on how firms should behave as good citizens and

considers the effects of their actions on all stakeholders in the

business� Interest in this philosophy has grown in recent years�

In addition to producing financial reports, PLCs now frequently

produce social reports about the impact of their activities on

all stakeholder groups�

Definition: Greenwashing refers to the way in which some

companies overstate the responsible and ethical nature of

their actions�

While large firms are now expected to produce social reports,

the reality is that many firms choose to report their actions as

part of a public relations exercise�

DemographicsDemographics refer to the characteristics of the population

and the general underlying trends within a country� Is the

general population ageing? Is the country experiencing net

migration or net immigration? Is the birth rate increasing or

declining?


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eXAM TiP

You need to be able to apply the general trends in population

changes to particular businesses� For example, the general rise

in the ageing population presents opportunities for firms that

cater specifically for this sector, such as Saga� In addition, firms

that provide products for children, such as Mothercare, will

be keen to have an understanding of the birth rates because this

will help them forecast sales and plan stock levels accordingly�

Environmental and ethical issuesEthical decisions are about doing what is morally right� They

are different from legal requirements� Businesses have to

decide on how big a role ethics will play in their decision

making� The overall trend is for ethical considerations to be

given greater weight by businesses� This is particularly evident

in relation to the environment and is a response to growing

public concern over ‘green’ issues�

The triple bottom line

Firms need to consider Profit, People and the Planet in their

decision making� It is no longer just about profit�

The implications of environmental and ethical issues

Production – reducing use of non-renewable resources

and increasing use of biodegradable packaging

Purchasing – sourcing from renewable and sustainable

suppliers, causing less damage to the environment

Marketing – making use of a firm’s ‘green credentials’ to

aid its marketing, e�g� The Body Shop and Lush cosmetics

Human resources – increasing employment opportunities

in environmental areas

Responses to changing social and ethical environments Adopting new techniques of production

Developing a new corporate image

Developing a new product range or entering new markets

The relationship between businesses and the technological environmentWe are living through an era of exponential technological

change� The development of new technology dramatically

affects the way we live our lives and therefore businesses have

to adapt�

Major technological developments in the last decade Widespread broadband usage, making online trading

quicker and more reliable

Growth of social media and networking sites,

e�g� Facebook and Twitter

Developments in CAD and CAM

Smartphones and Tablet computers

Self-service checkouts

Implications of changes in technologyIt is important that you consider the technological

developments as both opportunities and threats for a

business� The rate of change is also a major factor as is the

cost of R&D – developing new products that continue to be

required and up to date is a real challenge for a great many

businesses�

Technological developments and businesses Marketing New markets have emerged and the way

that businesses interact with customers has changed�

For example, advertising via sites such as Facebook,

Google and YouTube has seen a massive increase and

firms are switching away from traditional media

outlets�

Production New technology leads to quicker, faster and

more innovative methods of production�

Human resources New production processes generally

require fewer workers� However, there has been an increase

in the need for designers and computer programmers�

In addition, the use of technology has changed the way

businesses communicate with each other�

The relationship between businesses and the competitive environment

Porter’s five forcesMichael Porter’s ‘five forces of competitive position’ model

provides a simple framework with which to assess the

competitive strength of a business and it helps a firm identify a

suitable strategy for dealing with its current position�

A diagram of Porter’s five forces is shown overleaf�


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Competitive rivalry within an industry

Threat of new entrants

Bargaining power of customers

Bargaining power of suppliers

Threat of substitute products

Competitive rivalry – rivalry will be greater if a market is

easy to enter and the firms are of a similar size, selling similar

substitute products�

Power of suppliers – if there are relatively few suppliers to a

market, they will have more power�

Power of buyers – buyers or customers will have more

influence on a market where there are many products and

substitutes, as they can switch easily�

Threat of substitutes – if it is easy to switch to an alternative

product, then competition will be high�

Threat of new entrants – if entry barriers are low, greater

competition is more likely�

eXAM TiP

Porter’s model needs to be placed in context� The idea of the

model is to help you identify and analyse the likely factors

that are influencing the amount of competition within a

particular industry� The examiner will not want or expect you

to reproduce the notes above� Instead, you need to recognise

the determinants and extent of competitiveness in a particular

industry� More importantly, the examiner will expect you to

identify different strategic responses that firms can adopt�

Possible responses to a changing competitive environment Cost leadership

Differentiation

Focus

Market structureThe number of firms in an industry is often a key indicator of

the level of competitiveness�

A monopoly exists where one large firm dominates the

industry, e�g� Apple in the MP3 market

An oligopoly exists where 2-8 large firms dominate the

industry, e�g� supermarkets

A competitive market is where a large number of small

firms produce similar goods

Dominant firmsA dominant firm is able to have a substantial influence over

market prices because it is likely to have the largest market

share and will benefit the most from economies of scale� It

can use these to gain a cost advantage over other firms and

potential entrants to the industry� It can also look to merge or

take over rival firms, increasing its advantages further�

Managing changeInternal causes of changeChange in business is inevitable and a firm may face both

opportunities and threats�

eXAM TiP

This is a major aspect of the Unit 4 specification and it is highly

likely that you will face a question on this area�

Changes in organisational sizeThe majority of firms identify growth as a major corporate

objective�

Reasons for growth

Larger firms benefit from economies of scale

Larger firms have more power over their markets

Larger firms are safer from takeover threats

Larger firms have more status

noTeS


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Types of growth

Internal – expanding a business by means of opening

new branches, shops or factories (also known as organic

growth)

External – expanding a business by means of merging with

or taking over another business

Types of external growth

Horizontal – when a firm joins with another at the same

stage of the production process

Vertical – when a firm joins with another firm at a different

stage of the production process

Conglomerate – when a firm joins with another in a

completely different production process

Horizontal integration

Advantages

Eliminates competition and gives the firm greater market

share

Potential for further economies of scale

Increased power over suppliers

Potential for cost savings and rationalisation

Disadvantages

Harder to manage and control a larger firm

May lead to redundancies

Firm becomes too dominant and restricts choice for

consumers

Suppliers placed under greater pressure

Vertical backward integration (same industry but with a supplier of the business)

Advantages

Gives greater control over quality and price of supplies

Integrated R&D

Guaranteed supply of key materials

Disadvantages

Supplier may become complacent due to guaranteed

customer

Lack of experience in managing a supplier

Firm becomes too dominant and powerful

Vertical forward integration

(same industry but with a customer of the business)

Advantages

Obtains a secure outlet to sell own products

Direct contact with customers

Greater control over promotion and pricing of products

Disadvantages

Consumers have less choice

Prices might be higher

Lack of experience in running a retail company

Conglomerate integration

(different industry)

Advantages

Spreads risk

Allows the firm to have a wider product portfolio

Can move into fast-growing industries

Benefits of synergy

Disadvantages

Lack of direction and focus

Lack of management experience

Company spreads itself too thinly

Synergy is a term frequently used as an explanation for the

desire for growth� It is often explained as 2 + 2 = 5, which

means that the value of the total is greater than the sum of

the parts� When Morrison’s was successful in its takeover of

Safeway, the joined company was more profitable than the

two separate firms� Its takeover also allowed the firm to benefit

from the geographical locations of Safeway in the south of

England�

Retrenchment is the opposite of growth� In difficult economic

circumstances this strategy becomes more important� It is

the reduction of business costs in order to become more

financially stable, increase profits and move out of loss-

making areas of operation� M&S decided to shut down some

of its Simply Food stores due to their poor performance and to

concentrate on the stores that were making a profit�

Changes in ownership/leadershipIntegration is just one reason why the ownership and

leadership of a firm might change� Other possible reasons are:

Passing the business on to the next generation

Management buyouts (MBOs)

Flotation on the stock market

eXAM TiP

It is important to link the reasons for change to the objectives

and leadership styles of new owners and managers� You need

to assess why new owners make significant changes to a

business and how they aim to implement these changes�


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Poor business performanceIf a business performs poorly for a period of time, then

changes are likely to be introduced� Examples could include:

Replacing some staff

Restructuring the business

Implementing new systems and processes

Closing parts of the firm

Moving into a new market

Planning for change

Corporate plansDefinition: A corporate plan sets out what the business as a

whole is trying to achieve and how it intends to do this�

A typical corporate plan will include:

Overall objectives of the organisation

Strategies to be used to achieve the objectives

Tactics to be used to support the strategies

The corporate plan will often be derived from a SWOT

analysis of the firm’s operations:

Strengths

Weaknesses

Opportunities

Threats

Internal and external influences on corporate plans

Internal influences

Financial resources

Operational capacity

Managerial skills and experience

Human resources

Culture of the organisation

External influences

Macroeconomic conditions

Competitors’ actions

Technological change

Social aspects

Political intervention

eXAM TiP

It is always crucial to think of both the internal functional areas

of the business and the external aspects� PESTEL analysis

is a very useful way of remembering the external influences�

However, examiners will not want you to list all of the different

external factors – they will expect you to discuss two or three of

the most significant ones� Try to avoid lists and aim instead to

develop fewer points but in greater detail�

The value of a corporate planThe plan sets out the key targets and objectives of the firm�

It is of importance not just to the senior managers but also to

all stakeholders and potential stakeholders of the business�

It is essential that the plan is reviewed regularly to assess the

performance of the firm and that it is updated to take into

account changing market conditions�

Contingency planningBusinesses operate in uncertain and risky environments�

Contingency planning is a tool that is used in relation to

unexpected events� The aim is to minimise the potential

impact of a crisis and assess the likelihood of certain events

occurring� This planning should enable the firm to continue to

operate even if the worst-case scenario happens�

Advantages

Reassures staff and customers that plans are in place

Minimises negative impact on customers and suppliers in

the event of a major disaster

Ensures a swifter response because the firm has planned

for the event

Disadvantages

Costly and time consuming

Need constantly to update plans and train staff

Avoiding disasters is still better than planning for what to

do if they occur

Key influences on the change process: leadership A leader is someone that drives a business forward, whereas

a manager is someone that puts into action the vision of

the leader� Managers are the ones who plan, organise and

coordinate and control the business on a day-to-day basis�

Leadership stylesAutocratic leaders tell workers what to do and make

decisions without consulting others�

Democratic leaders engage in discussion with workers before

making decisions�

Paternalistic leaders treat the workforce as a family unit and

make decisions after consultation�


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Laissez-faire leaders leave workers to get on with their work

with limited supervision and control�

Bureaucratic leaders rely on rigid rules and procedures when

making decisions�

eXAM TiP

It is highly likely that you will have studied different leadership

styles in depth� It is important to remember that examiners are

not specifically looking for advantages and disadvantages of

the different leadership styles� They expect you to be able to

apply the different styles to relevant examples from the business

world and make a judgement on the effectiveness of that style

in that particular situation�

Factors that influence leadership style

Internal

The skill levels and experience

The culture of the organisation

Time constraints

External

Economic environment

Nature and speed of change within the industry

Legal changes

Just as it is important to understand the difference between a

manager and a leader, so it is important that you distinguish

between managing change and leading change�

Managing change Setting new objectives that recognise the need for change

Ensuring that the firm has adequate resources

Putting in place plans to meet the new changes

Leading change Establishing a vision for the business

Motivating staff at all levels

Putting change at the centre of an organisation’s culture

The importance of leadershipSuccessful leadership is vital for a business during periods of

growth and also when the firm might be struggling� Successful

leaders will be expected to:

Have a clear vision and sense of direction

Make confident and effective decisions

Support and understand the needs of the business

Plan for the future

Communicate clearly the objectives of the firm

Key influences on the change process: cultureCulture can be explained by the phrase ‘the way we do things

around here’� Different organisations will have different cultures

and the values, attitudes and beliefs of the people who work

there will influence that culture and how the firm is perceived�

Types of organisational cultureCharles Handy has identified four types of organisational

culture:

Power Power is concentrated among just a few people�

This culture is associated with autocratic leadership and

centralised organisational structures�

Role Each member of the organisation has a well-defined

role� This culture is associated with bureaucratic leadership

and hierarchical organisations� The power and influence

comes from the individual’s position within the company�

Task Based on cooperation and teamwork, this culture

is associated with matrix organisational structures� Team

members are encouraged to be creative�

Person Individuals are given freedom to express their

views and be creative� This culture is associated with

laissez-faire leadership styles and a decentralised

organisation�

A fifth type of culture can be classified as:

Entrepreneurial Encourages staff to take risks and come

up with new business ideas and ventures�

The importance of organisational culture

A-GRAde evALUATion eXAMPLe

I believe it is often easier for newly appointed leaders to bring

about changes in culture because they will be looking to adopt

new ways of working and to bring new ideas into the business�

They are therefore at an advantage over internally appointed

managers who will be expected to leave the culture unchanged�

Desired changes in culture need to be communicated to staff

by setting out a vision and encouraging workers to embrace

change�

Reasons for changing organisational culture

The business needs to adapt to changing market

conditions

A merger or takeover has led to two different cultures

joining together

There has been a series of poor financial results and staff

are demotivated


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A new management team has taken control

The business needs to be repositioned in a new market

Problems in changing organisational culture

There is resistance to change

It is difficult to communicate the idea effectively

It is hard to alter people’s attitudes without educating them

about the value of change

Change takes time

Making strategic decisionsThere are broadly two types of decision that a firm can

make:

Scientific – taking a rational and logical approach based on

the data presented

Hunch/intuition – certain entrepreneurs and businesses

will make decisions based on ‘gut feeling’ and because a

particular course of action just ‘feels right’

Strategic scientific analysis makes use of a range of

decision-making tools such as:

SWOT analysis

Market research data

Competitor analysis

Sales forecasts

Financial ratios

PESTEL analysis

Previous data and experience

Influences on decision making The nature of the industry and business

The risk involved

The corporate values, culture and objectives

The ethics of the decision

Available resources

The relative power of different stakeholders

Information managementStrategic management requires detailed information if it is to

be successful� Management information systems are often

computer systems that help managers plan, take decisions

and control the business operations� Components of an

information management system might include:

Data on different options

Simulated results and predictions on each option

Up-to-date information about the performance of all

aspects of the business

Implementing and managing changeChange management is about planning, implementing,

controlling and reviewing the movement of an organisation

from its current state to a new one�

Types of change Evolutionary or incremental – change occurs slowly

over time

Revolutionary or dynamic – sudden and unexpected

circumstances cause a business to bring in quickly a

new way of operating, which can be either external or

internal

Causes of change Technological advances

Macroeconomic conditions

Legislation

Competitors’ actions

Effecting changeThe best ways to bring about change have these main

components:

Concentrate on the positive aspects of the firm

Obtain the commitment of the key people within the

organisation

Communicate the new change effectively

Offer incentives

Provide training and encourage participation

Establish new objectives and a new mission statement that

reflect the new values and culture of the business

Where resistance occurs, it is possible to identify various

stages in the response of employees to the change process�

These stages can be remembered using the acronym

SARAH:

Shock

Anger

Rejection

Acceptance

Help

Reasons for resisting change Lack of trust and misunderstanding

A desire to return to the way things were before

Lack of belief in the change


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Exam practiceSection B essay questionsThe Section B essays are synoptic in nature� This means

you are encouraged to bring in material from other units� The

essay responses that follow should help you understand how

to draw on relevant examples, develop arguments and make

judgements on the specific questions set�

The relationship between businesses and the economic environmentWith reference to organisations or industries that you

know, to what extent do you think that recent changes in

the UK economy will inevitably have damaged the long-

term profits of businesses that operate in this country?

Candidate’s response (A grade)

The UK, along with other countries in the western world, has

been affected by a fairly severe slowdown in economic growth

as a consequence of the global credit crunch� A recession is

defined as two consecutive quarters of negative economic

growth as measured by GDP, and many of the world’s major

economies have fallen into a recession after years of economic

growth� This has had a significant effect on a number of

industries� However, while it has made the environment in

which businesses operate much more difficult, I do not believe

that all firms and industries will inevitably be damaged�

For some industries, the recession has actually provided

an opportunity for increased sales and profits� A number of

firms that sell essential items or inferior products in terms

of income elasticity have seen a period of high profitability�

While many restaurants have struggled, due to consumers

spending less as a result of lower disposable incomes and

reduced confidence, the takeaway segment of the market

has thrived� Firms such as Domino’s have actually increased

their number of outlets in response to demand, as consumers

look to stay at home more� There has been an increase too in

subscriptions for satellite TV companies, such as Sky� Firms

that adopt a cost-leadership approach are also likely to be

successful as individuals turn to cheaper, substitute products

in times of a recession� Clothing retailers such as Primark have

clearly benefited�

Firms that produce more income-elastic and luxury

products are likely to be harder hit and, indeed, a number of

major high-street chains have been forced to close down�

Companies such as Thorntons and La Senza have run into

trouble, partly due to the economic situation and partly due to

management difficulties� The package holiday market has also

seen sales decline as consumers look for cheaper alternatives

and opt to stay in the UK rather than travel abroad� The relative

weakness of the pound in relation to the euro has played a part

here� It has become relatively more expensive to travel to the

eurozone because the pound has depreciated� Firms operating

in this industry have seen profits decline as they reduce prices

to attract customers that have become even more price

sensitive� They have also seen a fall in their capacity utilisation,

with many holidays left unsold� This has a knock-on effect

in terms of their cash flow position� The firms have to secure

accommodation in advance and, by selling holidays at a

discounted price, they have reduced their profit margins�

For many firms, in many industries, the recession has

brought about a change in objectives, with the focus on

survival as much as profitability� However, I do not believe

that all firms will inevitably face lower long-term profits� It will

depend on the nature of a firm’s products and the industry

in which it operates� Businesses that have a global strategy

are likely to be less affected by the recent downturn because

they can look to other areas around the world for growth and

profit� This has been the case for companies such as Cadbury�

Its concentration on the Indian market has seen the group’s

profits increase despite a fall in UK sales and rising raw

material costs� This has been a bold strategic move and one

that shows that not all firms will inevitably be damaged�

This response addresses the ‘hook’ (‘inevitably damaged’)

and is structured around this� The clear definition at the

start is good technique, and the use of different industries

demonstrates good application� The answer intertwines

different aspects of the specification and builds arguments

effectively, especially in relation to exchange rates and the

objectives of the different firms� The candidate then reaches a

final judgement that addresses the question directly�

Application Analysis Evaluation OverallGood Good Good (just) 33/40 marks


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The relationship between businesses and the economic environmentDoes the increasingly global nature of business mean

that all organisations need to change their strategies

significantly to achieve higher profits? Justify your answer

with reference to businesses that you know.


It would be false to say that all businesses need to take on a

global strategy� Many small businesses operate at a very local

scale and are unlikely to be affected by changes in the global

market place – for example, a small local bakery or a window

cleaning business� However, for other businesses it is more

significant� The changing nature of technology has meant that

firms are able to build a global presence via their websites,

despite operating in a small domestic market� Search engines

are powerful tools that can be used by organisations and

consumers to find the lowest priced products and suppliers�

Having said that, it is unlikely that this alone would prompt a

change in strategy for all businesses�

Firms need to consider the global market place – both in

terms of potential customers and also in relation to operations�

The sheer size of emerging markets, such as the BRIC

economies, presents a huge opportunity for many domestic

firms� China and India together account for over 40% of the

world’s population and, with both economies seeing major

economic growth and rising incomes, the potential for sales

in these countries is enormous in certain sectors� Businesses

that have expanded into these countries early, such as Tesco

and Walmart, enjoy first mover advantage, but their success

is likely to prompt rival supermarkets to review their strategies

and focus on expansion into these areas as well�

In today’s global market place it is important for companies

in the fashion industry to minimise costs in order to increase

profits� Most clothes sold in the UK are manufactured in the

Far East so that firms can price their products competitively

and still make a profit� More open markets now enable

production to locate abroad more easily than in the past

when there were barriers to inward investment� Western

firms can benefit from lower land costs, cheaper labour

and less regulation in areas such as health and safety� M&S

famously moved production abroad because of a fear of

being beaten on price by its competitors� In order for major

competitors to retain their market position, it is essential that

they minimise their costs, and the easiest way to do this is

to move production abroad� They can then use this to price

products more competitively� For M&S, huge competitors such

as Primark have forced them to cut costs in order to retain a

place in what is a price-elastic market�

Certain firms such as Dyson have not moved all of their

production overseas, and their research and development

department is still based in the UK because they understand

the importance of innovation in the success of their products�

Such innovation means that these goods are more price

inelastic� Dyson has retained its core strategy even though

it has shifted production abroad� The company thus draws

on the strengths of each country, i�e� cheaper production in

Malaysia but strong research, design and technical skills in

the UK� It is the innovative products that contribute to a strong

reputation for quality, which leads in the long term to higher

profits� Companies like Dyson have therefore only changed

part of their approach due to the global opportunities, which

shows that there are degrees of change�

Market development as a long-term strategy is particularly

important if domestic markets are saturated� With fewer tariffs

and quotas, more open markets and global communication,

businesses have the opportunity to gain customers in global

markets� The resulting increase in profit provides a higher

return for investors�

Overall, the global nature of business certainly puts a lot of

pressure on market leaders to change their strategy in order

to achieve higher profits� It creates production and marketing

opportunities and also means competition in any market is

likely to be greater� For the clothing industry it is almost a

necessity to offshore production and adopt a strategy of cost

minimisation in order to remain competitive in the mass market�

The growth rates of BRIC economies are so much faster

than the UK (e�g� 10% per annum compared to an average of

2-3%) that investor pressure for growth may only be met by

expansion there� This has been especially true in recent years,

since many western markets have been hit by recession�

It is certainly true that any business has to consider whether

to adapt its strategy in order to achieve higher profits and

that global pressures have increased due to more advanced

technology, better communications and freer trade� However, it

is vital that a firm retains its USP or it risks alienating its existing

customers� Even so, in order to be successful firms need to

develop new markets while minimising costs, keeping core

strengths at the heart of their strategies irrespective of whether

they compete domestically or overseas�

This is an excellent response� The candidate uses extensive

examples and the majority of these relate directly to the

impact of globalisation and why firms can benefit or suffer

from the growth of global operations� There is a very clear

focus on the question throughout�

Application Analysis Evaluation OverallGood Good Good 40/40 marks


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The relationship between businesses and the social environment

To what extent is it now essential for firms to place greater

importance on environmental and ethical issues in their

operations?


Until recently, the main objective of most firms was to make

a profit and, while this is still a fundamental aspect of most

businesses, there is a clear trend towards companies placing

greater emphasis on the environment� Firms such as The Body

Shop have built their mission statements around the ‘Profits

with Principles’ message� The success of this particular firm

in the cosmetics industry has seen a number of imitation

firms keen to take advantage of the fact that customers now

expect companies to act in a way that is ethical and does

not harm the environment� Ben & Jerry’s is another example

of a business that has always placed corporate social

responsibility (CSR) at the heart of the organisation� This is not

a public relations exercise for such companies – ethical and

environmental concerns are very much a part of the identity of

the business� It is clear from their success that CSR can prove

extremely beneficial�

However, I would argue against the ‘essential’ aspect of the

question� Not all firms have the same culture and values and

it is interesting that the examples mentioned in the previous

paragraph are now in fact owned and run by two much larger

multinationals, L’Oréal and Unilever, that have not always been

as serious about CSR� For certain large multinationals the need

to take a CSR approach is often seen as a PR exercise and

the social reports that they produce can often be biased and

lead to ‘greenwashing’, where they overstate their activities in

relation to the environment and ethical considerations� While

the stakeholder approach has grown in importance, most

PLCs would consider their highest priority to be making a profit

and providing a decent return to shareholders via dividend

payments and increased share value� For certain organisations

the added cost of acting in a way that limits their impact on the

environment can appear prohibitively expensive� This issue is

particularly acute for firms that have adopted a cost leadership

strategy, such as Ryanair and other budget airlines, because

they are keen to minimise costs at every opportunity� The

fact that they operate in an industry that is highly polluting is

also relevant� It is harder for firms operating in such industries

to act in an ethical manner, no matter what they do� This

may go some way to explaining why budget airlines place

less emphasis on CSR and it is certainly the case that these

organisations do not see CSR as essential�

In conclusion, I believe that while certain firms see the

benefit of acting in a more responsible manner because it

will allow them to differentiate themselves from competitors

and give them a chance to have a USP, this is only likely to

be a significant factor when their customers are sensitive to

environmental and ethical issues� While this is a growing trend,

the majority of customers still consider the actual cost of the

product more important� For many firms this will therefore be

a decisive factor in the way they conduct their operations�

While acting ethically is seen as the morally right thing to do,

ultimately it often comes down to price� A move towards CSR

invariably results in price increases of products, which can

result in certain customers opting for cheaper and less ethical

alternatives� I believe that while CSR is a growing trend, it is

not essential� Given the current economic downturn, many

firms are preoccupied with making a profit and, in some cases,

with survival� Their usual response is, not surprisingly, to

reduce costs� This may be seen as a sad state of affairs, but

the reality is that the profit motive remains the key objective for

most businesses�

This solid answer makes good use of a range of examples�

However, while there are some elements of analysis, the

arguments are not always fully developed� The judgement

does make a clear decision about the importance of ethics,

which just moves it to level 3�

Application Analysis Evaluation OverallGood Reasonable Good 31/40 marks

The relationship between businesses and the technological environment

To what extent is the rate of technological development

more a threat than an opportunity for businesses?


Technological change is a factor that all businesses need

to consider� The rate of development, the nature of the

business in question and the current use of technology are

all significant� Firms involved in fast-moving industries such

as computers, cameras and games consoles need to be at

the forefront of technology because they must develop new

products that make use of the latest advances� These firms

need to invest heavily in R&D� Given the high cost of R&D and

the relatively low success rate of new product development,

this can be problematic for a firm� The need to invest retained

profits in new and untried products can lead to wasted funds

and carries a high opportunity cost� However, failure to launch

new products is almost certain to lead to a loss of market


market research

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share� The expectation is that firms such as Apple and Sony

will be at the forefront of new technology, and customers

will demand new and improved variations of successful

products� This places a huge burden on these firms� While

coming up with a ground-breaking product can be potentially

very profitable, it can also be seen as a major threat� If the

product is not what the customers are looking for, alternative

products are likely to be chosen� Even if the product is a major

success, much of the profit will need to be reinvested in the

development of a new and improved version� This is linked to

product life cycle theory� One of the issues with this concept is

that the length of the maturity stage of a product is undefined

and varies from product to product� The consequence of this

uncertainty and the remarkable speed of technological change

is that in many ways technology has to be seen as a threat –

even by companies that have enjoyed success in this area�

Firms with products that are less dependent on technology

may view the new developments more as an opportunity� The

widespread use of the Internet and broadband connections

around the globe has enabled many firms to market their

products and also to source cheaper supplies� Firms

operating at a smaller scale can make substantial cost

savings as a result� The use of price comparison sites, such

as gocompare�com and comparethemarket�com, can be seen

as an opportunity for those firms that offer the lowest-priced

products, but it is also a threat to firms that have enjoyed

market dominance and are not as competitively priced�

Ultimately, it is the consumer that is likely to benefit most

from new technology� While firms may benefit from new

production techniques and new marketing opportunities, there

are clearly threats to any business in adopting new technology�

That technology may become out of date quickly and the

cost of installing new technology is often very expensive�

The introduction of new technology may benefit firms, but

the risk is high� In addition to the initial cost, staff must be

trained in its use and customers need to be made aware of the

benefits it brings� However, technological change is a feature

of the business world, and the successful firm is the one that

embraces the opportunities rather than being daunted by the

threats�

There is excellent analysis in this response and the candidate

explains the importance of technological change� However, the

examples used are not as wide ranging as they could be and

the response is quite brief� The candidate has focused clearly

on the question set and the closing evaluation is solid, moving

the answer to the top of level 2 for evaluation�

Application Analysis Evaluation OverallReasonable Good Reasonable + 30/40 marks

The relationship between businesses and the competitive environmentThe UK supermarket industry has been dominated by

firms such as Tesco and Sainsbury’s for many years.

Asda/Walmart recently entered the UK market. What do

you think is the best strategy for existing businesses to

adopt in response to the entry of a new large competitor?

Justify your answer with reference to the UK supermarket

industry and/or other markets that you know.


Firms that have dominated an industry for many years are

likely to have built up not only substantial retained profits

but also a considerable reputation and brand loyalty from

their customers� This is a barrier to entry for other firms�

It is probable that dominant firms will have been able to

exploit economies of scale too, giving them a significant cost

advantage over other smaller firms within the industry� This

cost advantage can lead these firms to lower their prices

below those of their rivals and potential entrants� While this

may reduce their overall profitability in the short term, it will

enable them to maintain their dominance of the industry� They

are also likely to have well-established supply chains that

mean new competitors find it difficult to compete�

However, the question refers to a ‘large’ new entrant and it

is probable that such a competitor would have the benefits of

substantial finances and brand awareness, allowing the firm

to compete on price and make losses initially in order to break

into the market� This was clearly the case when Microsoft

entered the games console market� The market used to be

dominated by Sony and Nintendo (with Sega before them)�

Microsoft was able to break into the market by using its vast

profits from the PC market to invest in technologically more-

advanced products such as the Xbox and then sell these as

loss makers� The reaction of Sony and Nintendo was initially

to try and protect their market by only making certain games

available on specific consoles� When Xbox sales started to

grow due to the rise in popularity of online gaming and the

success of the Halo game, gamers had a straight choice

between Sony and XBox� Nintendo was being squeezed out

of the market, so it chose a policy of innovation and focused

on a different market segment (females, children and families)

by launching the Wii console� This strategy proved highly

successful� Their sales outstripped the combined sales of

their new rival and Sony� However, the core market is still very

much the serious gamers� Sony and XBox now recognise

this, releasing games that can be played on both platforms�

This is an example of ‘If you can’t beat them, join them’� Both

firms now recognise that the market is so valuable that it can


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actually support comfortably at least two and possibly three

firms� This does not mean that firms are keen to sit back, so

the development of the next generation of consoles is high on

all their agendas�

In the supermarket industry, the large firms have reacted to

the new arrival of Asda/Walmart in a number of ways� While

the major supermarkets still try to compete on price, it is Asda/

Walmart that tends to fair best on price comparison sites

because it has huge reserves arising from its dominance of the

US market� Tesco and Sainsbury’s have chosen to compete

using non-price methods, such as by introducing loyalty cards

and by diversifying their range of services� Tesco in particular

has looked to expand its business internationally� This has

presented an excellent opportunity for growth and, with the UK

economy in recession, has proved to be a sensible strategy�

In conclusion, it is hard to identify the best strategy for

firms facing new large rivals, as industries will differ and the

relative power of new rivals will vary� If the incumbent firms feel

that they can see off the new rival, then this is clearly a good

strategy to adopt� However, it is hard to think of examples

where a firm has been able to do this successfully� The best

approach may well be to accept that new and more intense

competition is inevitable and to come up with strategies that

will allow the firm to remain profitable and competitive in the

industry, as shown by both Sony and Nintendo� Firms, such

as Sega, that fail to take a new entrant seriously, are the ones

that are likely to perish�

This is a really strong response because it focuses on the

precise wording of the question in relation to dominant firms

and the threat of a new large rival� The examples that are used

are good and are well developed as the candidate explains the

different strategies that firms can adopt� Although the response

is not perfect and actually drifts slightly into story-telling mode

in the second paragraph, it is nevertheless an example of a

candidate trying to address the question throughout –

therefore application, analysis and evaluation are all strong�


Key influences on the change process: leadershipTo what extent can leaders make a significant difference

to the long-term success of an organisation?


There are many arguments to support the idea that a leader

can make a significant difference to the long-term success of

an organisation� One such argument is that leaders become

the ‘face’ of their organisation, such as Anita Roddick who

founded The Body Shop and developed and maintained its

excellent corporate social responsibility procedures� While her

leadership was an asset to the company, it can also be argued

that customer loyalty since her departure has been tested�

Customers may expect standards to slip and may no longer

associate corporate responsibility with The Body Shop� This

could lead to a decline in sales because the value of the brand

is reduced, and the profits of the business could be affected�

The problem of finding a suitable replacement for Anita Roddick

is likely to have a long-term effect on business performance�

Howard Schultz is the leader of Starbucks and it became

apparent just how much Starbucks would suffer without

him when he actually left� During his eight-year absence,

Starbucks’s performance deteriorated significantly and it

was apparent that his departure had severely damaged the

business� Upon his return he swiftly identified the problem:

Starbucks had focused too much on rapid growth at the

expense of quality� Schultz gave an emotional speech to

all his employees and then proceeded to shut down stores

and replace executives� The immediate improvement in the

company’s performance shows that a successful leader can

make a real difference to the success of a business�

The leader of a firm makes the strategic decisions that

determine its long-term direction� If the wrong strategy

is adopted, perhaps because it does not build on the

company’s strengths or respond appropriately to the external

environment, then the firm may be threatened� The leader (i�e�

the person who is followed by others) can therefore make a

significant difference to the long-term success (or sometimes

decline) of a business�

However, there are examples of leaders who appear to

have less of an effect� Although these leaders have an impact,

this is often only short term� Bill Gates, for example, as the

CEO of Microsoft and one of the richest men in the world,

gains lots of publicity and one might assume that Microsoft

would not perform as well without him� However, since 2002

he has gradually reduced his role and influence at Microsoft,

yet the business continues to perform successfully and is still

a market leader� This is because an effective leader should

develop the skills and experience of others so that they are

in a position to take over when required� In an organisation

such as Microsoft there are many talented people in many

different areas� The leader might inspire and help pull the

business together, but he or she cannot possibly be personally

responsible for all its successes or failures� Leaders may

be held accountable, but they rely on others (especially in

a business as large as Microsoft and operating in as many

countries and product areas)�


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Steve Jobs, the former CEO of Apple, is also a good

example� He was widely recognised as the face of Apple and

intrinsically linked to the brand� However, the strength of the

brand stems from exceptional style, design, marketing and

operations strategy – the leader is only a part of the equation�

The loss of Jobs is unlikely to have a significant negative

impact on Apple’s performance in the long run�

Richard Branson, as the ‘face’ of Virgin, is another

successful and highly influential leader� However, again he

is unlikely to make a significant difference to the long-term

success of Virgin because it is so diversified, with many

talented employees who specialise in their respective areas�

Branson is likely to have a strong management team that

keeps all areas of Virgin going while he attends charity events

and promotions� Virgin is perhaps also less dependent on

its leader because it comprises numerous independent

businesses� There are many separate decision makers (e�g� in

the airline, finance and TV sectors) and not just one leader�

In conclusion, I believe that a leader will not usually make

a significant difference to the long-term success of a business

because organisations should have a strong management

team in place and, indeed, investors will require this� Although

the departure of a leader may affect business performance in

the short term, as employees and customers adjust to new

people, practices and services, in the long term the business

will not be significantly affected provided careful planning

has taken place� After all, many of the well-known names in

business, such as McDonald’s, Coca Cola, Cadbury and IBM,

have outlived their respective business leaders�

This candidate uses an excellent range of leadership

examples� Interestingly, the response does not focus on

leadership styles specifically� However, it clearly addresses the

question of whether the role of the leader affects the long-term

success of an organisation�


Key influences on the change process: cultureHow easy do you think it is for a new chief executive to

change the culture of an organisation quickly? Justify your

answer with reference to businesses that you know.


The key issue here is to do with the timing� Any organisation

that wishes to change quickly is likely to face difficulties�

Culture can be defined as the ‘way things are done around

here’ and in many firms this culture can be deeply embedded�

The nature of the firm’s objectives is also a significant factor,

as is the type of industry in which the firm operates� Birds Eye

has been a major player in the frozen food industry for many

years and 90% of UK households have at least one Birds Eye

product in their freezer� The organisation has confronted many

challenges recently, such as having to adapt to changing

trends in buyer behaviour and the demand for sustainable

fishing, which has directly affected its supply chain� The

willingness of the firm to innovate through new product

development is an example of a business that has accepted

the changing needs of customers and reacted accordingly�

The appointment of a new chief executive is always a

significant event – whether it is a head teacher/principal of a

school or a leader of a major multinational� In many ways it

is easier when an external candidate is recruited� The danger

of an internally recruited CEO is that this individual is likely to

be entrenched in the old culture and arguably it will be harder

for this person to change that culture and embrace change�

An externally recruited CEO is likely to bring in new ideas

and experience from previous businesses and have greater

freedom of manoeuvre, not having had the time to forge

relationships and build up either friends or enemies in the firm�

However, this can lead to a lack of trust in the new CEO and

there may be resistance� The new Chelsea FC manager has

tried to change not only the way the team play but also how

the club makes use of younger players� This has led to mixed

results thus far because the more experienced players at the

club exert a large amount of influence and are reluctant to

embrace change� In contrast, Martin O’Neill has brought about

a change in attitude, performance and culture at Sunderland

after only a few months� The ability to bring about change is

affected by the clarity of the leader’s vision and how this is

communicated to the staff�

Stephen Elop, the new CEO at Nokia, has made a public

statement about how the business needs to change its culture

and to do this very quickly� The fact that Nokia is part of a

market where technological change is crucial is very important�

The constant need to innovate and invest huge amounts in

R&D means that such firms must reinvest in products that

have ever-shorter product life cycles� Nokia has grown to

such a size that it now faces diseconomies of scale� The latest

challenges have been not only difficulties in coordination and

communication but also a lack of clarity in terms of objectives�

Smaller, start-up businesses are more flexible and willing to

embrace and shape technological change to a greater extent

than larger firms such as Nokia� As a result, first Blackberry

and then Android phones have stolen market share away from

Nokia� The CEO has urged the firm to react quickly, but the

company has lost its dominant position and it will be difficult


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employing people


cash flow forecast

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sources of finance

breakeven analysis




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to implement rapid changes� One of the key points in favour of

Nokia’s ability to respond is the fact that since its inception as

a tree felling and toilet paper manufacturer, it has repeatedly

needed to react to the changing market place, gaining plenty

of experience of shifting its culture and objectives� However, it

could be argued that such a shift is much harder to engineer

now, since the firm has become a global manufacturer rather

than simply operating in Finland�

All firms need to respond to technological advances, and

the timing of any change is important� If a firm can drive the

change and become an early adopter of new technology,

this will lead to a dynamic corporate culture that accepts the

inevitability of change and adapts as necessary� However,

even these firms will find rapid change a challenge� I personally

believe that the appointment of a new CEO from outside the

firm is likely to bring about culture change more swiftly than an

internally promoted CEO� This will be important for firms that

are looking to reinvent themselves and embrace a new culture�

The candidate drifts away from the question at times,

concentrating too much on technological change because

of the example chosen� However, use of content to make

a judgement about the significance of how the CEO was

recruited demonstrates good synoptic knowledge� Use

of football examples suggests a sports fan, but as these

examples are used intelligently and help the candidate build

an argument for how businesses can change culture quickly,

they will be rewarded�

Application Analysis Evaluation OverallGood Reasonable+ Good (just) 33/40 marks

Key influences on the change process: cultureDo you think that resistance from employees is likely to be

the biggest problem for a business that wants to reinvent

itself? Justify your answer with reference to Nokia and/or

other organisations that you know.


Nokia is likely to experience employee resistance because

the level of change required to reinvent itself is significant and

will cause many problems� First, employees may feel their job

security threatened� This is demotivating, which creates the

problem of a fall in short-term productivity� This may increase

Nokia’s costs and lower profitability, which is likely to create

further difficulty as it tries to obtain funding for the reinvention�

Profitability and hence the availability of future funding can be

influenced by employees’ resistance to change� For example,

employee resistance may result in a dispute and in industrial

action that could be costly for Nokia� The firm could choose to

replace its workforce, but this would certainly create adverse

publicity, especially at a time when unemployment is higher

than usual in the UK due to global recession� Besides, it would

be very costly to recruit and train new employees, not to

mention the payments required for workers made redundant�

These costs, in addition to those associated with redesigning

Nokia’s image, would be extremely high�

Nokia must clearly emphasise and fully explain the need

for ‘beginning anew’, so as to reduce resistance� The costs

of offering additional training in the short term, to retain

employees, may appear great, but this is unlikely to be as

costly as industrial action and the need for a new workforce�

Besides, Nokia employee resistance may be less of a problem

than might be expected in other organisations because its

staff are likely to be used to change� After all, they operate in

a fast-moving market where there is constantly changing and

advancing technology that impacts on how they produce, sell

and advise customers� This experience highlights the need

for Nokia to implement strategies that will help retain such

valuable employees�

Nokia’s decision to reinvent itself must also take into

account the competitive environment, as well as the

resources, other than labour, that it has at its disposal to

facilitate change� In terms of this industry, technology is a fast-

moving market and so the need to gain first-mover advantage

through reinvention may be a ‘make or break’ factor when

establishing market share� In order to reduce this risk, Nokia

could consider integration with a competitor, such as LG,

which would provide greater economies of scale� However,

this may increase the risk of staff resistance, especially if

redundancies are required because of the need to close

duplicate departments�

Overall, the costs of redeveloping the business are likely

to be great and the likely resistance from employees is only a

part, albeit a significant part, of a much bigger problem� Nokia

needs to minimise the risk of employee resistance and should

consider a course of action to promote change in a positive

light� This may even require a new and more effective leader or

a campaign to encourage support�

The response focuses solely on Nokia� While the candidate

shows a great insight into this business, the answer would

have been improved if reference had been made to a range

of companies� The analysis in relation to the question and the

firm is good, but the overall evaluation is fairly standard and

therefore reasonable at best�

Application Analysis Evaluation OverallReasonable Good Reasonable 28/40 marks


market research

employing people


cash flow forecast

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sources of finance

breakeven analysis




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business ideas

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business plans


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breakeven analysis



market grow

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public

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private limited com

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costsrevenues

startups

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conribution

adding value


cash flow forecast

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market growthpublic limited companies

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strengths and weaknessescostsrevenuesstartupsriskstrademark

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strengths and weaknessesmarket sharerisks busines

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AQA AS Business Studies Unit 1


Planning & Financing a Business

crossAcademe

AQA AS Business Studies Unit 2

crossAcademe


Managing a Business

decision making

increasin

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impro

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flow

measu

ring p

rofi

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motivation theory

prod

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pro

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operations managem

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workin

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suppliers

degree of competition

trainingem

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pricing tactics

pricin

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return on capital

tech

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pricin

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mass m

arketing

workforce roles

organisational structure

internal and external recruitment

operatio

ns m

anag

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selectionpricin

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Marketin

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anag

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t Finan

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workforce roles

distribution channels

unique selling points

using budgetsrecruitment

operations management

adverse variances

recruitment process

marketing mix

recruitment process

workforce rolescustomer service

product life cycle

market conditions

measuring performance

unique selling points

marketing mixprofit pricing strategies

workforce effectiveness

unique selling pointsplacedistributors

job designplacedistributors

empowerment

working with suppliers

motivation theory

team working

promotional mix

measuring performanceusing budgetsprofit

People in business

team w

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profi

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job

desig

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empow

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mass m

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motivating em

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training

selection

measuring profit

operations managem

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recruitment

pricing tactics

finance

selectionplace

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incr

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using budgets

profit

selec

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technology

quality

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effective employer

employee relation

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usin

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finan

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using financial data

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operational objectives

innovationin

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analysing markets

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published accounts

investment

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differentiation

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lean production

understanding marketing

making investment decisions

lean productionlocation

selecting financial strategies

understandingfinancial objectives

resource mixmarket penetration

interpretingpublished accounts

working capitalanalysing markets

financial datadeveloping and implementing

marketing plansdata investment decisions

selecting marketingstrategieslocationdiversificationgearingoff-shoring

delayingfinancial efficiency

Ansoff’s matrix

working capitalscale of productiontrade unionsliquidity

Marketing strategies

profit utilisation

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profit q

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shareholder ratios

income statem

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training

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crossAcademe


Strategies for Success

aims and objectives

economic environment

social environment

legal environment

causes of change

leadershipimplementing and

managing change

strategic decisions

influencesenvironment

missionplanning for change

change process

leadership

culture environment


objectivesemerging markets

inflationexchange rates

demographic factors

political decisions

unemployment


health and safety

taxationsubsidy

Managing change Corporate aims and objectives social environment

planning for change


managing changeculturemission, aims and objectives





strategic decisionssocial environment

technologicallegal internal causesstrategic decisionsinfluencesleadershipfiscal policyinflationunemployment


buying powerpublic relations

environmental issuesfreedom of tradeinflation

Assessing changefreedom of trade

consumer protection

inflation

economic growth

monetary policyemerging markets emerging markets


mission statements


economic trends

the business cycle

European Union

fiscal policyunemployment


mergers

stakeholder perspectives

unemployment

taxation

subsidy

interest rates

takeovers

law trade

demographic

public relations

health

sellingpower

monetary

policy

subsidy

taxation


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aims and objectives

eco

nom

ic enviro

nm

ent

social e

nviro

nm

ent

legal environ

men

t

causes of change

leadersh

ipim

plem

enting and

man

aging ch

ange

strategic decisions

influencesenviro

nm

ent

missio

nplanning for change

change process

leadership

cultu

re

environm

ent


objectives

emerging m

arkets

infl

ation

exchange rates

dem

ograp

hic facto

rs

political d

ecisio

ns

unemploym

ent


health

and safe

ty

taxationsu

bsid

y

Managing change

Corpora

te a

ims

and o

bject

ives

social environment

planning for change


managing changeculture

mission, aims and objectives





strategic decisions

social environment

technologicallegal internal causesstrategic decisionsinfluencesleadership

fiscal policyinflationunemployment


buying power

public relationsenvironmental issues

freedom of tradeinflation

Assessing change

freedom of trade

cons

umer

protectio

n

inflat

ion

econ

omic

grow

th

moneta

ry polic

yemerging m

arkets emerging m

arkets


mission statem

ents

inflation

legislation

economic trends

the business cycle

European Union

fiscal policy

unemploym

ent


mergers

stak

eholder p

erspect

ives

unemployment

taxa

tion

subsid

y

interest rates

takeovers

law

trade

demograp

hic

public re

lation

s

healt

h

selling

power

monetary

policy

subsidy

taxation


crossAcademe



Bare Bones Revision Guides distil the essential content of the AQA units of study as clearly and succinctly as possible.

Written by an experienced examiner, each 24-page guide opens with a section about the exam, the mark allocation, the skills required and the importance of exam practice.

The subsequent content notes are highly focused, carefully structured and colourfully presented, making them perfect for revision. They include important Exam Tips, providing you with invaluable guidance on what the examiner is looking for and how to gain those vital extra marks. Regular A-Grade Analysis/Evaluation Examples throughout these notes emphasise the importance of the higher-level skills, and there are even Number Crunching activities to check your calculation ability.

An exam practice section at the end of the guides comprises integrated case studies followed by exam-style questions (units 1, 2 and 3) or exam-style essay questions (unit 4). Once you have assimilated the content notes, you should tackle the questions under timed conditions. Specimen A-grade responses, with accompanying examiner commentaries, are provided so that you can assess the quality of your own answers, identifying any weaknesses. You can then review those topic areas that require further attention.

The Bare Bones Revision Guides provide a unique combination of features:

Highly focused revision Written by an examiner Colour magazine format Exceptional value

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Bare Bones

Revision Guides

the business environment & managing...

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