AS and A Level

Business

Getting Started Guide

Pearson Edexcel Level 3 Advanced GCE in Business (9BS0)
Pearson Edexcel Level 3 Advanced Subsidiary GCE in Business (8BS0)
Gettting Startted: AS
A and A le
evel in
i
Bussinesss 201
15

Conttents
1. Inttroductiion 1
1.1
1 Research
h and key principles 1
1.2
2 Support for deliverring the ne
ew specific
cation 2
2. Wh
hat’s changed? 3
2.1
1 How hav
ve AS and A level changed? 3
C
Changes to
t AS and A level qu
ualifications 3
C
Changes to
t subject criteria 3
C
Changes to t Assessm
ment Objec
ctives 5
2.2
2 Changes to the Pearson Ede
excel AS an
nd A level Business
spe
ecificationss 5
S
Specificatiion overvie
ew 6
C
Constructiing a cohe
erent cours
se 7
C
Changes to
t specifica
ation conte
ent 7
C
Changes to
t assessm
ment 9
3. Pla
anning 11
3.1
1 Planning and delivering linea
ar AS and A level co
ourses 11
3.2
2 Delivery models 11
3.3
3 Co-teachhing AS an
nd A level 12
3.4
4 Suggesteed resourc
ces 12
4. Content gu
uidance
e 13
Theme 1: Marketing
M and people 13
1.1.1 The market 13
1.1.2 Mark
ket researrch 14
1.1.3 Mark
ket positio
oning 14
1.2.1 Dem
mand 15
1.2.2 Supply 15
1.2.3 Mark
kets 15
1.2.4 Price
e elasticity
y of deman
nd 17
1.2.5 Inco
ome elastic
city of dem
mand 17
1.3.1 Prod
duct/servic
ce design 18
1.3.2 Bran
nding and promotion
n 18
1.3.3 Priciing strateg
gies 19
1.3.4 Distribution 19
1.3.5 Mark
keting stra
ategy 19
1.4.1 Approaches to
o staffing 20
1.4.2 Recrruitment, selection and
a trainin
ng 20
 1.4.3 Orga
anisational design 21
1.4.4 Motiivation in theory
t and
d practice 21
1.4.5 Lead
dership 21
1.5.1 Role
e of an enttrepreneurr 21
1.5.2 Entrrepreneurial motives
s and charracteristics
s 22
1.5.3 Busiiness objectives 22
1.5.4 Form
ms of business 23
1.5.5 Busiiness choic
ces 23
1.5.6 Mov
ving from entreprene
e eur to lead
der 23
Theme 2: Managing
M businesss activitie
es 24
2
2.1.1 Internal financ
ce 24
2
2.1.2 Exte
ernal finan
nce 24
2
2.1.3 Liability 24
2
2.1.4 Plan
nning 25
2
2.2.1 Sale
es forecastting 25
2
2.2.2 Sale
es, revenue and costts 26
2
2.2.3 Brea
ak-even 26
2
2.2.4 Budg
gets 26
2
2.3.1 Proffit 27
2.3.2 Liquidity
2 28
2
2.3.3 Busiiness failure 28
2
2.4.1 Prod
duction, prroductivity
y and efficiency 28
2
2.4.2 Capa
acity utilis
sation 29
2
2.4.3 Stoc
ck control 29
2.4.4 Quality manag
2 gement 30
2
2.5.1 Econ
nomic influ
uences 30
2
2.5.2 Legislation 31
2
2.5.3 The competitiv
ve environ
nment 31
Theme 3: Business
B d
decisions s and stra
ategy 32
3
3.1.1 Corp
porate objectives 32
3
3.1.2 Theo
ories of co
orporate sttrategy 32
3
3.1.3 SWO
OT analysis 33
3.1.4 Impact of exte
3 ernal influences 33
3
3.2.1 Grow
wth 33
3
3.2.2 Merg
gers and takeovers
t 34
3
3.2.3 Orga
anic growtth 34
3
3.2.4 Reas
sons for sttaying small 35
3
3.3.1 Quantitative sales
s forec
casting 35
3
3.3.2 Inve
estment ap
ppraisal 35
3
3.3.3 Deciision trees
s 36
3
3.3.4 Critical Path Analysis
A 36
3
3.4.1 Corp
porate influences 37
 3
3.4.2 Corp
porate cultture 37
3
3.4.3 Sharreholders versus sta
akeholders
s 38
3
3.4.4 Busiiness ethic
cs 39
3
3.5.1 Interpretation
n of financiial statements 39
3
3.5.2 Ratio analysis
s 40
3
3.5.3 Hum
man resourrces 41
3
3.6.1 Caus
ses and efffects of ch
hange 41
3
3.6.2 Key factors in change 43
3
3.6.3 Scen
nario planning 43
Theme 4: Global
G bussiness 44
4
4.1.1 Grow
wing economies 44
4.1.2 International trade
4 t and business growth 44
4.1.3 Facttors contributing to increased globalisattion
4 44
4
4.1.4 Prottectionism 45
4
4.1.5 Trad
ding blocs 45
4
4.2.1 Cond
ditions tha
at prompt trade 45
4
4.2.2 Asse
essment of a countrry as a market 46
4
4.2.3 Asse
essment of a countrry as a pro
oduction lo
ocation 46
4
4.2.4 Reas
sons for global merg
gers or joint venture
es 46
4
4.2.5 Glob
bal compettitiveness 46
4
4.3.1 Mark
keting 47
4
4.3.2 Nich
he markets
s 47
4.3.3 Cultural/social factors
4 48
4
4.4.1 The impact off MNCs 48
4
4.4.2 Ethic
cs 48
4
4.4.3 Conttrolling MN
NCs 49
5. Assessment guida
ance 50
5.1
1 Implications of lineear assess
sment 50
5.2
2 AS level assessme ent 50
5.3
3 A level assessment 51
5.4
4 Pre-relea
ased conte ext (A leve
el Paper 3 only) 51
6. Qu
uantitatiive skills
s 55
6.1
1 Application of quan
ntitative skills 55
7. Tra
ansferab
ble skills 59
7.1
1 The needd for 21st century sk
kills 59
7.2
2 Cognitive
e skills 59
7.3
3 Interpers
sonal skills
s 61
7.4
4 Intrapers
sonal skills
s 63
8. Business and
a the Extended Proje
ect Qualificatio
on 65
1. Intro
oduction

1. In
ntroduction

1.1 R
Research
h and ke
ey principles
Our new AS and A level Business specificatio ons are des signed to su
upport a range of
sttudent interrests, learn
ning styles and
a aspirattions for progression.
Thhe specifica
ations have
e been deve eloped in co
onsultation with the te
eaching
co
ommunity, higher edu ucation, learned societties and sub
bject assocciations. Tea
achers
from a range e of schools
s and colleg
ges — in focus groups s, surveys, phone interviews
annd face-to-face conversations — have provided feedba ack at eachh stage andd have
heelped us to shape the specificatio
ons.
Accademics inn UK univerrsities have
e helped us
s understan nd how to build
b on the
e
sttrengths of the 2008 A level Busiiness speciffication and
d advised on
o how
prrogression to undergraaduate studdy could be
e improved.
W
We have com mmissioned d and conduucted our own
o researcch projects, including
internationall benchmarrking. The specificatio
s ns are also
o aligned wiith our Worrld Class
Qualification principles to ensure they
t are ap
ppropriate for
f a range of studentts.

Drawing on feedback
f frrom all partts of the Bu
usiness sub
bject community, the 2015
2
AS
S and A levvel specifica e been designed to support stude
ations have ents in deveeloping
th
he following
g skills thatt have beenn identified as key for progression in this su
ubject:
● Application of busin
ness concep
pts and the
eories to a range
r of real-world co
ontexts.
● A holistic
c understan
nding of business.
● Application of appro
opriate qua kills to relevant busine
antitative sk ess contextts.
● Engagemment with business
b thrrough wide
er reading and
a an awareness of the
current issues impa
acting on buusinesses.
● The ability to build and sustain
n business arguments
s.

Th
he 2015 AS
S and A leve
el specifications have been built on these key
k principle
es:
● Clear sppecifications. Clear guidance
g onn what stud
dents need to learn,
providing
g clarity forr planning, teaching and assessmments. The changes w we have
made to the structu ure of the specification
s ns are explained in Se
ection 2.2, page 5.
● Co-teac chable AS anda A leveel coursess. The AS leevel is embe edded in th
he
A level to
o allow co-teachability
y. The relattionship bettween AS level and A level
qualificattions and consideratio
c ons for co-tteaching the qualificattions are de
etailed
in Sectio
on 3 (page 11).
● Progresssion, not repetition n. The specifications su upport proggression fro
om our
GCSE in Business byb building on the und derstanding developed d at KS4 and
removing g unnecesssary repetittion, while ensuring
e sttudents neww to the subject
are apprropriately su
upported, to
t engage anda inspire all learners. Our apprroach
to progreession from
m GCSE is in ntroduced on
o page 5. Mapping documents and a
support for
f progres ssion from GCSE
G to the 2015 speecifications will be ava
ailable
on the Business pag ges of the Edexcel we ebsite.
● Problem m-solving anda dynammic approa ach. Stude ents will lea
arn that bussinesses
need to make choic ces and dec
cisions, and
d be responnsive but also far-sighted in
proach to th
their app hese choice
es and decisions. The focus is on n how businnesses
respond strategically to the chhanges theyy face. An understand ding of currrent
issues im
mpacting on n businesse
es, such as the digital economy, supports th his.
This conttent is integrated thro
oughout thee themes and the course overvie ew can
be foundd on page 6.6 Ideas andd suggestioons for teac
ching appro oaches are
detailed in Section 4 (starting on page 13).

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erial is not copyrright free. 1
 1. Introduction

● Reflect today’s gllobal world. Building on the strengths of thet Internattional

Business e 2008 course, the new specifica
s unit in the ations ensurre students s
develop an understtanding of current
c glob
bal issues impacting on
o business ses.
The overrview for th heme can be found on page 7 and the changes
he global th
made to this theme e (compared with the 2008 speciification) arre summarised in
the table
e on page 8.8
● Clear asssessmentts. Clear an
nd consistent use of co
ommand words
w across
assessments and between serries. Our appproach to the assessments, definitions
for the command words
w and details
d of ho
ow the commmand word ds relate to
o the
assessments are ex
xplained in Section 5 o
on page 500.
● Real business foc cus. All of the
t assessm
ments are based
b on re
eal business
ses,
real probblems and real
r opportunities. This helps pro
ovide stimu ulating asse
essment
materialss to cover a wide rangge of busine
ess issues for studentts to engage with.
This is fu
urther supp
ported by a pre-releassed context. (See Secttion 5, pagee 50.)
● Clear mark
m schemmes. The ne ew mark sc chemes proovide a consistent
understa
anding of thhe skills and
d connectio
ons betweeen these skiills required
d for
each queestion type. Clear worrding reflects how teac
chers and examiners
e
describe the qualities of stude
ent work, soo the expec
ctations are
e clear for
teachers
s and for markers. Ourr approach to skills-baased mark schemes is s
explained in Sectionn 5.7 on paage 53.
● Skills fo
or progres ssion. The pre-release
p ed context will
w encoura age studen
nts to
develop transferablle research skills to su upport stud dy in a wide e range of subjects
s
at univerrsity and th
he transition to employment. The ese skills innclude numeracy,
commun nication, an understanding of the e business environmen
e nt and commercial
awareness. Our app proach to skills
s develoopment is detailed
d in Section
S 5
(pre-rele
ease), Section 6 (quan on 7 (transfferable skills) and
ntitative skills), Sectio
Section 8 (Business s and the Extended
E Prroject Qualiification).

1.2 Support for deliv

vering the
t new specific
cation
Th
his Getting Started guuide providees an overvview of the new AS annd A level
sp
pecifications to help yo
ou get to grips with th
he changess to contentt and asses
ssment,
an
nd to help you
y undersstand what these chan nges mean for you and d your stud
dents.
Our package
e of supportt to help yo
ou plan and
d implemen
nt the new specificatio
s ons
include:
● Planning. In addition to the relevant
r section in this
s guide, we
e will be pro
oviding
a course planner an
nd scheme of work tha at you can adapt to suuit your
department. We will also be providing
p mapping doc cuments to highlight key
k
differenc
ces between
n the new and
a 2008 specification
s ns and our GCSE in Bu usiness.
● Teachin ng and learning. To support
s youu with deliv
vering the new
n specific
cations,
we will be
b providingg suggested d suggested
d resource lists, case studies and
activities
s, a studentt guide and
d materials for options
s evening.
● Understtanding thhe standarrd. Exempla
ar student work with examiner
e
commentaries for the sample assessmen
nt materials
s will be pro
ovided.
● Tracking g learner progress. ResultsPlus provides the most detailed
d anaalysis
available
e of your sttudents’ exa am perform
mance. It ca
an help you u identify to
opics
and skills
s where stuudents coulld benefit from further learning. Extra assessment
materialss for A leve
el will also be
b available
e to supporrt formative
e assessme ent.
● Supportt. Our subje ect advisorr service, le
ed by Colin Leith, and online commmunity
will ensu
ure you receeive help and guidanc ce from us as
a well as sharing
s ideas and
informattion with ea
ach other. You
Y can sign up to recceive e-newwsletters fro
om
Colin to keep up-too-date with qualificatioon updates,, and produuct and servvice
news.

2 © Pearso
on Education Ltd
d 2014. This ma
aterial is not copyright free.
2. What’s change
ed?

2. W
What’s changed?

2.1 H
How hav
ve AS an
nd A leve
el chang
ged?
Changes to
o AS and A level qualificati
q ions
Frrom Septemmber 2015,, A level Bu
usiness will be a linearr qualificatio
on. This me
eans
th
hat all exam
minations must
m be sat at the end of the couurse. More information n about
th
he implications of the move to lin
near assess
sment is giv ven on page 11.
Frrom Septem
mber 2015,, AS level Business
B will be a stan
ndalone qua alification.
Thhis means that
t it cann
not be usedd to contribute towards an A leveel Business grade.
More informaation aboutt the relatio
onship betw
ween AS an nd A level is
s given on
paage 11.

Changes to
o subjectt criteria
Th
he subject content reqquirements s for AS and
d A level Bu
usiness havve been rev vised.
Alll awarding organisatio
ons’ specifications mu
ust meet these criteria
a. The full s
subject
co
ontent docu ument can be found on the Depa artment for Education website, but the
oxes below highlight the
bo t key requirements.
Th
he following
g requirements apply to both AS
S and A leve
el Business specifications:

T
The knowledge, underrstanding and skills se
et out in the
e AS and A level
s
specification
ns must:
● enable students to
o investigatte different types and sizes of organisation in
various business sectors
s and environme ents, with an
a awarene ess of local,,
national and globa
al contexts,, recognisin
ng they face
e various degrees of
compettition
● enable students to
o identify business opp
portunities and proble
ems
● enable students to
o investigatte, analyse and evalua
ate busines
ss opportun
nities
and pro
oblems
● enable students to
o apply num
merical skillls, including
g those ind
dicated in th
he
Annex (page
( 4)
● enable students to
o make justtifiable decisions using
g both quallitative and
d
quantita
ative metho
ods, including those inndicated in the Annex
x (page 4)
● enable students too identify and understand how bu
usinesses adapt
a to op
perate
success
sfully in a dynamic bus siness environment
● promote a holistic understanding of bus
siness and enterprise.

A
All AS and A level spe
ecifications
s must cove
er the follow
wing core knowledge,
k
u
understanding and skiills:
● Externa
al influences: the mark
ket, compe
etition.
● Marketing: identify ying and an
nticipating customer needs,
n marketing mix,,
productt life cycle.
● Accountting and fin
nance: budg
geting, cas
sh flow fore
ecasting, brreak-even
analysis
s, ratio ana
alysis.
● People in organisa
ations: motivation, lea
adership, orrganisation design,
employer/employe ee relations
ships.
● Operations manag
gement: quality, produ
uctivity, added value.

© Pearson Education Ltd 2014.

2 This mate
erial is not copyrright free. 3
 2. What’s ch
hanged?

In
n addition, the
t followin
ng requirem
ments also apply to A level Busin
ness specific
cations:

A level spe
ecifications must also require stu
udents to:
● apply basic busine
ess conceptts to a wide
er range of contexts
● understtand and ap
pply more sophisticate
s ed concepts
s and techn
niques
● analyse
e, interpret and evalua
ate more co
omplex bus
siness information
● take a more
m strate
egic view off business opportunities, problem
ms and issu
ues.

A level spe
ecifications must also cover the following
f co
ore knowled
dge,
u
understanding and skiills:
● businesss objective
es and strattegy: differrent stakeholder and business
b
objectiv
ves, strateg
gy and implementation n, risk and uncertainty
y
● externa
al influences
s: global co
ontext, political, social, economicc and
technological facto
ors, ethical,, legal and environmeental issues
s
● busines
ss analysis: forecasting, data ana
alysis, mark
ket analysis
s, decision
making, measures s of perform
mance – financial and non-financcial
● change: causes an
nd effects of
o change, managing
m c
change.

Th
he main changes in th
he revised subject
s con
ntent are:
● the qualiification name has beeen changed d to Business to better reflect the
e
nature and coverag ge of the sp
pecifications
s
● the core content requirementss (outlined in the table
es above) must
m constitute
60% of the
t AS and A level spe
ecification content
c
● there is a greater emphasis
e onn the applic
cation of ap
ppropriate quantitative
q e skills
in a rang
ge of busineess contextts. The asse
essment off these skills will includ
de at
least level 2 mathematical skills as a minnimum of 10%
1 of the overall AS or
A level marks.
m

Sttudents are
e expected to accomplish the folllowing quan
ntitative sk
kills as part of their
ASS and A lev
vel study:

● calculatte, use and understand ratios, av

verages and fractions
● calculatte, use and understand percentages and pe
ercentage changes
c
● construct and interpret a ran
nge of stand
dard graphical forms
● interpre
et index numbers
● calculatte cost, rev
venue, profiit and break-even
● calculatte investme
ent appraisal outcome
es and interrpret resultts*
● interpre
et values off price and income ela
asticity of demand
● use and
d interpret quantitative and non--quantitativ
ve information in order to
make decisions
● interpre
et, apply an
nd analyse information
n in written
n, graphicall and nume
erical
forms
* this skill is not a req
quirement in the AS le
evel.

More informa
ation aboutt the applic
cation of qu
uantitative skills
s is given on
ages 55–58
pa 8.

4 © Pearso
on Education Ltd
d 2014. This ma
aterial is not copyright free.
2. What’s change
ed?

Changes to
o Assessm
ment Objjectives
Th
he AS and A level Bussiness Assessment Objjectives have been revised.
Th
he objectives have been made more
m expliciit to exemp
plify the skills developed
th
hrough the AS and A leevel specifiications. Thhe Assessm ment Objecttives are the same
fo
or both AS and
a A level but the weeightings are differentt.

AO1
1 Demonstratte knowledg
D ge of termss, concepts, theories,
AS 25–3
35% m
methods annd models to
t show an understand ding of how
w
in
ndividuals and
a organis
sations are affected by and respond to
A level 20
0–30% b
business iss
sues
AO2
2 Apply knowledge and understand
A u ding to various business
AS 20–3
30% c
contexts to show how individuals
s and organnisations are
a
affected by and respon
nd to issues
s
A level 20
0–30%
AO3
3 Analyse issu
A ues within business,
b showing
s an understandding of
AS 20–3
30% the impact ono individuals and org
ganisations of externa
al and
in
nternal influences
A level 20
0–30%
AO4
4 Evaluate qu
E ualitative an
nd quantita
ative eviden
nce to make
e
AS 15–2
25% in
nformed judgements and propos se evidencee-based solutions
to business issues
A level 20
0–30%

2.2 Changes to the P

Pearson
n Edexce
el AS an
nd A leve
el Busin
ness
specification
ns
Thhe A level specification
s n is structu
ured into four themes.. In this strructure business
sttudents are
e introduced d to core bu
usiness conncepts and develop a broad
unnderstandinng of how businesses
b work, befoore looking at the decision-makin ng tools
th
hat help bussiness peop ple move toowards a more
m scientific approacch to
m
management. In this th hematic approach, pro ogression is
s continuouus as students
deevelop their knowledg ge and unde erstanding throughoutt the course.
Th
he specifica
ation suppoorts progres ssion from our GCSE through
t ensuring studdents
ne
ew to the subject
s are supported and the co ontent is appropriately
y targeted.
Th
he new struucture avoids repetitio on from GCCSE as it be
egins with new
n topic areas
an
nd ensures engaging topics
t that students enjoy and caan relate to
o, such as
m
marketing an nd brandingg, are intro
oduced early on in thee course. Ma apping from
m our
GCSE to the 2015 spec cifications are available
e on the Bu
usiness sub bject pages.
Sttudents inv
vestigate, analyse andd evaluate business
b op
pportunities
s and issues, and
make supported decisio
m ons and rec commendattions using both qualittative and
qu
uantitative methods. T The goal is to develop
p a holistic understandding of busiiness.
In
n developing the AS and A level 2015
2 speciffications we
e have reta
ained the
sttrengths of the 2008 specification
s n:
● engaging
g and updated content
● real-life businesses
s in all assessments
● ocus
global fo
● pre-relea
ased contex
xt in A leve
el.

Ch
hanges hav ve been ma ade to the specificatio
s n content and
a the ass
sessments to
t
en
nsure the revised subjject conten
nt and asses ssment reqquirements are met
(a
as outlined in Section 2.1), and to
t bring the e specificatiion up-to-d
date (see pa
age 7).

© Pearson Education Ltd 2014.

2 This mate
erial is not copyrright free. 5
 2. What’s ch
hanged?

Th
he layout of
o the new s
specifications ensures that the re
equired con
ntent is clea
ar and
co
omprehensive. Section
n 4 of this guide
g gives
s further ex
xamples and guidance e for
ea
ach topic arrea.

Specificatiion overv
view
Thhe charts below
b provid
de an overv view of the AS and A level speciffications,
indicating the relationship betwee en the two. (Further gu
uidance on the relatio onship
beetween AS and A leve el is provide
ed on page 11.) The A level is strructured intto four
th
hemes with three exte ernally asseessed exam ms:

Theme 1 Themee2
arketing and people
Ma e ging business activitties
Manag
1.1 Meeting
g customerr needs 2 Raising finance
2.1
1.2 The ma
arket 2 Financia
2.2 al planning
1.3 Marketing mix and
d strategy 2 Managing finance
2.3
1.4 Managiing people 2 Resourc
2.4 ce management
1.5 Entreprreneurs and
d leaders 2 Externa
2.5 al influence
es
Theme 4 Theme e3
usiness
Global bu Business decision
ns and stra
ategy
4 Globalisation
4.1 3 Busines
3.1 es and strategy
ss objective
4.2 Global markets an
4 nd business
s 3 Busines
3.2 ss growth
e
expansion 3 Decision-making techniques
3.3 t
4 Global marketing
4.3 3 Influences on business decisions
3.4
4.4 Global industries and
4 a companies 3 Assessiing compettitiveness
3.5
onal corpora
(multinatio ations)
3 Managing change
3.6
Paper 1 Paperr2
Marketing, peop ple and glo
obal Business
s activities
s, decision
ns and
busineess strateegy
Assessing Theme 1 and Themme 4 Assessing Theme 2 and Them me 3
Paperr 3
Investiga
ating business in a competitiv
ve environ
nment
Assessing
A all themes

he AS level is embedd
Th ded in the A level: The
eme 1 and Theme 2 co omprise the
e same
co
ontent for both
b the AS el specifications. Therre are two exams:
S and A leve e

Themme 1 Them
me 2
Ma
arketing and
a people
e Manag
ging busin
ness activiities
1.1 Meeting
g customerr needs 2.1 Raising
g finance
1.2 The ma
arket 2.2 Financ
cial planning
g
1.3 Marketing mix and
d strategy 2.3 Managing finance
e
1.4 Managiing people 2.4 Resourrce manage
ement
1.5 Entreprreneurs and
d leaders 2.5 External influence
es
Papeer 1 Papeer 2
Ma
arketing and
a people
e Manag
ging busin
ness activiities

6 © Pearso
on Education Ltd
d 2014. This ma
aterial is not copyright free.
2. What’s change
ed?

Constructiing a coherent cou

urse
Sttudents aree introducedd to busine
ess through
h Theme 1 and
a Themee 2, which ffocus on
hoow businesses work. This
T enable
es students to build kn
nowledge and understtanding
off core busin
ness conceppts. Theme e 3 and The
eme 4 build on these themes.
t Theme 3
annd Theme 4 extend brreadth and depth of knowledge through
t cusing on business
foc
sttrategy andd decisions, and exploring the glo
obal contexxt in which modern
buusinesses operate.
o

Changes to
o specific
cation con
ntent
Chhanges havve been ma ade to the specificatio
s n content, both to enssure the revised
su
ubject conte
ent require
ements are met and to he specifications to briing
o refresh th
th
hem more up-to-date
u in response
e to our ressearch findings; for exxample, by
incorporating
g current is
ssues such as the digittal econommy.
he following
Th g content has
h been included in addition
a to the
t core co
ontent specified in
he DfE subject criteria (outlined on
th o pages 3 and 4). Th he content outlined
o in the
ta
able below has been in ncluded for contextualisation andd for develo
oping depth
h.

Specification conttent Rationa

ale for inclusion
T
The digital economy The digittal econom
my has been n included to
t
ensure the
t contentt is relevantt and up-to
o-date.
Referencces to the digital
d econ
nomy reflecct the
dynamicc and chang ging nature e of busines
ss.
Business ch
hoices Opportunity cost an nd trade-offfs have been
includedd to supportt the develo opment of
analyticaal skills thro
ough enablling students to
considerr the implications of ch hoice and think
t
logically when cons sidering bus
siness strattegy.
Entreprene
eurship and enterprise
e This topic is engaging for studdents as ma any
have reaal-life refere
ences on which
w to buiild and
aspire to
o be entrep preneurs themselves.
This topic supports s an awarenness of a ra
ange of
businesss types and d sizes.
Raising fina
ance This content has be een includeed to underrpin
student understand ding of howw businessees are
funded. It providess an importtant backgrround
and introoduction to
o the financce topics, su
uch as
financiall statementts. This con
ntent also builds
b on
the enteerprise conttent introdu
uced in Theeme 1.
G
Global busiiness and global
g focus
s Theme 4 focuses on global bu usiness and d the
global coontext. Thiss theme deemonstrates s how
business s concepts and theorie es can be applied
a
in differe
ent and reaal-world conntexts. Thee global
context is importan nt in develooping studeent
understa anding thatt businesses do not op perate in
isolation
n, that businnesses hav
ve global reach, the
implicatiions of trad
ding globally and how this is
becomin ng increasinngly important. Studen nts have
the oppo ortunity to apply theirr business
knowledge in any context.
c The global co ontext
also mak kes the couurse relevan nt and currrent,
reflecting the businness world students will
w
encounte er when they enter em mploymentt.

© Pearson Education Ltd 2014.

2 This mate
erial is not copyrright free. 7
 2. What’s ch
hanged?

Th
he table beelow is an overview
o of the main changes
c in content fro
om the 2008
sp
pecification. More detaailed mapping of indiv
vidual topics
s from the 2015 speciification
to
o the 2008 specificatio
on can be fo
ound on the e Business pages of th
he Edexcel
website.

2015 spe
ecification
n contentt Ch
hanges frrom 2008
8 specifica
ation
Theme e1 The marketing and peop ple function
ns are
Marrketing an
nd people inttroduced in this theme e. New conttent
inccludes dyna amic marke ets and online
1.1 Meeting
g customerr needs rettailing, inco
ome elasticity of dema and,
1.2 The ma
arket con nsiderationn of social trends in
1.3 Marketing mix and
d strategy ma arketing (su uch as social media),
approaches to o staffing, innovation within
1.4 Managiing people a business
b an
nd moving from
f entrep
preneur
1.5 Entreprreneurs and
d leaders to leader.

Themee2 The finance and

a operatioons functions are
Managiing busine
ess activitiies inttroduced in this theme e. Ratio anaalysis to
me easure proffitability and liquidity is
2.1 Raising
g finance inccluded.
2.2 Financial planning
g
2.3 Managiing finance
2.4 Resourrce manage
ement
2.5 Externa
al influence
es
Theme e3 Mooving from functions to strategy, new
Business
s decisions
s and strattegy con
ntent includ
des reasons for busineesses
sta
aying small, time-serie
es analysis
3.1 Busines
ss objective
es and stra
ategy (m
moving averrages), man naging change and
3.2 Busines
ss growth sce
enario planning.
3.3 Decisio
on-making techniques
t
3.4 Influen
nces on bus
siness decis
sions
3.5 Assessing compettitiveness
3.6 Managiing change
Theme e4 The global coontext has been
b made more
Global bus
G siness explicit and in
ncludes oth
her develop
ping
4 Globalisation
4.1 eco
onomies, namely Afric ca.

4.2 Global markets an

4 nd business
s
e
expansion
4 Global marketing
4.3
4.4 Global industries and
4 a companies
(multinatio
onal corporaations)

8 © Pearso
on Education Ltd
d 2014. This ma
aterial is not copyright free.
2. What’s change
ed?

Changes to
o assessm
ment
Th
he assessm
ment structu
ures for AS level and A level Bus
siness are outlined
o below and
on
n page 10. More detaiil on the as
ssessment for
f each component is s given in Section
S
5 from page 50.
here are three A level papers, ea
Th ach compris
sing 100 marks and 2 hours in duration.

Paper 1 on A: Based
Sectio d on stimulus material.
g, people and globa
Marketing al One da
ata respons se question comprising
ga
businessees numbeer of parts, including one
o extende
ed
open-response qu uestion.

T
Total marks: 100
W
Weighting: 35%
Exam time: 2hrs Sectio
on B: Based d on stimulus material.
One da
ata respons se question comprising
ga
numbeer of parts, including one
o extende
ed
Questions drawn
Q d from
m Theme 1 open-response qu uestion.
a
and Themee 4 content.

Paper 2 on A: Based
Sectio d on stimulus material.
Business activities, decisions One da
ata respons se question comprising
ga
and
a strateggy numbeer of parts, including one
o extende
ed
open-response qu uestion.

T
Total marks: 100
W
Weighting: 35%
Sectio
on B: Based d on stimulus material.
Exam time: 2hrs One da
ata respons se question comprising
ga
numbeer of parts, including one
o extende
ed
Questions drawn
Q d from
m Theme 2 open-response qu uestion.
a
and Themee 3 content.

Paper 3 Sectioon A: Based d on stimulus material.

Investtigating business This se
ection will fo
ocus on the
e broad
in a comppetitive en
nvironmennt pre-released conttext.
ata respons
One da se question comprising
ga
numbeer of parts, including one
o extende
ed
T
Total marks: 100 open-response qu uestion.
W
Weighting: 30%
Exam time: 2hrs
Sectioon B: Based d on stimulus material.
This se
ection will fo
ocus on a strand
s within the
A broad context will be
b issued in
n broad pre-release
p ed context.
November of the prev vious year. One da
ata respons se question comprising
ga
Q
Questions drawn
d from
m all themes. numbeer of parts, including one
o extende
ed
open-response qu uestion.

© Pearson Education Ltd 2014.

2 This mate
erial is not copyrright free. 9
 3. P
Planning

Th
here are tw
wo AS level papers, ea
ach compris
sing 80 marrks and 1 hour
h and
30
0 minutes in duration..

Paper 1 Sectio
on A: Based d on stimulus material.
eting and people
Marke One da
ata respons se question comprising
ga
numbeer of parts.

T
Total marks: 80
Sectio
on B: Based d on stimulus material.
W
Weighting: 50%
One da
ata respons se question comprising
ga
Exam time: 1hr 30 numbeer of parts.

Questions in
Q i Section A and B
Sectio
on C: Basedd on stimulu
us materiall.
d
drawn from
m Theme 1 content.
One exxtended ope se question,
en-respons
Q
Question n Section C drawn from
in m
requirin
ng students
s to make connections
c s across
T
Theme 1 and Theme 2 content.
Theme e 1 and The
eme 2.
Paper 2 Sectio
on A: Based d on stimulus material.
Managing
g business
s activities
s One da
ata respons se question comprising
ga
numbeer of parts.

T
Total marks: 80
Sectio
on B: Based d on stimulus material.
W
Weighting: 50%
One da
ata respons se question comprising
ga
Exam time: 1hr 30 numbeer of parts.

Questions in
Q i Section A and B
Sectio
on C: Basedd on stimulu
us materiall.
d
drawn from
m Theme 2 content.
One exxtended ope se question,
en-respons
Q
Question n Section C drawn from
in m
requirin
ng students
s to make connections
c s across
T
Theme 2 and Theme 1 content.
Theme e 1 and The
eme 2.

Chhanges hav ve been maade to the approach

a off the AS lev
vel and A le
evel papers s to
en
nsure the assessment
a ts are clear and consis
stent, enabling studennts to underrstand
th
he skills the
ey are required to dem
monstrate without
w ove
erly focusingg on exam
te
echnique. The
T changess summaris sed below are
a explaine ed in detaill in Section 5 from
pa
age 50:
● A reduction in the variety
v of command
c w
words use
ed, careful definition
d o the
of
at comprise
skills tha e each comm mand word d and consis
stent applic
cation of th
he
comman nd words wiithin and accross asses
ssments.
● Skills baased mark k schemes s that focus
s on the qua alities students are reequired
to demonstrate in their
t answe ers rather than the quantity of po oints within
n
responsees. Clarity of s comprising each com
o the skills mmand worrd reflects howh
teacherss and examiners descrribe the qua alities of student work k, so the
expectattions are cle
ear for teac
chers and for
f markers s and reduc ces subjectiivity.
● Short-answer que estions tha at focus on knowledge e, understa
anding and
application. These ensure
e the integration
n of assessmment objecctives within
n
questions so they are
a not considered in iisolation, su upport the application
n of
knowledg ge to real business
b co
ontexts andd require students to demonstrat
d te a
holistic understand
u ing of busin
ness throug gh making connections between their
knowledg ge and these business s applicatio
ons.
● A focus on
o the skills
s required for progres
ssion to university and
d employme
ent
within th
he pre-rele
eased conttext.

10 © Pearso
on Education Ltd
d 2014. This ma
aterial is not copyright free.
3. Planning

3. Pllanning

3.1 P
Planning
g and de
elivering
g linear AS
A and A level courses
s
Bo
oth the AS and the A level qualiffications are
e linear, with assessm
ments taken
n at the
en
nd of the co
ourse. Therre will be no January assessment
a t window.
Fo
or AS, thereefore, centres can deccide whethe er to teach Theme 1 and
a Theme 2 in
pa
arallel or se
equentially,, based on their timettabling and staffing sittuation.
Foor A level, centres
c ecide whether they arre delivering the A lev
willl need to de vel on
its
s own or coo-teaching ASA and A le evel studen
nts together, as this may
m impact on the
appproach to teaching inn the first year.
y See Sections 3.2
2 and 3.3 below for further
guuidance on this.
W
With a linearr A level, co
onsideration will need to be given to leaving g sufficientt time
fo i the second year, pa
or revision in articularly to
t revisit to
opics studied in the firsst year.
Th
he structure of the course suppo orts continuuous revisioon as students develop p
kn
nowledge and
a understtanding from Theme 1 and Them me 2 to Theme 3 and
Th
heme 4.

3.2 D
Delivery models
s
One of the first decisionns centres will need too make is the approac ch to offerin
ng AS
annd A level. The benefits of a linea
ar A level course
c inclu
ude more flexibility in
sttructuring the
t course, more timee for teachinng in the firrst year, grreater stude
ent
m
maturity whe en completting assessmments and more oppo ortunity for students to make
lin
nks betwee en different elements of
o the cours se. On the other hand d, it means that all
sttudents must embark on a two-y year course e; any stude ent who lea aves the coourse
affter one yeaar, for whatever reasoon, will leav
ve with no qualificatio on.
Ceentres wish
hing to offer the AS alongside the e A level will need to decide
d wheether
th
hey can runn separate AAS and A leevel classess, or whethher AS and A level stud dents
will need to be taught in the same e class. Co--teaching means
m that students may
m be
ab
ble to delay
y their decision to take
e the full A level once they have experience e of the
su
ubject conteent; many students are learning Business for f the firstt time at this level.
Th
hose who did
d go on to o the full A level would mined on all the
d still have to be exam
A level conte
ent at the end
e of the second
s year and their AS grade will
w not cou unt
to
owards their A level grrade.
Ce
entres are advised to check the funding implications of
o students delaying AS
A and
A level decis
sions.
Ce
entres co-teaching the e AS will fo
ollow a them matic appro oach, deliveering Theme 1 and
Th
heme 2 in the
t first yea
ar. The theemes could be run in parallel
p or taught
t
se
equentially,, depending g on what is most app propriate fo
or staffing and
a timetab
bling
within each centre.
c Cenntres offerin
ng only thee A level ma ay also starrt with Theme 1
nd 2 in the first year, but could decide
an d to sttructure the
e course differently annd
ad
dopt an inte egrated approach; forr example, by bringing g global asppects from Theme
4 earlier into
o the coursee to teach all
a of the marketing
m co
ontent toge ether. Sugggested
different appproaches too structuring the cours se are givenn in the sepparate Course
Planner docu uments (on the Busine ess subjectt pages of the Edexcel website).
Th
he chart on n page 12 illlustrates th
he differentt options deescribed ab bove.

© Pearson Education Ltd 2014.

2 This mate
erial is not copyrright free. 11
 3. P
Planning

Sept Jan Jun

ne Sept Ja
an une
Ju
2015 2016 201
16 2016 20
017 20
017

AS level
A Enter for AS level
o
only Theme
e Theme qualific
cation
1 2

Co-teaching
C Enter for AS level Entter for
A and A
AS Theme
e Theme qualific
cation Theme
T The
eme A level
level 1 2 3 4 qualification

Thematic
T Mock for Themes Entter for
a
approach to Theme
e Theme 1 and 2 Theme
T The
eme A level
A level 1 2 3 4 qualification

Integrated
I Entter for
a
approach to Theme 1, 2,
2 3 and 4 (in
ntegrated ap
pproach) A level
A level qualification

3.3 Co-teach
hing AS and
a A le
evel
Th
he AS level is embeddded in the A level: Theeme 1 and Theme 2 is
s the same content
fo
or the AS an
nd A level specificatio
s ns. This me
eans that Theme
T 1 an
nd Theme 2 can be
co
o-taught for AS and A level.
Thhe AS and A level asse essments are
a differentiated. Con ntent in Theeme 1 and Theme
2 may be assessed at both
b AS and d A level, but
b the style of questio ons may bee
differentiated
d; for exammple, studeents may be e asked to define
d a co
oncept from
m Theme
1 in the AS level assesssments butt may be as sked to exp
plain the im
mpact of this
s
co
oncept in thhe A level assessment
a ts. Students s may be required to perform a
ca
alculation at AS level bbut may be e asked to complete
c an additiona
al step (suc
ch as
interpret the
e result of this calculattion) at A le
evel.

3.4 Suggeste
ed resou
urces
Too support in
n the teach hing and leaarning of thhe new specifications, we will pro
ovide a
co
omprehensive suggestted resourc ces list to capture a ra
ange of sou
urces you may
m find
usseful. The list will be regularly
r up
pdated and can be vie ewed on thee Business pages
off the Edexc
cel website.

12 © Pearso
on Education Ltd
d 2014. This ma
aterial is not copyright free.
4. Conttent guidan
nce

4. Co
ontentt guida
ance

Th
his section
n providess ideas and suggesttions for teeaching ap
pproaches s and is
no
ot intendeed to be prrescriptive
e. The spe
ecification should be
e referred to as
th
he authoritative souurce of info
ormation.

Them
me 1: Ma
arketing
g and pe
eople
Th
his section provides id
deas and suuggestions for teaching approach
hes for Theme 1
an
nd is not intended to be
b prescriptive. The specification
n should be
e referred to
o as the
au
uthoritative
e source of information.

1
1.1 Meeting customer need
ds
MMarkets aree made up of buyers and a sellers. Successful businesse es will be pa
art of
a market th hat is different in size and charac cter, and afffected by change.
c Within
mmarkets, cuustomers have needs and wants.. Needs like e water are
e unavoidab ble.
WWants are different
d in the sense that the co onsumer will have som me choice about
a
tthem. So a successful product orr service an nd therefore e business will most liikely
bbenefit from
m effective market res search to enable the business
b to provide
cconsumers with the ch hoices that meet theirr needs and d wants. Furthermore,, a
ssuccessful business
b wiill position itself in a market
m in such a way as to ensurre
eeffective sa
ales in whatt may be a very comp petitive environment.

1.1.1 The market

a The diffe
erence betw ween mass and niche markets
m sh
hould be considered, a and
students should be able to giv ve examples s, such as general
g spo
ortswear sh
hops in
contrast to fishing tackle
t shopps; what beeing in a diffferent type
e of markett could
mean in terms of market
m size and marke et share; an nd how brands can inffluence
the posittion of a bu
usiness with
hin its mark
ket.
b The adva antages and d disadvanttages of onnline retailin
ng to both consumers s and
businesses should b be explored
d. Markets tthat are subject to change — because
of changes in consu umer tastess, such as cconfectione ery and elec ctrical products, or
changes in technolo ogy — couldd be compa ared with fa airly static product ma arkets,
such as for
f staple fo ood produccts like eggs and milk.. The growtth of online e
retailing,, with the in
ncreased siignificance of companies like Am mazon, iTunes and
ASOS, ha as led to drramatic cha
anges in the e market. Students
S co
ould explorre how
companie es like HMVV and Wate erstones have respond ded to these changes.
c Competittion occurs when two or more bu usinesses act
a independently to supply
goods an nd services to the sam
me group off consumers. Competition can be e direct
or indirec
ct. Direct competition is when buusinesses produce
p sim
milar produc cts that
appeal too the same group of consumers.
c Indirect co
ompetition occurs whe en
different businesses s make or sell
s productts that are not in direcct competittion but
compete for the sam me consummer expendiiture; for example, a shop
s selling
g DVDs
might bee competing g with the local cinema.
Competittion from other
o busineesses will ty
ypically affe
ect decision
n making in
n terms
of the na
ature of ownership, the nature off the product/service offered
o and
d
product range,
r pricing policies
s and marke eting methods. Students could c consider
how an independen nt grocer may respond d to the arrival of a loc
cal branch of a
supermarket chain such as Tesco Metro, or how an independe ent hairdres
sser
might respond to th he promotioonal offers of a franchhise hairdre
esser such as
a
Toni & Guy.

© Pearson Education Ltd 2014.

2 This mate
erial is not copyrright free. 13
 4. Content gu
uidance

d Risk is so
omething th hat can be planned fo or – probabilities of ou
utcomes are e known
or at leas
st understoood or conssidered. In this
t way, risk taking is a conscioous
decision. Uncertaintty in busine
ess is cause ed by unexxpected ofteen external factors
outside of
o the businness’s contrrol, even th
hough these e factors ca
an sometim mes be
predictabble. For exa
ample, chan nges in thee environme ent such ass the Tsunaami in
Japan in March 201 11 are sourcces of unceertainty. An
nother exam mple is the
unexpectted change es in UK govvernment policy
p to en
nable greate er devolutio
on of
power in the lead up to the Sc cottish Refeerendum in September 2014.

1.1.2 Mark
ket research
a Product orientation
o is when a business prioritises a product’s design
d quallity or
performaance ratherr than meetting custommer preferences to guiide producttion and
marketin
ng decisionss. Apple iPh
hones, Gille
ette’s disposable razorr blades and the
Sony Waalkman are useful examples of prroduct orientation. The Audi car
companyy and ‘Chos sen by You’’ range of ASDA
A groce
eries are us
seful exampples of
market-oorientated products.
p
b Primary market res search data refers to obtaining
o daata first hand by the
business to match the
t specific
c needs of the
t businesss. Example es include surveys,
s
observattions, interv
views, test marketing and focus groups/con nsumer pan nels.
Secondary sources include ma arket reportts (such as MINTEL), governmen nt data
(such as NSO), inte ernet source de publications like Th
es and trad he Grocer.
Quantitative data is s numericall and can be analysed statistically. Effective e
market research
r will link the quantitative
q e with qualiitative findiings to help
p build
a picturee of likely cu
ustomer prreferences and
a behaviour, enabling a busine ess to
identify and
a anticipa
ate custom mer needs and wants. Effective market
m research
will: help
p to reduce risk; unde erstand consumer behaviour and quantify potential
consume er demand; understan nd how muc ch consume ers are prep pared to paay;
identify competitors
c s and how they
t operate; and the
e key features of the
business environme ent (SLEPT factors).
c The advaantages and d disadvanttages of prrimary research based
d on cost an nd
accuracyy should be explored to determin ne which miight be besst, given the
e size
of the bu
usiness, thee market annd the business context. Studentts should explore
sample and
a represeentation and samplingg size but not samplingg techniquees.
Studentss should alsso consider how bias occurs;
o for example, interviewer bias,
bias quesstions or re
espondent bias.
b
d Studentss should consider how ICT can be e used to support marrket research and
the adva
antages and d limitations to the business of websites,
w so
ocial networrking,
such as Facebook
F a
and Twitter,, and the nature of bu
usiness data
abases, succh as
Experian.com.
e Market segmentatio on is the divvision of a market into groups, each
e of which has
ve customer preferenc
distinctiv ces. Commo on groupinggs include age, gendeer,
income, hobbies/intterests, loc cation, ethnnic origin/cu
ulture, occu
upation and
d
lifestyle. Sport Englland is a us
seful sourcee to show market
m segmentation types.

1.1.3 Mark
ket positioning
a Market mapping
m reffers to evalluating bus
siness ideass and produucts/service
es by
setting out
o the features of a market
m or product on a diagram. Each axis
represennts two polaar features;; for examp ple: high qu
uality versu
us lower quuality;
mass verrsus niche market; mo odern versus traditionnal; functional versus
aesthetic
c. Market mapping
m can
n be used tot identify a gap in thee market or to
reposition a product. Students s should consider the value of market mapp ping to
start-upss and existiing businessses launching a new product/se
p rvice. Exam
mples of
different businesses s, such as Burberry,
B c
could be useed.

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b Students s should be aware of ways

w in whiich compannies gain an
n advantage over
their commpetitors inn a market, such as thhrough pricee, adding value,
v innovvation,
reliability
y, quality, reputation/
r image, adv vertising/marketing annd brandingg,
convenie ence and cu ustomer serrvice. Exam
mples of diffferent businesses, suc
ch as
Dyson, could
c be use ed.
c Product differentiat
d ion can be used as a route to providing a competitive
c
advantagge and refeers to how a business might distinguish its product/ser
p rvice
from commpetitors given its disttinctive fea
atures or th
hrough marrketing in a
different way to em
mphasise a unique
u selling point (U
USP). For example,
e Green &
Black’s chocolate
c is made withh both Fair Trade coco oa and suga
ar and othe
er
ingredien
nts.
d Added va alue is the difference between th he price thaat is chargeed and the total
t
cost of th
he inputs reequired to create the product/se ervice. It might be ach
hieved
through improving the produc ct/service ittself or improving the way consumers
perceive the produc ct/service.

1
1.2 The market
m
TThis section
n focuses on the intera action betw
ween buyers (consume ers) and se
ellers
((producers)) and exploores the facctors that afffect demand and sup pply, determ
mining
pprice levels and sales. The sensittivity of dem
mand to price changes and changes in
income prov vide opporttunities for demonstra ating quanttitative skillls.

1.2.1 Dem
mand
a The effecctive demand (desire backed by readiness to t pay at a particular price)
for produ
ucts and seervices is de
etermined b by more than price, but also a ra ange of
other fac
ctors: the nature,
n availability and
d price of competitors’ products anda
alternativ
ve brands; prices of complement
c tary produccts; the lev
vel of, and any
a
changes to, consum mer income; trends in consumer fashion, tastes and
preferences; adverttising and branding
b o inform, influence or encourage
to
demand and enable e repeat purchases (co onsumer lo oyalty); poppulation strructure;
external shocks, such as threa at of terroriism, war, disease
d and health sca ares;
the time of year and holiday periods,
p the
e weather and
a climate.

1.2.2 Supp
ply
a Supply re efers to the
e amount th hat produce ers are ablee to provide at a given price.
Supply iss determine ed by price as this incentivises businesses to t supply more
m in
anticipation of higher profits. There
T are many
m signifficant factors leading to
t a
change in supply, such as: the e costs of production,
p which may y push pricees up,
and redu uce potentiaal sales and
d profits so a business s may simp ply reduce output;
o
the introduction of new techno ology may mean costs s and pricess may fall; indirect
taxes suc ch as a rise
e in VAT maay increase e prices andd therefore reduce sup pply;
governm ment subsidies, by enabling costs of producttion to fall, should lead to a
rise in su
upply; external shocks s, such as poor
p weather conditions, typhoons,
drought and war, te end to reduuce crop yieelds or the availabilityy of productts such
as oil or commoditie es, which can
c lead to reductions in supply anda therefo
ore lead
to an inccrease in prrices.

1.2.3 Mark
kets
a The interraction betw
ween buyerrs and selleers should provide
p an equilibrium
m price
in a markket where demand
d an
nd supply are equal (mmarket clearing price).. Where
supply exxceeds demmand (surplus) this is often due to
t too high a price; where
w
demand exceeds su i because of low price
upply (shortage) this is es.

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b Studentss are requirred to draw

w demand and
a supply (market) diagrams to
demonsttrate the intteraction between suppply and deemand to give an equiilibrium
price and
d level of sa
ales/outputt and be ab
ble to demoonstrate:
• a risee in demand
d — shift off the demand curve to o the right — which le
eaves a
shortage at currrent price, so
s that pric
ce will rise and
a the equilibrium quantity
will in
ncrease
• a fall in demandd — shift of the deman nd curve to the left — which leav ves a
surplu o that price will fall an
us at current price, so nd the equilibrium qua
antity
will decrease
• a risee in supply — shift of the
t supply curve to th he right — which
w leave
es a
surplu us at current price, so
o that price will fall an
nd the equilibrium quaantity
will in
ncrease
• a fall in supply — shift of th
he supply curve
c to thee left — wh
hich leaves a
shortage at currrent price, so
s that pric
ce will rise and
a the equilibrium quantity
will decrease.
These chhanges will be linked to
t non-price
e factors co
onsidered within
w dema and and
supply. It
I is importaant for stud
dents to un
nderstand that a changge in the price of
the goodd leads to a movement along the demand or supply cu urve, not a shift in
the dema and or suppply curve.
Diagram 1

Diagramm 1 shows a positive shift

s in dem
mand which causes both prices and
quantity bought and
d sold to ris
se. Revenuue expands from P1 Q1 to P2 Q2.

Diagram 2

Diagramm 2 shows a positive shift

s in supply which causes
c price
es to fall fro
om P1
to P2 and
d quantity bought and
d sold to ris
se from Q1 to Q2. Revvenue chan nges
from P1 Q1 to P2 Q2.
Q

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4. Conttent guidan
nce

1.2.4 Price
e elasticitty of dem
mand
a Students
s are requirred to calcu
ulate price elasticity
e off demand:
% chang
ge in quanttity demand
ded
% change in price
b Price elas emand (PED) measure
sticity of de es the respponsivenesss of demand d to a
change in price. A steep
s dema and curve inndicates a product witth price ine
elastic
demand,, that is, de emand for the
t productt is not respponsive to a change inn price.
A shallow
w demand curve
c show
ws a produc ct that has price
p elastic demand, that is,
demand is responsive to a cha ce. Products with price
ange in pric e inelastic demand
d
tend to have
h few suubstitutes, are necessities, and/oor can be addictive; foor
example, petrol and d cigarettes
s. PED is always a neg gative number. A num mber
which is between 0 and 1, ie a decimal, means
m dem
mand is pricce inelastic..
A numbe er between 1 and ∞ means
m dema and is price
e elastic.
c Factors that
t influence PED include the av vailability of substitute
es, the freq
quency
of purchaase, the rellative price/expense of
o a productt, whether the produc ct is a
luxury orr necessity and time.
d PED is ann importantt tool in determining pricing
p stra
ategy: lowering pricing
g
policies (competitiv
( ve pricing) are
a more likely where PED is elastic; settingg a high
price (sk
kimming) is more likely ED is inelastic.
y where PE
e If PED is inelastic th
hen a rise in price incrreases total revenue and
a a fall in
n price
reduces total revenue; if PED is elastic th hen a rise in price reduces total revenue
r
ncreases to
and a fall in price in otal revenue e.

1.2.5 Inco
ome elasticity of demand
a Students ulate income elasticity
s are requirred to calcu y of demand
d:
% chang
ge in quanttity demand
ded
% change in income
b Income elasticity
e off demand (YED) meassures the re
esponsiveneess of demand to
a change
e in incomee. A positive
e number means
m the product
p is normal;
n a negative
n
number means the product is inferior.
c Factors influencing YED include whether the produc ct is a luxurry, necessitty or
inferior good,
g and expectation
e ns of change
es in incom
me, such as loss of jobb,
promotio on, recessio
on or econo
omic growthh.
d YED is an n importantt tool in telling a busin
ness what their
t produucts/service
es
should be in order to t increase sales: if a business such as Poundland spe ecialises
in inferio
or goods witth negative e YED, thenn sales can be high duuring period
ds when
incomes are falling (recession)). Howeverr, given a lo ong-term trrend for inc
comes
to rise, this is not so good for producers of inferior goods. In this
t case,
producerrs/sellers off inferior go
oods may diversify
d by
y increasing
g their rang
ge of
products s to include some with growing markets,
m such as ASDA A providing the
premium m price and quality ‘Extra Special’ range of foods.
f

1
1.3 Marke
eting mix
x and stra
ategy
IIn this topic
c, the approopriate natture of the marketing mix (the 4Ps – produc ct,
ppromotion, price and place)
p for new
n or existing produccts or services should be
eexplored. Students
S should also consider how w social tre
ends may affect
a the
mmarketing mix;
m the Bo
oston Matrix, the prod duct life cyc
cle and its related
r sale
es
eextension strategies,
s w
with reference to prodduct and prromotional methods; and a
mmarketing strategies
s t
that relate to
t niche, mass,
m business to business (B2B)) or
bbusiness to consumer (B2C) marrketing, and d the beneffits and lim
mitations of these
sstrategies.

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1.3.1 Prod
duct/serv
vice desig
gn
a Students s could cons
sider exam
mples of standard or be espoke product or serrvice
designs that
t meet identified market
m need ds, such as the Dyson bagless vaacuum
or a full wedding
w pa
ackage, res
spectively.
b Examples of how diifferent bus sinesses adapt their design mix tot reflect so
ocial
trends shhould be ex xplored herre; for exam
mple, the efficiencies that
t can be
e
achievedd from chan nging the ty
ype of mateerials and technology
t used in ma
aking
productss. Toyota is replacing robots
r with
h skilled hummans to ennsure fewerr
defects, better quallity and less waste. Muddy Boots s Foods is ensuring
e
traceability for its ra
ange of beeef burgers by using kn nown suppliers of beeef and
other ing
gredients. Starbucks
S is
s an exampple of a global brand that
t also makes
use of etthical sourccing.

1.3.2 Bran
nding and
d promotion
a Types of promotion include pe ersonal selliing, direct marketing, advertisingg,
public relations, spo onsorship, sales prommotions (suc ch as buy one
o get one
e free,
price disc
counts, mo oney-off cou upons, sam
mples/giveaways, spec cial events and
point of sale)
s and digital
d commmunications s (online addvertising,
mobile coommunicattions, advergaming, social media a, consume er-generateed
content and
a viral sttrategies). Students
S sh hould exploore the advvantages annd
disadvanntages of ea ach type too businesses.
b Types of branding include man nufacturer//corporate branding
b su
uch as Nesttlé,
product branding
b suuch as KitK
Kat and own n brand pro
oduct (usua ally superm
market)
such as ASDA
A chocoolate. Students shouldd consider the advanttages and
disadvanntages of ea
ach type off branding to
t the producer and co onsumer.
Studentss should als
so explore rebranding
r – a marketing strateggy in whichh a new
name, teerm, symbo ol, design or
o combinattion is creatted for an established
e d brand
with the intention of
o developinng a new, differentiate
d ed identity in the mind
ds of
consume ers, investo
ors, and/or competitorrs.
c Branding g is a way to
t add value e, thereforee enabling higher pric ces to be ch
harged,
which can reduce PED to make e price elas
sticity of de
emand less elastic or even
e
inelastic;; for examp
ple, McVitie
e’s biscuits such as Ho obnobs. Stu udents could
consider brandnomers here, such as Hoo over, Pritt Stick,
S Sellottape, Tarmac and
Biro.
d Brands are
a strength hened throuugh unique e selling poiints (USPs)) and produuct
differentiation; for example,
e H
Häagen-Daz zs ice creamm using rea al dairy milk
k and
cream, and
a a rangee of premium ingredients and flav vours such as Strawberry
Cheeseca ake or Baileeys. Brandss such as premium
p car companie es like BMWW can
be built through
t advvertising on
n national TV.
T Sponso orship can also
a be used; for
example, the spons sorship of the FA Cup by Budweis ser at £9m-a-year bettween
2010 and d 2014. Stu udents shouuld also connsider how social med dia, such ass links
and endo orsements on Faceboo ok, is used to build braands.
e Viral marrketing inclludes videoo clips, interactive Flas
sh games, advergame
a es,
ebooks, brandable software,
s im
mages, tex xt messages s, email me
essages and web
pages. Social
S media a, such as Facebook,
F s
shows the sharing or exchange ofo
information and ide eas in virtuaal communities and ne etworks. Em
motional brranding
is the pra
actice of buuilding bran
nds that appeal directlly to a cons
sumer's emmotional
state, ne
eeds and as spirations; for example, with clotthing, alcohhol, confecttionery,
cars and toiletries.

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nce

1.3.3 Pricing strate

egies
a (a and b) Students should kno ow, understtand and be e able to appply/justify
y the
most app propriate pricing strategy for a good
g or serv
vice. For ex
xample, in
launchingg a new prooduct with a strong brrand identitty, it may be
b appropriate to
use a price skimmin ng strategyy in order to esearch and developm
o recover re ment
costs; for example, Sony PlayStation 4 or o the Apple e iPhone 5cc and 5s.
c ales by com
Online sa mpanies suc ch as Tescoo and Waitrrose for ord
dering groce
eries
and price
e compariso
on sites forr services such as car insurance have createed a
climate of
o competitive pricing..

1.3.4 Distr
ribution
a Students
s should be aware of the
t differen
nt types of distribution
d n channel th
hat
exist:
• Four stage – ma
anufacturerr/producer to wholesaler to retailer, then
consu
umer. Exam de groceries and confe
mples includ ectionery.
• Threee stage – manufacture
m er/producerr to retailerr, then cons
sumer. Exa
amples
includ
de electrica
al goods and cars.
• Two stage
s (direc
ct marketinng, no interrmediary le
evels) –
manu ufacturer/prroducer to consumer. Examples include facctory outlets and
holida
ay companies that do not use tra avel agents
s.
b The choic
ce of distrib
bution chan
nnel used will
w depend on the natture of the
product, the market, and the nature and size of the
e business.

1.3.5 Mark
keting strrategy
a Studentss should explore the stages of the product life cycle — from
developmment, to inttroduction, growth, maturity/saturation andd decline — as well
as the im
mplications for cash flo
ow and marrketing of the
t productt/service att each
stage.
Diagram 3

b This secttion covers the nature

e and purpoose of produuct extension strategies such
as product developm ment/modifications, foor examplee the Apple iPhone 5 to the
iPhone 5s or 5c; annd how prommotional methods can n be used too postpone the
decline of
o sales, succh as the Kellogg’s
K rebranding and re-launcch of its Nu
utri-
Grain bar.
c Studentss should explore the Boston
B Matrrix, be able to identify
y each categ
gory —
cash coww, problem child/questtion mark, star and do og — and understand
u the
implicatio
ons for cash flow and marketing of the prod duct/servic
ce in each
categoryy; for example, the reb
branding off a ‘dog’ pro
oduct or oc
ccasional
discountiing for cash
h cows.

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d Marketing strategiees vary depending on the t type off market. Sellers in maass
markets are more likely to ma ake use of expensive
e n
national television
advertising given afffordability and lower average marketing
m osts; sellers in
co
niche maarkets are more
m likely to focus onn effective customer service
s and other
ways to improve cu ustomer loy yalty, such as understa anding custtomers,
introducing a loyalty scheme which
w offers discounts s repeat purchases
s or targets
and are proactive.
p A awarene
An ess of businness to bussiness (B2BB) and businness to
consume er (B2C) ma arketing is required.
e Studentss should have an awarreness of cuustomer loy
yalty metho
ods, such as
a
effective customer service, loy
yalty cards and saver schemes.

1
1.4 Managing people
IIn this section the focu
us is on human resource issues, with considderation off how
eemployees can be effe ectively rec
cruited, dep
ployed, developed and
d trained,
mmotivated, managed and a led.

1.4.1 Apprroaches to
t staffing
g
a Employees have skills and com mpetencies that businesses shou uld value. Staff
S can
be consid dered as ann asset sinc ce they conntribute to the
t value of
o output, whether
w
this is through prov viding added value to a product by b supporting the
manufacturing proc cess or throough effectiive customer service. Employees s are
more like ely to be prroductive iff the busine
ess invests in them. Employees area also
a cost to businesses s in terms of recruitmment, traininng, remuneeration, wellfare
and even n severance e. Studentss should consider the distinction between wages
w
and salarries, and thhe implications of the national minimum wa age for a bu
usiness.
b Flexible working
w can mean wo orkers beingg prepared to take on a range off
different tasks within the business or pro oduction pro
ocess as many
m employees
will be multi-skilled
m . Employee es could acc
cept a rang
ge of emplooyment patterns,
including
g full-time and
a part-tim
me or zero hours conttracts, tempporary as well
w as
permane ent jobs, or working fle exitime or shift work. Businessess may also agree
for emplooyees to work from ho ome. Stude ents should
d consider the
t advantaages
and disaddvantages of flexible working
w to employerss and emplooyees.
c Dismissa
al (referred to informa
ally as firing
g or sackingg) is the termination ofo
employmment by an employer against
a the will of the employee. Employees are
made reddundant wh hen a busin
ness needs to reduce the t size of its workforrce or
even clos
se. Redunddancy can be
b voluntary y.
d Individuaal approach
hes to emplloyer/emplo oyee relatio
onships reffer to when a
single woorker negottiates their working coonditions and pay withh managem ment.
Collective
e bargainin
ng refers too the negotiiation betw
ween employ yees and
workforcce representatives; forr example, this could be through h a trade un
nion
such as UNISON.
U Trrade unions s act to pro
otect and im
mprove the economic and
working conditions for their members.
m

1.4.2 Recr
ruitment, selection
n and training
a The recru
uitment pro ocess includ
des the app plication, in
nterview an
nd other sellection
procedurres, such ass assessme ent days annd in-tray exercises.
e Students
S should
consider whether businesses should
s recruit for positive attitudde and/or fo
or skills,
and the distinction
d between jo ob specification and jo ob description.
b Recruitmment costs businesses
b money; for example, advertisingg, expenses,
agency fees
f and staaff appointing. Studen
nts should explore
e the
e significanc
ce of
labour tu
urnover ratees to a bus
siness’s recruitment an
nd training costs, and the
effectiveness of training.

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4. Conttent guidan
nce

c Induction
n is the fam
miliarisation
n with the company
c annd its backg
ground, policies,
health an
nd safety procedures. Students should
s also understand what is meant
m
by on-the-job and off-the-job
o training, and the benefits and drawbacks oof each
approachh to a busin
ness.

1.4.3 Orga
anisationa
al design
a (a to c) Students
S sh
hould consider how a business might
m organnise the num
mber of
y have recrruited in order to impllement business ideas
staff they s and achieve
objectivees, and how
w such a strructure may affect thee managem ment and
erations and communications.
effectiveness of ope

1.4.4 Motivation in theory and

a practiice
a Motivated employee es are often
n more pro eliable and loyal, and labour
oductive, re
turnoverr rates shou h staff motivation.
uld be considered with
b Studentss should explore the significance of motivattion theories to help ex
xplain
why diffe
erent businesses have e different staff
s benefits and how
w businesses meet
the range of needs,, such as ‘w
well done booards’ and appraisals for Masloww’s
esteem needs.
n Additional exammples can b be used to explore a variety
v of
motivatio
onal theorie
es and diffe
erent persppectives.
c (c and d)) The effecttiveness annd significannce of finanncial and no
on-financia
al
incentive
es to improv ve staff performance can vary be etween workers and different
d
types of job and buusiness. This should be e explored alongside motivation
m
theories. Students should
s also
o consider the
t processses and techniques of how
managerrs can get the
t best out of their sttaff, often to
t improve productivitty or
motivatee. This shou
uld again be e linked to motivation theories.

1.4.5 Lead
dership
a Studentss should explore the distinction between
b maanagementt and leadership.
Leadershhip is aboutt having a vision,
v sharring that vis
sion with others and
providing
g direction. Manageme ent is the day-to-day
d organisatioon of the bu
usiness,
including
g staffing.
b Students
s should explore types s of leaders
ship style and how eac ch might be
e more
appropria
ate according to circumstances, nature and d size of the
e business.

1
1.5 Entrepreneurs
s and lead
ders
TThis topic fo
ocuses on how
h people
e set up andd succeed in
i operatingg their ownn
bbusiness an nd the cons
straints they
y might fac
ce in doing so. Studennts will also
o
cconsider thee people sk
kills and personal qualities that entrepreneu
e urs will mos st
likely need to succeed; what driv ves people to set up thheir own buusiness; buusiness
oobjectives; and the vaarious forms of busineess ownersh hip and the choices wh hich
ttypically fac
ce owners of
o a business.

1.5.1 Role of an entrepreneur

a Being aw
ware of the role of an entreprene
e eur is funda
amental andd students should
be familiar with how et up and create their own businesses.
w people se
b s should als
Students so explore what
w it take
es to run, expand
e and
d develop a
business.
c Studentss should consider the entrepreneeurial qualitties employyers in large
er
organisations mightt demonstrrate; for example, crea ative, imag
ginative andd
ve employe
innovativ ees, self-con
nfident sale
es managerrs and bonu uses to staff who
provide innovative ideas.

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d Barriers to entrepreeneurship in
nclude: enttrepreneurial capacity, access to
finance, lack of training/know how and fe ear of failurre/lack of confidence.
c
e Risk and uncertaintty was intro oduced in 1.1.1d.
1 Risk
k is something an
entrepreneur can essentially planp for. Pro
obabilities of
o outcome es are know wn or at
least undderstood orr considered d. Risk takiing is a con
nscious decision and,
typically,, the greateer the risk the
t greaterr the rewarrd in busine ess. For exaample,
if an entrrepreneur decides
d to develop
d anniche produuct/service business without
w
any formm of markett research or o test marrketing (pro oduct orienttation) thenn this
would be e considered more risk ky yet could d be more profitable asa a result as
competittion is less likely. The classic exa ample of rissk, of course, is when
someone e initially de
ecides to seet up a bussiness but cannot
c be sure they will
w earn
as much income forr themselve es as a solee trader or partner tha an they ma ay have
done from m regular employmen
e nt. For exam mple, an ex xperienced teacher ma ay
decide too retire early from his or her job at a school to risk his s/her regulaar
income from
f a salary to becomme an educ cation consuultant in the hope of
receivingg a similar o or greater income
i from
m fees. Ano other exam mple when in
employm ment is thatt taking a salaried job guarantees a fixed, regular
r inco
ome
whereas commissio oned based work involves risking g that know wn regular income,
since succh remunerration depe ends on outtput or hours worked, for greaterr
reward.
Uncertainnty in businness is caus sed by uneexpected, offten externnal, factors outside
of the en
ntrepreneurr’s control even
e though they are sometimes s predictable.
Changes in the env vironment area sources of uncertainty – such h as the Tsu unami
in Japan in March 2011
2 – as are economic factors. For F examplle, commod dity
price sho
ocks, chang ges in intere est or exch
hange rates s, health scaares, the arrival of
competittors, politicaal factors, and
a changees in local or
o national legislation.. Unlike
risk, uncertainty is not objective and doe es not assume comple ete knowled dge of
ves. Recent examples
alternativ s include the horse me eat burger scandal in January
J
2013 or sudden cha anges in UK K governme ent policy to enable greater devo olution
of powerr in the wee ek before th he Scottish Referendu um in Septe ember 2014 4.
Studentss could cons sider a wide range of examples here; h for ex
xample, ho ow did
the histo
orically relattively poor performan nce of Manc chester Unitted affect ffast
food business profitts or merch handise proofits in the 2013-2014
2 football se
eason?

1.5.2 Entre
epreneurrial motiv
ves and ch
haracteristics
a Entrepreneurial cha aracteristics
s include: creativity,
c hard
h workin
ng, resilienc
ce,
initiative, self-confid
dence and risk taking. Skills mig ght include:: communic cation,
team working, prob blem-solving, organisa ation, nume eracy and information
technology.
b Reasons why people set up bu usinesses in
nclude: inde
ependence, work–life
balance, flexibility, more incom
me, ethical reasons, social
s purpo
ose and cha
allenge.

1.5.3 Business obje

ectives
a (a and b) Profit max ximisation is generally
y the aim of
o most bus sinesses in order
de the capittal needed for expansion and gro
to provid owth — or even
e surviv
val — to
enable th
he replacem ment of machinery or equipmentt which has been subje ect to
depreciattion. In the
e short term
m, survival through efffective cash flow
managem ment is more important than gaining an inc come or see eking profitt
maximisa ation.
c In order to support profit max ximisation, given that total reven
nue minus total
t
cost equaals profits, it is often necessary to
t support this aim wiith goals suuch as
sales maaximisation//an increas se market sshare; cost efficiencies
s to ensuree costs
are at their lowest; and emplo oyee welfarre and custoomer satisffaction to ensure
e
that prod
duction and d sales are at their mo ost effective
e.

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4. Conttent guidan
nce

1.5.4 Form
ms of business
a Businessses that start out as in
ndependentt sole tradeers often ex
xpand and develop
d
into othe
er business forms. This transform mation is de
etermined byb the business
owner, th he product,, the nature
e and size of the markket, and the level of
profitabillity.
b Students s should als
so be familiiar with the
e growing trrend in the setting up
p
lifestyle businesses as people demand fle exibility and
d a work–life balance..
c Students
s should explore growtth to PLC and
a stock market
m flota
ation in orde
er to
secure more
m finance
e, share ris
sks and exttend decisio
on making.

1.5.5 Business choices

a Opportun
nity cost is the value of
o the next best altern
native foreg
gone.
b A trade-o
off occurs when
w two things cannot be fully achieved; having
h morre of
one thing
g may mea an having le
ess of anoth
her. These concepts could
c be stu
udied
with resp
pect to business decisions regard
ding the choice of, for example:
product, market ressearch, bus
siness owneership, prommotional methods,
m pricing
strategy and quality
y.

1.5.6 Moviing from entrepreneur to le

eader
a Students s should consider the difficulties in moving from
f an entrepreneurr to a
leader. These
T mightt include th
he need to delegate, trust
t and ve
erify, learniing to
listen, ha
ave an open mind, be less reactive and dev velop emotiional intellig
gence.

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Them
me 2: Ma
anaging busines
ss activities
Th
his section provides id
deas and suuggestions for teaching approach
hes for Theme 2
an
nd is not intended to be
b prescriptive. The specification
n should be
e referred to
o as the
au e source of information.
uthoritative

2
2.1 Raisin
ng finance
SStudents arre expected d to undersstand the diistinction between inte ernal and
eexternal sources of finnance and be b able to ascertain
a which
w sourcees of financ
ce are
ssuitable for different situations
s and different types of business
b orrganisation.
FFor example, a sole trrader would d not be able to access s share cappital becausse of
tthe legal status of the organisatio on. Equallyy, a start-upp business would not be
aable to sell assets or use
u retained d profit, sin
nce the bus siness has only
o just co
ome
into existennce. Studen nts should beb able to assess
a whic ch source(ss) of financee are
mmost appliccable to any y given situ
uation and explain
e the
e reasons behind theirr
sselection. More
M often than
t not th
here will be a range orr blend of sources of finance
tthat the stu
udent could d choose; fo or example, purchasin ng raw materials could d be
ffinanced byy trade creddit or an ovverdraft, buut is unlikely
y to be funded via a bank
b
loan. Stude ents should be able to articulate advantages
a s and disaddvantages ofo
vvarious metthods and sources
s of finance.

2.1.1 Internal finan

nce
a Personal savings woould be an appropriate source off finance for a sole tra
ader or
partnership. The am
mount of fin
nance that can be rais
sed from th his method is
dependent on the personal
p sav
vings of the
e owner.
b d profit wou
Retained uld be available to all types
t of bu
usiness so lo
ong as the
business is profitable and has not recently started up.
u More offten than no ot
retained profit is ins
sufficient on its own to allow a business
b to expand.
c Asset salles can be used by all businesses a they are not a startt-up
s, so long as
business (since the business will
w have no o assets). Students
S may questionn
whether a business s which is efficiently ru e any surplus assets to sell
un will have
and whetther asset sales will generate sufficient fina e business to
ance for the
pursue itts objective
es.

2.1.2 External finan

nce
Sttudents sho
ould be able to disting
guish betweeen sourcess of finance
e and methods of
nance. For example, a business angel
fin a may provide veenture capittal for a bus
siness
orr crowd fun
nding could also be a potential
p so
ource of venture capital. Studentts
sh ble to understand the advantages and disad
hould be ab dvantages of
o various sources
s
annd methods s of finance
e.
a Studentss should be able to ide
entify possible sources
s of finance
e for a business
dependinng on a ran
nge of scenaarios and be
b able to explain
e the reasons beehind
the sourc
ce or sourc
ces of financ
ce which thhey have chhosen.
b Studentss also need to be able to select methods
m of finance tha
at are appropriate
to a give
en situation and busineess organissation. For example, a company would
not use share
s capita
al to fund the
t short-te
erm purcha ase of raw materials.
m

2.1.3 Liabiility
a Students s are expeccted to have e an unders
standing off unlimited and limitedd
liability and
a be ablee to recogniise which tyypes of bus siness organisation lim
mited
and unlim mited liabiliity applies to.
t Limited liability sig
gnificantly reduces
r the
e risk
faced by the shareh holders (ow wners) whic
ch, in turn, will allow the
t businesss to
raise more finance.

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4. Conttent guidan
nce

b Studentss should be able to rec cognise which sources s of finance

e are applicable to
companie e trader/partnerships. Students are
es and sole a not exp pected to knnow
what a limited liabillity partnerrship (LLP) is. This sec
ction of the
e specification
could be taught alongside inte ernal and exxternal finaance (2.1.1 and 2.1.2)).

2.1.4 Planning
a Students s are not reequired to know
k the fo
ormat of a business
b plan and will not be
asked to produce a business plan.
p Students will neeed to know what a bus siness
plan is, and
a its role in reducing
g risk to baank or potential investtors, allowing the
business access to a wider ran nge of meth hods/sourcees of financce. This couuld
result in a lower intterest rate (if a loan was
w being applied for) or a reduced
percenta age of total shares in issue being given to a venture ca apitalist.
b Studentss will not be
e asked to produce a graph
g of ca
ash flow over time, buut could
be askedd to comple ete a part completed cash
c flow ta
able and calculate anyy
missing figures.
f Alternatively a student may
m be giveen a diagra
am or table of
figures and they will need to interpret the cash flow
w implications to the
business.
c Studentss should be able to rec
cognise tha at, in dynam mic markets, cash flow
w
forecasts
s may be off limited us
se. Also, thee longer the period off time the cash
c
flow has been calcu
ulated for, the
t less like
ely it is to be
b accurate
e.

2
2.2 Financial plann
ning
TThis topic is
s linked to 2.1 in that financial planning is one
o method d that helps
s to
rreduce the risk of business failurre. In turn, this helps to
t increasee the range of
mmethods/so ources of fin
nance that the busine ess can gainn access to and helps to
mminimise thhe disadvan ntages of acccessing thhose sourcees of finance
e, (for exam
mple,
lower intere est rates on
n a bank loan).

2.2.1 Sales
s forecas
sting
Caalculations are not req
quired in 2..2.1; quanttitative sale
es forecasting is coverred in
3..3.1.
a The impo ortance of sales
s foreca
asts should
d be linked to cash flow
w in 2.1.4.
Sales forrecasting will
w allow the e business to decide whether
w it needs
n to inc
crease
productiv ve capacity
y and emplo oy more woorkers in th
he future. Alternatively
A y sales
forecasting could be e used to ascertain
a whhen a busin
ness should d start prom
motional
activity.
b Students s need to knnow how coonsumer trrends, econnomic variables and acctions of
competittors could cause
c sales forecasts to
t increase or decreasse. Studentts could
be given a business s scenario and
a then haave to decide which fa
actors could
d cause
sales to increase orr decrease and
a the rea
asons why. With the UK
U economy y in the
recovery y phase of the
t econommic cycle, bu
usinesses such
s as Pouundland or Aldi
A
could be used to illu
ustrate howw changes in
i economic variables could caus se sales
to fall.
c Although h the risk off producing
g inaccurate
e forecasts can be red
duced, forec casts
are not guaranteed
g and busineesses opera
ating in dyn
namic markkets will fin
nd it
significan
ntly more difficult
d to forecast acc
curately bey
yond a veryy short perriod of
time in the future.

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2.2.2 Sales
s, revenu
ue and co
osts
a Students
s are requirred to calcu
ulate sales volume
v and
d sales reve
enue:
Sales
s volume = Sales reve
enue
Selling priice
S
Sales revenu
ue = selling
g price x sa
ales volume
e
b Studentss need to be e able to id
dentify the difference between fixxed and variable
costs andd be able too identify which
w costs are fixed and
a which costs
c are va
ariable.
Fixed cossts should include
i ann
nual interesst on a bank loan, whiich can be
calculate
ed by applying an interest rate to o the size of
o a given looan; eg £100,000
loan at 10%
1 per annum (p.a.)) gives an interest cos st of £1000 p.a. Studeents
may be given
g variable costs per unit (ave erage variaable costs, AVC)
A and be
b
required to calculatte the total variable co
ost by multtiplying the AVC by the e
quantity produced.
Calculation of reven
nue and cos sts could be
e part of a larger ques
stion that requires
r
students to calculatte the profit of a busin
ness over a period of time.
t

2.2.3 Brea
ak-even
a Students
s may be re equired to calculate
c th
he contributtion genera
ated from selling
s a
good or service
s from
m either a break-even n chart or from numerrical data.
Conttribution = selling pric
ce – variable cost per unit
b ak-even point is where
The brea e total costss are the sa
ame as tota al revenue..
Students
s should be able to ide
entify the break-even
b level of output on a
break-ev
ven diagram
m, but they y will not be
e required to
t draw a break-even
b chart.
c To calcullate the bre
eak-even po
oint using contribution
c n:
Total fixe
ed costs
Contributio
on per unit
d The marggin of safetty is the diffference between the actual leveel of output and
the break-even leve el of outputt. It shows by how mu uch output can fall before the
business reverts baack to the break-even
b level of output.
e Studentss could be provided
p wiith a pre-drrawn break
k-even charrt and be assked to
use this information n to identify
y revenues, fixed and variable co
osts, profits
s and
losses att specified levels of ou
utput.
f The breaak-even mo odel has a number
n of limitations
l that reducee its use in the
real world. These limmitations innclude the assumption ns of the model
m being too
unrealisttic and the fact that it is only rea
ally useful fo
or a busine
ess that ma akes a
single prroduct.

2.2.4 Budg
gets
a The purp
pose of budgeting as a planning, forecasting
g, commun
nication and
d
motivatio
onal tool sh
hould be co
onsidered here.
b Studentss are requirred to undeerstand the difference between historical
h bu
udgeting
(using cu
urrent finanncial figures
s) and zero
o based buddgeting (using figures based
on potenntial perform
mance).
c Students
s should be able to perform a bassic variancee analysis on
o a set of figures
by comparing budgets with acctual figures y positive ((favourable) and
s to identify
negative (adverse) variances.
d Studentss need to co
onsider the
e difficulties
s of historic
c and zero based
b budg
geting
techniques and the need for budgets to be b realistic and flexible enough to
t cope
with changing circumstances.

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4. Conttent guidan
nce

2
2.3 Managing finance
TThis topic considers thhe differentt ways in which profit can be mea asured and d the
ddistinction between
b ca
ash and proofit. Studennts should be
b familiar with statemments
oof comprehensive inco ome and sta atements of
o financial position. There are lin
nks
in this topic
c to 3.5.1 (Interpretattion of finan
ncial statemments) and 3.5.2
((Ratio analyysis). Accou
unting ratioos are detailed in Appendix 4 in the
t specific
cation
((page 39 off the AS and page 53 of the A lev vel specification).

2.3.1 Profiit
a The distinction betwween gross profit, ope erating proffit and profit for the ye
ear
(net proffit) should be
b considerred. Studen nts are exppected to caalculate grooss,
operatingg and profitt for the ye
ear using in
nformation from a com mpany’s sta atement
of comprrehensive in ncome. The e following formulae should
s be used:
Gross profit = revenue – cost of sales
ng profit = gross profit – other operating ex
Operatin xpenses
Net profitt = operating profit – interest
Appendixx 4 on pagee 53 of the specificatio
on provides
s a summary of the re
equired
accountin
ng ratios.
b To measure profitabbility, stude
ents will be
e required to e the gross profit
t calculate
margin, operating
o p
profit margin and the profit for th
he year (neet profit) margin.
m
Students
s will need to
t be able to t extract informationn from a sta
atement of
comprehensive incoome or a ta able.
Gross proffit margin = Gross pro
ofit x 100
Revenu
ue
Ope
erating proffit margin = Operating
g profit x 100
1
Reven
nue
Net proffit margin = Net profitt x 100
Revenue
Studentss should intterpret, dra
aw comparisons and comment on n what the
calculate or these profitability ratios
ed figures fo r meann for a given business.
Studentss will not be
e expected to compile e their own statement of compreh hensive
income.
Studentss should consider the ways
w in whhich the bus
siness could
d improve its
profitabillity using methods
m tha
at will eithe
er increase revenue orr decrease costs.
This sub--topic links with 2.3.22 and 2.3.3. Students should con nsider the
distinctio
on between cash and profit,
p in th
hat profit is recorded straight
s away after
a sale, whereas
w cas
sh inflows and
a outflow
ws will be reecorded afte er the resppective
debtor and creditorr periods ha ave elapsed d, allowing the profit to
t be realise ed in
cash termms. Studen nts will be expected
e to
o understan nd the impoortance of cash
c
flow in preventing a business from failing g. Following g on from the
t cash flo
ow
exercise in 2.1.4, sttudents cou uld re-run a cash floww table takinng into acco ount
debtor and creditorr periods to examine the cash flo ow implications of acce epting
orders annd to highliight the diffference bettween cash h and profitt.

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2.3.2 Liquidity
a Studentss should understand what
w a state
ement of fin nancial pos
sition showss and
be able to
t use it to calculate the liquidity
y position of a given business. Th hey will
need to be
b able to extract
e the informatio on from the statementt of financia al
position and calcula
ate the currrent and accid test ratio
os, using th
he following
g
formulaee:
Curre
ent ratio = Current as
ssets
Cu
urrent liabilities
A
Acid test rattio = Curre
ent assets – Inventory
y
C
Current liab
bilities
Students s will not be
e expected to compilee a statemeent of financ
cial positionn, but
will be ex
xpected to know whatt the compo onents of the stateme ent of financial
position mean. They y should be
e able to ca
alculate andd interpret liquidity ratios for
different businesses s and expla
ain ways in which cashh flow/liquiddity in a bu
usiness
could be improved.
b Studentss should know the cyc cle of workinng capital and
a why ca ash is imporrtant to
the busin
ness. There e are links to
t sub-topic cs 2.3.1 (th
he differenc
ce betweenn cash
and profiit) and 2.3..3 (busines
ss failure) here.
h Differe
ent businessses can opperate
successfu
ully with different cash flow requ uirements.

2.3.3 Business failu

ure
a Potential causes of business fa ailure that stem
s from inside the business innclude
ciency, marketing and
poor effic d failure to innovate. External
E fac
ctors mightt
include economic
e reecession annd a strengtthening pound, reducing export
demand. The cause es of failure
e can then be
b further sub-divided
s d into financial and
non-finanncial factorrs, such as poor comm munication and
a bad maanagementt of
working capital.
Studentss should be able to explain the different cau
uses of business failurre and
recognisee that some causes off failure are
e more impportant thann others forr
certain businesses.
b Students could
c resea
arch the cau
uses of failu
ure for two
different businesses
s, such as Modelzone
M and Blockb
buster.

2
2.4 Resou
urce managementt
TThis sub-theme focuse es on methods of allow wing the buusiness to operate
o at
mmaximum efficiency
e in
n order to minimise
m th
he average total cost of
o productio on.
IIt also cons
siders differrent stock control
c (inv
ventory) tecchniques with
w a view point
p
ttowards ma aximising th he use of th
he business s’s resource
es. Quality is also
cconsidered since this should
s not fall as a co
onsequence e of improveed efficienc cy.

2.4.1 Prod
duction, productiv
p ity and effficiency
a Students
s should be aware of the
t differen
nce between
n different methods of
productio
on and the reasons whhy a product may be produced using
u differe
ent
methodss.
b Productivvity is defin
ned as outpput per inpu
ut (person oro machine e) per hour.. This is
not to be
e confused with production, whic ch is the tottal amount of output
produced d in a time period. Stuudents shou uld be able to recognise and exp plain
factors th
hat will lead ved productivity within
d to improv n a busines
ss, the pote
ential
drawbacks of some of the metthods and understand
u d the link be
etween
productivvity and competitivene ess.

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4. Conttent guidan
nce

c Efficiency
y is maximised when units of output are prroduced at minimum u unit or
average total cost and
a studentts will need
d to be able n reasons as to
e to explain
how a bu usiness cou
uld improvee its efficien
ncy. Labourr intensive production is
where labour is prim d to produce the good or service and capital
marily used
intensivee production
n is where machines area primarily used to produce
p the
e good
or service.

2.4.2 Capa
acity utilisation
a Studentss should be able to callculate capa
acity utilisa
ation as a percentage
p of
maximum m possible output. If a factory cu
urrently prooduces 40,0 000 units but
b has
a maximum capacitty of 100,000 units, itts capacity utilisation can
c be calc
culated
as follow
ws:
4
40,000 x 100 = 40%
1
100,000
b Implications of under-capacity y utilisation include hig
gher fixed costs
c per unit,
under-motivated staff, a negative brand image (forr example, empty seatts in a
restauran nt). Howevver, there could also be some ben nefits in tha
at there is
sufficientt space for the factory
y to meet new
n orders and mainte enance and d repair
of machines can be e scheduled more easily.
Problems s of over-uttilisation off capacity in
nclude incre
eased overrtime costs,,
mistakes s in producttion, the inability to sc chedule maachine mainntenance and the
inability to accept new
n orders..
c Capacity utilisation can be imp
proved thro
ough factorrs such as competitors
c s exiting
the mark
ket, balanciing seasonaal demand and improv ved marketting.

2.4.3 Stock controll

a Studentss will not be
e required to
t draw a stock
s contro
ol diagram,, but may b be
asked to calculate figures
f and describe what
w the sto
ock control diagram is s
showing.. For examp ple, studennts might bee asked to calculate thhe size of specific
s
orders, id
dentify the re-order le
evel of stoc
ck, identify the level of buffer sto
ock and
calculate
e the lengthh of time stock takes to
t arrive aftter re-ordeering.
In this ex
xample, thee stock that arrived in
n week 8 to
ook 5 weeks s to arrive as the
re-order level of sto
ock was rea
ached in we eek 3. The order that arrived in
week 8 comprised
c 7 units (95-25 units)).
75

Diagram 4

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b Studentss should be able to explain the ad dvantages and disadv vantages off
holding buffer
b ks for differrent businesses in diffferent mark
stock kets.
c The stock-in and stock-out cos sts that res
sult from po
oor stock control for different
d
businesses that ope
erate in diffferent markkets should
d be consideered here.
d Studentss should understand what
w just in time (JIT) management is and thet
advantagges and dis sadvantages of JIT. Sttudents sho e the different
ould explore
types of business thhat might be
b suited to o a JIT stock managem ment system m and
appreciatte the link between JIIT and wastte minimisaation and le
ean management.
e Waste minimisation
m d reduce the unit costs
n will help improve effficiency and s of
productio
on.
f Studentss should know what is meant by lean produ uction, how lean produ uction
can be achieved and the benefits of achie
eving it. Th
his concept is linked to
o those
in (d) and (e) above.

2.4.4 Quallity mana

agement
Th
here is cons
siderable cross-over in this section with 2.4
4.3 as JIT, lean production
an
nd waste minimisation
m n could be deemed
d to be examplles of continuous
im
mprovemen nt.
a Students s need to knnow the disstinction beetween qua ality control and qualitty
assuranc ce and the purpose
p of quality circ
cles. Total Quality
Q Mannagement (TQM)(
is part off an organis
sation’s cullture wheree quality is at the centtre of every ything
that an organisation
o n does. Stuudents shou uld recognis se the impoortance of quality
q
in allowin
ng a busineess to succeeed and tha at the impo ortance of this
t will difffer from
business to busines ss.
b Studentss should rec
cognise the
e importanc ce of contin
nuous impro
ovement (K
Kaizen)
in a business and ways
w in whicch a culture
e of continu ovement can be
uous impro
ed.
stimulate
c Quality refers
r to ho
ow well a prroduct does
s what it is intended to do. In a
competittive busines ss environm
ment, businnesses compete by offfering produ ucts or
services that are diffferent and
d/or superio
or to their rivals
r in ways that maatter to
customers. Quality is an important factorr in gaining g a competiitive advantage as
it is asso
ociated with
h consistenccy. For exa
ample, a sattisfied custtomer may be
more likeely to repeaat purchase
e from the business if they believ ve the prod
ducts
are of a high qualityy. Furtherm
more, custoomers who value quality may be willing
to pay more
m for the
e product or service.

2
2.5 External influe
ences
T
This topic re
equires stu
udents to coonsider the impacts off the econo
omy and
legislation on
o a busineess. Studennts are not required to
o have an inn-depth
u
understanding of legisslation, but should focus on the effect
e new laws
l may have
h
o
on the business.

2.5.1 Econ
nomic inflluences
a Students s should explore the positive
p and
d negative impacts of economic change
c
on businesses and recognise
r t
that differen
nt business
ses will be impacted
i in
n
differing magnitudees. Students are not expected to know the causes
c of any
a
economic c change(s).
b Macroecoonomic and d microeconnomic unceertainty cann affect the business
environmment. For exxample, ho
ow might a shortage of o agriculturral products such
as wheatt or cocoa caused
c by crop
c diseas
se or drought affect thhe supply and price
of bread or chocolate? The role and signiificance of economic
e forecasting and the
benefits of continge
ency planning could bee considereed.

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4. Conttent guidan
nce

2.5.2 Legis
slation
a Students s are expec cted to know w the effects of goverrnment legislation on a
business. There is non requirem ment for an in-depth understand
u ing of any specific
s
or example, students would be expected
policy; fo e to know thatt competitio
on
policy co
ould restrictt the ability
y for a busin
ness to gro
ow organicaally as oppo
osed to
a detailed list of the
e elements that make up UK/EU competitio on law.

2.5.3 The competitive environment

a The competitive env vironment was introdu uced in 1.11.1c. Compe etition from
m other
businesses will typically impac ct on busineess decisionn making inn terms of the
nature off ownershipp, the nature of the prroduct/serv vice and prooduct range,
pricing policies and marketing methods. Students could c also consider
c how
w an
independdent grocerr may respo ond to arriv al branch of a supermarket
val of a loca
chain succh as Tescoo Metro, or how an ind dependent hairdresser might res spond to
the prom anchise hairrdresser such as Toni & Guy.
motional offfers of a fra
Market size is essen ntially the number
n of buyers/connsumers and
sellers/producers inn a particulaar market. This is esp
pecially impportant for
businesses that wis sh to launch h a new prooduct or service, since
e small marrkets
are less likely to be
e able to support a higgh volume ofo goods. Large marke ets
could bring in more e competitio on. There is
s an opporttunity here for students to
recognisee the signifficance of sales
s volum
me and rate of sales tu urnover to a
business’s success. Successful entrepren neurs do theeir researchh to undersstand
target markets, identify a custtomer base e and weighh up the competition; for
example, James Dy yson and his bladeless s fan in 200
08.

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 4. Content gu
uidance

Them
me 3: Bu
usiness d
decision
ns and strategy
s y
Th
his section provides id
deas and suuggestions for teaching approach
hes for Theme 3
an
nd is not intended to be
b prescriptive. The specification
n should be
e referred to
o as the
au e source of information.
uthoritative

3
3.1 Busin
ness objec
ctives and strateg
gy
B
Business obbjectives arre what a business
b hopes to achiieve, and business
b strrategy
is what a bu
usiness doe es to achiev
ve these ob
bjectives.
S
Students sh
hould consider the diffference bettween a generalised aim and mis ssion
a
and a moree specific SM
MART objec ctive, and should
s engaage with pu ublished buusiness
d
documents,, such as coompany accounts, tha at should he
elp to illum
minate this
p
process. Co
onsidering different
d sta
akeholder views
v when n reviewing mission
s
statements is a useful first step in
i critically assessing them.
SStudents sh
hould exploore a range of analytic
cal tools and theories and unders stand
tthe uses an
nd limitation
ns of these for businesses develooping a corrporate stra
ategy.

3.1.1 Corp
porate objjectives
a Studentss should explore the hierarchy
h off business objectives,
o starting with
mission statements
s s and generral aims, prroceeding through corrporate obje ectives
to departtmental/fun
nctional objjectives. Ann understannding of SMMART objec ctives is
also requ
uired.
b Students
s should critically apprraise the na
ature of mis
ssion statements and aims,
and could
d consider the followinng:
• What is their purpose?
• Who is the inten
nded audien
nce?
• How does
d the coorporate strategy follo
owed by the
e business compare to
o the
mission in reality?
The usess and limita
ations of miission state
ements should also be e considered
d here
er perspectives: who is the mission stateme
as well as different stakeholde ent
aimed att and how does
d the strategy affect differentt groups?

3.1.2 Theo
ories of co
orporate strategy
a Students s should explore the key
k featuress of Ansoff’’s Matrix an
nd Porter’s
Strategicc Matrix (ge
eneric strattegies), app
ply these sttrategies too business
examples of corporate strateg gy, and mak ke assessm ments of the ese based on
o
Ansoff’s and Porter’’s Matrices.. Students should also o evaluate the
t uses an
nd
limitation
ns of Ansofff and Porte
er to the deevelopment of corpora ate strategy
y.
b Students
s should explore the key
k features
s of the Bos
ston Matrix
x (Boston Box)
B
product portfolio
p an
nalysis, and
d assess its uses and limitations
l in relation to
business examples and applica orporate strategy.
ations to co
c Studentss should consider Kay’’s (1993) model
m of dis
stinctive capabilities and their
origins: architecture
a e; origin; reputation. These can be applied to busines ss
examples to analyse whether or not businesses hav ve achievedd a competitive
advantag ge.
d Students s should be able to disstinguish beetween straategic and tactical
t dec
cisions
in a business contex xt. Strategy is more loong term and
a relates to achievinng an
overall goal; tactics
s are shorteer-term acttions that help to achieeve the strrategy.
Considerration of thee impact off these should focus on
o the impa act on huma an
ment, training, redundancy, etc.)); physical (investmen
(recruitm nt in fixed assets,
a
location, etc.) and financial
f (sources of fiinance, etc.) resourcees. Students s
should be able to make
m judgemments as to o whether decisions
d are strategic c or
tactical and
a whethe er the distin eful in business.
nction is use

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4. Conttent guidan
nce

3.1.3 SWO
OT analysis
a SWOT an nalysis shou uld be applied to a ran nge of business examples, coverring
businesses of differrent sizes, with
w differe
ent objectiv
ves and ope erating in different
sectors. This
T will en
nable stude ents to gain a good overview of the differing g nature
of each aspect
a uations; forr example, a micro sta
in diifferent situ art-up businness
compared with a large multina ational. Stuudents shouuld consider how SWO OT
analysis can be use ed to make strategic and/or
a tactical decision
ns to achievve
corporatee objectives.
Strengths and weak knesses encompass as spects of th
he businesss functions that
they can directly inffluence, such as peopple, marketiing, finance
e and operaations.
Opportunnities and threats
t rela
ate to the external envvironment which
w can only
o be
reacted to
t – this seection couldd be taught with PESTLE in 3.1.4.

3.1.4 Impa
act of extternal inffluences
a PESTLE analysis
a can
n be discus
ssed as an extension
e to
t SWOT an nalysis. Stu
udents
should coonsider eac
ch aspect and focus on
n its impact on busine
ess activity rather
than its origin.
o
b The focus on the ch
hanging commpetitive environment should em mphasise th
he
nature off dynamism
m within PESTLE and Porter’s
P Five Forces. Students
S sh
hould
focus on the extern
nal nature of
o change inn this sectio
on.
c Porter’s Five
F Forces
s model sho ould not be confused with
w Porter’s Strategic
c Matrix
in 3.1.2. Students should
s alyse how a wider rang
use this to ana ge of factorrs than
simply coompetitors affect the environment in which businesses operate. Porter’s
explanation of his original
o moddel and an update cann be explored.

3
3.2 Busin
ness grow
wth
SStudents shhould explo
ore how and d why (and in some ca ases why not)
n busines
sses
aachieve gro
owth. A starrting point is how bussiness size can
c be meaasured and, in
tturn, how growth
g can be measurred. Different business s case studies can be
eexplored; fo
or examplee, Marks and Spencer and its orig gins as a so
ole trader owned
o
bby Michael Marks, to itts current position
p as a large mu
ultinational Public Limiited
CCompany.

3.2.1 Grow
wth
a Simple calculations could be completed when
w exploring economies of sca ale to
demonsttrate how average cos sts can fall as
a total outtput increases in a business.
Achievem
ment of thiss gives businesses thee opportunity to increaase profit m
margins
and/or re
educe price
es.
The objeective to ‘inc crease marrket power over customers and suppliers’
s can be
linked baack to Porte er’s Five Fo
orces in 3.1.4 and the objective tot ‘increasee
market share’
s can be
b exempliffied by rese earching UKK supermarrkets and their
quest to gain marke et share. This growth objective can
c be intro
oduced as a short-
to mediuum-term ob bjective thaat feeds into
o the long-tterm objective of incrreased
profitabillity. Profitability should be clearly
y distinguis
shed from simply
s increeased
nd this can be achieve
profits an ed with refeerence backk to total costs and
economie es of scale.. A Venn diagram approach could d be used here,
h with
students identifying g the similaarities and differences
d between profit
p and
profitabillity.
b Diseconoomies of scaale can be explored th hrough simple numerical examples of
average cost increaasing for a business
b beeyond a cerrtain level of
o output.
Graphicaal representtation throu
ugh the use e of long-ru
un average cost curve es is
useful for developin
ng quantitative skills.

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uidance

The probblems of groowth can be analysed with refere ence to cas

se studies,
particularly those re
elating to businesses
b choosing to
o reduce th
heir size.
Overtradding is moree commonly y associate
ed with new
w businessees and can be
explored in lessons with refere al, growing businesses.
ence to loca

3.2.2 Merg
gers and takeoverrs
a An over-arching the eme to this s section is the comparison and contrast
c bettween
the state
ed aims of a merger or takeover and the ac s. These are often
ctual results
very diffe
erent and can
c be due to a range of issues, such as claashes in corrporate
culture that were no ot originally
y foreseen or considered in enouugh depth by
b key
stakeholdders in the beginning..
Mergers and takeov vers can alsso be linked
d to the dis
scussion of analytical
framewoorks, such as
a tactical and
a strategic decisionss. Tactical reasons
r forr
a attempt to ensure increased market
takeoverrs include an m sharre and acceess to
o intellectual property
technology, staff, or y. Strategic
c motives might
m includ
de
access to
o new mark kets, improved distribution netwo orks or imp proved brannd
awareness.
b Case studies can be e used to exemplify ho ow inorganic growth can
c be in th
he form
of a merger where two or morre business ses agree to
o join to forrm a new
business; for example, BA me erging with Iberia to become IAG G. Takeoverrs
nvolve one business taking contrrol of anoth
usually in her busines ss following a
buyout of
o their sharres. The target busineess is then usually abssorbed into the
operationns of the bu
usiness tha
at initiated the
t purchase; for example, Kraftt’s
takeoverr of Cadbury.
c A diagram mmatic appproach can be helpful when cons sidering horrizontal and
d
vertical integration — drawing g a chain off production mary, through
n from prim
secondarry, to tertia
ary sectors with differeent busines ss examples in each —
showing how differe ent businessses joining g at differen
nt stages caan be categgorised
as horizoontal (samee sector) orr vertical (d
different sector).
d Financial risks can iinclude the original pu
urchase cos
st and the costs
c of adjjusting
the new business, such
s as red
dundancies of staff hollding duplic
cate roles.
Financial rewards ca an include immediate increased revenue fro om the new w
business and econo omies of sca ale leading to reduced
d costs.
e Problemss of rapid growth
g incluude disecon
nomies of scale
s resultiing from
communication problems and the loss off strategic direction
d nd focus on core
an
competency that ca an result fro
om the join
ning of two or more prreviously se
eparate
businesses.

3.2.3 Orga
anic grow
wth
a Unlike inorganic gro
owth, organ nic growth does not in
nvolve anotther busine
ess
taking ovver or merg
ging with it.
b Organic growth
g can
n be achieveed through, for examp ple: new prroduct laun nches;
opening new stores s/branches;; expanding g into foreig
gn markets s; and expa ansion
of the woorkforce. Ansoff’s Matrix (3.1.2) could be reevisited herre, with stu
udents
exploringg exampless of market developme ent, producct developmment and
diversific
cation.
c Advantag ges of orgaanic growth include: le ess expense e in the sho
ort term; leess risky
due to an n increasedd level of co
ontrol of the variables s; maintainiing existing
g
managem ment and culture; and d the ability
y to plan for and effecctively contrrol
growth. Disadvanta ages includee that it is often
o slow and can lim
mit a busineess’s
ability to
o react to th
he growth ofo competittors, with growth being limited as a
result; fo
or example, funds may be limited d to interna
al growth of
o sales reve enues.

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4. Conttent guidan
nce

3.2.4 Reas
sons for staying
s sm
mall
a This secttion is particularly (but not exclusively) rele
evant to smmall busines
sses
that are established d and considering the next step in i their dev
velopment. Links
could be made back k to Kay’s distinctive
d c
capabilities (3.1.2) an
nd how thesse
might bee maintaine ed or strenggthened fro om remainin ng small.

3
3.3 Decision-making techniques
TThis topic explores
e howw business ses can use quantitativ ve decision-making to ools in
oorder to inc
crease the accuracy
a off their pred
dictions andd provide an n element oof
ppredictabilitty. Each meethod will involve a de egree of calculation an nd interpretation
oof these ressults – the key is the business ap pplication of
o this inforrmation andd the
inherent limmitations off each techn nique. Studdents should consider the limitations of
tthe techniques and the e assumptions on whiich each are based. Ke ey question
ns for
eeach could include the e following:
● What is
s the purpose of this decision-ma
d aking techn
nique?
● What iss the quantitative inforrmation tha
at results and how might a busin
ness
use it?
● What in
ncreases the accuracy of the resu
ults? For ex
xample, has
s this busin
ness
made similar forec
casts in the
e past? Hav
ve these been accurate
e?
● What as
ssumptions
s is the metthod based on?
● How mu uch of the information
i n is based on
o estimatees and how can a busiiness
aim to improve
i the accuracy of these es
stimates?
● What quualitative is
ssues will im
mpact on th
he decision
n and how can
c a busin
ness
conside
er these?

3.3.1 Quan
ntitative sales fore
ecasting
a The calcuulation of th
hree-periodd and four-quarter mo
oving avera
ages and
ese is required.
interprettation of the
b This will include the
e calculation of cyclica
al and avera age variatio
ons and thee use of
these to extrapolatee into the future,
f usinng line of be
est fit and the
t completion of
graphs showing trend data. Time-series analysis can be used in a range of
business concepts from
f sales forecasting
f g to the estimation of future costts, such
as energy usage. Students willl be expectted to make a limited number off
calculatio
ons, but should be able to interp pret these inn a businesss context; for
example, taking som me previou us sales datta and mak king a forec
cast based on
o past
trends.
c The limittations of th
his approac
ch can be summarised d as: ‘past performanc ce is no
guaranteee of the future’. Busin
nesses need to apprec ciate the addditional factors
(both intternal and external)
e th
hat can affe
ect future predictions.
p Discussion ns here
could be linked back to the SW WOT/PESTL LE sections (3.1.3 and 3.1.4).

3.3.2 Inve
estment appraisal
a
Th
his section involves th
he traditional calculatio
on methods of the following inve
estment
ap
ppraisal tec
chniques:
a Simple payback.
p
b Average (Accountin
ng) Rate of Return.
c Discountted Cash Flo
ow (Net Pre
esent Value
e only).
Studentss could be given
g a prediction of future
f cash flows, alon
ng with
appropriaate discoun
nt factors and, where appropriate e, alternative investm
ments
that the business co
ould choose e to invest in.

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 4. Content gu
uidance

d Students
s should be able to explain what the results
s of their ca
alculations show:
s
for exam
mple, does a higher or lower figurre make the
e investme ent attractiv
ve?
What shoould this fig
gure be com
mpared with?
e Students
s will also need
n to apppreciate botth the gene
eral limitatio
ons of investment
appraisal — for exaample, it is based on future cash flow foreca asts that arre
themselvves predictiions — and limitationss of the individual techhniques
themselvves.

3.3.3 Decision tree

es
a Decision trees have e a number of busines ss uses; forr example, the probab bility of
success ini a choice of product launch, diffferent marrketing cam mpaigns, orr a
decision to relocatee. Whereverr there is uncertainty,, but probabilities can be
estimated, there is a role for decision
d tre
ees. The em mphasis is on
o the
interprettation of sim
mple decisioon trees annd being fam miliar with their key
features:: decision nodes;
n channce nodes; probabilitie es and exppected monetary
values. Where
W consstruction is required, this
t will be in simple te
erms, with the
range of probabilitiees limited. Key things to remind students in nclude the
importannce of subtrracting the initial investment cos sts from thee expected
monetary y rewards.
b Studentss should be able to complete calc culations to
o determine e the expeccted
monetary y rewards for
f different options. Interpretat
I ion of these
e calculatio
ons then
stems fro
om which option
o is be
est, while co
onsidering the initial investment costs
and the probabilitie
p es of succes
ss. The big question with
w this tec
chnique is how
h the
probabilities and es
stimates of returns aree arrived att by the business in question.
There is a large deg
gree of unccertainty abbout any sittuation thatt a decision
n tree
might bee used for, so the beneefits of add
ding this de
egree of qua antitative certainty
c
can be fu
undamentally question ned.
c As with all
a decision--making techniques, the t degree of usefulne
ess will vary with
the busin ness contex xt. Students should be e encouraged to exploore a range of
examples of decisio ons where this
t might be
b an approopriate tool, and thosee where
nitely not, giving
it is defin g reasoons for this
s assessme
ent.

3.3.4 Critic
cal Path Analysis
A
a Critical Path
P Analysis has a rannge of uses
s, from the more common examples,
such as building
b proojects, to other
o exampples such as
a the comp pletion of a
marketin ng launch. Students
S sh
hould be familiar with a range off possible uses.
Students
s should understand Critical
C Path
h Analysis and
a its role in scheduliing a
range of activities that
t make up
u a projec ct. Its purpo
ose is to pla
an projectss in a
way thatt limits the use of limitted resourc
ces and ena ables a projject to be
completeed in the shhortest timee possible.
b Students
s are not re
equired to construct
c crritical path diagrams from
f scratc
ch – the
emphasiss is on com
mpleting a semi-compl
s ete networrk and show wing an
understa
anding of what this shoows a businness in termms of its re
esource
managemment.
c The key areas for innterpretatio
on are the identificatio
i on of the crritical path and
what thiss means for the business in ques stion, alongg with total float. Calculations
of Earlies
st Start Tim
me and Lateest Finish Times
T will be
b expected d both in terms of
completing semi-co ompleted neetwork diaggrams and also calcula ating these e based
on a commpleted diag gram.

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4. Conttent guidan
nce

d The limittations of Critical

C Path Analysis can be explo
ored from two
t perspectives:
• The assumption
a s and estim
mates on which the technique is based – forr
exam ngth of time needed for
mple, the len f each acttivity, whetther the nex
xt
activity can actu
ually start on
o time, etc
c.
• The qualitative
q f
factors thatt the technique canno ot account for
f – for example,
mpact of the weather for large-sc
the im cale buildin
ng projects..

3
3.4 Influe
ences on business
s decision
ns
F
Following thhe focus on n quantitative techniqu ues, this se
ection explo
ores the
q
qualitative factors
f thatt have a major influen nce on the direction businesses take
t –
a
as such, the e focus of this
t section is on the ‘human element’ of bu usiness dec cision
m
making. This section should
s be explored
e in terms of thhe underlying motives s that
c
can frame a business’s s strategy and
a inform decision making.
m Theere is clear cross-
o
over with other sections of Them me 3; for ex xample, objjectives andd strategy,
a
analytical frrameworks and decision-making techniques s.

3.4.1 Corp
porate inffluences
a Corporatte timescalees refers to
o strategy a
and the exppectation off when a re eturn
will be ac
chieved. ‘Short-termis sm’ is wherre businesses and their managerrs are
focused on
o quick finnancial rew
ward, such asa quarterlyy profit or sales
s figure
es, often
at the exxpense of in
nvestment in importan nt areas such as resea arch and
developm ment, staff developme ent or technnology inve
estment. ‘Lo ong-termism’ is a
more hollistic approach to busiiness strateegy, incorporating asp pects such asa
Corporatte Social Re y (CSR) and ethical be
esponsibility ehaviour. Advocates
A a
argue
that operrating with a long-termm timescale is not jus
st the ‘rightt’ thing to do,
d but
also the most comm mercially prrudent apprroach.
b Studentss should consider the basis of strrategic and tactical de
ecisions, and the
advantagges and dissadvantages of each approach. ‘E Evidence-ba ased approoaches’
encompa ass the use of the decision-makin ng techniqu
ues exploreed in 3.3 an
nd 3.5.
‘Subjective decisionn making’ is
s less struc
ctured and based on th he decision
ns of
viduals in th
key indiv he businesss.
The impoortance of context
c sho
ould be emphasised; for
f example e, small sta
art-ups
which haave been loss-making in the first months off business are
a likely to o be
more shoort-term in their strategic outloo
ok, and decision makin
ng may be more
subjectiv
vely based on the viewws of the enntrepreneurs involved
d in the bussiness’s
inception
n.

3.4.2 Corp
porate cullture
a (a to d) Students
S sh
hould exploore what it is that makkes a culturre ‘strong’ or
‘weak’. This
T might include
i a fo
ocus on corre values annd the recruitment and
training of
o staff, as well as the
e history off the busine
ess and the
e role of its
founderss.
The class sification off corporate culture can
n help stud
dents gain a greater
understa anding of th his concept. The use and
a exploration of bus siness case studies
provide a good basis for explo oring how corporate cu ulture is forrmed and
difficultie
es in changing an esta ablished cullture. Stude
ents could consider th he
following g:
• Would
d you categ
gorise the culture
c as strong
s or weak?
w
• Whichh of the fou
ur classifica
ations would
d you put this
t examplle in? Whatt
evide
ence do you u have for this?
t

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uidance

• Why do you thinnk this business has such a cultu ure? From where
w does it
origin
nate? Do th
he founderss of the bus
siness still work
w ? Are they key
there?
decision-makerss?
• Has the culture always bee
en as it is? What changes have occurred?
o H
How did
hanges hap
the ch ppen?
The formmation of coorporate culture depen nds on man ny factors that are uniique to
each bus siness and its
i history. Some of th he key factors includee: the role of
o the
founders s and owners – are theey still invo
olved in key
y decisions,, are they ‘visible’
to other workers?; the nature of the business and the t productts and services it
e degree to
sells; the o which thes
se have cha anged overr time; the business
environm ment into which
w the bu
usiness was s born (this
s could be linked to PEESTLE
analysis)); the recru
uitment andd promotion n process of
o key staff;; working hours;
h
and attitude to custtomer service.
This secttion can be linked to strong
s and weak cultures. Strong g cultures are
a
particularly difficult to change, but the na ature of whhat constitu
utes culturee makes
it very diifficult to ad
dapt any orrganisationn. This is be
ecause an organisation
o n’s
culture comprises
c a interlock
an king set of goals,
g roles
s, processess, values,
communications pra actices, atttitudes and assumptions. This intterlocking mmeans
that eachh component reinforce es the othe
er. Changes s, such as those
t to
managem ment systems, custom mer service policies, or quality syystems, can n soon
be drawn n back into the existin ng organisational cultuure.
Large orgganisations
s often have
e sub-cultu
ures in diffe
erent areas of the business.
Examples include: managers,
m part-time staff,
s sales assistants and delivery
drivers.
Recent examples
e off businesse
es where cu
ultural chan
nge has bee
en difficult include
i
Kodak, Nokia,
N Lond
don Underground, and previously y, Marks an
nd Spencer..

3.4.3 Sharreholders
s versus stakehold
s ders
a The analysis of stak
keholders is
s importantt from a nu
umber of pe
erspectives:
• Who are they?
• Are they interna
al or extern
nal?
• Whatt is their po
ower?
• Whatt is their intterest?
• How do they inffluence corp
porate obje
ectives?
• Are their influen ve or negative?
nces positiv
• Do sttakeholder influences conflict witth those of the business’s owners
s?
b The focus should be e on what the
t stakehoolders’ obje
ectives are and what
influencees these. Th
he key question is: do
o these objeectives conflict with, or
o
complem ment, those of the business overaall? Stakehoolder ‘mappping’ is a useful
tool for students
s to use.
c (c and d)) Stakehold
der influenc
ces and the e potential for
f conflict between
shareholders and sttakeholders s could be taught
t toge ether: sharreholder
perspectives tend to focus on the achieve ement of profit, while the stakeh
holder
approachh might foc
cus on wide er ethical co
onsiderationns.

38 © Pearso
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4. Conttent guidan
nce

3.4.4 Business ethiics

Thhere is conssiderable cross-over in this section with 3.44.3, which discusses
d
sttakeholderss and corpoorate culturre. Students s should be
e encourage ed to makee these
lin
nks across the theme,, particularlly in relatio
on to a spec
cific contex
xt/case stud
dy.
a Businesss ethics con
nsiders the moral ‘righhts and wrongs’ of a decision. The main
focus here is on the
e strategic level, rathe
er than the decisions made
m by, fo
or
example, individual employees s. The conccept of a traade-off is an
a importannt one
here, implying that,, in some circumstanc
c ces, it is no
ot possible for
f a busineess’s
strategy to be both profitable and ethical, or at leasst ethical dimensions may
have to be
b sacrifice
ed.
b The topicc has a speecific focus on the issu
ue of pay annd rewards in relation to
ethics. Topical issuees should be
b introduce ed here; for example, the differe
ence
between executive pay levels and those of employe ees could be
e explored and
debated.
c Corporatte Social Re esponsibility
y (CSR) is now an esttablished as spect of ma
any
business strategies. Its key features can be explore ed through the assessment of
this sectiion in busin
ness accoun nts. Studen
nts could co
ollate this in
nformation and
compare it to otherr declarations, such as s the missio
on statement. Studentts
should coonsider thee strengths and weakn nesses of an approach h that focus
ses
on CSR.

3
3.5 Asses
ssing com
mpetitiven
ness
SStudents sh
hould explo
ore publishe
ed financial informatio
on and mak ke assessments of
a business’ss competitiveness bas
sed on this.. The consttruction of financial
f
ddocuments (statement of income e or statem
ment of finan ncial positio
on) is not
rrequired bu
ut students should und
derstand thhe main features of ea ach and the e
interpretation of chang
ges in these from year-to-year and
a from bu usiness to
bbusiness.
A
An over-arcching conceept to this section
s is th
he stakeholder approa ach and wh
hich
g
groups will be interestted in differrent aspectts of a busin
ness’s perfo
ormance.
C
Concepts suuch as proffitability, liq
quidity and solvency are
a important in analysing a
b
business’s financial
f po
osition with more accu uracy.
TThe section on human n resource measureme
m ents can alsso be exploored from a range
oof perspectives. Stude ents should be encouraged to carrry out the calculation ns as
ooutlines, intterpret these at face-v
value, but then
t look beyond
b thes
se to explore
uunderlying issues for different
d bu
usinesses and contexts. For exam mple: the la
abour
tturnover figgure sugges sts one thin
ng, but howw much of this
t is due to the business
itself, and how
h much isi it to do with
w externa
al factors beyond
b the business’s
immediate control?
OOnce more,, there is an opportunity to revis sit and apply SWOT annd PESTLE
aanalysis to the results of these ca
alculations.. Students could consider which
ffactors affecting the performance e in financia
al statemen
nts or human resource e
ccompetitiveeness can be
b controlleed, and which ones only reacted to.

3.5.1 Interpretation of finan

ncial stattements
a Students
s should understand whatw the maain features
s of a state
ement of
comprehensive inco ome represent. For ex xample, what turnoverr, cost of sa
ales
and gros
ss profit acttually meann and what can affect these. A ‘to op-down
approach
h’ is often useful,
u with
h students gaining
g an understand ding of wha
at the
business ‘begins witth’ and wha at it ‘ends up
u with’ – the
t bottom line.

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The interrests of stakeholders can

c be revisited and applied
a heree. The pers
spective
can be lo
ooking at thhe whole do ocument annd learning about the business’s
profitabillity — someething owners or poteential investtors might want to doo — or it
could be focusing on specific sections;
s fo
or example,, expenses might be
particularly interestting for managers andd workers, particularly
p y if labour costs
c
make up p a large paart of these expenses.
b A similarr approach can be take en with the e statementt of financiaal position –
students should und derstand what
w this infformation shows
s abou
ut a busines ss,
somethin ng that is mmuch more abstract fo or this docu
ument than it is for the e
income statement.
s In simple terms,
t it is the ‘worth of a busineess on a giv ven
day’ – a snapshot. It shows whether a bu usiness cann pay its billls on time,, its
financial flexibility to
t acquire capital
c and its ability to
t distribute e cash in th
he form
of dividends to the company's owners.
Liquidity and solven ncy should be discusseed as conce
epts and also applied to
specific figures
f in given financ
cial informa
ation.

3.5.2 Ratio
o analysis
s
a The ratio
os in this se
ection should be coverred in addittion to revis
siting those
e in
Theme 2.2 The ratioss are detailled in Appe
endix 4 of the specificaation (on page 39
of the AS
S and page 53 of the A level spec cification).
b Gearing measures thet proporttion of a bu
usiness thatt is financedd from longg-term
borrowin
ng. These leenders are often bank ks and there efore expecct an intere
est
paymentt in additionn to the rep
payment off the origina al loan amoount. A highher
gearing ratio
r indicates a greatter vulnerabbility to inte
erest rate changes.
c
The diffe
erence betw
ween a high hly geared bbusiness (rratio over 50%)
5 and a low
geared business
b (beelow 50%) should be considered d. Students should also be
encouragged to try to
t find out why
w funds have been borrowed; for examp ple,
borrowinng to purchaase assets in order to expand may be seen as less of a
problem than borro owing to finance current expenditture or cover cash flow
w
problems s.
Students s should consider the business de
ecisions tha
at can be in
nformed by
y these
ratios, su
uch as the following:
f
• How should
s we ffinance exp
pansion?
• What are the coosts and benefits of fin
nancing thro
ough borro
owing comp
pared
with doing
d so th
hrough furth
her equity release?
• Are stakeholders securing an accepta
able return on their inv
vestments?
? Are
native inves
altern stments mo
ore attractive?
c The limittations of ra
atios should
d also be co
onsidered in this sectiion:
• They are only ass useful as the financial documen nts on whic
ch they are based;
for ex
xample, a statement
s of
o financial position is a ‘snapsho
ot’ and therrefore
subjeect to chang
ge.
• Ratios need to b
be compareed over a lo
ong time pe
eriod to gain an
underrstanding of
o trends.
• Compparison with
h competito ors is neede
ed to put th
he figures into
i industrry
conte
ext and und
derstand wh hich factors
s the busine
ess can conntrol and which
w
ones may be afffecting all businesses.
b

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4. Conttent guidan
nce

3.5.3 Hum
man resou
urces
a When intterpreting labour prod ductivity, labour turnover and rettention, and
absentee eism, stude ents can determine, foor example,, that a high labour tu
urnover
suggests s that a larg
ge number of staff aree leaving a business, possibly
p because it
is not a good
g place to work.
Howeverr, after thesse literal intterpretations, wider is
ssues should be consid dered.
For exammple, is the type of bu usiness one where peo ople naturally only work there
for a few
w months/ye ears due to orkers? Students can draw
o the age profile of wo d on
their ownn experiencces if relevaant; for exaample, theyy may work k in retail or
o the
wider serrvice sector before mo oving on too employme ent/training
g elsewhere e.
Businessses need to understand as much as possible e about thee underlying
g
causes of changes iin these me easures if tthey are to be able to ‘make deciisions’
based onn these. The ese decisions might in nclude: chaanging recruuitment meethods
and polic
cies, new trraining, a different
d approach to pay
p and rewwards, etc. If the
information on whic ch these deecisions aree based is not
n scrutinis sed and,
importanntly, the sta
aff involved
d are not qu uestioned, then
t the reesulting dec
cisions
are less likely to be
e the best ones
o for the
e business.
b view of wha
An overv at each humman resourc ce strategy
y is and the
eir intended
d
purpose is required but specia
alist detail of
o different strategies is not a
requirem
ment.

3
3.6 Managing chan
nge
TThis topic explores
e how
w change can
c be impllemented and
a the facttors that
influence itss likely success. Makin
ng businesss decisions is one thin
ng, but ensuuring
tthe desired outcomes for these decisions
d is another. This
T section
n draws together
tthe conceptts introduce ed throughout the the
eme.
TThe distincttion betwee
en internal and externnal factors is a useful framework,
f ,
linking backk to SWOT analysis an nd some of the other analytical
a f
frameworks s.
SStudents shhould understand the qualitative factors tha at will impa
act on busin
ness
ddecision maaking. Mana agement off change thheories (for example, Kotter) aree not a
rrequiremennt but couldd be include
ed within th
he teaching and learning.

3.6.1 Caus
ses and effects
e of change
Th
he causes of
o change are
a broad, but
b studentts do not ne eed to inve
estigate the
ese
be
eyond apply erms – the focus of the
ying concepts from elsewhere in general te
se
ection is ho
ow these ch
hanges impa act on a bu
usiness and
d so what is
ssues they raise
fo
or managing g the chang
ge:

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 4. Content gu
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C
Change How this
t might Iss
sues for managers
m s to
maniffest itselff add
dress
C
Changes in The bussiness expaands ● communic
cation
o
organisation
nal size into a new
n ● performan
nce
international locattion management
● training
● n
motivation
● labour cos
sts
● impact on business
culture
P
Poor busine
ess This will vary betw
ween ● how to improve
p
performancce businessses but miight performannce
include: ● resistance
e to change
e
● poo
or sales figu
ures ● changing objectives
o
● low
wer profits than
t and/or strrategy
exp
pected
● incrreased costts of
opeerations
● slow
wer expanssion
tha
an planned
N
New owners
ship ● merger ● role duplic
cation
● tak
keover ● culture cla
ash
● dev
velopment ffrom ● brand man
nagement
Ltd to PLC ● methods of
o
● management buy- communiccation
outt
T
Transformaational Changee in leaders
ship ● resistance
e to change
e
leadership (see
( below)) personn
nel and/or
ethos
TThe markett and other ● new
w entrants to ● corporate objectives
eexternal fac
ctors the
e market change
((PESTLE) ● com
mpletion lea aving ● new strate
egy
the
e market (link ● increased research and
a
bacck to Porterr’s developmeent
Five
e Forces model)
● brand stra
ategy
adjustmennt

Sttudents aree not requirred to learnn lots of new

w conceptss beyond ne
ew key term ms in
th
his section. The aim is
s for them to t apply the e key cause
es of chang
ge identified
d in the
re
est of the th
heme and course
c to th
he concept of change itself.
Trransformational leadership is a different
d con
ncept because the driver of channge
omes from the manag
co gement, ratther than thhe management dealin ng with oth
her
re
easons for change.
c Hoowever, it is
s often the case that a transform
mational lea
ader will
deevelop their role, or be put in pla
ace as a wid
der reaction from the key stakehholders
in a business
s to the nee ed for chan
nge.

42 © Pearso
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aterial is not copyright free.
4. Conttent guidan
nce

3.6.2 Key factors in

n change
a (a to d) Students
S sh
hould explo
ore the facttors that inffluence the
e origin, natture of
and reac ction to change in a bu
usiness. The concepts here have been cove ered in
detail in the rest of the themee and students should analyse the possible impact
they could have on how and why w businessses change e.

3.6.3 Scen
nario plan
nning
a Scenario planning iss the proce
ess of anticipating pos
ssible chang ges in a bus
siness’s
situation and devisiing ways off dealing with them. Itt incorporates the features of
what is also
a known as contingency plann ning.
Complex x numerical risk assesssment tech hniques are not requireed here, buut the
technique of compa aring probability with potential
p fin
nancial imp
pact, as use
ed in
decision trees, is us
seful.
b There are degrees oof risk mitig
gation and these depeend on spec cific contex
xtual
es and the overall
influence o attittude of dec
cision-make
ers in the business:
b
• Risk acceptance
a e – where th he full cost of mitigation is greatter than the
e cost of
the risk itself. Th
his is often the case foor small bu
usinesses.
• Risk avoidance
a – this is the
e opposite of risk acceeptance. It could involve
ceasing to follow
w a particullar action altogether;
a for examplle, a multin
national
ng out of an
pullin n unstable country.
c
• Risk limitation
l – this is the
e most common risk managemen
m nt strategy used by
businesses. An example
e off risk limitattion is a co
ompany acc cepting thatt data
storage may faill and avoiding a long period of fa ailure by ha
aving back--ups.
• Risk transferenc
t ce – this is the involve
ement of ha
anding risk off to a willing
third party. For example, numerous
n c
companies outsource operations
o such as
custoomer service, payroll services,
s ettc.
Businesss continuity may take the form off identifying g alternativ
ve locationss if
struck by
y a natural disaster orr providing a range of data back--up in the event
e of
IT system
ms failure. Succession n planning may
m be inco orporated as
a part of HR
H
strategy and could involve ma aking use off work-shad dowing and d staff apprraisals
to share experiencees and train n staff in a range of bu usiness are
eas (job rottation
and job enrichment
e t), so that staff
s can step in if collleagues lea
ave.

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Them
me 4: Glo
obal bus
siness
Th
his section provides id
deas and suuggestions for teaching approach
hes for Theme 4
an
nd is not intended to be
b prescriptive. The specification
n should be
e referred to
o as the
au e source of information.
uthoritative

4
4.1 Globa
alisation
IIn this topic
c students should undderstand tha at the majoority of bus
sinesses no
longer view w their markkets to be purely
p dommestic. Globalisation ha as created
ssignificant opportunitie
o es for busin
nesses to sell their goods and se ervices overrseas.
HHowever, at the same e time, this has led to significant increases in
i global
ccompetitionn in world markets.
m
T
This topic explores
e the
e reasons why
w globalissation has occurred an
nd the reas
sons
w
why some c countries may
m want to
o limit its sp
pread.

4.1.1 Grow
wing econ
nomies
a Studentss will not be
e expected to state the growth ra
ate of any specific cou
untry
but should understa and how the growth ra ate of emerging econoomies compares
with the UK.
b Students s could cons sider the BRICS and MINT
M econo omies. BRIC CS economies are
considere ed to be: Brazil,
B Russia, India, China
C and South
S Africa
a. MINT ecoonomies
are considered to be: Mexico, Indonesia,, Nigeria an nd Turkey. TheT emerging
economie es with incrreasing aveerage incommes sugges st that the middle
m clas
sses are
increasin
ng. This proovides these e economie es with incrreasing market power over
traditionaal western economies s. Increasedd demand for f western goods and d
services in these markets is lik kely to resu
ult in signifficant increa
ases in
profitabillity.
c Demand in emergin ng economies is likely to be incom me elastic, providing
significan
nt opportunnities for increased rev venues andd profit. Equually, low la
abour
costs and d proximity
y to a mark ket that is growing
g in size
s has ledd to more firms
deciding to outsourrce production/custom mer service facilities to
o locations such
s as
China an nd India. Th
his has had implication ns for emplloyment in the UK in c certain,
but not all,
a industries.
d Studentss should be able to reccognise indicators of economic
e growth and
interprett what the indicators of
o growth are telling th
hem about a given country.
There is no requirem ment to know how to calculate Gross
G Dome estic Produc
ct
(GDP) pe er capita orr Human Deevelopmentt Index (HD DI).

4.1.2 Internationall trade an

nd busine
ess growtth
a Students
s should rec
cognise the
e distinction
n between imports
i and
d exports.
b Students s are not re
equired to understand
u the theory
y of comparrative advantage,
but should understa and what specialisatio
on is and hoow it results in greater
efficiency
y. This allow
ws for good
ds and servvices to be produced ata a lower unit
u
cost, whiich then allows a business to redduce its pric
ces or incre
ease its pro
ofit
margin.
c Students s are requirred to know
w what foreign direct investment (FDI) is an
nd how
it allows a business
s to grow.

4.1.3 Facto
ors contrributing to increas
sed globalisation
a Students s are expeccted to knoww what tradde liberalisa
ation is, an
nd how it makes
m
markets more comp petitive and
d creates more
m opporttunities for businesses
s.
Students s should als
so be able to
t articulate
e the beneffits and draawbacks of the
trade libe
eralisation process.

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4. Conttent guidan
nce

b (b to h) Students
S are expected d to know how
h all of these
t factorrs — politic
cal
change, reduced coost of transport and coommunicatiion, increas sed significance of
ompanies, increased in
global co nvestment flows, migrration, growwth of the global
g
labour fo
orce and strructural cha
ange — havve led to inncreased gloobalisation of
markets and the immpacts on businesses rresulting from these factors.
f
For exam
mple, largerr ships and containeris e significantly reduced
sation have d
transporttation costs
s, therefore
e allowing production
p overseas too become
competittive comparred with do omestically produced goods
g and services.
s

4.1.4 Prote
ectionism
m
a In this se
ection students are ex xpected to know what a tariff is, how it worrks and
the impa act of a tariff on a business’s ability to sell overseas.
o W
Why a country may
impose tariffs
t and the
t possible
e advantages and disa advantagess of doing s
so
should also be cons sidered.
b Studentss should explore what an import quota is, howh it works and the impact
of an impport quota on a busine
ess’s ability
y to sell ove
erseas. Stu
udents needd to
know wh hy a country
y may impo ose import quotas and d the possib
ble advantaages
and disaddvantages of doing soo.
c Other traade barriers
s, namely governmen
g t legislation
n and domeestic subsid dies,
should be explored.. Students are expected to know w how non-ttariff barrie
ers
restrict trade and th
he impact they
t will ha
ave on a bu usiness’s ab
bility to sell
overseas s. Students should und
derstand wwhy a country may imp pose trade barriers
and the possible
p ad
dvantages and
a disadvaantages of doing so.

4.1.5 Trad
ding blocs
s
a Studentss should rec
cognise the een trade liberalisation
e link betwe n and trading
blocs. When a counntry joins a trading blooc, this mak
kes it easie
er for the
businesses located with the trading bloc to sell to th
hat country y. Studentss need
to understand the opportunitie
o es and drawwbacks of selling
s goodds and servvices to
a country
y within an expanding g trading bloc. The EU is the Euroopean Unio on,
ASEAN iss the Assocciation of So
outh East Asian
A Nation
ns and NAF FTA is the North
N
Americann Free Tradde Area.
b Students s are not ex
xpected to have an in--depth understanding of specific trading
blocs, buut should fo
ocus on the opportunitties and dra
awbacks foor a busines ss that
is either located witthin a trading bloc me
ember counntry or is wiishing to se
ell to a
market within
w a giv
ven trading bloc from a country which
w is nott a member of the
trading bloc.
b

4
4.2 Globa
al markets and bus
siness ex
xpansion
T
This section
n considers the reason
ns why businesses bas sed in moree affluent
c
countries su
uch as the UK may wa ant sell their goods annd services in overseas
m
markets and/or relocaate overseas. This secttion builds on topic 4.1 since it
e
explores the opportunities faced by businessses from thhe increasing globalisaation
o
of markets.

4.2.1 Cond
ditions th
hat promp
pt trade
a There are some facctors that fo
orce busineesses to connsider sellin
ng abroad, such
high leve
els of dome
estic compe etition and a saturatedd market which offers only
low growwth opportu
unities. These are push h factors.
b There are significan
nt opportunnities for bu
usinesses se elling to ov
verseas marrkets,
such as the
t ability to
t spread risk and the e ability to gain
g the be
enefits of gllobal
economiees of scale.. These are
e pull factorrs.

© Pearson Education Ltd 2014.

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 4. Content gu
uidance

c Studentss should understand th he differenc

ce betweenn off-shoring and outs sourcing
and the benefits
b and drawback ks of both of
o them to a business. Off-shorin ng is
the reloc
cation of a business
b fu
unction, usuually manuffacturing orr customer
services,, to a location oversea
as. Outsourrcing is whe
ere a busine ess function is
contracteed out to a third party
y. The third
d-party orga
anisation may
m or mayy not be
located overseas.
o
d Products can be in different
d sttages of the
e product life cycle depending onna
given cou
untry; for example,
e a product in the declinee phase in the UK cann be in
the grow
wth phase inn emerging g markets. Students
S sh
hould exploore the reas
sons for
this.

4.2.2 Asse
essment of
o a country as a market
m
a Students s should be able to ide
entify factors that will make somme countries s more
attractive
e as a markket than otthers. For example,
e po
oor infrastrructure in a
country could
c decre
ease the ab bility to deliver goods at a low co
ost or on tim
me,
reducing the attracttiveness off that marke et.

4.2.3 Asse
essment of
o a country as a productio
p on locatio
on
a Students s should be able to reccognise fac ctors that make
m one coountry morre/less
attractivee as a prod
duction locaation compa ared with other
o countries. Students
should be able to make
m judgem
ments betw ween which factors are e more imp portant
given thee nature of the busine ess, the prooduct it sells and the market
m it op
perates
in. As an
n activity, sttudents cou
uld be given informatiion on a va ariety of diffferent
countriess and be assked in grouups to decide which co ountry is th
he best prooduction
location for
f a particcular produc ct or servic
ce. Some co ould be straaightforwarrd, such
as extracctive industtries, where
eas others could be more
m debata able, such as
a
overseas s customer support (ca all) centres
s.

4.2.4 Reas
sons for global
g me
ergers or joint ven
ntures
a (a to e) The
T reasons why mergers/joint ventures
v oc
ccur and the rationale
e behind
them sho ould be expplored in this section. Students should
s be able to make
judgeme ents as to th
he most immportant rea asons why a merger/joint venturre has
occurred and articulate the be enefits and drawbacks of any me erger/joint venture
v
activity to
t the businnesses invoolved.

4.2.5 Glob
bal compe
etitivenes
ss
a Studentss should explore what an appreciiation or de epreciation of a curren
ncy
means and the implications off exchange rate movements on different
d
businesses. For exaample, a strrong pound heaper in pounds.
d will make imports ch
Howeverr, the impac ct of this de
epends on the degree e to which a UK-based
business purchases s its raw ma aterials from
m overseass and the extent to whhich it is
ble to foreig
susceptib gn competitors in its domestic
d m
market.
b Competittive advanttage can be e achieved through co ost leadersh
hip which, in turn,
allows fo
or lower pric
ces. Differe
entiation is another ro
oute to gain
ning a comppetitive
advantagge. Studentts are expe ected to be able to ide
entify which
h of the two
o routes
a businesss has take
en to achievve competittive advanttage and thhe reasons behind
that deciision.
There are consideraable links between othher parts off Theme 4 in
i this section —
for exam
mple, outsouurcing, gain
ning global economies s of scale, off-shoring
o —
since the
e aim of a b
business is to gain com
mpetitive advantage.

46 © Pearso
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4. Conttent guidan
nce

c The lack of ability to

o acquire skilled
s work
kers could leead to a deecline in
competittiveness. Sttudents sho ould recogn
nise that the impact off skill shorttages
will be fe
elt more heavily on buusinesses thhat follow a differentia
ated approa ach to
gaining a competitiv ve advantaage. There are
a again liinks with otther parts ofo
Theme 4 in this sec ction since off-shoring
o and outsourcing are potential so olutions
to this prroblem.

4
4.3 Globa
al marketing
T
This topic fo
ollows on frrom the pre
evious secttion and examines how w businesse es can
a
adapt their marketing to the challenge of se elling in a newly
n identtified overse
eas
m
market. Stu udents shouuld recognise that, de
epending on n the produuct, differennt
m
marketing approaches
a s may be ne ecessary to
o overcome e the barriers that prev vent
s
successful marketing
m i certain countries.
in c

4.3.1 Mark
keting
a Studentss should be able to dis
stinguish be
etween diffferent types
s of marketting
strategy and determmine which type of ma arketing strrategy a bu
usiness, giv
ven the
product it
i sells, sho
ould use.
Glocalisa
ation is capttured by th
he phrase ‘tthink global, act local’’ and refers
s to the
notion off having to personalisee marketing where required to th he local ma
arket,
while at the same time
t trying to keep ma arketing ap
pproaches consistent
c a
across
all marke
ets.
b Studentss are expeccted to havee an unders
standing off the differeent marketiing
approachhes businesss adopt in internation
nal marketing and app ply the corrrect
marketin
ng strategy to a busine ess conside
ering the markets
m it op
perates in and
a the
nature off the produ
ucts it produ
uces.
Studentss should consider the advantages
a s and disad
dvantages ofo each app proach
and recoognise exam
mples of eacch; for example, Apple and Ferra ari sell mos
stly
standarddised products everyw
where, McDo onald’s maiintains a global brand but
adapt its
s menus in each counttry and Unilever adaptts many of its productts to
each individual marrket.
c The 4Ps and Ansofff’s Matrix shhould be exxplored in relation
r to businesses
b
operatingg in the international marketplacce in this se
ection. For example,
promotioonal activities may nee ed to be ad
dapted to be culturallyy relevant
or avoid offence, an nd products
s may need d to be chan nged to me eet differing
g needs
or cultural sensibilitties.

4.3.2 Niche marketts

a Differentt markets have
h differe
ent cultural and religio
ous sensitiv
vities. Stude
ents
should ex xplore thes
se and the impact thiss has on businesses op perating glo
obally.
b Global niiche markets are small specialise
ed parts of a global market. With hin an
individuaal country these
t markeets may bee relatively small, but combining them
over several countrries provide
es a large enough
e marrket for a business to enjoy
nt demand..
significan
c Businessses will need to develo
op a marketting strateg gy (4Ps) wh hich is suita
able for
global niche marketts. Studentts could be given a nic che market product, such
s as
Beats byy Dr Dre headphones, and be tas sked with de esigning a marketing
campaign for the prroduct thatt allows it to
o be successsfully sold in a given
country. Students could
c research the styyle of adverrtisements used in a given
g
country using
u YouTube and research the country.

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 4. Content gu
uidance

4.3.3 Cultu
ural/social factors
s
a All markeets will hav
ve their diffferences an nd the elem ments of thee marketing g mix
will need
d to be adappted to cate er for indiv
vidual mark kets. Depennding on the e
product and
a the cou
untry, there e may be the need forr more/less s adaptations. For
example, UK products for the Australian market ma ay require fewer
f adapttations
than thosse for the Chinese
C ma arket since the cultura al and socia
al difference
es
between Australia and
a the UK are relativ vely small. Students
S coould be shoown
examples of food na ames to illuustrate the difficulties of brandin ng a produc ct in one
country that
t does not
n offend people’s
p sennsitivities in
n another country.
c

4
4.4 Globa
al industries and companie
c s (multin
national corporatio
c ons)
TThis topic considers th
he impacts of MNCs on n a country
y’s economy y and exam mines
tthe benefitss and drawbacks to th hat country from the operation
o off an MNC tooa
rrange of staakeholders. Students should be able
a to que
estion whether an MNC C is
ooperating in
n a truly ethical manner and reco ognise the difficulties of controlling
gglobal comp panies, esp
pecially in LEDCs.
L

4.4.1 The impact off MNCs

a Studentss should understand what
w an MNC is and th
he impact itt can have on
o a
country’ss local econ
nomy. Depe ending on the
t nature of
o the MNC C, a countryy may
benefit to
o a greaterr/lesser deg
gree. Stude
ents should consider both
b positiv
ve and
negative impacts.
b The impaact on the national
n eco
onomy sho ould also bee considered d. Studentss should
consider both positiive and neg gative impaacts as welll as the exttent to whic ch a
country might
m bene efit. For exaample, a coountry is lik
kely to bene efit from a MNC
mining company if thet mineral resource is rare, since the MNC C does not have
the optio
on of choosing a differrent country y. A countrry is likely to
t benefit more
m
from an MNC produ ucing textilees, since th
hese types ofo business s are labourr
intensive
e and it is unlikely
u that ex-patriott labour will be used. Therefore,
althoughh best practtice transfer will be lim
mited due to the skill level of the work,
there couuld be a substantial de ecrease in unemploym ment in the LEDC.
Studentss could rese
earch the im
mpact of Fo
ord’s decisio
on in 2013 to cease th
he
productio
on of cars and
a vans in
n the UK, with
w van prooduction be
eing switcheed to
Turkey.

4.4.2 Ethic
cs
a Conflicts between stakeholder
s rs resulting from the operation
o off an MNC should
be explored. For ex xample, con
nflict over resource
r de
epletion allo
owing for greater
profits bu
ut at the ex
xpense of pollution
p in the host co
ountry.
b Pay and working coonditions shhould be ex
xplored. Is it
i ethical fo
or workers iin
LEDCs to
o be paid le
ess and accept possibly unsafe working
w conditions commpared
with equivalent worrkers in the
e UK?
c Should MNCs
M be allowed to follow less sttringent env
vironmenta
al legislation
n in
ompared with countrie
LEDCs co es such as the
t UK? Students sho
ould explore e
environm
mental cons
siderations such as emmissions and waste dis
sposal.
d Supply chain consid
derations, namely
n the exploitatio
on of labourr and child labour
should be considere
ed here. Is it in the be
est interests of the MNNC to explooit the
supply ch
hain and ch ? Students should consider various MNCs an
hild labour? nd
whether the produccts sold by the MNC arre more/les ss likely to result in
damaging protests.

48 © Pearso
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4. Conttent guidan
nce

e Promotioonal activities and labeelling will, to

t a degree e, have to be
b altered around
a
the specifics of an individual market.
m This will depennd on charaacteristics of
o the
country the
t businesss is trying to sell to and
a the nature of the product.
p
This coulld be consid
dered with cultural an nd social fac
ctors in 4.3
3.3.

4.4.3 Conttrolling M
MNCs
a Students s should consider the likely succe ess of differrent methoods of contrrolling
the activvities of MNCs and the benefits and drawbac cks of each
h method.
Differentt methods of o control are
a more orr less likely to work de epending on n the
MNC, the e activities of the MNCC and the country in question.
q or example, an
Fo
MNC extracting a re elatively rare ore fromm a country should be in a situatiion
where po olitical and legal contrrols work since the MN NC has limitted markett power
because this resourrce is not ubiquitous and a can only be found in certain
geologica al locationss. Footloose
e MNCs, on the other hand, are much m moree
difficult to
t control since
s they can
c threaten to relocatte out of a country, taaking
FDI, tax revenues and a employyment with them.

© Pearson Education Ltd 2014.

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 5. Asse
essment gu
uidance

5. As
ssessm
ment guidanc
g ce

5.1 Im
mplicatiions of linear
l assessme
ent
Fo
or the AS leevel qualific
cation, both
h exams (P
Paper 1 and d Paper 2) must
m be satt at the
en
nd of the coourse – norrmally one year. First AS level as
ssessment for the new
w
sp
pecifications is 2016.
Fo
or the A lev
vel qualifica
ation, the th
hree examss (Paper 1, Paper 2 annd Paper 3)) must
be
e sat at the
e end of the e course (normally two years). First
F A level assessmennt for
th
he new spec cifications is
i 2017.
Th
here will be
e no Januarry assessment window w and it willl not be pos
ssible to take
ex
xams for thhe same qualification in
i different exam seriees: all asse
essments must
m be
co
ompleted toogether at tthe end of the course.
It will not be
e possible fo
or students
s to re-sit in
ndividual co
omponents
s. Students may
re
e-take the whole
w AS or A level qu
ualification..

5.2 A
AS level assessm
ment
Th
he focus at AS level is
s on building knowledg ge and understanding of core business
co
oncepts, with a greateer emphasis s on breadtth rather th
han depth.
Th
here are tw
wo externallly assessedd papers at AS level. Each
E paper comprises
80
0 marks annd is 1 hourr 30 in dura
ation.
Eaach paper assesses
a distinct areas of the speecification content,
c wiith Paper 1
asssessing Th
heme 1 con ntent and Paaper 2 asseessing Them me 2 content. In each h paper,
Seection A an
nd Section B are based d on stimulus material and asses ss breadth, with
daata respons
se questionns (including short ansswer questiions) that have
h a grea
ater
fo
ocus on AO1 1 and AO2.. These que estions inte
egrate the requiremen
r nts in the
asssessment objectives,, ensuring that
t knowleedge is not demonstra ated in isola
ation
from businesss applications. The sttimulus material will be
b drawn frrom various s
buusiness con
ntexts.
Se
ection C is based on stimulus
s ma aterial and assesses depth,
d enab
bling studen
nts to
de
emonstrate e higher-ord
der skills. The
T extende ed open-response que
estion in Se
ection C
as
ssesses exttended writting skills and enables s students to
t make connections between
b
th
he businesss concepts.
Th
he structure of the two papers is
s the same to ensure a consisten
nt approach
h to
ssessing the different content are
as eas.
Alll of the stim
mulus mate erial is base
ed on real businesses
b and real data. This su
upports
sttudents in developing
d a holistic understandi
u ing of how the core cooncepts andd
th
heories rela ate to the re
eal world inn which the
ey live and work. This approach also
a
suupports students in ge enuine appllication to a range of business
b co
ontexts.
Att AS level synoptic
s asssessment is
s achieved through lin
nking topics
s within the
emes –
sttudents aree required to make connnections between
b tw
wo functionaal business areas
annd understa and the link
kages acros
ss core con
ntent areas.

50 © Pearso
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aterial is not copyright free.
5. Asse
essment gu
uidance

5.3 A level assessme

ent
Th
here are three externaally assesse
ed papers at
a A level. Each
E comprises 100 marks
m
an
nd is 2 hours in duratiion.
Paaper 1 and Paper 2 as ssess distinct areas of the qualific
cation conttent, with Paper
P 1
as
ssessing Th heme 1 and d Theme 4 content,
c an
nd Paper 2 assessing ThemeT 2 annd
Thheme 3 con ntent. In eaach paper, each sectioon is based on stimulu us material and
co
omprises da ata respons se questionns (including short ansswer questiions), which have
a greater foccus on brea adth and AO O1 and AO2 2. The shorrt answer questions
q in
ntegrate
th
he requiremments in the e assessme ent objectiv
ves, ensurinng that kno owledge is not
n
deemonstrate ed in isolation from buusiness applications. The
T extende ed open-res sponse
quuestion in each
e section assesses depth, ena abling studeents to dem monstrate higher
h
orrder and exxtended wriiting skills. The stimullus materiaal will be drrawn from various
v
buusiness conntexts.
Ass with the AS
A level, all of the stim
mulus mate erial in the A level is based
b on re
eal
buusinesses and
a real datta to suppo
ort studentss in developping a holisstic understtanding
off how the core conceppts and theo ories relate
e to the real world in which
w they live
an
nd work. Th his approacch also supports stude ents in genuuine applicaation to a range
r of
buusiness con
ntexts.
Att A level sy
ynoptic asseessment is achieved thhrough link
king themess across the
sppecification (Theme 1 and Theme e 4 in Pape
er 1, Themee 2 and Theeme 3 in Pa
aper 2),
lin
nking topicss within the
emes and linking acrooss all them
mes (in Pape
er 3). Students
arre required to make co onnections and underrstand the linkages across the whhole
sppecification content att A level.
A key differeentiator bettween the ASA and A le evel assessmments is th
hat the A level
paapers draw on contentt from acro oss all four themes; un nlike the ASS, Theme 1 and
Thheme 2 con ntent is nott assessed discretely
d a A level. A further diifferentiatio
at on is
prrovided in the
t style off questions at A level when
w assesssing conte
ent that is covered
c
in Theme 1 and
a Theme e 2; for example, students may be b asked too define a concept
from Theme 1 in the AS S level asse
essments butb may be asked to explain
e the impact
off this conce
ept in the A level assessments. Students
S maay be requiired to perfform a
ca
alculation at AS level b but may be e asked to complete
c an additionaal step (suc ch as
interpret thee result of this calculattion) at A le
evel.

5.4 P
Pre-relea
ased con
ntext (A
A level Paper
P 3 only)
To
o support the investigatory nature of the sp pecification, A level Pa
aper 3 has a
brroad pre-re
eleased con ntext. This broad
b conte
ext will be released in Novemberr of the
prrevious yea
ar, will be a
available on
n the Edexc
cel website and will relate to the
ex
xamination series in th he following
g summer.
Th
he focus is on a broad d business context,
c such as an in ndustry or market
m in which
w
buusinesses operate.
o The first section of the paper
p will fo
ocus on this broad context
an
nd the seco ond section will focus on at least one strand d within the
e context
prrovided, such as a parrticular bus siness. For example, in n the sampple assessmment
m
materials, thhe broad prre-released context is the snack foods mark ket, the foc
cus in
th
he first secttion of the paper
p is the
e market foor crisps annd the stran
nd in the seecond
ection of the paper is a business operating within the snack foods market, in this
se
ca
ase Burt’s Crisps.
C
Thhe purpose of the pre-released context
c is too enable students to conduct
c
independentt learning and research. These arre importan nt skills to develop
d forr
prrogression to universitty. The pre
e-released context
c pro
ovides a bas sis for furthher
re
esearch and d investigattion by the student. Itt is also an opportunitty for them to
beecome familiar with cu urrent issue
es and tren
nds and ena able them to t draw on this
fa
amiliar conttext to resp
pond to unfamiliar stim
mulus mate erial.

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 5. Asse
essment gu
uidance

Ea
ach section of Paper 3 will contain unseen stimulus
s maaterials andd students will
ne
eed to apply their knoowledge and d understanding from all four the emes and their
t
un
nderstandinng of the brroad contex xt to this ev
vidence. Th
hrough this s, students will
m
make connec ctions betw
ween the co ontent and will demonstrate a ho olistic
un
nderstandinng of the suubject conttent (which is similar to
t the Unit 4 paper in the
20
008 specificcation). Botth sections have the same
s structture but require studeents to
ap
pply their knowledge
k a
and undersstanding to two differeent unseen contexts which
w
ha
ave been ch hosen to re
eflect the breadth and depth of the subject..
Thhe pre-released conteext supportss the findin esearch conducted with key
ngs of the re
sttakeholders
s, including universitie
es, and supports the application
a of business
s theory
to
o real-world
d business contexts.
c

5.5 Q
Question
n types
A range of question typpes have be een used ac
cross the AS
A and A levvel Busines
ss
as
ssessmentss. All of the questions are based on stimulus material, underpinning the
im
mportance of
o the appliication of knowledge
k a
and understanding to a range of
bu
usiness con
ntexts.
Shhort open response
r quuestions haave been us sed to asseess both dis
screte know wledge
an
nd understa anding of business
b concepts and issues (AO O1) as well as the app plication
off these concepts to a particular
p business
b stiimulus or context
c (AO
O2). Questio ons
as
ssessing AOO1 target lo
ower-order skills. Short open res sponse ques stions also allow
fo
or the development of student re esponses, re equiring stu
udents to make
m conneections
an
nd show a logical
l chain of reasonning and thherefore acc cess higherr-order cognitive
sk
kills and demand (AO3 3). Extendeed open res sponse itemms have bee en used to assess
ac
cross the breadth of assessment
a objectives
s.

5.6 Taxonom
my (command words)
w
Ta
axonomy re elates to th
he command words us sed in assesssments. A taxonomy for
Buusiness has
s been defined and will be applieed consistenntly to ensu
ure studentts are
re
ewarded forr demonstrrating the appropriate skills for th
he subject. Careful
co
onsiderationn has been given to th he taxonom
mies associaated with particular
p quuestion
ty
ypes to ensure that as ssessment objectives
o a targete
are ed consistenntly across
qu
uestions. The variety of comman nd words us
sed has bee en reduced to provide e clarity
an
nd consisteency in the skills busin
ness studen
nts are expeected to dis
splay in the
e
as
ssessments s.
Th
he skills stu
udents are required to o demonstrrate in theirr responses
s are summ
marised
be
elow and de etailed in th
he skills-ba
ased mark schemes
s (s
see section 5.7).

C
Command
d Definitiion
W
What is meant by / AS only. Assesses factual
f inforrmation and requires a
G
Give definition
n or examples.
C
Calculate / Assesses s quantitativ
ve skills. ‘C
Calculate’ re
equires a
U
Using calculatio
on comprisiing at leastt four stage es. For exam
mple,
locating the
t data, id
dentifying the
t formulaa, substitutiing
the data in the form
mula and pe erforming the calculation.
‘Using’ re
equires stud
dents to us
se a prescriibed diagram or
formula.
E
Explain Requires a multi-sta age definition relating
g to contextt and
includes analysis. Inn terms of graphs, inc cludes
interpretation. Requ uires students to convvey
understanding by making
m a po
oint and link
king the po
oint
with a justification.

52 © Pearso
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5. Asse
essment gu
uidance

C
Command
d Definitiion
A
Assess Requires a contextuualised and balanced answer
a withh
connectivves. Requirres students to carefully considerr
factors or events th
hat apply (a
awareness ofo competin ng
argumen nts) and ide
entify which
h are the most
m important
or releva
ant. Requirees students
s to make an
a informed d
judgement on the im mportance of somethiing.
E
Evaluate Requires an informe ed judgeme ent and suppported
conclusioon. Requires students to review information
i n
then brinng it together to form a conclusioon, drawing g on
evidencee including strengths,
s weaknesse
w es, alternatiive
actions, relevant
r da
ata or inform
mation. Requires studdents
to come to a supported judgem ment of a subject’s
s
qualities in relation to its conte
ext.

Th
hese commmand words are used consistently
c y between sections
s within papers
s and
ac
cross paperrs to ensure
e comparab
bility.

5.7 M
Mark sch
hemes
Skkills based mark schemes have been b develo
oped for ex
xtended ope en response
quuestions (8, 10, 12 an nd 20 mark k questions)). These ma ark schemees provide a
coonsistent unnderstandinng of the skkills and co
onnections between
b th
hese skills ffor each
quuestion type and relatte directly to
t the taxon nomies (command wo ords) used in the
asssessments s. The band ds within ea
ach mark sc cheme cleaarly show th
he progress sion of
th
hese skills from
f the low
wer bands to the high her bands. Focusing
F onn the skills
sttudents aree required to demonstrate within each comm mand word ensures th hat
wording is cllear, reducees reliance on subjecttive statements such asa ‘some an nalysis’
annd reflects how teache ers and exaaminers describe the qualities
q off student wo ork,
m
meaning the e expectatioons are cleaar for teach
hers and for markers. There is a
skkills-based mark schem me for each h of the commmand wo ords and theese will be
appplied conssistently.
or example, below is the
Fo t mark sccheme for a 12 mark ‘assess’
‘ question. Thee skills
ou
utlined in th
he Assessm
ment Objecttives (know
wledge and understandding, appliccation,
an
nalysis and evaluation
n) are connected and evidenced
e throughout
t t the levels.

© Pearson Education Ltd 2014.

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 5. Asse
essment gu
uidance

L
Level Mark Descriptor
L
Level 1 1–2 Isolate
ed elementts of knowle
edge and understandi
u ng –
recall based.
Weak or no relev
vant applica
ation to bus
siness
examp
ples.
Generric assertion
ns may be presented.
L
Level 2 3–4 Elemeents of know
wledge andd understan
nding, which is
applied to the bu
usiness example.
Chainss of reasoning are pre
esented, bu
ut may be
asserttions or inco
omplete.
A gene
eric or supe
erficial asse
essment is presented..
L
Level 3 5–8 Accuraate and tho
orough knowledge and d
understanding, supported
s throughout by use of
ant and effe
releva ective use of
o the busin
ness
behavviour/contexxt.
Analyttical perspe
ectives are presented,, with
develo
oped chains s of reasoning, showin
ng cause
and/or effect(s).
An atttempt at an
n assessme ent is presented, altho
ough
unlikely to show the signific
cance of competing
argumments.
L
Level 4 9–12 Accuraate and tho
orough knowledge and d
understanding, supported
s throughout by use of
ant and effe
releva ective use of
o the busin
ness
behavviour/contexxt.
A cohe
erent and lo
ogical chain
n of reason
ning, showin
ng
cause and/or effe
ect(s).
Assess
sment is baalanced, wide-rangingg and well
contex
xtualised an
nd shows an
a awarene ess of
compeeting argum
ments/factoors leading to a suppoorted
judgem
ment.

Thhe mark schemes focu us on the quality

q of sttudent answ
wers ratherr than the quantity
q
off points ma
ade and, as such, do not
n state an ny number of points sttudents shoould
m
make in their responses. To guidee teachers and
a markerrs, the brea
akdown of marks
m
allocated to each Asses
ssment Objective is given within the levels based mark
chemes to identify
sc i the
e emphasis of each As ssessment Objective
O within
w each
quuestion type.
Th
he applicatiion of the new
n mark schemes
s will be demonstrated in the exemp plar
m
materials (m
marked stud dent answers to the sa
ample assessment que estions with
ex
xaminer commentary)) which will be availab ble on the Edexcel
E web
bsite in
sp
pring 2015..

54 © Pearso
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d 2014. This ma
aterial is not copyright free.
6. Quan
ntitative sk
kills

6. Quantitative skills
s

6.1 A
Applicatiion of qu
uantitattive skills
Sttudents aree required to
t develop and demon nstrate commpetence in n the quantitative
sk
kills outlined in this se
ection throuughout the course of study.
s It is important for
th
hese skills to
t be applie ed to relevaant businesss contexts to ensure students
s de
evelop
a holistic undderstandingg of the application off quantitativ
ve skills to business.
Sttudents will already be e familiar with
w most of
o the skills through th heir study of
o GCSE
Maths and itt is important to demo onstrate how these ma athematical skills are
elevant to real-life
re r bus
siness practtice.
Quantitative skills will be
b assessed d in each exam series s, with a minimum of 10%
1 of
he total marks across the AS leve
th el or A leveel accountinng for the assessment
a of the
qu
uantitative skills outlin
ned in the Annex
A in th
he Departm ment for Eduucation’s Su
ubject
Co
ontent for Business
B doocument. These
T skills will be ass
sessed at le
evel 2
m
mathematica al skills appplied in an AS
A or A lev vel Businesss context.
W
Where appro opriate, the
e quantitativve skills ha
ave been included with hin the specified
coontent in ea
ach theme of the spec cification. The
T tables in this section capture the
direct references to thee quantitative skills within the sppecification content annd make
suuggestions of where th hese skills may be furrther develo oped throug gh applicattion to
wider busine ess contextss. These arre not exha austive and there are opportuniti
o es for
sttudents to develop
d the
ese skills th
hroughout the
t specific
cation conteent – studeents
shhould be enncouraged tot practise and apply these skills s throughou ut each theeme.
Thhe skills can also be developed through the e use of stim
mulus mate
erial and ca
ase
sttudies, provviding oppo
ortunities fo
or students to apply a range of quantitative
q e skills
to
o analyse re eal business cases. Thhis stimulus
s material should
s take
e the form of
o both
quualitative and quantitaative busineess informa
ation.
Quantitative skills will be
b assessed d in discrette ‘calculate
e’ questions
s as well as
s within
ex
xtended open-respons se question
ns. The marrk schemes s make cleaar the quantitative
sk
kills assesse
ed within questions an nd how the e marks are e allocated to these sk
kills
within extended questio ons.
Fu
urther supp
port materia als for quan
ntitative sk
kills, coverin
ng the poss
sible metho
ods,
so
ome sugges sted theme es to use for applying the skills, suggested
s practice qu
uestions
an
nd areas off possible confusion fo
or students,, are availaable on the subject pages of
th
he Edexcel website.

Q
Quantitati
ive skill Appliication
Calculate, use
C u and understand 1.1.1 The marke
et
ratios, averrages and fractions
f 1.1.2 Market res
search
1.1.3 Market positioning
2.1.4 Planning
2.2.2 Sales, revenues and costs
2.2.3 Break-eve
en
2.3.1 Profit
2.3.2 Liquidity
2.4.2 Capacity utilisation
u
3.3.1 Quantitativ
ve sales forecasting
3.5.2 Ratio analysis
3.5.3 Human res
sources

© Pearson Education Ltd 2014.

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 6. Quantitativ
Q ve skills

Q
Quantitati
ive skill Appliication
Calculate, use
C u and understand 1.1.1 The marke
et
percentagees and perc
centage 1.1.2 Market res
search
c
changes
1.1.3 Market positioning
1.3.3 Pricing strrategies
2.2.2 Sales, revenues and costs
2.3.1 Profit
2.3.2 Liquidity
2.4.2 Capacity utilisation
u
2.5.1 Economic influences
3.5.2 Ratio analysis
3.5.3 Human res
sources
4.1.1 Growing economies
e
Construct and
C a interpret a range of 1.1.3 Market positioning
s
standard graphical forrms 1.2.3 Markets
1.3.5 Marketing strategy
1.4.3 Organisatiional design
n
2.2.3 Break even
2.4.3 Stock conttrol
3.1.2 Theories of
o corporate
e strategy
ve sales forecasting
3.3.1 Quantitativ
3.3.3 Decision trrees
3.3.4 Critical path analysis
4.3.1 Marketing
The uuse of stimu
ulus material throughoout the
teachhing and lea
arning will enable
e stud
dents to
interp
pret a wide range of standard graaphical
formss.
Interpret in
ndex numbers 1.1.1 The marke
et
1.2.1 Demand
1.2.2 Supply
2.5.1 Economic influences
3.1.4 Impact of external in
nfluences
4.1.1 Growing economies
e

56 © Pearso
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d 2014. This ma
aterial is not copyright free.
6. Quan
ntitative sk
kills

Q
Quantitati
ive skill Applic
cation
Calculate cost, revenu
C ue, profit 1.1.3 Market
M positioning
a
and break-even 1.3.2 Branding
B an
nd promotio
on
1.3.3 Pricing
P strattegies
2.1.4 Planning
P
2.2.1 Sales
S foreca
asting
2.2.2 Sales,
S reven
nue and costs
2.2.3 Break-even
B
2.2.4 Budgets
B
2.3.1 Profit
P
2.3.2 Liquidity
L
2.4.1 Production,
P productivitty and effic
ciency
3.3.1 Quantitative
Q e sales fore
ecasting
3.5.1 Interpretation of financial statem
ments
3.5.2 Ratio
R analys
sis
3.5.3 Human
H reso
ources
4.2.5 Global
G comp
petitiveness
Calculate in
C nvestment appraisal 1.5.5 Business
B ch
hoices
o
outcomes and
a interpret results 2.1.4 Planning
P
2.4.2 Capacity
C utilisation
3.3.1 Quantitative
Q e sales fore
ecasting
3.3.2 Investment appraisal
3.5.2 Ratio
R analys
sis
3.5.3 Human
H reso
ources
4.1.2 Internationa
al trade and
d business growth
4.2.3 Assessment
A t of a counttry as a pro
oduction
location
Interpret values of price and 1.2.1 Demand
D
emand
income elasticity of de 1.2.2 Supply
S
1.2.3 Markets
M
1.2.4 Price
P elastic
city of dema
and
1.2.5 Income elas
sticity of de
emand
1.3.2 Branding
B an
nd promotio
on
1.3.3 Pricing
P strattegies
2.2.1 Sales
S foreca
asting
3.1.2 Theories
T of corporate strategy
3.2.1 Growth
G
4.3.1 Marketing
M
4.3.2 Niche
N markets

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 6. Quantitativ
Q ve skills

Q
Quantitati
ive skill Applic
cation
Use and intterpret quaantitative 1.1.1 The
T markett
a
and non-quuantitative information
n 1.1.2 Market
M rese
earch
in order to make decisions
1.1.3 Market
M positioning
1.2.3 Markets
M
1.2.4 Price
P elastic
city of dema
and
1.2.5 Income elas
sticity of de
emand
1.3.5 Marketing
M s
strategy
2.1.4 Planning
P
2.2.1 Sales
S foreca
asting
2.2.2 Sales,
S reven
nue and costs
2.2.3 Break-even
B
2.2.4 Budgets
B
2.3.1 Profit
P
2.3.2 Liquidity
L
2.3.3 Business
B failure
2.5.1 Economic
E in
nfluences
3.1.2 Theories
T of corporate strategy
3.1.4 Impact of external influences
3.3.1 Quantitative
Q e sales fore
ecasting
3.3.2 Investment appraisal
3.3.3 Decision
D tre
ees
3.3.4 Decision
D tre
ees
3.5.1 Interpretation of financial statem
ments
3.5.2 Ratio
R analys
sis
3.5.3 Human
H reso
ources
4.2.2 Assessment
A t of a counttry as a ma
arket
4.2.3 Assessment
A t of a counttry as a pro
oduction
location
4.2.5 Global
G comp
petitiveness
4.3.1 Marketing
M
4.3.3 Cultural/soc
C cial factors
The use of stimulus material throughou ut the
teachinng and learning will en
nable studeents to
interprret a wide range
r of business information.
This infformation should
s be drawn
d from both
qualitative and quuantitative data.
Interpret, apply
a and analyse
a This sk
kill can be developed
d t
throughout all of
informationn in written
n, graphical the sec
ctions listed
d in this tab
ble. The usee of
a
and numerrical forms stimulu
us material throughou ut the teach
hing and
learning will enabble studentss to interpret a
wide ra
ange of bus siness inforrmation in written,
w
graphiccal and nummerical formms.

58 © Pearso
on Education Ltd
d 2014. This ma
aterial is not copyright free.
7. Tran
nsferable skills

7. Trransferable skills
s

7.1 The need

d for 21s
st centu
ury skills
s
Higher educaation institu
utions, as well
w as emp ployers, hav
ve consisteently highlig
ghted
th
he need for students to develop a range of ttransferable skills to enable
e themm to
re
espond to the demand ds of underggraduate sttudy and th
he world off work with
co
onfidence.
Th
he Organisa ation for Ec
conomic Co o-operation and Development (OECD) defines
sk
kills, or com
mpetencies,, as ‘the bu
undle of kno
owledge, atttributes an
nd capacitie
es that
ca
an be learned and that enable individuals to o successfu
ully and connsistently perform
p
an
n activity or task and can be buillt upon andd extended through learning.’1
Th
he Nationall Research Council’s 21st
2 centuryy skills fram
mework identifies thre ee
ov
verarching skills doma ains: cognittive skills, iinterpersonnal skills an
nd intraperssonal
sk
kills. This se
ection mapps the new A level in Business
B to these skills
s, and outliines
ho
ow transferrable skills can be dev veloped thro ough the te eaching and d learning of
o
bu
usiness and d how thesee skills are assessed (where
( applicable) thrrough the relevant
As
ssessment Objectives.

7.2 Cognitive
e skills
Co
ognitive skills relate to
o:
● Non-routtine problem-solving: expert thin
nking, meta
acognition and creativ
vity
● Systems
s thinking: decision-m
d aking, reas
soning skills
s and critical thinking
● ICT litera
acy: the ab
bility to access, manag
ge, integratte, evaluate
e, construc
ct and
commun nicate using
g IT
● Collabora
ative proble
em-solving

Cognitiv
ve skills
Assess Teach Ev
vidence
Non-routine problem-solving
g
Expert thin
nking X X Ex
xamine info
ormation an nd data, recognise
pa
atterns and
d trends, annd use and select
th
he appropriate informaation and data.
d
Unnderstand the
t limitations of mak
king
re
ecommenda ations and drawing
co
onclusions.
Diagnose/ideentify opportunities, problems
p
nd issues and propose
an e solutions//make
re
ecommenda ations.

1
OECD (2 2012), Better Skills,
S Better Jobs,
J Better Lives (2012):
http://skiills.oecd.org/d
documents/OEECDSkillsStrattegyFINALENG G.pdf.

© Pearson Education Ltd 2014.

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 7. Transferab
T le skills

Metacognittion X X Draw on kno owledge and d understanding to

re
eflect on whhether a problem solving
sttrategy is working
w (or the likeliho
ood of a
sttrategy bein
ng effective
e) and mak ke
fu
urther recommmendatio ons as appro opriate.
Deevelop que
estioning skkills and
unnderstand that
t ‘there is no right answer’
in problem-s
solving and strategic decision
d
m
making.
C
Creativity X X Generate new and inno ovative soluutions to
bu
usiness issuues and draaw on a holistic
un
nderstandin ng of business to integ
grate
av
vailable info
ormation and data.
S
Systems t
thinking
System thinking X X Deevelop a ho olistic unde
erstanding of o
buusiness in a range of contexts
c an
nd
unnderstand how
h busineesses are afffected
byy, and resppond to, internal and external
e
influences.
Deevelop a chhain of reas soning of
ca
auses/conse equences/c costs/resultts,
co
onsidering alternative
a explanatioons.
Decision making X X Evvaluate thee consequen nces of indiividual
acctions for all parts of the
t internal and
exxternal envvironment.
Annalyse and evaluate the relative costs
annd benefits of potentia al actions aand
m
make recommendations as approp priate.
Deevelop skillls in strateg
gic decisionn
m
making and proposing evidence-b based
so
olutions.
Reasoning skills X X Deevelop skillls in system
ms analysis and
sy
ystems evaluation, and abstract
re
easoning re egarding ho ow the diffe erent
elements of a work pro ocess (such as
prroduction) interact.
C
Critical thin
nking X X Deevelop a crritical underrstanding of
o
co
oncepts and d behaviour through
unnderstandinng the exteent to whichh
individuals/oorganisationns are affec
cted by,
annd respond to, business issues, and
a the
vaariables imppacting on
ca
auses/conse equences/c costs/resultts.
Usse qualitative and qua
antitative evidence
to
o make infoormed judgements abo out
bu
usiness issuues and pro
opose evide ence-
ba
ased solutioons to thes
se.
ICT literac
cy
A
Access X Co
ollect and/oor retrieve information n and
ata to form an evidence base fro
da om
which recommmendation ns and judgements
ca
an be made e.
Manage X Deevelop skillls through organising
o data;
th
he complexity of the data
d will sup
pport
higher level thinking.

60 © Pearso
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aterial is not copyright free.
7. Tran
nsferable skills

Integrate X In
nterpret, suummarise, compare
c annd
co
ontrast infoormation an nd weigh up p
quualitative and quantitaative evidence.
Draw on sim milar or diffe
erent forms s of
epresentatio
re on and med dia.
Evaluate X Reeflect on information and
a data to
o make
ju
udgements about the quality,
q rele
evance,
ussefulness and efficienc cy of inform
mation.
Usse ICT to access a bro oader range e of
information and
a develop an
unnderstandin ng of the co
onstraints of
o
so
ources.
C
Construct X Usse ICT to generate ne ew knowledge by
addapting, appplying, rep
presenting anda
auuthoring infformation; for example, using
sp
preadsheets s for data manipulatio
m on or
grraphing toools for markket research.
C
Communica
ate X Coonvey inforrmation and d knowledg ge to
vaarious indiv
viduals and//or groups;;
deevelop skills in commu unicating th
hrough
a range of teechniques and
a media.
C
Collaborat
tive proble
em solving
g
Collaborativ
C ve X Es
stablish and
d maintain shared
problem soolving un
nderstandinng and teamm organisation and
ta n, developed
ake approprriate action
th
hrough in-class group work,
co
ompetitionss and business-based tasks.

7.3 In
nterpers
sonal sk
kills
In
nterpersona
al skills rela
ate to:
● Commun nication: ac
ctive listening, oral communicatio
on, written communic
cation,
assertive
e communic cation and non-verball communic cation
● Relations
ship buildin
ng: teamwo ork, trust, interculturaal sensitivity
y,
self-pres
sentation, social
s influe
ence and co onflict resolution and negotiation
n

In
nterperso
onal skills
s
Assess Teach Ev
vidence
C
Communic
cation
A
Active Liste
ening X En
ngage with the viewpooints of othhers and
un
nderstand any
a ambiguuities in ord
der to
de
ebate issue
es, especially with regaards to
qu
uestioning ideas and statements
s .
O
Oral communication X Deevelop skillls in articulating argum
ments
nd debates, questionin
an ng concepts and
prroviding answers to ju ustify
re
ecommenda ations throu ugh group
discussions and
a peer leearning.
Written
W X X Write cohere
W ently and sttructure res
sponses
c
communica
ation in assessmen
nts.
evelop skillls in how to
De o write for different
d
au
udiences.

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 7. Transferab
T le skills

Assertive
A X X Deevelop skillls in forminng and susttaining
c
communica ation ann argumentt, how to present an
arrgument (i.e. being as ssertive, noot
agggressive), presenting g facts and
oppinions andd drawing on o an evidence
baase to suppport a position.
Non-verball X Deevelop skillls in reinforrcing spokeen
c
communicaation co
ommunication through h body lang guage,
geestures, ton
ne and arte efacts; for
exxample, in--class prese entations and
grroup discusssions.
Relationsh
hip buildin
ng
T
Teamwork X Deevelop an understand
u ding of how to work
with others and
a supporrt team members
hrough an enterprise
th e activity,
a gro
oup
work, joint research pro ojects and
buusiness gam mes.
T
Trust X Deevelop a be elief in the integrity annd
re
eliability of another pe erson offering a
different perrspective orr behaviourr in
buusiness thro ough teamwork and groupg
work.
Interculturaal X X Deevelop an understand
u ding of interrcultural
s
sensitivity se
ensitivity, supported
s through bus siness
co
ontent; for example, in global ma arketing
annd the impo ortance of understand
u ding
cu
ulture and customs.
c
Self-presen
ntation X In
nfluence the e reactions and image es
peeople have of individu uals and theeir
ideas.
Unnderstand that
t manag ging these
im
mpressions encompass s a wide range of
beehaviours designed
d to
o create a positive
p
influence on work collea agues.
Social influence X X Deevelop an understand
u ding of curreent
issues; for example, ho ow things are
ch
hanging, un nderstandin ng differentt
influences an nd the impo ortance of this
t for
individuals/o organisationns.
Conflict res
C solution X W
Weigh up arg guments an nd, throughh doing
a
and negotiaation th
his, develop p an unders standing of how to
re
esolve confllicts in grouups (differeent
oppinions).
Syynthesise the best ide eas from alll
viewpoints and perspec ctives, and use this
o make reco
to ommendatiions/propos se
so
olutions.

62 © Pearso
on Education Ltd
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aterial is not copyright free.
7. Tran
nsferable skills

7.4 In
ntrapers
sonal sk
kills
In
ntrapersona
al skills rela
ate to:
● Adaptability: the ab
bility and willingness
w t cope with uncertain
to n, new and rapidly
changing
g conditionss, handling work stres ss and adap
pting to diffferent
personalities, commmunication styles and cultures
● Self-man nagement and
a self-development: work rem motely in virrtual terms,, work
autonom mously, be self-motiva
s ting and se
elf-monitoriing, and the willingness and
ability to
o acquire ne
ew information and skkills related to work

In
ntraperso
onal skills
s
Assess Teach Ev
vidence
A
Adaptabili
ity
Ability and
A X Deevelop the ability to adapt
a to chaanging
w
willingness to cope sittuations, unexpected events and d
ammbiguity; fo or examplee, understanding
w
with uncerttain, new
buusiness failure, adapting to changing
a
and rapidly
y
internal and external en nvironmentts, and
c
changing conditions re
esponding to t current isssues.
Handling work
w X Deevelop the ability to analyse
a the known
s
stress annd unknown as part of a process s of
m
making decis
sions/recommmendations and
co
oming to ju udgments.
Direct effortss towards constructive
c e
olutions/rec
so commendattions.
Adapting to
A o X Unnderstand that
t busine
ess can be studied
s
d
different fro
om a range e of perspectives: dev velop
sk
kills in being flexible and
a listening to the
personalitie
es,
views of othe ers. Unders stand the
c
communica ation
mportance of
im o tailoring behaviour to
s
styles and cultures peersuade, influence and d work efficciently
(e
e.g. differennt motivatioonal theorie es);
leading groups (management and
leadership sttyles); adjuusting beha aviour to
sh
how respect for value and custom ms
(c
corporate culture); and understand the
im
mplications of their ow wn behaviou ur.
S
Self-mana
agement and
a self-de
evelopmen
nt
Work remo
W otely, in X Unndertake inndependentt learning and
a
v
virtual term
ms re
esearch, rea ad around the
t subjectt, keep
upp-to-date with
w currentt issues, us
sing the
av
vailable too
ols to achievve this (i.e. range
off media chaannels) andd seek sourrces of
he g. social media for
elp as apprropriate (e.g
peeer supportt).
W
Work auton
nomously X Deevelop own n way of woorking and manage
hoomework and revision n tasks withh little or
noo supervisioon.

© Pearson Education Ltd 2014.

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 7. Transferab
T le skills

Be self-motivating X Thhrough the course con ntent A leveel

a
and self-mo
onitoring sttudents devvelop an unnderstandinng of
seetting goals
s/targets, devising
d pla
ans, the
im
mportance of o motivatio
on and pro--
acctively, and
d performannce strategies.
Willingness
W s and X Un ndertake wider
w readin
ng and
a
ability to accquire independent research skills;
s for ex
xample,
ussing the brooad pre-released conttext.
new inform mation
Bee proactivee in develop
ping relevannt skills
a
and skills related
r to
byy drawing on
o and applying subje ect
w
work knnowledge to o competitiions and re
elated
coourses, or the
t Extende
ed Project
Qualification.

64 © Pearso
on Education Ltd
d 2014. This ma
aterial is not copyright free.
8. Business and the
t Extended Projectt Qualificattion

8. Bu
usinesss and the Ex
xtende
ed Projject
Qualificatiion

Thhe Extende ed Project Qualification

Q n (EPQ) is a standalonne qualificattion that ca
an be
ta
aken alongs side an A le
evel. The EP PQ supports the devellopment of independe ent
learning skillls such as research,
r critical think
king, extend g and project
ded writing
m
management. Students s identify an
nd agree a topic of their choice which
w may or may
noot be relate
ed to an A level subjec ct they are already stuudying.
Thhere is an opportunity
o y for studennts to use the
t broad pre-released
p d context foor
A level Paper 3 as a basis for theirr EPQ throuugh comple eting an in-depth exploration
off one aspecct of the pre
e-released context. Foor example, when researching th he
market for snack foods, students might investigate an issue, such
m h as obesity
y and
th nack foods in this, forr their EPQ. Using the pre-release
he role of sn ed context in this
way supports students in deepening their un nderstandin
ng and wide ening their
peerspective of
o this partticular conte
ext.
Allternatively
y, Business students may
m wish to
o choose a topic of interest from within
th
he Business s specificatiion contentt to explore
e for their EPQ.
E For example, the ey may
be
e interestedd in exploring a contro oversial bussiness issuee such as child
c labourr,
ex
xecutive pa ay or adverttising to ch
hildren, or investigate an aspect of a particu ular
usiness, such as how a business motivates its employees.
bu
Ceentres shou
uld refer to the EPQ sp pecification
ns for furthe
er guidance
e and conta
act the
re
elevant awaarding orgaanisation if there are any
a questions regardin
ng choice o
of topic
fo
or the EPQ.

© Pearson Education Ltd 2014.

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