Subject Content

1-Understanding business activity

1.1 Business activity

1.1.1 The purpose and nature of business activity:

Concepts of needs, wants, scarcity and opportunity cost

Importance of specialisation

Purpose of business activity

The concept of adding value and how added value can be increased

1.2 Classification of businesses

1.2.1 Economic sectors in terms of primary, secondary and tertiary sectors:

1.2.2 Classify business enterprises between private sector and public sector in a mixed economy

Basis of business classification, using examples to illustrate the classification

Reasons for the changing importance of business classification, e.g. in developed and developing economies

1.3 Enterprise, business growth and size

1.3.1 Enterprise and entrepreneurship:

Characteristics of successful entrepreneurs

Contents of a business plan and how business

plans assist entrepreneurs

Why and how governments support business start-ups, e.g. grants, training schemes

1.3.2 The methods and problems of measuring business size:

Methods of measuring business size, e.g. number of people employed, value of output, capital employed (profit is not a method of measuring business size)

Limitations of methods of measuring business size

1.3.3 Why some businesses grow and others remain small:

Why the owners of a business may want to expand the business

Different ways in which businesses can grow, e.g. internal/external

Problems linked to business growth and how these might be overcome

Why some businesses remain small

1.3.4 Why some (new or established) businesses fail:

Causes of business failure, e.g. lack of management skills, changes in the business environment, liquidity problems

Why new businesses are at a greater risk of failing

1.4 Types of business organisation

1.4.1 The main features of different forms of business

Sole traders, partnerships, private and public limited companies, franchises and joint ventures

Differences between unincorporated businesses and limited companies

Concepts of risk, ownership and limited liability

Recommend and justify a suitable form of business organisation to owners/management in a given situation

Business organisations in the public sector, e.g. public corporations

1.5 Business objectives and stakeholder objectives

1.5.1 Businesses can have several objectives and the importance of them can change:

Need for business objectives and the importance of them

Different business objectives, e.g. survival, growth, profit and market share

Objectives of social enterprises

1.5.2 The role of stakeholder groups involved in business activity:

Main internal and external stakeholder groups

Objectives of different stakeholder groups

How these objectives might conflict with each other, use examples

1.5.3 Differences in the objectives of private sector and public sector enterprises

2-People in Business

2.1 Motivating employees

2.1.1 The importance of a well-motivated workforce:

Why people work and what motivation means

The benefits of a well-motivated workforce: labour productivity, reduced absenteeism and labour turnover

The concept of human needs, e.g. Maslow’s hierarchy

Key motivational theories: Taylor and Herzberg

2.1.2 Methods of motivation:

Financial rewards, e.g. wage, salary, bonus, commission and profit sharing

Non-financial methods, e.g. job enrichment, job rotation, teamworking, training, opportunities for promotion

Recommend and justify appropriate method(s) of motivation in given circumstances

2.2 Organization and management

2.2.1 Draw, interpret and understand simple organizational charts:

Simple hierarchical structures: levels of hierarchy, span of control, chain of command e.g. tall/short

Roles and responsibilities of directors, managers, supervisors, other employees in an organisation and inter-relationships between them

2.2.2 The role of management:

Functions of management, e.g. planning, organising, coordinating, commanding and controlling

Importance of delegation; trust versus control

2.2.3 Leadership styles:

Features of the main leadership styles, e.g. autocratic, democratic and laissez-faire

Recommend and justify an appropriate leadership style in given circumstances

2.2.4 Trade unions:

What a trade union is and the effects of employees being union members

2.3 Recruitment, selection and training of employees

2.3.1 Recruitment and selecting employees:

Recruitment and selection methods

Difference between internal recruitment and external recruitment

Main stages in recruitment and selection of employees

Recommend and justify who to employ in given circumstances

Benefits and limitations of part-time employees and full-time employees

2.3.2 The importance of training and the methods of training:

Importance of training to a business and to employees

Benefits and limitations of induction training, on-the-job training and off-the-job training

2.3.3 Why reducing the size of the workforce might be necessary:

Difference between dismissal and redundancy with examples

Understand situations in which downsizing the workforce might be necessary, e.g. automation or reduced demand for products

Recommend and justify which employees to make redundant in given circumstances

2.3.4 Legal controls over employment issues and their impact on employers and employees:

Legal controls over employment contracts, unfair dismissal, discrimination, health and safety, legal minimum wage

2.4 Internal and external communication

2.4.1 Why effective communication is important and the methods used to achieve it:

Effective communication and its importance to business

Benefits and limitations of different communication methods including those based on information technology (IT)

Recommend and justify which communication method to use in given circumstances

2.4.2 Demonstrate an awareness of communication barriers:

How communication barriers arise and problems of ineffective communication; how communication barriers can be reduced or removed

3-Marketing

3.1 Marketing, competition and the customer

3.1.1 The role of marketing:

identifying customer needs

Satisfying customer needs

Maintaining customer loyalty

Building customer relationships

3.1.2 Market changes:

Why customer/consumer spending patterns may change

The importance of changing customer needs

Why some markets have become more competitive

How businesses can respond to changing spending patterns and increased competition

3.1.3 Concepts of niche marketing and mass marketing:

Benefits and limitations of both approaches to marketing

3.1.4 How and why market segmentation is undertaken:

How markets can be segmented, e.g. according to age, socio-economic grouping, location, gender

Potential benefits of segmentation to business

Recommend and justify an appropriate method of segmentation in given circumstances

3.2 Market research

3.2.1 The role of market research and methods used

Market-orientated businesses (uses of market research information to a business)

Primary research and secondary research (benefits and limitations of each)

Methods of primary research, e.g. postal questionnaire, online survey, interviews, focus groups

The need for sampling

Methods of secondary research, e.g. online, accessing government sources, paying for commercial market research reports

Factors influencing the accuracy of market research data

3.2.2 Presentation and use of market research results:

Analyse market research data shown in the form of graphs, charts and diagrams; draw simple conclusions from such data

3.3 Marketing mix

3.3.1 Product:

The limitations and benefits of developing new products

Brand image; impact on sales and customer loyalty

The role of packaging

The product life cycle: main stages and extension strategies; draw and interpret a product life cycle diagram

How stages of the product life cycle can influence marketing decisions, e.g. promotion and pricing decisions

3.3.2 Price:

Pricing methods (benefits and limitations of different methods), e.g. cost plus, competitive, penetration, skimming, and promotional

Recommend and justify an appropriate pricing method in given circumstances

Understand the significance of price elasticity: difference between price elastic demand and price inelastic demand; importance of the concept in pricing decisions (knowledge of the formula and calculations of PED will not be assessed)

3.3.3 Place – distribution channels:

Advantages and disadvantages of different channels, e.g. use of wholesalers, retailers or direct to consumers

Recommend and justify an appropriate distribution channel in given circumstances.

3.3.4 Promotion:

The aims of promotion

Different forms of promotion and how they influence sales, e.g. advertising, sales promotion

The need for cost-effectiveness in spending the marketing budget on promotion

3.3.5 Technology and the marketing mix:

Define and explain the concept of e-commerce • The opportunities and threats of e-commerce to business and consumers

Use of the internet and social media networks for promotion

3.4 Marketing strategy

3.4.1 Justify marketing strategies appropriate to a given situation:

Importance of different elements of the marketing mix in influencing consumer decisions in given circumstances

Recommend and justify an appropriate marketing strategy in given circumstances

3.4.2 The nature and impact of legal controls related to marketing:

Impact of legal controls on marketing strategy, e.g. misleading promotion, faulty and dangerous goods

3.4.3 The opportunities and problems of entering new foreign markets:

Growth potential of new markets in other countries

Problems of entering foreign markets, e.g. cultural differences and lack of knowledge

Benefits and limitations of methods to overcome such problems, e.g. joint ventures, licensing