This Document provides summarized Class notes for Business Studies Alevels. These notes help to retain the important concepts and is effective if a user go through notes after reading the course book.
1 Business & its environment ......................................................................................................................................2
1.2 Business structure ...............................................................................................................................................2
1.3 Size of business ..................................................................................................................................................3
1.6 External influences on business activity .............................................................................................................4
2 People in organisations .......................................................................................................................................... 13
2.3 Human resource management (HRM) ............................................................................................................. 13
2.4. Organisational structure .................................................................................................................................. 18
2.5 Business communication ................................................................................................................................. 23
3 Marketing ................................................................................................................................................................ 28
3.4 Marketing planning ........................................................................................................................................... 28
3.5 Globalisation & international marketing ........................................................................................................... 32
4 Operations & project management ......................................................................................................................... 36
4.2 Operations planning ......................................................................................................................................... 36
4.4 Capacity utilisation ........................................................................................................................................... 36
4.5 Lean production & quality management .......................................................................................................... 38
4.6 Project management ........................................................................................................................................ 42
5 Finance & accounting ............................................................................................................................................. 45
5.3 Costs ................................................................................................................................................................ 45
5.6 Budgets ............................................................................................................................................................ 46
5.7 Contents of published accounts ....................................................................................................................... 48
5.8 Analysis of published accounts ........................................................................................................................ 50
5.9 Investment appraisal ........................................................................................................................................ 52
6 Strategic management ............................................................................................................................................ 54
6.1 What is strategic management? ...................................................................................................................... 54
6.2 Strategic analysis ............................................................................................................................................. 55
6.3 Strategic choice ................................................................................................................................................ 58
6.4 Strategic implementation.................................................................................................................................. 61
, 1 Business & its environment
1.2 Business structure
1.2.1 Local, national, & multinational businesses
❖ main differences between local, national, & multinational businesses
- Local business: a business which provides goods &// services to a limited & specific area of one country
i.e., a village / town. E.g., small building & carpentry firms, single-branch shops & hairdressing businesses.
- National business: a business that provides goods / services to many different regions of one country.
E.g., car-retailing firms, retail shops w/ many branches & national banking firms.
- Multinational business: a business that has its headquarters in one country but operates in at least one
country other than its home.
❖ the growing importance of international trading links & their impact on business
activity
- Free trade: no restrictions / trade barriers exist that might prevent / limit trade between countries.
- Protectionism: using barriers on free trade to protect a country’s own domestic industries.
- Tariffs: taxes imposed on imported goods to make them more expensive than they would otherwise be.
- Quotas: limits on the physical quantity / value of certain goods that may be imported.
- Voluntary export limits: an exporting country agrees to limit the quantity of certain goods sold to one
country (possibly to discourage the setting of tariffs/quotas).
- Globalisation: the increasing freedom of movement of goods, capital, & people around the world.
- The World Trade Organisation – countries committed to freeing the world from trade restrictions. They
hold meetings to discuss the reductions in tariffs & quotas & these must be agreed on by all its members.
- Free-trade blocs – countries, usually geographically grouped, that have arranged to trade w/ each other
w/o restrictions.
• NAFTA (North American Free Trade Association – USA Canada & Mexico)
• ASEAN (Association of South East Asian Nations)
• EU (European Union)
- Advantages & disadvantages of international trading links to businesses
Advantages Disadvantages
A larger market – global market Higher competition = pressure on price = less profits
Fewer restrictions placed on import/export More consumers = more variety = less economies of scale
Lower import duties by the participating governments Developing countries have lower wages = exported products are
Growth of a business cheaper = loss of jobs in other countries
Economies of scale Not all goods are acceptable for sale = alcohol, weapons, etc;
Beneficial sharing of expertise business should be aware
- Advantages & disadvantages of free trade to nations
Advantages Disadvantages
Consumers are offered a more variety Lack of efficiency = cannot compete = loss of jobs in firm
Imported raw materials = produce output = industrialisation Conflict between countries = issues to import (specialisation)
Countries can specialise = economies of scale = higher standard Transition to specialisation may lead to job losses
of living due to higher income due to better quality New business may face challenges
Importer may sell good below cost to eliminate competition
If imports exceed exports, there will be loss in foreign exchange.
, 1.2.2 Multinationals
❖ benefits & disadvantages of a multinational.
Advantages Disadvantages
Closer to main markets = lower transport costs Communication links w/ headquarters may be poor
Government grants & tax incentives to encourage Language, legal & cultural differences lead to
industrialisation misunderstanding
To the business
Close to main markets = viewed as local company = gain Poor coordination w/ headquarters = conflicting marketing
customer loyalty policies
Lower labour rates Cost of training programmes due to high skill levels
Cheaper rent & site costs
Close to main markets = more market information
Avoid import restrictions by producing in local country
Access to local natural resources; not available in host
country
Foreign currency exchange Exploitation of local workforce
To the host country
Employment opportunities No/lower business for local firms
Local firms will receive orders from multinationals Pollution from firms, higher than allowed in other countries
Competition will force better quality & efficiency in local firms Advertisements = imposing of western culture = reduced
Increased tax received by government cultural identity
Increase output, thus increased GDP Profits may be sent back to country of origin
Management expertise in community will improve Extensive depletion of limited natural resources
1.2.3 Privatisation
❖ advantages & disadvantages of privatisation in each situation.
- Privatisation: selling state-owned & controlled business organisations to investors in the private sector.
Advantages Disadvantages
Greater efficiency due to profit motive Does not consider the needs of the society
Quicker decision making than state-owned Difficult to achieve coordinated policy for the entire country
Direct involvement & control = higher motivation for managers The business is no longer accountable to the government
Unconstrained by the government on growth Can exploit customers w/ high prices
No politics involved; decisions are taken for commercial reasons Smaller business = reduced opportunities for economies of scale
Sale of business = government raises funds for other projects
Access to stock markets = increased capital investments
1.3 Size of business
1.3.1 External growth
❖ the different types of merger & takeover
- Merger: an agreement by shareholders & managers of two businesses to bring both firms together under a
common board of directors’ w/ shareholders in both businesses owning shares in the newly merged
business.
- Takeover: when a company buys more than 50% of the shares of another company & becomes the
controlling owner of it – often referred to as ‘acquisition’.
- Horizontal integration – integration w/ firms in the same industry & at same stage of production
- Vertical integration forward – integration w/ a business in the same industry but a customer of the
existing business
- Vertical integration backward – integration w/ a business in the same industry but a supplier of the
existing business
- Conglomerate integration – integration w/ a business in a different industry
- Hostile takeover: a business, who wants to remain independent, being taken over w/o consent.
- Friendly takeover: a business taken over w/ the agreement of both parties.
- Synergy: literally means that ‘the whole is greater than the sum of parts’, so in integration it is often
assumed that the new, larger business will be more successful than the two, formerly separate, businesses
were.
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