Business: Unit 1 & Unit 2 PDF

Business Unit 1 Unit 2 & Business................................................................................................................................................................................. 1 Unit 1 & Unit 2.....................

Business Unit 1 Unit 2 & Business................................................................................................................................................................................. 1 Unit 1 & Unit 2............................................................................................................................................................. 1 Enterprise........................................................................................................................................................................ 10 Explain the meaning of enterprise and SMEs......................................................................................................... 10 Explain how satisfying needs and wants can give opportunities to entrepreneurs.......................................... 10 Identify business opportunities................................................................................................................................ 10 Explain the role of the entrepreneur in creating, setting up, running, and developing a business................ 10 Explain the financial and non-financial motives of entrepreneurs....................................................................... 10 Explain the characteristics and skills of entrepreneurs........................................................................................ 10 Explain the importance of entrepreneurs and SMEs to the primary, secondary, and tertiary sectors of the Welsh and the rest of the UK economies............................................................................................................. 11 Evaluate the impact of entrepreneurs and SMEs on businesses and the economy......................................... 11 Identify the various stakeholders who are affected by a business...................................................................... 11 Business Plans................................................................................................................................................................. 11 Explain the purpose and main components of a business plan........................................................................... 11 Evaluate the importance of a business plan............................................................................................................ 11 Identify the main sources of information and guidance available to entrepreneurs in Wales and the rest of the UK......................................................................................................................................................................... 11 Markets............................................................................................................................................................................ 11 Explain what is meant by a market and competition............................................................................................ 11 Identify different types of market, including local/global, mass/niche, trade/consumer, product/service, and seasonal........................................................................................................................................................................ 12 Analyse and interpret market data, including market size, market share, and market trends...................... 12 Explain what is meant by market segmentation.................................................................................................... 12 Explain how markets are segmented...................................................................................................................... 12 Understand that different markets have differing degrees of competition, ranging from perfect competition to monopoly......................................................................................................................................... 12 Explain the features of perfect competition, monopolistic competition, oligopoly, and monopoly and their impact on business behavior.................................................................................................................................... 12  REPORT TITLE Understand the reasons why consumers sometimes need protection from exploitation from businesses 12 Explain what is meant by demand, supply, and equilibrium................................................................................. 13 Understand the importance of demand and supply in the market..................................................................... 13 Explain the factors that lead to a change in demand and supply........................................................................ 13 Construct and interpret demand and supply diagrams........................................................................................ 13 Understand the factors that cause the demand and supply curves to shift and the effect this has on equilibrium price and quantity.................................................................................................................................. 13 Analyse and evaluate factors which affect demand and supply and equilibrium............................................... 13 Understand the concept of price and income elasticity of demand (learners are not required to do calculations)................................................................................................................................................................. 13 Explain the nature of inferior, normal, and luxury goods.................................................................................... 13 Market Research............................................................................................................................................................ 14 Explain what is meant by market research............................................................................................................ 14 Explain the value of carrying out market research............................................................................................... 14 Distinguish between primary and secondary market research........................................................................... 14 Evaluate the use of market research to business and its stakeholders............................................................. 14 Distinguish between qualitative and quantitative data.......................................................................................... 14 Explain the different methods of primary and secondary research available to businesses........................... 14 Explain the issues involved in selecting the most appropriate method of market research.......................... 14 Evaluate the use of the different methods of primary and secondary research............................................... 14 Interpret and evaluate quantitative and qualitative research.............................................................................. 15 Explain what is meant by sampling.......................................................................................................................... 15 Explain the difference between random and quota sampling methods............................................................. 15 Understand the need to avoid bias in market research....................................................................................... 15 Evaluate the usefulness of sampling for a business and its stakeholders........................................................... 15 Business Structure.......................................................................................................................................................... 15 Explain the difference between the private and public sector............................................................................ 15 Explain the aims of private sector businesses including survival, growth, and profit...................................... 15 Explain the aims of the public sector and its role in providing goods and services in Wales and the rest of the UK......................................................................................................................................................................... 16 Evaluate the roles of the public and private sectors in the provision of goods and services........................ 16 Explain the legal structure of different private sector business organisations including sole traders, partnerships, private and public limited companies.............................................................................................. 16 Explain what is meant by unlimited liability and limited liability.......................................................................... 16 Explain the advantages and disadvantages of choosing different legal structures for a business................... 16 Evaluate the factors affecting the choice of the legal structure of a business.................................................. 16 Explain the main features of not-for-profit organisations including social enterprises, charities, co- operatives, and societies........................................................................................................................................... 16 Business Location........................................................................................................................................................... 17 Explain the factors that need to be considered when locating a new business............................................... 17 Analyse these factors in relation to the needs of the business........................................................................... 17 2  REPORT TITLE Evaluate the choice of different locations for a new business............................................................................ 17 Business Finance............................................................................................................................................................. 17 Explain the sources of finance available to entrepreneurs and SMEs in Wales and the rest of the UK...... 17 Analyse the advantages and disadvantages of each source of finance................................................................ 17 Evaluate different sources of finance available to entrepreneurs and SMEs..................................................... 17 Business Revenue and Costs........................................................................................................................................ 17 Explain what is meant by costs, revenue, and profit............................................................................................ 17 Identify costs to a business, including fixed, variable, semi-variable, direct, indirect/overhead costs, and total costs.................................................................................................................................................................... 18 Calculate revenue, costs, and profit........................................................................................................................ 18 Interpret revenue, costs, and profit calculations................................................................................................... 18 Evaluate the impact of costs, revenue, and profit on a business and its stakeholders.................................... 18 Explain what is meant by contribution................................................................................................................... 18 Explain what is meant by break-even...................................................................................................................... 18 Calculate contribution and understand its application to the calculation of break-even............................... 18 Construct and interpret break-even charts, including the margin of safety..................................................... 18 Illustrate on a break-even chart the effects of changes in costs and revenue.................................................. 19 Analyse how changes in costs and/or revenue can affect break-even ('what-if' analysis)............................... 19 Evaluate the usefulness of break-even to a business and its stakeholders........................................................ 19 Business Finance (Continued)...................................................................................................................................... 19 Explain the sources of finance available to entrepreneurs and SMEs in Wales and the rest of the UK...... 19 Unit 2........................................................................................................................................................................... 20 MARKETING.................................................................................................................................................................. 20 Explain the purpose of marketing and its importance to different types of business organisation in different situations..................................................................................................................................................... 20 Explain what is meant by market orientation, product orientation and asset-led marketing........................ 20 Explain what is meant by the marketing mix......................................................................................................... 21 Explain what is meant by product, product portfolio, brand, unique selling point (USP) and differentiation...................................................................................................................................................................................... 21 Evaluate the importance of having the right product(s) to a business and its stakeholders.......................... 21 Explain what is meant by the product life cycle.................................................................................................... 21 Explain the stages in the product life cycle............................................................................................................ 21 Explain what is meant by an extension strategy.................................................................................................... 21 Construct and interpret a product life cycle diagram including extension strategies..................................... 22 Evaluate the impact of extension strategies on a business.................................................................................. 22 Explain the relationship between the product life cycle and cash flow............................................................. 22 Analyse product life cycles and extension strategies for different businesses, products and markets........ 22 Evaluate the use of the product life cycle to a business and its stakeholders.................................................. 22 Explain how the Boston matrix can be used to manage a product portfolio................................................... 22 Evaluate the use of the Boston matrix to a business and its stakeholders....................................................... 22 3  REPORT TITLE Explain the different strategies used by businesses to determine the appropriate price for a product including penetration, skimming, cost-plus, competitive, psychological and contribution............................. 23 Understand how different types of business organisations in different situations will use different pricing strategies...................................................................................................................................................................... 23 Evaluate the importance for a business of selecting the most appropriate pricing strategy.......................... 23 Evaluate the impact of pricing decisions on a business and its stakeholders.................................................... 23 Explain what is meant by promotion...................................................................................................................... 24 Explain the different above the line and below the line strategies used by businesses to promote their products....................................................................................................................................................................... 24 Understand how different types of business organisations in different situations will use a range of different promotional strategies.............................................................................................................................. 24 Explain the importance for a business of selecting the most appropriate promotional strategy.................. 24 Evaluate the impact of selecting the right promotional strategy on a business and its stakeholders........... 24 Explain what is meant by place................................................................................................................................ 25 Explain the different distribution channels used by businesses........................................................................... 25 Explain what is meant by multi-channel distribution............................................................................................ 25 Explain the importance for a business of selecting the most appropriate distribution channel/s................. 25 Evaluate the impact of selecting the right distribution channel/s on a business and its stakeholders.......... 25 Explain how the marketing mix will differ in different contexts including local, national or global markets, goods or services markets, size of business, niche or mass markets and market structure......................... 25 Evaluate the marketing mix in different contexts................................................................................................. 26 Explain how new technology is used in marketing, including the role of digital media, social media, e-tailing and m-commerce....................................................................................................................................................... 26 Explain the impacts of new technology on existing businesses such as high street retailers......................... 26 Evaluate the impact of new technology on the marketing activities of businesses and its stakeholders..... 26 Finanace........................................................................................................................................................................... 27 Understand the role of the finance department................................................................................................... 27 Explain what is meant by a budget.......................................................................................................................... 27 Explain the purpose of budgets................................................................................................................................ 27 Evaluate the use of budgets to a business and its stakeholders.......................................................................... 27 Explain the sources of finance available to established and large businesses in Wales and the rest of the UK and consider their appropriateness for different circumstances................................................................. 27 Understand that sources of finance can be internal and/or external................................................................. 27 Explain internal sources of finance including owner’s capital, retained profit and sale of assets.................. 27 Explain external sources/methods of finance including overdrafts, loans, share capital, venture capital, leasing, trade credit and debt factoring.................................................................................................................. 28 Explain the advantages and disadvantages of different sources of finance to a business and the importance of choosing appropriate sources............................................................................................................................. 28 Evaluate the impact of different sources of finance to a business and its stakeholders.................................. 28 Explain what is meant by cash flow......................................................................................................................... 28 Explain what is meant by a cash flow forecast....................................................................................................... 28 Construct, calculate and interpret cash flow forecasts........................................................................................ 29 4  REPORT TITLE Evaluate the impact of a cash flow forecast on a business and its stakeholders.............................................. 29 Explain the causes of cash flow problems.............................................................................................................. 29 Explain strategies by which a business can improve cash flow........................................................................... 29 Evaluate the strategies a business uses to improve cash flow problems........................................................... 29 Explain the benefits and limitations of cash flow forecasts.................................................................................. 29 Explain the main components of a trading, profit and loss account (the income statement) and the way that it is constructed.................................................................................................................................................. 30 Calculate gross profit and net profit....................................................................................................................... 30 Evaluate ways in which a business could improve its profit................................................................................ 30 Calculate and interpret gross and net profit margins........................................................................................... 30 Evaluate the calculations of profitability ratios to assess the performance of a business............................... 30 Human reasources......................................................................................................................................................... 30 Understand the role of human resource management........................................................................................ 30 Explain the importance of human resource planning........................................................................................... 31 Explain the link between human resource planning and the achievement of business objectives................ 31 Describe the main elements of the recruitment process.................................................................................... 31 Explain different methods of recruitment.............................................................................................................. 31 Evaluate the advantages and disadvantages of internal and external recruitment........................................... 31 Explain the role of selection methods in the recruitment process.................................................................... 31 Evaluate the different selection methods and their appropriateness for different types of jobs.................. 32 Explain the importance of training for businesses................................................................................................ 32 Explain the types of training used in businesses.................................................................................................... 32 Evaluate the benefits and drawbacks of different types of training.................................................................... 32 Explain the importance of employee motivation.................................................................................................. 32 Explain different theories of motivation................................................................................................................. 32 1. F.W. Taylor (Scientific Management).............................................................................................................. 32 2. E. Mayo (Human Relations Theory)................................................................................................................ 33 3. A. Maslow (Hierarchy of Needs).................................................................................................................... 33 4. F. Herzberg (Two-Factor Theory).................................................................................................................. 33 5. V. Vroom, L. Porter, and E. Lawler (Expectancy Theory)........................................................................... 33 Evaluate the use of motivation theories in businesses......................................................................................... 33 Explain the role of leadership and management in organisations....................................................................... 34 Explain the differences between leadership and management............................................................................ 34 Evaluate different leadership styles and their impact on employee performance............................................ 34 Explain the importance of employee relations...................................................................................................... 34 Evaluate the impact of poor employee relations................................................................................................... 34 Explain the role of trade unions in protecting workers’ rights........................................................................... 35 Evaluate the role of trade unions in employee relations..................................................................................... 35 Understand the legal framework surrounding employment............................................................................... 35 Explain the key employment laws affecting businesses........................................................................................ 35 5  REPORT TITLE Evaluate the impact of employment legislation on businesses............................................................................ 35 Explain what is meant by added value..................................................................................................................... 35 Calculate added value................................................................................................................................................ 35 3. Explain ways of increasing value added.............................................................................................................. 36 4. Evaluate the importance of added value to a business and its stakeholders................................................ 36 5. Explain the different methods of production including job, batch, and flow................................................ 36 6. Evaluate appropriate methods of production for businesses......................................................................... 36 7. Explain what is meant by productivity................................................................................................................ 36 8. Understand ways of measuring productivity..................................................................................................... 37 9. Explain ways in which productivity can be increased....................................................................................... 37 10. Evaluate the importance and impact of productivity for a business and its stakeholders........................ 37 11. Explain the concept of capacity utilisation....................................................................................................... 37 12. Calculate and interpret capacity utilisation..................................................................................................... 37 13. Evaluate the concept of capacity utilisation for a business and its stakeholders....................................... 38 14. Explain how new technology can be used by businesses, including the use of information technology, CAD, CAM, and robotics......................................................................................................................................... 38 15. Evaluate the impact of new technology on the various stakeholders of a business.................................. 38 16. Evaluate the importance and impact of technology in the operations of a business................................ 39 17. Explain what is meant by lean production....................................................................................................... 39 18. Explain the range of lean production practices that are used to reduce waste and improve productivity including kaizen (continuous improvement), just-in-time, cell production, and time-based management... 39 19. Evaluate the importance and impact of lean production for businesses and their stakeholders............ 39 What is meant by quality?......................................................................................................................................... 40 2. Analyse the importance of quality to a business............................................................................................... 40 3. Difference between quality control and quality assurance.............................................................................. 40 4. What is total quality management (TQM)?....................................................................................................... 40 5. What is innovation, research and development (R&D)?................................................................................. 40 1. What is the importance of purchasing and working with suppliers?............................................................. 41 2. What is stock control?.......................................................................................................................................... 41 3. Methods of stock control..................................................................................................................................... 41 1. What are economies of scale?............................................................................................................................. 41 2. Internal economies of scale.................................................................................................................................. 42 3. External economies of scale............................................................................................................................. 42 4. Internal diseconomies of scale............................................................................................................................. 42 5. Problems caused by internal diseconomies of scale......................................................................................... 42 6. Survival of small firms............................................................................................................................................ 42 Business................................................................................................................................................................................. 1 Enterprise........................................................................................................................................................................ 10 Explain the meaning of enterprise and SMEs......................................................................................................... 10 Explain how satisfying needs and wants can give opportunities to entrepreneurs.......................................... 10 6  REPORT TITLE Identify business opportunities................................................................................................................................ 10 Explain the role of the entrepreneur in creating, setting up, running, and developing a business................ 10 Explain the financial and non-financial motives of entrepreneurs....................................................................... 10 Explain the characteristics and skills of entrepreneurs........................................................................................ 10 Explain the importance of entrepreneurs and SMEs to the primary, secondary, and tertiary sectors of the Welsh and the rest of the UK economies............................................................................................................. 11 Evaluate the impact of entrepreneurs and SMEs on businesses and the economy......................................... 11 Identify the various stakeholders who are affected by a business...................................................................... 11 Business Plans................................................................................................................................................................. 11 Explain the purpose and main components of a business plan........................................................................... 11 Evaluate the importance of a business plan............................................................................................................ 11 Identify the main sources of information and guidance available to entrepreneurs in Wales and the rest of the UK......................................................................................................................................................................... 11 Markets............................................................................................................................................................................ 11 Explain what is meant by a market and competition............................................................................................ 11 Identify different types of market, including local/global, mass/niche, trade/consumer, product/service, and seasonal........................................................................................................................................................................ 12 Analyse and interpret market data, including market size, market share, and market trends...................... 12 Explain what is meant by market segmentation.................................................................................................... 12 Explain how markets are segmented...................................................................................................................... 12 Understand that different markets have differing degrees of competition, ranging from perfect competition to monopoly......................................................................................................................................... 12 Explain the features of perfect competition, monopolistic competition, oligopoly, and monopoly and their impact on business behavior.................................................................................................................................... 12 Understand the reasons why consumers sometimes need protection from exploitation from businesses 12 Explain what is meant by demand, supply, and equilibrium................................................................................. 13 Understand the importance of demand and supply in the market..................................................................... 13 Explain the factors that lead to a change in demand and supply........................................................................ 13 Construct and interpret demand and supply diagrams........................................................................................ 13 Understand the factors that cause the demand and supply curves to shift and the effect this has on equilibrium price and quantity.................................................................................................................................. 13 Analyse and evaluate factors which affect demand and supply and equilibrium............................................... 13 Understand the concept of price and income elasticity of demand (learners are not required to do calculations)................................................................................................................................................................. 13 Explain the nature of inferior, normal, and luxury goods.................................................................................... 13 Market Research............................................................................................................................................................ 14 Explain what is meant by market research............................................................................................................ 14 Explain the value of carrying out market research............................................................................................... 14 Distinguish between primary and secondary market research........................................................................... 14 Evaluate the use of market research to business and its stakeholders............................................................. 14 Distinguish between qualitative and quantitative data.......................................................................................... 14 7  REPORT TITLE Explain the different methods of primary and secondary research available to businesses........................... 14 Explain the issues involved in selecting the most appropriate method of market research.......................... 14 Evaluate the use of the different methods of primary and secondary research............................................... 14 Interpret and evaluate quantitative and qualitative research.............................................................................. 15 Explain what is meant by sampling.......................................................................................................................... 15 Explain the difference between random and quota sampling methods............................................................. 15 Understand the need to avoid bias in market research....................................................................................... 15 Evaluate the usefulness of sampling for a business and its stakeholders........................................................... 15 Business Structure.......................................................................................................................................................... 15 Explain the difference between the private and public sector............................................................................ 15 Explain the aims of private sector businesses including survival, growth, and profit...................................... 15 Explain the aims of the public sector and its role in providing goods and services in Wales and the rest of the UK......................................................................................................................................................................... 16 Evaluate the roles of the public and private sectors in the provision of goods and services........................ 16 Explain the legal structure of different private sector business organisations including sole traders, partnerships, private and public limited companies.............................................................................................. 16 Explain what is meant by unlimited liability and limited liability.......................................................................... 16 Explain the advantages and disadvantages of choosing different legal structures for a business................... 16 Evaluate the factors affecting the choice of the legal structure of a business.................................................. 16 Explain the main features of not-for-profit organisations including social enterprises, charities, co- operatives, and societies........................................................................................................................................... 16 Business Location........................................................................................................................................................... 17 Explain the factors that need to be considered when locating a new business............................................... 17 Analyse these factors in relation to the needs of the business........................................................................... 17 Evaluate the choice of different locations for a new business............................................................................ 17 Business Finance............................................................................................................................................................. 17 Explain the sources of finance available to entrepreneurs and SMEs in Wales and the rest of the UK...... 17 Analyse the advantages and disadvantages of each source of finance................................................................ 17 Evaluate different sources of finance available to entrepreneurs and SMEs..................................................... 17 Business Revenue and Costs........................................................................................................................................ 17 Explain what is meant by costs, revenue, and profit............................................................................................ 17 Identify costs to a business, including fixed, variable, semi-variable, direct, indirect/overhead costs, and total costs.................................................................................................................................................................... 18 Calculate revenue, costs, and profit........................................................................................................................ 18 Interpret revenue, costs, and profit calculations................................................................................................... 18 Evaluate the impact of costs, revenue, and profit on a business and its stakeholders.................................... 18 Explain what is meant by contribution................................................................................................................... 18 Explain what is meant by break-even...................................................................................................................... 18 Calculate contribution and understand its application to the calculation of break-even............................... 18 Construct and interpret break-even charts, including the margin of safety..................................................... 18 8  REPORT TITLE Illustrate on a break-even chart the effects of changes in costs and revenue.................................................. 19 Analyse how changes in costs and/or revenue can affect break-even ('what-if' analysis)............................... 19 Evaluate the usefulness of break-even to a business and its stakeholders........................................................ 19 Business Finance (Continued)...................................................................................................................................... 19 Explain the sources of finance available to entrepreneurs and SMEs in Wales and the rest of the UK...... 19 9  REPORT TITLE Unit 1 Enterprise Explain the meaning of enterprise and SMEs Enterprise refers to the activity of starting and managing a business to meet needs or solve problems, often involving innovation and risk-taking. SMEs (Small and Medium Enterprises) are businesses with a limited number of employees and turnover, typically less than 250 employees, contributing significantly to employment and economic growth. Explain how satisfying needs and wants can give opportunities to entrepreneurs By identifying unmet needs and wants in the market, entrepreneurs can create products or services that offer solutions, leading to potential business opportunities. Identify business opportunities Business opportunities can be found by analyzing trends, market gaps, consumer behavior, technological advances, and even through creative thinking. Explain the role of the entrepreneur in creating, setting up, running, and developing a business Entrepreneurs drive the creation of business ideas, set up the structure and strategy, run the daily operations, and look for ways to expand and grow the business over time. Explain the financial and non-financial motives of entrepreneurs Financial motives: Profit, wealth creation, financial independence. Non-financial motives: Personal satisfaction, social impact, lifestyle, and passion for the business idea. Explain the characteristics and skills of entrepreneurs Entrepreneurs tend to be innovative, risk-taking, determined, and adaptable. They require skills in leadership, problem-solving, decision-making, and financial management. 10  REPORT TITLE Explain the importance of entrepreneurs and SMEs to the primary, secondary, and tertiary sectors of the Welsh and the rest of the UK economies Entrepreneurs and SMEs contribute to economic growth, job creation, and innovation. In the primary sector, they may be involved in natural resource extraction. In the secondary sector, they might be involved in manufacturing, and in the tertiary sector, they may provide services. Evaluate the impact of entrepreneurs and SMEs on businesses and the economy Entrepreneurs and SMEs stimulate competition, innovation, and job creation. They contribute to local economies and often provide unique products or services. However, they can face challenges like limited resources and access to finance. Identify the various stakeholders who are affected by a business Stakeholders include owners, employees, customers, suppliers, government, shareholders, and the local community. Each group has a vested interest in the business's success. Business Plans Explain the purpose and main components of a business plan Purpose: A business plan provides direction, sets objectives, and helps secure funding. Main components: Executive summary, business description, market analysis, organizational structure, product/service offering, financial projections, and funding needs. Evaluate the importance of a business plan A business plan helps to organize thoughts, identify potential challenges, and clarify goals. It is essential for attracting investors and securing loans, but it must be adaptable to changing circumstances. Identify the main sources of information and guidance available to entrepreneurs in Wales and the rest of the UK Sources include government websites, business advisory services, chambers of commerce, banks, industry associations, and online resources such as forums and business development centers. Markets Explain what is meant by a market and competition A market is a space or system where buyers and sellers interact. Competition refers to other businesses offering similar products or services, influencing price and consumer choice. 11  REPORT TITLE Identify different types of market, including local/global, mass/niche, trade/consumer, product/service, and seasonal Local/Global: Geographic scope of the market. Mass/Niche: Size and specialization of the target market. Trade/Consumer: Businesses selling to other businesses or directly to consumers. Product/Service: Tangible goods or intangible services. Seasonal: Products or services with demand that fluctuates based on the time of year. Analyse and interpret market data, including market size, market share, and market trends Market size: The total volume or value of sales in a market. Market share: The percentage of the total market controlled by a business. Market trends: Patterns or changes in consumer behavior and industry conditions over time. Explain what is meant by market segmentation Market segmentation involves dividing a broad market into smaller groups based on shared characteristics (e.g., demographics, location, lifestyle). Explain how markets are segmented Markets are segmented using criteria like age, income, location, purchasing behavior, and product preferences.Evaluate the importance and impact of segmentation to a business and its customers Benefits for business: Tailored marketing strategies, better resource allocation, increased customer satisfaction. Benefits for customers: More relevant products/services, personalized marketing. Understand that different markets have differing degrees of competition, ranging from perfect competition to monopoly Perfect competition: Many businesses, identical products, no barriers to entry. Monopoly: One business dominates, with significant barriers to entry. Explain the features of perfect competition, monopolistic competition, oligopoly, and monopoly and their impact on business behavior Perfect competition: Many firms, no product differentiation, and price is determined by supply and demand. Monopolistic competition: Many firms with differentiated products, some control over price. Oligopoly: Few firms, interdependence, and significant barriers to entry. Monopoly: One firm dominates, controls supply, and sets prices. Understand the reasons why consumers sometimes need protection from exploitation from businesses Consumers may need protection from high prices, poor-quality goods, and misleading advertising, which could exploit their lack of knowledge or bargaining power. 12  REPORT TITLE Explain what is meant by demand, supply, and equilibrium Demand: The quantity of a good or service consumers are willing to buy at a given price. Supply: The quantity of a good or service producers are willing to offer at a given price. Equilibrium: The price at which demand equals supply. Understand the importance of demand and supply in the market The interaction of demand and supply determines market prices, guiding businesses' production decisions. Explain the factors that lead to a change in demand and supply Demand: Changes in consumer income, preferences, price of substitutes/complements, etc. Supply: Changes in production costs, technology, government regulation, etc.Explain how a change in demand and supply can impact on price and quantity An increase in demand leads to a higher price and quantity. An increase in supply leads to a lower price and higher quantity. Construct and interpret demand and supply diagrams A demand and supply diagram shows the relationship between price and quantity. The intersection of the curves is the equilibrium point. Understand the factors that cause the demand and supply curves to shift and the effect this has on equilibrium price and quantity Shifts in demand or supply cause the equilibrium price and quantity to change. A shift to the right (increase) causes higher prices and quantities; a shift to the left (decrease) causes lower prices and quantities. Analyse and evaluate factors which affect demand and supply and equilibrium Factors include consumer income, tastes, cost of production, and external factors like government intervention. Understand the concept of price and income elasticity of demand (learners are not required to do calculations) Price elasticity: Measures the responsiveness of demand to price changes. Income elasticity: Measures the responsiveness of demand to income changes. Explain the nature of inferior, normal, and luxury goods Inferior goods: Demand decreases as income increases. Normal goods: Demand increases as income increases. Luxury goods: High-quality, expensive goods with demand increasing more than proportionally with income. Great! Here's the continuation of your revision: 13  REPORT TITLE Market Research Explain what is meant by market research Market research involves collecting, analyzing, and interpreting data about customers, competitors, and the market to help businesses make informed decisions. Explain the value of carrying out market research Market research helps businesses understand customer needs, reduce risks, identify opportunities, and make decisions based on data rather than assumptions. Distinguish between primary and secondary market research Primary research: Data collected firsthand by the business (e.g., surveys, interviews, observations). Secondary research: Data gathered from existing sources (e.g., government reports, industry publications, competitor analysis). Evaluate the use of market research to business and its stakeholders Market research helps businesses make informed decisions, minimize risks, and improve products. Stakeholders such as investors, employees, and customers can benefit from data-driven decision- making and better market positioning. Distinguish between qualitative and quantitative data Qualitative data: Descriptive and non-numerical, providing insights into feelings, opinions, and behaviors (e.g., focus groups). Quantitative data: Numerical data that can be measured and analyzed statistically (e.g., sales figures, survey results). Explain the different methods of primary and secondary research available to businesses Primary research methods: Surveys, interviews, focus groups, observations. Secondary research methods: Online databases, government reports, industry publications, academic journals. Explain the issues involved in selecting the most appropriate method of market research Issues include budget constraints, time available, the accuracy of data required, and the specific business objectives that need to be addressed. Evaluate the use of the different methods of primary and secondary research Primary research: More specific and tailored to the business but more time-consuming and costly. 14  REPORT TITLE Secondary research: Quicker and less expensive, but may not provide data specific to the business's needs. Interpret and evaluate quantitative and qualitative research Quantitative research provides clear numerical data that can be analyzed statistically, whereas qualitative research gives deeper insights into customer feelings, but is harder to analyze. Explain what is meant by sampling Sampling refers to selecting a small group from a larger population to represent the entire group in market research. Explain the difference between random and quota sampling methods Random sampling: Every individual has an equal chance of being selected. Quota sampling: Participants are selected to meet specific characteristics (e.g., age, gender, income) to match the overall population profile. Understand the need to avoid bias in market research Bias occurs when the research methods, questions, or sample are skewed, leading to inaccurate or unrepresentative results. Businesses should aim to avoid bias to ensure the research is valid and useful. Evaluate the usefulness of sampling for a business and its stakeholders Sampling helps businesses gather data quickly and cost-effectively. However, the accuracy of the results depends on the sampling method used, and stakeholders should be aware of potential sampling biases. Business Structure Explain the difference between the private and public sector Private sector: Comprises businesses owned by individuals or companies, aiming for profit (e.g., sole traders, corporations). Public sector: Comprises organizations owned and operated by the government, aiming to provide services (e.g., NHS, education, local authorities). Explain the aims of private sector businesses including survival, growth, and profit Survival: The ability to continue operating, especially in the early stages. Growth: Expansion in terms of size, market share, and profitability. Profit: Earning a surplus from business activities after covering costs. 15  REPORT TITLE Explain the aims of the public sector and its role in providing goods and services in Wales and the rest of the UK The public sector aims to provide essential services such as health, education, and infrastructure, with a focus on accessibility and equality rather than profit. Evaluate the roles of the public and private sectors in the provision of goods and services Private sector: Efficient, innovative, and customer-focused, but may prioritize profit over social impact. Public sector: Focuses on equity, accessibility, and welfare, but can be less efficient due to bureaucracy. Explain the legal structure of different private sector business organisations including sole traders, partnerships, private and public limited companies Sole trader: Owned and run by one individual, unlimited liability. Partnership: Two or more individuals share ownership, responsibilities, and liabilities. Private limited company (Ltd): Owned by shareholders with limited liability. Public limited company (PLC): Can sell shares to the public, and shares are traded on the stock market. Explain what is meant by unlimited liability and limited liability Unlimited liability: Owners are personally responsible for business debts. Limited liability: Owners are only responsible for business debts up to the amount they invested in the company. Explain the advantages and disadvantages of choosing different legal structures for a business Sole trader: Simple to set up, but high risk due to unlimited liability. Partnership: Shared responsibility, but potential conflicts. Ltd and PLC: Limited liability and easier access to finance, but more regulations and costs. Evaluate the factors affecting the choice of the legal structure of a business Factors include the level of control desired, liability concerns, ease of raising capital, and the potential for business growth. Explain the main features of not-for-profit organisations including social enterprises, charities, co-operatives, and societies Social enterprises: Businesses that aim to address social issues and reinvest profits into the mission. Charities: Organizations that raise funds for charitable causes. Co-operatives: Businesses owned and run by their members for mutual benefit. Societies: Organizations formed for a common interest or purpose, often non-profit.Evaluate the importance and impact of the legal structure for the various stakeholders for a business 16  REPORT TITLE The legal structure affects stakeholders in terms of liability, control, access to profits, and the ability to raise funds. It also influences taxation and reporting requirements. Business Location Explain the factors that need to be considered when locating a new business Factors include proximity to customers, suppliers, transport links, labor availability, costs, local competition, and government support. Analyse these factors in relation to the needs of the business For example, a retail business may need high foot traffic, while a tech business may prioritize access to skilled workers. The location should align with the business's operations and target market. Evaluate the choice of different locations for a new business Urban locations: High customer traffic but higher costs. Rural locations: Lower costs but potentially fewer customers and higher distribution challenges. Business Finance Explain the sources of finance available to entrepreneurs and SMEs in Wales and the rest of the UK Sources include personal savings, loans, grants, crowdfunding, venture capital, angel investors, and government schemes like the Start Up Loans Scheme. Analyse the advantages and disadvantages of each source of finance Personal savings: No interest, but risky for personal finances. Loans: Access to funds but involves debt and interest payments. Grants: Non-repayable, but competitive and may require specific conditions. Crowdfunding: Potential for wide support but uncertain outcomes. Evaluate different sources of finance available to entrepreneurs and SMEs Entrepreneurs must consider the cost of finance, risk, and the level of control they wish to maintain when choosing between different sources. Business Revenue and Costs Explain what is meant by costs, revenue, and profit Costs: Expenses incurred in the production or operation of a business (e.g., raw materials, wages). Revenue: The income generated from selling goods or services. 17  REPORT TITLE Profit: The surplus remaining after all costs have been deducted from revenue (Profit = Revenue - Costs). Identify costs to a business, including fixed, variable, semi-variable, direct, indirect/overhead costs, and total costs Fixed costs: Costs that remain constant regardless of production levels (e.g., rent). Variable costs: Costs that change depending on the level of output (e.g., raw materials). Semi-variable costs: Costs that have both fixed and variable components (e.g., electricity bills). Direct costs: Costs directly associated with production (e.g., raw materials). Indirect (overhead) costs: Costs not directly tied to production but necessary for operations (e.g., administration). Total costs: The sum of fixed and variable costs. Calculate revenue, costs, and profit Revenue = Price × Quantity sold. Profit = Revenue - Total costs. Interpret revenue, costs, and profit calculations Understanding these calculations helps businesses assess their financial health, make pricing decisions, and identify areas for cost control. Evaluate the impact of costs, revenue, and profit on a business and its stakeholders Costs affect profitability and pricing decisions. Revenue reflects the business’s ability to attract customers. Profit is a key performance indicator, influencing reinvestment, growth, and stakeholder satisfaction (e.g., employees, investors). Explain what is meant by contribution Contribution: The amount each unit sold contributes to covering fixed costs after accounting for variable costs (Contribution = Price - Variable cost per unit). Explain what is meant by break-even Break-even is the point where total revenue equals total costs, resulting in zero profit. It helps businesses understand how much they need to sell to cover their costs. Calculate contribution and understand its application to the calculation of break- even Break-even point = Fixed costs ÷ Contribution per unit. Construct and interpret break-even charts, including the margin of safety Break-even chart: A graphical representation of total revenue, total costs, and break-even point. 18  REPORT TITLE Margin of safety: The difference between actual sales and break-even sales, indicating how much sales can fall before the business starts making a loss. Illustrate on a break-even chart the effects of changes in costs and revenue Increase in fixed costs: The break-even point shifts to the right. Increase in sales price or reduction in variable costs: The break-even point shifts to the left. Analyse how changes in costs and/or revenue can affect break-even ('what-if' analysis) If costs rise or prices fall, the break-even point increases, meaning the business needs to sell more to cover costs. Conversely, reducing costs or increasing prices can lower the break-even point. Evaluate the usefulness of break-even to a business and its stakeholders Break-even analysis helps businesses set sales targets, understand profitability, and assess financial risks. However, it may be less useful if costs or market conditions fluctuate significantly. Business Finance (Continued) Explain the sources of finance available to entrepreneurs and SMEs in Wales and the rest of the UK Personal savings: Low risk but depletes personal funds. Bank loans: Requires good credit, involves interest payments, and fixed repayment schedules. Government grants and loans: Non-repayable or low-interest financing, but competitive and may require specific conditions. Venture capital: Investment in exchange for equity, providing both finance and expertise, but involves giving up control. Crowdfunding: Funds raised online from many small investors, but success is not guaranteed. 19  REPORT TITLE Unit 2 MARKETING Explain the purpose of marketing and its importance to different types of business organisation in different situations Answer: Marketing helps businesses identify, meet and anticipate customer needs. It's key for attracting and retaining customers, increasing sales, and staying competitive. For new businesses, it builds awareness. For established ones, it maintains loyalty and market share. Explain what is meant by market orientation, product orientation and asset-led marketing Answer: Market orientation: Focuses on customer needs and wants. Product orientation: Focuses on the product and quality. Asset-led marketing: Uses the firm’s strengths (like brand or tech) alongside market research. 20  REPORT TITLE Explain what is meant by the marketing mix Answer: The marketing mix is the combination of 4Ps (Product, Price, Place, Promotion) used to market a product effectively. Explain what is meant by product, product portfolio, brand, unique selling point (USP) and differentiation Answer: Product: A good or service offered by a business. Product portfolio: Range of products a business sells. Brand: A name, symbol or design that identifies a product. USP: A feature that makes a product stand out. Differentiation: Making a product unique in the market. Evaluate the importance of having the right product(s) to a business and its stakeholders Answer: A strong product meets customer needs, drives sales and improves reputation. Stakeholders like investors and customers benefit from business success and satisfaction. Explain what is meant by the product life cycle Answer: A model showing the stages a product goes through: Introduction, Growth, Maturity, and Decline. Explain the stages in the product life cycle Answer: 1. Introduction – New product launch, high costs. 2. Growth – Sales increase, profit starts. 3. Maturity – Sales peak, competition increases. 4. Decline – Sales fall, product may be withdrawn. Explain what is meant by an extension strategy Answer: Techniques used to prolong a product’s life, like rebranding, new features, or new markets. 21  REPORT TITLE Construct and interpret a product life cycle diagram including extension strategies Answer: Draw a graph with sales on the Y-axis and time on the X-axis. Label the four stages, and show where extension strategies are used to stop decline and restart growth. Evaluate the impact of extension strategies on a business Answer: Can boost sales and delay product decline, but may involve extra cost and may not always work if the market is saturated. Explain the relationship between the product life cycle and cash flow Answer: Introduction = Negative cash flow (high costs). Growth = Cash inflow starts. Maturity = Strong cash flow. Decline = Falling cash flow. Analyse product life cycles and extension strategies for different businesses, products and markets Answer: Businesses must adapt their strategy depending on the product’s stage. Extension strategies work better for established brands or in markets with loyal customers. Evaluate the use of the product life cycle to a business and its stakeholders Answer: Helps in planning and resource allocation, but it’s only a model—actual product performance can vary. Explain how the Boston matrix can be used to manage a product portfolio Answer: Categorises products into Stars, Cash Cows, Question Marks, and Dogs based on market growth and share. Helps with decisions on investment and product development. Evaluate the use of the Boston matrix to a business and its stakeholders Answer: Helps manage resources effectively, but oversimplifies products and doesn't consider external Pricchanges like trends or competition. 22  REPORT TITLE Explain the different strategies used by businesses to determine the appropriate price for a product including penetration, skimming, cost-plus, competitive, psychological and contribution Penetration: Low price to enter the market and attract customers. Skimming: High price at launch to maximise profits from early adopters. Cost-plus: Add a % markup to the cost of making the product. Competitive: Set prices based on what rivals charge. Psychological: Pricing like £9.99 to make it seem cheaper. Contribution: Price based on how much a product contributes to covering fixed costs and generating profit (Price - Variable Cost). Understand how different types of business organisations in different situations will use different pricing strategies Start-ups: Often use penetration or skimming to establish themselves. Established firms: May use competitive or psychological pricing. Luxury brands: Tend to use skimming to maintain exclusivity. Mass-market firms: Likely to use cost-plus or competitive to stay affordable. Evaluate the importance for a business of selecting the most appropriate pricing strategy Choosing the right strategy can: Attract the right customers. Match market expectations. Maximise profits. Keep the business competitive. Poor pricing can mean lost sales, damaged brand, or reduced profits. Evaluate the impact of pricing decisions on a business and its stakeholders Customers: Affects affordability and value perception. Owners/shareholders: Influences profits and dividends. Employees: Strong sales from good pricing can secure jobs. Suppliers: Stable pricing can support steady demand. Government: Interested in fair pricing and avoiding price-fixing. 23  REPORT TITLE Explain what is meant by promotion Promotion is how a business communicates with customers to inform, persuade, and remind them about its products or brand. Explain the different above the line and below the line strategies used by businesses to promote their products Above the line (mass media): TV, radio, newspapers, cinema, internet ads — aimed at a large audience. Below the line (more direct): Flyers, sponsorships, social media, direct mail, PR, in-store displays — targeted promotion. Understand how different types of business organisations in different situations will use a range of different promotional strategies New businesses: Social media and influencer marketing (cheap and targeted). Large firms: TV or digital campaigns for mass exposure. Luxury brands: High-end magazine ads and sponsorships. Seasonal firms: Short bursts of advertising near peak seasons. Explain the importance for a business of selecting the most appropriate promotional strategy The right strategy: Reaches the target audience effectively. Matches the budget. Reinforces the brand image. Helps increase sales or launch a product successfully. Evaluate the impact of selecting the right promotional strategy on a business and its stakeholders Business: Boosts sales, improves brand awareness, increases market share. Customers: Receive useful info and better product awareness. Employees: Success from good promo can secure jobs. Suppliers: May see increased demand. Shareholders: Higher sales → better returns. 24  REPORT TITLE Explain what is meant by place Place refers to how a product gets from the business to the customer — the distribution channel. Explain the different distribution channels used by businesses 1. Direct: Manufacturer → Customer (e.g. websites, own shops). 2. Retail: Manufacturer → Retailer → Customer (e.g. supermarkets). 3. Wholesale: Manufacturer → Wholesaler → Retailer → Customer — helps with bulk buying. Explain what is meant by multi-channel distribution Using more than one method to sell products to customers (e.g. online store and physical shop). Gives customers more choice and convenience. Explain the importance for a business of selecting the most appropriate distribution channel/s The right channel: Ensures product availability to target customers. Matches the product type (e.g. luxury vs everyday goods). Affects costs and speed of delivery. Impacts customer experience. Evaluate the impact of selecting the right distribution channel/s on a business and its stakeholders Business: Improves efficiency, cuts costs, boosts sales. Customers: More convenience and better access. Retailers: More sales if placed well. Employees: More demand can create job security. Shareholders: Good distribution = more profit. Explain how the marketing mix will differ in different contexts including local, national or global markets, goods or services markets, size of business, niche or mass markets and market structure Local: Customised products, local pricing/promotion National: Larger scale, more uniform branding Global: Adapt or standardise mix depending on culture 25  REPORT TITLE Goods: Tangible — focus on product and place Services: Intangible — focus on people and process Small firms: Limited promotion and reach Large firms: Greater budget and variety of channels Niche: Focused, specialised mix Mass: Broad appeal, mass production Market structure: In perfect competition, pricing power is low; in monopoly, high control over mix Evaluate the marketing mix in different contexts The right marketing mix: Increases sales and profit Builds reputation and loyalty Helps adapt to market conditions But: Needs constant review Can be expensive to adapt for different markets Risk of poor decisions in one area affecting others Explain how new technology is used in marketing, including the role of digital media, social media, e-tailing and m-commerce New tech in marketing includes digital media (web ads, emails), social media (targeted content, influencers), e- tailing (online stores), and m-commerce (mobile apps). These tools help businesses reach wider audiences and personalise promotions. Explain the impacts of new technology on existing businesses such as high street retailers High street stores face reduced footfall as customers shift online. They must adapt by offering online shopping, improving digital presence, or risk losing market share. It may also force changes in staffing and store layouts. Evaluate the impact of new technology on the marketing activities of businesses and its stakeholders Pros for businesses: Lower advertising costs, better targeting, global reach, fast data collection. Pros for customers: More personalised experiences, convenience, 24/7 access. Cons: High setup costs, digital divide, staff redundancy, data/privacy issues. Overall, new tech transforms marketing but requires careful management to benefit all stakeholders. 26  REPORT TITLE Finanace Understand the role of the finance department The finance department manages money — tracking income, expenses, budgeting, forecasting, paying staff, and ensuring the business stays financially healthy. Explain what is meant by a budget A budget is a financial plan for expected income and expenditure over a period of time. Explain the purpose of budgets Budgets help control spending, set financial targets, identify problems early, and ensure resources are used efficiently. Evaluate the use of budgets to a business and its stakeholders Pros: Helps with planning, control, motivation, and communication. Cons: Can be unrealistic or demotivating if targets are too strict. Stakeholders: Managers get better control, employees understand targets, and investors gain confidence in financial planning. Explain the sources of finance available to established and large businesses in Wales and the rest of the UK and consider their appropriateness for different circumstances Sources include retained profit, overdrafts, loans, share capital, leasing, venture capital, and trade credit. Choice depends on size, urgency, cost, and business goals. Understand that sources of finance can be internal and/or external Internal: From inside the business — e.g., retained profit, sale of assets. External: From outside — e.g., bank loans, overdrafts, investors. Explain internal sources of finance including owner’s capital, retained profit and sale of assets Owner’s capital: Money invested by the owner. Retained profit: Profit kept in the business. 27  REPORT TITLE Sale of assets: Selling off machinery, property, etc., to raise funds. Explain external sources/methods of finance including overdrafts, loans, share capital, venture capital, leasing, trade credit and debt factoring Overdrafts: Short-term borrowing from bank. Loans: Borrowing with interest over a set time. Share capital: Selling shares to investors. Venture capital: Investment from individuals in return for equity. Leasing: Renting equipment instead of buying. Trade credit: Buy now, pay later. Debt factoring: Selling unpaid invoices to a third party for quick cash. Explain the advantages and disadvantages of different sources of finance to a business and the importance of choosing appropriate sources Internal finance: No interest, retains control. Internal finance: Limited funds. External finance: Access to more money. External finance: Repayments and loss of control (if shares are sold). Choosing the right source helps manage cost, risk, and control. Evaluate the impact of different sources of finance to a business and its stakeholders Impacts: Owners may lose control (shares). Employees may benefit from improved operations. Banks/lenders have interest returns. Customers may see improved quality or price. Explain what is meant by cash flow Cash flow is the movement of money in and out of a business. Explain what is meant by a cash flow forecast A cash flow forecast predicts the expected inflows and outflows of cash over time. 28  REPORT TITLE Construct, calculate and interpret cash flow forecasts You list inflows (sales, loans), outflows (expenses), and calculate: Net cash flow = Inflows – Outflows Closing balance = Opening balance + Net cash flow Evaluate the impact of a cash flow forecast on a business and its stakeholders Helps avoid cash shortages, plan spending, reassure investors. Stakeholders can see if the business can pay debts and grow. Explain the causes of cash flow problems Too much stock Late payments Low sales High expenses Overtrading (growing too fast) Explain strategies by which a business can improve cash flow Speeding up payments Delaying outflows Reducing expenses Leasing rather than buying Selling unused assets Evaluate the strategies a business uses to improve cash flow problems Effective: Can solve short-term problems quickly. Risky: May damage supplier relationships or impact operations. Explain the benefits and limitations of cash flow forecasts Benefits: Planning, avoiding shortfalls, better decisions. Limitations: Predictions can be inaccurate, external factors may change outcomes. 29  REPORT TITLE Explain the main components of a trading, profit and loss account (the income statement) and the way that it is constructed Revenue – Cost of sales = Gross profit Gross profit – Expenses = Net profit Shows how much profit a business makes over a period. Calculate gross profit and net profit Gross profit = Revenue – Cost of sales Net profit = Gross profit – Expenses Evaluate ways in which a business could improve its profit Increase sales Reduce costs Improve efficiency Raise prices (if demand allows) Calculate and interpret gross and net profit margins Gross profit margin = (Gross profit ÷ Revenue) x 100 Net profit margin = (Net profit ÷ Revenue) x 100 Higher margins = more efficient or better pricing strategy. Evaluate the calculations of profitability ratios to assess the performance of a business Useful: Show how well a business is generating profit. Limitations: Need comparison over time or against competitors. Doesn't show future risk. Human reasources Understand the role of human resource management Human resource management (HRM) is responsible for managing employees — from recruitment, training, and development, to ensuring motivation, fair treatment, and compliance with legal regulations. 30  REPORT TITLE Explain the importance of human resource planning Human resource planning ensures a business has the right number of staff with the right skills at the right time. It helps in managing workforce levels, skills, and productivity. Explain the link between human resource planning and the achievement of business objectives Effective HR planning supports business goals by ensuring the right talent is available, avoiding skill shortages, and ensuring optimal productivity to meet targets. Describe the main elements of the recruitment process Job analysis (job description & person specification) Advertising the role Shortlisting candidates Interviews and selection Job offer and induction Explain different methods of recruitment Internal recruitment: Hiring from within the business (promotions, transfers). External recruitment: Hiring from outside the business (job boards, agencies). Online recruitment: Using websites and social media to find candidates. Evaluate the advantages and disadvantages of internal and external recruitment Internal recruitment: Familiarity with business culture Limited fresh ideas External recruitment: Access to a larger pool of talent Risk of cultural mismatch Explain the role of selection methods in the recruitment process Selection methods (e.g., interviews, tests, assessment centers) help identify the most suitable candidates for a job based on their skills, experience, and personality. 31  REPORT TITLE Evaluate the different selection methods and their appropriateness for different types of jobs Interviews: Good for most roles, but subjective. Psychometric tests: Good for assessing skills or personality. Assessment centers: Good for senior roles, evaluating teamwork, leadership, and problem-solving. References: Valuable for confirming experience but may be biased. Explain the importance of training for businesses Training improves employee performance, productivity, and satisfaction. It also helps meet the demands of the business and adapt to changes in the market. Explain the types of training used in businesses Induction training: Introduces new employees to the company. On-the-job training: Learning while working, through mentoring or hands-on experience. Off-the-job training: External courses or workshops for skill development. Evaluate the benefits and drawbacks of different types of training On-the-job: Less costly, immediate application Limited exposure to new ideas Off-the-job: Specialized skills, diverse perspectives Expensive, may lack immediate relevance Explain the importance of employee motivation Motivated employees are more productive, engaged, and likely to stay with the company, leading to lower turnover rates and higher quality work. Explain different theories of motivation 1. F.W. Taylor (Scientific Management) Key Idea: Workers are motivated mainly by money. Main Points: o Tasks should be divided into smaller parts. o Workers are paid based on how much they produce. 32  REPORT TITLE Relevance: Works for repetitive tasks but not for creative jobs. 2. E. Mayo (Human Relations Theory) Key Idea: Social factors, not just money, motivate workers. Main Points: o Worker productivity is improved by good relationships with colleagues and management. o Workers need recognition and to feel valued. Relevance: Useful for team-based or people-oriented jobs. 3. A. Maslow (Hierarchy of Needs) Key Idea: People are motivated by different needs at different levels. Main Points: o Basic needs (e.g., salary, job security) must be met first. o Higher needs (e.g., personal growth, esteem) come later. Relevance: Applies to most workers, but not all people need to follow the same order. 4. F. Herzberg (Two-Factor Theory) Key Idea: Two factors motivate workers: hygiene factors (prevent dissatisfaction) and motivators (increase satisfaction). Main Points: o Hygiene factors (e.g., salary, working conditions) must be managed to avoid dissatisfaction. o Motivators (e.g., recognition, responsibility) increase job satisfaction. Relevance: Helps focus on both avoiding dissatisfaction and encouraging motivation. 5. V. Vroom, L. Porter, and E. Lawler (Expectancy Theory) Key Idea: Workers are motivated if they believe their effort will lead to performance, and performance will lead to rewards. Main Points: o Expectancy: Effort will lead to good performance. o Instrumentality: Performance leads to rewards. o Valence: Rewards are valued by the employee. Relevance: Works well where performance can be clearly measured and linked to rewards. Evaluate the use of motivation theories in businesses Taylor: Works well for manual, repetitive tasks (e.g., factory work) but not for jobs needing creativity. Mayo: Shows the importance of relationships and morale but may overlook financial incentives. 33  REPORT TITLE Maslow: Useful in understanding that employees have different needs, but not all workers follow the same hierarchy. Herzberg: Helps focus on improving workplace satisfaction through motivators but assumes hygiene factors alone won’t motivate. Vroom: Effective where clear rewards are linked to performance but assumes all workers value rewards the same. Explain the role of leadership and management in organisations Leaders set the vision and inspire employees, while managers ensure day-to-day operations run smoothly. Effective leadership aligns team efforts with business goals, while management focuses on resource allocation and problem-solving. Explain the differences between leadership and management Leadership: Inspires and motivates employees. Management: Organizes and coordinates tasks to achieve goals. Evaluate different leadership styles and their impact on employee performance Autocratic: Leader makes decisions alone. Democratic: Involves employees in decision-making. Laissez-faire: Gives employees freedom to make decisions. Impact: Autocratic may lead to fast decision-making but low morale; democratic can boost morale but slow decision-making; laissez-faire works well for highly skilled teams but can result in a lack of direction. Explain the importance of employee relations Good employee relations foster communication, trust, and collaboration, reducing conflict, increasing job satisfaction, and promoting a positive working environment. Evaluate the impact of poor employee relations Poor relations can lead to low morale, high turnover, absenteeism, and legal issues. It’s costly to resolve conflicts and can damage the company's reputation. 34  REPORT TITLE Explain the role of trade unions in protecting workers’ rights Trade unions negotiate for better pay, working conditions, and benefits, and they provide support to employees in disputes with employers. Evaluate the role of trade unions in employee relations Useful: Protects employees' rights, helps with negotiation. Limitations: Can create conflict with employers, may lead to higher costs for businesses. Understand the legal framework surrounding employment Employment law sets the rules for hiring, firing, discrimination, health and safety, and employee rights. It helps ensure fair treatment for all employees. Explain the key employment laws affecting businesses Key laws include: Employment Rights Act (e.g., unfair dismissal, redundancy). Equality Act (protects against discrimination). Health and Safety at Work Act (requires businesses to ensure a safe working environment). Evaluate the impact of employment legislation on businesses Benefits: Protects employee rights, improves reputation, reduces legal risks. Costs: Compliance can be expensive and time-consuming. Explain what is meant by added value. Key Idea: Added value is the difference between the cost of production and the price at which a product or service is sold. Main Points: o It’s the value a business adds to raw materials during production. o The difference between the cost of inputs and the selling price of the product. Relevance: Crucial for profitability and pricing strategy. Calculate added value. Key Idea: Added value can be calculated by subtracting the cost of inputs from the sales revenue. Formula: Added value = Selling price − Cost of raw materials Example: £15 (selling price) − £5 (cost of raw materials) = £10 added value. 35  REPORT TITLE Relevance: Helps measure profitability from each product sold. 3. Explain ways of increasing value added. Key Idea: Increasing added value involves improving product quality, brand, and efficiency. Main Points: o Innovation: Adding new features or improving existing ones. o Branding: Creating a premium brand image. o Efficiency: Reducing production costs while maintaining quality. Relevance: Leads to higher margins and competitive advantage. 4. Evaluate the importance of added value to a business and its stakeholders. Key Idea: Added value impacts p