CAIE AS Level Business PDF

ZNOTES.ORG UPDATED TO 2023-2025 SYLLABUS CAIE AS LEVEL BUSINESS SUMMARIZED NOTES ON THE THEORY SYLLABUS Prepared for FAZEELA MARINE for personal use only. CAIE AS LEVEL BUSINESS Added value = selling price - cost pr...

ZNOTES.ORG UPDATED TO 2023-2025 SYLLABUS CAIE AS LEVEL BUSINESS SUMMARIZED NOTES ON THE THEORY SYLLABUS Prepared for FAZEELA MARINE for personal use only. CAIE AS LEVEL BUSINESS Added value = selling price - cost price 1. Enterprise Difference between added value and profit Added value is not the same as profit. 1.1. Purpose of Business Activity Added value is used to measure efficiency of a business within a specific operation, assessing whether the product Businesses aim to add value to raw materials and semi- is profitable before selling or not and is there room for finished goods in order to satisfy needs and wants. This improvement. helps raise living standards of the economy as businesses Profit, on the other hand, is used to assess gain or loss of will employ people for production. a business (quarterly or annually). How to increase added value 1. Increase selling price by providing higher quality goods (higher quality raw materials), increasing advertising, changing packaging, making small improvements in the product. 2. Decrease cost price by reducing wastage through lean What activities does a production methods, find cheap supplies, reduce quality of the product, increase efficiency by training business need to do in order workers and using advanced technology. to start? Identifying the wants and needs of customers Buying resources relating to the 4 factors of production in order to start production of goods and services Produce goods and services that meets the need of their 1.5. Scarcity customers, it is done so with profit motive or other aims (further explained in Business objectives) It occurs as there are limited resources and unlimited wants. 1.3. Factors of production Due to the existence of scarcity, people are forced to make a choice 1. Land - all natural resources used in production Opportunity cost is the next best alternative forgone Return for land is “rent” 2. Labour - both manual and skilled work 1.6. Entrepreneur Return for labour is “salary” or “wages” 3. Capital - finance that is needed to set up and run the The role of an entrepreneur business as well as man made goods used in production (ex. machinery). These are known as Produce a business idea capital goods. Invest their own capital Return for capital is “interest” Accept responsibility of running and managing the 4. Enterprise - the driving force that arranges all other business factors of productions and takes the risk of the new Accept the risks of failure business venture Reward is profit earned through sales of the business Return for enterprise is “profit” The individual who will be taking the risk and The role of intrapreneur combining all factors together to produce goods and services is known as entrepreneur Developing a new and innovative product/project that is profitable 1.4. What is added value? The risk is taken by the business Their risk is promotion or raise in salary but main benefit it is the difference between the cost of materials required is to the business they are working at. to make the product and the price the finished product is sold at. Formula: WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by FAZEELA MARINE at VIKAASA World School on 11/07/24. CAIE AS LEVEL BUSINESS For a firm to survive it must build customer loyalty and Difference between entrepreneur and brand image. intrapreneur Businesses can do this by: Offering pre and after sales services An entrepreneur is the individual who starts a business Providing discounts and other sales promotions and takes the risk of the business. They are the founder Providing goods that meet specific needs (which a An intrapreneur is an individual who is an employee of the large firm will be reluctant to do) business, taking direct responsibility of producing an idea Flexibility towards decision-making: into a profitable project/business. This will allow the business to adapt to new situations and invest in new opportunities, which might give Characteristics of an entrepreneur and intrapreneur them a competitive edge. 1. Innovation 2. Commitment 3. Self-motivation 1.8. Enterprise's role in economic 4. Multiskilled development of a country: 5. Leadership skills 6. Communication skills Job creation 7. Self-confidence Economic growth 8. Ability to bounce back Business survival and growth Innovation and technological advancement Advantages of intrapreneurs in a existing business Export Personal Development Creation of new products to raise sales and product social cohesion (increase in unity of a portfolio or finding stimulating ways to sell existing community/communities) products through their creativity. Change ways of business operation: Use their critical thinking to use method to solve issues such as low 1.9. What does a business need to do in efficiency which better than old methods order to succeed in a market? Charging advancement and change within organization: Ensuring that new opportunities are approved more Good evaluation of customer needs: leniently due to mindset of adaptability They need to thoroughly and accurately know their Giving the business a competitive edge customer’s need in order to satisfy them. Encouraging the best employees to stay within the Efficient operation: business Management ensuring the cost of operations is not higher than sales, so they don’t make a loss. 1.7. Challenges faced by entrepreneurs Adequate finance: To ensure business does not run into problems of low Identifying successful business opportunities: cash and expand when best opportunities arise. Entrepreneurs need to find markets which have enough demand in order to be profitable 1.10. Why do new businesses fail? People get their ideas from: Own skills Lack of record keeping Previous employment Lack of cash and working capital: Small-budget market research Working capital is the capital needed to run the day-to- Sourcing finance: day business Entrepreneurs face financial issues due to: Ways to avoid working capital shortage: Lack of own finance Make a cash flow forecast Lack of awareness of grants and subsidies Inject more capital into the business Lack of trading records in order to receive loans Establish good relations with bank from bank Use effective credit control with customers A poor business plan Poor management skills: Determining a location: Essential skills to avoid management problems: An entrepreneur will have to decide the best location Leadership skills keeping in mind costs, potential target market, status Cash handling and cash management skills of area, etc. Planning and coordinating skills Competition Decision-making skills Building a customer base: Communication skills Marketing, promotion and selling skills WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by FAZEELA MARINE at VIKAASA World School on 11/07/24. CAIE AS LEVEL BUSINESS Changes in business environment: It is easier to get financial injection/loans from Bankers, A few changes include: Venture capitalist, potential shareholders, friends and New competitors family if the entrepreneur knows concretely what they are Legal changes doing Economic changes Technological changes Drawbacks: Why may businesses fail in early stages? It does not guarantee success as the business world is usually dynamic (constantly changing) so they have to Internal problems – have the ability to adapt well Weak business idea The business plan has to be detailed with extensive and Lack of managerial skills accurate market research otherwise, creditors or anyone Lack of suitable employees stakeholder giving the business finance will delay or Lack of sufficient finance cancel their decision Lack of entrepreneurial skills Some entrepreneurs become reluctant to adapt and only Poor initial research follow want to follow the plan. this hinders ability to take Over ambitious ideas potential opportunities for higher sales/profit. Poor decisions External problems – Anticipated customers did not materialize 2. Business Structure Changes in business environment affected customer’s spending patterns 2.1. Classification of business activity Unexpected competition 1. Primary sector – extracting natural resources. E.g. 1.11. Types of entrepreneurial fishing, mining 2. Secondary sector – manufacturing sector. E.g. car businesses manufacturing, clothes-making 3. Tertiary sector – service sector. E.g. banking, 1. Primary sector – extracting materials like fishing and transportation coal mining 2. Secondary sector – manufacturing sector like craft manufacturing 2.2. Changes in business activity 3. Tertiary sector – service sector like hairdressing The importance of each sector changes as the economy develops. The importance of each sector is measured by 1.12. Purpose of business plan employment levels or output levels. It is a document which has description of the business, 1. Industrialisation is when the importance of secondary their strategies, the market they operate/sell their sector rises. This occurs in developing countries like products in and cashflow forecast. India and China Features: Advantages Disadvantages Causes a huge movement Overview of business and its plan for succession It increases the GDP of the from rural to urban areas, Description of market opening for the business country, helping raise living causing social and housing Strategies of business for their department standards. problems. Details of entrepreneur expertise and recruitment strategy Imports of raw materials will It increases the employment Operation plan: increase, increasing import opportunities available costs. Benefits: Manufacturing industries Increases exports and growth is usually occurred reduces imports. It ensures that the business is less likely to fail as they due to growth of MNCs have considered every possibility such as their Firms will be more profitable, opportunities, strength, weaknesses and surrounding increasing tax revenue threats Manufacturing sector goods It gives the owner of business a proper vision/aim to work have more value than primary towards to that will determine their course of action taken sector goods. in the initial stage of operation WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by FAZEELA MARINE at VIKAASA World School on 11/07/24. CAIE AS LEVEL BUSINESS 2. De-industrialisation occurs when the importance of Advantages Disadvantages secondary sector declines. It occurs in developed Each partner may specialise in countries like USA, UK. Unlimited liability different areas As a country develops, the average income per person Shared decision-making Profits are shared increases. Rising incomes lead to increasing living Additional finance (capital) injected Risk of conflicts standards as consumers will be able to spend more on by each owner services than goods, showing demand for services rises Losses are shared No continuity more quickly than physical goods Fewer legal formalities As the world industrialises, more and more manufacturing businesses enter the market, increasing the competition and causing prices to fall. This makes it 2.7. Limited companies easier for developed countries to buy these goods rather than producing it themselves. Features: Limited liability – each shareholder will only lose the 2.3. Public and Private Sector amount invested if the business/idea fails Legal personality – the company has a separate legal 1. Public sector – firms controlled and managed by the identity from its owners/shareholders government/local authority. Continuity – even after the death of a shareholder, there 2. Private sector – firms controlled and managed by is no need for dissolution. individuals. Private limited companies 2.4. Types of Economies It is a business owned by shareholders who are friends 1. Free market economy – only private sector and no and family government intervention. 2. Mixed economy – both private and public sectors. Advantages Disadvantages Governments and individuals make decisions Limited liability High legal formalities together. Governments usually offer essentials like Separate legal identity Can’t sell shares to public health care and education. Continuity Difficult to sell shares 3. Command economy – economies that have only the public sector. Have to send accounts to Original owner will be able to companies’ house – less retain control secrecy 2.5. Sole trader Ability to raise capital from These are businesses owned by one person sale of shares The one person owns and controls the business. Higher status It has no formal legal structure as business and owner are considered one and the same. Public limited company Advantages Disadvantages These are businesses which have legal rights to sell Easy to set up and manage Limited finance (capital) shares to the public. Owner has complete control Unlimited liability Advantages Disadvantages Ability to choose working May face intense competition Limited liability High legal formalities times Separate legal identity Cost of hiring specialists Easy to establish relations with employees and Unable to specialise High fluctuation in share Continuity customers prices Freedom of making own Easy to buy and sell shares Less secrecy Lack of continuity decisions Access to substantial capital Insufficient skills sources due to the right to High risks of takeover issue prospectus (flatation) Directors influenced by short 2.6. Partnership term objectives of major investors It is a business owned by a group of individuals WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by FAZEELA MARINE at VIKAASA World School on 11/07/24. CAIE AS LEVEL BUSINESS Legal formalities in setting up a company Advantages Disadvantages Easy, risk-free way of 1. Memorandum of association – name, address, contact Potential management issues expansion number, maximum share capital, declared aims Easy to manage Difficult to monitor 2. Articles of association – name of director, procedures to be followed Still have some control These documents must be submitted to the ‘registrar of To the franchisee companies Advantages Disadvantages Lower risks as business is Proportion of revenue sent to 2.8. Other forms of business established franchisor organisation Advice, training, supplies and Rigid business model already advertising obtained by made Cooperatives franchiser Potential loss of large Economies of scale These are organisations owned by their members investment Features: Access to experts Expensive initial fee All members contribute to running and managing Franchiser won't open All members have a say in important matters another outlet in the same Equally shared profits area Advantages – Buying in bulk Working together to solve problems 2.10. Public-sector enterprises – public Good motivation corporations Disadvantages – Poor management skills Known as public corporation Capital and finance shortage In the public sector Slow decision making Profit is not their main aim Holding companies Advantages Disadvantages Managed with social A business which owns and controls many different High chances of inefficiencies objectives rather than profit companies, but is not unified as one Still operate, even if making a Subsidies may encourage Joint ventures loss inefficiency Finance raised from Government may interfere in When 2 or more businesses agree to join for one project government business decisions Reasons: Shared costs and risks Different companies’ different strengths 3. Size of Business Together more powerful Risks: Conflicts 3.1. Different methods of measuring Errors or mistakes size Business failure of one partner, risk the whole project. 1. Number of employees 2.9. Franchise 1. The size is measured upon the basis on number of workers employed. A business which uses the name, logo, trading methods of 2. Problems- a firm may be capital intensive, an existing successful business making this method insubstantial. They have a legal agreement to do so 2. Revenue 1. Used to compare businesses of same industry To the franchisor 2. Depends on the total value of sales made. Advantages Disadvantages 3. Problem – less effective when comparing high- Poor management of one value and low-value firms. Guaranteed income from 3. Capital employed business, affecting reputation franchisee 1. Depends on the total value of long-term of all finance available in the business WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by FAZEELA MARINE at VIKAASA World School on 11/07/24. CAIE AS LEVEL BUSINESS 2. Problem – can’t be used to compare firms in Finding cost-effective premises different industries 4. Market capitalisation 3.4. Small and large businesses 1. Market capitalisation = current share price * total number of shares issued Advantages 2. Limited to public limited companies Small Business Large Business 3. Problem – share prices change on a daily basis Managed and controlled by making the comparison unstable Ability to employ specialists 5. Market share owners 1. Market share = total sales of business/total Flexible - adapt quickly to Can conduct through market sales in industry * 100 changes in demand research 2. Problem – if the total market is small, results Personal contact with Diversified risks will not be accurate employees and customers Offer personal service Ability to sell at lower prices 3.2. Measuring business size Economies of scale Best form of measurement Disadvantages Small Business Large Business No ‘best’ measure Limited access to finance Diseconomies of scale To choose which method to use, we need to known if we are interested in absolute size or comparative size. Divorce between ownership Not diversifies, high risks Absolute size – test using at least 2 criteria and make and management comparison Few economies of scale Conflicts Poor communication, slow Unable to afford specialists Problems while measuring businesses: decision making Difficult to manage and control There are many different methods to measure business size and each method gives us different answers. There is no internationally agreed definition on the size of 3.5. Family business a business. These are businesses which are owned and managed by at-least 2 family members. 3.3. Small and micro-businesses Strengths Weaknesses Significance of small and micro-businesses Success/continuity problem - Commitment - family owners Benefits of encouraging development of small and micro- there might be failure within will show more dedication businesses: the family causing the failure towards their work Many jobs created as small businesses won’t have funds of the entire business. to buy capital equipment Knowledge continuity - Informality - there may be Often run by dynamic entrepreneurs. Provides greater families ensure they pass on many inefficiencies and variety the business knowledge to the internal conflicts as personal Will create competition for large businesses. Discourage next generation allowing and professional life is not monopoly experienced and skilled separate May provide specialist goods or necessities managers. Helps them grow and become large Reliability and pride - as the Will have lower costs as no diseconomies of scale family business will have their Nepotism may lead to name and reputation, they try inefficient management Government assistance for small businesses to improve quality at all times. Traditional - they are Governments may provide assistance to small businesses reluctant to change in the form of: (inflexibility) Reduced rate of tax Loan guarantee scheme Conflicts - Family problems Information, advice, support may affect business Aid designed to overcome specific problems like: management Lack of specialist management expertise Problems raising finance 3.6. Business growth Marketing a limited product range WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by FAZEELA MARINE at VIKAASA World School on 11/07/24. CAIE AS LEVEL BUSINESS Reasons for growth – T – time-specific: there must be time limits to the objectives established. 1. Increased profits 2. Increased market share 4.4. Benefits of Objectives 3. Economies of scale 4. Lower risks They provide a sense of direction 5. Increased power and status Helps improve the focus of individual employees and 6. Ability to be more competitive departments 7. Increase value of business Provides a framework for decision-making 8. Easy to access new target groups and markets Acts as a motivation tool Acts as a means of assessing performance progress and Internal growth identifying training needs Helps plan for the future in terms of the resources It is expansion by expanding the existing operations required It is cheap Avoids takeover problems Takes long time for results 4.5. Hierarchy of Objectives Limited extent of growth May not receive the desired outcome This shows the balance and dependencies between the Ways for internal growth: - different stages of setting aims and objectives. Enter new markets Increased marketing activities Increase investment Use newer techniques to produce more efficiently 4. Business Objectives Aims are the long-term goals of a business. They act as a framework for a business to create further objectives and set a purpose of the business. 4.2. Importance of Business Objectives An objective helps to direct, control and review any business activity. 4.6. Corporate Aims For any aim to be achieved successfully, there have to be strategies in place which will guide the business to These are long-term business goals and provide the central purpose of the business. achieve the goal. These strategies must be reviewed These are objectives that translate the aims into constantly to know if it is effective. achievable targets. Every business’s aims and strategies change over time. Advantages of Corporate Aims 4.3. SMART Criteria Helps develop a sense of purpose and direction for the Every business objective must meet the SMART criteria business S – SPECIFIC: the aim must focus on what the business Helps check progress does and must directly relate to the business’s They help the development of successful tactics and activities. strategies M – MEASUREABLE: every aim must have quantitative values to prove targets are effectively met. 4.7. Vision Statement A – Achievable: aims that are impossible to achieve in a time period must not be set. Such aims will Vision statement is the desired future of the company demotivate the employees. It is a company’s road map indicating what the company R – realistic and relevant: aims should be realistic wants to become in the future. according to the resources available and relevant to the people carrying it out. Mission Statement WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by FAZEELA MARINE at VIKAASA World School on 11/07/24. CAIE AS LEVEL BUSINESS A mission statement is a statement of a business’s core 2. Benefits – aims, phrased in a way to motivate employees and 1. There are fewer chances of a stimulate the interests of outside groups. takeover It is a summary of how they intend to support/achieve 2. Economies of scale their vision 3. Motivated employees and Businesses communicate their mission statement managers through – publishing it in their accounts, websites, 4. If not growing, it may lose its appeal banners, advertising posters, company newsletters, etc. to new investors. 3. Limitations – Benefits – 1. Too rapid expansion may lead to cash flow problems Helps inform the external stakeholders about the aims 2. Growth may be achieved due to and vision quickly lower profit margins It helps attract employees, potential investors, 3. Diseconomies of scale shareholders, etc. 4. Using retained earnings to finance Help motivate employees profits will reduce dividends Help guide and direct individual employee behaviour and 5. May lose focus, and direction is conduct diversified Limitations – 4. Increasing market share – 1. A company can grow, but its market share It can be quickly adopted by any business of any size is reduced if the market is expanding. It is not specific to a business 2. If the market share is high, it indicates the They are too vague and general marketing mix of the business is more Used as a PR activity successful than most of its competitors. Impossible to analyse 3. Benefits of being the market leader – 1. Retailers will be keen to maintain 4.8. Corporate Objectives high-profile clients so that they may provide good quality and low prices. These are specific to a business and provide a much 2. Higher profits due to lower supply clearer guide for management. prices 1. Profit maximisation – 3. Effective promotional campaigns to 1. It means producing at the output level, attract customers which leads to the greatest difference 5. Survival – between total revenue and total costs. 1. Mostly an objective for start-ups 2. The limitations of this corporate objective 6. Corporate Social Responsibility (CSR) – include: 1. This concept applies to those businesses 1. If short-term profits are high, that consider the interests of society by competitors may end up taking responsibility for the impact of their jeopardising the long-term survival decisions and activities on customers, 2. Issues of independence and employees, communities, and the retaining control may be of higher environment. importance 2. Benefits – 3. Analysts assess business 1. Helps boost the morale of performance through return on employees as they feel more capital employed rather than profits connected 4. Shareholders may aim for profit 2. Helps attract skilled workers maximisation, but other 3. Workers have higher productivity stakeholders may want to prioritise and demand low wages other issues 4. Helps build a reputation as a 5. It is challenging to assess when the responsible leader, gives a maximised profit has reached competitive advantage 6. Negative impact on customers 5. It may help reduce costs and 2. Profit satisficing – improve profits as consumers will 1. It means achieving enough profits to keep be willing to pay higher prices for the owners happy sustainable products 3. Growth – 6. It increases sales and builds 1. Growth is measured through the value of customer loyalty which helps attract sales/output investors WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by FAZEELA MARINE at VIKAASA World School on 11/07/24. CAIE AS LEVEL BUSINESS 7. Maximising short-term sales revenue Benefits of communicating the aims of the business with 8. Maximising shareholder value - employees: 1. This involves increasing the share price of May achieve more the company’s stock Know how their individual goals fit into the overall plan Creating shared employee responsibility 4.9. Relationship between Mission Easier for managers to stay in touch with employees’ progress Statements, Objectives, Strategies and Tactics 4.13. Ethical influences on business Aims and objectives provide basis for business strategies objectives and decisions as they are the long-term plans for the company. It is a document detailing a company’s rules and Strategies and tactics are derived from a company’s guidelines on staff behaviour that must be followed corporate objectives. It may be expensive in the short term Strategy provides the path a business needs to follow in But, in the long term: order to achieve a organisations corporate objective Avoid legal problems Tactics are more concrete and specific smaller steps for Avoid bad publicity shorter time durations to achieve a strategy. Avoid pressure groups May receive grants and subsidies 4.10. Objectives and decision making May attract skilled workers and investors Stages in decision making framework: Advantages and disadvantages of targets 1. Set objectives 2. Assess the problem/situation 3. Gather data about the problem and find possible solutions 4. Consider all solutions and decisions 5. Make a strategic decision 6. Plan and implement the strategy 7. Review its success against original objectives 4.11. Factors that determine the 5. Stakeholders in a business corporate objectives of a business Stakeholders: People or groups of people that are affected by, and therefore have an interest in the 1. Corporate culture activities of a business. 1. It is the code of behaviour and attitudes that Stakeholder concept: The view that businesses and their influence decision making managers have responsibilities to a wide range of groups- 2. Size and legal form of the business not just their shareholders 1. Small businesses – profit satisficing The roles, rights and responsibilities of stakeholders: 2. Public limited companies – growth, increase stock value Roles Rights Responsibilities 3. Public sector or private sector Receive goods 1. Public sector – CSR Purchase and services 2. Private sector – profits goods and Honesty that meet local 4. The number of years the business has been operating services laws 5. Economic conditions 6. Ethics Offered Customers replacements, Provide repairs, etc- as Not stealing 4.12. Management by objectives (MBO) revenue legally obligated A method of coordinating and motivating all staff in an organisation by dividing its overall aim into specific Not make false targets for each department, manager and employee claims Communicating objectives WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by FAZEELA MARINE at VIKAASA World School on 11/07/24. CAIE AS LEVEL BUSINESS Roles Rights Responsibilities CSR is a form of WINDOW DRESSING Supply goods in If it is found that CSR is used as a PR activity, it will lead to bad word of mouth Supply goods On-time time and CSR maybe expensive in the short run, but will help the Suppliers and services payment condition business raise profits in the future already decided As it will lead to better reputation, lower regulations, Fair treatment chances of subsidies and grants, customer loyalty, etc. Provide manual Treated within and other minimum legal Honesty labour services limits 6. Human Resource Employment contract Meet Management employment payment and contract treatment It aims to recruit capable, flexible and committed people, Employees managing and training them and rewarding them Cooperate with Join a trade management accordingly. union for reasonable HRM has a major impact on efficiency, flexibility and requests motivation Observe Ethical 6.1. Purpose and Roles of HRM code of conduct. Recruit and train workers to ensure maximum productivity Provide local Consulted so that all corporate objectives are met services and about major Cooperate In the past, HRM was: Local infrastructure changes Bureaucratic and had an inflexible approach Community Meet Focused solely on recruitment and selection rather Not have lives reasonable than development and training badly affected Reluctant to delegate requests Laws- restrain Businesses to Treat Not part of the strategic management team business meet businesses Roles of HRM include: activity requirements equally Workforce planning – identifying future needs in terms of number of employees and skills required Law and order- Prevent unfair Recruitment and selection – recruiting the most allow activity to competition suitable employees take place Gov. Developing employees – training, appraisal and Good trading developing employees links Employment contracts – preparing employment Achieve internationally- contracts and ensuring they are abided by economic allow Ensuring HRM operates across the business – stability international involving managers in the development and training of trade employees Provide agreed Employee morale and welfare – monitoring and Provide finance Repaid on finance on improving employee morale. Giving guidance and in different agreed dates agreed date advice and ensuring appropriate work-life balance Lender forms and time Incentive systems – paying appropriately Paid finance Monitoring -measuring and monitoring employee charges performance Dismissing employees with inappropriate behaviour 5.2. Corporate social responsibility – an 6.2. Recruitment evaluation It is necessary when a business is expanding or It is the concept that accepts that businesses should employees are leaving the organisation consider the interests on the society in their activities and decisions, beyond the legal obligations that they have Job analysis CSR distracts businesses from their key role of using scare resources to their maximum and produce goods It involves identifying a vacant position, understanding its and services roles and responsibilities. WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by FAZEELA MARINE at VIKAASA World School on 11/07/24. CAIE AS LEVEL BUSINESS Job description 6.5. Employment contracts It provides a complete picture of what the job will entail, They are legally binding documents to ensure that all its roles, rights and responsibilities. policies are fair and in accord with the current It helps attract the right type of people to the job employment laws. It includes workers responsibilities, working hours, holiday Person specification entitlement, wages, appraisal process, etc It imposes responsibility on both employers and It includes analysis of the type of qualities, skills and employees to honour the contract. characteristics needed by any person appointed to a job. It is based on the job description after assessing the complexity of the job. It is a ‘person profile’ for the job 6.6. Labour turnover Job advertisement It measures the rate at which employees leave the organisation It includes the requirements, personal qualities needed. It Number of employees leaving in 1 year/average number can be displayed within the organisation or outside, of employees employed * 100 depending on the recruitment method chosen. High and increasing labour turnover indicates low moral If external, can advertise in online recruitment services, and employee discontent newspapers, magazines, government agencies, It increases costs of recruiting, selecting training new recruitment agencies, etc. workers Customer service maybe compromised 6.3. Types of recruitment Difficult to establish loyalty and team spirit Low skilled workers may be replaced by productive ones 1. External – outside the organisation New ideas 1. Bring new ideas May reduce costs if business is planning redundancy and 2. Wider choice of applicants rationalisation 3. Avoids jealousy and resentment 4. Standard of applicants maybe higher 6.7. Training and development of 2. Internal – from within the organisation 1. Already known to the business, no need for employees induction training It is work-related education given to employees to 2. Known to the selection team improve their efficient and productive 3. Well aware of the organisational culture, Types of training – ethical code of conduct, etc Induction training – 4. Quicker, less time consuming It is an introduction training given to all new 5. Cheaper employees 6. Gives workers a chance to progress, motivates It helps the worker understand the customs, them, Herzberg, Maslow procedure, layout of the organisation 7. Management style already known On-the-job training – Instructions at the place of the work 6.4. Selection process Done by watching and working closely with an experienced member Shortlisting applicants It is cheaper Off-the-job training – After receiving various applications, the business will Instructions given away from the work place by shortlist them according to their CV’s, references, experts previous work, etc It is expensive but more productive Selecting between applicants Training is expensive But it will increase morale amongst employees as The shortlisted candidates are then selected through they will feel more valued and secured as it will interviews, aptitude tests, psychometric tests, trail work, increase chances of promotion etc It may encourage poaching which acts as a They often use a 7-point plan – achievement, intelligence, disincentive for companies to set up expensive skills, interests, personal manner, physical appearance, training programmes personal circumstances Increases productivity and efficiency Makes the workforce more flexible WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by FAZEELA MARINE at VIKAASA World School on 11/07/24. CAIE AS LEVEL BUSINESS Better customer service and lower accidents Some methods to do this may include: Flexible working 6.8. Development and appraisal of Teleworking – work from home facility Job sharing – 2 people working as one full time employees employee Sabbatical periods – extended period leave from work Development is a continuous process in the form of new This is mainly due to: challenges and opportunities Consumers expect access to goods and services 24/7 It is to help an employee achieve self-actualisation and Globalisation and increased competition fulfilment levels Appraisal is a process of assessing employee effectiveness. It is a part of the staff-development 6.13. Policies for diversity and equality programme Equality is when everyone is treated fairly and has equal The performance is measured against pre-set goals. chances to succeed It encourages them to work harder Diversity is the process of creating a mixed workforce Benefits – 6.9. Discipline and dismissal of Higher reputation employees Higher morale Ability to recruit top talent If a worker fails to meet obligations in the contract of Capture a greater consumer market employment, the HR department has to discipline them Better ideas and greater creativity They can even be dismissed. This is when a worker is asked to leave, due to parts of their job or behaviour being unsatisfactory 7. Motivation There maybe chances of unfair dismissal allegations if the organisation can not prove that the necessary steps have 7.1. What is motivation? been take to avoid it. These may include verbal warnings, written warnings, It is the desire of workers to do a job quickly and training sessions, etc efficiently. An employee may reach out to an employment tribunal to They are the external and internal factors that stimulate claim unfair dismissal people to take actions to meet a specific aim. Importance of motivation 6.10. Redundancies Help a business achieve its goals Redundancy is when a worker loses their job because the Help remain as cost-effective as possible (lower accidents job is no longer necessary, through no fault to their own and wastage) This is done when there is a fall in demand, advances in Helps maintain low labour turnover and absenteeism technology, business is trying to rationalise and cut costs rates Business must ensure these announcements are made Impact the productivity and competitiveness of the efficiently as they have a major impact on other business employee’s morale and job security. Well-motivated staff will be ready to accept responsibility and will make suggestions to improve customer service 6.11. Employee morale and welfare and satisfaction. HR departments are expected to offer advice, counselling 7.2. F.W. Taylor – scientific and guidance to employees who are in need of it. Increases morale and sense of loyalty management/theory of an economic man 6.12. Work-life balance His main purpose was to reduce inefficiencies It is where workers are not able to balance time between His approach included 7 steps: their work and their personal life. Select group of workers Workers expected to work long and unsociable hours Observe them perform tasks leads to stress and poor health Record time taken HR must work with employees to help them achieve good Identify the quickest method work-life balance to increase efficiency and productivity Train all employees in that method WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by FAZEELA MARINE at VIKAASA World School on 11/07/24. CAIE AS LEVEL BUSINESS Supervise them Difficult and impractical to identify for each worker Pay them accordingly and have separate measures for each He believed that people are only motivated by money Self-actualisation is never permanently achieved He believed piece rate method of payment should be used where worker’s output is directly linked to their wage 7.4. Frederick Herzberg – Two factor rates He believed that autocratic leadership style should be theory used Workers should be closely supervised and no discussion He conducted interviews and surveys to know and identify or feedback should be taken factors which give good feelings and the ones that provide One-way communication negative feelings Theory X manager ideology is adopted Job enrichment principles should be adopted Problems of this method – Complete units of work – workers should be allowed to Not everyone is motivated by money produce a recognisable part of the product/service Quantity over quality is encouraged – not acceptable in Feedback on performance – workers must be given the long run accurate feedback on their work. Good work must be In modern times, due to advanced education and training, recognised worker participation should be encouraged and will help A range of tasks – workers must be given challenging and the business in the long run beyond their current experience tasks Team work should be encouraged and adopted He divided his results into 2 factors – 7.3. Abraham Maslow – Hierarchy of Hygiene factors – human needs Salary, working conditions, supervision, social relations He categorised employee needs into 5 levels. They DO NOT motivate employees, but their absence Every employee starts at the lowest level DEMOTIVATES them They just remove dissatisfaction Motivators – Achievement, recognition, work itself, responsibility, advancement These factors MOTIVATE employees 7.5. David McClelland – Motivational needs theory He identified 3 types of motivational needs in his book – The achieving society 1. Achievement motivation – 1. Have realistic goals 2. Seek opportunities of job enrichment and advancement 3. Have result driven attitudes 2. Authority motivation – 1. Desire to control others 2. Need to be influential, effective, make an Physical needs – food, shelter, water, rest impact Safety needs – job security, health and safety 3. Strong leadership instincts Social needs – trust, friendship, teamwork, acceptance 3. Affiliation motivation – Esteem needs – respect, status, recognition, achievement 1. Need for friendly relations Self-actualisation – reach one’s full potential, challenging 2. Teamwork and interaction with others and creative work 3. Be liked and popular Regression is possible – once one need is satisfied, Achievement motivated people are the ones who give the greater quantity of the same need will not motivate business the best results. people Limitations- Everyone has different needs 7.6. Vroom – expectancy theory WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by FAZEELA MARINE at VIKAASA World School on 11/07/24. CAIE AS LEVEL BUSINESS Individuals will choose to behave in ways they believe will Time based wage Piece rate Salary lead to the best outcome and rewards rate People can be motivated if they believe: Quality and safety There is a positive link between performance and effort issues \n Leads to Regular appraisal is Will result in a favourable reward falling quality necessary Reward will help satisfy important needs standards Desire to satisfy the need is strong Resistance from 3 beliefs – Valence – depth of the want of an employee for an workers in the extrinsic reward event of change of Expectancy – degree to which people believe hard- work work will lead to their desired reward Instrumentality – confidence of employees that they Performance- Frin Commission Bonus Profit-sharing will receive the reward they desire related pay Bene Even if any 1 belief is missing, motivation will not occur A bonus for staff based 7.7. Motivational theories – evaluation A bonus on the profits of the scheme to They provide the starting point and a framework to Proportion In addition to business- can Non reward staff defining motivational methods and issues of the sales their be a form for “above They are often criticized due to its lack of rigour and made wages/salary proportion of rew average work follow up work the salary, performance” Important to identify the most appropriate theory and issue of identify their relevance in the business organizations shares 7.8. Motivators - Financial rewards Com Maybe too cars, Given for work Earns Time based wage persuasive, In addition to insura Piece rate Salary well commitment poor brand basic salary pens rate done/efficiently from staff image sche Payment to a Payment to worker Annual income, loa worker made for for each unit paid monthly Requires each hour worked produced. regular Mode of payment Reflects the Professional, target for manual, clerical difficulty of the job In case of supervisory and setting, and other blue and the standard issue of In add management staff annual collared workers time. Low security shares solves to no appraisals Too low- for workers the problem paym against demotivates, too of “us and sche preset Time rate is high- reduces Fixed each year and them” targets and present, usually incentives (will be determines the paying paid weekly able to meet their status of job bonuses target wage level Often easily) Reduces inadequate, Does not directly Encourages faster Job evaluation helps Teamwork retained short-term link to efforts put in working and efforts decide salary bands is not profits and effect \n encouraged dividends for Security of income Problem of shareholders Low security for Requires output to and helps in cost favouritism workers be measurable and price Herzberg calculation