1 Business & its Environment
1.1 Enterprise
- Definition: An organisation that combines resources (land, labour, capital, entrepreneurship) to produce goods or services for profit.
- Examples: a local bakery, a multinational car manufacturer.
1.2 Business Structure
- Simple (sole trader / partnership) – owner(s) have full control and unlimited liability.
- Limited company – separate legal entity, shareholders own the business, directors manage it, liability is limited.
- Public limited company (PLC) – can sell shares to the public; subject to stricter regulation.
1.3 Size of Business
- Measured by turnover, number of employees, market share, or asset value.
- Categories: micro (≤ 10 staff), small (10‑49), medium (50‑249), large (≥ 250).
1.4 Business Objectives
- Profit‑maximisation – primary aim of most private‑sector firms.
- Growth – increase market share, sales, or geographical reach.
- Survival – maintain operations in a challenging environment.
- Corporate Social Responsibility (CSR) – ethical, environmental, community goals.
1.5 Stakeholders
| Stakeholder | Interest in the Business |
|---|
| Owners / Shareholders | Return on investment, share price. |
| Employees | Job security, wages, working conditions. |
| Customers | Quality, price, service. |
| Suppliers | Timely payment, long‑term contracts. |
| Government | Tax revenue, compliance with law. |
| Community / NGOs | Environmental impact, local employment. |
2 Human Resource Management (HRM)
2.1 HRM Processes
2.1.1 Purpose and Roles of HRM
- Plan, recruit, develop, and retain a capable workforce.
- Ensure legal compliance and promote employee well‑being.
2.1.2 Workforce Planning & Recruitment
- Analyse current and future skill needs.
- Use job analysis to produce a job description and person specification.
- Sources: internal promotion, adverts, recruitment agencies, online portals.
2.1.3 Selection
- Screening (CVs, application forms).
- Assessment methods – interviews, psychometric tests, work samples.
- Legal considerations – discrimination, right to work.
2.1.4 Training & Development
- Induction – familiarises new staff with policies and culture.
- On‑the‑job training – coaching, job‑shadowing.
- Off‑the‑job training – workshops, e‑learning, external courses.
- Development focuses on career progression and personal growth.
2.1.5 Performance Management & Appraisal
- Set SMART objectives, monitor progress, give feedback.
- Link appraisal outcomes to rewards, training needs or career paths.
2.1.6 Redundancy, Dismissal & Welfare
- Redundancy – genuine organisational need, fair selection, statutory pay.
- Dismissal – misconduct, capability, procedural fairness.
- Welfare – health & safety, employee assistance programmes, work‑life balance.
2.2 Motivation – Methods in Practice
2.2.1 Motivation as a Management Tool
Motivation is a core managerial function used to:
- Align employee effort with organisational objectives.
- Support the achievement of targets set by managers and leaders.
- Enhance employee well‑being, retention and productivity.
It underpins leadership approaches – transformational, participative and transactional – by influencing how leaders inspire, direct and reward staff.
2.2.2 Human Needs
Human needs are the basic requirements that drive behaviour. In the workplace they can be satisfied by appropriate policies.
- Physiological – fair wages, rest breaks, refreshments.
- Safety – safe environment, job security, clear health‑and‑safety procedures.
- Social (Belonging) – team‑building, supportive supervision, inclusive culture.
- Esteem – recognition, responsibility, achievement opportunities.
- Self‑actualisation – personal development, challenging projects, career progression.
2.2.3 Motivation Theories (Cambridge syllabus)
| Theory |
Core Idea (syllabus wording) |
Key Organisational Implications |
| Taylor’s Scientific Management |
Motivation is increased by selecting the right person for the right job and offering a fair piece‑rate wage. |
Job analysis, standardisation, performance‑related pay. |
| Mayo’s Hawthorne Studies |
Social factors and feeling valued increase motivation. |
Team cohesion, supportive supervision, informal communication. |
| Maslow’s Hierarchy of Needs |
People progress through a sequence of needs from basic to self‑actualising. |
Policies that satisfy each level – e.g., safe premises, team events, training. |
| Herzberg’s Two‑Factor Theory |
Hygiene factors prevent dissatisfaction; motivators create satisfaction. |
Maintain adequate wages, conditions, security (hygiene) and add achievement, recognition, growth (motivators). |
| McClelland’s Theory of Needs |
Individuals are driven by the need for achievement, affiliation and power. |
Offer stretch goals (achievement), teamwork/mentoring (affiliation), delegated authority (power). |
| Vroom’s Expectancy Theory |
Motivation = Expectancy × Instrumentality × Valence. |
Ensure effort leads to performance (expectancy), performance leads to reward (instrumentality), and reward is valued (valence). |
2.2.4 Motivation Methods – Translating Theory into Practice
- Job Design & Enrichment
- Task variety, autonomy, regular feedback – satisfies Maslow’s esteem/self‑actualisation and Herzberg’s motivators.
- Job rotation and added responsibility – develops McClelland achievement and power.
- Reward Systems
- Base pay, safe contracts, statutory benefits – address hygiene factors and physiological/safety needs.
- Performance‑related bonuses, profit‑sharing, public recognition – act as motivators, increase expectancy and valence (Vroom).
- Training & Development
- Skill‑building programmes and certifications – support achievement (McClelland) and self‑actualisation (Maslow).
- Mentoring, coaching, peer‑learning – fulfil affiliation needs.
- Leadership Style
- Transformational – articulates a vision that appeals to self‑actualisation.
- Participative (democratic) – involves staff in decision‑making, raising perceived control and expectancy.
- Transactional – clarifies the link between effort and reward, strengthening instrumentality.
- Performance Management
- Set clear, challenging yet realistic targets – boosts expectancy.
- Link appraisal outcomes directly to tangible rewards – strengthens instrumentality.
- Discuss individual career aspirations to ensure rewards are personally valuable – raises valence.
2.2.5 Evaluation of Motivation Methods
| Method |
Strengths (why it works) |
Limitations (what to watch out for) |
| Job Enrichment |
Increases autonomy and skill variety → higher intrinsic motivation. |
May overload staff; not all employees want extra responsibility. |
| Financial Rewards |
Clear link to performance; easy to measure. |
Risk of becoming the sole motivator, reducing intrinsic drive; “pay‑for‑performance” fatigue. |
| Recognition & Non‑Financial Rewards |
Addresses esteem and affiliation; low cost. |
Subjective perception; possible accusations of favouritism if not transparent. |
| Training & Development |
Supports achievement and self‑actualisation; builds organisational capability. |
Requires time and money; benefits may be realised only in the medium‑term. |
| Leadership Style Adaptation |
Matches motivational needs of different employee groups. |
Leaders must be skilled in several styles; inconsistent use can cause confusion. |
2.2.6 Case Study – Retail Chain (ABC Retail)
ABC Retail applied a blended approach based on the four syllabus theories:
- Recognition programme – “Employee of the Month” (Herzberg motivator, Vroom valence).
- Cross‑training & job rotation – staff work in sales, stock and customer service (Maslow social/esteem, McClelland achievement).
- Transparent commission structure – clear sales targets linked to tiered bonuses (Vroom expectancy & instrumentality).
- Monthly team‑building events – foster affiliation and belonging (Maslow social, McClelland affiliation).
Outcomes (one‑year period)
- Staff turnover reduced by 12 %.
- Average sales per employee increased by 8 %.
- Employee‑satisfaction scores rose from 68 % to 82 %.
3 Marketing
3.1 Market Research, Segmentation & Targeting
- Primary research (surveys, interviews) and secondary research (published data).
- Segmentation variables – demographic, geographic, psychographic, behavioural.
- Targeting – selecting one or more segments that offer the best return.
- Positioning – creating a distinct image in the mind of the target market.
3.2 The Marketing Mix (4 Ps)
| Product | Price | Place | Promotion |
|---|
| Features, quality, branding, life‑cycle management. |
Pricing strategies – cost‑plus, penetration, skimming, psychological. |
Distribution channels, logistics, retail locations, e‑commerce. |
Advertising, sales‑promotion, public relations, personal selling, digital marketing. |
3.3 Product Life‑Cycle (PLC)
- Introduction – low sales, high costs, focus on awareness.
- Growth – sales rise, economies of scale, competition appears.
- Maturity – sales peak, market saturated, emphasis on differentiation.
- Decline – sales fall, possible product withdrawal or rejuvenation.
4 Operations Management
4.1 The Transformational Process & Productivity
- Inputs (raw materials, labour, capital) → transformation → outputs (goods/services).
- Productivity = Output ÷ Input; higher productivity → lower unit cost.
- Efficiency – doing the same work with fewer resources; effectiveness – achieving the right output.
4.2 Production Methods & Capacity
- Job production – customised, low volume (e.g., bespoke furniture).
- Batch production – groups of identical items (e.g., bakery loaves).
- Flow (mass) production – high volume, low variety (e.g., car assembly).
- Just‑In‑Time (JIT) – minimise inventory, rely on reliable suppliers.
- Capacity utilisation – % of potential output actually achieved; important for cost control.
4.3 Outsourcing, Location & Quality
- Outsourcing – contracting out non‑core activities to reduce cost or gain expertise.
- Location decisions – factors: transport costs, labour availability, market proximity, government incentives.
- Quality management – total quality management (TQM), ISO standards, continuous improvement (Kaizen).
5 Finance & Accounting
5.1 Business Finance & Sources of Finance
- Internal sources – retained earnings, sale of assets.
- External debt – bank loans, overdrafts, bonds.
- External equity – share issue, venture capital.
- Choice depends on cost, control, risk and the stage of the business.
5.2 Cash‑Flow Forecasting
- Project inflows (sales, receivables) and outflows (payables, wages, overheads) over a 12‑month period.
- Identify potential shortfalls and arrange short‑term finance if needed.
5.3 Costing Methods
| Method | Key Features | Typical Use |
|---|
| Absorption (full) costing |
All production costs (fixed & variable) allocated to units. |
External financial reporting. |
| Marginal (variable) costing |
Only variable costs allocated to units; fixed costs treated as period costs. |
Short‑term decision‑making, break‑even analysis. |
5.4 Break‑Even Analysis
- Break‑even point (units) = Fixed Costs ÷ (Selling Price per unit – Variable Cost per unit).
- Shows the sales level at which total revenue equals total costs.
- Useful for pricing decisions and assessing the impact of cost changes.
5.5 Budgeting & Variance Analysis
- Budgets – financial plans for revenue, costs, cash flow over a period.
- Variance = Actual – Budgeted.
- Favourable variance: actual costs lower or revenue higher than budget.
- Unfavourable variance: actual costs higher or revenue lower.
- Analyse variances to control performance and inform future planning.
6 A‑Level Extensions (optional)
If the notes are used for Cambridge 9700 (A‑Level) study, the following additional topics should be added:
- External influences on business – PESTLE analysis, Porter’s Five Forces.
- Strategic planning – SWOT, Ansoff matrix, BCG growth‑share matrix.
- Organisational structure – functional, divisional, matrix, network.
- Advanced leadership – situational, charismatic, ethical leadership.
- Advanced marketing – branding, digital marketing strategies, market penetration vs. development.
- Operations strategy – lean production, total quality management, supply‑chain integration.
- Advanced finance – ratio analysis, investment appraisal (NPV, IRR, payback period).
Suggested Diagram (for 2.2 Motivation)
A flowchart can link each motivation theory → a specific workplace practice → the expected organisational outcome (e.g., higher productivity, lower turnover). This visual aids revision and exam planning.