1 Business & Its Environment (AS Level – 1.1 to 1.5)
1.1 Enterprise and Entrepreneurship
- Enterprise – the ability to recognise opportunities, organise resources and take risks to create value.
- Entrepreneur – a person who creates a new business or introduces a new product/service, bearing the financial and personal risk.
- Key characteristics: innovation, risk‑taking, pro‑activity, vision.
Example: A university graduate launches an app that matches freelance designers with small‑business owners.
1.2 Business Structure and Size
| Structure | Key Features | Typical Example |
|---|
| Sole trader | Owned/controlled by one person; unlimited liability. | Local bakery. |
| Partnership | Two or more owners; shared liability and profit. | Law firm. |
| Private limited company (Ltd) | Separate legal entity; limited liability; shares not publicly traded. | Tech start‑up. |
| Public limited company (PLC) | Shares traded on a stock exchange; limited liability. | British Airways. |
Size is measured by turnover, number of employees, market share or assets. Small, medium and large enterprises face different resource constraints and strategic options.
1.3 Business Objectives
- Profit‑oriented objectives – e.g., increase profit margin, achieve a target ROI.
- Growth objectives – market share, sales volume, geographic expansion.
- Non‑profit objectives – corporate social responsibility (CSR), environmental sustainability, employee welfare.
Objectives should be SMART (Specific, Measurable, Achievable, Relevant, Time‑bound).
1.4 Stakeholders and Their Interests
| Stakeholder | Primary Interest | Potential Conflict |
|---|
| Owners/Shareholders | Profit and return on investment | May clash with employee wage demands. |
| Employees | Job security, fair pay, good conditions | Can conflict with cost‑cutting measures. |
| Customers | Value for money, quality, service | May oppose price increases. |
| Suppliers | Timely payment, long‑term contracts | May be affected by aggressive bargaining. |
| Government | Tax revenue, compliance, employment | Regulation can limit flexibility. |
| Community & NGOs | Environmental protection, ethical conduct | Can pressure firms to change practices. |
1.5 External Environment – PEST Analysis
- Political – tax policy, trade restrictions, stability.
- Economic – inflation, exchange rates, consumer confidence.
- Social – demographics, lifestyle trends, education.
- Technological – innovation speed, R&D, automation.
PEST helps identify opportunities and threats that shape strategic choices.
2 Human‑Resource Management (AS Level – 2.1 to 2.3)
2.1 Recruitment, Selection & Training
- Recruitment – attracting suitable candidates (internal promotion, external advertising, online job boards).
- Selection – shortlisting, interviews, assessment centres, reference checks.
- Training & Development – on‑the‑job training, apprenticeships, e‑learning, leadership programmes.
Diagram suggestion: Flowchart showing Recruitment → Selection → Induction → Training → Development.
2.2 Motivation and Leadership
| Theory | Key Idea | Implication for Managers |
|---|
| Maslow’s Hierarchy | Needs progress from physiological to self‑actualisation. | Design reward packages that address multiple need levels. |
| Herzberg’s Two‑Factor | Hygiene factors prevent dissatisfaction; motivators increase satisfaction. | Ensure good working conditions and provide achievement‑oriented tasks. |
| McGregor’s Theory X/Y | X assumes employees dislike work; Y assumes they are self‑motivated. | Adopt a Theory Y style where possible to foster empowerment. |
2.3 Performance Management & Employee Relations
- Performance appraisal – SMART objectives, 360° feedback, KPI tracking.
- Reward systems – salary, bonuses, profit‑share, non‑monetary (recognition, flexible working).
- Employee relations – trade unions, collective bargaining, grievance procedures, disciplinary policies.
3 Marketing (AS Level – 3.1 to 3.3)
3.1 Nature of Marketing
Marketing creates value by identifying, anticipating and satisfying customer needs profitably. It translates corporate objectives into measurable marketing objectives and aligns the 4‑Ps (product, price, place, promotion) with target markets.
3.1.1 Demand, Supply & Pricing
- Demand – quantity consumers are willing & able to buy at a given price.
- Supply – quantity producers are willing to sell at a given price.
- Equilibrium price is set where the two curves intersect.
- Shifts in demand (e.g., income rise) or supply (e.g., lower production cost) move the equilibrium, influencing pricing strategies.
3.1.2 Market Segmentation & Targeting
- Geographic – region, climate, urban/rural.
- Demographic – age, gender, income, education.
- Psychographic – lifestyle, values, personality.
- Behavioural – usage rate, loyalty, benefits sought.
Segmentation enables firms to decide between a mass‑marketing (undifferentiated) or niche‑marketing (focused) approach.
3.1.3 Mass (Undifferentiated) vs. Niche (Focused) Marketing
| Aspect | Mass Marketing | Niche Marketing |
|---|
| Target market | Whole market or very large segment | Small, well‑defined segment |
| Product strategy | One standardised product | Specialised product(s) with added features |
| Pricing | Low price – economies of scale | Premium price – value‑added |
| Promotion | Mass media, high reach | Targeted media, personalisation |
| Distribution | Intensive – maximum availability | Selective – outlets frequented by niche |
| Risk | Lower per‑unit, high total investment | Higher per‑unit, lower total investment |
Advantages & Disadvantages
- Mass Marketing
- Advantages: large sales volume, cost efficiencies, strong brand awareness.
- Disadvantages: intense competition, limited differentiation, risk of price wars.
- Niche Marketing
- Advantages: higher margins, strong loyalty, less direct competition.
- Disadvantages: limited growth potential, higher per‑unit costs, vulnerability to market changes.
Real‑World Illustrations
- Mass market: Coca‑Cola – single flagship drink sold worldwide via intensive distribution and mass media.
- Niche market: Patagonia – high‑performance outdoor apparel for environmentally‑conscious enthusiasts, priced at a premium.
- Hybrid (mass‑niche): Apple iPhone – sold to a broad audience but positioned as a premium, design‑focused product that also serves specialist segments (e.g., photographers).
3.2 Market Research
- Primary research – surveys, interviews, focus groups, observation.
- Secondary research – published reports, industry statistics, company records.
- Data collection methods: quantitative (questionnaires, online polls) vs. qualitative (depth interviews).
- Key steps: define objective → choose method → collect data → analyse → draw conclusions → make recommendations.
Sample exam question: “Explain how a company could use primary research to decide whether to adopt a niche‑marketing strategy for a new product.”
3.3 The Marketing Mix (4‑Ps) & Product Portfolio Analysis
Product
- Core product, actual product, augmented product.
- Life‑cycle stages: introduction, growth, maturity, decline.
- Product‑development strategies: line‑extension, brand‑extension, new‑to‑market.
Price
- Pricing objectives: profit‑oriented, sales‑oriented, status‑oriented, competitive‑oriented.
- Methods: cost‑plus, target‑return, competition‑based, value‑based, psychological pricing.
- Elasticity of demand – price elasticity (PED) indicates how quantity demanded reacts to price changes.
Place (Distribution)
- Channel design – direct vs. indirect, intensive vs. selective vs. exclusive.
- Logistics – warehousing, inventory management, transport.
- Location decisions – market proximity, cost, infrastructure.
Promotion
- Promotion mix – advertising, sales promotion, public relations, personal selling, direct/online marketing.
- Objectives – inform, persuade, remind.
- Message strategies – emotional, rational, moral.
Product‑Portfolio Tools
| Tool | Purpose | Key Axes |
|---|
| BCG Matrix | Allocate resources among product lines. | Market growth (vertical) vs. relative market share (horizontal). |
| GE/McKinsey Matrix | Assess business strength & industry attractiveness. | Industry attractiveness vs. business unit strength. |
| Product‑Life‑Cycle (PLC) Chart | Plan marketing activities over time. | Stages (intro‑grow‑mature‑decline) vs. sales & profit. |
4 Operations Management (AS Level – 4.1 to 4.3)
4.1 Production Methods
- Job (one‑off) production – custom, high cost, low volume (e.g., bespoke furniture).
- Batch production – groups of identical items, moderate cost (e.g., bakery producing loaves).
- Mass (flow) production – continuous, high volume, low cost (e.g., car assembly line).
- Continuous production – 24/7 operation, often in utilities (e.g., electricity generation).
4.2 Location, Scale & Technology
- Location factors – market access, transport costs, labour availability, government incentives.
- Economies of scale – cost per unit falls as output rises (technical, managerial, purchasing).
- Technology – automation, robotics, computer‑aided design (CAD), Enterprise Resource Planning (ERP).
4.3 Quality, Lean & Continuous Improvement
- Quality management – ISO 9001, Total Quality Management (TQM), Six Sigma.
- Lean production – eliminate waste, improve flow, use of Kaizen (continuous improvement).
- Capacity planning – match output to demand; tools include capacity utilisation rate and break‑even analysis.
5 Finance & Accounting (AS Level – 5.1 to 5.5)
5.1 Sources of Finance
| Source | Type | Key Features |
|---|
| Bank loan | Debt | Fixed interest, repayment schedule, secured/unsecured. |
| Share issue | Equity | Dilutes ownership, no fixed repayments, dividends optional. |
| Retained earnings | Internal | Reinvested profit, no external cost. |
| Leasing | Hybrid | Use of assets without ownership, fixed payments. |
5.2 Financial Statements & Analysis
- Income statement – shows revenue, costs, profit for a period.
- Balance sheet – snapshot of assets, liabilities, equity.
- Cash flow statement – inflows & outflows from operating, investing, financing activities.
Key ratios:
| Ratio | Formula | Interpretation |
|---|
| Gross profit margin | Gross profit ÷ Sales × 100% | Efficiency of production. |
| Current ratio | Current assets ÷ Current liabilities | Short‑term liquidity. |
| Return on capital employed (ROCE) | Operating profit ÷ Capital employed × 100% | Overall profitability. |
| Debt‑to‑equity | Total debt ÷ Equity | Financial risk. |
5.3 Budgeting & Forecasting
- Sales forecast – based on market research, trend analysis, seasonality.
- Budget types – static, flexible, zero‑based.
- Variance analysis – compare actuals with budget, investigate favourable/unfavourable variances.
5.4 Investment Appraisal
- Payback period – time to recover initial outlay.
- Net present value (NPV) – present value of cash inflows minus outflows; accept if NPV > 0.
- Internal rate of return (IRR) – discount rate that makes NPV = 0; accept if IRR > required rate of return.
5.5 Ethical & Legal Considerations in Finance
- Corporate governance, transparency, anti‑money‑laundering (AML) regulations.
- Stakeholder impact of financing decisions – e.g., debt increases risk for shareholders.
6 Business & Its Environment (A Level – 6.1 to 6.2)
6.1 Strategic Analysis Tools
- PESTEL – adds Environmental and Legal to PEST.
- SWOT – internal Strengths & Weaknesses vs. external Opportunities & Threats.
- Porter’s Five Forces – threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes, industry rivalry.
- Ansoff Matrix – market penetration, market development, product development, diversification.
- BCG & GE matrices – resource allocation across business units.
6.2 Strategic Choices & Implementation
- Growth strategies (organic vs. inorganic), stability, retrenchment.
- Strategic objectives must be aligned with mission, vision and stakeholder expectations.
- Implementation tools – balanced scorecard, change management models (Lewin’s 3‑step, Kotter’s 8‑step).
7 Human‑Resource Management (A Level – 7.1 to 7.4)
7.1 Organisational Structure & Design
- Functional – departments by expertise (marketing, finance).
- Divisional – by product line, geography or market.
- Matrix – dual reporting (functional & project).
- Flat vs. tall hierarchies affect communication speed and control.
7.2 Leadership & Management Styles
| Style | Key Characteristics | Impact on Motivation |
|---|
| Autocratic | Centralised decision‑making | Quick decisions but low employee morale. |
| Democratic | Consultative, shared decision‑making | Higher commitment, slower decisions. |
| Laissez‑faire | Minimal supervision | Encourages innovation but may cause ambiguity. |
7.3 Strategic HRM
- Linking HR policies to business strategy (e.g., talent acquisition for innovation‑led firms).
- Workforce planning – forecasting future skill needs, succession planning.
- Learning & development – continuous professional development (CPD), e‑learning platforms.
7.4 Industrial Relations & Employment Law
- Trade unions, collective bargaining, strikes and lock‑outs.
- Key legislation (UK examples): Employment Rights Act, Equality Act, Health & Safety at Work Act.
- Employer responsibilities – contracts, minimum wage, working time regulations.
8 Marketing (A Level – 8.1 to 8.2)
8.1 Advanced Market Research & Segmentation
- Conjoint analysis – measures how consumers value product attributes.
- Cluster analysis – statistical technique to identify natural market segments.
- Use of big data & analytics (social listening, predictive modelling).
8.2 Full Marketing‑Plan Framework
- Situation analysis – PESTEL, SWOT, competitor audit.
- Marketing objectives – SMART, linked to corporate goals.
- Target market & positioning – perceptual maps, USP (unique selling proposition).
- Marketing‑mix strategy
- Product – line‑extension, branding, packaging, after‑sales service.
- Price – dynamic pricing, price‑skimming, penetration pricing, price discrimination.
- Place – omni‑channel distribution, e‑commerce platforms, logistics optimisation.
- Promotion – integrated marketing communications (IMC), content marketing, influencer partnerships, digital advertising, CRM.
- Budget & control – marketing budget allocation, ROI measurement, KPI tracking.
- Implementation timetable – Gantt chart of activities.
- Evaluation – post‑campaign analysis, market share change, customer‑lifetime value.
International Marketing Considerations
- Standardisation vs. adaptation of the 4‑Ps.
- Cultural dimensions (Hofstede) – individualism, power distance, uncertainty avoidance.
- Legal & ethical issues – product labelling, advertising standards, trade barriers.
9 Operations Management (A Level – 9.1 to 9.3)
9.1 Location & Scale Decision‑Making
- Quantitative techniques – break‑even analysis, cost‑benefit analysis, linear programming.
- Qualitative factors – political stability, labour skills, infrastructure.
9.2 Quality Management & Continuous Improvement
- Six Sigma – DMAIC (Define, Measure, Analyse, Improve, Control).
- ISO 14001 – environmental management systems.
- Benchmarking – internal, competitive, functional.
9.3 Technology, Automation & Sustainable Operations
- Industry 4.0 – IoT, cyber‑physical systems, data analytics.
- Renewable energy integration, circular economy principles.
- Impact on labour – up‑skilling, job redesign.
10 Finance & Accounting (A Level – 10.1 to 10.4)
10.1 Advanced Financial Statement Analysis
- Common‑size statements – express items as % of sales (income) or % of total assets (balance sheet).
- Trend analysis – multi‑year comparisons.
- DuPont analysis – ROE = profit margin × asset turnover × financial leverage.
10.2 Strategic Use of Ratios & Forecasting
- Liquidity, solvency, efficiency, profitability ratios linked to strategic decisions (e.g., expansion, dividend policy).
- Pro‑forma statements – forecast future performance based on assumed changes.
10.3 Investment Appraisal – Advanced Techniques
- Adjusted present value (APV) – separates operating risk from financing risk.
- Real options – value of flexibility (e.g., option to expand a project).
- Sensitivity analysis – test how changes in key assumptions affect NPV/IRR.
10.4 Ethics, Corporate Governance & Risk Management
- Codes of conduct, board independence, audit committees.
- Risk registers – identify, assess, mitigate financial, operational, reputational risks.
- Stakeholder reporting – integrated reports combining financial and non‑financial performance.
Summary of Key Connections
- Corporate objectives drive the choice of market‑coverage strategy (mass vs. niche) and shape the marketing mix.
- Effective market research and segmentation underpin both AS‑level and A‑level marketing planning.
- Operations, HRM and finance must be aligned with the chosen strategic direction – e.g., a niche strategy may require specialised production, skilled staff and higher‑margin financing.
- Strategic analysis tools (PESTEL, SWOT, Porter) provide the evidence base for decisions across all functional areas.
- Ethical considerations, stakeholder impact and sustainable practice are woven throughout the entire syllabus, from product design to financial reporting.
Quick‑Check Questions
- Define “mass (undifferentiated) marketing” and give one advantage and one disadvantage.
- Explain how price elasticity influences a firm’s decision to adopt a price‑skimming strategy.
- Using Porter’s Five Forces, analyse the competitive pressure faced by a new entrant in the electric‑vehicle market.
- Calculate the current ratio for a company with current assets £500 000 and current liabilities £300 000. Interpret the result.
- Outline the steps of the DMAIC process in Six Sigma and explain why it is valuable for a niche‑market producer.