KNOX ACADEMY

HIGHER
BUSINESS
MANAGEMENT

WHAT YOU
NEED TO
KNOW
CONTENTS
Business Decision Areas

BDA: Marketing....................................................3

BDA: Operations..................................................6

BDA: Financial Management................................8

BDA: Human Resources.....................................10

BE LO 1 - Business in Contemporary Society.....12

BE LO 2 - Information and IT..............................14

BE LO 3 – Decision Making in Business..............16

BE LO 4 - Internal Organisation.........................18

External Assessment..........................................19
 BDA: Marketing

What is a market? Consumer/industrial

What is marketing?

Role and importance of marketing Identify

Anticipate
Satisfy

Marketing as a strategic activity

Product-orientated
Market-orientated

Marketing of products and services

Marketing environment • Consumer trends

 Age distribution
 Gender
 Disposable income
 Household status
 Social class (class tables)
 Taste, fashion and lifestyle
• Competition
• Government
• Economy
• Technology

Branding Brand loyalty

Unique selling point
Own brands
Generic

Marketing mix Product

Price
Promotion
Place

Product Core
Augmented
Product life cycle
Extension strategies

Product mix Boston matrix – Problem Child, Star, Cash

Cow, Dog

3
Product innovation Research and development

Price Importance
Pricing strategies - low, market, high
Tactics
Short-term – skimming, penetration,
destroyer, promotional
Demand-orientated pricing

Place Channel of distribution

- producer, wholesaler, retailer, consumer
Physical distribution decisions
Factors affecting distribution

Main channels of distribution

• The wholesaler
• The retailer
• Direct selling
• Mail order
• Direct response advertising
• Telephone selling
• Television selling
• E-commerce

Promotion Aims
• Persuading
• Informing
• Reminding

Types
• Above the line
• Below the line

Advertising
• Informative
• Persuasive

Advertising decisions
• Print media
• Broadcast media
• Outdoor media

Controls on advertising

Sales Promotion
• Into the pipeline
• Out of the pipeline
Personal selling
Public relations
Publicity

4
Target markets Undifferentiated
Differentiated
Segmentation eg age, sex, income, etc

Personal selling
Niche marketing
Market share
Market growth

Market research What is market research?

Need for market research

Methods of research
• Primary
• Secondary

Primary – field
Techniques – questionnaires, personal
interview, telephone interview, test
marketing, postal survey, consumer panel

Secondary - desk
– internal eg sales figures
- external eg government publications

Information technology and market

research
Sampling (see extra notes)
Problems with market research

5
 BDA: Operations

Role and importance of operations Operating systems

• Input
• Process
• Output

Operations management
• Purchase and storage of raw
materials
• Production and storage of finished
goods
• Distribution of the finished goods

Production systems Factors when deciding

• Nature of the product
• Quantity to be produced
• Resources available
• Labour
• Capital

Methods of production Job

Batch
Flow
Examples

Advantages/disadvantages - learn

Factors affecting quality Quality assurance

Quality control
Quality standards eg BS5750, Kite Mark
Total Quality Management – learn
features

Benchmarking
Quality circles

6
Stock control Types
• Raw materials
• Work-in-progress
• Finished stock

Monitoring stock levels

• Stock record cards
• Spreadsheet

Maximum, minimum, re-order level

(diagram)

Storage
Just-in-time – learn advantages and
disadvantages
Centralised/decentralised – learn
advantages and disadvantages

Purchasing mix Quantity

Supplier – price, delivery dates, quality,
etc

Payment systems Time-rate

Overtime
Piece-rate
Piece-rate + fixed pay element
Commission payments
Fringe benefits
Bonuses
Incentives to professionals
Contract employment
Profit-sharing schemes

Motivation for employers and

employees when devising payment
systems

Distribution and delivery Warehousing

• Design and layout
• Mechanical handling
• Transportation

Transport and delivery of goods to the

customer

Scheduling

7
 BDA: Financial Management

Role and importance Adequate funds

Control costs
Ensure adequate cash flow
Control profitability levels

Cash flow Definition

Financial information Balance sheet – list of assets and

liabilities and how they are financed
Fixed Assets
Current Assets
Current Liabilities
Working Capital
Financed by

Trading, profit and loss account –

overall profit of company
Sales
Cost of goods sold
Gross Profit
Expenses
Net Profit

Interpretation of Final Accounts Trading, Profit and Loss account

Balance Sheet

Ratio analysis Purposes of interpretation

Uses of Ratio Analysis (Advantages)
Limitations of Ratio Analysis
(Disadvantages)

Profitability – gross profit margin, net

profit margin
Efficiency - return on capital employed
Liquidity – working capital, acid test

Budgetary control Uses of budgets

Cash Budgets
Types eg sales, production
Importance to the role of management

Using financial information Reviewing

Planning
Comparing

8
Users of information Internal eg managers, employees

External eg general public, government

Limitations of financial analysis Historic

Methods of stock valuation
Inflation
Variations in accounting standards
Intangibles are subjective eg goodwill
Does not take into account morale/staff
turnover etc

9
 BDA: Human Resources

Role and importance of Human Function within organisations

Resource Management Roles
• Facilitator
• Audit
• Consultancy
• Executive
• Service

FACES

Activities of HR function Strategic eg personnel policies

Tactical eg staff training and
development
Operational eg selecting applicants

HR planning Potential future staffing requirements

How to motivate employees
How to support staff

4 categories:
• New staff
• Potential staff
• Existing staff
• Departing staff

Changing patterns of employment Full-time

Part-time
Women
Casual

The workforce – part-time, variable

hours, temporary work, self-
employment

Implications for the organisation

Recruitment Identify vacancy

Job analysis
Job description
Person specification
Internal and external sources

Selection Application forms

References
Interviews

Psychological tests
10
 Intelligence tests
Personality tests
Aptitude tests
Attainment tests

Training and staff development Why train? – costs and benefits

Types
Induction training
On-the-job
Off-the-job
Staff development
Appraisal

Employee relations The ways in which employers deal with

their employees
Main institutions - ACAS, employers’
associations, trade unions

Processes in employee relations

Negotiation
Consultation
Arbitration
Collective bargaining

Employee representation Works councils, employee directors, etc

Development of policies • Appraisal

• Grievance
• Discipline
• Health and safety

Personnel information and record Basic employee data

keeping Training
Absence, etc

Legislation Health and Safety at Work Act 1974

Sex Discrimination Act 1975 (1986)
Race Relations Act 1976 (Commission
for Racial Equality)
Employment Protection Acts
Equal Pay Act 1970
Minimum Wage Act

Industrial tribunals

11
 BE LO 1 - Business in Contemporary Society

Role of business in society Production of goods and services

Factors of production
Cycle of business

Sectors of industrial activity Primary, Secondary, Tertiary

Types of business organisation Private-sector Organisations

Sole trader
Partnership
Private Limited Company (Ltd)
Public Limited Company (PLC)
Franchise

Public-sector Organisations eg council

Voluntary Organisations eg charity

Business objectives Maximising profit

Survival
Growth
Maximising sales
Managerial objectives
Satisficing
Creating a good reputation (corporate
or social responsibility)
Provision of a service

The role of enterprise and the Production of goods and services

entrepreneur Ideas, Resources, Finance, Risk

Stakeholders and their influence Internal

Shareholders/owners
Managers
Employees

External
Suppliers
Customers
Banks
The government
Local community
Taxpayers
Donors (for charities)
Local government
The community as a whole (society)

12
Sources of finance and assistance Internal – retained profits

External
Short-term eg bank overdraft
Medium-term eg bank loans
Long-term eg mortgages
Government eg Scottish Enterprise

Growth Horizontal integration

Vertical integration
Conglomerate integration
(diversification)
Demerger
Divestment
Contracting out/outsourcing
Management buy-out/management
buy-in

Business as a dynamic (ever-changing) Internal pressures eg new

activity management, new technology,
financial change

External Pressures (PESTEC)

• Political/legal
• Economic
• Social
• Technological
• Environmental
• Competitive

13
 BE LO 2 - Information and IT

Sources of Information Primary/Secondary

Internal/External

Costs and benefits of different sources

of information

Types of Information Qualitative/quantitative

Formats
• Oral
• Written
• Pictorial
• Graphical
• Numerical

Value of information Accuracy

Timeliness
Completeness
Appropriateness
Availability
Cost effectiveness
Objectivity
Conciseness

ICT in business Mainframe, desktop, laptop

Computer networks
Local area networks
Wide area networks

Telecommunications
The internet
Electronic mail
Multi-media systems
Teletext
Interactive video
Video conferencing
Fax
EPOS, EFTPOS

Learn features of websites

Business software Word Processing

Databases
Spreadsheets
Desktop Publishing
Personal productivity software
Presentation software

14
Uses of ICT ICT and decision making
ICT and production

Costs and benefits of ICT

Legislation Data Protection Act

Computer Misuse Act
Copyright, Designs and Patents Act
Freedom of Information Act

15
 BE LO 3 – Decision Making in Business

Nature of decisions • What to produce

• Where to locate premises
• Method of production
• How many staff to employ
• What price to charge

Types of decision Strategic – set out aims of organisation

- long term
Tactical – set out objectives of
organisation - medium term
Operational – day-to-day - short term

Review/evaluation/alteration

Who makes decisions? Strategic – most senior people

Tactical – most senior people or middle
management
Operational – manager, section head or
individuals

Who needs to know about decisions? Mission statement – summary of

strategic aims of the company

Role of managers Plan

Organise
Command
Co-ordinate
Control
Delegate
Motivate

Decision making model Start - Identify the problem

Finish - Evaluate

POGADSCIE

IT and decision-making Internet/Databases/Spreadsheets

SWOT Analysis Strengths

Weaknesses
Opportunities
Threats

16
Problems of structured models Time-scale
Ability to collect all information
Problems of generating alternative
solutions
Lack of creativity

Benefits of structured process of

decision-making

Aids to decision-making Brainstorming

PESTEC analysis
- Political
- Economic
- Social
- Technological
- Environmental
- Competitive
(see LO 1)

Factors affecting quality of decisions Quality/quantity of information used

Training
Risk taking
The human element

17
 BE LO 4 - Internal Organisation

Grouping of activities Functional

Product/service
Customers
Place/territory
Technology
Line/staff

Functional activities Advantages/disadvantages of grouping

by function

Marketing
Human resources
Finance
Operations
Research and development

Organisational structure Hierarchical

Flat
Matrix
Entrepreneurial
Centralised/decentralised

Aspects of organisational structure Charts

Span of control
Line relationships
Functional relationships
Staff relationships
Formal and informal structures

Awareness of organisational culture Corporate culture

Changes in structure De-layering

Downsizing

Role and responsibilities of

management

18
 External Assessment

- based on a written paper of 2½ hours

duration

The paper will consist of 2 sections:

Section One - 50 marks

Knowledge and understanding, problem

solving and decision making will be assessed
through a case study or interpretation of
about 750 words. All questions are
compulsory and all areas of the course are
covered.

Section Two - Extended response - 50 marks

The main purpose of this section will be to

assess knowledge and understanding. You
will be required to answer 2 questions from
a choice of 5. Each question will be worth
25 marks. Each question is integrated and
can cover 2-3 areas of the course.

19