AQA Level 1/Level 2 GCSE (9-1) in Business

Interpretation of data given on financial statements

Purpose of financial statements

understand the importance of financial statements for assessing business performance and helping make business decisions

make judgements on the performance of a business through the interpretation of the information contained in income statements

calculate gross profit margin and net profit margin to help assess financial performance.

Components of financial statements

consider current performance, performance against previous years, performance against competitors and performance from the perspective of a range of stakeholders

identify the main components of the income statement and the statement of financial position

understand the difference between assets and liabilities and that the statement of financial position is a snapshot in time

Factors influencing the location decision of a business

Students should be able to understand the factors that influence where a business is located, including proximity to the market, availability of raw materials, labour, competition and costs.

What business operations involve, their role within the production of goods and the provision of services, and how they influence business activity.

Students should understand the interdependent nature of business operations, human resources, marketing and finance. Students should be able to give examples of how business objectives would be split into functional plans with clear links throughout.

Sole traders

understand the concept of limited liability and which legal structures benefit from this

Private limited companies (ltd)

Not-for-profit organisations

Public limited companies (plc)

Partnerships

analyse the benefits and drawbacks of each legal structure (including issues such as management and control, sources of finance available, liability and distribution of profits)

understand the different legal structures that businesses adopt

evaluate which legal structure would be most appropriate for a variety of business examples, including new start-up businesses and large established businesses.

Basic financial calculations

The main sections within a business plan

analyse the benefits and drawbacks of business planning

understand the difference between variable costs, fixed costs and total costs

The purpose of business planning

understand the reasons why businesses create plans, including importance in setting up a new business, raising finance, setting objectives and detailing how functions of a business will be organised

Basic financial terms

understand the concept of revenue, costs, profit and loss.

understand the main sections of a business plan

Interpreting cash flow forecasts

Importance of cash to businesses

understand how and why cash flow forecasts are constructed

evaluate possible solutions to cash flow problems, including re-scheduling payments, overdrafts, reducing cash outflow, increasing cash inflow and finding new sources of finance.

Difference between cash and profit

complete and interpret sections of a cash flow forecast (this includes an understanding of cash inflows and outflows, net cash flow and the opening and closing balance. Students are not expected to be able to construct an entire cash flow forecast)

understand the consequences of cash flow problems and the effect of positive cash flow

understand the reason why entrepreneurs embark on running businesses and the activities businesses can undertake to minimise risks.

Impact on businesses of operating in competitive markets

understand the risks businesses face and the reasons why all businesses face uncertainty

Uncertainty and risks businesses face

understand the meaning of a market and competition

analyse potential impacts of competition on businesses and identify situations when businesses face minimal or no competition

Ethical considerations Students should be able to identify and analyse where there may be a possible trade off between ethics and profit.

Ethical behaviour requires businesses to act in ways that stakeholders consider to be both fair and honest.

Students should be able to demonstrate knowledge and understanding of how business and consumers accept greater environmental responsibility in their decision making and the costs and benefits of businesses behaving this way.

Students should be able to identify and analyse where there may be a possible trade-off between sustainability and profit.

noise and air pollution.

impact on traffic congestion

Students are expected to know relevant examples of ways in which a business can behave ethically and the benefits and drawbacks of ethical behaviour.

Environmental considerations:

global warming

Sustainability:

using scarce resources.

recycling

disposing of waste

Methods of expansion

Economies of scale

Diseconomies of scale

calculate and interpret average unit costs.

understand the meaning of purchasing and technical economies of scale

Benefits and drawbacks of expansion

understand that with growth businesses increase the risk of diseconomies of scale occurring due to poor communication, coordination issues and reduced staff motivation

discuss the advantages and disadvantages of methods of growth

understand the methods used by businesses when expanding (organic growth through franchising, opening new stores and expanding through e-commerce, outsourcing and external growth through mergers and takeovers)

understand the benefits of growth in terms of unit cost advantages due to economies of scale and the drawbacks of growth due to diseconomies of scale

Students should understand the interdependent nature of business operations, human resources, marketing and finance. Students should be able to give examples of how business objectives would be split into functional plans with clear links throughout.

The purpose of the finance function, its role within business and how it influences business activity.

evaluate the value of using break-even analysis to a business.

Average rate of return

identify the break-even level of output and margin of safety from a break-even chart

understand the main investment projects that businesses undertake, including investment in new machinery, buildings and vehicles and be able to calculate the average rate of return for these projects

understand the meaning of the term break-even output and interpret break-even charts

Basic financial terms

understand the concept of revenue, costs, profit and loss

Break-even

Basic financial calculations

understand the difference between variable costs, fixed costs and total costs

better designs

How UK businesses compete internationally, offering:

higher quality products at lower prices.

Students should be able to demonstrate knowledge and understanding of globalisation and the benefits and drawbacks that it offers UK businesses.

Exchange rates Students should understand the impact of exchange rates on the profit and sales of those businesses that import and/or export.

Students should be able to understand the importance of providing good service to customers and analyse the techniques businesses use to provide good customer service.

The ways in which advances in ICT have allowed customer services to develop:

Students should understand the sales process.

dissatisfied customers

social media.

post sales services (eg user training, help lines, servicing).

Benefits of good customer service, including:

Methods of good service:

product knowledge

customer engagement (creating a positive experience for the customer)

increase in customer satisfaction

websites

increased spend

reduction in revenue.

poor reputation via word of mouth

customer loyalty

profitability.

e-commerce

Dangers of poor customer service, including:

The purpose of human resources, its role within business and how it influences business activity.

Students should understand the interdependent nature of business operations, human resources, marketing and finance. Students should be able to give examples of how business objectives would be split into functional plans with clear links throughout.

Students should understand the importance of identifying and satisfying customer needs, in order to:

avoid costly mistakes

be competitive.

increase sales

select the correct marketing mix

provide a product or service that customers will buy

The importance of identifying and satisfying customer needs

business operations

marketing

The importance of external influences on business and how businesses change in response to these influences.

Students need to be aware of the impact influences on business have on the four functional areas of business:

human resources

finance.

Employment law

Only brief knowledge of each law is needed. More emphasis should be placed on the effects of the legislation on businesses.

national minimum wage/living wage

the Equality Act (2010).

Consumer law

Health and Safety law

Employment law including:

Consumer law including trade descriptions.

Students should be aware of the benefits for providing a safe working environment.

Students should be able to assess the impact of legislation on businesses, for example cost, training needs, recruitment and the consequences of failure to follow legislation for the business.

Health and safety law including: the Health and Safety at Work Act (1974).

The purpose of marketing, its role within business and how it influences business activity.

Students should understand the interdependent nature of business operations, human resources, marketing and finance. Students should be able to give examples of how business objectives would be split into functional plans with clear links throughout.

understand the use of non-financial methods of motivation, including styles of management, importance of training and greater responsibility, fringe benefits.

understand the benefits of a motivated workforce, such as staff retention and high productivity

understand the use of financial methods of motivation (including an understanding of the main methods of payment including salary, wage, commission and profit sharing)

Importance of motivation in the workforce

Methods to motivate staff

Appropriateness of organisational structures

how organisational structure may affect the different ways of communication.

Students should be able to understand:

internal organisational structures, span of control, chain of command, delayering and delegation

why businesses have internal organisational structures, including an understanding of different job roles and responsibilities throughout the business

the impact that having a tall or flat organisational structure has on how a business is managed

Centralisation and decentralisation

Methods of production:

Students should be familiar with job and flow production methods and understand when each is appropriate.

flow.

Students should consider how production might be made more efficient by the use of lean production techniques.

Efficiency in production:

job

lean production

just in time (JIT).

analyse the benefits of having an effective recruitment and selection process for a business, including high productivity, high quality output or customer service and staff retention

The need for recruitment

Methods of recruitment and selection of employees

understand the benefits of full and part time employment.

Contracts of employment

understand the difference between internal and external recruitment and the benefits and drawbacks of each approach

understand the difference between part time and full time contracts, job share and zero hour contracts

outline the main stages in the recruitment and selection process, including an understanding of job analysis, job description, person specification, and selection methods

age

gender

Types of segmentation Students should understand how and why different businesses use segmentation to target customers, including:

location

income.

Use of objectives in judging success

understand how and why the objectives set will differ between businesses (reasons include the size of the business, level of competition faced and type of business (not-for-profit organisations))

understand how and why the objectives set may change as businesses evolve. Students should consider how the objectives of larger more established businesses might differ from smaller start-up businesses, eg becoming the dominant business in the market, international expansion, increasing shareholder value and ethical and environmental considerations

understand the success of a business can be measured in other ways than profit.

What are business aims and objectives

understand the main aims and objectives for businesses: survival, profit maximisation, growth (domestic and international), market share, customer satisfaction, social and ethical objectives and shareholder value

Purpose of setting objectives

understand the role of objectives in running a business

Role of objectives in running a business

Changing objectives

Appropriateness of sources of finance

understand the main internal and external sources of finance available (including family and friends, retained profit, a new share issue, obtaining a loan or mortgage, selling unwanted assets, overdrafts, trade credit, hire purchase and government grants)

evaluate the suitability of sources of finance for new and established businesses.

Methods businesses use to raise finance

analyse the advantages and disadvantages of each method for a given situation

Impact of business activity on stakeholders

understand stakeholders’ main objectives including maximising pay for workers, minimising environmental impact on local community and high dividend payments for owners

Impact and influence stakeholders have on businesses

Main stakeholders of businesses

understand the impact and influence stakeholders have on businesses and their objectives and how businesses may face conflict between stakeholders.

Objectives of stakeholders

understand what is meant by a stakeholder and who the main stakeholders of a business are, including owners, employees, customers, local community and suppliers

Digital communication changing the way businesses communicate with stakeholders. Students are expected to know relevant examples of digital technology/communication.

E-commerce

E-commerce to access wider markets.

Digital communication

Students should understand the impact of the changing use of ICT and how it influences business activity.

How businesses identify quality problems and how businesses measure quality and the consequences of these issues.

inspection costs

Methods of maintaining consistent quality: Total quality management (TQM)

Costs and benefits of maintaining quality:

Students should be aware of the methods of maintaining consistent quality and be able to identify the advantages to a business of using TQM.

Consequences of quality issues Students should have an understanding of customer expectations of quality in terms of production of goods and the provision of services.

image/reputation

higher price

staff training

the provision of services.

product recalls

Students should be aware of the possible quality issues as businesses grow, particularly if outsourcing and franchising is used.

additional sales

Students should be able to demonstrate and understand how businesses might be affected by changes in the rate of interest.

how fluctuating interest rates can affect consumer and business spending.

Students should be able to identify how and why businesses might be affected by changes in levels of employment.

how fluctuating interest rates can affect businesses that rely on overdrafts and loans for finance

Interest rates:

Level of employment

Consumer spending

Students should be able to discuss how demand for products and services may change as incomes fluctuate.

growth

Pricing methods, including:

competitive pricing

cost-plus.

Students should have an understanding of the basic relationship between price and demand ie as prices rise demand is likely to fall.

Product Students should understand the benefits and risks of developing new products.

nature of the market

internet

billboards.

sponsorship

inform/remind customers about the product

retailers

Students should be able to recognise how the marketing mix evolves over time and evaluate how businesses may react to this.

the nature of the market

product life cycle.

Product differentiation:

loss leader

Students should understand the importance of product design, image and the needs of the target market when designing new products.

introduction

The factors that influence pricing decisions, including:

Students should be able to recognise the factors, internal and external, which might influence the pricing decision, particularly as businesses grow and expand. They should be able to evaluate the factors and use them to assess the suitability of pricing methods for a given business.

adding more or different features

price skimming

costs

Students should have an understanding of the main features of pricing methods and the impact they will have on a business.

price penetration

research and development

degree of competition

Students should appreciate the significance of having a USP in a competitive market and the importance of a good brand image.

Students should have an understanding of the product life cycle and demonstrate how demand for a product or service might change over time.

price reduction.

Product portfolio Students should understand how and why businesses might broaden and balance their product portfolio using the Boston Matrix.

The product life cycle:

brand image.

television

sales promotion

coupons

extension strategies:

maturity

Students should be familiar with the promotional methods which are likely to be used by a given business.

samples

unique selling point (USP)

advertising

Promotional methods:

Students should appreciate the benefits and drawbacks of promotional methods used by businesses.

updating packaging

Students should be able to evaluate the effectiveness of extension strategies and when they would be suitable.

Students should be able to identify and explain the four categories of the Boston Box.

decline

newspapers

changing target market

advertising, including:

magazines

PR

target market.

wholesalers

free gifts

competitions.

Reasons for promotion:

Students should be aware of the importance of the four elements and how they work together.

point of sales displays

competitor actions

Students should be able to analyse the appropriateness of each distribution method for a given scenario.

2 for 1 offers

the nature of the product or service

telesales.

create or change the image of the product

Students should be able to analyse factors influencing the selection of the promotion mix to assess their suitability for a given business.

Factors influencing the selection of the promotional mix:

Students should be familiar with the different channels of distribution used by businesses to gain access to potential customers.

Using the marketing mix to inform and implement business decisions

social media.

finance available

E-commerce and m-commerce Students should be able to analyse the growing importance of e-commerce and m-commerce and how it can extend the reach of businesses to include international markets.

Students should be able to recommend appropriate marketing activities for a given business.

persuade customers to buy the product.

create or increase sales

Place (the different channels of distribution used by businesses):

Students should be able to identify the benefits and drawbacks of a business using e-commerce and m- commerce.

Integrated nature of the marketing mix

Purpose of market research

Students should be able to interpret and use qualitative and quantitative market research findings to help make appropriate decisions for different types of business.

Students should understand why businesses conduct market research, such as to identify market opportunities and to get a better insight into their customers and competitors.

printed press eg newspapers.

questionnaires

internet research

Use of market research: information that may help decision making

Students should be able to identify market size and market share.

Students should be expected to manipulate and interpret data from tables and charts.

surveys

Collect information about:

Students should understand the difference between qualitative and quantitative market research.

interviews

competition

target market.

Methods of market research to include primary and secondary:

demand

focus groups

Students should identify the benefits and drawbacks for various market research techniques and select the best method for a given business.

understand the term enterprise and what is meant by an entrepreneur

understand the difference between goods and services, needs and wants

Purpose of business

understand what a business is and the reasons for starting a business (including producing goods, supplying services, distributing products, fulfilling a business opportunity and providing a good or service to benefit others)

understand that businesses face a constantly changing business environment due to changes in technology, economic situation, legislation and environmental expectations.

Reasons for starting a business

define the three sectors of primary, secondary and tertiary and give examples of types of business that operate in each sector

Dynamic nature of business

Business enterprise and entrepreneurship

Basic functions and types of business

define opportunity cost

outline the characteristics of an entrepreneur, such as hard working, innovative, organised and willingness to take a risk

understand the meaning of factors of production – land, labour, capital, enterprise

outline the objectives of an entrepreneur, including to be their own boss, flexible working hours, to pursue an interest, earn more money, identify a gap in the market and dissatisfaction with current job

reliability.

efficiency

The benefits of having spare stock to satisfy demand balanced against the cost of holding buffer stock.

Just in time (JIT)

Students should be able to evaluate the use of managing stock using JIT to a given business.

Students should recognise that the benefits of reduced costs must be balanced against the cost of more frequent deliveries and lost purchasing economies of scale.

The effects of procurement and logistics on a business, including:

Students should recognise that the benefits of reduced costs must be balanced against the quality of service.

Just in case (JIC).

Factors affecting choice of suppliers including:

Students should be able to analyse the factors that affect the choice of supplier for a given business.

cutting any waste and unnecessary costs to create a streamlined process and fast production times.

Managing stock:

quality

Students should understand what procurement and logistics are and their effect on a business.

price

Students should understand what a supply chain is and recognise the benefits of managing an effective supply chain.

lower unit costs.

The value of effective supply chain management, including:

working with suppliers to ensure that key processes are running efficiently and cost effectively

getting goods and services for the best price and value

Importance of training the workforce

Types of training undertaken by businesses

explain the benefits of training employees for a business, including increased productivity, ability to deal with changes in technology, increased motivation, staff retention, production of high quality goods and good customer service

explain the benefits of induction training

analyse the benefits and drawbacks of on the job and off the job training and evaluate which would be the most appropriate method for a variety of businesses.

understand the methods of training undertaken by businesses, including induction training, on the job training and off the job training