As Business - Marathon Sheet

AS Business | Marathon Sheet [2024] | PAPER 1 & PAPER 2
SECTION 1
Topic 1: Enterprise
(1) Business Enterprise: (1) An organization that uses resources to meet the needs of the customers. (2) The primary motive is profit but
they can have other motives as well.
(2) Factors of production: (1) These are resources that are required to carry out business activity. (2) Includes land, labor, capital and
enterprise.
(3) Types of factors of production:

Land = All the natural resources
Labor = All the Physical and mental human effort
Capital = Machinery and man-made resources
Enterprise = Risk taking ability and combining other factors of production
(4) Added Value = (1) Difference between the selling price of finished goods and cost of bought in materials. (2) Added Value = SP - Cost of
materials bought in. (3) It can be improved by increasing the selling price (Through branding) or reducing cost (Buying in bulk to get
discounts).
(5) Opportunity Cost: (1) This is regarded as the next best alternative forgone. (2) It occurs due to the basic economic problem. (3)
Consumers, Firms and Governments all face it.
(6) Business Failure: (1) This is when the business is no longer able to continue operations. (2) Happens due to several internal and
external reasons.
Internal reasons for failure External Reasons for Failure
(1) Lack of cash > because of banks not willing to (1) Unfavorable political and legal conditions.
lend. (2) Technology changes causes the business to fail if the
(2) poor management > inexperience. business is unable to adapt
(3) Lack of record keeping (3) Intense competition from a new firm or existing rivals.
(7) Entrepreneur: (1) An individual who organizes the factors of production. (2) Has the idea to start the business. (3) Invests capital and
assumes the risk with aim of profit.
Qualities of an Entrepreneur
(1) Innovative > Comes up with new business ideas and methods of production.
(2) Multiskilled > Understands different areas of the business.
(3) Risk Taking > Takes calculated risk by first assessing the market and then investing the money.
(4) Leadership > They are able to guide junior workers towards a common goal.
(8) Intrapreneurs (NEW): (1) A business employee who takes direct responsibility for turning idea into a profitable new product of
business ventures. (2) The risk and reward remains with the business.
Reasons companies keep intrapreneurs:
(1) Creative employees > Launch new products and services.
(2) Improve efficiency > Figure out ways to cut costs
(3) Retain employees > Helps talented workers within the firm.
Note:
Entrepreneur = Owner
Intrapreneur = Employee having similar qualities of an entrepreneur, has max control.
(9) Benefits to a country of Businesses / Entrepreneurs

(1) Generates taxes
(2) Results in economic growth
(3) Bring innovative products
(4) Brings employment
(5) Increases exports
(10) Business Plan: (1) A written document that describes its objectives, it strategies, the market the business is in and the financial
forecast. (2) Includes executive summary, sales strategy and details about the functional departments.
Advantages Disadvantages:
(1) Helps to attract investors (1) Based on forecasts > might be wrong
(2) Allows the business to check the strengths and (2) Plan requires market research > it is expensive
weaknesses (3) It can lead to entrepreneurs becoming fixed on one
(3) Helps to check the performance by comparing the actions strategy and not innovating with market changes.
with the plan.
AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 1

Topic 2: Business Structure

(1) Private Sector: (1) This sector includes privately owned businesses with the main motive of profits. (2) Exists in the free market
economy.
(2) Public Sector: (1) Includes businesses that are owned, funded and controlled by the government. (2) Operates for the welfare of the
community. (3) Exists in the planned economy.
(3) Sole Trader: (1) A business in which one person provides the finance and in return has full control over the business. (2) Gets to keep
all the profits. (3) Unlimited liability, lacks separate legal status, lacks continuity.
(1) Unlimited liabilities: If the business is unable to pay off debts the lender reserves the right to take over the personal assets.
(2) Lacks separate legal status: The business and the owner are the same in the eyes of the law. If a business makes a mistake, the
owner is personally liable for the crime.
(3) Lacks continuity: If the owner dies the business comes to an end.
Advantage Disadvantage
(1) Gets to keep all the profits (1) Unlimited liability

(2) Owner has complete control over decision making (2) Limited finance
(4) Partnership: (1) Two or more people coming together to own a business usually to make a profit. (2) Individuals invest capital and
share responsibilities. (3) Unlimited liability, lacks separate legal status and lacks continuity.
Advantages Disadvantages
(1) Shared workload (1) Unlimited liability

(2) More capital from partners (2) Profit shared
(5) Private Limited company: (1) Small-medium sized business that is owned by shareholders who are often members of the same family
and cannot sell shares to the general public. (2) Has separate legal status, has continuity and has limited liability.
(1) Limited liability: If the owner is unable to pay back the amount, the lender cannot take over the personal assets to recover the
amount.
(2) Separate legal status: If the business makes a mistake owner is not personally liable for those mistakes.
(3) Continuity: Death of an owner does not lead to a breakup of the business.
(1) Limited liability (1) Process has more legal formalities and is more expensive
(2) Separate legal status (2) Limited potential to raise money since can't sell of the stock
(3) More finance from selling shares and still retain control market
(3) Can't easily transfer shares > Investors are less likely to
invest.
(6) Public Limited company: (1) Large business often a large business owned by shareholders, with legal rights to sell shares to the general
public through the stock exchange. (2) Limited liability, has separate legal status and has continuity.
(1) Limited liability (1) More legal formalities + High cost of formation
(2) Has separate legal identity (2) Risk of takeover if more shares are sold
(3) Raise large sums of money from the general public. (3) Less secrecy over financial accounts > competitors can access
the data.

(7) Co-operative: (1) Autonomous association of people owned by workers, customers and members united voluntarily to meet their
common economic, social and cultural needs. (2) Businesses are democratically controlled. (3) Every member has one vote and they share
profits equally.
(1) Economies of scale as they can purchase in bulk (1) Poor management if professional managers are not hired
(2) Workers work together which allows them to take better (2) Limited ability to raise finance > can't sell shares to non-
decision members
(3) Workers get a share in the profits which leads to better (3) Members need to be consulted on important issues
motivation. which slows decision making.
(8) Franchise: (1) A business in which exclusive rights are purchased for selling goods and services under a specific brand name and logo.
(2) Franchisor sells the rights to the franchisee authorizing the franchisee to use the brand name and logo.
(1) Already established brand name (1) Expensive license fee

(2) Franchisor pays for advertisements + labor training (2) Limited control over the price and products.
*These adv + dis are from the perspective of buying the license.
(9) Joint Venture: (1) Two or more businesses or people come together to work together on a particular produce or project. (2) They share
the costs, risk and responsibilities. (3) companies maintain their individual identities and create separate divisions to do so.
(1) Costs and risk is shared (1) Cultural clash due to different style of management.
(2) Can benefit from the expertise of others. (2) Mistake by one partner can damage the reputation of others
or cause business failure.
(10) Social Enterprise: (1) A business with primarily social objectives whose majority surpluses are reinvested mostly in a business or the
community. (2) Rather than providing profits for shareholders or owners. (3) Have a triple bottom line objective including economic, social
and environmental.
• Economic: Make profit and reinvest it

• Social: Invest money in social causes and benefiting disadvantaged segment of the society
• Environmental - Uses environmentally friendly production methods.

Topic 3: Size of a Business

(1) Methods to measure business size
1. Number of employees
2. Revenue
3. Capital Employed
4. Market share
5. Market Capitalization = Value of the company's shares
(2) Small Business > Less employees, low revenue, less capital employed.
(1) Easier to control (1) Limited sources of finance

(2) Flexible with customer preference (2) Difficult to gain economies of scale
(3) Family Owned business: (1 + 2) Owned and controlled by members of the same* family.
(1) Family members are more committed (1) New generations might not be competent
(2) Willing to provide finance and expertise (2) Follow traditional methods
(4) Internal Growth > (1) Expansion by opening new branches, shops and factories. (2) Grows without joining hands with any other firms.
(3) Reinvest profits to achieve this.
(1) More power of suppliers and customers (1) Difficult to manage

(2) More branches = more sales (2) Slow growth + extra cost to grow.
(5) External Growth > (1) Expansion by means of merger or takeover (2) Joins with a firm in the same or different industry.
(6) Horizontal Growth > (1) Integration with a business in the same industry and the same stage of production. (2) Car manufacturer
mergers with a car manufacturer.
(1) Removes competition (1) Workers might be fired to due to duplication of jobs
(2) Gain economies of scale due to the large size. (2) Govt. intervention if it becomes a monopoly.
(7) Forward Vertical Growth > (1) Integration with a business in the same industry, but with the customer. (2) Example: Car manufacturer
buys a showroom company.
(1) More control over promotion + price (1) Lack of experience and expertise.
(2) Secures outlet = competitors product eliminated
(8) Backward Vertical Growth > (1) Integration within the same industry, but with the supplier. (2) Example: Car manufacturer buys a
spare parts company.
(1) More control over supplies + improves quality (1) Lack of experience and expertise.
(2) Improves quality due to joint research.
(9) Conglomerate > (1) Integration with a business in a different industry. (2) Example: Car manufacture buys a shoe factory
(1) Risk spread (1) Lack of experience and expertise.

(2) Attract new customers by entering new markets.
(10) Strategic Alliances > (1) Firms agree to commit resources to achieve objective (2) Can be made at local, national and international
level. (3) Formed between a university, competitors or a supplier. [Same as joint ventures]

Topic 4: Business Objectives

(1) Business Objectives / Corporate Objectives: (1) Aims and targets of a business as a whole. (2) Set by the top management. (3) Must
meet a SMART criterion (Specific, Measurable, achievable, realistic, time specific). (4) Example: Profit max, growth, survival etc.
(2) Departmental Objectives: (1) Aims and targets of the functional departments of the business. (2) Marketing, HR, finance etc. (3) Must
be inline with the corporate objectives as it helps to provide the strategy.
(3) Usefulness of objectives

(1) Provides guideline to strategy for senior managers (1) Unrealistic can demotivate workers.
(2) Junior managers use to build their goals. (2) If they are outdated, they are useless
(3) Used to check the performance of the workers and (3) Not communicated, they will not work.
business.
(4) CSR > Corporate social responsibility > (1) A business that considers the interest of their stakeholders (2) as well as their shareholders.
(3) Considers the interest of customers, employees, communities etc.
(5) Ethics > (1) Regarded as principles that are thought to be morally correct and (2) not necessarily profitable.
(1) Higher wages = motivated workers (1) Expensive = high wages + green technology
(2) Better quality = USP (2) High cost = expensive products > low sales
(3) Green Technology = Helps to save costs in the long-run (3) Loss customers = people who do not value ethics only want
cheap products.
(6) Mission Statement > (1) Sets out the overall purpose and vision (2) core aims and used by both internal and external stakeholders. (3)
Gives context of corporate culture and principles of business activity.
(1) Outsiders like investors can know about he business (1) Too general = adds no value
(2) Workers know how to perform activities (2) Based on PR > sometimes not entirely true.
(7) Strategy vs Tactics > Strategy (Focus on Long-term) vs Tactics (Focus on short-term)
(8) Why objectives can change?

Internal Reasons External Reasons
(1) The stage of the business (Small = survival vs Large (1) Growth laws (Relax = growth and profit) (strong=
Business = growth) survival)
(2) Financial resources (More money = Growth, Less money (2) Competition (High = survival) (Weak = profit)
= survival)
(3) Technology (Rapidly changing = survival)
(3) Change of ownership (More ethically inclined = CSR vs (stable = profit)
more profit = profit maximization)
(9) How to communicate objectives to workers? / how to communicate mission statement

• CEO address
• Team meetings
• Digital platforms
• Training

Topic 5: Stakeholders
(1) Stakeholders > (1) Individuals or group of individuals who influence and are influenced by the activities of a business. (2) They can be
internal stakeholders (operate from within the business) or external stakeholders (operate from outside the business) .
(2) Internal Example: Owners, workers
(3) External Example: Customers, government, banks etc.
(4) Rights and responsibility

(1) Owner
o Right = Get profits
o Responsibility = Set targets for the business
(2) Customers
o Right = Receive good quality
o Responsibility = pay for the goods / no false claims
(3) Workers
o Right = receive pay + contract of employment
o Responsibility = observe the ethical code + complete the job requirements.
(4) Government
o Right = Collect tax + ensures business is following the laws
o Responsibility = Prevent unfair competition
(5) Conflicts: Usually the interests of these stakeholders tend to be conflicting therefore the business has to decide which ways to benefit
all the parties involved.

SECTION 2
Topic 1: Human Resource Management

(1) HRM > (1) It is a strategic approach to the effective management of an organization's workers so that they help the business gain a
competitive advantage. (2) The HR department ensures that workers have a good relationship with firms in order to enhance efficiency
and minimize wastage.
(2) Workforce Plan > (1) It is a plan that assess the current workforce and actions necessary to meet businesses future labor needs. (2)
Includes the relevant skills and the number of workers.
(1) Helps to check the skills need for the future > helps to set (1) If the plan is incorrect it leads to > wrong decisions
training requirements
(2) Does not take into account factors like motivation or other
(2) Ensures that the number of workers are accurate this prevents external changes.
over or under hiring.
(3) Labor Turnover = The rate at which employees are leaving an organization during a certain time period. LTO = (Number of workers who
are leaving / Total workers) x 100
(4) Recruitment > (1) Regarded as the process that identifies the need for a new employee, define the job, draw up a profile or an ideal
candidate for the job and advertising the position. (2) Two types internal and external recruitment.
• Internal > Within the business.

(ADV) > Know the strengths + tool for motivation
(DIS) > Creates an atmosphere of competition + No new ideas
• External > Outside the business

(ADV) > New ideas + motivated workforce
(DIS) > Time consuming + expensive
(5) Selection > (1) It is regarded as a process in which candidates are shortlisted, and screen using multiple test and interviews out of
which the most suitable one is chosen. (2) Done by looking at the CV or references. Methods includes, interviews, psychometric tests and
assessment centers.
(6) Job Description > (1) A detailed list of key point about the job to be filled (2) Has all the relevant details about the job. Job title, task
and responsibility.
[ADV] > It helps to guide workers what job needs to be performed > tasks are achieved.
[ADV] > It helps to check the performance > performance is compared to the job description.
(7) Person specification > (1) Specific list of all the skills and qualities and qualifications that an applicant needs to have for a job. (2)
Includes degree requirements or communication skills.
(8) Contract of employment > (1) Legal agreement between employer and employee (2) highlights the terms and conditions of the
employment arrangement. (3) Includes details of work, job title, hours of work etc.
(9) Dismissal > (1) Ending a worker's employment contract for a reason that the law regards as being fair. (2) Example: worker breached
the contract or committed fraud.
(10) Redundancy > (1) Employee is asked to leave not because he/she was incompetent or breached the discipline. (2) But because he/she
is no longer required by the organization. (3) Technology replaced the worker or company cannot pay the salary.
(11) Morale > (1) Overall attitude and level of satisfaction of employees when at work. (2) closely linked to motivation.
(12) Welfare > (1) Covers a wide range of facilities that are essential for the well-being of a business employee. (2) includes health, safety
and level of morale at work.
(13) Work-life balance > (1) A situation where employees are able to give the right amount of time and effort to work and their personal
life outside work. (2) Allows workers to maintain a healthy working environment and perform at their best level.
(14) Diversity > (1) Ensure that the organization has a blend of workers from all different age, backgrounds, genders and cultures to (2)
create a mixed workforce.
ADV DIS
(1) More ideas (1) Expensive to hire and maintain

(2) easy to sale to international markets

(15) Equality > (1) Ensure that everyone in the organization is treated fairly and has an equal opportunity to fulfil their potential. (2)
Ensures that everyone in the organization must have the opportunity to each senior positions in a business irrespective of their age,
gender etc.
ADV DIS
(1) Attract the best quality workers (1) Expensive to maintain

(2) Good brand name + avoid govt. fines
(16) Training > (1) Teaching the employee a new skill or improving a previous one. (2) Training can help employees improve their
productivity and meet organization objectives.
(17) Development > (1) Continuously setting challengers and opportunities. Adding courses and promotion. (2) Aim to make sure workers
achieves a continuous sense of achievement. (3) Done through appraisal
• Induction - given to new workers

• On the job - trained while working
• Off the job - worker is sent away to a specialist training institute
ADV DIS
(1) Improve productivity (1) Expensive and time consuming

(2) workers motivated = promotions (2) Employees might be overstressed
(3) improves image of the company = new product ideas (3) Workers can leave after being trained.
(18) Trade Union (1) Association of people with the objective of improving pay and working conditions of their members. (2) Provide them
with legal support.
(19) Collective bargaining > (1) Process of negotiating in terms of employment between an employer and a group of workers usually trade
union representatives. (2) Aim is to get better wages and working conditions.
• ADV > Saves time in negotiations

• ADV > avoid industrial actions
(20) Industrial Actions > (1) Measures and methods adopted by the workforce or trade union to put pressure on the management to
accept the demand. (2) collective bargaining, go slow etc.

Topic 2: Motivation
PART 1
(1) Motivation > (1) Driving force that enables workers to perform the task at his best level. (2) Ensure workers are interested in a job +
have job satisfaction. (3) Helps to improve productivity.
(2) Theory 1: Taylor

• Financial rewards are the best way to motivate
• Select the right people for the job
• Pay according to the performance of the worker.
(3) Theory 2: Mayo
• Consulting workers improve performance
• Teamwork
• Allow workers to control their own way of working
(4) Theory 3: Maslow : Believes that if you meet these 5 needs workers will be motivated
• Physical Needs > Food, shelter and clothing
• Safety Needs > Job security + Physical safety
• Social Needs > Trust + Teamwork
• Esteem Needs > Respect and recognition for achieving a goal.
• Self-Actualization > Reaching ones full potential
(5) Theory 4: Herzberg | 2 Factor Theory
• Hygiene Factors: (1) They do not add to motivation they just remove demotivation. (2) Example: Company policy,
supervision, salary etc. (Outside factors)
• Motivators : (1) They actually add to the motivation. (2) Example: Achievement, recognition, work itself.
(6) Theory 5: McClelland | 3 Needs for achievement
• Need for Achievement: These people are motivated if they get realistic but challenging targets.
• Need for Power: These people are motivated if they are in control
• Need for Affiliation: These people are motivated when they are given a friendly working environment.
(7) Theory 6: Vroom
Believes motivation depends on 3 factors (Expectancy, Instrumentality, and Valance).
Expectancy: Effort will improve performance. (If I study 2 hours I will get better at business)
Instrumentality: Performance will lead to an outcome (If I get better at business, I will get an A*)
Valance: The value of that outcome (How important is an A* for me)
PART 2 | Financial Motivators
(1) Time Rates > (1) Paid on the basis of working hours they spend at the workplace or each period of time. (2) Total wages multiplied by
hours worked.
[ADV] Easy to calculate wages
[DIS] No incentive to produce quickly.
(2) Piece Rates > (1) Payment scheme in which an employee is strictly paid in accordance with the level of output or units produced. (2)
Applicable in industries working in the secondary sector.
[ADV] Encourages workers to work faster
[DIS] Quality might fall.
(3) Salary > (1) Annual sum which is usually paid on monthly basis. (2) Fixed rate extra work is not paid for.
[ADV] Security of pay motivates workers
[DIS] Workers do not put extra effort since extra work is not paid for
(4) Commission > (1) Percentage of the monetary value of good being sold. (2) Total income paid or added with the salary.
[ADV] Motivates workers to boost sales
[DIS] Discourages team work as they are given on individual performance.
(5) Bonuses > (1) Lump sum (Collectively) amount paid to the worker to achieve a target or job well done. (2) Example: increase in output
or reaching a sales target. (3) Paid in addition to the salary usually at the end of the year.
[ADV] Motivates to achieve targets
[DIS] Unable to achieve the target can cause demotivation.

(6) Profit Sharing > (1) A bonus for staff based on the profits of the business. (2) Paid as a proportion of basic salary. (3) Used in service
sector where it is difficult to identify the contribution of each employee.
[ADV] Staff is more committed to increase profits
[DIS] shareholders might not agree as profits go down.
(7) Share-ownership > (1) Scheme that gives employees shares in the economy. (2) or allow them to buy them at a discounted price.
[ADV] Increases sense of belonging
[DIS] workers can sell shares in the future > reduces their commitment.
(8) Performance related pay > (1) A bonus to reward for above average work performance. (2) Used where output is measurable in
quantitative terms. (3) Given when worker meets or exceeds per-set criteria.
[ADV] Workers motivated to do their best
[DIS] Can damage team work > people prefer to focus on individual performance.
[Learn by heart]
Non-Financial Rewards
(1) Fringe Benefits >(1) Benefits given addition from the pay to the employee. (2) Gives high level of employee status (3) Non-cash rewards
like company car, insurance.
[ADV] Attract and retain good quality workers
[DIS] Cost the business > reduces profits.
(2) Job Rotation > (1) Employee is moved or swapped around (2) Switching the task or switching departments on temporary basis. (3)
Example Finance managers shift to marketing.
[ADV] Reduces boredom
[DIS] Motivation is limited as responsibility and control is the same
(3) Job Enlargement > (1) Increase the scope of the job by broadening or deepening the tasks undertaken. (2) Similar level of complexity.
(3) Increase number of tasks to reduce boredom. (4) Can be done from the old skills, horizontal expansion.
[ADV] Reduces boredom
[DIS] Increased workload reduces productivity
(4) Job Enrichment > (1) Adding more tasks and increasing the level of complexity. (2) More skills required (3) Reduction in supervision +
employees take more responsibility. (4) Expansion is vertical.
[ADV] Workers become involved and get more ownership
[DIS] High cost of labor training
(5) Job Redesign > (1) Involves restructuring a job with employees’ involvement. (2) Make work more interesting, satisfying and
challenging. (3) Done by adding something or removing something.
[ADV] Increases motivation as job is more interesting
[DIS] Training is expensive.
(6) Training > (1) Adding a new skill or improving a previous one. (2) Can help employees improve their productivity since this reduces
changes of accidents.
[ADV] Improved skill sets helps to boost output + worker works better
[DIS] Expensive + worker can get overworked.
(7) Quality Circles > (1) Voluntary groups of workers who meet regularly to discuss work-related problems and issues. (2) Meetings not led
by managers + informal.
[ADV] Workers understand the problem better > they have hand-on experience
[DIS] Time consuming activity > delay decisions
(8) Employee participation > (1) Workers are encouraged by the management to actively participate in the decision making at team of
group level. (2) Directions to consultative procedure or suggestion schemes.
[ADV] Motivation due to more responsibility
[DIS] Decision making gets slow
(9) Team working > (1) Organizing workers in groups or teams to complete the work. (2) Mutual goals + undertake complete units of work.
[ADV] Improves motivation because workers have their social needs met
[DIS] some workers can have goals different from the company
(10) Empowerment > (1) Giving workers skills, resources, authority and opportunity so that they can take decisions (2) Accountable for
their work. (3) Workers have freedom to organize and manage their job.
[ADV] Quick decision making > don't have to ask the senior managers
[DIS] If workers are unskilled > take wrong decisions.

Topic 3: Management
(1) Management > (1) Defined as the process of organizing and coordinating resources, including people to achieve objectives (2) Function
include planning, organizing, motivating etc.
(2) Fayol [5 Functions / Role]

• Planning > Set goals
• Organizing > arrange resources
• Coordinating > brings together activities
• Commanding > Leading and guiding workers
• Controlling > Evaluate the performance of workers and identify weak and strong areas
(3) Mintzberg [10 Functions / Role]
• Interpersonal
o Figure head > Symbolic leader
o Leader > motivate and train staff
o Liaison > Link managers from other departments and organizations
• Information
o Monitor > Collect relevant data
o Disseminator > Send information to relevant people
o Spokesperson > Communication of current position to external groups
• Decision
o Entrepreneur > Looks for new business opportunities
o Disturbance handler > respond to situations that put the business at risk
o Resource allocator > Organizing the financial, human and physical resources
o Negotiator > Represent the company at important negotiations
(ADV)
+ Hire the best worker by comparing them with these qualities
+ Train the workers > the qualities that they miss > train workers for them
(4) Leadership roles

• CEO > Highest ranking executive
• Directors > Senior managers who are the heads of the function departments
• Managers > Individual responsible for people and resources along with decision making
• Supervisors > Overlooks the work of people
(5) Autocratic Leadership > (1) One manager takes all the decision with little input from others (2) Low levels have little authority (3) One
way communication and have limited information about the organization. (4) Used with unskilled workers.
[ADV] Helps to take quick decisions
[DIS] No discussion = no new ideas generated
(6) Democratic Leadership > (1) Active participation on workers in decision making. (2) Two way communication (3) Feedback is
encouraged and managers have information about the business. (4) Used with skilled labor force.
[ADV] Gives more ideas = workers are motivated + part of the decision making process
[DIS] Time waste in decisions
(7) Laissez-Faire / Free Rein > (1) Leaves much of the decision making to the workforce. (2) Management believes in least interference (3)
Only sets broad limits and explains the end results workers decide how they want to achieve it. (4) Used where workers are highly skilled.
[ADV] No delays > no discussion
[DIS] Lack of structure > can lose direction
(8) Paternalistic > (1) Manager is in a better position than the worker to know what is best for an organization. (2) Workers are consulted
but final authority is with the managers.
[ADV] Better decisions because senior managers are skilled
[DIS] Workers are only consulted and have no real power = demotivates them
(9) Theory X > X type managers

• Workers are lazy
• Strict control = only work with a threat of punishment
• Autocratic leadership style
(10) Theory Y > Y Type managers
• Workers are internally driven
• Non-financial rewards
• Democratic leadership

SECTION 3
Topic 1: What is marketing
(1) Marketing > (1) Management function that aims to identify customer needs and develop strategies to satisfy those needs. (2) Done in a
profitable manner. (3) Combination of 4 variables (Product, Price, Promotion and Place)
(2) Market > (1) A place where buyers and sellers meet (2) Engage in exchange of goods and services.
(3) Marketing Objective > (1) Targets of the marketing department to help the busines achieve its overall objectives. (2) Example: Increase
sales, increase market share.
(4) Demand > (1) Willingness and ability of consumers to buy goods and services at a given price over a given period of time. (2) When
price rises demand falls assuming everything else is constant.
Other factors of Demand

• Fashion and taste
• Advertisement
• Price of Substitute [Alternative (Coke vs Pepsi]
• Price of complements [ Products that are used collectively Car and Petrol]
• Income of consumers
(5) Supply > (1) Willingness and ability of a seller to sell goods and services at a given price, at a given period of time. (2) When price rises
supply increases assuming everything else is constant.
Other factors of Supply

• Cost of Production
• Indirect Taxes
• Subsidies [Benefits that govt. gives]
• Technology
• Weather
(6) Market Equilibrium > (1) A point where there is no tendency in market prices and quantity. (2) This is a point where demand = supply.
(7) Market Size > (1) Total Sales of all producers in the market. (2) Can be in the form of volume or value of goods.
(8) Market Growth > (1) The percentage change in total size of a market over a period of time. (2) (New - Old) / Old x 100
(9) Market Share > (1) This is the ratio between the sales of the company and sales industry. (2) Market Share (Company Sales / Total
Market Sales ) x 100
(10) Product Orientation > (1) An inward looking approach (2) focuses on making products that can be made or have been made for a
long-time and then trying to sell them. (3) High proportion of resources on product features rather than marketing.
[ADV] Superior quality products
[DIS] Risk of failure is high because products might not meet customer demand.
(11) Market Orientation > (1) Outward looking approach. (2) First the company conducts market research and then develops the
products. (3) High proportion goes into first doing research.
[ADV] Improves chances of success > products is exactly make the customer requirements.
[DIS] It is expensive to research the market
(12) Industrial Product / Market > (1) Business to business sales > rather than final consumer (2) Goods and services are used to produce
other goods. (3) Example: Further production takes place like industrial ovens.
(13) Consumer Product / Market > (1) Business to consumer sales (2) No further production takes place > build for the final consumption.
(3) Example: Pizza that consumer consume.
(14) Niche Market > (1) Catering and exploiting a small segment of a large market by developing products that suits the market's needs (2)
It is not filled by competitors. (3) Tends to be smaller but highly profitable. (4) Customers have specific needs.
[ADV] Firms would be able to survive easily in market
[ADV] Charge premium process
[DIS] No economies of scale
[DIS] Few customers > risky to operate

(15) Mass Market > (1) Selling the same products to the whole market with no attempt to target groups within it (2) Usually used in fast
moving consumer goods. (3) Mass production, high turnover and not many variations.
[ADV] Economies of scale
[ADV] Low cost > low Prices > more sales
[DIS] Lack of a brand name
[DIS] Low sales if people want differentiation
(16) Market Segmentation > (1) Breaking down the market into sub groups in which each group shares a common characteristic. (2)
Company targets each group with a different product or service. (3) Helps to business to stay customer focused.
(17) Market Segment > (1) Part of a market defined by properties (2) Like income, gender etc.
(18) Target Market > (1) Specific group to which a business decides to sell its product or services to. (2) Age, gender income etc. (3) Allows
business to develop a specific product for each segment.
(19) Types:
• Age
• Gender
• Income
• Geographic
• Psychographic
[ADV] Focused approach

[ADV] Price discrimination > Different rates to different markets.
[DIS] Extra cost of developing variations
[DIS] Over specialization can cause a failure.
(20) Customer Relationship Management > (1) Approach to a company's interaction with current and future customers. (2) Aim is to keep
the existing customers and attract new ones. (3) Gather information and adjust the 4Ps accordingly. (4) Methods like targeting marketing,
customer service, communication etc.
[ADV] High sales > increases customer satisfaction
[ADV] Loyal customer base
[DIS] Expensive to train and implementing system
[DIS] Requires a customer base

Topic 2: Market Research

(1) Marketing Research > (1) Regarded as the process of collecting, recoding and analyzing data (2) From customers, competitors and
market regarding condition for the products and services of a business. (3) Helps to act in a market oriented way.
[ADV] Reduce risk associated with a launch of a new product
[DIS] The data collected might not be accurate due to biases and errors.
(2) Primary Research > (1) Gathering first hand data about markets (Size, trends, competitors). (2) The purpose is to produce new
information, directly related to the business.
[ADV] More up-to-date information
[DIS] Information is expensive to collect
(3) Types of primary Research:

• Focus Group: (1) Qualitative research technique in which a group of individuals are asked about their attitude towards
a product, service or advertisement. (2) Group members discuss openly and researchers simulate the discussion.
[ADV] Detailed information
[DIS] Expensive and time consuming
• Observation and Recording: (1) Quantitative technique in which marketers observes and record how consumers
behave. (2) Involves sales trends, buying behavior etc.
[ADV] Quick and cost effective
[DIS] Only shows the trend no the reason
• Test Marketing: (1) Launching a product in a specific area and researchers observe the success before a full scale
launch. (2) Based on the results the product, price, place and promotion.
[ADV] Risk is reduced as changes can be made before full scale launch
[DIS] Not representative of the entire population.
• Survey / Questionnaire: (1) Individuals are asked about their opinion on a survey. (2) On paper or internet.
[ADV] Large amount of qual and quant data can be collected
[DIS] Incorrect question = incorrect results.
(4) Secondary Research: (1) Secondary research is regarded as using information that is already published and available. (2) Usually
conducted before primary since it is cost effective and less time consuming. (3) Example: Govt. reports, past company records
[ADV] Cheaper to collect since the data is already collected
[DIS] Outdated information = inaccurate results.
(5) Sampling: (1) An activity where a group of individuals are selected for market research survey assuming that they representative of the
entire target market. (2) Done because the company does not have time research the entire market.
[ADV] Less expensive to study
[ADV] Less time consuming
[DIS] Imperfect sample design > too small = incorrect results
[DIS] Sample might be incorrect = incorrect results

Topic 3: Product
(1) Marketing Mix: (1) A combination of four marketing variables namely product, price, promotion and place. (2) Adjusted in accordance
with the changing market conditions. (3) 4Ps should fit together and should not counteract the other.
(2) Product: (1) End result of the production process sold on the market to satisfy a customer need. (2) Products can be industrial or
consumer goods and services. (3) one of the elements of the marketing mix. (4) Can be industrial or consumer.
(3) Product Positioning: (1) It is the consumer perception of a product or service compared to its competitors. (2) Used to build a brand
name.
(4) New product development: (1) Come up with new products (2) Make improvements in previous products to stay competitive.
[ADV] Helps the company to quickly adapt to market changes
[DIS] Research is expensive
(5) Product Differentiation: (1) Process of making a product or service distinctive and able to stand out from products of competitors (2) In
the perception of consumers.
(6) Unique selling point: (1) USP is a special feature of a product or service what sets it apart from its competitors. (2) Gives the business a
competitive edge in price, quality, customer service etc.
[ADV] Charge a premium price
[DIS] Expensive to do research and development.
(7) Product Portfolio > (1) The number of products a firm produces (2) The more the products the larger the portfolio.
(8) Product Portfolio Analysis > (1) It is examining the market position of a firm's products. (2) Portfolio analysis is process of looking in the
units of a business to understand the businesses effectiveness and vulnerabilities. (3) Helps to plan out strategies.
(9) Product Life Cycle > (1) It highlights various stages that product passes through in its life time. (2) From launch to withdrawal. (3) It has
four stages mainly intro, growth, maturity and decline. (4) Helps to conduct product portfolio analysis.
[ADV] Helps to plan out the 4Ps at each stage
[DIS] Not every product follows the same four stages in the same order.
(10) Boston Matrix > (1) It is a strategic analysis technique that helps the company to identify and analyze its product portfolio. (2)
Classifies products into four categories based on two variables (i) Market Growth (ii) Market share
• Star Products: High Growth + High Share = Strategy (Hold)

• Cash Cow: Low Growth + High Share = Strategy (Harvest)
• Problem Child: High Growth + Low Share = Strategy (Build)
• Dogs: Low Growth + Low Share = Strategy (Divest)
[ADV] Helps check the performance of the current product portfolio

[DIS] Assumes high share = high profit which is not true.
Market Growth = How is the market performing for that product

Market Share = How is your product performing in that market

Topic 4: Price
(1) Competitive > (1) Price is based on price set by its competitors. (2) Either match or slightly below. (3) Usually when the firm has to
compete with a rival firm.
[ADV] Prevent loss of sales
[DIS] The prices might be too low > can't make profits.
(2) Penetration pricing > (1) Practice of offering a low price for a new product or service during its initial offerings. (2) The price is
increased slightly if the product is successful.
[ADV] Helps the business to break into new markets.
[DIS] If the initial price is too low might not be able to recover the costs.
(3) Skimming pricing > (1) Setting the price high in the start and then lowing it with time. (2) Done for unique and differentiated products.
[ADV] Helps the company to earn quick profits.
[DIS] might lose sales due to high price
(4) Psychological pricing > (1) Setting the price which matches consumers view about the products perceived value. (2) High price for a
product trying to create a luxury image (3) Sometimes a light low price to make the product look cheaper than it actually is like $1.99
instead of $2.
[ADV] Increases chances to earn more revenue
[DIS] Difficult to calculate the exact consumer perception.
(5) Price Discrimination > (1) Selling the same product at different prices to different buyers in order to maximize sales. (2) Markets must
be separated (3) Different groups must have different willingness to pay.
[ADV] Increases revenue by capturing more clients
[DIS] Some customers might end up paying higher prices and discontinue
(6) Dynamic Pricing > (1) Charging according to the level of the demand and customers’ ability to pay (2) Changes with market conditions
(3) Done using e-commerce. (4) Consumers cannot tell what other buyers are paying.
[ADV] Increases chances of sales as people pay according to their ability
[DIS] Difficult to exactly check the demand.
(7) Cost-based Pricing > (1) Involves adding a markup to the cost of the good to calculate the final price. (2) Cost + Markup = Selling Price
[ADV] Price will cover the all costs > ensures profits
[DIS] If the product level changes > cost changes > prices will keep changing.

Topic 5: Promotion
(1) Promotion: (1) Use of advertising, sales promotion, personal selling, sponsorships etc. (2) The purpose is to persuade and inform
customers to buy the product.
(2) Advertising / ATL: (1) Paid means of communication. (2) Done through different media like newspapers, ratio, Tv etc. (3) The aim is to
inform the customer about the product.
• Informative Advertisement: Gives information about the product to potential purchasers. Usually used with new
products.
• Persuasive Advertisement: Aim is to create a distinct brand name or identity.
[ADV] Allows to cover a wider audience

[DIS] Expensive to advertise on TV
(3) Sales Promotion / BTL > (1) Attempts to boost sales using techniques like price offers, loyalty reward programs etc. (2) Aim is to
increase short-term increase in sales.
[ADV] Helps to attract new customers
[DIS] Reduce short-term profits due to discounts
(4) Direct Promotion > (1) Do not use paid-for medium, unlike advertising like direct mail, telemarketing etc. (2) The aim to sell in person
and clear any confusions that a customer might have.
[ADV] Helps to explain in detail
[DIS] Expensive to train the staff
(5) Digital promotion > (1) Promotion of products using technologies, mainly on the internet and cell phones. (2) Example: Social media
marketing, e-mail marketing etc.
[ADV] Offers worldwide coverage
[DIS] extra cost of setting up teams or hiring companies for it.
(6) Packing > (1) Physical container or wrapping for the product. (2) Important element in the product and its promotion.
[ADV] Protects the product + gives information about the product
[DIS] Expensive to develop good packing
(7) Branding > (1) A strategy to differentiate the products from those of competitors (2) This aim is to create an identifiable image for the
product and make clear expectations.
[ADV] Can charge a premium
[DIS] Expensive to build > requires advertising and promotion + time

Topic 6: Place
(1) Distribution Channel > (1) Means by which the product is passed from place of production to the customer or retailer. (2) Includes
multiple channels like direct selling, single intermediary etc.
(2) Direct Selling > (1) No intermediary (2) Like farmers selling fruits and vegetables or airlines selling tickets to customers
[ADV] No profit margin shared
[DIS] Company has to pay for storage
(3) Single Intermediary > (1) Selling through a retailer or selling through an agent. (2) Example: selling tickets through agents.
[ADV] Reduces inventory hold costs
[DIS] Intermediary takes a part of the profit margin.
(4) Two intermediary > (1) Wholesaler buys goods from produce and sells to retailer. (2) Example: Large scale distribution of soft drinks,
electrical goods etc.
[ADV] Sells in bulk to the wholesaler > increases potential for sales
[DIS] Intermediary takes a part of the profit margin.
(5) E-commerce > (1) Buying and selling of goods and services online using the internet. (2) Aim is to create convenience for customers.
[ADV] Company can target a large audience
[DIS] customers can't try the product > resistance in buying the product
(6) Integrated marketing mix > (1) Marketing decision should complement each other (2) Consumers have consistent message about the
product.

SECTION 4
Topic 1: Nature of Operations
(1) Operations Management > (1) It is discipline of managing resources to achieve efficient on-going production of goods and services. (2)
It deals with the workflow, efficiency, quality etc.
(2) Production Process > (1)An activity or group of activities that transform one or more inputs, adds value (2) Produces output for
customers. (3) Helps to earn profits.
(3) Intellectual Capital > (1) Amount by which the market value of a company exceeds its tangible assets. (2) Includes human capital,
structural capital, relational capital. (3) Value of the knowledge and skills + intangible capital.
(4) Effectiveness > (1) The ability to meet the objectives of the enterprise by using inputs productively + meets customers needs (2) Goes
beyond than just being efficient. (3) Doing the right thing.
(5) Efficiency > (1) Task is measured against a pre-set standard such cost, speed, completeness that indicates the best use of resources. (2)
It describes the process that uses the lowest number of inputs to create the greatest number of output. (3) Doing the thing right.
[ADV] Saves cost > increase profits.
[ADV] Helps to achieve the objective of growth.
(6) Productivity > (1) How efficiently are inputs are converted into output. (2) Measure of efficiency. (3) Can be measured though labor
productivity and capital productivity.
Method to improve productivity:

(1) Increase hours of working
(2) Training
(3) Implement machines
(7) Sustainability > (1) Operations that can be maintained in the long-term by protecting the environment and not damaging the quality of
life future. (2) Example: Recycle waste, reduce energy consumption etc.
[ADV] Reduces cost in the long-run > less wastage
[ADV] Improves brand name
[DIS] High initial cost
[DIS] Time to train the labor
(8) Capital Intensive > (1) Involves employing more quantity of capital equipment like machinery as compared to labor input. 2) Used for
large scale production. (3) Helps keep the products standardized.
[ADV] Large scale = Economies of scale
[ADV] More consistent quality = high quality
[DIS] High initial cost
[DIS] Replacement cost.
(9) Labor intensive > (1) Involves employing more quality of labor input as compared to capital equipment. (2) Used where production is
small and unique products are usually required (3) Aim is to produce exclusive items.
[ADV] Worker motivated = jobs are more interesting
[ADV] Premium price = exclusive image
[DIS] Not fast = No Economies of scale
[DIS] Lack of standardization = poor quality

(10) Job production > (1) Unique, non-standardized goods are made. (2) Products are one-off specially designed for the customer. (3)
Single product done at a time. (4) Labor intensive usually.
[ADV] Projects are more value added = premium price
[ADV] motivated = creative nature of job.
[DIS] lack of economies of scale > high per unit cost
[DIS] time consuming > delays in getting payments.
(11) Batch Production > (1) Limited number of identical products pass through each stage of the production process before passing on to
the next stage. (2) Production cannot move ahead until the entire batch is complete.
[ADV] Production is in larger quantities = economies of scale
[ADV] Flexibility > allows for different designs.
[DIS] Workers demotivated > nature of the job is boring.
[DIS] Production delays > cannot dispatched unless the entire batch is finished.
(12) Flow Production > (1) Items are made in a continuously moving process with highly specialized inputs. (2) In flow production, large
quantities of standardized products are production. (3) Can move from one stage to another as soon as they are ready.
[ADV] Large quantities = Economies of scale
[ADV] Low labor cost = mostly capital intensive
[DIS] Setup cost high > due to machines
[DIS] Products are standardized > no variety
(13) Mass customization > (1) Use of flexible computer aided production systems to produce items to meet individual customer
requirements at mass production cost level. (2) Production is on a large scale with the ability to produce different models. (3) Company
keeps a basic version allows customers to change few key components.
[ADV] Low unit cost with flexibility
[ADV] high valued added = can charge a premium price.
[DIS] more machinery
[DIS] difficult to implement on every product.

Topic 2: Inventory Management
(1) Inventory > (1) Stocks of raw materials, semi-finished goods or finished goods. (2) Held by the company in order to maintain
operations.
(2) Inventory Management > (1) Activities involved in maintaining appropriate and optimal level of inventory. (2) Involves ordering,
storing and using inventory. (3) Done to ensure operations are uninterrupted.
[Technique which ensures optimum inventory levels]
(3) Just-in-case > (1) This aims to reduce the risk of running out of inventory (2) Hold minimum buffer inventory levels.
[ADV] Bulk buying = economies of scale > reduced cost per unit
[ADV] Ensure production does not stop
[DIS] Opportunity cost > working capital tied up /cash tied up
[DIS] Storage cost
(4) Just-in-time > (1) Japanese inventory control system that emphasizes low stock levels. (2) Suggests materials should be ordered or
purchased only when it is urgently needed as opposed to bulk buying.
[ADV] Cash not tied up
[ADV] reduces storage cost
[DIS] Failure to meet a sudden rise in demand
[DIS] No bulk discounts
(5) Inventory Management Key terms

• Maximum inventory level > total inventory that a business can keep
• Buffer inventory level > Minimum amount of inventory that a business wants to hold just in case of problem like delays
• Re-order level > The level that triggers a new order
• Lead time > Time it takes from ordering supplies to the point they arrive at the business.
• Re-order quantity > Units ordered each time
(6) Supply Chain > (1) The network of all the businesses and activities involved in creating a production for sales, (2) starting with the
delivery of raw materials and finishing with the delivery of finished products. [By heart]
(7) Supply chain management > (1) Handling the entire production flow of a product (raw materials to finished products) to minimize
costs but improve customer service. (2) Done by establishing good relations with suppliers and improving transportation systems.
[By heart]

Topic 3: Capacity Utilization
(1) Capacity utilization > (1) Measures the existing level of output relative to the maximum output. (2) Helps manufacturer to use the
available resources in an optimum way.
CU = (Current Output / Maximum Output) x 100
(2) Under-utilization > (1) It is a situation where capacity utilization is low and demand for the goods is lower than what the company can
produce or is producing. (2) Mainly due to a fall in demand or loss of brand name. (3) Company uses strategies like rationalization or
improving marketing strategy to fix it.
[DIS] [Potential loss of sales]
(3) Over-utilization > It is a situation where capacity utilization is high and demand for the goods is higher than what the company can
produce or is producing. (2) Mainly due rise in demand or improvement of brand name. (3) (3) Company uses strategies like outsourcing or
buying new machinery to fix it.
[DIS] [Machinery breaks down]
(4) Outsourcing > (1) A situation where firms contract out work to other businesses / third parties (2) that might otherwise have been
performed by the organization itself. (3) Done with company is at full capacity or the third party specializes in the product.
[ADV] No capital investment is required to expand operations
[ADV] Can focus on core functions = improve quality.
[DIS] Quality issues > other party might not be skilled
[DIS] Higher cost > third party adds their profit margin.

SECTION 5
Topic 1: Business Finance
PART 1
(1) Finance > (1) Amount of money a business needs to buy assets and pay expenses. (2) Main reason to pay for startup capital, expand
the business etc.
(2) Cash vs Profit > (1) Cash is the physical movement of money within the business. (2) Profit is the surplus after total costs have been
deducted from sales revenue. (3) Profitable does not mean that the business also has cash.
(3) Administration > (1) When administrators manage a business that is unable to pay off its debts. (2) Intension of selling it and trying to
find a buyer for it.
(4) Bankruptcy > (1) Legal procedure of liquidating a business (2) which cannot fully pay its debts.
(5) Liquidation > (1) When a business’s ceases trading (2) assets are sold to pay cash to pay suppliers and other creditors.
(6) Working Capital > (1) Amount of capital that is used to meet the day-to-day expenses of a business such as fuel, bills etc. (2) Failure to
hold will lead to a business failure.
(7) Revenue Expenditure > (1) Money to be spent on day-to-day expenses e.g. fuel, rent etc. (2) Regular expenditure over short-period of
time. (3) Benefit lasts for less than a year. (4) Funded by short-term sources.
(8) Capital Expenditure > (1) Money to be spent on non-current assets which will last for more than one year e.g. building. (2) Expenses
are irregular (3) give benefit over a long-term (3) Funded by long-term sources.
PART 2 | Internal Sources
(1) Internal Sources > (1) Finance generated from within the business. (2) Example: Retained profit.
(2) Retained Profits > (1) It is the profit after tax and dividends that is reinvested into the business. (2) This profit is not given to
shareholders. (3) Used for revenue expenditure
[ADV] No interest
[ADV] Complete control over the money
[DIS] Not sufficient for large finance
[DIS] Reduces returns to shareholders.
(3) Sale of Assets > (1) Selling idle assets like machinery, land etc. (2) Internal source of finance.
[ADV] No interest
[DIS] Can't use the asset after sale.
(4) Sale and Leaseback > (1) Sells valuable assets and lease them back again. (2) Gain capital and still continue to use the asset.
[ADV] Asset can be used + the business gets the amount.
[DIS] The asset that was previously free not has to be paid for.

PART 3 | External Sources | Short-term
(1) Short-term source > (1) Money for working capital for day-to-day running of business operations. (2) Paid in less than a year. (3)
Example: overdrafts
(2) Overdraft > (1) The bank gives the business the right to overdraw the bank account. (2) Borrow up to an agreed limited when it is
required.
[ADV] Flexible way to get money
[DIS] High interest rate
(3) Debt factoring > (1) Selling the claims over trade receivables to a specialist organization(debt factor) in exchange for immediate cash or
liquidity. (3) Covers a percentage of that amount e.g. 90%.
[ADV] improve liquidity
[DIS] does not cover the entire amount
(4) Hire Purchase > (1) Installment buying (2) Gives a down payment and the rest is paid in monthly installments
[ADV] Easier to buy fixed assets even when the business lacks finance.
[DIS] Down payment + interest
(5) Leasing > (1) It is a rental agreement (2) firm uses the asset by paying monthly payments but does not purchase it.
[ADV] Saves cost of down payment + maintenance
[DIS] Expensive in the long-run.
(6) Debentures > (1) Certificates issued by companies with the objective of raising funds (2) Debenture holders serve the purpose of
creditors of the company.
[ADV] Collateral security is not required.
[DIS] Interest has to be paid
(7) Venture capital > (1) Small companies who cannot raise finance through stock exchange ask wealthy individuals who take massive risk
with a small business. (2) Done usually for startup businesses.
[ADV] Get risky ventures funded
[ADV] Gain expertise from the venture capitalists
[DIS] Lose ownership
[DIS] Forced management
(8) Micro finance > (1) Providing financial services for poor and low-income customers who do not have access to banking services such as
loans and overdrafts. (2) They usually have low interest.
[ADV] Get funding for startups > where regular banks are not willing to fund
[DIS] Interest might be high = administration cost of loan + high risk
(9) Crowd funding > (1) Small amounts of capital from a large number of people to finance a new business venture. (2) Done through the
internet.
[ADV] No need to sell equity
[ADV] May not have to pay interest.
[DIS] Some cases might have to pay interest or offer a priority product
[DIS] Idea can be copied by competitors.
(10) Government grant > (1) Funding provided by government agencies (2) Purpose is to expand small business and promote growth in
developing regions.
[ADV] does not have to return the money
[DIS] might not be enough

Topic 2: Cash Flow
(1) Cash flow > (1) Movement of cash into and out of a business. (2) Cash flow = Cash inflow - cash outflow.
(2) Cash flow forecast > (1) Estimates of a firm's future cash inflows and outflows (2) Helps to improve financial planning. (3) Closing
Balance = Opening Balance + Cash inflow - Cash outflow.
[ADV] Predicts imbalances > helps to plan the strategy
[ADV] Helps investors > they can take the right decision
[DIS] Errors due to incorrect assumptions
[DIS] window dressed > might be false to gain trust
(3) Cash flow problems

• (1) Lack of planning
• (2) Over expansion
• (3) Unexpected events
(4) Improving cash flow
Increase inflow:
o Bank loans
o Cash sales
o Sell assets
Decrease outflow
o Delay payments to suppliers
o Reduce overheads
o Delay buying capital expenditure.

Topic 3: Costs
(1) Why should a business calculate costs?

• Calculate profits
• Set prices = Cost plus pricing
• Make budgets
(2) Revenue > (1) Income that a business receives by selling its goods and services (2) Revenue = Price x Quantity sold
(3) Fixed Cost > (1) Cost that does not vary with the level of production. (2) Have to paid at zero output level. (3) Ex. Rent.
(4) Variable Cost > (1) That cost that changes with the level of production (2) Production increases cost increases. (3) Ex. Wages
(5) Marginal cost > (1) Cost of producing one extra unit. (2) Indicates the contribution to a cost center.
(6) Direct Cost > (1) Cost directly related to the production or activity of a product. (2) Cleary identified and can be allocated to a cost
center. (3) Example: Raw material
(7) Indirect Cost > (1) Cost that are not directly related to the production or activity of a product. (2) Cleary cannot be identified and can
be allocated to a cost center. (3) Rent
(8) Full Costing > (1) Allocates all costs of production (direct and indirect) for the whole business. (2) Costs are absorbed by each unit. (3)
Good for single product firms where entire cost can be attributed to one product.
[ADV] Takes all costs into consideration = better decisions
[DIS] Difficult to allocate indirect costs > wrong allocation = wrong results
(9) Contribution Costing > (1) Allocates only direct costs to cost centers or profit centers, not overheads. (2) Concentrates on marginal cost
and contribution.
[ADV] Avoids miss allocation of direct indirect costs.
[DIS] not useful where both direct and indirect have to be covered by single product
(10) Break-even > (1) A point where total revenue equals total cost (2) No profit no loss level of output (3) BE = (Fixed Cost) / Contribution
[ADV] easy to use
[ADV] Used for planning and comparisons
[DIS] cost and revenues change, BE assumes they remain constant
[DIS] assumed everything made would be sold > incorrect assumption
(11) Margin of Safety > (1) Amount by which the value of the company exceeds the break-even point. (2) Range of output on which the
profit is made.

Topic 4: Budgets
(1) Budgets > (1) Financial plan setting out expected income and expenditure over a future period. (2) Expressed in financial or physical
terms. (3) Based on data collected from analyzing the market, actions of competitors etc.
[ADV] Helps to plan for the future by setting targets
[ADV] Prevents overspending of resources
[DIS] Might be based on incorrect assumptions
[DIS] Shot-term usually one year = not good for long-term plans.
(2) Incremental Budgets > (1) Last years budget + makes chances for this year. (2) Raised or lowered based on the market conditions.
[ADV] Adjusted for forecasted inflation and economic changes.
[DIS] Can't check for unforeseen events.
(3) Zero Budgeting > (1) All budgets set to zero every year. (2) Managers have to argue their case for target levels to receive any finance.
[ADV] Provides incentive to defend their work
[DIS] time consuming to review the work from every department
(4) Flexible Budget > (1) Budgets for each expense is allowed to vary of sales an output vary. (2) If output changes the percentage
budgeted cost will also change.
[ADV] More realistic
[DIS] Takes time o make adjustments
(5) Variance Analysis > (1) Calculation of difference from actual results from the budgeted results. (2) and analysis for reason of the
different. (3) Can be adverse or favorable.

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AS Business | Marathon Sheet [2024] | PAPER 1 & PAPER 2

AS Business | Marathon Sheet [2023] | PAPER 1 & PAPER 2

(3) Types of factors of production:

(9) Benefits to a country of Businesses / Entrepreneurs

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 1

Topic 2: Business Structure

(1) Gets to keep all the profits (1) Unlimited liability

(1) Shared workload (1) Unlimited liability

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 2

(1) Already established brand name (1) Expensive license fee

• Economic: Make profit and reinvest it

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 3

Topic 3: Size of a Business

(1) Easier to control (1) Limited sources of finance

(1) More power of suppliers and customers (1) Difficult to manage

(1) Risk spread (1) Lack of experience and expertise.

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 4

Topic 4: Business Objectives

(3) Usefulness of objectives

(8) Why objectives can change?

(9) How to communicate objectives to workers? / how to communicate mission statement

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 5

(2) Internal Example: Owners, workers

(3) External Example: Customers, government, banks etc.

(4) Rights and responsibility

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 6

Topic 1: Human Resource Management

• Internal > Within the business.

• External > Outside the business

(1) More ideas (1) Expensive to hire and maintain

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 7

(1) Attract the best quality workers (1) Expensive to maintain

• Induction - given to new workers

(1) Improve productivity (1) Expensive and time consuming

• ADV > Saves time in negotiations

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 8

(2) Theory 1: Taylor

PART 2 | Financial Motivators

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 9

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 10

(2) Fayol [5 Functions / Role]

(4) Leadership roles

(9) Theory X > X type managers

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 11

Other factors of Demand

Other factors of Supply

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 12

[ADV] Focused approach

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 13

Topic 2: Market Research

(3) Types of primary Research:

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 14

• Star Products: High Growth + High Share = Strategy (Hold)

[ADV] Helps check the performance of the current product portfolio

Market Growth = How is the market performing for that product

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 15

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 16

[ADV] Allows to cover a wider audience

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 17