AQA BUSINESS GCSE for APPLIED OPTIONS NEIL DENBY DAVID HAMMAN Orders:pleasecontactBookpointLtd,130MiltonPark,Abingdon,OxonOX144SB.Telephone:(44)01235827720. Fax:(44)01235400454.Linesareopenfrom9.00–5.00,MondaytoSaturday,witha24hourmessageansweringservice. Youcanalsoorderthroughourwebsitewww.hoddereducation.co.uk Ifyouhaveanycommentstomakeaboutthis,oranyofourothertitles, [email protected] BritishLibraryCataloguinginPublicationData AcataloguerecordforthistitleisavailablefromtheBritishLibrary ISBN:97801444102871 FirstEditionPublished2010 Impressionnumber 10 9 8 7 6 5 4 3 2 1 Year 2014 2013 2012 2011 2010 Copyright ©2010NeilDenbyandDavidHamman Allrightsreserved. Nopartofthispublicationmaybereproducedortransmittedinanyformorbyanymeans,electronicormechanical, includingphotocopy,recording,oranyinformationstorageandretrievalsystem,withoutpermissioninwritingfromthepublisheror underlicencefromtheCopyrightLicensingAgencyLimited. Furtherdetailsofsuchlicences(forreprographicreproduction)maybe obtainedfromtheCopyrightLicensingAgencyLimited,ofSaffronHouse,6–10KirbyStreet,LondonEC1N8TS. HachetteUK’spolicyistousepapersthatarenatural,renewableandrecyclableproductsandmadefromwoodgrowninsustainable forests.Theloggingandmanufacturingprocessesareexpectedtoconformtotheenvironmentalregulationsofthecountryoforigin. ArtworkbyOxfordDesigners&Illustrators,BarkingDogArtandStephanieStrickland Coverphoto©MarkEvans/iStockphoto.com TypesetbyPhoenixPhotosetting,Chatham,Kent PrintedinItalyforHodderEducation,anHachetteUKCompany,338EustonRoad,LondonNW13BH Contents How to use this book v The AQA GCSE Business Specification ix Acknowledgements xi SECTION 1 People in Business 1 Chapter 1 Introduction to people in business 2 Chapter 2 Organisation structures 7 Chapter 3 Communication and decision making 14 Chapter 4 Job roles 20 Chapter 5 Working arrangements 26 Chapter 6 Effective working relationships 32 Chapter 7 Motivating staff 38 Chapter 8 Appraisal and training 44 Chapter 9 Personal skills 50 Chapter 10 Personality tests 56 SECTION 2 Marketing and Customer Needs 63 Chapter 11 Introduction to marketing and customer needs 64 Chapter 12 Customers and their needs 70 Chapter 13 Measuring customer satisfaction 75 Chapter 14 The factors affecting product decisions 81 Chapter 15 The factors influencing pricing decisions 87 Chapter 16 Using promotional activities 92 Chapter 17 Factors affecting distribution 98 Chapter 18 Competition 103 Chapter 19 Effective customer service 108 Chapter 20 Improving customer service 113 SECTION 3 Enterprise 119 Chapter 21 Introduction to enterprise 120 Chapter 22 Enterprise skills 125 Chapter 23 The importance of enterprise skills 130 Chapter 24 Assessing and researching enterprise ideas 135 Chapter 25 The business plan 141 Chapter 26 Setting up the team 147 Chapter 27 Effective communications 152 Chapter 28 Motivation to succeed 158 Chapter 29 Monitoring progress and performance 164 Chapter 30 Evaluating your enterprise 169 SECTION 4 Finance 175 Chapter 31 Introduction to finance 176 Chapter 32 Business costs 181 Chapter 33 Using breakeven to make decisions 186 Chapter 34 Sources of business finance 192 Chapter 35 Profit and loss accounts 197 Chapter 36 The balance sheet 203 Chapter 37 Cash flow forecasts 209 Chapter 38 Business and ICT 215 Chapter 39 Financial ratios – gross and net profit 221 Chapter 40 Ratios – ROCE and liquidity 227 Index 233 How to use this book This book provides information, exercises and responsibilities within the organisation. It materials to cover the learning required for the investigates how communication and decision newAQAGCSEAppliedBusiness(DoubleAward). making takes place and how different organisational structures can affect factors such The new GCSE qualification has several routes, as efficiency and communication. It goes on to but all begin with ‘Setting Up a Business’. This explore the rights and responsibilities of both unit is an introduction to setting up and running employers and employees and motivation in the abusinessandlooksatthefactorsthatmighthelp workplace.Finally,youwilllookatyourownskills the business to succeed or cause it to fail. It also and personality traits, using tools like personality shows that businesses operate within societies and aptitude tests to measure your own and communities and that they must therefore suitability for certain jobs. take a number of people and their views into account when operating. This is covered in the Your controlled assessment for this section asks book AQA Business for GCSE: Setting Up A Business you to research a business to show: by the same author team and available from ● how the organisation of the business and the Hodder Education (ISBN: 9780340974926). roles within it help it to succeed From this starting point, you may choose to take ● what it is that motivates three chosen thefullGCSE,theshortcourseGCSEortheGCSE employees of the business, and Applied Business (Double Award). For this qualification you would complete the unit ● in the light of your own personality tests, ‘Setting Up a Business’ by taking a one hour whetherthebusinesswouldbeagoodplacefor written examination. You would then complete you to work in the future. two out of the three options: ● People in Business Section 2: Marketing ● Marketing and Customer Needs and Customer Needs ● Enterprise This covers Section 3.5 of the AQA Specification. ThesetopicsareeachtestedthroughaControlled This section deals with how businesses compete Assessment,acoursework-styleassignmentwhich with each other for customers. It investigates is explained more fully on page 4. how a business finds out about the needs and Youwillalsotakeaonehourwrittenexamination wants of its customers and therefore how it can in Business Finance. plantomeetthem.Itexploresthemarketingmix ofproduct,price,promotionandplace,andhow This book covers each of these areas in detail. this can be altered to better gain a competitive advantage.Italsolooksatthenatureofcustomer Section 1: People in service and how important this is to both the business and its customers. Business Your controlled assessment for this section asks you to research a business to show: This covers Section 3.4 of the AQA Specification. This section looks at how a business organises its ● howmeasuringcustomersatisfactionhelpsitto workforce and defines their job roles and succeed vi AQA BUSINESS FOR GCSE: APPLIED OPTIONS ● how it uses marketing and customer service to profit and loss accounts and balance sheets. It compete also explores the tools used in financial planning and forecasting, such as cashflow forecasts and ● a judgement on the success of the business, many key business ratios. relative to its competition. This unit is tested through a one hour Section 3: Enterprise examination. NB This book covers the National Criteria for Business, as they relate to Applied Business, on This covers Section 3.6 of the AQA Specification. whichallBusinessStudiescoursesarebased,sois This section explores what it is that makes an equally useful for Applied GCSE courses other entrepreneur and lets you test your own skills by than AQA. running a business enterprise. It investigates the types of skills and attributes that make for a successful entrepreneur and why they are Getting the most out of important. It then explores your own enterprise this book skills by letting you set up an enterprise. You will be expected to work in a team to find or create a ‘gap in the market’ through market research, This book is divided into four parts, covering all write a business plan and then launch and run four units of the Applied Business qualification. the enterprise. At the end of the activity, you You only have to choose TWO of the first THREE must judge whether or not your enterprise was a units. You do not have to study the units in this successandusethistoplanforthefutureofboth order: that’s up to you and your teacher. yourself and your enterprise. Eachchapterisdesignedtobeapproachedinthe Your controlled assessment for this section asks same way: you to set up and run an enterprise and use this ● Read the ‘Applied in the Business World’ to show: section so that you have put the ideas into ● how enterprise skills help businesses to succeed context and can think about how they apply to ● howyouplannedandcarriedouttheenterprise the real world ● a judgement on the success of your enterprise ● Read the text explaining the ideas and the team running it. ● Read ‘CoreKnowledge’and‘AndMore’which give the basic information and then further Section 4: Finance knowledge about the ideas in the chapter ● ‘Have a Go’ at the exercises and activities to This covers Section 3.7 of the AQA Specification. seehowwellyouhaveunderstoodthematerial. Thissectioninvestigateshowabusinessmanages You can come back to the activities at any time its finances. It looks at costs and revenues, if you need to revise the topic for tests or breakeven and its use as a tool and the financial examinations, or you need to refresh your statements which businesses use. These include memory for the Controlled Assessment. How to use this book vii ThisisfollowedbyLiveLinkstocurrentwebsites AApppplliieedd iinn tthhee ande-learningmaterials,sothatthestorycanbe followeduporinvestigatedfurther,orsothat bbuussiinneessss wwoorrlldd additionalinformationcanbefound.Ifanyofthese linksdonotwork,useasearchenginetofinda similartopicorbusinessonwhichtobaseyour Eachchapterstartswithashortnewspiece, studies.Afterthenewspiece,asetofquestionstests basedonrecenteventsorasituationthat youonyourunderstandingofit. putstheideasdiscussedinthechapterinto Afterthenewspiece,thekeyinformationneeded areal-worldcontext. forthechapterisexplained. Hit the spot These questions require longer answers, where you can demonstrate your understanding of ideas and information in greater depth. The chevrons ( ) show the difficulty levels of the questions. One chevron is used for easier questions, that everyone should be able to do; two chevrons indicate harder questions, where some explanation of the answer is needed. The hardest questions, which may require you to state and justify an opinion, or to weigh up two sides of an argument, have three chevrons. Summary ● This set of bullet points summarises the most important information contained in the chapter. You could think of this as the absolute minimum that you should learn from the chapter. Core knowledge The Core Knowledge then gives the basic knowledge that all students will need regarding this topic. And more Following on from the Core Knowledge, And More provides higher level or more in-depth knowledge for students who are aiming at higher grades or just want to improve their knowledge of a particular area. Did you know… ? Theseboxesarescatteredthroughoutthebook.Theycontainextrainformationthatiseitherusefulor interesting, and which can often help to put the topic into a real-world context. viii AQA BUSINESS FOR GCSE: APPLIED OPTIONS Have a go! This section contains a set of activities and exercises that can be carried out in class or at home in study time. Some are designed to be carried out on your own, others with friends or by using web resources. ✔ Group activity The group activity is designed to be used with the group that you work with in school or college. It is not usually possible for this activity to be carried out by a single person, though sometimes a pair of people might complete the exercise. Often it is a way to gather a wider sample of opinions or skills than you have on your own, or to test your opinions against those of others. (cid:1) Discussion The discussion may follow on directly from the group activity, perhaps so that you can explore why you did or did not agree, had different views, or had different experiences to share. It will make you think more deeply about the area that you are studying! @ Web-based activity This activity requires access to a computer and an internet connection. It may take you to a specific site or sites, perhaps to see how an idea or knowledge has been put into practice in the real world, or it may ask you to use a search engine to find out more information. There is then a short activity based on what you have found. Quickfire questions These questions appear in every chapter. They will test your knowledge of the ideas and information in the chapter. Your teacher might use them to start or end a lesson, as a quiz with the class, or may ask you to complete them on your own. They are usually simple questions with simple answers, designed to check basic knowledge so, for instance, they might ask for definitions and brief explanations. Cracking the code Some words in the text are highlighted. These terms are explained under the ‘Cracking the Code’ heading. In business studies many words have a particular meaning, and it may even be different to how you use the word in normal speech. Cracking the Code will help you to use these words and terms in the correct way. The AQA GCSE Business Specification The AQA GCSE Applied Business specification is ● Looks at how a business recruits its people, basedonthe‘story’ofasmallbusinessenterprise makes them want to work hard and keeps the and the specialised jobs and tasks that take place best of them. within it. Unit 1 is called Setting up a Business ● Describes how the operations of the business andlooksatthebusinessconceptsandideasthat are carried out. are needed to establish a small business, and at Many of the topics that you will meet in Units 4, howthatbusinessmightmeasureitssuccess.You 5, 6 and 7 have similar titles to those in Unit 1. will then choose to study two out of: Don’t think that you will be covering the same ● Unit 4 People in Business work, however. Each additional Unit will: ● Unit 5 Marketing and Customer Needs ● Extend your understanding of the topics by ● Unit 6 Enterprise. considering how they apply to a business. Each of these is tackled through a Controlled ● Look in more detail at the topics, so you have Assessment: details of each are provided in the afirmerunderstandingofthemandareableto ‘Core’ feature in the first chapter of each section. use them in different circumstances. Finally, you will be examined on Unit 7 Business Unit 4, People in Business, shows how the Finance. business organises its staff and defines their job Unit 1 is intended to provide you with enough roles. You will investigate the working information to understand the basics of running a arrangements of various staff and learn how smallbusiness.Afterall,manyyoungpeoplestudy these meet the needs of the business. You will the subject because they feel they might want to study how a business motivates its employees runtheirownbusinessatsomestageinthefuture. and the expectations that employers have of Unit 1 is covered in a separate book, AQA GCSE employees. You will also look at your own skills Business: Setting up a Business (ISBN and abilities to gauge what types of occupation 9780340974926). Unit 1: or role might best suit you. ● Covers how the idea for a business might be Unit 5, Marketing and Customer Needs, shows created, how a gap in the market could be how the business carries out customer research found (or made) and how an entrepreneur to identify and meet the needs of its customers. might go about filling that gap. You will study how a business uses marketing to ● Looks at the reasons why people want to go compete with rivals and, in particular, how it adapts and uses various parts of the marketing intobusiness–notalwaysjusttomakemoney, mix. In addition, you will learn about customer but for independence or to fulfil an ambition. serviceanditsimportancetobothcustomersand ● Investigates how a business sets its targets, the business. how it plans and locates and the way in which Unit 6, Enterprise, shows the importance of it must handle its legal paperwork. enterprise skills in both profit and social ● Covers how it lets people know what it is enterprises. You will then set up and run a small selling, where, when and at what price. You enterprise of your own, taking it from the will therefore study the nature of markets and planning stage through to operating. You will how a business markets its products. then judge how well you thought the business ● Shows how a small business raises and records was operated and use this to plan for the future. itsfinance,andthetoolsthatitcanusetohelp Units 4, 5 and 6 are tested through a Controlled it to manage its accounts. Assessment in which you investigate a particular