GCSE Business Studies

The Class of 2008

Follow this definitive guide to revision to

achieve a final grade that you
will be proud of

Revision for AQA B Business 1

GCSE Business Studies

Revision Checklist

I have outlined below the syllabus headings so that you can check your own
knowledge and understanding against each section. As you go through your revision,
check that you understand what each term means. Write brief notes against each term
and then check against the explanation in the textbook to see if you were right. Use
the Activity sections in your textbook as practical exercises to help you revise.

In the exam, you will be expected to APPLY business theories and concepts to given
case study scenarios. Remember that many of the questions will be level marked and
you need to use the right business terminology to higher level marks. Always read the
question carefully and underline or highlight any key words in each question eg
EXPLAIN, DESCRIBE, DISCUSS all require you to give full answers relating theory
to practice. Without full sentences and full explanations you will not get above Level
1. If you are asked to LIST points, you will not be expected to give full explanations.
Look at the mark allocation. As you work through your revision, enter any unfamiliar
terms into your GLOSSARY in your revision book. Later, try to put an explanation
against each term. This will help you to become more familiar with terminology.

Remember to read the command words LIST, IDENTIFY, DESCRIBE, EXPLAIN.

If you are asked to EXPLAIN 3 points you should use full sentences using good
business language and APPLY it to the case study scenario. If you simply LIST, you
will only get a low level mark, even if you listed 10 points.

Questions carrying more than 8 marks will be level marked. As a general rule of
thumb, the levels are marked:

Level 1 Basic answer only. Brief points without explanation

Level 2 Some business language used with brief explanations
Level 3 Good understanding of business language with some reference
to the particular scenario of the case study
Level 4 Good business terminology applied effectively to the case study
scenario and possibly identifying consequences of the actions
described to the future development of the company.

The syllabus is broken down into the following sections:

EXTERNAL ENVIRONMENT AND BUSINESS

In general, business organisations should be explored from a range of perspectives –

public and private section. However, a major emphasis is likely to be the economic
perspective. Government economic policy, for example, is likely to play an important
part in influencing business decisions.

Revision for AQA B Business 2

Business in the community and its environment The external benefits and
external costs of business actions on the community and environment.

External benefits including:

• the creation of jobs and income

• improvements in standards of living
• improvements in facilities and amenities
• economic and social regeneration
• effects on other businesses

External costs including:

• forms of pollution
• the adverse effects of business, change and development on employment,
income and expenditure
• loss of amenities and heritage
• pressures on infrastructure

EXTERNAL FACTORS AFFECTING BUSINESS

The main factors outside the business which may affect it need to be explored
including:

• changes in rates of unemployment and inflation

• changes in exchange rates and the move towards globalisation
• changes in taxation
• changes in interest rates
• competition
• population trends
• health and safety legislation
• broad policies on education and training
• trends in markets including e-commerce
• enterprise culture and support
• the impact of the EU, including the social chapter

Enterprise culture

The UK is said to have an “enterprise culture” - this means that the entrepreneur and
the small business is encouraged and helped to succeed. Small businesses are seen as
making a significant contribution to the economy, providing employment and adding
value. Enterprise culture includes:

• the qualities required of an entrepreneur

• encouraging motivation
• the nature and rewards of risk taking
• government and other support for risk taking

Revision for AQA B Business 3

 • reasons for the success and failure of enterprises.

THE OWNERSHIP AND CONTROL OF BUSINESS

The private and public sectors should be distinguished. You should be able to
identify and distinguish between the main forms of business. You should be able to
understand how companies achieve growth through mergers and takeovers.

The structure, organisation and control of a business will have implications for its
finance, production methods, marketing strategy and its management of people.

Forms of business: ownership and operation – sole traders, partnerships, private and
public limited liability companies, co-operatives, franchise operations, publicly
owned organisations.

Criteria for comparison of the forms of business: you should understand how each
type of organisation is managed, controlled, ease of setting up in terms of legal
documents and whether there is limited or unlimited liability (and what it means)

Growth The internal and external methods of growth need to be understood.

Reasons for growth including

• increasing market share

• eliminating rivals
• protecting the firm from competition
• gaining economies of scale
• increasing profit

Directions of growth

• Vertical integration Can you draw a diagram to

• Horizontal integration show different types of
• Lateral integration? Use the example
• Conglomerate of a brewery in the secondary
sector
Constraints on growth including

• financial limitations
• size of the market
• government controls
• human resources

The Aims and Objectives of Business

Three main objectives of private sector companies will be profit, survival and
growth. These will vary in importance according to the nature of the business and the
type of business structure. Objectives should be seen as targets for a business to
judge its success over a period of time.

Revision for AQA B Business 4

You should be able to look at these aims and objectives in relation to the overall
economic environment in which business activity takes place. For example, changes
in government policy and in the economy may cause a business to alter its objectives.

Objectives Businesses may choose one or several from a range of objectives.

These could include:

• making the most of something, including maximising sales, turnover or profit

• keeping stability, including maintaining market share or a reasonable income
• personal or more general objectives, including being independent (own boss)
or obtaining customer satisfaction

The management of people within a business

The structure of different business organisations should be identified and department

functions understood along with the importance of their interdependence. The roles
of people within the departments need to be understood together with management
styles from employer and employee perspective.

Structure of organisations You should be able to identify and explain organisation

charts, span of control, hierarchy, chain of command, communication methods and
problems.

Methods of management
The effect of the following on the business should be considered: leadership styles

• Delegation Can you name and describe the

• Team work three main management styles?
• Methods of motivation
• Management of change What are the motivational
theories of Maslow, Herzberg,
Problems of management Taylor and McGregor?

Problems arising from the structure of organisations and methods of management

including:

• Communication
• Co-ordination
• Control
• Motivation

Role of Personnel Management

The main aspect of work covered by the Personnel department should be considered
including:

• assessing labour requirements

What is a Trade Union?
• recruitment and selection of people
What is the name of the trade
• training union representative in a
factory called? What does
ACAS stand for and what do
Revision for AQA B Business they do? 5
 • industrial relations
• application of legislation.

Accounting and Finance

The three key elements in this section are the sources, uses and management of
finance. You should be able to understand that the scope and scale of financial
decisions will obviously be dependent upon the structure, organisation and control of
the firm. Decisions made by small sole traders will have less far reaching effects than
those made by large companies, where finance must be linked with other business
decisions.

Sources and uses of finance

The sources need to be considered in terms of why the finance is needed, its cost,
availability and the likely time period for the finance. Uses of finance to include:

• purchase of fixed assets using owner’s funds, retained profits, bank loans, hire
purchase, leasing
• purchase of current assets using supplier’s credit, overdraft
• financing of short-term needs including use of working capital

Planning

Planning needs to be considered at start up and as an on going procedure. The

methods used and limitations of the following techniques need to be understood:

• the production of a business plan

• break even analysis
• cash flow forecasting and monitoring

as a means of monitoring the success of the company and as a way of identifying

when remedial action is necessary.

Analysis of profitability, liquidity and performance

You should be able to calculate, analyse and make decisions using the following
measures of profitability, liquidity and performance:

• data from profit and loss accounts
• data from balance sheets
• ratio of gross profit to sales revenue
• current ratio
• acid test ratio
• return on capital employed
What is the difference between a Balance
Sheet and a Profit and Loss Account?
Why is cash flow forecasting so important?
Make sure you learn the different ratios for
calculating liquidity

You should be able to make decisions and suggest methods of improving profitability,
liquidity and performance.

Revision for AQA B Business 6

Production

You need to understand how production fits into the overall sectors of industry –
primary, secondary and tertiary. You should understand how organisations use and
manage resources to produce goods and services. Consider the effects of introducing
new technology in a wide variety of business situations including the introduction of
new production strategies.

Resources and the production chain Production is a process by which a product or

service is created to meet the needs of the consumers. Consideration needs to be
given to

• resources required
• stages in the production process, added value concept and the channels of
distribution needed to pass the goods from producer to consumer
• different methods of production

Production strategies: you need to understand that decisions are made by businesses
as to appropriate methods of:

• choosing the right scale of production to gain appropriate economies of scale

and minimise diseconomies;
• measuring and improving efficiency including productivity, unit costs and
resource management;
• stock control including Kanban, JIT and lean production techniques;
• quality management including traditional quality checks, statistical process
control, total quality management and Kaizen

Both the factors a firm considers when locating in business and the role of external
influences need to be considered including:

• geographical factors
• cost of the site
• infrastructure
• labour
• the nature of the product;
• historical factors;
• external help and advice;
• availability of premises

Marketing

To understand the marketing process you should be able to identify the ways in which
customer needs can be identified and satisfied in a changing and competitive
environment.

Marketing is the contact between the business and its environment, and that marketing
policy will be influenced by the size and type of the business. The marketing process

Revision for AQA B Business 7

should be viewed as a whole process in which the various components of marketing
are linked to achieve a co-ordinated marketing strategy.

Marketing should be viewed from both the psychological and sociological

perspectives.

Market planning and research Analysing the market involves a number of methods
and strategies. These should include the analysis of existing and potential markets for
goods and services.

Analysis of methods and strategies should include:

• market segmentation
• SWOT analysis
• Field research
• desk research
• sampling methods including random, quota and target samples (where a
specific age, gender or socio-economic group is identified for sampling);
• product life cycle

Marketing mix The application of the marketing mix should be applied to a variety
of case study scenarios. Analysis should be made in context to evaluate possible
solutions to problems.

Aspects of the mix to be considered are:

• product decisions
• pricing methods including cost plus policy, competitor pricing, promotional
pricing, penetration pricing, skimming or creaming, loss leaders, predator or
destroyer pricing;
• promotion techniques and decisions;
• channels of distribution

External constraints

The consideration of external constraints should include:

• Legal
• Moral
• Cultural
• Ethical constraints on marketing activities

FINANCE IS A TOPIC THAT WILL DEFINITELYCOME UP IN THE EXAM –

MAKE SURE YOU UNDERSTAND THE DIFFERENT FINANCIAL
DOCUMENTS AND HOW TO INTERPRET THEM. MAKE SURE YOU CAN
COMPARE THE TURNOVER OF ONE YEAR OF TRADING WITH ANOTHER.

Revision for AQA B Business 8

CAN YOU CALCULATE NET PROFIT MARGIN? WHAT IS THE
APPROPRIATION ACCOUNT? WHAT IS CORPORATION TAX? WHAT IS
RETAINED PROFIT AND WHY IS IT IMPORTANT TO A COMPANY?

BUSINESS OBJECTIVES IS ANOTHER IMPORTANT TOPIC – MAKE SURE

THAT YOU CAN EXPLAIN HOW EACH DEPARTMENT IN A COMPANY
HELPS TO CONTRIBUTE TO OVERALL COMPANY OBJECTIVES OF PROFIT,
SURVIVAL AND GROWTH.

REMEMBER:

CAREFULLY PLANNED REVISION + ASKING QUESTIONS + PRACTICE =

AN OUTSTANDING BUSINESS STUDIES GRADE

GOOD LUCK IN THE EXAM!

Revision for AQA B Business 9