1. business and industrial

Pearson BTEC Level 3 90-credit Diploma in Business
Unit / Module Synopsis and Learning Outcomes
Unit 1: The Business Environment
The aim of this unit is to give learners the fundamental knowledge of a range of business organisations, and the
many factors that shape the nature of organisations operating in an increasingly complex business world.
Learners new to the studying of business will already be familiar with organisations through having dealt with them
as customers or employees. One of the aims of this unit is to help learners to build on these experiences and learn
to ‘walk in the shoes’ of owners, stakeholders and managers of organisations.
The unit introduces learners to a range of business activities. They will consider the purposes of different
organisations and the influence of stakeholders and how businesses organise themselves through strategic
planning and organisational structures.
Learners will then explore the dynamic nature of organisations through studying the impact of external (political,
legal and social) influences on business operations.
Next, they will study the fundamental economic principles that impact on businesses.
By studying two different business environments learners will gain some insight into how businesses operate in
different parts of the world and how the development of a global marketplace impacts on all businesses.
Learning outcomes
On completion of this unit a learner should:
1 Know the range of different businesses and their ownership
2 Understand how businesses are organised to achieve their purposes
3 Know the impact of the economic environment on businesses
4 Know how political, legal and social factors impact on business.
In order to pass this unit, the evidence that the learner presents for assessment needs to demonstrate that they
can meet all the learning outcomes for the unit. The assessment criteria for a pass grade describe the level of
achievement required to pass this unit.
To achieve a pass grade the evidence must show that the learner is able to:
P1 describe the type of business, purpose and ownership of two contrasting businesses
P2 describe the different stakeholders who influence the purpose of two contrasting businesses
P3 describe how two businesses are organised
P4 explain how their style of organisation helps them to fulfil their purposes
P5 describe the influence of two contrasting economic environments on business activities within a selected
organisation
P6 describe how political, legal and social factors are impacting upon the business activities of the selected
organisations and their stakeholders.
Unit contents
1 Know the range of different businesses and their ownership
Range of different businesses: local; national; international; global; public; private; not-for- profit/voluntary;
sectors of business activity (primary, secondary and tertiary)
Business purposes: supply of products or services; difference between profit and not-for profit organisations
Ownership: public, private and voluntary sectors; types of ownership (sole trader, partnerships, private and public
limited companies, government departments, government agencies, worker cooperatives, charitable trusts); main
implications of different types of ownership on businesses (extent of liability, limitations to operation for public and
charitable organisations)
Key stakeholders: customers; employees; suppliers; owners; trade unions; employer associations; local and
national communities; governments; influence of stakeholders on organisations
2 Understand how businesses are organised to achieve their purposes
Organisational structures: purpose (division of work, lines of control and communication); types of structure
(functional, geographic, product, type of customer); diagrammatic representation of structure (organisation
charts); span of control
Functional area: finance; marketing; production; customer service; sales; human resources.
Strategic planning: mission and values; development of strategic aims and objectives; cascading of objectives
throughout the organisation; strategic planning process; use of SMART (specific, measurable, achievable,
resourced, time-bound) objectives
Influencing factors: stakeholders; business environment; business type and ownership.
Different aims: private sector aims (breakeven, survival, profit maximisation, growth); public sector aims (service
provision, cost limitation, value for money, meeting government standards, growth of range of provision)
3 Know the impact of the economic environment on businesses
Economic: importance of stability; impact on business of changes in the economic environment (growth, recession,
ripple effect); levels of inflation; availability and cost of credit; labour; changes in government policy (legal, fiscal,
monetary)
Demand: influenced by affordability; competition; availability of substitutes; level of Gross Domestic Product
(GDP); needs and aspirations of consumers
Supply: Influenced by availability of raw materials and labour; logistics; ability to produce profitably; competition
for raw materials; government support
Changes in supply and demand: supply and demand curves; elasticity of demand; price sensitivity; influence of
branding on price sensitivity
Global interaction: levels and types of interdependence (supply chains, ownership of businesses, movement of
capital and business operations, reducing ability of national governments to regulate global businesses)
4 Know how political, legal and social factors impact on businesses
Political: political stability; government support for different types of organisations eg private, voluntary, public;
fiscal eg levels and types of taxation; direct support eg grants, loans; providing infrastructure eg transport;
internet; enhancing skills of the working population eg education, training, research; organisations to support
businesses eg Business Link; membership of international trading communities eg European Union
Legal: providing framework for business eg company law; protecting consumers and employees eg contract law,
employment law, consumer protection; ensuring fair and honest trading eg competition law.
Social: demographic issues eg population growth or decline; changes in structure eg ageing; households and
families; education; attitude to work; religions; attitudes to male and female roles; ethics
Unit 2: Business Resources
The aim of this unit is to develop learner knowledge of the range of human, physical, technological and financial
resources required in an organisation, and how the management of these resources can impact on business
performance.
At the core of every organisation are the human, physical, technological and financial resources that enable it to
function. This unit will give learners a broad understanding of the importance organisations place on managing
their resources efficiently in order to achieve their objectives. It is important that learners are able to relate their
understanding of resource management to a real organisation. This will provide an essential link between theory
and practice.
Understanding how these resources are managed is one of the keys to assessing how well the organisation is
performing. The first part of this unit explores the range of human, physical and technological resources for a
selected organisation. Learners will investigate the importance of managing these resources efficiently. The
contribution that recruiting and retaining suitable staff can make to the organisation’s performance is examined.
The importance of managing the organisation’s physical and technological resources efficiently is also explored.
For an organisation to survive its finances need to be sound and secure. The second part of the unit explores the
sources of financial resources available to organisations. The level of an organisation’s performance can be seen in
its financial statements. The unit aims to develop knowledge and understanding of the financial statements and it
underpins other financial units in the qualification. This part of the unit focuses on the interpretation and analysis of
financial documents in order to highlight the need for the monitoring and control of costs and budgets. It is
important that learners appreciate that poor management of resources can have a negative impact on an
organisation’s performance.
Learning outcomes
On completion of this unit a learner should:
1 Know how human resources are managed
2 Know the purpose of managing physical and technological resources
3 Know how to access sources of finance
4 Be able to interpret financial statements.
In order to pass this unit, the evidence that the learner presents for assessment needs to demonstrate that they
can meet all the learning outcomes for the unit. The assessment criteria for a pass grade describe the level of
achievement required to pass this unit.
To achieve a pass grade the evidence must show that the learner is able to:
P1 describe the recruitment documentation used in a selected organisation
P2 describe the main employability, personal and communication skills required when applying for a specific job
role
P3 describe the main physical and technological resources required in the operation of a selected organisation
P4 describe sources of internal and external finance for a selected business
P5 interpret the contents of a trading and profit and loss account and balance sheet for a selected company
P6 illustrate the use of budgets as a means of exercising financial control of a selected company
P7 illustrate the financial state of a given business.
Unit contents
1 Know how human resources are managed
Human resources: staffing to meet changing business demands; coordination of team resources to meet targets;
monitoring of team performance; liaison with other departments; establishment of professional culture eg levels of
formality, separation of professional from private activities; provision of appropriate incentives; encouraging
creativity and initiative; outsourcing versus in-house decisions
Maintenance of operation: adequate resources to meet tasks eg staffing, equipment, working capital, facilities,
administration; monitoring; troubleshooting and problem solving
Human resources: recruitment and retention; suitably skilled staff; contracts of employment; job descriptions
Employability skills: suitable qualifications; experience in similar role; knowledge of products/services; experience
of specific industry; effectiveness in meeting personal and team/departmental targets; ability to observe and raise
professional standards of production/service delivery
Personal skills: patient; hardworking; able to work as part of a team; good interpersonal skills; cooperating with
others eg line managers, colleagues; negotiation eg in seeking agreements, resolving conflicts, agreeing targets,
agreeing budgets; interviewing skills
2 Know the purpose of managing physical and technological resources
Physical resources: buildings and facilities; materials and waste; plant and machinery; equipment including ICT;
planned maintenance and refurbishment; emergency provision; insurance; security
Technological resources: intellectual property eg designs, drawings, text, music, video; accumulated experience
and skills; software licences; protection via patents and copyrights
3 Know how to access sources of finance
Internal sources: owner’s savings; capital from profits
External sources: banks eg overdraft, business loan, commercial mortgage, venture capital, hire purchase, leasing,
factoring, share issues
4 Be able to interpret financial statements
Costs and budgets: costs managed to budget (fixed costs/variable costs, monitoring budgets and variances);
breakeven; bidding to increase future resources eg capital grants, investment; provision of appropriate
liquidity/working capital; provision of appropriate reserves to address emergencies/crises
Financial statements: profit and loss (purpose and use, measure of trading performance, establishing profit figures)
and balance sheet (purpose and use, establishing net worth, business valuation)
Basic ratios: to determine solvency eg current ratio, acid test ratio; to determine profitability eg gross profit
percentage; net profit percentage; return of capital employed; to determine performance eg stock turnover,
debtors’ collection period, asset turnover
Unit 3: Introduction to Marketing
The aim and purpose of this unit is to give learners an understanding of how marketing, research and planning and
the marketing mix are used by all organisations.
Marketing is at the heart of every organisation’s activity. Its importance is also growing in the non-commercial,
public and voluntary sectors. Also, at the heart of marketing is the customer. This unit will introduce learners to
some of the tools and techniques all types of organisations use to achieve their objectives.
Firstly, learners will explore how different types of organisations use marketing principles to meet the needs of
their customers and achieve their objectives. The constraints under which organisations operate are important and
learners will study the legal requirements and voluntary codes that affect marketing.
Learners will then go on to investigate how organisations collect data through market research and turn it into
useful information which can be analysed and used to plan their marketing activities.
The segmentation and targeting of groups of customers is a key marketing technique and this is studied in detail.
This includes the different bases for segmentation of both consumer and business markets.
Next, learners will examine how a marketing mix is developed to meet the needs and aspirations of a targeted
group of prospective customers, before going on to develop a marketing mix for a new product or service.
The unit gives a brief overview of the principles of marketing or can be used as a basis for further study of
specialist marketing units.
Learning outcomes
On completion of this unit a learner should:
1 Know the role of marketing in organisations
2 Be able to use marketing research and marketing planning
3 Understand how and why customer groups are targeted
4 Be able to develop a coherent marketing mix.
In order to pass this unit, the evidence that the learner presents for assessment needs to demonstrate that they
can meet all the learning outcomes for the unit. The assessment criteria for a pass grade describe the level of
achievement required to pass this unit.
To achieve a pass grade the evidence must show that the learner is able to:
P1 describe how marketing techniques are used to market products in two organisations
P2 describe the limitations and constraints of marketing
P3 describe how a selected organisation uses marketing research to contribute to the development of its marketing
plans
P4 use marketing research for marketing planning
P5 explain how and why groups of customers are targeted for selected products
P6 develop a coherent marketing mix for a new product or service.
Unit content
1 Know the role of marketing in organisations
Role: overall concept; marketing definitions
Objectives: private sector aims and objectives (survival, growth); public and voluntary sector aims and objectives
(service provision, growth of range of provision, cost limitation, meeting quality standards); marketing objectives,
eg market leadership, brand awareness, perceptions of customers or users; link between organisational objectives
and marketing objectives
Techniques: growth strategies (diversification, product development, market penetration or market development,
Ansoff’s Matrix); survival strategies; branding (importance in influencing buyer behaviour, brand building,
positioning, brand extension); relationship marketing (definition, difference between transactional marketing and
relationship marketing, value of lifetime customer)
Limitations and constraints: legal (Sale of Goods Act 1979, The Consumer Protection from Unfair Trading
Regulations 2008, Consumer Credit Acts 1974 and 2006, Consumer Protection (Distance Selling) Regulations, Data
Protection Act 1998); voluntary, eg Code of Advertising Practice and Advertising Standards Authority; pressure
groups and consumerism; acceptable language
2 Be able to use marketing research and marketing planning
Marketing research: qualitative; quantitative; primary internal/external research; secondary internal/external
research; uses (reduce risk in decision making, measure progress over time); limitations (cost effectiveness,
validity of data collected)
Marketing planning: marketing planning process model (audit with PESTLE (political, economic, social,
technological, legal and environmental external factors); SWOT (internal strengths and weaknesses, external
opportunities and threats); set SMART (specific, measurable, achievable, resourced, time-bound) objectives;
determine strategy and tactics, implement changes; evaluate)
3 Understand how and why customer groups are targeted
Identifying customers in consumer markets: difference between customers, consumers and buyers; importance of
identifying who has influence over purchasing decisions
Market segmentation: importance; bases for segmentation of consumer markets (geographic, demographic,
psychographic, lifestyle); uses of geo-demographic systems to identify and reach target groups eg ACORN,
MOSAIC; reasons for choice of target group (accessibility, current and future prospects of group as customers,
profitability; ability to service customer group, fit with organisation’s mission)
Identifying customers in business to business markets: decision making unit (DMU)
Market segmentation: bases for segmentation of business markets (size, region, value, public/private/voluntary
sector, product, industry); benefits for different members of the DMU, eg cost benefits, ongoing relationships,
security of supply
4 Be able to develop a coherent marketing mix
Marketing mix: 4 P’s – product; price; place; promotion; objectives of developing mix (support brand building,
satisfy needs and aspirations of targeted group of customers); importance of need for cohesion of different
elements of the marketing mix
Product: product range; benefits versus features of product or service for targeted customers; concept of product
life cycle
Price: pricing strategies (premium pricing, penetration pricing, economy pricing, price skimming, psychological
pricing, captive product pricing, product line pricing)
Place: distribution; online and/or physical presence
Promotion: promotional mix (advertising (different media, online techniques), personal selling, public relations,
sales promotion)
Unit 4: Business Communication
The aim of this unit is to show learners that the collection and management of business information, and the
successful communication of that information throughout a business, is critical for the future prosperity of the
organisation.
A business needs accurate and relevant information from internal and external sources in order to operate
profitably. Proper collection of data creates an environment where informed decisions can be taken for the benefit
of the business. In order to manage information effectively, there must be good communication systems within the
organisation. Staff must possess good verbal and written skills in order to communicate and share information.
Business information can be used to obtain competitive advantage and promote efficiency. Organisations generate
information internally, recording details of products manufactured, purchased and sold, and their associated costs.
Businesses use information to manage not only what is currently happening in the organisation but also to plan for
the future and ensure their survival. Information is collected, stored, manipulated, analysed and reported to those
who need to use it. People need to become skilled manipulators and users of information to ensure organisations
become more efficient and succeed in achieving their stated purposes. Since the development of the personal
computer and more recently the internet, communication methods have changed significantly. Gathering relevant
information from a range of sources is a skill that needs to be developed using electronic and non-electronic
sources.
Learning outcomes
On completion of this unit a learner should:
1 Understand different types of business information
2 Be able to present business information effectively
3 Understand the issues and constraints in relation to the use of business information in organisations
4 Know how to communicate business information using appropriate methods.
In order to pass this unit, the evidence that the learner presents for assessment needs to demonstrate that they
can meet all the learning outcomes for the unit. The assessment criteria for a pass grade describe the level of
achievement required to pass this unit.
To achieve a pass grade the evidence must show that the learner is able to:
P1 explain different types of business information, their sources and purposes
P2 present complex internal business information using three different methods appropriate to the user’s needs
P3 produce corporate communications
P4 evaluate the external corporate communications of an existing product or service
P5 explain the legal and ethical issues in relation to the use of business information
P6 explain the operational issues in relation to the use of business information
P7 outline electronic and non-electronic methods for communicating business information, using examples for
different types of audience.
Unit content
1 Understand different types of business information
Types of information: verbal; written; onscreen; multi-media; web based
Purpose of information: updating knowledge; informing future developments; strategic direction; SWOT analysis;
offering competitive insight; communicating sales promotions; inviting support for activities
Sources of information: internal, eg financial, human resources, marketing, purchasing, sales, manufacturing,
administration; external, eg government, trade groupings, commercially provided, databases, research; reliability
of data sources
2 Be able to present business information effectively
Presentation methods to meet the needs of the user: eg document, use of style, verbal presentations, role plays,
onscreen multi-media presentation, use of images, web-based presentation, multi-lingual support
Output requirement: eg resolution of images, page layout, text formatting, use of tables, combining information
from a range of applications, use of specialist software and hardware
Presenting corporate communication: methods; mission statements, advertising, packaging, logos, livery, strap
lines, endorsements, sponsorship
3 Understand the issues and constraints in relation to the use of business information in organisations
Legal issues: relevant data protection legislation eg Data Protection Act 1998, Freedom of Information Act 2000;
other relevant legislation, eg Computer Misuse Act 1990
Ethical issues: codes of practice, eg on use of email, internet, ‘whistle blowing’; organisational policies; information
ownership
Operational issues: security of information; backups; health and safety; organisational policies; business
continuance plans; costs, eg additional resources required, cost of development; impact of increasing sophistication
of systems, eg more trained personnel, more complex software
4 Know how to communicate business information using appropriate methods
Audience requirements: eg age, gender, ethnicity, special needs, readability, legibility, attention span, accessibility,
interest, distraction avoidance, business experience and knowledge, industry-related experience and knowledge
Methods of written communication: eg letter, memorandum, fax, invoice, flow charts, publicity material, email and
screen based, SMS (short message service), www (worldwide web)
Methods of non-written communication: eg telephone call, video conferencing
Technologies: computers; touch screens; digital broadcasting; DVD (digital versatile/video disc); mobile phones;
the internet and WAP (wireless application protocol)
Communication skills: formal/informal; verbal/non-verbal; listening; understanding; seeking clarification;
responsiveness; eye contact; facial expressiveness; body language; use of appropriate professional language;
ability to adapt communication techniques to audience requirements; presentation skills; ability to invite
commitment to shared goals
Unit 5: Business Accounting
The aim of this unit is to enable learners to understand the purpose of accounting, and the associated processes
and its role in the managing of a business. Learners will develop the skills and knowledge needed to understand
financial information.
Understanding how a business operates and what makes it successful, requires knowledge of the accounting
process. Accounting involves recording business transactions and, this in turn, leads to the generation of financial
information which can be used as the basis of good financial control and planning. Inadequate record keeping and a
lack of effective planning ultimately lead to poor financial results. It is vital that owners and managers of
businesses recognise the indications of potential difficulties. Remedial action can then be taken.
The unit is divided into two parts. The first develops an understanding of the accounting processes necessary to
provide accurate and relevant financial information. The second part covers the practical aspect of carrying out
those accounting activities.
Learners will be introduced to accounting terminology as they study the purpose and function of accounting and
consider the various categories of business income and expenditure. It is important to know the sources of an
organisation’s income and the nature of its expenditure, as this clarifies the basis of its profitability and enables
more effective control of the business. Control begins with the planning process and learners will study the use of a
cash flow forecast which requires managers to set cash flow targets that can be monitored and adjusted on a
regular basis. Learners will consider the effective management of cash flow and the implications of cash flow
problems. The link between business failure and cash flow problems will be highlighted.
The measurement of an organisation’s financial performance and position requires an understanding of a basic
profit and loss account and balance sheet with this understanding learners can analyse profitability, liquidity and
efficiency of the organisation through the application of ratio analysis. Analysis will always require comparison of
current figures with those from a previous accounting period, or those of a similar business organisation. Learners
will discover how to carry out ratio analysis as well as the meaning and implication of the figures.
Learning outcomes
On completion of this unit a learner should:
1 Understand the purpose of accounting and the categorisation of business income and expenditure
2 Be able to prepare a cash flow forecast
3 Be able to prepare profit and loss accounts and balance sheets
4 Be able to review business performance using simple ratio analysis.
In order to pass this unit, the evidence that the learner presents for assessment needs to demonstrate that they
can meet all the learning outcomes for the unit. The assessment criteria for a pass grade describe the level of
achievement required to pass this unit.
To
P1
P2
P3
P4
P5
achieve a pass grade the evidence must show that the learner is able to:
describe the purpose of accounting for an organisation
explain the difference between capital and revenue items of expenditure and income
prepare a 12-month cash flow forecast to enable an organisation to manage its cash
prepare a profit and loss account and balance sheet for a given organisation
perform ratio analysis to measure the profitability, liquidity and efficiency of a given organisation.
Unit content
1 Understand the purpose of accounting and the categorisation of business income and expenditure
Purpose: record transactions; monitor activity; control; management of the business (planning, monitoring,
controlling); measurement of financial performance (gross profit, net profit, value owed to and by the business)
Capital income: sole traders; partners; shares; loans; mortgages
Revenue income: sales (cash and credit transactions); rent received; commission received Capital expenditure:
fixed assets (land and buildings; office equipment; machinery; furniture and fittings; motor vehicles); intangibles
eg goodwill, patents, trademarks
Revenue expenditure: premises costs eg rent, rates, heating and lighting, insurance; administrative costs eg
telephone charges, postage, printing, stationery; staff costs eg salaries, wages, training, insurance, pensions;
selling and distribution costs eg sales staff salaries, carriage on sales, marketing; finance costs eg bank charges,
loan and mortgage interest; purchase of stock (cash and credit transactions)
2 Be able to prepare a cash flow forecast
Cash flow forecast: structure; timescale; credit periods; receipts (cash sales, debtors, capital, loans, other
income); payments (cash purchases, trade creditors, revenue expenditure, capital expenditure, Value Added Tax
(VAT)); opening and closing cash/bank balances
Cash flow management: problems within the cash flow forecast eg insufficient cash to meet payments due;
solutions eg overdraft arrangements, negotiating terms with creditors, reviewing and rescheduling capital
expenditure
3 Be able to prepare profit and loss accounts and balance sheets
Profit and loss account: purpose and use; trading account and calculation of gross profit (sales, purchases, opening
and closing stocks); calculation of net profit (overheads, other revenue income eg discounts received); commission
received; transfer of net profit to balance sheet
Balance sheet: purpose and use; vertical presentation; order of permanence; fixed assets; current assets;
intangible assets; long-term liabilities; current liabilities; working capital; net assets; transfer of net profit from
profit and loss account; capital employed
International Equivalents: changes to reporting requirements under the International Accounting Standards (IAS),
eg statement of comprehensive income, statement of financial position.
4 Be able to review business performance using simple ratio analysis
Profitability: gross profit percentage of sales; net profit percentage of sales; return on capital employed (ROCE)
Liquidity: current ratio; acid test ratio/liquidity ratio
Efficiency: debtors’ payment period; creditors’ payment period; rate of stock turnover
Unit 7: Management Accounting
The aim of this unit is to enable learners to understand how important management accounting is to all businesses.
It looks at costing and budgeting, and how to use current or historical financial data to plan for the effective
finances and costs of the business for the future.
Whether an organisation is successful and long established or a business start-up, one of the most important
aspects of its management is effective financial planning and control. This is known as management accounting
and it builds on historical accounting information provided by financial accounts. A sound understanding of costs
and cost accounting is an essential part of managing finances.
Learners need to understand the nature of costs and the impact on those costs of expanding the organisation or
increasing business activity. Appropriate pricing of an organisation’s products or services will play a large part in its
future profitability. This unit aims to help learners to understand how management accounting begins with planning
the activity levels and establishing the costs, incomes and profits for future periods. Break-even analysis allows
managers to assess optimum activity levels whilst historical data can be used to look for trends that can forecast
more accurately the figures that are used in budgets.
Simply preparing financial forecasts is not sufficient to keep control of a business organisation will then want to
compare actual activity levels, costs and incomes with those that were planned. The management accountant will
calculate and consider the differences between budgeted and actual figures. This will form the basis of
management decisions which are used to steer the business back towards its planned targets.
On completion of this unit, learners will have a good appreciation of the skills and understanding necessary to
manage the finances of an organisation. They will be able to assess the problems highlighted by variance analysis
and make realistic decisions on the likely courses of action.
Learning outcomes
On completion of this unit a learner should:
1 Understand how production costs are determined and used to calculate prices
2 Be able to use break-even analysis
3 Be able to use appropriate statistical information to review and predict business performance
4 Be able to use budgetary techniques.
In order to pass this unit, the evidence that the learner presents for assessment needs to demonstrate that they
can meet all the learning outcomes for the unit. The assessment criteria for a pass grade describe the level of
achievement required to pass this unit.
To
P1
P2
P3
P4
P5
achieve a pass grade the evidence must show that the learner is able to:
explain how an organisation can cost a product and determine its price at any activity level
carry out a break-even analysis for a selected organisation
use accounting data and statistical information to measure business performance
use budgetary techniques to prepare budgets for a selected organisation
describe how budgets can be used to set targets, to monitor and control an organisation.
Unit content
1 Understand how production costs are determined and used to calculate prices
Costs: direct costs (raw materials, unfinished goods, direct labour costs, direct expenses); variable costs;
depreciation; semi-variable costs; stepped costs; indirect costs; fixed costs; cost centres; profit centres;
non-production (service) department overheads; overhead allocation; apportionment; overhead
absorption rate; absorption costing; activity-based costing; marginal costing; standard costing
Prices: cost plus; discounting; impact of pricing policies on production and costs; income
2 Be able to use break-even analysis
Break-even analysis: contribution; break-even formula; break-even graph; break-even point; area of profit;
area of loss; margin of safety; budgeted activity and sales levels; numerical calculation; changing overheads;
direct costs; selling prices and budgeted activity levels; target profit levels of activity; use of computerised
spreadsheet (tabulation, charts, goal-seeking); limitations and assumptions (sales levels being identical to
production levels, consistency of selling price, contribution and overhead behaviour); external factors
(inflation, interest rates)
3 Be able to use appropriate statistical information to review and predict business performance
Accounting data: previous period (sales, production costs, profits); information from published financial reports
Statistical information: changes over time; moving averages; seasonal variations; price indices eg Retail
Price Index (RPI); trends to assess and predict business performance
Performance: ratio analysis; liquidity ratios (current ratio, liquid capital ratio); profitability ratios (gross profit
mark-up, gross profit margin, net profit margin, overheads to sales margin, return on capital employed);
efficiency (stock turnover days, debtors’ collection days, creditors’ payment days, fixed assets turnover
ratio, net current asset turnover ratio); capital gearing; previous periods
4 Be able to use budgetary techniques
Budgets: master; sales; production; purchases; debtors; creditors; cash; departmental (consolidation);
standard costing; analysis of variances eg change of activity levels, costs and prices; use of accounting and
statistical information
Budgetary techniques: preparing and revising budgets (changes to costs and selling prices); use of budgets
for short-term target setting; monitoring (comparison of standard or budgeted costs with actual costs,
calculation and explanation of variances); control measures (decision making, taking action); reliability
(importance of accuracy, results of error, inaccurate assumptions); relationship between costs and
incomes at different activity levels; strengths and weaknesses of budgetary techniques
Unit 21: Aspects of Contract and Business Law
The aim of this unit is to introduce learners to the operation of the law of contract as it applies to businesses.
Learners will apply the law to business and consumer situations and consider the meaning and effect of standard
form contracts.
A business can only make money legitimately by making contracts with other businesses and customers.
Businesses want to make the terms of these contracts the most favourable to themselves. All those involved
in a contract need to know the exact terms on which it is based so that their rights and obligations are clearly
understood and appropriate action can be taken if the contract is not implemented satisfactorily. Many businesses
try to minimise their responsibilities under a contract, and the law attempts to balance the customer’s interests and
gives consumers, in particular, rights in relation to business sellers and service providers.
Learners will consider rules for the formation of contracts and develop an understanding of the legal effect of each
stage in negotiating a contract, up to and including the final agreement. The law on misrepresentation and the
terms in contracts are explored. It is central to the unit that learners understand the meaning of express and
implied terms in a contract. They will examine a contract or contracts to consider the use of key terms.
For example, terms with respect to payment can be analysed and put into the context of implied terms found in
legislation and the remedies available for failure to honour the terms of a contract.
Exclusion clauses that attempt to remove all or some liability for one party’s breach of contract are a common part
of written contracts, yet these terms often have no legal effect. The law is concerned to balance freedom of
contract with protection of the weaker party (usually a consumer) and this can be evaluated as part of the overall
contract.
Learners will also consider the statutory consumer protection laws in relation to contracts for the sale and supply of
goods and services, both face to face and at a distance. Learners will analyse the terms of contracts so as to
understand the rights and responsibilities that arise from the contract and consider the overall effect of the contract
and the remedies that are available.
Learning outcomes
On completion of this unit a learner should:
1 Understand the legal requirements for a valid contract
2 Understand the meaning and effect of terms in a standard form contract
3 Understand the impact of statutory consumer protection on the parties to a contract
4 Know the remedies available to the parties to a contract.
In order to pass this unit, the evidence that the learner presents for assessment needs to demonstrate that they
can meet all the learning outcomes for the unit. The assessment criteria for a pass grade describe the level of
achievement required to pass this unit.
To
P1
P2
P3
P4
P5
P6
P7
achieve a pass grade the evidence must show that the learner is able to:
identify the legal criteria for offer and acceptance in a valid contract
explain the law in relation to the formation of a contract in a given situation
describe the law with respect to misrepresentation in a given situation
describe the meaning of terms in a standard form contract
explain the effect of terms in a contract
explain the law with respect to consumer protection in given situations
describe the remedies available for breach of contract.
Unit content
1 Understand the legal requirements for a valid contract
Contracts: definition; types; verbal, written, standard form; offers – distinguishing invitations to treat;
counter-offers; communication of offers; acceptance; the battle of the forms; consideration and the
Contracts (Rights of Third Parties) Act 1999; application of requirements
Factors which invalidate/vitiate: misrepresentation
2 Understand the meaning and effect of terms in a standard form contract
Sale of goods: definitions of goods; implied terms for title, description, fitness, satisfactory quality; sample
under Sale of Goods Act 1979 (as amended)
Supply of goods and services: definitions; implied terms for supply of goods and services, work and materials;
implied terms for hire of goods under Supply of Goods and Services Act 1982
3 Understand the impact of statutory consumer protection on the parties to a contract
Types of term: express, implied; distinction between express and implied
Impact of contractual terms: time for performance and rejection of goods; price variation; payment terms;
quality and quantity of goods delivered; reservation of title; exclusion clauses; Standard form contracts
Impact of statutes on common contractual terms: up-to-date legislation eg Unfair Contract Terms Act 1977,
Unfair Terms in Consumer Contract Regulations 1994, the Consumer Protection (Distance Selling)
Regulations 2000 (as amended); the Electronic Commerce (EC Directive) Regulations 2002
4 Know the remedies available to the parties to a contract
Remedies: damages; liquidated and unliquidated; mitigation of loss; rejection; lien, resale; reservation
of title; injunctions; specific performance
Application of remedies: courts; time limits
Unit 26: Managing Business Information
The aim of this unit is to enable learners to understand the importance of providing accurate business information
to support decision making in an organisation, and to develop the skills and knowledge needed to manipulate data
management software to produce information in a suitable format.
The phrase ‘information economy’ identifies the importance that organisations attach to information as they go
about their day-to-day business. Courier companies can locate all shipments at any time and keep their customers
fully informed of a consignment’s whereabouts and its scheduled delivery time. Supermarkets can identify fast
selling lines and restock quickly. Managers’ diaries can be synchronised and teleconference meetings can be set up
with participants from around the word.
It is important, therefore, for learners to appreciate that business information is used to obtain a competitive
advantage and promote efficiency, and it is obtained from various sources. Organisations generate information
internally through their business activities, recording details of products purchased, made and sold, and the
associated costs. The size, composition and cost of the workforce are known. The business environment changes
constantly and organisations need to respond to these changes in order to adapt their practices and survive.
Markets, technology and business cultures are evolving continuously. For example Reuters moved
from being a financial information provider and news agency to now also providing electronic trading systems
– both hardware and software. Businesses use the information they have to manage what is currently happening in
the organisation but also to plan for the future and ensure their survival.
The first part of this unit explores the importance of business information and looks at its purpose and uses for
business decision making. Factors that influence this such as legal issues, are investigated. The second part of the
unit focuses on how technological change has provided an infrastructure for processing information that now
provides organisations with a wide range of accurate and up-to-date information. Learners will have the
opportunity to develop skills and knowledge in manipulating information in data management software to produce
information in suitable formats to help with decision making.
Learning outcomes
On completion of this unit a learner should:
1 Understand the importance of information to organisations
2 Know how organisations use business information
3 Be able to maintain an information system
4 Be able to produce information to support decision making in organisations.
In order to pass this unit, the evidence that the learner presents for assessment needs to demonstrate that they
can meet all the learning outcomes for the unit. The assessment criteria for a pass grade describe the level of
achievement required to pass this unit.
To
P1
P2
P3
P4
P5
P6
achieve a pass grade the evidence must show that the learner is able to:
describe the characteristics of the information needed in a selected organisation
explain the sources of information needed in a selected organisation
describe how information is used for different purposes in a selected organisation
describe the legal issues an organisation must consider in using business information
input and manipulate the data entered into data management software
produce information in suitable formats to support business decision making.
Unit content
1 Understand the importance of information to organisations
Characteristics: type of information (qualitative, quantitative, primary, secondary); quality of information
(valid, complete, accurate, timely, fit-for-purpose, accessible, cost-effective, intelligible)
Sources of information: internal (financial, personnel, marketing, purchasing, sales, manufacturing); external
(government, trade groupings, commercially provided, databases, research)
2 Know how organisations use business information
Purposes: record transactions and activity; monitor activity; control activity; coordinate activity; plan activity;
analysis (patterns, trends); prediction (extrapolation, what if?)
Information use: operational support; decision making (operational, tactical, strategic); administration;
promote efficiency; develop competitive advantage; increase market share; legal issues (the Data
Protection Act 1998, the Freedom of Information Act 2000, the Computer Misuse Act 1990);
ethical issues (privacy, access, organisational IT protocols, codes of practice from the Information
Commissioner’s Office (ICO) and the British Computer Society (BCS))
3 Be able to maintain an information system
Input data: insert; delete; amend; data types (alpha, numeric); records; files; securing data
Manipulate data using software: add; subtract; combine; extract; combine; link; software, eg database,
spreadsheet, accounting
4 Be able to produce information to support decision making in organisations
Information format: written; tabular; graphical; images; paper based; presentation; electronic; screen based
(email, diary, calendar); communication channels; audience needs; communication protocols
Decision making: operational; tactical; strategic
Unit 39: International Business
The aim of this unit is to introduce learners to the role played by international business. The importing and
exporting of goods and services are important economic activities to any economy. Learners will study national and
international businesses and the framework in which they operate.
Apple’s iPods and insurance from Aviva are products that have a global identity. Brand names are often recognised
across the world as organisations seek to increase demand for their products, by expanding from a national to an
international market. Initially, the nature of the international business environment will be considered by looking at
the size and importance of international markets. Governments encourage businesses to trade internationally but
protectionism is also common. International business is regulated by national governments and also by
transnational trading arrangements promoted by trading blocs such as the European Union and global agencies
such as the World Trade Organization (WTO).
Both large and small businesses trade internationally but this is often more complex than doing business in the
home market. Consideration will be given to the issues facing a business when it expands its operations
internationally. However, additional insight is provided by considering issues faced by overseas businesses as they
have expanded their operations by moving into the UK market. Tesco has had very limited success in extending
operations into France but has had more success in Malaysia and China. The business environment needs to be
considered with its mix of political, economic and legal issues. Cultural questions about how best to operate in
international settings, as individual markets have unique characteristics that need to be understood before they
can be exploited, need to be explored.
Support is available to businesses that want to work internationally. It includes trade delegations, voluntary
industry-specific groups, government assistance and help from commercial businesses for example how to finance
international business activities. Working internationally requires businesses to look at strategies and techniques
that promote international working. Should factories be built or should local partnerships be developed using local
businesses in joint ventures or licensing deals? Activities such as production, sales, marketing, human resource
management and purchasing will need to be adapted. Each venture needs to be considered on its own merit. The
next time you have a drink on holiday, read the label on the bottle it comes in and think about the significance of
the production information.
Learning outcomes
On completion of this unit a learner should:
1 Understand the international business environment
2 Know how cultural differences affect international business
3 Know how international business is financially supported
4 Understand the strategies used by international businesses.
In order to pass this unit, the evidence that the learner presents for assessment needs to demonstrate that they
can meet all the learning outcomes for the unit. The assessment criteria for a pass grade describe the level of
achievement required to pass this unit.
To
P1
P2
P3
P4
P5
P6
achieve a pass grade the evidence must show that the learner is able to:
explain the international business environment in which a selected organisation operates
describe the mechanisms that regulate international trade
describe how the environment and culture of another country affects a business operating internationally
describe how the monetary environment affects businesses that operate internationally
identify why businesses operate internationally
explain the business strategies used by a business operating internationally.
Unit content
1 Understand the international business environment
International business: economic value of international trade (to individual businesses, to the economy);
imports; exports; balance of trade; balance of payments; value of world trade; trends; globalisation;
multinational corporations; competition; economies of scale; labour movement; foreign investment;
developing countries
Economic activities that encourage/restrict international trade: free trade; barriers to trade; embargoes;
quotas; tariffs; economic blocs, eg European Union; World Trade Organization (WTO)
2 Know how cultural differences affect international business
Environment: ideology; political; economic; technology; social; legal; ethics, environmental issues
Culture: language; religion; values; attitudes; customs; manners; education; material culture; institutions;
infrastructure; work attitudes
3 Know how international business is financially supported
International monetary environment: foreign exchange system; the European Monetary System (EMS);
balance of payments; international money markets; international banking; trade credit; letters of credit;
Export Credit Guarantees; forfeiting; factoring; bills of lading; international debt; methods of protection
against exchange rate fluctuations
Trade support: government agencies; trade associations; insurance; legal issues
4 Understand the strategies used by international businesses
Reasons: growth (value, volume, market coverage); diversification; emerging markets; economies of scale;
cost reduction; taxation regime; legal and regulatory regime
Marketing: identifying markets; data analysis; marketing information systems; promotion; advertising;
adaptation/standardisation of product and promotion, licensing, co-production, joint ventures
Production and distribution: standardisation of products; product differentiation; product pricing; distribution
channels; transportation; supply chain; logistics
Human resources management: staff; foreign personnel; expatriate personnel; labour expertise; labour
mobility; recruitment; induction and training; cross-cultural training
Technology: internet; industrial development; transfer of technology; adapting technology to conditions