NATIONAL QUALIFICATIONS CURRICULUM SUPPORT
Business Management
Business Enterprise
Activities and Solutions
[HIGHER]
The Scottish Qualifications Authority regularly reviews
the arrangements for National Qualifications. Users of
all NQ support materials, whether published by
Learning and Teaching Scotland or others, are
reminded that it is their responsibility to check that the
support materials correspond to the requirements of the
current arrangements.
Acknowledgement
Learning and Teaching Scotland gratefully acknowledges this contribution to the National
Qualifications support programme for Business Management.
The publishers gratefully acknowledge permission from the following sources to reproduce
copyright material: ‘Smells of the City’, ‘Offshoring starts to hit jobs’, ‘Green bandwagon’ all
© The Sunday Times; ‘Nissan’ (adapted from two articles, 22 October 1999 and 4 July 2006),
‘Wi-Fi’ (September 2006) © BBC News website; WHSmith text and image © WHSmith PLC.
Images with ‘Smells of the City’ and ‘Green bandwagon’ © 2007 Microsoft Corporation
Every effort has been made to trace all the copyright holders but if any have been inadvertently
overlooked, the publishers will be pleased to make the necessary arrangements at the first
opportunity.
© Learning and Teaching Scotland 2007
This resource may be reproduced in whole or in part for educational purposes by educational
establishments in Scotland provided that no profit accrues at any stage.
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BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
© Learning and Teaching Scotland 2007
Contents
Business in contemporary society
Activities
Solutions
4
11
Business information and ICT
Activities
Solutions
19
29
Decision-making in business
Activities
Solutions
39
44
Internal organisation
Activities
Solutions
50
55
BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
© Learning and Teaching Scotland 2007
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BUSINESS IN CONTEMPORARY SOCIETY
Business in contemporary society
Activities
Activity 1
(a)
Identify the three sectors of industry.
(b)
Describe each sector, giving an example of a local firm in each case .
(c)
Identify three objectives for each firm.
(d)
Explain how the importance of each sector of industry has changed o ver
the past 20 years.
Activity 2
Your friend tells you she wishes to become a self-employed hairdresser.
Describe two types of business organisation she might establish to achieve
this aim, pointing out at least two advantages and two possible disadvantages
of each.
Activity 3
Explain why a local authority might find it cheaper to contract out the provision
of school meals to a profit-making organisation rather than provide them itself.
Activity 4
Explain the way in which the objectives of an NHS hospital differ from those
of a private hospital.
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BUSINESS IN CONTEMPORARY SOCIETY
Activity 5
(a)
Identify at least three examples of stakeholders in two different types of
organisation.
(b)
Identify and explain three reasons why their aims might conflict.
Activity 6
Read the case study below and then answer the questions that follow.
Ellygance
The little town of Dollar nestling in the Ochil Hills was an ideal location for
Elly Parks. Over the years she had built up a steady flow of income from going
round people’s houses giving them facials, pedicures and manicures. When a
small decorator’s shop on the main street became available for rental, Ellen
jumped at the chance to establish her presence right in the town centre. Dollar’s
population of 4,000 was quite affluent and there was no other beauty salon in
the area. Glasgow and Edinburgh, important centres for picking up new
products and ideas, were within an hour’s drive, and Stirling and Dunfermline
could be reached within twenty minutes. Elly’s customers all encouraged her
and promised to support her in her new premises. Dave, her husband, was a
signwriter and enthusiastically embarked on creating a colourful design,
displaying the name ‘Ellygance’ surrounded by daisies for the shop front.
Meanwhile Elly’s mum and dad painted all the walls and put up a curtain
dividing the front of the shop from the ‘treatment room’ at the back. Her bank
manager agreed to lend her £1,000 and she borrowed a further £5,000 from her
parents. Elly was pleased about this as she did not want to shar e the ownership
of the firm. Three days after opening with a glass of sparkling wine for anyone
who came into the shop for a look, Elly was visited by the Environmental Health
Officer. He explained that special regulations regarding hygiene applied to
premises where treatments such as electrolysis were offered. This would
involve Elly spending a further £5,000 to upgrade the premises which were only
rented anyway. Reluctantly Elly decided to abandon her plans for more
sophisticated services and to revert to offering the basic treatments she had
formerly done in people’s homes. Naturally she had to increase her prices quite
a bit to cover the extra costs of rent, rates and insurance on the premises.
Six months after the grand opening Elly and Dave drank the final glass of
‘bubbly’ as they closed the door on the salon for the last time and put the key
through the letterbox. ‘I can’t understand what went wrong,’ Elly said sadly.
‘Where did all the customers go?’
BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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BUSINESS IN CONTEMPORARY SOCIETY
1.
Identify at least three objectives which Elly is likely to have had in
setting up her business.
2.
What type of business did Elly set up? Explain three reasons for her
choosing this form of business organisation.
3.
In which sector of industry was Elly operating? How has that sector of
industry changed in terms of importance in the past decade?
4.
Describe three stakeholders in Elly’s business, explaining their
influence.
5.
Describe three internal and three external constraints facing Elly’s
business.
6.
Identify three reasons for the failure of Elly’s business.
7.
Outline two alternative strategies that might enable Elly to start up her
business again and run it more successfully.
Activity 7
Draw up a table as shown below, and then list the names of everyone in your
class. Find out what job/career they have in mind to follow and complete the
table. Indicate which sector of industry – primary, secondary or tertiary – the
career would be classed as.
Name
Career
Sector of Industry
Describe and justify your findings e.g. the number for each sector, explaining
why there are so few, if any, in a specific category and why most people want
to work in another category.
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BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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BUSINESS IN CONTEMPORARY SOCIETY
Activity 8
Read the case study below and answer the questions which follow.
McDonald’s has had great success with franchises in Scotland, Wales and
Northern Ireland, but until 1994 most of their branches in England were
company-owned. In that year they embarked on a plan to double the number
of franchises within ten years, and by 1997 almost half of McDonald’s outlets
were operating as franchises. McDonald’s takes great care in selecting its
franchisees. Each year it receives thousands of enquiries about franchises.
Before even being considered as a franchisee candidates have to work in a
McDonald’s for several days. Training for franchisees takes 9 months and
includes a stint at Hamburger University in London where, at their own
expense, franchisees learn how to motivate their staff and satisfy customers
in the McDonald’s way. Franchisees use McDonald’s ma terials and
equipment so that the meals offered are of a standard quality in all outlets. In
return franchisees have to finance 40% of the cost of setting up their branch,
and pay McDonald’s an annual royalty.
1.
Describe the advantages of becoming a McDonald’s franchisee.
2.
Identify three advantages to McDonald’s of franchising some of its
outlets.
3.
In which sector of industry is franchising most common? Give
examples of actual businesses and explain why this sector is
particularly suited to being organised via franchises.
Activity 9
Many organisations offer homeworking, teleworking and flexible work
patterns. This may be due to socio-cultural or technological changes.
Discuss the possible benefits of these changes to the employee and the
employer.
BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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BUSINESS IN CONTEMPORARY SOCIETY
Activity 10
1.
Choose an organisation which belongs to the private sector e.g. Boots
PLC, Marks & Spencer PLC or Tesco PLC. Explain in your own words
why this organisation belongs to the private sector. Outline who the
owners are, and describe how it may have obtained its finance.
2.
Repeat this exercise for an organisation of your choice from the public
sector e.g. your local council, and again for an organisation from the
voluntary sector e.g. Oxfam.
3.
Look again at the three organisations of your choice and compare them,
making reference to the differences in their activities, ownership and
ways of obtaining finance.
Activity 11
Read the following case study, and answer the questions below.
W H SMITH PLC
W H Smith originated as a news vendor business and
was established in London in 1792 by Henry Walton
Smith and his wife Anna. After their deaths, the
business was taken over by their son William Henry
Smith and in 1846 became W H Smith & Son when his
son, also William Henry also joined the firm. The firm
took advantage of the railway boom by opening
newsstands on railway stations, starting with Euston in
1848. They also made use of the railways to become
the leading national distributor of newspapers. It is best known for i ts chain
of high street and railway station shops selling books, stationery, magazines,
newspapers and entertainment products. W H Smith, is now quoted on the
stock exchange, with its headquarters in Swindon, England. It was a major
distributor of newspapers and magazines but demerged this division of the
business in September 2006.
For many years, the main rival to both W H Smith’s small railway -station
outlets and their news distribution business was John Menz ies; however, in
1998, W H Smith bought all retail outlets of Menzies.
W H Smith Retail is divided into W H Smith High Street, W H Smith Travel
Retail and W H Smith Direct. The High Street division is responsible for the
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BUSINESS IN CONTEMPORARY SOCIETY
operation of the company’s 542 high street stores across the UK. The Trav el
Retail division is responsible for the operation of the company’s 200 stores at
railway stations and airports throughout the UK. The W H Smith Direct
division is responsible for the company’s e -commerce website
whsmithplc.co.uk, which sells goods similar to those for sale in W H Smith
high street shops.
The main aim of the organisation is to supply high quality products that are
produced by people working in decent conditions with minimal possible
impact on the environment. In recent years the organis ation has introduced a
widespread range of measures to improve its corporate responsibility e.g.
 50 per cent of the electricity purchased comes from renewable sources
 delivery vehicles which are less than 80% full wait until the next day; they
have introduced double deck trailers and larger capacity store delivery
vehicles to deliver further efficiencies
 the W H Smith Group achieved a 6% reduction in volumes of waste sent to
landfill, through reductions in the amount of packaging being used on
products; the majority of the waste generated in high street stores is
cardboard.
Source: http://www.whsmith.co.uk, © W H Smith PLC
1.
What sector of business does W H Smith operate in?
2.
What type of business organisation is W H Smith now?
3.
Justify changing from a partnership to this type of business.
4.
In 1998 W H Smith bought all the retail outlets of John Menz ies. What
type of integration is this? Justify your answer.
5.
Explain the possible advantages of this type of growth.
6.
Why did it demerge its distribution of newspapers and magazines?
7.
Explain why the organisation has decided to sell goods through a
website.
8.
Describe the external factors that may have pressured W H Smith to
make the changes described in the case history.
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BUSINESS IN CONTEMPORARY SOCIETY
9.
Explain why W H Smith has corporate responsibility as one of its
business objectives.
10.
Identify two other business objectives which the organisation might
choose and explain how these might be achieved.
11.
Multinationals, such as Ford and Sony, operate in many countries.
Discuss the benefits of operating as a multinational.
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BUSINESS IN CONTEMPORARY SOCIETY
Solutions
Activity 1
(a)
The three sectors are primary, secondary and tertiary.
(b)
Examples will depend on local firms chosen but suggested examples
are:
Primary: e.g. farmer, oil extractor, open cast coal mine
Secondary: any manufacturing firm, e.g. IBM, Marconi
Tertiary: any service organisation, e.g. school, hairdresser, computer
service provider.
(c)
Objectives will also depend on firms chosen. Suggestions could be:
Farmer: satisficing (obtain a satisfactory solution), survival, being
environmentally friendly
Manufacturing firm: growth, sales maximisation, meeting personal aims
of managers
School: providing a service, social responsibility to society as a whole
and to community (which could count as two objectives).
(d)
Generally, the tertiary sector has become more important over the last
20 years in terms of share of output and employment. The
manufacturing sector has declined in terms of output and employment
(de-industrialisation). The primary sector in the UK has ch anged (e.g.
importance of oil) but other areas (e.g. agriculture, coal mining) have
declined.
BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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BUSINESS IN CONTEMPORARY SOCIETY
Activity 2
Possibilities
Advantages
Disadvantages
Sole trader
Easy to set up; cheap to
establish; owner has
complete control; owner
takes all profits
Difficult to raise finance;
proprietor has sole
responsibility for all financial
commitments
Private limited
company
Limited liability; separate
entity from owner; can keep
some parts of accounts
private
Takes time and money to set
up; must file accounts with
Registrar of Companies
Activity 3
Reasons for contracting out may be:
 contractor may be large and be able to buy ingredients in bulk.
 contractor may be able to produce food in bulk and thus more cheaply.
 contractor may have specialist expertise which allows meals to be
provided more cheaply.
Activity 4
An NHS hospital will be non-profit making and thus its objectives will centre
on provision of service, excellence in any area of medical speciality, serving
the interests of the community, ensuring it keeps within budget. A private
hospital will be expected to have a profit objective ( e.g. maximising profits,
satisficing) but may also have social responsibility -type objectives.
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BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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BUSINESS IN CONTEMPORARY SOCIETY
Activity 5
(a)
Students could pick any two organisations such as:
Organisation
Stakeholders
Aberdeenshire Council
Council taxpayers; residents of the area;
government (who also provide funds)
Scottish & Newcastle Brewers
Shareholders, managers, customers
(b)
Aims might conflict because:
 Stakeholders are involved with the organisation in different ways,
e.g. residents of Aberdeenshire may want services which the council
taxpayers do not wish to pay for.
 They may have different objectives, e.g. shareholders may want
profit whereas managers may wish higher salaries.
 They may have a different level of commitment, e.g. customers can
go elsewhere whereas residents of Aberdeenshire cannot change the
existence of the council, although they can influence its composition.
Activity 6
1.
2.
3.
4.
5.
6.
7.
Growth, make a profit, provide a service, ru n her own business, etc.
Sole trader – easy to set up; Elly has complete control; she takes all the
profits.
Tertiary – it has grown in terms of share of output and employment in
the UK.
Herself – the commitment and standard of her own work influe nces the
success
Her parents – provided capital
Her customers – made the decision to purchase or not to purchase.
The bank – provided finance
Internal constraints – availability of finance from her family, etc.; size
of the premises; facilities on the premises; she doesn’t own the
premises, etc. External constraints – Environmental Health; number of
potential customers; requirements for insurance; other premises in the
High Street may affect Elly’s business, etc.
Lack of market research, lack of marketing, absence of a business plan,
people not willing to come to the High Street, inability to provide more
sophisticated services, increase in prices, etc.
Market research linked into a business plan; marketing her services;
additional finance to provide all relevant equipment, etc.
BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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BUSINESS IN CONTEMPORARY SOCIETY
Activity 7
Primary and secondary – usually low numbers, if any
Tertiary – most pupils likely to choose careers in this sector
Reasons
Jobs in primary and secondary tend to be low paid and more physical, perhaps
poorer working conditions
Farming and fishing associated with long hours
Tertiary sector appears more attractive with better rates of pay and working
conditions, wider range of opportunities and promotion
Less jobs available in farming and fishing due to mechani sation, legislation,
technological advances
Greater disposable income/standard of living means people spend a larger
proportion of their income on services such as leisure and entertainment
therefore more job opportunities here
Boom in financial sector due to rising incomes and less state pension
provision
Demographic – reduction in family size coupled with an increase in the
number of women working has increased the average family’s disposable
income and led to an increase in demand for services in genera l and services
such as child care in particular; also more young earning adults still living
with parents adding to family’s total disposable income
Catering, cleaning and caring may only be seen as temporary, student work
due to low pay and less opportunities for advancement
Less jobs in manufacturing due to foreign competition and more jobs in
housing
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BUSINESS IN CONTEMPORARY SOCIETY
Activity 8
1.
A well-known name and established reputation; national advertising,
logos, etc; customer familiarity with the products; well -established
system of operation; back-up service from franchisor; availability of
new products, etc.
2.
Finance provided by others; enthusiasm and commitment of franchisees
who will see it as their own business; cheap and straightforward method
of expansion; franchisee takes much of the risk, etc.
3.
Most common in service industries where there are usually retail
outlets, such as fast food (e.g. McDonalds, Kentucky Fried Chicken);
clothing (e.g. Benetton); cosmetics (Body Shop); car hire (Budget Rent
a Car). This is because actual outlets are usually small and require few
staff – hence they can be run by an individual or a small firm. Also
local knowledge of good sites etc. may be of help and owner can
provide this. In these areas also training of franchisees is
straightforward as few technical skills are required.
Activity 9
Benefits to employee:




Can work at a time most suitable to themselves
Greater feeling of empowerment, responsibility
Can avoid rush hour traffic, commuting, less expense, time saved
Can fit in personal appointments around working hours
Benefits to employer:





More motivated workforce
Greater output/productivity
More likely to retain staff if they can have this flexibility
Less staff turnover, therefore less costs training, recruiting
Less overheads
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BUSINESS IN CONTEMPORARY SOCIETY
Activity 10
1.
An example of one organisation from the private sector e.g. Boots PLC:
Belongs to private sector as the organisation is owned by private
individuals i.e. the shareholders, with the basic aim of making a profit;
finance comes from shares sold to investors, shares sold to the public.
2.
Public sector: local authorities e.g. Aberdeenshire Council
‘Owned’ by the taxpayers, financed by council tax and funding from
central government, also funds from fees e.g. from swimming pools,
playing fields/games halls rented out; understanding shown of providing
a service and operating within a budget.
Voluntary sector: e.g. Oxfam
Not for profit organisation, it exists and aims to help charitable causes;
finance comes from donations, sales from retail shops, funds from
National Lottery; any profits made will be ploughed back into the
charity.
3.
Comparison of activities, ownership, finance bringing out difference in
the three (core notes).
Activity 11
1.
Tertiary sector, private sector, retail
2.
Public limited company
3.
 Needed more finance provided by shareholders investing money
 More financial stability
 Greater sums of capital will allow the organisation to grow
4.
Horizontal integration, both types of organisation operate in the terti ary
sector and sold similar range of products
5.




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BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
Eliminate competition
Achieve greater economies of scale
Acquire the shops, goods, staff, other assets of the other firm
More likely to be secure from a hostile take over bid
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BUSINESS IN CONTEMPORARY SOCIETY
6.
 To concentrate on its core/narrower range of activity
 Might have a higher share valuation when split into two
components, than it does when operating as one
 Avoids the costs and inefficiency of becoming too large
7.
 To attract a wider and more global market
 To be able to sell 24/7
 To keep up with competition
8.
Political – local government may have forced the organisation to
recycle more waste e.g. cardboard
Social – people wanting to shop at any time of day or night, this may be
due to flexible work patterns, customers too busy to shop in high
streets, prefer convenience of shopping online
Technological – more households have computers with internet access
so can shop online
Environmental – pressure from stakeholders to minimise the impact the
organisation has on the environment
Competitors – need to benchmark against competitors – e.g. if they are
selling online, introducing new or better products, offering goods on
‘sale’, then W H Smith would need to match this, or better it, to remain
competitive
9.




10.
(a)
Maximising profits – cut costs, sell unique products, offer better
quality or service compared to competitors
(b)
Growth – sell more goods, sell at lower, competitive prices, sell
greater range of products, open more branches/outlets, hire more
staff, greater number and range of customers
To improve its image
To make it stand out from other similar companies
Helps boost survival in the long term
Less likely to suffer from adverse publicity from pressure groups
BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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

 cheap labour may be available
 economic incentives may be offered by governments e.g. premises,
finance
 land may be available
 closer to resources required for production
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BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
11.

© Learning and Teaching Scotland 2007
BUSINESS INFORMATION AND ICT
Business information and ICT
Activities
Activity 1
When John Smith was considering replacing his car he used the following
information. Identify whether the information is primary or secondary.
 he went to his local garage and asked the opinion of the mechanics – their
information was based on feedback from their customers and what they
actually had to deal with in workshop repairs
 he read the current edition of What Car? magazine
 he took the car on a 48-hour test drive
 he listened to his neighbour and a friend who used to drive a Renault
 he researched information on the internet
 he looked at various models in the car showroom
 he studied the car manufacturer’s leaflets containing prices and technical
specifications
 he read a newspaper article written by Jeremy Clarkson
Activity 2
Compare the value of primary information with secondary in formation.
Activity 3
Identify two sources of information, other than a brochure, that would be
useful to a person choosing a holiday. Give examples of the types of
information within these sources and discuss their value for the purpose of
making a good decision in this context.
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BUSINESS INFORMATION AND ICT
Activity 4
Distinguish between internal and external information.
Activity 5
Using the eight characteristics that indicate the quality and value of
information, grade the following sources of information as either High Val ue
or Low Value for the purpose required and give a reason for your decision.
The first solution is included for you.
Source
Purpose required
High/Low
value
Reason for grade
Class registers
Identifying absent
pupils
High
Accurate, timely,
complete, appropriate,
available, cost effective,
objective, concise
The 6.30pm
weather forecast
To decide if Sports
Day is to be cancelled
The Sun
newspaper
To assess if the
Government is keeping
election promises
Which? magazine
To decide what
vacuum cleaner to buy
Conversation
between two men
on a bus
Critical analysis of
David Beckham’s
football skills
A TV advert for a
new car
To decide which car to
buy
Your Business
Education teacher
To learn about
information technology
The internet
To find out the price of
a holiday in Majorca
The Financial
Times
To decide whether or
not to sell your BT
shares
A history textbook
from the library
To find out about the
causes of the First
World War
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BUSINESS INFORMATION AND ICT
Activity 6
Organisations with e-commerce usually ask customers to register personal
details such as their name. Identify five other details which might be
appropriate.
For what purposes might an organisation use this information?
Activity 7
Describe ways an electronic database improves the effectiveness o f the
following areas of an organisation:
 Administration
 Human resources
 Marketing.
Activity 8
Identify three different advantages of an organisation having e -commerce for:
 a consumer
 an organisation.
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Activity 9
Read the following case study and then answer the questions that follow.
‘Oh no,’ cried Susie in despair, as all of her client files blew onto the floor.
‘This is the end,’ she thought. ‘I must get a better system for storing and up dating these files as I do more work for each client. I never know what stage
each job is at, or when I should be sending out an invoice – or a receipt for
that matter. It always takes me hours to sort things through – I dread doing
the books for the accountant each year.’
Susie runs a small interior design business, called ‘Sue’s Inside’. Her clients
include both businesses and private home -owners. Once a design is agreed
and the drawings completed she has to purchase the materials, paints,
wallpaper and furniture required. She also has to book and schedu le
tradesmen such as electricians, plumbers, joiners and plasterers.
During the lifetime of each job there are likely to be several bills allocated to
each client. As a rule, clients only receive one invoice on the final
completion of the job. However, in special circumstances, when for example
a specific piece of furniture is required, an individual invoice will then be
sent out for that one item.
Susie can have a number of jobs on the go at one time as they are often at
different stages in the design process.
(a)
Explain why Susie might find an integrated software package, such as
Microsoft Office, useful.
(b)
Identify three things, other than preparing letters for clients, that Susie
could use the word processing package for.
(c)
Susie has decided to approach her bank manager to request a loan to buy
a van for use in the business. She can estimate what her income is
likely to be, going on the information from the last three years’ final
accounts. She is also convinced that the van will increas e the number of
jobs that she can take on – and therefore increase her profits, but is
unsure by how much. She is also not sure if she should ask for the loan
over a three-year or five-year period.
(i)
(ii)
22
What software package could she use to help her to set out her
financial situation for the bank manager to see?
What feature of this software is particularly useful to Susie at the
moment?
BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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BUSINESS INFORMATION AND ICT
(iii) Why should she keep individual client accounts on a package like
this?
(d)
In a client database, Susie would use the fields ‘Name’, ‘Address’ and
‘Telephone Number’. Identify three other fields that she might wish to
use. Justify the use of each field.
(e)
Susie has decided to use a Network Service provider and link her
computer to the internet.
(i)
(ii)
Why might she find this very useful for purchasing materials and
furniture for the jobs she is working on?
How might she use the internet to market her business?
(f)
Why might a personal organiser improve Susie’s personal effectiveness?
(g)
Identify one other communications tool that Susie might find useful and
say why.
Activity 10
Crime on the internet and crime using computers has soared e.g. data
espionage, credit card theft, fraud, identity theft, computer hackers, computer
worms.
Describe how organisations can secure their networks and reassure customers
that making payments over the web is also secure.
Activity 11
The ability of organisations to store, process and communicate vast amounts
of information has led to an increase in legislati on designed to protect
individuals.
Identify and describe three pieces of legislation designed to protect
individuals from misuse of information. Your description should include at
least two facts about each piece of legislation.
BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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BUSINESS INFORMATION AND ICT
Activity 12
Read the following article and then answer the questions below.
WI-FI
Wi-fi hotspots are spreading across the UK, with blanket wi -fi zones now
being rolled out in many city centres. Operators are promising wireless
surfing at the touch of a button – from the park, the bus or the street corner.
Wi-fi means Wireless Fidelity, essentially a way of
transmitting data over a wireless network. It allows
you to connect to the net at broadband speeds
without cables, as long as you have the right
equipment and, in most cases, a regular internet
service provider and a wi-fi account.
Norwich city is pioneering a free wi -fi project which covers three sectors and
its city centre. The county hall, all educational establishments and the city
centre all have wi-fi access. The £1.1m, 18 month pilot has been backed by
the East of England Development Agency and run by Norfolk County
Council.
More than 200 antennas are positioned around the city,
mainly on lampposts, creating blanket wi -fi coverage.
The city is one giant hotspot. People have been accessing
the net from laptops, PDAs, Playstation portables, mobile
phones and even games consoles.
So far, wi-fi has been a service that is most useful for business people who
need to work on the move; public service workers w ho are working ‘off site’
use the system to save them coming back to their offices and to link into
information systems back at their base e.g. maintenance workers, doctors, or
midwives.
Norfolk local authority is interested to see how people use the netw ork.
“What we want to explore is the potential for public service workers out and
about to save coming back to offices, and to link into information systems
back at their base.” There will be many benefits in terms of economic
development, and the speed of inputting and retrieving information which
will be of great benefit for the public and public service workers.
Source: http://bbc.news.co.uk September 2006
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BUSINESS INFORMATION AND ICT
1.
2.
3.
4.
5.
6.
Justify the use of the internet to an organisation.
Compare the objectives of a public sector organisation such as Norfolk
County Council, and a private sector organisation such as the Holiday
Inn.
Identify and describe three pieces of software that will help
organisations to make more effective decisions.
Describe, using examples, the type of inf ormation which would be
included on a website for a large organisation such as the Holiday Inn.
The wi-fi project was financed partially by a grant from the East of
England Development Agency. Justify the use of two other long-term
sources of finance.
Discuss the advantages and disadvantages of an organisation
introducing new technology.
Activity 13
Read the following article and then answer the questions below.
SMELLS OF THE CITY
What is the smell of a city like New
York?
One ambitious entrepreneur has come
up with a scheme to improve the way
the Big Apple hits the nose. Laura
Robertson, who lives in New York,
has come up with the idea of creating
luxury fragrances that capture the
individual spirit and creativity of
each neighbourhood – from Chelsea
to Park Avenue and Gramercy Park.
She has called the collection Bond
No 9 after the address of the
company’s Manhattan headquarters.
Robertson hired four French
perfumers to devise the fragrances.
The Central Park fragrance, for
example, to commemorate the city’s
greenery, is made of fresh basil and
mandarin leaf and lime blossom, “to
transport its wearers to a lush
sensory landscape”.
Park Avenue, in
reality a wealthy
uptown district
oozing class, is a
serious mix of
camomile,
narcissus and vanilla. West
Broadway is a bouquet of lime, lily of
the valley and sheer musk. In
September Robertson launched Little
Italy, a perfume that mingles exotic
oranges and other citrus flavours. A
slim 3.4 oz bottle of one of her
fragrances costs $168 (£94).
So if you are a budding entrepreneur
with a nose for a good idea and think
that you could capture the essence,
of, say, Edinburgh, Glasgow or
Aberdeen in a bottle, now might be a
good time to give it a try.
Source: Sunday Times, August 2004
© The Sunday Times
BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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BUSINESS INFORMATION AND ICT
1.
When Laura came up with her idea she used the following information:




newspaper articles
government statistics
French perfume manufacturers costing information
personal interviews with members of the public in New York .
Identify each source and type of information she used.
2.
Describe the value and reliability of the information identified for
Laura’s needs.
3.
Describe the characteristics of an entrepreneur.
4.
Why is it necessary for organisations to come up with ideas for new
products?
5.
Describe three sources of finance for starting up a business.
6.
For each source identify one advantage and one disadvantage.
7.
Identify two sources of advice for someone starting up a business.
Outline what they could offer.
8.
Why do you think customers buy the perfume at the very high price of
£94?
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BUSINESS INFORMATION AND ICT
Activity 14
Read the following article and then answer the questions below.
OFFSHORING STARTS TO HIT JOBS
It is 7pm on a hot evening in
Bangalore, southern India. On the
city’s outskirts near the airport,
the noisy streets are full as
rickshaws weave through the traffic
and crowds of people head home.
Reuters is to axe 20
journalists in US and
Europe as it expands its
base in Bangalore …
Inside the office the company’s six
reporters face each other across
open-plan hot desks dotted with black IBM
computer screens, ready for work. When working of fsite all Reuters
reporters use blackberries.
Reuters announced its plans to increase their number to 40 by the middle of
next year, leading directly to job losses in the US and Europe. In Bangalore,
Reuters journalists will be paid a quarter of the amou nt staff could expect in
Britain. This is the first time the impact of offshoring has been felt in an
industry that has generated much of the hype surrounding it – the media.
David Schlesinger, the company’s global managing director said: “My hope is
that people won’t notice where a story is written. I don’t think you can tell
whether a story is written or edited in London, New York or Bangalore.”
Reuters remote correspondents represent the latest in a long line of jobs, from
call-centre operators to radiologists, architects, lawyers and pure scientists,
that have been shipped offshore in recent years.
Source: Sunday Times, August 2004
© The Sunday Times
BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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BUSINESS INFORMATION AND ICT
1.
Identify the sector of industry in which Reuters operates.
2.
Identify and describe two other sectors of industry and explain why
they have seen falling employment.
3.
Identify and describe three different means of ICT which allow people
working in India to communicate with customers globally.
4.
Explain why the organisation decided to offshore its jobs to In dia.
5.
Customers, employees and managers are stakeholders in Reuters.
Explain their interest in the organisation’s decision to locate in India.
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BUSINESS INFORMATION AND ICT
Solutions
Activity 1
Primary
Secondary
opinion of the mechanics, feedback
from their customers, workshop
repairs
current edition of What Car?
magazine
48-hour test drive
internet
listened to his neighbour, and a
friend
newspaper article
looked at various models in the car
showroom
he studied the car manufacturer’s
leaflets containing prices, etc
Activity 2 – make sure student’s answer is a comparison
Primary more valuable as source can be traced, verifiable, and can go back to
it for further detail/explanation whereas this may not be the case with
secondary.
Primary is more expensive and time consuming to collect and analyse:
however, secondary is cheaper to obtain and much quicker to collect .
Primary is more reliable, useful and not available to competitors, therefore
will give a competitive edge, whereas secondary may be biased, of a gene ral
nature and available to all.
Primary is for a specific purpose so therefore very useful, secondary may not
be as useful.
Primary not entirely valuable on its own, secondary info will give a fuller
picture of external factors.
Primary is more likely to be up to date compared to secondary.
BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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BUSINESS INFORMATION AND ICT
Activity 3
Friends – oral, qualitative
Travel agents – oral, quantitative, qualitative
Internet – written, pictorial, quantitative, qualitative
Oral information from a friend may be subjective opinions, an easy w ay of
getting information, probably first-hand therefore valuable, trustworthy.
Travel agents’ information is relevant and wide-ranging but may be out-ofdate and collected from a secondary reference source, cheap and easy to
collect, may be biased.
The internet will usually give a wide variety of information, difficult and
time-consuming to sort through, should be up to date, very convenient to
collect.
Activity 4
Internal information comes from within an organisation whereas external is
sourced from outwith.
Internal information is verifiable and reliable (its accuracy level is known) ;
however, external information’s reliability cannot always be verified .
Internal information is not usually available to competitors but external
information is available to competitors.
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BUSINESS INFORMATION AND ICT
Activity 5
Source
Purpose required
High/Low
value
Reason for grade
Class registers
Identifying absent
pupils
High
Accurate, timely, complete,
appropriate, available, cost
effective, objective, concise
The 6.30pm
weather
forecast
To decide if
Sports Day is to
be cancelled
Low
Is appropriate, available, cost
effective, objective, concise
Is NOT accurate, timely, complete
The Sun
newspaper
To assess if the
Government is
keeping election
promises
Low
Is timely, appropriate, available,
cost effective, concise
Is NOT accurate, complete,
objective
‘Watchdog’
To decide what
vacuum cleaner to
buy
High/Low
Is timely, appropriate, available,
cost effective, concise, accurate
May not be objective, complete
Conversation
between two
men on a bus
Critical analysis
of David
Beckham’s
football skills
Low
Is timely, available, cost effective
May not be objective, complete,
concise, accurate, appropriate
A TV advert
for a new car
To decide which
car to buy
High/Low
Is timely, available, cost effective,
accurate
May not be objective, complete,
concise, appropriate
Your Business
Studies
teacher
To learn about
information
technology
High
Is timely, available, cost effective,
accurate, objective, complete,
concise, appropriate
The internet
To find out the
price of a holiday
in Majorca
High
Is timely, available, cost effective,
accurate, concise, appropriate
May not be objective, complete
The Financial
Times
To decide whether
or not to sell your
BT shares
High
Is timely, available, cost effective,
accurate, concise, appropriate
May not be objective, complete
A history
textbook from
the library
To find out about
the causes of the
First World War
High
Is timely, available, cost effective,
accurate, concise, appropriate
May not be objective, complete
BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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BUSINESS INFORMATION AND ICT
Activity 6
Address, age, phone/mobile number, email address, salary, interests,
occupation
To establish a database of existing or potential customers
To send information of relevant offers
To pass on or sell to other companies
Activity 7
Administration – improves the security of information with password
protection; rapid access to information; space may be saved
Human resources – details of staff can be kept up-to-date; allows
interrogation, searches for training updates
Marketing – allows target marketing; may be integrated with Word to allow
mail merge to customers
Activity 8
A consumer:




up-to-date information on company products available at a convenient time
can buy online, greater convenience, may be cheaper
compare prices, products between organisations
can email organisation with queries
An organisation:
 can show pictures, detailed information of products which will encourage
sales
 advertise special offers, deals
 provide background information on organisation
 advertise job vacancies
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BUSINESS INFORMATION AND ICT
Activity 9
(a)
It would allow her to use word processing, database, spreadsheet and
communications packages all from the same software. Integrating the
packages means that e.g. mail merge uses details from a database to
produce circular letters in Word. Information can be easily pasted
between packages.
(b)
1.
2.
3.
Word processing work schedules
Word processing contracts for tradesmen
Word processing advertising leaflets
(c)
1.
A spreadsheet package
2.
Its ability to do ‘what if?’ calculations
3.
It is easy to enter data as required and for each customer’s account
to be automatically updated when this is done. This will prevent
Susie from losing track of what is outstanding on each account and
will help her to note when payments are made.
1.
Date contract agreed – to let her see how quickly work was
progressing on each job from the contract date.
2.
Date tradesmen started and finished work – would allow her to
keep a check on the efficiency and reliability of the tradesmen she
uses in terms of the time they take to complete each job.
3.
Special purchases – would allow her to identify easily any
customers who had bought specialist or rare items of furniture.
1.
She can find out about furniture by visiting various websites. She
can also make purchases online.
2.
She could establish her own website and give an e-mail address
where people can contact her.
(d)
(e)
(f)
It would allow her to plan out what she had to do each day/week and
record all appointments she makes – date, time, place and person
involved.
(g)
Fax machine – it can transmit exact copies of drawings or sketches to
clients for their approval.
or
CAD software to help her with design and drawing of plans.
BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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BUSINESS INFORMATION AND ICT
Activity 10
 Encrypt data before transmission (putting data into code so t hat it makes
no apparent sense); display padlock symbol on website
 Use techniques which scramble the data – decryption – the data is then
decoded at the receiving end
 Use of passwords and access level restrictions on computers
 Use of firewalls that filter incoming messages from viruses and prevent
hacking
 Tough penalties for offenders, inside and outside the organisation e.g.
prosecution under the Computer Misuse Act; prosecute criminal activity of
employees
 Use and update anti-virus software
 Use password protected screensavers
 Advise customers to use a www card to pay for online shopping – here
they can pre-load a set amount onto their card for their online shopping
(removes the possibility of huge losses that could occur if criminals gained
access to the shopper’s bank or credit card details).
Activity 11
 Computer Misuse Act 1990 – protects against unauthorised access to
computer material without permission e.g. looking at someone else’s files;
protects against modification of computer material e.g. creating, spreading
a virus, changing exam results; protects against accessing computer
material with intent to commit further criminal offences
 Freedom of Information Act 2000 – regulates information held by public
organisations e.g. local authorities, doctor’s surgery; a person making a
request to see information should receive a reply within 20 days; claims
for compensation can be made if an individual suffers damage because of
inaccuracy of personal data held or unauthorised disclosure of information
 Data Protection Act 1998 – regulates how your personal information is
used and protects you from misuse of personal details; the organisation
must register the purpose they hold the information for; must obtain the
information fairly and lawfully; information must be accurate and up-todate.
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BUSINESS INFORMATION AND ICT
Activity 12
1.






2.
public sector
3.
research of competitors’ products, prices, information
global communication available 24/7
speed of accessing, receiving, handling and sending information
access to broadband and wi-fi
website can provide information to customers
online buying and selling
private sector
usually ‘not for profit organisation’ want to keep
within a budget, want to provide a service
want to maximise profits
public sector
private sector
want to provide a service
want to provide a service
public sector
private sector
want to grow by providing more services e.g. beds
for a hospital
want to grow by selling more, open more stores
public sector
private sector
money usually ploughed back into community
profits paid out in dividends
Word processing
written text/documents can be keyed in, edited,
stored and recalled with facilities to change text
size, highlight to create high quality documents
Databases
a store of information organised into records
used to store and retrieve information which can
be sorted, searched, filtered for data
Spreadsheets
allows numerical data to be entered into cells
and the computer can them perform calculations
by way of formulae data can be displayed in
form of graphs, charts
Desktop publishing
enables the user to produce materials to a
professional standard including importing text,
graphs, charts, drawings with the capacity to
enhance text
BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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BUSINESS INFORMATION AND ICT
4.
Written – any form of text or written info e.g. history of firm
Pictorial – pictures e.g. picture of the restaurant, bedroom, food
Numerical – info given in number format e.g. the price, dates
Qualitative – descriptive info e.g. customer’s opinion of the hotel
5.
Mortgage
 amount is repaid in equal monthly instalments to ease repayments
 lower rate of interest than ordinary loans
 longer period of time is allowed for repayments e.g. 25 years,
therefore monthly repayments are smaller
 allows property to be bought and expansion of firm, more goods for
made, sold and therefore higher profits
Sale and Leaseback
 firm needs the assets so cannot afford to just sell them
 easier method of repayment as smaller amounts are repaid monthly,
not a large outlay monthly
 allows assets to continue to be used, more goods made, sold, higher
profits
Capital
 partners or sole trader add more of their own money which they
already have
 no need to borrow from a bank, therefore no interest needs to be paid
 allows expansion of firm and possibility of higher sales and profits
6.






initial costs of hardware and software purchase and ins tallation
costs of repairing and upgrading systems
staff training
new furniture for housing equipment
computer viruses, risk of hacking
health and safety issues for staff
 increased efficiency – quality and quantity of work should eventually
improve
 increase in sales and customer satisfaction
 competitive edge
 allows more flexibility for where and when staff can work
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BUSINESS INFORMATION AND ICT
Activity 13
1.
Newspaper articles – secondary and written perhaps pictorial
Government statistics – secondary and written, graphical or perhaps
numerical
French perfume manufacturers – secondary and numerical/graphical
Personal interviews – primary and oral
2.
Newspaper articles – cheap, easy to access, not gathered for specific
purpose so less value, available to competitors, may be biased and out
of date
Government statistics – inexpensive, easy to access, not gathered for
specific purpose, available to competitors, may be out of date but useful
for wider view
French perfume manufacturers – could be very useful for PESTEC
factors, may be difficult to collect, may be unreliable, may be out of
date
Personal interviews – should be correct for purpose, time consuming
and expensive to collect, can go back to source if need be, not available
to competitors so gives organisation a competitive edge, may be a
flawed sample e.g. too small, wrong segment, very useful for making
marketing decisions
3.




Takes risks
Ability to develop an idea
Brings factors of production together
Has capital to invest
4.






Most products go into decline
Need to have a competitive edge
Consumers looking for something new
Need to improve sales
Businesses need to grow
Businesses need to survive
5.
Sources of finance and a description – bank overdraft; retained profits
bank loan; grant; owner’s savings; share issue; venture capital; sale of
an asset
BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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BUSINESS INFORMATION AND ICT
6.
Any suitable advantage and disadvantage; encourage students to use
different advantage and disadvantage where possible
7.
Local Enterprise Agency – secondary – offer free advice, training
courses, provide contacts
The Prince’s Trust – advice, training and grants for young people
starting up business
Banks – advice on sources of finance and drawing up business plans;
packs of information
8.
Unique product, status symbol, no competitors, they can afford it
Activity 14
1.
Tertiary or service sector
2.
Primary – businesses in this sector grow products or extract r esources
from the ground e.g. farming, fishing, forestry, mining
Falling employment due to mechanisation replacing humans, long hours
and low wages/profits, more attractive conditions and wages in tertiary
sector, need for extensive/intensive methods to survive
Secondary sector – businesses manufacturing products or construction
e.g. shipbuilding, factories building houses
Falling employment due to less need for ships, naval boats, high
competition from overseas, more attractive conditions and wages i n
tertiary sector
3.
Fax, mobile, blackberry, website, phone, email plus appropriate
description
4.
To cut costs, lower wages in India, had the ICT means to work there and
communicate globally, skilled/flexible staff in India, staff willing to
relocate, to increase profits
5.
Customers – want lower prices, faster communication, quality/improved
service
Employees – want job security, good conditions and salaries, promotion,
enrichment
Managers – want good sales and profits to earn commission, bonuses,
improved status and benefits, to improve their CV
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DECISION-MAKING IN BUSINESS
Decision-making in business
Activities
Activity 1
Describe fully strategic, tactical and operational decisions.
Activity 2
Study the following tables of decisions. Rewrite each table, identifyin g each
decision as strategic, tactical or operational. The first one has been done for
you as an example.
To achieve a Grade A in Business Management
Strategic
To study, learn and revise all topics
Tactical
To pay attention, work in class and hand in homework
Operational
Winning the game with 10 minutes to go, the football team
adopts a defensive position
To win the premiere league
The team is losing with little time left, a defensive player is
injured on the field, a substitute is brought on wh o has a role
as a striker
To improve sales by 10%
To be the best supermarket in the UK
Train staff
BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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DECISION-MAKING IN BUSINESS
To improve the reputation of the organisation
To hire a new assistant
To recycle more waste
Ryanair decides to re-organise shift rota of personnel
Ryanair decides to open a new airline route
Ryanair wants to increase its share of market
Activity 3
1.
What is the overall purpose of managers making decisions?
2.
What is the purpose of an organisation having a mission statement?
Activity 4
Walkers and Coca Cola are well known organisations that manufacture
snacks, crisps and fizzy drinks. Currently the industry is facing poor
publicity in relation to rising levels of obesity, adverse effects on behaviour,
etc.
1.
Identify an appropriate strategic objective for the organisations above.
2.
Identify two tactical objectives which could help them achieve the
objective you have chosen.
Activity 5
The manager of a chocolate manufacturer decides to introduce a new
chocolate bar. Describe the role of a manager in achieving this objective.
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DECISION-MAKING IN BUSINESS
Activity 6
Using the structured decision-making model POGADSCIE, show the process
that could be taken to solve the problem of customers queuing at checkouts in
the local supermarket.
Activity 7
1.
Describe a SWOT analysis.
2.
Carry out a SWOT analysis on your school. Draw up at least four
conclusions, which must be justified.
Activity 8
Describe the costs and benefits of using decision-making tools such as SWOT
analysis and structured models in decision-making.
BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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DECISION-MAKING IN BUSINESS
Activity 9
Read the following article and then answer the questions below.
GREEN BANDWAGON
It is an environmentalist’s dream. A high -tech store
where tills are powered by wind turbines, the in -house
bakery is fired by solar power and every part of the
building is made from recycled materials. However,
this is not a vision, but the reality of a supermarket
that Tesco will open in Wick in two months time.
Tesco is investing £100m in environmental technologies in a bid to slash by
half, the amount of energy it uses by 2010, compared with 2000 levels.
Tesco’s plan is one of the boldest attempts to address a huge issue facing
businesses – how to get greener.
As part of Tesco’s strategy to offer customers
more choice, they have secured the designer
Katharine Hamnett to design a range of
clothing.
This is to be a premium brand, reflecting the
quality of Katharine’s designs and the organic
production processes involved. But it will
also be affordable because Tesco wants to
make organics accessible to all.
The retailer is launching the collection in spring next year to respond to
growing customer demand that now sees one in three shoppers regularly
buying organics.
The Tesco range uses raw materials that have been grown without chemical
fertilisers and manufactured and dyed in an environmentally sustainable way.
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DECISION-MAKING IN BUSINESS
The cotton is grown by farmers in India working
in a series of co-operatives, enabling them to be
taught skills such as how to control pests
organically, without harming the land and other
beneficial creatures, and their habitat.
A former British Fashion Council Designer of
the Year, Katharine Hamnett said: “By buying organic cotton you are
supporting a movement working to improve the health of the soil, plants,
animals and people.”
Source: The Sunday Times September 2006
© The Sunday Times
1.
Is Tesco’s decision to invest in environmental t echnologies a strategic
or tactical one? Justify your answer.
2.
How will Tesco find out whether the decision taken to launch the new
clothing range was the right one?
3.
Discuss the factors that might affect the quality of the decision taken by
Tesco’s clothing manager.
4.
Additional finance may be necessary to launch the n ew clothing
designs. Identify two suitable sources of finance. Justify your choices.
5.
Outline the factors that may restrict the use of new technology.
BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
© Learning and Teaching Scotland 2007
43
DECISION-MAKING IN BUSINESS
Solutions
Activity 1
Strategic – long-term decisions, made by senior managers, define aims and
objectives or organisations, major policy statements, need to consider a large
number of variables
Tactical – medium term decisions which may have long-term consequences,
how resources are to be used, how to achieve strategic objectives, made by
middle managers
Operational – day-to-day decisions, routine, repetitive, made usually by
supervisors, but could be made by any level of management, made in
response to a change in circumstances
Activity 2
To win the premiere league
Strategic
Winning the game with 10 minutes to go, the football team
adopts a defensive position
Tactical
The team is losing with little time left, a defensive player is
injured on the field, a substitute is brought on who has a role
as a striker
Operational
To be the best supermarket in the UK
Strategic
To improve sales by 10%
Tactical
Train staff
Operational
To improve the reputation of the organisation
Strategic
To recycle more waste
Tactical
To hire a new assistant
Operational
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DECISION-MAKING IN BUSINESS
Ryanair wants to increase their share of market
Strategic
Ryanair decides to open a new airline route
Tactical
Ryanair decides to re-organise shift rota of personnel
Operational
Activity 3
1.
To achieve the organisation’s aims and objectives
2.
 To encourage employees to understand the purpose of the
organisation
 To set targets to work towards
 To assist in marketing the organisation/company products
Activity 4
1.
Improve their image/social responsibility
2.
 Advertise lower salt/fat content of their products
 Sponsor healthy activities, e.g. Olympics
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DECISION-MAKING IN BUSINESS
Activity 5
Plan – the launch, set date; aim to sell 1 million bars in first six months,
objective to make £300,000 profit
Organise – the production of the chocolate bars and delivery of s upplies to
each shop, organise the advertising of the new chocolate bar
Command – tell the factory how many to produce and tell each shop when
delivery will be made, where to place the product on the shelves, the price
Co-ordinate – ensure the factory can meet the deadline and transportation is
arranged to each shop
Control – check each week that production is on target in the factory, have a
meeting with the sales reps to ensure orders are coming in and advertising is
taking place, make adjustments if original plans not working
Delegate – give subordinates (factory, finance, marketing) authority and tasks
to complete, managers would not do everything themselves
Motivate – have regular meetings to see if anyone needs help, encourage
subordinates to put forward ideas and work as a team to help solve problems
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DECISION-MAKING IN BUSINESS
Activity 6
Identify the problem
Build up of customers queuing at
checkouts
Identify the objectives
Customers to pass through checkouts
quickly, no more than one in a queue
Gather information
Collection information from
employees and customers e.g.
questionnaires, interviews
Analyse information
Study information collected – are
there any common issues/solutions?
Devise alternative solutions
Add more checkouts
Employ more staff (at peak times) to
ensure all checkouts are operational
Always ask customers if they would
like a bag packer
Checkouts for basket shoppers
Self-service checkouts
Select from alternative solutions
Add more checkouts
Add self-service checkouts
Communicate the decision
Inform staff at staff meeting
Send email to all staff
Inform customers via posters,
announcements
Implement the decision
Order/install new checkouts
Recruit/train more staff
Evaluate the decision
Monitor queue levels
Feedback from customers and staff
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DECISION-MAKING IN BUSINESS
Activity 7
1.
A management tool to help with decision-making, used to evaluate
problems/situations and set objectives for the future.
2.
Solutions for this depend on responses from students. However, ensure
that there are internal factors for strengths and weakne sses and only
external factors for opportunities and threats. Also check that
conclusions have been drawn from items within their SWOT analysis,
and they must be justified.
Activity 8
Costs




Time consuming to gather information and analyse it
Needs to be carried out regularly – again time consuming
The structured process may stifle creativity
Some managers may have conflicting views, i.e. one manager’s perceived
threat may be another manager’s opportunity
 Difficult to choose from many solutions
Benefits
 Helps to decide if decisions made were successful
 No rash decisions made as time is taken to gather information and analyse
it
 Identifies both internal and external factors
 Decisions are based on gathered facts
 Time has been taken to think of alternative solutions
 Proactive, not reactive
 Logical, structured process
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DECISION-MAKING IN BUSINESS
Activity 9
1.
Tactical decision because: medium term made by middle management
to help achieve the long-term strategic objectives of how to be more
environmentally friendly, or cutting their energy (costs) or to offer
customers more choice
2.




Sales, profits will rise
Evaluate results – has the problem been solved
Ask customers, employees if situation improved
Carry out a SWOT analysis, or use POGADSCIE
3.








Availability of good quality information
Time taken to consider all options
No snap judgements made
Ability to take risks
Experience and quality of manager
Ability to use decision making techniques
Personal interest of the decision maker
Company policy
4.




Bank loan – easy and quick to obtain
Lease machinery – eases cash flow
Profit reinvestment – no interest repayable, no collateral required
Sell assets – quick to raise money, no interest paid, no collateral
required
5.

















Cost of installation, maintenance and training
Lack of technical support
Lack of staff knowledge/skill
Compatibility with existing software
Staff reluctance to accept change
Availability of technology
Virus/hackers
Space to put new technology
Inability to keep information secure
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INTERNAL ORGANISATION
Internal Organisation
Activities
Activity 1
One method of grouping staff and work within an organisation is by function.
Describe the advantages and disadvantages of this method.
Activity 2
Identify five main departments of a functional organisation. Describe the key
tasks within each department.
Activity 3
Sun Alliance chooses to group its activities around its different types of
customer. Discuss the value of this.
Activity 4
Explain why an organisation would choose to change from one type of
organisational structure to another.
Activity 5
Copy out the table below and put in two examples of organisations that group
their activities according to each method.
Grouping
Functional
Product/Service
Customer
Place/Territory
Technology
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Example
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INTERNAL ORGANISATION
Activity 6
Describe and draw appropriate diagrams for:
(a)
(b)
a hierarchical structure
a flat structure.
Activity 7
Compare communication, decision-making and the span of control within
hierarchical and flat structures.
Activity 8
Explain why organisations may have to change their type of structure as they
grow.
Activity 9
Describe a matrix structure and its possible use within a construction
company which has projects worldwide.
Activity 10
Discuss the effects of delayering on the employees of an organisation.
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INTERNAL ORGANISATION
Activity 11
Draw an organisation chart for an organisation that you know e.g. your
school.
Clearly show the positions held by individuals within the organi sation and the
links between these individuals.
It is NOT necessary to name individuals within the organisation; you should
simply use the position or job title.
Clearly identify:




a line relationship
a staff relationship
a functional relationship
the span of control of ONE of the managers .
Identify three things that an organisation chart might be used for.
Activity 12
Outline the advantages and disadvantages of informal structures to an
organisation.
Activity 13
Explain why organisations are keen to develop a strong corporate culture.
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INTERNAL ORGANISATION
Activity 14
Read the following article and then answer the questions below.
NISSAN
In 1999 Nissan, one of the world’s most famous
car companies from Japan, had $22bn of debt
and was close to bankruptcy. Since then it has
have been taken over by Renault, the French car
manufacturer, and made $7bn profit by the end
of March 2004. This considerable about turn in
its fortunes has resulted from a restructuring
of the company.
Complaints regarding their former management style included:
 employees only concentrating on their narrow responsibilities within their
own department
 managers not listening to the ideas from younger employees
 lack of communication across departments and across geographical
divisions
 too many managers
 complacent employees
 many different suppliers
Car manufacturers are coming under increasing pressure to consolidate and
cut overcapacity to cut costs. The alliance between the two car companies
would allow the firms to share the development and production of car
engines, chassis and other parts – this would produce big savings and cut the
risks associated with developing new technologies
The chairman of the new alliance tackled these problems with various
methods such as downsizing – cutting over 22,000 management jobs, halving
the number of parts suppliers, introducing enforced job rotation and cross functional team working.
Source: adapted from http://www.bbc.news.co.uk
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INTERNAL ORGANISATION
1.
Outline how restructuring to centralised decision-making could benefit
an organisation.
2.
Outline the advantages of a decentralised structure.
3.
Describe the benefits to employees, and the organisation, of making
employees rotate jobs.
4.
Describe the following terms and justify why organisations would
decide to:
 downsize
 delayer.
(do not repeat any reason)
5.
Describe the key tasks undertaken by a Research and Development
department.
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BUSINESS ENTERPRISE (HIGHER, BUSINESS MANAGEMENT)
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INTERNAL ORGANISATION
Solutions
Activity 1
Advantages
 More efficient use of resources
 Staff working within each function can share knowledge, experience, help
each other
 Decision-making improved due to expertise
 More opportunities for career progression
 Better communication within functional departments
 Easier problem-solving within teams/departments
Disadvantages
 Staff may be more loyal to their department rather than organisation as a
whole
 Communication between departments not as good
 Decision-making for whole organisation more time consuming, less effective
 Rivalry between departments
 Slow to respond to changes in general business environment, consumer
demands
Activity 2
Human resources – organise recruitment, staff training and appraisal, keep
employee records, help negotiate pay and conditions, help organisation meet
all legal requirements in employment law
Marketing – communicate between organisation and the customer, find out
what customers want now and in the future, they help decide on the marketing
mix
Finance – keep all the financial records of the organisation, control the flow
of money in and out of the organisation, provide management with
information needed to make decisions, forecast outcome of different courses
of action, prepare budgets and reports
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INTERNAL ORGANISATION
Operations – select suppliers of materials, organise best methods of
production of goods/services, store and deliver goods to customer, decide on
best methods of assuring quality of product/service
Administration – provide support for all information systems within
organisation, ensure information flows internally and externally
Research and development – look for new ways to produce products, new
products to produce and/or improve existing products
Activity 3
 They will have close contact with consumers, therefore they can identify
consumer needs, thus sales and profits more likely to increase
 Consumers respond well to this level of personal serv ice therefore
consumer loyalty is built up
 Organisation can respond quickly to changes in consumer needs .
 Takes more time and effort to liaise/meet consumer needs therefore more
expensive method of delivering service
 Feeling of personal service is lost if and when staff change
 Duplication of resources and personnel.
Activity 4




To
To
To
To
reduce costs
be more responsive to customer needs
improve quality of service/product
be more competitive, more efficient, match competitors
Activity 5
Grouping
Example
Functional
Own school, Tesco, Baxters
Product/Service
Virgin, Royal Bank of Scotland, Unilever
Customer
Sun Alliance, Clydesdale Bank, financial
services, Direct Line
Place/Territory
Shell, BP, Unilever
Technology
W H Smith, car manufacturer
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INTERNAL ORGANISATION
Activity 6
Hierarchical structure generally used in traditional organisations looks like a
tall pyramid shape with many levels of management. Employees are
organised into specialised departments.
Flat structure is a flatter pyramid shape with few levels o f management.
Employees are given more independence and responsibility.
a hierarchical structure
a flat structure
Activity 7
Communication is slower in the tall structure due to the many level s of
management it must pass down through, and faster in the flatter structure due
to fewer levels of management
Decision-making is delegated to the various departments/levels within a tall
structure with each person and each level of management having c learly
defined roles, tasks and procedures; within each functional area , decisionmaking will be done by experts in that field; however , within a flat structure
decision-making will be quicker and more independent due to less layers and
more responsibility given to each worker. Decisions that require information
from many employees will be faster in a flat structure whereas in a tall
structure information may stop at each level on the way up or down the
hierarchy.
In a flat structure there will be a wider span of control as there are less
managers directly controlling/supervising workers, the workers need to be
more skilled and reliable; in a tall structure the span of control is much
smaller with closer supervision, which should allow greater quality of
product/service. There may be a feeling of resentment of being so closely
supervised in a tall structure whereas in a flat structure the workers may feel
they are using more creativity and initiative .
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INTERNAL ORGANISATION
Activity 8
 No longer efficient in present method
 Owner/entrepreneur can no longer control or manage by themselves
(growth may be in sales, customers, outlets, products)
 Feeling of stress by sole trader, managers
 Manager needs to delegate
 Customers want greater quality/quantity of goods/service
 Manager does not have expertise, experience in new service
Activity 9
Activity is grouped around teams; teams are created for a specific task or
project; team members come from different functional areas .
Each member of a team has their own specialist skills and takes responsibility
for these.
Team members report to project manager and also to their functional
manager.
At the end of the project the team members go back to their functional area .
Each construction contract may be quite different and be long term.
Staff needed require to work in a matrix team and may only come into the
team when their skill is needed – this may be at the start, middle or end of the
contract, or perhaps the person is needed for the life of the contract .
Staff may be moved to other teams/projects/contracts as necessary.
Good for developing varied skills, flexibility of staff, and motivation of staff
is high.
Activity 10







58
Some managers will lose their jobs
Remaining employees may find they have more/different work as a result
Increased responsibility for some employees
Wider span of control for managers
Workforce may become demoralised
Fewer promotion opportunities for remaining employees
Some employees may find it difficult to adjust to new structure/roles
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INTERNAL ORGANISATION
Activity 11
Solutions will vary according to the choice of organisation.
 To show employees who to report to and who they are responsible for
 To give an overall impression of the organisation
 To assist visitors, new employees, receptionists
Activity 12
 Employees will have a greater sense of security or belonging.
 Information may be communicated more quickly than from the formal
structure.
 Information passed on in this way may be false, inaccurate, confidential
 May cause isolation, resentment if staff are excluded from the informa l
structure.
Activity 13
 Establishes good practice and teamwork within the organisation
 Helps new employees fit in regarding how to behave, dress, attitudes,
policies to follow
 Will set expectations, standards
 Will increase success therefore motivation and job satisfaction
 Encourages teamwork, fosters good working relationships
Activity 14
1.
Centralised decision-making benefits:





Standardisation of procedures
Economies of scale
Decisions made for the benefit of the whole organisation
Easier to promote a corporate image
Decisions made by experienced/skilled managers usually better
quality
 Strong leadership
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INTERNAL ORGANISATION
2.
Advantages of a decentralised structure:





3.
Delegation to less junior managers is a key motivator
Senior managers will be relieved of many routine deci sions
Decision making is quicker
More likely to respond to local needs
Junior staff more prepared for promotion
Benefits to employees:
 Will be more skilled
 Greater chance of promotion
 Less repetitive/monotonous job
Benefits to organisation:





4.
Will achieve a more skilled workforce
Will be easier to introduce change successfully
More flexible in responding to customer needs
May improve the image of the organisation due to increased training
Easier to attract new staff
Downsizing involves focusing on the core activities of an organisation
by removing certain areas e.g. a department or branch:


to remove excess capacity if productivity has increased
to reduce the scale of operations due to a fall in consumer demand
Delayering removes a layer of management:



to flatten the organisation structure to speed up decision-making
and/or communication
to become more responsive to consumers/adapt more quickly
to reduce costs/make the organisation more competitive
5.
Technical research into a new product, modifying a pro duct
research into developing/improving production techniques
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