ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
CONTENTS
Introduction .............................................................................................................................................................................................................................................................................. 4
Unit 1: Business and Its Environment ..................................................................................................................................................................................................................................... 5
Business Activity in the UK ................................................................................................................................................................................................................................................. 5
The Objectives of a Business .............................................................................................................................................................................................................................................. 8
External Constraints on Business Activity ......................................................................................................................................................................................................................... 11
Aiding Business Activity .................................................................................................................................................................................................................................................... 14
Organisation and Structure ............................................................................................................................................................................................................................................... 15
Unit 2: Human Resources ..................................................................................................................................................................................................................................................... 19
Function of the Human Resources Department ................................................................................................................................................................................................................. 19
Motivating Workers ........................................................................................................................................................................................................................................................... 24
Paying Workers ................................................................................................................................................................................................................................................................ 27
Industrial Relations ........................................................................................................................................................................................................................................................... 31
Methods of Communication .............................................................................................................................................................................................................................................. 32
Unit 3: Finance and Accounting ............................................................................................................................................................................................................................................ 34
Function of the Finance Department ................................................................................................................................................................................................................................. 34
Sources of Finance ........................................................................................................................................................................................................................................................... 37
Decision Making ............................................................................................................................................................................................................................................................... 38
Unit 4: Marketing ................................................................................................................................................................................................................................................................... 40
Function of the Marketing Department .............................................................................................................................................................................................................................. 40
Identify Markets for Goods and Services ........................................................................................................................................................................................................................... 40
Marketing Mix ................................................................................................................................................................................................................................................................... 45
International Trade ............................................................................................................................................................................................................................................................ 50
Product Life Cycle ............................................................................................................................................................................................................................................................. 51
Unit 5: Production & Operations ............................................................................................................................................................................................................................................ 52
Function of the Production / Operations Department ......................................................................................................................................................................................................... 52
Location of a Business ...................................................................................................................................................................................................................................................... 54
Types of Production .......................................................................................................................................................................................................................................................... 55
Methods of Production ...................................................................................................................................................................................................................................................... 56
Growth of Firms ................................................................................................................................................................................................................................................................ 56
Glossary ................................................................................................................................................................................................................................................................................ 58
Examination Technique ......................................................................................................................................................................................................................................................... 61
Introduction to the Exam ................................................................................................................................................................................................................................................... 61
Getting Ready ................................................................................................................................................................................................................................................................... 62
What You Are Assessed On.............................................................................................................................................................................................................................................. 62
Topics You Need to Cover ................................................................................................................................................................................................................................................ 62
Report Writing ................................................................................................................................................................................................................................................................... 63
Format for Writing a Report ............................................................................................................................................................................................................................................... 64
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Introduction
This revision toolkit is designed to help you prepare for the terminal examination for ICAA / CEA GCSE Business Studies B
(G37).
For 2008, the examination is based on the Research Brief and Background Information provided on ScreenScene plc– a UK
cinema group with 240 cinemas across England and Wales.
Please remember that the Research Brief does not indicate the content of the questions you will be set in the examination.
You need to revise ALL of the areas of the syllabus, but study them by thinking about how they relate to ScreenScene plc
and the cinema market.
This toolkit encourages you to cover the entire syllabus by providing:
 An overview of the syllabus requirement – what you need to know.
 Example questions and answers based on ScreenScene plc that demonstrate how the examiner will test your
understanding.
Good luck!
Dan Cottrell
tutor2u
www.tutor2u.net
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Unit 1: Business and Its Environment
Business Activity in the UK
You need to be able to:
 Explain that business activity is the production of goods and services to satisfy people’s wants and needs
 Explain that business activity involves using the factors of production, i.e. land, labour, capital, enterprise
 Show an understanding that production and consumption decisions involve an opportunity cost
 Show an understanding that the UK has a mixed economy, i.e. has both a private and a public sector
Example Questions
Suggested Answers
What type of business organisation
is ScreenScene plc?
ScreenScene plc is a commercial organisation that exists in order to earn profits for its
owners.
ScreenScene plc is a public limited company. It is owned by the shareholders.
The original business was set up as a sole trader in 1936. It became a private limited
company in 1955. In 1966 it moved from being a private limited company to a public
limited company.
What sort of business is
ScreenScene plc?
It is business which satisfies people’s demand for going to the cinema. This is a leisure
product. It is not just for people going to see a film, but aiming to give them a whole
entertainment experience.
A significant percentage of ScreenScene plc’s revenues come from the sale of
confectionary, soft drinks and junk food. They are looking at healthier options.
There are three sectors in the
economy: primary, secondary and
tertiary. To which sectors does
ScreenScene plc operate?
ScreenScene plc belongs to the tertiary sector. It provides the service of a place to
watch a film, plus purchase food and drink. The food and drink is produced by
businesses in the secondary sector, in other words manufacturers. The manufacturers
will use products from the primary sector, the raw materials to produce food, drink and
packaging.
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
ScreenScene plc is a public limited
company. Does ScreenScene plc
operate in the public or private
sector?
ScreenScene plc operates in the private sector.
In the private sector of the economy, private individuals and organisations own the
business activity.
In the public sector, organisations are owned and controlled by the Government.
These include central government, local government and public corporations. A local
County Council is an example of a public sector organisation.
[Note: the UK is a mixed economy: a mix of public sector organisations and private
sector businesses]
State two ways in which the owners
of ScreenScene plc might raise
finance for possible business
strategies [for example,
modernisation]
Select two from options such as
- Bank loan (mortgage) to fund the purchase of the land, buildings and equipment for
expansion.
- As a public limited company, issuing shares.
- Selling off cinemas in poor performing areas.
State four factors of production that
are used in the operation of a
ScreenScene plc
The four categories of factors of production are:
Land and natural resources: e.g. land for the cinemas or electricity
Labour: e.g. the employees needed to run each cinema
Capital: e.g. projection equipment, vending machines
Entrepreneurship: the owners and risk takers of the business, as well as the
managers of their cinemas.
Customers have needs and wants.
Describe the difference between
needs and wants and explain which
you believe the product provided by
ScreenScene plc satisfies
Needs satisfy our basic requirements for living: e.g. food, water, warmth, security,
shelter and clothing.
A want is something we desire beyond our needs. However, once a want has been
satisfied, something more is then wanted. For instance, to make best use of leisure
time, to develop new skills, to socialise and make friends, to spend time with the
family.
ScreenScene plc’s product (for instance) satisfies several possible consumer wants.
E.g.
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-
To watch films.
To have a family night out.
State the meaning of the term
opportunity cost.
Opportunity cost is the financial benefit forgone of the next best alternative use of
money. A business can measure the outcome of a decision by comparing it with the
benefits (probably measured in profits or revenue) that it could have achieved if it had
taken the next best option.
Give an example of how the
management of ScreenScene plc
need to think about opportunity cost
when making decisions about what
to spend money on
Example:
The opportunity cost of modernising facilities will be the benefits foregone of spending
the money on building more multiplexes.
Explain what is meant by the terms
“capital intensive” and “labour
intensive”. How would you
categorise ScreenScene plc –
capital or labour intensive?
Capital intensive:
- Where the production of goods is mainly by machines/technology
- Use of technology e.g. automated ticket machines.
- Possible introduction of state-of-the-art automatic vending machines for some
food products
Labour intensive:
- Where the production of goods and services is mainly by workers
- Staff for selling, tickets, manning booths, running the films.
ScreenScene plc could be both a capital and a labour intensive business. Running a
film does not require many employees, not does the selling tickets and food. However
they cannot replace the staff with machinery for many jobs, like cleaning, checking
tickets, passing on information or selling some of the food.
NOTE: ScreenScene plc is considering introducing vending machines to replace some
of the staff in the cinemas to reduce staffing costs.
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
The Objectives of a Business
You need to be able to:
 Identify and show understanding of the following business objectives:
- to make a profit
- to survive
- to grow in size
- to increase market share
- to increase turnover
- to gain a good reputation
- to maximise customer satisfaction
 Show understanding of links, and possible conflicts between objectives
 Explain the influence of stakeholders in the setting and pursuit of business objectives and appreciate the effects of
possible conflicts of interest
Example Questions
Suggested Answers
Explain what the objectives of a
business like ScreenScene plc are
likely to be.
Note: ScreenScene plc is a well-established business, so an objective such as
“survival” is not likely to be as important to the owners as it would be for a new
business
Short term objectives: likely to include:
- Sales (revenue) targets for each cinema (weekly and monthly) and for each
area or group of cinemas
- Increasing the number of multiplexes in an area
- Keeping costs within budget
- Meeting quality objectives (e.g. quality of service)
Long term objectives: could include:
- Expand into new areas of the country (Scotland or Northern Ireland)
- Increase market share or become market leader
- Satisfy shareholders i.e. investors.
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Explain what is meant by the term
“profitability”
Profitability is the ability of the ScreenScene plc to create profit. Profit is the difference
between “turnover” and operating costs. In other words, the excess of money it
receives from sales of its products and the money spent on doing that. The better it is
at selling more at a higher price and keeping costs down, the more profitable it will be.
Give two reasons why a business
wants to be profitable
Choose two from:
- to earn more money for the owners/shareholders
- to have funds to increase the size of the business, by more sites and building
more cinemas
- to have funds in case competitors force the business to cut prices or suppliers
increase costs
- to have funds to modernise
Explain what is meant by the term
“market share”
Market share is the percentage of total sales that a business achieves in a particular
market.
Market share is an important measure of business success, since research has
shown that firm’s with a higher market share tend to earn better profits than their
smaller competitors.
Current the market share is 240 out of 770 cinemas in the UK. (31%)
Describe two ways in which
ScreenScene plc could increase
sales via a website
Choose two from:
- website promotion (e.g. advertise more on Google)
- more marketing through fliers and ads in specialist magazines pointing to a
website
- drop prices of on line sales to make it more attractive than buying on the door.
ScreenScene plc has a number of
stakeholders. Explain what the
objectives of two main stakeholders
might be
Choose two from main stakeholder groups such as:
Owners/shareholders:
Owners want to maximise the return they make from the business. So they are
focused on the sales, profits and growth in the value of their investment in the
company.
Employees:
Employees are mainly concerned with the way in which employment by ScreenScene
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plc meets their needs – i.e. financial and non-financial rewards. Employees will be
focused on:
- The amount they are paid by ScreenScene plc
- The job security they have
- The prospects for promotion and personal development (e.g. a cinema
manager may wish to develop a career towards involvement in head office
management)
- The job satisfaction they obtain from working in the business
- The overall attractiveness/safety of each section of business, both home and
abroad.
Suppliers
Building a positive relationship with suppliers is an important aim for any business. For
ScreenScene plc, suppliers who deliver reliably, to the right quality and at value-formoney, help to ensure the business is viable. For their part, suppliers want to work
with businesses that pay on time and provide repeat business.
Local Community:
The local community benefit from the employment and other economic benefits
brought by being close to a cinema and the head office.
The community may also have objectives around maintaining the peace and quiet of
the area, or improving the local environment. They won’t want their High Street littered
with cinema tickets or food and drinks containers.
Explain the possible conflicts of
interest between ScreenScene plc
stakeholders
ScreenScene plc and the owners want increase profitability. This can conflict with
employees’ desire for higher pay and customers’ desires for lower prices.
ScreenScene plc will want to have lower prices from the suppliers for goods and get
more productivity from their workers.
However these conflicts in objectives do not mean that they cannot find a middle
ground, otherwise no business would ever be conducted!
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
External Constraints on Business Activity
You need to be able to:
 Identify the following categories of external constraints and explain their effects on business activity
- Central Government
- Taxation, i.e. income tax, corporation tax, VAT, excise duties
- Consumer legislation, i.e. Trade Descriptions Act, Sale of Goods Act, Weights and Measures Act, Food Safety Act
- Employment legislation, i.e. Health and Safety at Work Act, Race Relations Act, Sex Discrimination Act, Equal Pay Act,
Trade Union Reform and Employment Protection Act, viz. written statement of employment (contract of employment)
- Agencies, i.e. Office of Fair Trading, Competition Commission (Monopolies and Mergers)
- Local Government
- Planning regulations
- Agencies, i.e. Environmental Health Department, Trading Standards
- Business rates
- European Union (EU), i.e. single market, employment regulations
- Independent bodies, i.e. Advertising Standards Authority (ASA), British Standards Institution (BSI)
- Financial, i.e. interest rates, exchange rates
- Consumers’ tastes
- Population trends
- Competitors
- Pressure groups
- Environmental
- Consumer, i.e. Consumers’ Association
- Employment, i.e. trade unions, employers’ organisations
Example Questions
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Suggested Answers
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
List two other market sectors that
compete with the ScreenScene plc
for sales of cinema tickets
Select two from competing sectors such as:
- Other cinemas.
- DVDs and home entertainment (the dominant leisure activity).
- Other types of leisure product, like outdoor pursuits or reading a book, listening to
music or radio.
List two factors that have led to an
increase in the amount spent by
customers on the going to cinema in
the UK in recent years
Select two from factors such as:
- Higher disposal income for families due to economic growth and lower
unemployment.
- Greater focus of people looking to find ways to enjoy leisure time.
- Greater range of entertainment available from cinemas, more exciting films and
multiplexes being part of other shopping experiences.
State, with examples, two ways in
which ScreenScene plc is directly
affected by government legislation
Select examples from legislation such as:
Health & Safety legislation:
Health and safety is a key concern at ScreenScene plc. The business has a legal
responsibility to protect the safety of both customers and employees. This covers
areas such as:
- The installation, maintenance and operation of projection equipment
- Safe working environment for employees (well ventilated, especially where there is
more technology)
Minimum Wage legislation
The cinema industry – like many entertainment markets – is affected by the
introduction of, and subsequent changes to, the Minimum Wage. An increase in the
Minimum Wage immediately would push up ScreenScene plc’s employment costs.
With a large number of low skilled workers involved on the retail side of the business,
this needs to be carefully considered.
Disability / Discrimination legislation
E.g. the new Disability Discrimination Act means that factories and offices must be
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
accessible to those with disabilities
ScreenScene plc may not discriminate against people’s age, gender or ethnic
background in making recruitment and other employment decisions
Outline two of the main laws that
affect how ScreenScene plc
manages employees?
Explain how an increase in interest
rates might affect ScreenScene plc
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Select from the main areas of employment-related legislation below:
Equal Pay Act 1970
Ruled that both sexes should be treated equally in terms of
pay and other employment issues
Sex Discrimination
Act 1975
Made discrimination on the grounds of sex or marital status
illegal in all aspects of working life
Race Relations Act
1976
Made discrimination on grounds of colour, race or nationality
in terms of employment illegal
Disability
Discrimination Act
1995
Ruled that employers must treat a disabled person equally
as others unless good reason
Working Time
Regulations 1998
EU legislation that set a limit on the maximum number of
hours (48 hours) employees should be required to work in a
week. Employees can choose to work more hours if they
wish.
Interest rates are the cost of borrowing and reward for saving.
If interest rates increase then:
- sales might fall because people will want to save more, or have to pay more
back on the money they are borrowing (e.g. mortgages)
- sales may fall because credit cards are more expensive to use
- ScreenScene plc may have to pay more cash back to the bank on any money
they have borrowed (thus affecting their cash flow)
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Explain how exchange rate might
affect ScreenScene plc
Give two examples of an indirect
and direct tax
The exchange rate is how much one currency of one country is worth in terms of
another.
If the pound gets stronger against the Euro, e.g. £1: 1.50 Euros goes to £1: 1.70 Euros
then their imported products would be cheaper.
It is unlikely to have much effect on ScreenScene plc as most films and food goods
are supplied by UK distributors.
Direct tax (tax on incomes and profits) Indirect tax (tax on spending)
Income tax
VAT
Corporation tax
Excise duty
Describe how VAT and income tax
affect ScreenScene plc
VAT is value added tax, and is 17.5% added to the price of any good that
ScreenScene plc sell in their cinema. The VAT is collected by ScreenScene plc and
then paid to the government at the end of each quarter. An increase in VAT
percentages can either mean that ScreenScene plc will need to increase their prices
or have lower profits.
Income tax is taken from ScreenScene plc employees pay at the end of each pay
period (weekly or monthly), as well as any other employee in the UK.
An increase in income tax will reduce the spending power of the UK public which might
adversely affect ScreenScene plc sales.
With examples, outline an internal
and an external constraint on the
business.
Internal constraints: (from within the business)
- Technology available to ScreenScene plc
- Capacity in cinemas, measured in the number of seats available for
shows. Particularly when there is a launch of a new blockbuster.
External constraints: (from outside the business)
- Interest rates
- Legislation (like employment laws)
Aiding Business Activity
You need to be able to:
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
 Describe the following sources of assistance:
- Government Regional Policy, i.e. government grants, location incentives
- Grants from the European Union (EU)
Example Questions
Suggested Answers
State two ways in which
ScreenScene plc might receive
support from the Government to
help develop or run its business
Select two from options such as:
- Employment subsidies to employ and train young people or the long-term
unemployed
- Grants or taxation allowances to build new multiplexes in areas that need
regeneration (for instance old brown-field sites).
- Assistance with opening a new Head Office in an area that attracts government
grants for new businesses (e.g. regional assistance areas)
Organisation and Structure
You need to be able to:
 State and describe the characteristics of the main forms of business ownership in the private and public sectors of the
economy, i.e. sole trader, partnership, private limited company, public limited company, franchise agreements,
multinationals, public corporations
 Describe the formal organisation and internal structure of a business with respect to:
- The purpose of an organisation chart
- Hierarchical structure and its effect on an organisation
- The difference between span of control and chain of command
- Delegation
- The advantages and disadvantages of centralisation and decentralisation
- Describe the main business functions, i.e. production, accounting and finance, marketing, managing people in business
Example Questions
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
State two kinds of business
organisation
Select four from the following:
- Sole trader (sometimes also known as a “sole proprietor”) – the business is owned
and managed by one person
- Partnership – the business is owned by two or more people who agree to share
ownership and responsibility for the business
- Limited company – there are two kinds:
- Private Limited Company (“Ltd”) – a company owned by a group of private
shareholders
- Public Limited Company (“plc”) – a company that can sell its shares to the
general public (ScreenScene plc is a public limited company)
- Cooperatives – organisations jointly owned by their members
- Franchises – a business idea licensed by a franchisor to be operated by other
people (“franchisees”)
- Public sector – organisations owned/controlled by the government
State two advantages of being a
public limited company
As a public limited company:
- ScreenScene plc may sell shares to the general public (a way of raising money)
- The liability of the shareholders in the company is limited to amount that they have
invested (same in a private limited company)
Making the company into a public limited company was a good way of raising new
finance in order to fund a more rapid expansion of the business in the 60s.
What is a “multinational” and is
ScreenScene plc such a business?
A large company that operates in a number of countries is known as a multinational.
ScreenScene plc only has cinemas in the UK.
State the meaning of the term
“organisation structure”
The organisation structure of a business describes:
- How the business is organised in terms of activities and departments
- How the roles and responsibilities of people working in a business are related
State the main departments you
would expect to see in the
organisation structure of
ScreenScene plc
The main departments in the organisation structure of a business like ScreenScene
plc would include:
- Head Office: the main administrative functions would operate at the head office –
sales and marketing, finance, operation and human resources.
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
These “head office” departments control various functional areas across the business:
 Marketing: responsible for developing and delivering the marketing plan
and achieving the marketing objectives
 Sales: responsible for organising the selling of products – it is likely that
the sales department will split by each sales area, regions or groups of
cinemas.
 Operations: responsible for production and supply. Each cinema will have
its own department, which might be just two technicians and a chief
projectionist.
 Finance: responsible for controlling the costs and cash flows of the
business
 Human resources: responsible for recruiting, training and paying
employees
State two functions of the
production/operations department
-
Acquire spare parts
Maintenance of film equipment
Ordering new vending machines or fridges
Monitor quality
Stock control
Packaging
State two functions of the marketing
department
-
identifies the needs and wants of customers and provides goods to satisfy
finds the right market for the product
promotes and advertises products
What is the purpose for a business
like ScreenScene plc for having an
organisation chart?
For a large business an organisation chart helps workers understand the chain of
command. The chain of command shows the line along which decisions are passed
down from the top of the organisation.
With examples, what is the
difference between centralisation
and decentralisation?
Centralisation is where the head office retains most of the power to make decisions for
other parts of the business, whereas a decentralised business has parts of the
business making their own decisions.
For ScreenScene plc, it is likely that it is a centralised business, where all the cinemas
take strategies for selling from the Head Office (e.g. pricing, placement of products,
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
sales promotions, marketing).
So some decisions will be made centrally, like marketing or what films are going to be
shown. Other decisions will be decentralised, so individual cinemas will recruit locally,
and decide on the timings for different films.
Explain what is meant by the “span
of control”
The number of people (subordinates) who are controlled by a manager.
The more people under one manager the wider the span of control
What is the advantage of a narrow
span of control
A narrow span of control allows a manager to communicate quickly with the
employees under them and control them more easily.
Feedback of ideas from the workers will be more effective. It requires a higher level of
management skill to control a greater number of employees.
What is the difference between a
tall and flat organisation
A tall organisation has a large number of managers with narrow spans of control.
A flat organisation has few managers with a wide span of control.
A tall organisation can suffer from having too many managers (a huge expense) and
decisions can take a long time to reach the bottom of the hierarchy. BUT, a tall
organisation can provide good opportunities for promotion and the manager does not
have to spend so much time managing the staff.
Explain what is meant by the term
“hierarchy”?
A hierarchy describes the structure of the management of the business, from the top
of the company – the managing director, through to the shop worker, who reports to
their shop manager.
The hierarchy of a business is usually best understood by drawing an organisation
chart showing which levels of management and employees report to whom.
Explain what is meant by the term
“chain of command”
The chain of command is the line on which orders and decisions are passed down,
from the top of the hierarchy to the bottom.
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Unit 2: Human Resources
Function of the Human Resources Department
You need to be able to:
 Explain the different roles people may have in a business
 Describe and evaluate methods of recruitment and selection
 Describe and evaluate methods of training
 Describe and evaluate staff appraisal systems
 Distinguish between methods of dismissing staff, i.e. dismissal, early retirement, voluntary redundancy, compulsory
redundancy
Example Questions
Suggested Answers
State the meaning of the following
kinds of employment:
- Full-time employment
- Part-time employment
- Freelance staff
Permanent employment:
Employees who work full-time in the ScreenScene plc business and who have a full
contract of employment. This will include details of the notice period that must be given
before employment is ended.
At ScreenScene plc, the permanent employees will include those holding management
or administrative posts (e.g. head office staff)
Part-time
Part-time employees will work less than a full week’s work. For example, they may only
work two or three days per week, or perhaps just in the evenings.
Cinemas often need workers for evening and weekend shifts, therefore a number of the
workers will be part time.
Freelance staff:
Freelance staff are not directly employed by a business. However, their services are
used as required.
Examples might include maintenance or IT engineers and cleaners.
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State two advantages and two
disadvantages of ScreenScene plc
employing part-time workers in the
cinema business
Advantages to ScreenScene plc
Disadvantages to ScreenScene plc
- More flexible – staff levels can be
increased or decreased to meet short-term
changes in demand (e.g. launch of a
blockbuster)
- Minimises employment costs
- Creates high level of staff turnover
- Higher staff recruitment and training
costs
- Potential problems with maintaining
quality
State two ways in which
Select two from recruitment advertising options such as:
ScreenScene plc could advertise for - Advertise in local job centres
people to work in the business
- Advertise in local newspapers
- Advertise in specialist industry magazines (not so likely)
- Encourage “recommend a friend” recruitment scheme (employees are given incentives
for recommending friends who are accepted as employees)
Describe the main stages of the
recruitment process at
ScreenScene plc
The main stages the of the recruitment process at ScreenScene plc are likely to be:
- Preparation: identifying what jobs need filling and what the role and specification of the
job is
- Finding possible candidates: using the various methods (e.g. advertising) to
encourage potential candidates to apply for the job
- Selection: using interviews and other selection processes to choose the best person
for the job and completing the contractual employment of that person
- Induction: introducing the selected candidate to the business
Explain, with examples, the
differences between a job
description and a job/person
specification
A job description is a detailed explanation of the roles and responsibilities of the post
advertised. Most applicants will ask for this before applying for the job. It refers to the
post available rather than the person.
For example, the job description for a cinema manager at ScreenScene plc would
describe the activities that the manager would perform at ScreenScene plc, how this fits
into the organisation structure of ScreenScene plc etc
A job/person specification is drawn up by the business and sets out the kind of
qualifications, skills, experience and personal attributes a successful candidate should
possess. It is a vital tool in assessing the suitability of job applicants and refers to the
person rather than the post.
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
For example, the job/person specification for a projectionist would describe the attributes
required (e.g. interest in the film and cinema industry, reliability and good with people)
State three objectives of the
recruitment process at
ScreenScene plc
List three categories of information
you would expect to see on a job
application form for a job at
ScreenScene plc
Select three from objectives such as:
- To inform the audience of potential candidates about the opportunity
- To provide enough information to both inform and interest possible applicants
- To help “screen” or dissuade unsuitable applicants
- To obtain the most number of suitably qualified applicants for the post advertised
Personal details
Name, address, date of birth, nationality
Educational history
Including examination results, schools/universities
attended, professional qualifications
Previous employment Names of employers, position held, main achievements,
history
remuneration package, reasons for leaving
State three kinds of information
ScreenScene plc managers would
wish to obtain during a recruitment
interview with a potential employee
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Suitability and
reasons for applying
for the job
A chance for applicants to ‘sell themselves’
Names of referees
Often recent employer or people who know applicant well
and are ideally independent
Information that cannot be obtained on paper from a CV or application form:
- Conversational ability- often known as “people skills”
- Natural enthusiasm or manner of the applicant
- Applicant’s reactions under pressure
- Queries or extra details missing from CV or application form
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
State the meaning of the term
“induction training”
Induction training is the training that a new employee receives when he or she first joins
a business.
Induction training is a very important part of making a new employee feel welcome and
helping them get to grips with the job.
Induction training introduces new employees to the job, their new colleagues, the
premises and to the values, and aims of the business
List three areas you would expect to
be included in an induction training
programme for ScreenScene plc
employees
You could mention areas such as:
- Ice-breakers / games to help new employees get to know each other
- Introduction to the business (e.g., ScreenScene plc ownership, history, strategy and
objectives)
- Organisation and structure of the business (e.g. management, departments, roles and
responsibilities)
- Health and safety (rules; what to do in an emergency)
- Standards (e.g. uniforms, time-keeping, rules and regulations)
- Customer service
- Shop security procedures
Describe, with examples, three
functions of the Human Resources
department at ScreenScene plc
The main functions of the Human Resources department would probably include:
- Employee recruitment (permanent, part-time)
- Employee training (induction training and ad-hoc training on–the-job)
- Dealing with employee welfare issues (e.g. sickness, morale) and grievances
- Administration of employee remuneration (payroll)
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
State three advantages for
ScreenScene plc providing training
to its employees
Select from three from the following advantages:
- Introduce new employees to the business (this is known as “induction training”) – see
above
- Help provide the skills the business needs (in particular make the workforce more
flexible)
- Provide employees with better knowledge about the business and the market in which it
operates
- Support the introduction of new working methods
- Reduce the need for supervision
- Help achieve a good health and safety record
- Help improve quality and lower customer complaints
- Increase employee motivation and loyalty to the business
Define, with examples, what is
meant by the following terms:
On-the-job training
Off-the-job training
On-the-job training:
- Takes place at the workplace
- New employee learns from experienced worker- initially may shadow or observe
Example: a new sales person spends the day with an experienced sales person
seeing how to deal with customers, work the tills and sell “packages” of food, like
meal deals.
Off-the-job training:
- Takes place outside the workplace e.g. at a college or training agency
- Learn from specialists in that work area
- May take the form of lectures or self-study
Example: the cinema management teams from some of the outlets attend a twoday course on how to market their cinema locally.
Firms like ScreenScene plc place
great emphasis on high levels of
customer satisfaction. State two
ways in which new ScreenScene
plc employees could be trained to
deliver customer service to the
Select two examples such as:
- On-the-job training – observing how experienced employees handle customers
- Induction training – including role-playing difficult customer service situations
- Customer manuals / guidelines; written advice on what is expected of employees
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
required level
Changing from individual cinemas
to multiplexes might have meant
there needed to be fewer staff.
Outline the ways and costs of
reducing staff.
Explain why health and safety
training is so important at
ScreenScene plc
Method of reducing staff
Costs
Dismissal – for acting in way that is
detrimental to the business (unlikely for
this scenario)
Staff member may contest – possible
legal costs
Early retirement – offer older members of
staff the chance to retire now, rather than
in a few years time
Increased pension costs
Voluntary redundancy – offer the worker
money to leave job
Cost of redundancy pay
Compulsory redundancy – tell the worker
that their job no longer exists, but still give
them some pay
Cost of redundancy pay, plus cannot
replace this worker with another worker
for a period of time. May be contested
(see above)
All businesses have to reach a certain health and safety standard which is monitored by
the government run Health and Safety Executive.
If ScreenScene plc employees do not adopt good health and safety practices then the
business could be fined or even closed down.
Motivating Workers
You need to be able to:
 Describe and explain needs of individuals and why they work, i.e. to satisfy basic needs
 Earn an income, gain job satisfaction, others e.g. develop a career/ambition
 Describe and apply Maslow’s theory of motivation
 Describe and evaluate methods of motivation, i.e. job rotation, job enlargement, job enrichment, teamworking
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Example Questions
Suggested Answers
Define what is meant by the term
“motivation”
Motivation is the will to work. This comes from the enjoyment of the work itself and/or
from the desire to achieve certain goals e.g. earn more money or achieve promotion
Outline two advantages to
ScreenScene plc of having wellmotivated employees
Select from the following advantages:
- Better productivity (amount produced per employee)
- Better quality of customer satisfaction (a possible objective of ScreenScene plc since it
can differentiate itself from other cinemas)
- Lower levels of absenteeism
- Lower levels of staff turnover (the number of employees leaving the business)
- Lower training and recruitment costs
What is Maslow’s theory of
motivation and how did he believe
employees should be motivated?
Workers are not just motivated by money but by having their human/social needs met
Maslow concluded that motivation can be increased by:
Better communication between managers and workers
Greater manager involvement in employees working lives
Working in groups
In practice, therefore, businesses should introduce team working and personnel
departments to look after employees’ interests
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Name three reasons why
employees decide to work (think
about the needs that are satisfied)
Select three from:
- To earn money
- To feel a sense of achievement or job satisfaction
- To feel a sense of belonging to a group
- To achieve a sense of security
- To obtain a feeling of self-worth
Define, with examples, what is
meant by the terms job rotation and
job enlargement
Job rotation:
- A formal programme in which employees are assigned to different jobs to expand their
skills base and to learn more about various parts of the business.
- For example, an employee who works in one part of the cinema works in another area
the next week (changes from ushering to working on the popcorn counter).
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Job enlargement:
- Job enlargement is the addition of more tasks to a job instead of treating each task as
separate. It is a way of giving an employee more variety and/or responsibility (a good
way of increasing employee motivation). However, it is not meant to significantly
increase the workload of the employee (which would probably reduce motivation!)
- For example, a duty manager in ScreenScene plc is given the responsibility of
monitoring the activity and effectiveness of a certain promotions campaign that is being
run.
Explain the difference between job
enlargement and job enrichment
Job enlargement means simply giving workers more tasks to do of a similar nature or
complexity. Job rotation is a part of this.
Job enrichment means giving workers more interesting and challenging tasks. This is
therefore seen as more motivating as it gives workers the chance to further themselvesHerzberg in particular recommended this approach.
Explain what is meant by the term
“teamworking”
Teamworking is where each member of the work team takes personal responsibility for
their performance and quality and seeks opportunities to make valued contributions to
the team's performance and quality goals.
Teamworking is a good way of improving the quality of service and in improving
employee productivity
Paying Workers
You need to be able to:
 Distinguish between payment systems, i.e. flat, time, piece rate
 Describe and evaluate incentive schemes: bonuses, performance related pay, profit
 Sharing, share ownership, piece rate, commission
 Explain the term and perform the calculation for ‘take home pay’, i.e. the difference between gross pay and net pay
 Define the term fringe benefits and give financial and non-financial examples
Example Questions
Suggested Answers
Explain the difference between
financial and non-financial methods
of remuneration
Financial methods are about paying money for the services provided by employees
Examples include wages, salaries and bonuses
Non-financial methods involve providing services that employees value
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Examples include a pleasant and safe working environment, flexibility in terms of how
employees work (e.g. allowing part-time work)
List four kinds of financial incentive
Select four examples from financial methods such as:
that ScreenScene plc might use to
Normally paid per hour worked and receive money at the end of the
pay its management and employees Wages
week, ScreenScene plc part-time or temporary staff are likely to be
paid this way
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Salaries
Normally an annual salary which is paid at the end of each month.
ScreenScene plc permanent staff (e.g. management) are likely to
be paid this way
Bonus
system
Usually only paid when certain targets have been achieved (e.g.
target sales; quality of service levels achieved)
Commission
Some workers, often salesmen, are partly paid according to the
number of products they sell or services they deliver. Some of
ScreenScene plc retail sales staff may be incentivised this way. For
example, they will receive a percentage of the value of the sales
they make during a month
Profit sharing
A system whereby employees receive a proportion of the
company’s profits. Likely to be only available to permanent staff at
ScreenScene plc
Performance
related pay
Is paid to those employees who meet certain targets. The targets
are often evaluated and reviewed in regular appraisals
Share
options
A common incentive for senior managers who are given shares in
the company rather than a straightforward bonus or membership of
a profit sharing scheme
Fringe
Often known as ‘perks’, these are items an employee receives in
addition to their normal wage or salary e.g. company car, private
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
benefits
health insurance, free meals; discounted film tickets
Define what is meant by the terms
“gross pay” and “net pay”. State
three items that are taken away
from an employee’s gross pay
before it is paid over
Gross Pay:
The pay each month or week before any deductions have been removed (e.g. income
tax, national insurance contributions)
Net Pay:
The pay after deductions have been taken off and is sometimes known as take-home
pay.
Main deductions from the pay packet are:
- Income tax (Pay As You Earn, or PAYE)
- National insurance contributions
- Pension contributions
ScreenScene plc pay some of their
employees overtime whilst others
qualify for a bonus payment.
Explain the difference between
overtime and bonuses
Overtime is additional hours worked over and above the normal working hours, such as
at weekends or holiday time. This is paid at a higher rate - often 1.5 or 2 time’s normal
hourly wage.
Bonus pay is given out when certain performance targets have been met and is
normally applicable at manager level in a company
The full-time management team of
ScreenScene plc could participate
in a profit-sharing scheme. Define
what is meant by the term “profitsharing”
Profit–sharing is system in which an agreed proportion of a company's profits is paid to
employees (as well as wages and salaries).
The profit-share is normally dependent on a minimum amount of profit being earned.
State two advantages of using
profit-sharing as a way of motivating
the management team at
ScreenScene plc
Select two from advantages such as:
- Creates a direct link between pay and performance
- Creates a sense of team spirit. It helps remove ‘them and us’ barrier between
managers and workers if all employees involved
- May improve management loyalty to the company (so they don’t leave and join the
competition)
- Employees more likely to accept changes in working practices if can see that profits will
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
increase overall
State two types of non-financial
incentives for working at
ScreenScene plc?
Define what is meant by the term
“fringe benefit”
© tutor2u 2007 (www.tutor2u.net)
Select two examples from non-financial incentives such as
Empowerment
Delegating power to employees so they can make their own
decisions
Praise
Recognition for good work (e.g. employee of the month
award)
Promotional
opportunities
Promoting employees to a position of higher responsibility
Job enrichment
Giving employees more challenging and interesting tasks
Job enlargement
Giving employees more tasks of a similar level of complexity
Better two-way
communication
Employees have a chance to give feedback and advice to
managers
Better working
environment
Providing a safe, clean, comfortable environment to work in
Team working
Offers employees an opportunity to meet their social needs
and often accompanied by some form of empowerment for
the team
Benefits other than your wages and salaries, such as health insurance, life insurance,
and pension plans.
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
State two fringe benefits that
ScreenScene plc could offer its
employees
Select three from options such as:
- Discounts for film tickets
- Friends and family discounts
- Subsidised staff restaurant
- Staff social events
Industrial Relations
You need to be able to:
 Explain the purpose of trade unions and the role of the TUC (Trades Union Congress)
 Explain the purpose of employers’ organisations and the role of the CBI (Confederation of British Industry)
 Show an understanding of recent developments, i.e. single union agreements, trends in trade union membership, single
status employment, multiskilling, teamwork
 Show an understanding of the impact a trade union can have on a business
 Explain the role of ACAS (Advisory, Conciliation and Arbitration Service)
Example Questions
Suggested Answers
Define what is meant by the term
“trade union”
A trade union is an organisation that employees can join in order to have their interests
and goals better represented.
Explain what the role of the Trade
Unions Congress (“TUC”) is
The main role of the TUC is to represent all British trade unions at a national and
international level.
In particular, the TUC tries to influence government decision making in the best interests
of unions and workers and to coordinate with trade union movements in other EU
countries.
What are the key benefits of team
working for ScreenScene plc
Reduces the boring nature of line production. Team members have more responsibility
and can deal with a certain amount of the decision making process involved in
production. They can also check quality themselves. Reduces the burden on middle
management.
State two impacts a trade union can
have on ScreenScene plc
Choose any two:
- pressure for higher wages
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
-
pressure for better working conditions
work with ScreenScene plc to help workers and business produce better training
programmes
act to represent employees in disputes (e.g. over unfair dismissal)
Evaluate the benefits of a trade
union to both management and
workforce of ScreenScene plc
The trade union offers experience and advice to both management and workers to
improve working conditions and productivity of workers
Trade union offers security to workers, which one of the needs described by Maslow
Management deals with a smaller number of people than many individuals
Trade union is stronger than just one individual, increasing the bargaining position of the
workforce
Explain which ScreenScene plc
employees, if any, might be
members of a trade union
The permanent employees of ScreenScene plc may be members of a trade union,
especially the projectionists and technicians at the cinemas.
Methods of Communication
You need to be able to:
 Describe methods of communication available to a business i.e. verbal, (telephone, meetings), written, (letters, memos,
notices, reports, minutes), electronic, (facsimile transmission, e-mail, video conferencing)
 Evaluate the effect of communications and communications development on business
Example Questions
Suggested Answers
Define, with examples, what is
meant by the term “communication”
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Communication is the process by which a message or information is exchanged from a
sender to a receiver
For example:
- The ScreenScene plc marketing manager sends a report to the managing director and
other operational managers on the results and activities of the marketing department
each month
- Posters and notice boards in the staff rest area promote and explain the variety of
products available
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
State two advantages of good
communication for a business like
ScreenScene plc
Select two from possible advantages such as:
- Motivates employees – helps them feel part of the business
- Makes it easier to control and coordinate business activity – prevents different parts
of the business going in opposite directions
- Makes successful decision making easier – decisions are based on more complete
and accurate information
- Improves the relationship with customers – which will hopefully increase sales
- Improve relationships with suppliers
- Improves chances of obtaining finance – e.g. keeping bankers and shareholders upto-date about how the ScreenScene plc business is doing
Describe two ways in which
ScreenScene plc management
could communicate with: (1)
Employees, and (2) the Local
Community
Communicating with Employees:
- Daily team briefings just before each cinema starts up in the morning to point out any
special orders, issues etc
- Daily/weekly team debriefings – to get quick feedback about any operational issues that
need to be sorted out (e.g. equipment failure, complaints from customers)
- Letter confirming the details of employment once an employee’s application has been
successful
- Appraisal meeting and report
Communicating with the Local Community:
- Advertisements
- Meetings with local stakeholders (e.g. local council to discuss licensing issues or
planning permissions)
- Newsletters
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Unit 3: Finance and Accounting
Function of the Finance Department
You need to be able to:
 Prepare and interpret cash flow forecasts and explain how they can be used to monitor and control the cash flow of the
business
 Explain the relationship between the components of a (trading and) profit and loss account, i.e. turnover, cost of sales,
gross profit, net profit
 Calculate and use net profit:sales and gross profit:sales ratios to inform decisions relating to the performance (profitability)
of business
 Explain the relationship between the components of a balance sheet, i.e. net current assets (working capital), net assets
 Calculate and use ROCE (return on capital employed) to inform decisions relating to the performance (profitability) of the
business
 Calculate and use the current ratio and acid test ratio to inform decisions relating to the liquidity of the business
Example Questions
Suggested Answers
What is a cash flow forecast?
It shows a prediction of the money coming in and out of a business over the next 12
months (or longer). It can be used to predict if the business will need to find extra
finance to cover any shortfalls in cash.
It can be used as a budget or target. If ScreenScene plc is under budget (or target)
then it can adjust its strategy to return them to the forecast amounts. For instance, if
sales of cinema tickets are below their predicted amount, then a new promotional
strategy might be introduced.
On a cash flow forecast, what is the
difference between credit sales and
cash sales?
ScreenScene plc will be making both credit and cash sales. Credit sales are where the
customer does not pay for the items straightaway – thus acting as an incentive to “buy
now, pay later”. Therefore the timing of the sale and the receiving of the cash will be
different on the cash flow statement. Cash sales will appear at the date they are made
(or predicted to be made) on the forecast.
Credit sales will delay cash into the business and can cause a cash flow problem.
Large amounts of credit sales are unlikely for cinemas.
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Explain the meaning of each of the
following terms:
(1) Gross profit margin
(2) Net profit margin
(3) Working capital
(4) Return on capital employed
(1) Gross profit margin
The gross profit margin ratio tells us the profit a business makes on its cost of sales, or
cost of goods sold. It is a very simple idea and it tells us how much gross profit per £1
of turnover the business is earning.
(2) Net profit margin
The amount of net profit generated per pound of sales
Calculated as net profit divided by total sales (or revenues)
Expressed as a percentage
(3) Working capital
Working capital is the amount of short term capital available for the day to day running
of the business. Working capital is usually expressed as the current assets less
current liabilities e.g. value of debtors and stocks less creditors
(4) Return on capital employed
Return on capital employed (“ROCE”) is a measure of the “return on investment” by a
business. It is calculated by expressing the net profit as a percentage of capital
employed
ROCE is a better indicator than profit alone of how well a business is using the money
invested. It shows how much profit is being generated from the investment compared
with alternative investments in similar businesses or with interest from bank deposits
Define what is meant by the term
“turnover”
Turnover is the term given to the value of revenue (or “sales” achieved by a business)
It is represented by the amount actually spent by customers
Explain what is meant by the terms
“fixed assets” and “depreciation”
Fixed assets:
Assets that provide a benefit for the business for more than 12 months, e.g. buildings
and machinery
Assets that the business intends to keep
Depreciation:
A fixed asset reduces in value over its useful life due to wear and tear and
obsolescence
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Depreciation reduces the original value of an asset by charging an amount every year
of its useful life to the profit and loss account.
Describe what would be included in
the main categories of “current
assets” shown in the ScreenScene
plc balance sheet
Stocks:
Finished goods, work in progress and raw materials (note: you may also see stocks
called “inventories”). For instance, food, drink or posters for promotions.
Debtors:
People who owe the business money (customers who owe money are known as “trade
debtors”) – not so likely in the cinema business.
Cash:
In the bank and in the cash box (and tills)
Explain what is meant by the term
“current ratio” and how this differs
from the “acid test” ratio
The “current ratio” is a ratio that illustrates the liquidity position of a business.
It compares the value of current assets (e.g. stocks, debtors and cash) with value of
current liabilities (amounts due for payment in the next 12 months).
In general, it is best for a business to have a current ratio in excess of 1 – which would
imply that the business has sufficient assets to turn into cash in order to pay the
amounts that are due. However, the current ratio varies from industry to industry.
For ScreenScene plc, a ratio of less than 1 would be acceptable because they will
receive a very large amount of cash on a daily basis (because they are a large cinema
group). Therefore, though they have fewer current assets than current liabilities at any
one point in time, they will have sufficient cash the next day to cover any bills that are
due.
The “acid test ratio” is similar to the current ratio except that the value of stocks is
eliminated from current assets. This is because, in many businesses, it can be difficult
to quickly turn stock into cash if creditors require payment.
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Sources of Finance
You need to be able to:
 Evaluate different methods of raising long and short term finance from a variety of sources, i.e. internal sources (retained
profits, sale of assets, reducing stocks, trade credit) and external sources (personal savings, commercial banks, building
societies, factoring services, share issue, debentures)
 Explain the function of a business plan in raising finance
Example Questions
Suggested Answers
Explain, with examples, the
difference between “internal” and
“external” sources of finance
Internal finance comes from the trading of the business. For example:
- Day to day cash from sales to customers (e.g. sales of tickets and food and drink at
each cinema)
- Money loaned from trade suppliers through extended credit
- Reductions in the amount of stock held by the business
- Disposal (sale) of any surplus assets no longer needed
- Use of retained profits (normally excess cash saved in the bank)
External finance comes from individuals or organisations who do not trade directly
with the business e.g. banks
Identify one source of finance that
might be used to solve a cash flow
problem
When ScreenScene plc bought
more land, identify its most likely
sources of finance
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-
bank overdraft
factoring (where ScreenScene plc “sell” their outstanding debts from customers
to a business in return for about 90 to 95% of the cash outstanding)
LIKELY
- retained profits (cheap)
- loan from the bank (but will have to pay back interest on loan)
- issue more shares (will mean less control of the business and more of the profit
goes to the people who buy the shares and not to the original owners)
UNLIKELY
- bank overdraft
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-
factoring
Explain what “leasing” means
Leasing is like renting a piece of machinery/equipment.
The business pays a regular amount for a period of time, but the item belongs to the
leasing company.
ScreenScene plc might lease their premises or cinema equipment. Other equipment
likely to be leased are vending machines selling drinks and chocolate.
State ONE advantage and ONE
disadvantage of ScreenScene plc
using leasing
ADVANTAGES OF LEASING
DISADVANTAGES OF LEASING
Cheaper in the short run than buying premises
outright
More expensive in the long run,
because the leasing company
charges fees which make the total
cost greater than the original cost
Leasing company may well maintain premises,
removing the hassle of looking after it yourself
If technology is changing rapidly or equipment
wears out quickly it can be regularly updated or
replaced - e.g. computers
The business does not own the
asset
Cash flow management easier because of
regular payments
Decision Making
You need to be able to:
 Evaluate profitability and liquidity to inform stakeholders’ decisions
 Suggest the most appropriate sources of finance for a variety of business contexts
Example Questions
Suggested Answers
List three of the main users of
ScreenScene plc financial
information, providing an example
of which part of the information
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User of
ScreenScene plc
Financial
Information
Interested In
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would be of particular interest to
them
Shareholders
- Growth of sales
- Profits earned
- Cash flow generated (does the business have enough
funding?)
Management
- Financial performance of the business (sales, profits)
- Costs (are these being kept under control?)
Employees
- Profits – is the business doing well, likely to survive
- Employment costs – are we being paid enough?!
Suppliers
- Cash flow: will the business be able to pay for trade credit?
Government
- Profits: how much tax is due
Monitor financial performance by analysing different financial ratios
Key ratios are:
- Return on capital employed
- Gross profit margin
- Net profit margin
These can be compared with previous years’ figures and with key competitors
State two ways in which
ScreenScene plc management can
measure the financial performance
of the business
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The management could assess the liquidity of ScreenScene plc by looking at two
ratios Acid test ratio or current ratio – these show the ability to pay back the money it
owes in the short term. A ratio of less than one may mean that the business could find
it difficult to cover their liabilities and so the bank may be reluctant to extend or
continue lending
Other information that would be required includes:
- Profit forecasts – a successful business will be able to pay back its loans
- Cash flow forecasts – future cash flows will be needed to pay interest and repay
loans
- Fixed assets – a business can use assets as security for loans
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Unit 4: Marketing
Function of the Marketing Department
You need to be able to:
 Explain the purpose of assessing the current market
 Explain the purpose of meeting customers’ needs now and in the future
Example Questions
Suggested Answers
State two reasons why the
management of ScreenScene plc
needs to understand the cinema
market
Key reasons are:
- Understand what factors influence customer demand for cinema visits (e.g.
consumer disposable income, competing leisure activities, changes in demographics)
- Understand what competitors are doing (e.g. cinema set ups, promotional work and
prices)
- Understand what the opportunities and threats are
Why is it important for ScreenScene
plc to meet customer needs?
Ultimately a business cannot exist profitably unless it delivers a product or service that
a customer values.
Marketing is about understanding customer needs and wants – and then satisfying
them profitably
Identify Markets for Goods and Services
You need to be able to:
 Explain the purpose of market research
 Describe methods of market research, i.e. field research and desk research methods
 Explain the purpose of sampling
 Identify market segments using age, gender, income, family size, geographical regions, hobbies and interests
 Describe factors which influence demand for goods/services
 Explain how demand responds to changes in price
 Explain the relationship between the marketing department and the production department (including R&D)
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Example Questions
Suggested Answers
Describe two ways in which market
research is helping ScreenScene
plc?
Two ways from the list below:
Market research is being used to:
- Find data and information that helps ScreenScene plc understand what customers
want now or in the future so they can decide whether they want “up-market” facilities.
- Find out whether the current products are satisfying customers and how they can
differentiate from the competition (“their main rivals”)
- Test new elements of the products (e.g. are they “up-market”?)
- Assess the results of ScreenScene plc marketing strategy – e.g. effectiveness of
advertising and sales promotional campaigns
- Understand the activities of competitors so they can effectively differentiate.
What are the two main types of
market research? Provide an
example of each that ScreenScene
plc might undertake
The two main types of market research are:
Primary research: involves getting original data directly about the product, data
which did not exist before
An example might be a product questionnaire/survey completed by existing
ScreenScene plc customers obtaining feedback about satisfaction with the products,
level of service and ideas for new areas to explore.
This could have been used in their market research to decide whether to “modernise
facilities”.
Secondary research: involves using existing information and material about a
market.
For example, ScreenScene plc might purchase a market research report on cinema
ticket sales in different parts of the country as part of the process of evaluating
whether to open new cinemas in the area.
Another example of secondary research would be the use of specialist cinema
industry databases.
Another example would be the sales information collected by Head Office (e.g. sales
of each product) which helps ScreenScene plc understand the nature of demand.
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State three examples of secondary
market research that might be of use
to ScreenScene plc management
Choose from examples such as:
- Published accounts of rivals (assuming that they are required to make their
accounts public)
- Data from consumer groups
- Use of manufacturer’s information (they may have marketing strategies they want to
share with ScreenScene plc)
- Reports from market research companies (e.g. Mintel, Keynote)
- Internal records – e.g. sales reports
- Press cuttings
- Cinema industry databases, magazines and newsletters
- Attendance at industry conferences
Name three kinds of useful
information that ScreenScene plc
might obtained from secondary
market research data
Choose three from information such as:
- Size of the cinema market
- Number and type of competitors in the market place (e.g. other cinema groups like
Odeon Cinemas or Cineworld)
- Prices of competitors
- Age and socio-economic profile of potential customers (e.g. number of
ABC1’s)
- General views about what customers say they want from cinemas (customer needs)
- Information about why potential customers do not buy their products
- Information about the “external environment” and how it is affecting the market (e.g.
surveys or statistics on consumer spending)
State the meaning of the term
“primary research data”
Primary research data is first hand information about the specific product or market.
The data is collected specifically for the purpose of the research need rather than for
another purpose (secondary research)
ScreenScene plc management are
The report could include:
investigating increasing profitability
- Current costs for ScreenScene plc
through cost saving measures. They - Existing competitor analysis (who they are; what their strategies are)
could use consultants to report on the
- Potential strategies for cost savings (for instance from the case study: increased
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cost savings. List three areas that the
consultants should include in their
report
use of state-of-the-art automatic vending machines for some food products.)
- How ScreenScene plc compares with the main competitors (strengths &
weaknesses)
List three ways in which
ScreenScene plc management could
obtain feedback on customer
satisfaction
Select three options from methods such as:
- Focus groups (very strong feedback, but expensive)
- Feedback forms (e.g. “Customer Satisfaction Questionnaires”)
- Face-to-face surveys (perhaps offer a free gift or film vouchers for customers who
agree to participate)
- Feedback from ScreenScene plc staff – obtained via meetings, surveys or informal
discussion
Describe, with examples, two kinds of
information that might be included in
a survey that measured customer
satisfaction
Areas that a customer satisfaction survey might cover would include:
- Overall satisfaction with “value for money” of the product
- Feedback on various aspects of the quality of customer service (e.g. helpfulness of
staff, encouragement, speed and delivery of products)
- View on how problems have been dealt with (if any have occurred)
- Whether the customer is likely to continue to go to ScreenScene plc cinemas
State three different kinds of
sampling used in market research
Select three from the main methods such as:
- Quota sampling – asking people who have certain characteristics (e.g. aged
between 18-25)
- Random sampling – everyone has an equal chance of being asked a question
- Stratified sampling – population is segmented by a common characteristic
- Cluster sampling – target population is divided into groups (normally by
geographical region) and random sample taken from these groups
Define what is meant by the term
“market segment”
A market segment is made up of customers that have similar needs and wants – and
who buy the same kind of product to satisfy those needs and wants.
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List four ways in which a market can
be segmented
Select four from the following main methods of segmentation:
- Socio-economic grouping
- Age of the customer
- Gender
- Size and composition of customer households
- Geographical location
- Ethnicity and/or religion
- Educational background of customers
Explain why market segmentation is
an important issue for a business like
ScreenScene plc
Market segments help a business understand the different customer needs and
wants.
By focusing a product closely on the needs and wants of customers in a particular
market segment, a business is more likely to deliver a product that satisfies
customers.
In other words, a business is more likely to be successful if it (1) understands the
requirements of a market segment and (2) delivers what customers want
For a business like ScreenScene plc they want to deliver to a range of age groups
and backgrounds. They can focus on which films to show, at what times and what
prices to match the current circumstances of their audiences. For instance different
prices for pensioners and students.
Describe ways in which the UK
leisure market can be segmented
based on the information provided to
you
The background information on leisure industry suggests several ways in which the
market is segmented:
- Health and fitness – healthy foods demand
- Leisure time spending activities – what do people spend their money on to
enhance their leisure time?, eg buying DVDs and watching them
- Leisure time activities – watching DVDs, or cheaper options of reading a book,
listening to music or watching TV.
- Weekend leisure activities
- Age groups – younger people prefer going to the pub, cinema and concerts;
older people prefer reading, gardening and DIY.
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Marketing Mix
You need to be able to:
 Apply and evaluate a marketing strategy in a variety of situations
 Explain the importance of the product design
 Describe what is involved in promotion, i.e. advertising, promotional activities, public relations, product differentiation
through branding and packaging
 Explain the purpose of advertising
 Describe methods of advertising and the motives to which advertisers appeal
 Evaluate the effects of advertising and promotional activities
 Explain the term ‘placement’ (distribution), i.e. the route a product takes from the producer to the consumer, the most
suitable channel of distribution
 Evaluate the impact of e-commerce on retailing
 Explain factors influencing price, i.e. demand, supply, competition, VAT
 Evaluate the effect of pricing strategies in competitive environments
Example Questions
Suggested Answers
Why is it important for ScreenScene
plc to set marketing objectives?
Managers need to set targets for their work. They can then measure more effectively
the success or failure of their marketing strategies to achieve these objectives.
ScreenScene plc has made a significant investment in multiplexes. This makes it
particularly important for the business to earn a satisfactory return on investment.
Marketing objectives need to be set for each multiplex investment which, if achieved,
will help earn the required return
State three possible marketing
objectives for ScreenScene plc and
outline how each could be measured
by management
Objective
How Measured
Increase sales in a certain food line,
e.g. popcorn– 10% increase in value.
Monthly sales figures
Increase sales of on line sales of
tickets in the next months by 5%
Monthly sales figures
Make repeat business a more
significant share of all sales
Surveys
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Widen audience who receive
ScreenScene plc messages
State the four main elements of
ScreenScene plc marketing mix
Surveys
The four main elements of the marketing mix are:
Product - the product (or service) that the customer obtains. Product includes all
aspects of the ScreenScene plc products, from the physical product at the cinema
(for instance the seating, quality screening of films and sound) to the service received
when buying tickets and after sales service (e.g. dealing with complaints).
Increasingly they are concentrating on food and drink to generate greater revenues.
Price - how much the customer pays for a product
Promotion - how the customer is found and persuaded to buy the product. For
ScreenScene plc the main kinds of promotion are:
Advertising (e.g. in the local papers)
Sales promotion (e.g. special offers and sponsorship)
Direct marketing – particularly direct mailing to a database of potential
customers or previous customers
Place – how the product is distributed to the customer. The physical location of the
cinema.
It may want to develop “place” in the sense of online sales.
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Provide two examples of how the
elements of ScreenScene plc
marketing mix interact with each
other
For example:
(1) The launch of a healthy “pasta” option (product) would mean co-ordinating how
the products would be positioned in the cinemas (place) simultaneously with the
running of an advertising campaign (promotion).
(2) A direct marketing campaign sent to new customers (promotion) offering them a
discount (price) for their first ticket to build loyalty to the brand
(3) Offering a discount (price) to current customers (place) who use a ScreenScene
plc loyalty card. This means that ScreenScene plc can use a direct marketing
campaign (promotion) via direct mail at a later date.
List three ways in which
ScreenScene plc could improve or
change the product offered
Select two examples from options such as:
- New seats
- Change the mix of films in the cinemas
- Different food and drink options (healthy food options)
- Expand into another type of product, like conferences
Note: some operators in this market are introducing branded operations to attract
new customers: small, up market facilities to command premium prices.
- luxury lounges, free food and drink extra comfortable sofas for two and luxury
chairs.
Provide examples of some likely
Objectives are likely to include:
objectives of ScreenScene plc pricing - To maximise the total revenue generated
policy
- To set prices that provide customers with good value for money and help attract
new customers
- To provide a range of prices that meet the needs of different customer segments
(e.g. pricing for students or pensioners who might come in during the day)
Describe, with examples, two factors
that affect ScreenScene plc product
pricing policy?
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Select two from factors such as:
- The revenue and profit objectives that the owners and management of
ScreenScene plc want to achieve for their business. If the target is for an increase in
profitability and sales as stated, then management need to decide how much of this
will come from higher prices (will this mean customers will fall?)
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- Pricing by competitors; for example, if another cinema decides to discount its ticket
prices over the Christmas period, does ScreenScene plc also reduce their prices?
- Are customers willing to spend more – i.e. are incomes increasing so people feel
they can afford to pay higher prices for items like luxury cinema experiences or
healthy food options.
Describe two ways in which
ScreenScene plc could encourage
more sales in the long run
Select two from options such as:
- drop prices for a short time to encourage new customers to buy from
ScreenScene plc: these may be customers who then come back to
ScreenScene plc in the future
- build stronger links with customers so they continue to use ScreenScene plc:
better quality of service through special offers or loyalty cards
- create an ScreenScene plc website; make it “sticky”: make customers want to
come back to the website to find out what is going on in their chosen area of
interest. Forums, blogs, news of events all increase site hits.
State three media which
ScreenScene plc could use to run an
advertising campaign
Select three from advertising media such as:
- National and regional newspapers
- Television (either national or selected regional areas)
- Radio (free-to-air or digital)
- Online (e.g. targeting web sites that are used by customers in the target market
segments)
- Lifestyle magazines
- Poster campaigns
Define what is meant by the term
“sales promotion”
A sales promotion is an incentive for a customer to buy or test a product or service.
For example, ScreenScene plc could run a sales promotion with a specialist
magazine where a new subscriber to that magazine receives a free ticket or discount
from ScreenScene plc.
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Explain one advantage of using a
sales promotion to increase sales
Select one advantage from suggestions such as:
- Building a customer base means customers are likely to come back and watch
the “latest” films (which is very much the case in this type of industry) from
someone they trust. A sales promotion gives the customer the sense of an
established business that is confident in the quality of their product. It also
gets the product in front of customers.
- Word-of-mouth recommendation is an important and powerful promotional tool
for a cinema business. People talk to their friends about what they have just
been or “show off”. Someone else’s recommendation is more powerful than
your own.
Explain what is meant by the term
“public relations”
Public relations (often shortened to “PR”) involves various kinds of communication
with the public is designed to build a brand or promote product.
The most common form of PR is publicity. For example, the ScreenScene plc
marketing team may issue a press release saying “who” is coming down to their
latest showing – perhaps a famous soccer player or Big Brother contestant (!). Or it
might be sponsorship of an event where likely customers are going to be present.
What is meant by branding and give
two reasons why it is important for
ScreenScene plc?
A brand is a trade name that can only be used by the business that has registered
the name.
The benefits of branding are:
- Brand loyalty with consumers which means they are likely to buy more
products from this business in the future.
- Allows a business to charge a higher price (known as premium pricing)
What are the main objectives of a
public relations campaign so far as
ScreenScene plc is concerned?
ScreenScene plc objectives are likely to be:
- To achieve favourable publicity about the ScreenScene plc at a low cost (a press
release costs nothing to produce)
- To build the image and reputation of ScreenScene plc, particularly amongst the
target customer base
- To communicate effectively with existing and potential new customers about the
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benefits of ScreenScene plc product range
State two advantages to
ScreenScene plc of using public
relations rather than advertising
The two main advantages of public relations are:
(1) No direct charge is made for PR, though business will need to pay for its own PR
department or external PR consultant
(2) PR is arguably more powerful because the message the business communicates
through PR is often more believable than paid-for advertising.
However there is no guarantee that PR will reach its target audience (newspapers
may fail to print the story) whereas advertising must be printed since the space in the
newspaper is paid for.
List the factors which ScreenScene
plc considered when choosing their
channels of distribution
A channel of distribution is the link between the product and the final buyer or
consumer.
- the types of product and services involved (films, food and drink)
- the type of customer
- the packaging needed for food and drink
- issues of health and safety
State three kinds of information that
Select three from options such as:
could appear on the ScreenScene plc - Contact details
web site to make it an effective part
- Prices & supporting details (plus any current special offers)
of the marketing mix
- Descriptions of films (and of course lots of pictures or clips of the films in “action”)
- Details of how to order
International Trade
You need to be able to:
 State and discuss the problems associated with international trade and possible solutions
 Describe the effect of a single European market on the UK, i.e. lack of internal tariffs, free movement of labour and capital,
the possibility of a single currency
Example Questions
Suggested Answers
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What are the advantages of
ScreenScene plc trying to expand
their sales in the European market?
Europe offers a larger market than just the UK.
New European partners are growing richer and therefore more likely to start
spending on going to the cinema.
The single European market means low cost movement of goods in comparison to
selling around the world due to (1) no internal tariffs (2) good transport infrastructure.
This is not considered an option by ScreenScene plc.
Product Life Cycle
You need to be able to:
 Interpret and explain the product life cycle of a given product, i.e. introduction, growth, maturity, saturation, decline
 Evaluate the usefulness of the product life cycle in business decisions
Example Questions
Suggested Answers
State the meaning of the term
“product life cycle”
The “product life cycle” is a marketing theory which suggests that products or brands
follow a sequence of stages including: introduction, growth, maturity, and sales
decline.
How might ScreenScene plc use the
product life cycle to influence its
business decisions
ScreenScene plc can judged when to boost their marketing effort on some products
(e.g. those who have reached maturity) or drop others from their product line (e.g.
those products that are on the decline.)
This is most likely in the areas like food and drink. Hence the “launch” of healthy food
options and perhaps dropping less popular foods.
Assess where UK cinema “products”
is in their life cycle
According to the information provided in the brief:
- UK cinema audiences are falling slightly but revenues are increasing. This is
due to increased prices and the growth in food and drink sales.
- different products in the market will be in their infancy (introduction) e.g.
healthy food options
- there is a growth in sales of food and drink
- other products are more mature, e.g. single screen cinemas and they are
going to be sold off by ScreenScene plc in the next five years.
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Unit 5: Production & Operations
Function of the Production / Operations Department
You need to be able to:
 Describe how physical and human resources are used in the production of goods and services
 Describe methods of stock control
 Explain the importance of maximum, minimum and re-order levels and the costs of holding too much or too little stock
 Explain how the business can make sure that the quality of the goods/services meets the customer’s specification
 Show knowledge and critical understanding of quality assurance using traditional and total quality management (TQM)
systems
 Show an up-to-date knowledge of production processes, i.e. lean production, just in time (JIT), teamworking, automation
including computer aided design/computer aided manufacture (CAD/CAM)
 Calculate production costs, i.e. total costs and unit costs
 Distinguish between fixed costs and variable costs
 Explain the purpose of break-even analysis
 Calculate and interpret break-even points to predict the effect of changes in costs of production and price
 Explain the importance of research and development (R&D) to meet changing markets and production methods
Example Questions
Suggested Answers
Give two reasons why stock control
will be important for ScreenScene
plc
Good stock control
- reduces costs of storage
- does not tie up too much cash in stocks
- means there is enough raw materials to cover the production needs or finished
stock to meet demand.
Explain the meaning of the following
terms:
- maximum stock level
- buffer stock
- re-order level
Maximum stock level - highest quantity of stock which ScreenScene plc wants to
keep; dictates how much new stock is bought.
Buffer stock – the minimum stock level a business keeps to cope with unexpected
periods of demand, production or late delivery of raw materials.
re-order level – level of stock at which the business will order new stock
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-
lead time
lead time – the amount of time between ordering supplies and their delivery
What do the letters JIT stand for?
Just in Time – a method of stock control where the materials and/or products arrive
just in time for their usage, thus reducing stockholding costs
Explain the importance of quality
control to ScreenScene plc in
maintaining levels of high quality
products and customer satisfaction
Good quality products means satisfied customers, therefore customers who are likely
to buy again from the same company. This is important for ScreenScene plc who want
to keep consumers coming back to the cinema.
A poor quality product can occur extra costs; cost of refunds
Identify two advantages of
ScreenScene plc introducing of
using Total Quality Management
TQM is where all the workers in the organisation contribute to and are responsible for
quality. The advantages are:
- motivates the workers (because they are responsible for the quality)
- keeps costs down in the long run because there are less defects and wastage
- improves quality overall because the product is checked at all stages
Define what is meant by the term
“fixed cost”
Fixed costs are those that do not vary with the level of output. For example, the costs
of a rent/mortgage for the cinema and management salaries at ScreenScene plc are
fixed costs, whilst the cost of providing food varies with the number of items produced
To stay in business, a business must be able to cover fixed costs
State two examples of fixed costs in
the ScreenScene plc business
Select two from fixed cost categories such as:
- Payroll costs of management and administrative staff
- Depreciation on the cost of shop fittings
- Insurance
- Rent & rates
- Lighting, heating and maintenance (e.g. cleaning, repairs)
- Marketing campaigns (e.g. advertising and direct mailing campaigns)
What is meant by the “break even
point” for a business?
Break even is the point at which the contribution from the number of units sold (or
sales revenue) exactly equals all the fixed costs of the business
Profit is made above the break even point when the number of units sold exceeds the
number of units at break even point
Explain what is meant by the term
The amount of money each unit sold contributes to pay for the fixed and indirect costs
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“contribution”
of the business
Contribution = selling price less variable cost per unit
E.g. a ticket sells for £6 and has variable costs per unit of £2. Each unit sale therefore
makes a contribution of £4 towards the fixed costs of the business. If the business had
fixed costs of £2,000, then it would need to sell 500 units (£4 x 500 = £2,000
contribution) in order to break even
Explain why it is important for a
business to understand its break
even position
The contribution from every unit sold above the breakeven point adds to profit. The
break even point provides a focus for the business, but also helps it work out whether
the forecast sales will be enough to produce a profit and whether further investment in
the product is worthwhile
Location of a Business
You need to be able to:
 Describe and apply the factors affecting the location of a business
Example Questions
Suggested Answers
Discuss whether the availability of
labour influences a new head office
location for ScreenScene plc
Points that could be made include:
In general, a business needs labour as a vital resource. It needs access to either
cheap labour (an incentive to move to areas of high unemployment) or highly skilled
labour. These people need to be within reasonable travelling distance (commuting) of
the business.
For ScreenScene plc, they will need access to staff that have retail experience and
management expertise for instance.
State three points ScreenScene plc
would need to consider when
deciding on a new location for a
cinema multiplex
Points that could be made include:
- High Street or out of town
- Cost of premises and other costs such as light, business rates
- Workforce availability
- Size of market
- Closeness of competitors
Note that some cinema operators have moved back to city centre locations, focusing
on refurbishments.
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Suggest two kinds of business
infrastructure that a business should
consider when choosing a head
office location.
Which of these is most important for
ScreenScene plc?
Infrastructure covers the modes of transport for people, materials and information. Key
considerations:
Road/rail/sea and air links (depending on type of business, but road is used by over
80% of business)
Communications network – mobile phone coverage and suitable telephone lines;
availability of broadband internet access
Access to basic facilities such as water and electricity (and enough power)
The most important factor for ScreenScene plc is likely to be that it is central to its
cinema operations so managers can travel easily between cinema if necessary and
these factories do not feel isolated. In other words communications network.
Types of Production
You need to be able to:
 Distinguish between the three types of production/industrial sector, i.e. primary, secondary and tertiary
 Describe the stages in the chain of production, i.e. the relationship between primary, secondary and tertiary
Example Questions
Suggested Answers
In which sector does ScreenScene
plc operate?
ScreenScene plc in the tertiary sector (selling goods in their shops)
Describe the stages in the chain of
production for ScreenScene plc
A food producer receives raw materials like flour and sugar.
The workers, using the production plan, use the machines to mix and produce
popcorn, which is then packaged and sent off to ScreenScene plc.
The finished goods (popcorn) are then sold in the cinemas.
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Methods of Production
You need to be able to:
 Distinguish between job, batch and flow methods of production
 Evaluate the appropriateness of the method of production in a given context
 Explain the principle of division of labour and specialisation
 Describe current automated production processes
 Evaluate the effects of introducing automation into a given business context
Example Questions
Suggested Answers
Distinguish between job, batch and
flow methods of production.
Job production: making a single item. A vending machine manufacturer might be
asked to produce a special item for a ScreenScene plc who need them for new food
products in the foyer.
Batch production: a number of the same products are produced together. For small
runs of expensive items with lots of extras, then batch production would suit, like
cinema chairs.
Flow production: a product is made continuously, often through the use of an
assembly line. Best for mass produced items like food and drink items (sweets for
instance)
Give two examples of how
ScreenScene plc can use
technology to improve the operation
of the business
Technology could be used to improve:
- Design
- Machine operation
- Payroll
- Stock control
Growth of Firms
You need to be able to:
 Distinguish between internal growth, i.e. increased markets, either at home or abroad and external growth i.e. takeovers,
mergers (horizontal, vertical, lateral, conglomerate)
 Explain reasons for growth
 Describe and explain methods of diversification
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Example Questions
Suggested Answers
Distinguish between internal growth
and external growth with reference
to ScreenScene plc
Growth can refer to:
Number of cinemas
Number of screens
Number of sales
Value of sales
Number of employees
Internal growth: From 1936 to present, the increase in the number of seats sold and
cinemas opened by ScreenScene plc across England and Wales. Growth has
happened by increased sales.
External growth: a possible takeover of a rival firm with other sites which it could use
(like City Screens)
What is the difference between a
vertical and horizontal takeover?
A vertical takeover is when a business buys another business who is either:
- a supplier
- a customer (unlikely for a cinema business since you cannot buy a household)
A horizontal takeover is when a business buys another business which in the same
business (e.g. ScreenScene plc takes over another cinema group like Vue)
State two factors that ScreenScene
plc management would need to
consider if they wished to continue
to expand the overseas
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Key factors to consider are:
- How attractive is the overseas market? Is it growing as fast as the UK? How many
existing competitors are there – and how will they respond?
- Financial implications (what is the investment and what are the likely revenues and
profits that would arise from the expansion?)
- Does it fit with their current plans/objectives and expertise?
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Glossary
The table below provides definitions for key terms used in the text of the 2008 Research Brief and Background Information:
Term
Definition / Description
Research brief
Sole trader
A sole trader is a business that is owned by one person. It may have one or more
employees. It is the most common form of ownership in the UK.
Private limited company
A legal form of business: owned by the shareholders; shares can only be sold with
agreement of shareholders; limited liability. Limited ability to raise funds through sale of
shares. Normally majority of shareholders owned by management.
Public limited company
A legal form of business: owned by shareholders but shares can be free traded on the stock
market. Can raise large sums by selling shares to the public, but less control over decisions.
Limited liability.
Floated on the stock market
Selling shares to the public, so shares can be bought or sold anyone. Not all the shares will
be sold in the business, but some of the control will be lost by the original owners.
Premium pricing
Setting prices above the average price for a standard unit. In the context of cinemas, it is the
chance to charger higher prices for what is perceived to be a better product.
Differentiation
Distinguishing one product from another by changing the make up the final product. For
instance through branding, adding new elements (healthy food, better seating)
State-of-the-art
Using the latest technology.
Profitability
The ability each unit of sale to generate a profit. It is a balance of price and decreasing
costs.
Retail park sites
Sites which have a number of shops in one place, normally large chains, like Boots, Currys
and MFI, plus other smaller retail chains.
Vending machines
Boxes which contain products where the customer slots in money to buy them. Does not
need a staff member to make the sale. Used mainly for food and drink products in cinemas.
Foyer
The area immediately outside the entrance to the screens where customers gather to wait to
enter the screens. Here they can buy their tickets as well as food and drink.
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Term
Definition / Description
Directors
The main managers of the functions of the business.
Market research department
Part of the marketing function. This department sources information on the state of the
business and the market to help make decisions.
Background information
Brand names and brand loyalty
A brand name is an identity that distinguishes it from other products in the same market. It
can “add value” to a product because customers come to trust a brand and will continue to
buy it. This form of repeat sale is called brand loyalty. This means a business can charge
higher prices because customers are less price sensitive.
Market niches
A small segment of a much larger market. It is normally where a small company can operate
profitably, whilst larger companies concentrate on the wider market.
Merged
Two companies joining together.
Consolidation
Firms deciding not to expand, and concentrate on their current activities to make them more
profitable.
USPs
Unique Selling Points – something distinguishes the product from competitor products – for
ScreenScene plc it could be the expert service in the cinemas or a money back guarantee.
Total market
The sales of all of the same type of goods in a period of time, normally a year.
Discounting
Where the price of good is reduced (normally because of purchasing power, buying in large
amounts)
Further questions based on research:
List two advantages of operating
multiplex cinemas compared with
single screen cinemas
- offer a wider range of films (product range)
- spreads the fixed cost of cinema staff across a larger number of customer visits
- allows a cinema greater capacity (in total) and also more flexibility (e.g. mix of smaller and
larger screens)
Explain two ways in
which ScreenScene's business is
affected by changes in the economy
- Consumer spending - consumers spending an increasing proportion of their disposable
income on leisure activities, including cinemas, restaurants etc
- Interest rates - an increase would lower disposable income - impact on spending
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Explain why multiplex cinemas are
usually found on retail park sites
- Next to other leisure attractions (e.g. restaurants) which makes them more appealing as a
leisure destination
- Retail parks designed for easy access - often easier for customers to reach than city centre
locations
- Much more space available
- Incentives (e.g. lower rents) provided by retail park developers who recognise the
importance of having a multiplex cinema as a way of attracting customers throughout the
day and during the evening
Outline the reasons why Screenscene
might want to close so many single
screen cinema sites
- Avoids need to spend significant amounts on renovation and other improvements
- Single screen cinemas likely to be unprofitable (lower customer numbers, but high rents
and other operating costs)
- Proceeds from the property sales can be re-invested in more profitable locations (out-oftown multiplexes)
- Focuses the business on the most profitable locations
List two kinds of primary market
research that ScreenScene could
undertake to help them understand the
demand for more up-market facilities:
- Customer questionnaires completed by cinema visitors (offer prize draws or other
incentives for those who complete the surveys)
- Visit the US cinema market to see first-hand how innovation is allowing cinema operators
to sell more premium-priced services
Outline the main categories of
operating costs involved in running a
multiplex cinema:
Principal Areas of Expenditure
Staff costs: manager, deputy/relief manager, projection staff, box office and ushering staff,
cleaners, etc.
Marketing and publicity
Premises costs: rates, insurance, maintenance, heat and light, cleaning, security
Office costs and licences (Performing Rights Society, etc.)
Programme enhancement/education costs
Finance costs, interest, audit fees
Source: BFI
List the main sources of revenue that a
ScreenScene cinema would generate:
- Ticket (entrance) prices to a film
- Sale of food and drink
- Revenue from other uses of the cinema - e.g. presentations, product launches, meetings
- Advertising before the film is screened
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Estimated annual admissions 80,000 for a 2
screen cinema
Average ticket revenue
£3.45
Annual ticket income
£276,000
Film rentals (@38%)
(£104,880)
Net ticket income
£171,120
Concession income (£0.75 x 80,000) £60,000
Concession cost of sales
(£25,000)
Net concession income
£35,000
Screen advertising
£15,000
Brochure advertising
£5,000
Bar & Cafe net profit
£25,000
Total annual net income
£251,120
Examination Technique
Introduction to the Exam
This is a brief introduction to the ICAAE/CEA GCSE Business Studies B (G37) Case Study Exam. It explains how your exam
is organised and the kind of questions you will be set. It also describes the comments that examiners have made about
previous papers – so you get the inside track on what the examiner is looking for from you!
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Getting Ready
You have already completed 25% of your GCSE Business Studies exam - this is your coursework. The rest is down to the
exams that you will sit in June.
To prepare thoroughly for this exam you will need:
 Your class notes
 Your textbook
 The Research Brief and Background information
 This tutor2u case study toolkit – which will help you get the best out of your revision for the case study exam
What You Are Assessed On
The examiner will be setting questions that test your ability to:
 Demonstrate knowledge and understanding of the specified subject content;
 Apply knowledge and understanding using appropriate terms, concepts, theories and methods effectively to address
problems and issues;
 Select, organise, interpret and use information from various sources to analyse problems and issues;
 Evaluate evidence; make reasoned judgements and present conclusions accurately and appropriately.
Doesn’t ask much – the Examiner – does he?
Sounds daunting? Don’t worry. By working through this Toolkit carefully, and using your other GCSE Business Studies notes,
you will be fine.
Let’s take a look at the structure of your exam.
Topics You Need to Cover
The subject content of your exam is based on the following five units of study:
• Unit 1 - Business and its Environment
• Unit 2 - Human Resources
• Unit 3 - Finance and Accounting
• Unit 4 - Marketing
• Unit 5 - Production
We have used these headings to help structure this revision toolkit.
There are two tiers of entry to the exam – Foundation and Higher Tier. Your teacher will decide with you which Tier is most
appropriate for you to follow. The exam structure is slightly different depending on the Tier chosen.
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The Foundation Tier has an introductory section of short answer questions and a section comprising structured questions
with guidance given to the candidate.
The Higher Tier comprises structured questions with less guidance given than in the Foundation Tier.
There will be five compulsory structured questions at the Higher Tier. The Foundation Tier will be a combination of a
compulsory section of short answers and four compulsory structured questions. The stimulus material may take a variety of
forms. We have included some examples of this kind of material in this toolkit.
Report Writing
Towards the end of the exam paper you will find questions that offer many more marks than at the start. Often these require
you to write a brief report.
You must write your answer in report format, this means your answers should look like the example that follows
Report writing is not easy. It pays to practice this format often and to develop a writing style that is both concise and precise.
Remember - the marks you will earn for report-type questions are not based on the amount you write – but on the style and
content of your answer.
A word of warning at this stage! The examiner often complains that the reports produced by candidates are clearly preprepared answers to questions that candidates wish had been asked. In other words – the candidate does not answer the
question set.
You can see the temptation to do this. One sight of the word “marketing mix” and the candidate launches into a wellrehearsed report on every possible aspect of marketing relating to ScreenScene plc.
In a word – DON’T.
You must read the questions carefully and given the examiner exactly what is required
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ICAAE/CCEA GCSE Business Studies B (G37): Summer 2008 – ScreenScene plc
Format for Writing a Report
The format below illustrates the kind of reports you should be aiming to produce:
To:
The Board of Directors of ScreenScene plc (or whoever you are asked to report to)
From:
Kevin Ellis (Management Consultant)
Subject:
Whatever you have been asked to do
Date:
June 2008
Introduction
Briefly set out here exactly what the report is about in no more than two short sentences.
Heading 2
This heading should be obvious from the question that you have been given. The examiner will provide clues as to the kind
of report and the content that is required.
For example, you might be asked to report on the advantages and disadvantages of a proposal. You might be asked to
consider things like problems, opportunities, threats or difficulties. Use these key “trigger words” as the basis for the headings
in your report. The examiner will be delighted, because it shows you have read the question
You should bullet point the issues that you intend to deal with here.
It is vital that you fully explain each issue. Quality and depth is essential. It is far better to deal with a small number of issues
properly than to cover too many issues briefly. Explanation and analysis marks are earned here.
Heading 3
Adopt the same style as under Heading 2, developing the next area that the question has asked you to address.
Try to make each of your sections of a similar length and depth. This gives the report a nice balance.
Chances are the first section (e.g. Heading 2) will be dealing with one side of an argument / issue, whereas the next section
(e.g. Heading 3) will be looking at the other side of the argument.
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Conclusion
This is the vital section. It is here that you earn the valuable evaluation marks.
You must make decisions and firm judgments.
What do you think and why?
Base your conclusions on the evidence that you have presented earlier in the report.
Be balanced – if there is any uncertainty about your conclusions or about the approach you are recommending – then say so
– and why.
And finally – do not sign the report at the end. It looks unprofessional and is unnecessary. It will not earn you any more
marks.
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