Evaluation
AQA A-Level Business 7132
What Is Business?
Topic overviewWhy businesses exist and their objectivesRevenue, costs and profitCalculating and presenting business dataBusiness forms, sectors and liabilityShare capital, market capitalisation and dividendsWhat moves a share price, and how ownership shapes objectivesCompetition, market conditions and incomesInterest rates, demographics and environmental issues
Managers, Leadership and Decision Making
Topic overviewManagement, leadership and the four leadership stylesThe Tannenbaum Schmidt continuumChoosing a leadership style and its limitationsScientific and intuitive decision making, and expected valueReading a decision treeRisk, uncertainty and opportunity costWhat influences a management decisionStakeholders and stakeholder mappingStakeholder needs and managing the relationship
Marketing Management
Topic overviewWhy businesses set marketing objectivesBrand loyalty and calculating the marketing measuresPrimary and secondary market researchSampling methodsCorrelation, confidence intervals and extrapolationPrice and income elasticity of demandCalculating market share, market growth and sales growthSegmentation and the bases for itNiche and mass marketing, targeting and market mappingThe elements of the marketing mixProduct portfolio analysis and the Boston MatrixThe product life cycle and extension strategiesPricing, branding, place and the influences on the mix
Operational Management
Topic overviewOperational objectives: cost and qualitySpeed, flexibility and environmental objectivesAdded value and the trade-offs between objectivesLabour productivity and unit costsCapacity and capacity utilisationImproving capacity utilisationRaising labour productivity, and the obstaclesLean production and Just in TimeLabour-intensive and capital-intensive productionTechnology in operationsQuality control and quality assuranceThe benefits and costs of improving qualityMatching supply to demandThe inventory control chartInfluences on inventory and choosing a supplierSupply chain managementOutsourcing: benefits and drawbacks
Financial Management
Topic overviewFinancial objectives and return on investmentGross profit, operating profit and profit for the yearBudgets and variance analysisCash flow forecastsBreak-even, contribution and the margin of safetyBreak-even charts and how they shiftThe uses and limits of break-even analysisProfit margins, payables and receivablesInternal sources of financeShort-term external financeShare capital, loans, venture capital and crowd fundingChoosing a source of financeMethods of improving cash flowMethods of improving profitsThe difficulties and trade-offs in improving cash flow and profit
Human Resource Management
Topic overviewHuman resource objectives and their valueHard and soft human resource managementCalculating labour turnover and labour productivityEmployee costs as a percentage of turnover, and labour cost per unitUsing and interpreting human resource dataTypes of organisational structureSpan of control, hierarchy and delegationHuman resource flowThe value of a motivated workforce, and TaylorMaslow's hierarchy of needsHerzberg's two-factor theoryFinancial methods of motivationNon-financial methods of motivationChoosing and assessing methods of motivationEmployee involvement and the influences on itTrade unions, works councils and communication channelsThe value of good employer-employee relations
Analysing the Strategic Position of a Business
Topic overviewInfluences on the mission and corporate objectivesMission, objectives, strategy and tacticsFunctional objectives and their influencesSWOT analysis and its limitationsReturn on capital employed and the current ratioGearing and the ratios of working capitalFinancial statements and the categories of ratioUsing ratio analysis, and its limitsNon-financial measures of performanceBenchmarking and core competencesThe Triple Bottom LineCompetition law and labour market legislationEnvironmental legislation and government supportRegulators, infrastructure and environmental incentivesTrade policy and responding to political changeGDP, taxation and exchange ratesInflation, fiscal policy and monetary policyTrade, protectionism and responding to economic changeDemographic and social changeCorporate social responsibility and its criticsCarroll's pyramid and technological changePorter's five forces: entry and buyer powerSupplier power, rivalry and substitutesUsing five forces to shape strategyPayback period and average rate of returnNet present value and the time value of moneyInvestment criteria, risk and sensitivity analysis
Choosing Strategic Direction
Strategic Methods: How to Pursue Strategies
Topic overviewOrganic growth, external growth and retrenchmentEconomies and diseconomies of scale, synergy and overtradingMethods of external growthThe advantages and disadvantages of organic and external growthProduct and process innovation and its driversKaizen, research and development, and intellectual propertyThe causes of globalisation and its opportunitiesMethods of entering international marketsChoosing a country to trade with or invest inOff-shoring, re-shoring and multinationalsGlobal, multi-domestic and transnational strategiesDigital technology and the pressure to adopt itThe value and the limits of digital technology
Managing Strategic Change
Topic overviewTypes of change and Lewin's force field analysisFlexible organisations, restructuring and delayeringReasons for resistance and overcoming it through education, participation and supportOvercoming resistance: negotiation, manipulation and coercionOrganisational culture and Handy's four typesRecognising cultures and what shapes themChanging organisational culture and the difficultiesLeadership, communication and structure in implementationNetwork analysis and reading a network diagramFloat, the critical path and the value of network analysis
Problems with Strategy and Why Strategies Fail
Topic overviewUncertainty and cognitive bias in strategic decisionsResource and organisational barriers to implementationPlanned and emergent strategyReasons for strategic driftFinancial and non-financial measures of strategic performanceThe balanced scorecard, KPIs and the limits of evaluationThe value of strategic planningContingency planning and crisis management
Choosing Strategic Direction
- 6 subtopics
- 15 things to know
- Papers 1, 2 and 3
What Choosing Strategic Direction covers
Choosing strategic direction is examined on Papers 1, 2 and 3. It covers the two decisions at the heart of strategy: which markets to compete in and what to offer, then how to compete once you are there.
Where it is assessed
Papers 1, 2 and 3
All three papers may draw on any part of the specification.
Check the AQA specification ↗The 6 subtopics
Each one has its own page.
- The Ansoff matrix: penetration and market developmentThe two axes, market penetration as the lowest-risk route, and taking a product into a new market.Open →
- New product development and diversificationThe risk each carries, and related against unrelated diversification.Open →
- Influences on the choice of strategic directionMarket size and growth, competition, barriers, resources, risk appetite and available finance.Open →
- Porter's generic strategiesLow cost, differentiation and focus, and the two variants of a focus strategy.Open →
- Choosing a positioning strategyHow the market, competitors, resources and customers decide which strategy fits.Open →
- Competitive advantage and the threats to itWhat competitive advantage gives a business, and how imitation, changing tastes and complacency erode it.Open →
What you need to know
Answer each one before you reveal it.
Your recallNot started
Numbers
How can marketing, pricing and loyalty schemes achieve market penetration?
Evaluation
What is market development, how can it be achieved, and why does it carry moderate risk?
Evaluation
What are related and unrelated diversification, and why is diversification riskiest?
Evaluation
What do market penetration and market development offer a business?
Evaluation
How do risk appetite, available finance and potential profitability shape the choice of direction?
Evaluation
Why might a business pursuing market development be better positioned to survive an economic downturn in one region?
Numbers
How do business objectives influence the choice of strategic direction?
Evaluation
How do competitors and a business's own resources shape positioning, and what is differentiation focus?
Process
How do customers and the external environment shape positioning, and when does low cost suit?
Evaluation
When is a focus strategy valuable, and what does differentiation demand?
Evaluation
What is competitive advantage, and what does it do for profit margins?
Evaluation
What is pricing power, and how does competitive advantage create it?
Evaluation
Why do rising costs pose a challenge to maintaining competitive advantage?
Key term
What are Porter's three generic strategies?
Take Choosing Strategic Direction further
The same content, four other ways.
Commonly confused
Pairs that lose marks when they are blurred together.
Market penetration vs Market development
Market penetration: selling existing products more deeply in existing markets. Market development: selling existing products in new markets.
Product development vs Diversification
Product development: offering new products to existing markets. Diversification: offering new products to new markets.
Cost leadership vs Differentiation
Cost leadership: competitive advantage through lower costs. Differentiation: competitive advantage through distinctive value.
Questions from this topic
Each one with the model answer underneath.
- 1
What two key decisions does strategic direction involve for a business?
Model answer
Deciding which markets the business will compete in and what products it will offer to those markets.
- 2
What is the Ansoff matrix?
Model answer
A strategic planning tool that maps four growth strategies based on whether markets and products are existing or new.
- 3
What are the two axes of the Ansoff matrix and what do they represent?
Model answer
Products (existing vs new) on one axis and markets (existing vs new) on the other axis.
- 4
Define market penetration as a growth strategy.
Model answer
A growth strategy that involves selling more existing products to existing markets.
- 5
Why is market penetration typically considered the lowest risk strategy in the Ansoff matrix?
Model answer
Because the business operates with familiar products and customers, reducing uncertainty.
- 6
How can increased marketing activity help achieve market penetration?
Model answer
By raising awareness and encouraging existing customers to buy more frequently or in greater quantities.
What is inside Levo
Six ways to work the same material.
Choosing Strategic Direction revision questions
- What does Choosing Strategic Direction cover in AQA A-Level Business?
- 6 subtopics: the ansoff matrix: penetration and market development, new product development and diversification, influences on the choice of strategic direction, porter's generic strategies, choosing a positioning strategy and competitive advantage and the threats to it. Each one has its own page with questions and model answers.
- How is Choosing Strategic Direction organised?
- By the AQA 7132 specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in Choosing Strategic Direction, on a schedule.
Attempt a question from memory, write the correct version, then attempt it again. Levo records the jump between your first attempt and your last, and brings each question back on the day you are due to forget it.
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