Key term
CCEA A-Level Business 3210
Enterprise and Entrepreneurship
The Central Purpose of Business Activity
Forms of Business Ownership
Stakeholder Groups
Markets and Market Forces
Quality Management
Topic overviewWhat is quality?Total quality management, quality assurance and quality control definedThe advantages and disadvantages of TQMThe advantages and disadvantages of quality assurance and quality controlISO 9000 certification and the quality policyQuality control and quality assurance reviewedTQM, control and assurance comparedThe approaches to quality, and the case for and against TQMQuality control and quality assurance weighedISO 9000 certification, and how quality is measuredQuality as a dimension of competitiveness
Productivity and Investment
Organisational Design
Topic overviewHierarchy, span of control, chain of command and delegationCentralised, decentralised, tall, flat and matrix structuresCentralisation versus decentralisation, delayering, and the effects of designCentralisation and decentralisation weighedTall and flat structures weighedOutsourcingCentralisation, structure and outsourcing
Investing in People
Topic overviewSuccession planning, skills audits and the factors behind people investmentThe benefits and drawbacks of investing in peopleMethods of recruitment and selectionTraining and appraisal methodsOnline recruitment and selectionOnline training and appraisalInduction training: content, benefits and drawbacksOn-the-job training: methods, advantages and drawbacksOff-the-job training: methods, advantages and drawbacksContinuing professional developmentChoosing a training methodInternal and external methods of recruitmentInternal versus external recruitment weighedThe stages of selection, and the methods usedPsychometric testing: what it measures and what it missesPsychometric testingThe purpose of appraisal, and its benefits and drawbacksTechnology in the appraisal processOnline recruitment and selection technologyOnline training and appraisal technologyThe benefits and drawbacks of online HR processes
Motivation
Topic overviewTaylor's scientific management and Maslow's hierarchyHerzberg's two-factor theory, and the limits of each theoryTaylor and Maslow reviewedHerzberg's hygiene factors and motivators in detailMonetary and non-monetary methods of motivationLeadership styles, and choosing a method of motivationThe monetary methods of paymentThe monetary methods weighed, and calculating commissionJob design, empowerment, team working and flexible workingRecognition and development, and how non-monetary methods link to theory
Principles of Management and Leadership
Market Size, Share and Growth
The Degree of Competition in a Market
Market Research
The Marketing Mix
Elasticity of Demand
The Product Life Cycle
Market Planning and Strategy
E-Business and E-Commerce
Sources of Finance
Break-Even Analysis
Cash Flow
Cash Flow Forecasts
Budgeting
Financial Statements
Business Objectives
Organisational Culture
Topic overviewWhat organisational culture is, and what it influencesStrong and weak cultures, what shapes them, and their effect on performanceHandy's four types of organisational cultureHofstede's Multi-Focus Model and its six dimensionsComparing Handy and HofstedeHandy's culture types reviewedHofstede's dimensions reviewed, and the strengths of each modelThe factors that shape organisational cultureWhy culture resists change, and how it is changedMergers, crises, leadership and structure as cultural forcesSize, workforce and external pressures on cultureChanging organisational culture reviewedWhy culture is changed, and the methods usedResistance to cultural change and how it is overcomeBarriers to change, measuring success, and the pace of changeReasons for change and resistance reviewedMethods, barriers and the pace of change reviewed
Stakeholder Objectives
Topic overviewStakeholder groups and their objectivesConflicting objectives and stakeholder influenceManaging conflict, and the shareholder versus stakeholder approachStakeholder objectives reviewedWhat gives a stakeholder powerCompromise, prioritisation and corporate social responsibilityPower, legitimacy and urgencyConsultation, incentives and stakeholder mapping
Communication
Topic overviewHow technology has changed business communicationDigital channels and their drawbacksBarriers to effective communicationChoosing a communication channelThe positive and negative impacts of technologyBarriers and channel choice reviewedThe impact of technology reviewedThe types of barrier to effective communicationHow technology helps and hinders communicationPhysical, semantic, psychological and organisational barriers in detailThe drawbacks of electronic communication
Economies and Diseconomies of Scale
Topic overviewInternal and external economies of scale distinguishedThe types of internal economy of scaleDiseconomies of scale and minimum efficient scaleGrowth, competitive advantage and its problemsInternal and external economies reviewedDiseconomies and minimum efficient scale reviewedSources of economies and diseconomies, and the risks of growth
Business Strategy and Planning
Topic overviewBusiness planAnalyse the current position: SWOT analysisThe six PESTEL categoriesHow PESTEL is used, and its limitationsThe Ansoff matrix: penetration, market development and product developmentDiversification, choosing a strategy, and the limits of the matrixThe Boston matrix axes, stars and cash cowsQuestion marks, dogs, portfolio balance and the limits of the matrixPorter's generic strategies and their risksPorter reviewed, and Bowman's Strategy ClockThe Balanced Scorecard, the Triple Bottom Line and KPIsDecision trees, expected value, and their limitationsBowman's Strategy ClockKaplan and Norton's Balanced Scorecard modelElkington's Triple Bottom LineKey Performance Indicators (KPIs)
Decision Tree Analysis
Risk and Uncertainty
Topic overviewRisk, uncertainty, the risk management process and the four strategiesContingency planning: purpose, benefits and drawbacksTypes of risk, and the balance in managing themThe four risk strategies appliedThe risk management process and the sources of risk reviewedContingency planning reviewed
Company Accounts
Topic overviewCash versus profit, and how accounts are comparedReturn on capital employed, and the limits of published accountsProfitability and liquidity ratios from published accountsGearing, earnings per share, and the limits of ratio analysisCash, profit and the ratio formulas reviewedClassifying the ratios, and what published accounts cannot show
Ratio Analysis
Investment Appraisal
Topic overviewThe payback period: method, advantages and limitationsNet present value: method, advantages and limitationsQualitative factors and the cost of capitalCalculating the payback period in practiceDiscounting and net present value in practiceQualitative factors in investment decisionsPayback and net present value comparedQualitative judgement and the appraisal formulaeFinancing strategic decisions
The Macroeconomic Framework
Government Policies
Topic overviewGovernment policy objectives and the conflicts between themTypes of policy and how businesses respondDirect and indirect taxation as policy instrumentsGovernment expenditure and interest ratesThe exchange rate as a policy instrument, and the limits of policyThe effects of fiscal, monetary, exchange rate and supply-side policyEmployment, environmental and trade policy, and why the impact variesHow government policy affects a business, and the counter-strategies availableRelocation, lobbying, diversification and pricing, and choosing between them
Globalisation
Topic overviewWhat makes a business global, and the drivers of globalisationGlobal business strategies and the Bartlett and Ghoshal modelEntering global markets, and why businesses trade globallyThe opportunities and threats of globalisationGlobal marketing and the factors to considerTrade regulations and export assistanceAnalysing global business dataTransport, communication and the liberalisation of trade and capitalWhy multinationals expand, and where they locateForeign direct investment, and its effect on the host countryThe benefits and risks of FDI to the investing firm, and the global strategiesForeign direct investmentFranchising and joint ventures as entry methodsLicensing and direct investment as entry methodsReasons for trading globallyImpact of trading globallyThe opportunities of global trade, and what e-business addsThe threats of global trade, and judging whether to enter a marketStandardisation versus adaptation, and the differences that force adaptationGlobal branding, glocalisation, distribution, pricing and ethicsTariffs, quotas, embargoes, subsidies and non-tariff barriersExchange rates, customs rules, and the bodies that liberalise tradeTrade promotion organisations and export financeAnti-dumping duties, compliance costs, and judging trade supportGlobal business dataGlobalisation and global business strategiesMethods of entering global marketsWhy businesses trade globally, and the effectsGlobal marketing, and what varies between marketsTrade regulation, assistance and analysing global data
Business Ethics and Organisational Culture
Sustainability
Topic overviewSustainable business activity: what it is, and its benefits and costsWhy businesses become sustainable, and how government encourages itThe triple bottom line, and stakeholder pressure for sustainabilityThe positive and negative impacts of sustainability reviewedSustainable development, greenwashing, and judging a sustainability claim
Corporate Social Responsibility
The Influence of Stakeholder Groups
Topic overviewStakeholder groups and conflicting outcomesHow decisions affect employees and shareholdersHow decisions affect customers, suppliers and local communitiesStakeholder mapping, trade-offs and ethical considerationsPressure group tactics, and internal versus external stakeholdersStakeholder priorities and where they conflictOne decision, many stakeholdersStakeholder groups and organisational structure
Organisational Structures
Monopolies, Mergers, Takeovers and Restrictive Practices
Change Management
Topic overviewTypes of change and information as a strategic resourceLewin's force field analysisPressure groups and legislation as causes of changeMarket growth, decline, diversification and modernisationResistance to change and why it arisesKotter and Schlesinger's six strategiesChoosing a strategy, and why businesses must changeTypes of change, Lewin's model and information management reviewedCauses of change and resistance to change reviewedKotter and Schlesinger's strategies reviewed
Ratio Analysis
- 5 subtopics
- 13 things to know
- Unit A2 1
What Ratio Analysis covers
Ratio analysis is examined in Unit A2 1, Strategic Decision Making. It covers profitability and liquidity ratios calculated, gearing, earnings per share and return on equity calculated, the three families of ratio, and how ratios are compared, the strengths and limitations of ratio analysis and the ratio formulas and what each term means.
Where it is assessed
Unit A2 1
Strategic Decision Making, written examination, 30% of A level.
Check the CCEA specification ↗The 5 subtopics
Each one has its own page.
- Profitability and liquidity ratios calculatedWorking out return on capital employed, gross and net profit percentages and the current ratio, and reading what each figure says about performance and liquidity.Open →
- Gearing, earnings per share and return on equity calculatedWhat gearing measures and how it is calculated, why a highly geared firm is exposed in a downturn and rewarded in a boom, and what earnings per share and return on equity tell a shareholder.Open →
- The three families of ratio, and how ratios are comparedWhat profitability, liquidity and shareholder ratios each assess, why a single year says little, and why a figure only means something against the same industry.Open →
- The strengths and limitations of ratio analysisWindow dressing in the context of ratio analysis, creative accounting and information is not disclosed in published accounts.Open →
- The ratio formulas and what each term meansCapital employed, formula for calculating Gross Profit Percentage and formula for calculating Return on Equity.Open →
What you need to know
Answer each one before you reveal it.
Your recallNot started
Key term
What is gross profit, what is profit after tax, and what is the formula for return on equity?
Key term
Give the current ratio formula, work it out for 700 against 675, and say what range counts as healthy.
Numbers
Calculate the ROCE when operating profit = £340,000, capital employed = £2,900,000.
Key term
What does gearing measure?
Key term
What happens to interest payments when a highly geared company makes a loss?
Key term
How do trends in ratio analysis help decision-making?
Key term
How do ratios simplify complex financial data?
Key term
Define capital employed.
Numbers
Calculate the gross profit percentage when gross profit = £560,000, revenue = £1,450,000.
Key term
How can high gearing benefit shareholders when trading conditions are favourable?
Key term
How do ratios enable comparison between companies of different sizes?
Numbers
State the formula for calculating capital employed.
Take Ratio Analysis further
The same content, four other ways.
Commonly confused
Pairs that lose marks when they are blurred together.
Gross profit vs Net profit
Gross profit: revenue less the direct cost of sales. Net profit: what remains once all other expenses have been taken off as well.
Gearing vs Return on capital employed
Gearing: the proportion of long-term funding that is borrowed. Return on capital employed: operating profit as a percentage of the capital invested.
Questions from this topic
Each one with the model answer underneath.
- 1
Calculate the ROCE when operating profit = £340,000, capital employed = £2,900,000.
Model answer
ROCE = (340 ÷ 2900) × 100 = 11.7 %.
- 2
Calculate the gross profit percentage when gross profit = £560,000, revenue = £1,450,000.
Model answer
Gross profit percentage = (560 ÷ 1450) × 100 = 38.6 %.
- 3
What does Net Profit Percentage measure?
Model answer
It measures the proportion of revenue retained as profit after all operating expenses have been deducted.
- 4
Calculate the net profit percentage when net profit = £200,000, revenue = £1,600,000.
Model answer
Net profit percentage = (200 ÷ 1600) × 100 = 12.5 %.
- 5
What does the current ratio measure?
Model answer
It measures a business's ability to meet short-term liabilities using its current assets.
- 6
State the formula for calculating the current ratio.
Model answer
Current Ratio = Current Assets ÷ Current Liabilities.
What is inside Levo
Six ways to work the same material.
Ratio Analysis revision questions
- What does Ratio Analysis cover in CCEA A-Level Business?
- 5 subtopics: profitability and liquidity ratios calculated, gearing, earnings per share and return on equity calculated, the three families of ratio, and how ratios are compared, the strengths and limitations of ratio analysis and the ratio formulas and what each term means. Each one has its own page with questions and model answers.
- How is Ratio Analysis organised?
- By the CCEA 3210 specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in Ratio Analysis, 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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