Key term
Eduqas A-Level Business A510QS
Enterprise, Business Plans and Location
Topic overviewEnterprise, entrepreneurs and SMEsNeeds, wants and spotting a business opportunityThe role of the entrepreneur in setting up and running a businessFinancial and non-financial motives of entrepreneursCharacteristics and skills of entrepreneursEntrepreneurs, SMEs and the sectors of the UK economyStakeholders and their interestsBusiness plans and sources of adviceChoosing a business location
Markets, Demand and Market Research
Topic overviewMarkets and competitionTypes of marketMarket size, market share and market trendsMarket segmentationMarket structures and degrees of competitionConsumer protectionDemand and the factors that shift itSupply and the factors that shift itEquilibrium price and shifts in the marketPrice and income elasticity of demandPrimary and secondary market researchQualitative and quantitative dataSampling and bias in market research
Business Structure and Sources of Finance
Topic overviewThe private sector and the public sectorAims of private sector businessesSole traders and partnershipsPrivate and public limited companiesUnlimited and limited liabilityChoosing a legal structureNot-for-profit organisationsInternal and personal sources of start-up financeBorrowing, equity and grants for a small business
Revenue, Costs and Break-Even
Topic overviewRevenue, costs and profitFixed, variable and semi-variable costsDirect costs, indirect costs and overheadsCalculating revenue, costs and profitContribution and its usesCalculating the break-even pointBreak-even charts and the margin of safetyWhat-if analysis of changes in costs and revenueThe usefulness and limits of break-even
Marketing and the Marketing Mix
Topic overviewThe purpose of marketing and market orientationThe marketing mix and the four PsProduct, brand, USP and differentiationThe product life cycleExtension strategiesThe product life cycle and cash flowThe Boston matrixPricing strategiesChoosing the right pricing strategyPromotion above the line and below the linePlace and distribution channelsThe marketing mix in different contextsNew technology in marketing
Financial Planning and Accounts
Topic overviewThe role of the finance departmentBudgets and the purpose of budgetingThe benefits and drawbacks of budgetsInternal sources of financeExternal sources of financeChoosing the right source of financeCash flow and cash flow forecastsConstructing and interpreting a cash flow forecastCash flow problems and how to improve cash flowThe income statement, gross profit and net profitGross and net profit margins
People in Organisations
Topic overviewThe role of the human resource departmentThe flexible workforceNew technology and changing working patternsWorkforce planningThe recruitment process, job analysis and job descriptionsInternal and external recruitmentMethods of selecting employeesMethods of trainingThe value of training to a businessAppraisal and its methodsMeasuring workforce performanceOrganisational structures and the chain of commandDelegation, empowerment and delayering
Motivation, Management and Employee Relations
Topic overviewMotivation and the benefits of a motivated workforceTaylor and scientific managementMayo and the Hawthorne studiesMaslow's hierarchy of needsHerzberg's two factor theoryExpectancy theories of Vroom, Porter and LawlerFinancial methods of motivationNon-financial methods of motivationManagement, management by objectives and Theory X and YLeadership and leadership stylesLeadership theories and choosing a styleEmployment rights, contracts and equal opportunitiesTrade unions, industrial conflict and dispute resolution
Operations Management
Topic overviewOperations management and added valueJob, batch and flow productionProductivity and how to raise itCapacity utilisationTechnology in operations: IT, CAD, CAM and roboticsLean production, kaizen and just-in-timeQuality control and quality assuranceTotal quality managementPurchasing, suppliers and methods of stock controlStock control diagrams and stock levelsInnovation, research and developmentInternal and external economies of scaleDiseconomies of scale and the survival of small firms
Data and Market Analysis
Topic overviewPresenting and interpreting business dataIndex numbers and comparing figures over timeCalculating price elasticity of demandInterpreting price elasticity and its effect on revenueIncome elasticity of demandSales forecasting and the reliability of a forecastMoving averages and time-series analysisCorrelation, scatter graphs and extrapolationQualitative forecasting techniques
Analysing Business Performance
Topic overviewBudget variances and how to calculate themAnalysing and evaluating budget variancesThe balance sheet and how it is constructedWorking capital, capital employed and depreciationLiquidity ratios: the current ratio and the acid testReturn on capital employed and gearingComparing accounts over time and between businessesEvaluating the financial position of a businessNon-financial measures of performance and vision statements
Aims, Objectives and Strategy
Topic overviewAims, objectives and SMART targetsMission and vision statementsStrategy, tactics and corporate plansSWOT analysisPorter's Five ForcesThe Ansoff matrixOrganic growthExternal growth: mergers and takeoversHorizontal and vertical integrationFranchising as a method of growthRationalisation and relocationOutsourcing production
Decision-Making and Investment Appraisal
Topic overviewTypes of business decisionScientific and intuitive decision-makingDecision trees: constructing and calculatingEvaluating decision tree analysisCritical path analysis: building the networkInterpreting and evaluating critical path analysisCost benefit analysisPayback and the average rate of returnDiscounted cash flow and net present valueChoosing between investmentsSpecial orders
Change and Risk Management
Topic overviewCauses of change in a businessInternal and external causes of changePlanned and unplanned changeEffects of change on a businessManaging change and Storey's four approachesResistance to change and how it is overcomeEvaluating change and its impact on stakeholdersTypes of risk a business facesRisk assessment, prevention and insuranceContingency planning and crisis management
PEST Factors and the External Environment
Topic overviewPolitical factors and the role of governmentTaxation and subsidiesFiscal and monetary policyEconomic growth, GDP and the business cycleInflation and how it is measuredInterest rates and exchange ratesUnemploymentDemographic changeSocial and cultural changeTechnological factors and automation
Ethical, Legal and Environmental Factors
Topic overviewBusiness ethics and ethical objectivesEthical issues facing a businessCorporate social responsibilityEthics, profitability and stakeholder viewsCompany law, intellectual property and pay lawEmployment, discrimination and health and safety lawConsumer, competition and data protection lawEnvironmental costs of business activityControlling environmental costs and business responses
International Trade, Globalisation and the European Union
Topic overviewInternational trade and why it happensFree trade and protectionismTrading blocs and the single marketEntering new international marketsGlobalisation and its causesThe effects of globalisation on businessStrategies for global growthGlocalisation and adapting to local marketsMultinational companiesThe European Union and the single European marketThe euro, the Eurozone and membership
Decision-Making and Investment Appraisal
- 11 subtopics
- 30 things to know
- Component 2
What Decision-Making and Investment Appraisal covers
Decision-Making and Investment Appraisal is examined in Component 2, Business Analysis and Strategy, and can be drawn on in the synoptic Component 3. It covers types of business decision, scientific and intuitive decision-making, decision trees: constructing and calculating, Evaluating decision tree analysis, critical path analysis: building the network, Interpreting and evaluating critical path analysis, cost benefit analysis, payback and the average rate of return, discounted cash flow and net present value and choosing between investments.
The 11 subtopics
Each one has its own page.
- Types of business decisionStrategic decision, tactical decision and operational decision.Open →
- Scientific and intuitive decision-makingScientific decision-making, intuitive decision-making and role of information technology in business decision-making.Open →
- Decision trees: constructing and calculatingDecision tree analysis, expected value and payoff on a decision tree.Open →
- Evaluating decision tree analysisWhat a tree adds and what it leaves out — estimated probabilities, no qualitative factors, and an expected value that is an average over repetitions a one-off decision never gets.Open →
- Critical path analysis: building the networkCritical path analysis, node in a critical path network and activity in a critical path network.Open →
- Interpreting and evaluating critical path analysisJust-in-time ordering in the context of a network and crashing a project.Open →
- Cost benefit analysisCost benefit analysis, difference between a private cost and an external cost and difference between a private benefit and an external benefit.Open →
- Payback and the average rate of returnInvestment appraisal, payback period and average rate of return.Open →
- Discounted cash flow and net present valueTime value of money, discount factor and net present value.Open →
- Choosing between investmentsWhy payback, the average rate of return and net present value can disagree, criterion levels, sensitivity analysis and risk, capital rationing, and the qualitative factors and objectives that shape the final choice of project.Open →
- Special ordersWhat a special order is, calculating its contribution, when accepting it adds to profit and when it does not because capacity is full or extra fixed costs arise, and the non-financial factors to weigh.Open →
What you need to know
Answer each one before you reveal it.
Your recallNot started
Key term
Give two examples of a strategic decision.
Evaluation
Give two advantages of scientific decision-making.
Key term
What is a payoff on a decision tree?
Key term
How can bias enter a decision tree?
Key term
How is the forward pass carried out?
Key term
How is the backward pass carried out?
Key term
What is total float?
Numbers
A scheme has private costs of £4 million and external costs valued at £1.5 million. Calculate the social cost.
Numbers
A machine costs £100,000 and returns £30,000 in year one, £40,000 in year two and £60,000 in year three. Calculate the payback period.
Numbers
A vehicle costs £48,000 and returns £16,000 each year. Calculate the payback period.
Evaluation
Give two disadvantages of the average rate of return.
Key term
When should a special order earning a £4,000 contribution be accepted?
Key term
What does critical path analysis tell a business about the project duration?
Key term
What is the time value of money?
Key term
What is scientific decision-making?
Key term
What is decision tree analysis?
Key term
Give two benefits of decision tree analysis.
Key term
How does critical path analysis help with resource allocation?
Key term
What is cost benefit analysis?
Key term
What is discounting?
Key term
Why do the three appraisal methods sometimes disagree?
Key term
What is a tactical decision?
Key term
What is intuitive decision-making?
Key term
What do the square and circle nodes on a decision tree represent?
Key term
How does a decision tree help a business compare risk?
Key term
What is meant by just-in-time ordering in the context of a network?
Key term
What is the difference between a private cost and an external cost?
Key term
What is a discount factor?
Key term
Which method should a business use when liquidity is its main concern?
Take Decision-Making and Investment Appraisal further
The same content, four other ways.
Commonly confused
Pairs that lose marks when they are blurred together.
Scientific decision-making vs Intuitive decision-making
Scientific decision-making: following a structured process using quantitative data. Intuitive decision-making: relying on the experience and judgement of the manager.
Crashing a project vs Sensitivity analysis
Crashing a project: spending more to shorten the critical path. Sensitivity analysis: reworking an appraisal under different assumptions.
Questions from this topic
Each one with the model answer underneath.
- 1
What is a strategic decision?
Model answer
A strategic decision sets the long-term direction of the whole business. Senior management takes the decision. The resources committed are large and the decision is difficult to reverse.
- 2
Give two examples of a strategic decision.
Model answer
Entering an overseas market is a strategic decision. Acquiring a competitor is another. Each changes what the business is rather than how it operates day to day.
- 3
What is a tactical decision?
Model answer
A tactical decision puts a strategy into effect over the medium term. Middle managers usually take tactical decisions, and the resources committed are smaller than for a strategic one.
- 4
Give two examples of a tactical decision.
Model answer
Choosing which advertising media to use for a campaign is a tactical decision. Deciding to open on Sundays is another.
- 5
What is an operational decision?
Model answer
An operational decision concerns the daily running of the business. Junior managers and supervisors take operational decisions, and each is easily reversed.
- 6
Give two examples of an operational decision.
Model answer
Reordering stock is an operational decision. Setting next week's staff rota is another.
What is inside Levo
Six ways to work the same material.
Decision-Making and Investment Appraisal revision questions
- What does Decision-Making and Investment Appraisal cover in Eduqas A-Level Business?
- 11 subtopics: types of business decision, scientific and intuitive decision-making, decision trees: constructing and calculating, evaluating decision tree analysis, critical path analysis: building the network, interpreting and evaluating critical path analysis, cost benefit analysis, payback and the average rate of return, discounted cash flow and net present value, choosing between investments and special orders. Each one has its own page with questions and model answers.
- How is Decision-Making and Investment Appraisal organised?
- By the Eduqas A510QS specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in Decision-Making and Investment Appraisal, 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.
Or £46 a year, about £3.83 a month. Cancel anytime.