Key term
OCR A-Level Business (H436) H436
Business Activity
Topic overviewBuying, selling and adding valueSpotting an opportunity and starting a businessEntrepreneurs and intrapreneursRisk, reward and uncertaintyBusiness objectives: profit, growth, survival and sustainabilitySMART objectives and the usefulness of objectivesPrimary, secondary and tertiary sectorsSole traders and partnershipsPrivate and public limited companiesLiability, legal status and choosing an ownership structureSocial enterprises and not-for-profit organisationsThe stakeholders of a businessWhat each stakeholder wants from a businessConflicting stakeholder objectivesMeasuring the size of a businessOrganic growth and franchisingMergers, takeovers, integration and diversificationFactors influencing the scale of operationsEconomies and diseconomies of scaleMarket power and overtradingStages of the customer journeyCustomer experience and how it is measured
Marketing
Topic overviewThe purpose of marketing and the unique selling pointMarket orientation and product orientationWhy a business researches its marketPrimary research: questionnaires, focus groups and observationSecondary research sources and their reliabilityRandom, stratified and systematic samplingQualitative and quantitative research dataMarket size, market share and market growthConsumer markets and business marketsMass markets and niche marketsSegmenting a market into customer groupsNew product development, innovation and R&DThe product life cycle and extension strategiesThe Boston Matrix and product portfolio analysisSkimming, penetration and cost-plus pricingCompetitor, psychological, dynamic and freemium pricingPrice and income elasticity of demandAdvertising, sponsorship and public relationsSales promotion, direct mail and point of saleBranding and packagingSocial media, influencers and content marketingWebsites, search engine optimisation and pay-per-click advertisingDistribution channels, e-commerce and intermediariesWhy businesses forecast their salesHistorical sales forecasting and the line of best fitIntuitive forecasting and forecasting for a new productBig data and artificial intelligence in marketingGamification, virtual reality and augmented realityComplaints, reviews and the net promoter score
People
Topic overviewHuman resource management and workforce planningFull-time, part-time, permanent and temporary contractsFlexible, shift and remote workingOrganisational design, flexibility and intrapreneurshipTall, flat, matrix and divisional structuresLevels of hierarchy, span of control and delayeringAuthority, delegation and centralisationWhy motivation matters at workSalary, wages, piece rates and commissionBonuses, profit sharing, pensions and fringe benefitsRecognition, empowerment and job designWork-life balance, wellbeing and inclusion at workLeadership, vision and company cultureAutocratic, democratic and transformational leadershipEmployee voice, suggestion schemes and works councilsTrade unions, collective bargaining and strikesRedundancy, fair dismissal and unfair dismissalInternal and external recruitmentCVs, interviews and assessment centresThe benefits of training and developmentInduction, on-the-job and off-the-job trainingCoaching, mentoring, shadowing and apprenticeshipsEmployee turnover and retentionAbsenteeism and employee productivity
Operations
Topic overviewThe purpose of operations and the transformation processAdded value and how it is calculatedWays of adding value: convenience, branding, design and facilitiesSustainability as a way of adding valueAutomation, robotics and 3D printing in productionAI, cloud services and digital technology in productionEfficiency, effectiveness and productivityMeasuring and improving productivityProduction quality: purpose and standardsQuality control and quality assuranceCapacity utilisation and how it is calculatedManaging capacity: increasing output, cutting capacity and outsourcingTypes of inventory and the purpose of inventory controlInventory control charts, re-order levels and lead timeJust In Time and inventory management systemsThe stages of supply chain managementLogistics: procurement, transport and reliability of supplyKey performance indicators in operations
Finance
Topic overviewThe finance function and business failureAssets, liabilities and capitalCash, profit and working capitalCost behaviour and sales revenueContribution and the break-even pointBreak-even charts and the margin of safetyUsing contribution to make short-term decisionsLevels of profit and profit marginsBudgets and budget settingBudget variancesCash flow forecasting and its usesThe structure of a cash flow forecastRemedies for a cash flow shortageLiquidity, the current ratio and the acid testRetained profit, owners' investment and asset salesLoans, overdrafts and other debt financeShare capital, venture capital, crowdfunding and grantsChoosing a source of financeFinancial statements and who uses themThe income statementThe statement of financial position (balance sheet)Return on capital employed and gearingInventory turnover, receivable days and payable daysRatio analysis and its limitations
External Influences
Topic overviewDemand, supply and the market mechanismPrice, income and the drivers of demandCosts, capacity and the drivers of supplyRivalry, market share and competitor behaviourImports, exports and the case for open tradeTrade barriers and trade agreementsExchange rates and the value of the poundCulture, law and politics in overseas marketsThe forces behind a globalised marketPolitical stability and the reach of government policyThe business cycle and the state of the economyInterest rates, tax and subsidiesDemographics, lifestyle and cultural changeShopping habits, communities and pressure groupsArtificial intelligence, automation and roboticsCybersecurity, cloud services and connected devices
Strategy, Risk and Managing Change
Topic overviewBusiness planning and the reduction of riskThe uses and limitations of a business planBusiness strategy and the interdependence of business decisionsSWOT analysisPEST analysisThe Ansoff matrixPorter's five forcesOpportunity cost, risk and uncertainty in decision makingThe stages of making a business decisionCorporate planning from objectives to evaluationHandy's four organisational culturesThe payback periodAverage rate of returnNet present value and discounted cash flowJudging an investment decisionContingency planning and disaster recoveryCrisis management and the response to a crisisInsurance and the protection it gives a businessInternal and external causes of changeThe effects of change on a businessBarriers to change and resistanceLewin's force field analysisCritical path analysis and the critical pathTotal float, free float and the use of a networkMonitoring change with quantitative and qualitative dataEthical treatment of workers and suppliersEthical marketing and community engagementConsumer and employee protection lawPollution, waste and the environmental auditSustainability, net zero and the circular economyESG reporting
External Influences
- 16 subtopics
- 45 things to know
- Component 02
What External Influences covers
External Influences is examined in Component 02, Operations, finance and external influences. It covers demand, supply and the market mechanism, price, income and the drivers of demand, costs, capacity and the drivers of supply, rivalry, market share and competitor behaviour, imports, exports and the case for open trade, trade barriers and trade agreements, exchange rates and the value of the pound, culture, law and politics in overseas markets, the forces behind a globalised market, political stability and the reach of government policy, the business cycle and the state of the economy, interest rates, tax and subsidies, demographics, lifestyle and cultural change, shopping habits, communities and pressure groups, artificial intelligence, automation and robotics and cybersecurity, cloud services and connected devices.
Where it is assessed
Component 02
Operations, finance and external influences.
Check the OCR specification ↗The 16 subtopics
Each one has its own page.
- Demand, supply and the market mechanismRecall questions on markets, demand and supply, how quantity demanded and supplied respond to price, equilibrium price, the effects of pricing above equilibrium, and why businesses forecast demand and study supply in input markets.Open →
- Price, income and the drivers of demandRecall questions on substitute, complementary, normal and inferior goods, how income, expectations, population, promotion and changing tastes drive demand, and the operational problems an unexpected surge in demand creates.Open →
- Costs, capacity and the drivers of supplyRecall questions on how production costs, the number of suppliers, capacity, productivity, weather, indirect taxes and subsidies affect supply, why supply responds slowly to price, and how businesses cope with scarce raw materials.Open →
- Rivalry, market share and competitor behaviourRecall questions on calculating market share, how the number and size of competitors affect prices and profits, non-price competition, price wars, barriers to entry, and how competition benefits consumers and businesses.Open →
- Imports, exports and the case for open tradeRecall questions on imports, exports and open trade, why businesses export and import and the risks involved, specialisation, trade deficits, finding overseas customers, service exports and licensing agreements.Open →
- Trade barriers and trade agreementsRecall questions on protectionism, tariffs and quotas, calculating a tariff, non-tariff barriers and customs checks, trade agreements and customs unions, infant industries, and how protection can harm domestic producers.Open →
- Exchange rates and the value of the poundRecall questions on exchange rates, appreciation and depreciation of sterling, converting prices and revenue between currencies, how a strong or weak pound affects exporters and importers, volatility and hedging currency risk.Open →
- Culture, law and politics in overseas marketsRecall questions on adapting the marketing mix for overseas markets, ethnocentric approaches and glocalisation, political instability, differing employment, product and data protection laws, business etiquette, joint ventures and intellectual property.Open →
- The forces behind a globalised marketRecall questions on globalisation and the communication, e-commerce, trade liberalisation and transport developments behind it, containerisation, offshoring, global supply chains, global competition and the benefits to consumers.Open →
- Political stability and the reach of government policyRecall questions on how government regulates business through competition, environmental and health and safety policy, the National Living Wage, government as a customer, lobbying, deregulation, and political stability and risk.Open →
- The business cycle and the state of the economyRecall questions on the stages of the business cycle, recession and gross domestic product, how businesses respond to a contraction, employment and tight labour markets, and the difference between nominal and real income.Open →
- Interest rates, tax and subsidiesRecall questions on the Bank of England base rate and how interest rate changes affect businesses, direct and indirect taxes such as corporation tax and VAT, government subsidies and their risks, and government spending.Open →
- Demographics, lifestyle and cultural changeRecall questions on demographics, an ageing population, urbanisation, household size, lifestyle trends and hybrid working, environmental awareness and greenwashing, multicultural markets, fashion cycles and spotting changes in consumer tastes.Open →
- Shopping habits, communities and pressure groupsRecall questions on omnichannel retailing, falling high street footfall, online and physical selling, click and collect and online returns, pressure groups and how businesses respond to them, community relations and social media.Open →
- Artificial intelligence, automation and roboticsRecall questions on automation and its benefits, drawbacks and effects on costs and staff, uses and risks of artificial intelligence, drones, robots and quality, electric vehicle fleets, and technology as a competitive necessity.Open →
- Cybersecurity, cloud services and connected devicesRecall questions on cybersecurity, data breaches and ransomware, cloud computing and its benefits and drawbacks, commercial uses of social media and influencer marketing, mobile technology and wearable technology.Open →
What you need to know
Answer each one before you reveal it.
Your recallNot started
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Why is a producer of luxury goods more exposed to the business cycle than a supermarket?
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Why does the definition of demand require buyers to be able to pay, and not simply to want the product?
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Define a substitute good.
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Define market share.
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Define an export.
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Define protectionism.
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Define an exchange rate.
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Why must a business research cultural differences before entering a new country?
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Define globalisation.
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Name three areas of business activity that government policy directly regulates.
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Which body decides the Bank of England base rate?
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Define demographics.
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What is meant by omnichannel retailing?
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Define automation.
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Define cybersecurity.
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Who makes up the demand side of a market?
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Define a complementary good.
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How does a rise in production costs affect the quantity a business is willing to supply?
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Why can a market served by only a few large businesses be more profitable for those businesses?
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Define an import.
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Define a tariff.
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What does it mean to say that sterling has appreciated?
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Which elements of the marketing mix most often need adapting for an overseas market?
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How have improvements in communication technology helped businesses trade internationally?
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How does tighter environmental regulation affect a manufacturer?
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Define the business cycle.
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Why does the Bank of England raise the base rate when inflation is high?
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What workforce problem does an ageing population create for employers?
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Why has high street footfall fallen in many towns?
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What are the main benefits of automating a production line?
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Name three costs a business faces after a serious data breach.
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Who makes up the supply side of a market?
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What happens to demand for a product when the price of a close substitute falls?
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Name two production costs that would reduce market supply if they rose sharply.
Evaluation
What advantage does a competitor's size give it when dealing with suppliers?
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What is meant by open trade?
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Define a quota.
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What does it mean to say that sterling has depreciated?
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Define an ethnocentric approach to international marketing.
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How has e-commerce changed the size of the market open to a small business?
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What is meant by political stability?
Process
Name the four stages of the business cycle.
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Why is a highly geared business especially vulnerable to rising interest rates?
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How does migration from rural areas towards cities affect a retailer's location decisions?
Take External Influences further
The same content, four other ways.
Commonly confused
Pairs that lose marks when they are blurred together.
Tariff vs Quota
Tariff: a tax placed on imported goods, which raises their price in the home market but still lets an importer buy any amount it wishes. Quota: a physical limit on how much of a good may be brought in during a given period, which shuts an importer out completely once the ceiling is reached.
Appreciation of sterling vs Depreciation of sterling
Appreciation of sterling: the pound has risen in value against another currency, so each pound buys more of that currency, making imports cheaper and exports dearer abroad. Depreciation of sterling: the pound has fallen in value against another currency, so each pound buys less of that currency, making imports dearer and exports more competitive abroad.
Direct tax vs Indirect tax
Direct tax: a tax paid straight to the government by the person or business on whom it is levied, such as income tax or corporation tax. Indirect tax: a tax charged on spending and collected from the customer by the seller, such as value added tax or fuel duty.
Questions from this topic
Each one with the model answer underneath.
- 1
What is a market in business terms?
Model answer
A market is any arrangement that brings buyers and sellers together so that a good or service can be exchanged for a price.
- 2
Define demand.
Model answer
Demand is the quantity of a good or service that buyers are willing and able to purchase at a given price over a period of time.
- 3
Define supply.
Model answer
Supply is the quantity of a good or service that sellers are willing and able to offer for sale at a given price over a period of time.
- 4
Why does the definition of demand require buyers to be able to pay, and not simply to want the product?
Model answer
Wanting a product is not demand unless the consumer also has the money to buy it, so demand measures spending power rather than desire.
- 5
Who makes up the demand side of a market?
Model answer
The demand side is made up of the consumers, households and other businesses that buy the product.
- 6
Who makes up the supply side of a market?
Model answer
The supply side is made up of the businesses that produce the product and offer it for sale.
What is inside Levo
Six ways to work the same material.
External Influences revision questions
- What does External Influences cover in OCR A-Level Business (H436)?
- 16 subtopics: demand, supply and the market mechanism, price, income and the drivers of demand, costs, capacity and the drivers of supply, rivalry, market share and competitor behaviour, imports, exports and the case for open trade, trade barriers and trade agreements, exchange rates and the value of the pound, culture, law and politics in overseas markets, the forces behind a globalised market, political stability and the reach of government policy, the business cycle and the state of the economy, interest rates, tax and subsidies, demographics, lifestyle and cultural change, shopping habits, communities and pressure groups, artificial intelligence, automation and robotics and cybersecurity, cloud services and connected devices. Each one has its own page with questions and model answers.
- How is External Influences organised?
- By the OCR H436 specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in External Influences, 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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