Key term
WJEC A-Level Business 601-5238-2
Enterprise and Starting a Business
Markets and Market Research
Topic overviewTypes of marketMarket size, market share and market trendsMarket segmentationThe degree of competition in a marketPerfect competition and monopolistic competitionOligopoly and monopolyConsumer protectionDemand and the demand curveSupply and the supply curveMarket equilibrium and changes in price and quantityPrice and income elasticity of demandInferior, normal and luxury goodsThe value of market researchPrimary market researchSecondary market researchQualitative and quantitative dataSampling and avoiding bias
Marketing
Topic overviewMarket orientation, product orientation and asset-led marketingThe marketing mixProduct and the product portfolioBranding, 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 contexts and global marketingNew technology in marketing
People in Business
Topic overviewThe flexible workforceNew technology and changing working practicesWorkforce planningThe recruitment process, job analysis and job descriptionsInternal and external recruitmentMethods of selectionTrainingAppraisalLabour productivity, absenteeism and labour turnoverOrganisational design and structuresDelegation, empowerment and delayeringMotivation theoriesFinancial and non-financial methods of motivationManagement and management by objectivesLeadership styles and theoriesEmployment rights, duties and equal opportunitiesTrade unions, conflict and dispute resolution
Operations Management
Topic overviewAdded valueJob, batch and flow productionChoosing the right method of productionProductivityCapacity utilisationNew technology in operationsLean production and kaizenJust-in-time and cell productionQuality control and quality assuranceTotal quality managementStock control and stock control diagramsPurchasing and working with suppliersInnovation, research and developmentInternal economies of scaleExternal economies of scaleDiseconomies of scale and the survival of small firms
Business Finance and Accounts
Topic overviewInternal sources of financeLoans, overdrafts and trade creditShare capital and venture capitalLeasing and debt factoringChoosing an appropriate source of financeFinance for entrepreneurs and SMEs in WalesRevenue, costs and profitTypes of costContribution and break-evenBreak-even charts and the margin of safetyBudgets and budgetingCash flow forecastingImproving cash flowThe income statementGross and net profit margins
Business Analysis and Decision-Making
Topic overviewPrice and income elasticity of demandSales forecasting and its reliabilityMoving averages and time-series analysisCorrelation, scatter graphs and extrapolationPresenting and interpreting data: pie charts, histograms and index numbersQualitative forecasting techniquesBudgets and budget variancesThe balance sheetWorking capital, capital employed and depreciationLiquidity ratios: the current ratio and the acid testReturn on capital employed and gearingInterpreting and comparing company accountsNon-financial measures and vision statementsDecision treesCritical path analysisCost benefit analysis and scientific decision-makingPayback period and average rate of returnNet present value and discounted cash flowSpecial orders and contribution
Strategy and Implementation
Topic overviewAims and objectivesSMART objectivesMission and vision statementsCorporate, divisional and functional strategyStrategy, tactics and corporate plansSWOT analysisPorter's Five ForcesThe Ansoff matrixOrganic growthMergers and takeoversHorizontal and vertical integrationFranchising as a method of growthLocation and relocation decisionsRationalisation and outsourcing production
Managing Change and Risk
Topic overviewInternal and external causes of changePlanned and unplanned changeThe effects of change on a businessManaging change effectivelyStorey's four approaches to managing changeResistance to changeLewin's three step processOrganisational culture and leadership in changeEvaluating the management of changeThe risks a business facesRisk assessment and preventative actionInsurable and uninsurable risksContingency planning and crisis management
The External Environment
Business Analysis and Decision-Making
- 19 subtopics
- 48 things to know
- A2 Unit 3
What Business Analysis and Decision-Making covers
Business Analysis and Decision-Making is examined in Unit 3, Business Analysis and Strategy, and again in Unit 4. It covers price and income elasticity of demand, sales forecasting and its reliability, moving averages and time-series analysis, correlation, scatter graphs and extrapolation, qualitative forecasting techniques, budgets and budget variances, the balance sheet, working capital, capital employed and depreciation, liquidity ratios: the current ratio and the acid test, return on capital employed and gearing, interpreting and comparing company accounts, non-financial measures and vision statements, decision trees, critical path analysis, cost benefit analysis and scientific decision-making, payback period and average rate of return, net present value and discounted cash flow and special orders and contribution.
The 19 subtopics
Each one has its own page.
- Price and income elasticity of demandPrice elasticity of demand and income elasticity of demand.Open →
- Sales forecasting and its reliabilitySales forecasting, three decisions that depend on a sales forecast and how a sales forecast supports workforce planning.Open →
- Moving averages and time-series analysisTime-series analysis, trend in a time series and purpose of calculating a moving average.Open →
- Correlation, scatter graphs and extrapolationScatter graph used for in business analysis, line of best fit and positive correlation.Open →
- Presenting and interpreting data: pie charts, histograms and index numbersPresenting and reading business data: pie chart angles, histograms and frequency density, and calculating, interpreting and comparing index numbers, with their limitations.Open →
- Qualitative forecasting techniquesQualitative forecasting technique, what is meant by using intuition to forecast and one benefit of brainstorming as a forecasting technique.Open →
- Budgets and budget variancesBudget variance, formula for a variance and favourable variance.Open →
- The balance sheetKey difference between a balance sheet and an income statement, non-current assets and current liabilities.Open →
- Working capital, capital employed and depreciationWorking capital, capital employed and why depreciation is charged in the accounts at all.Open →
- Liquidity ratios: the current ratio and the acid testFormula for the current ratio, formula for the acid test ratio and why inventory is removed from the acid test ratio.Open →
- Return on capital employed and gearingFormula for return on capital employed, formula for the gearing ratio and main risk of high gearing.Open →
- Interpreting and comparing company accountsWhat is meant by comparing accounts with previous years, why comparing firms in different industries is misleading and window dressing.Open →
- Non-financial measures and vision statementsWhy financial measures alone give an incomplete picture of performance, why customer satisfaction is described as a leading indicator and two ways a company's environmental record can be measured.Open →
- Decision treesDecision tree, formula for the expected value of a chance node and main weakness of relying on estimated probabilities.Open →
- Critical path analysisCritical path analysis, earliest start time of an activity and how earliest start times are calculated.Open →
- Cost benefit analysis and scientific decision-makingWhy decision-making is central to business success, scientific and intuitive decision-making and role of information technology in business decision-making.Open →
- Payback period and average rate of returnInvestment appraisal, payback period and formula for the average rate of return.Open →
- Net present value and discounted cash flowWhat is meant by the time value of money, discounted cash flow and discount factor.Open →
- Special orders and contributionRecall questions on why an order below full cost can still be worth taking, what contribution has to cover, and the longer-term dangers of accepting one.Open →
What you need to know
Answer each one before you reveal it.
Your recallNot started
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Explain why different stakeholders read the same accounts differently.
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Define price elasticity of demand.
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What is time-series analysis?
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What is a scatter graph used for in business analysis?
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What is meant by a qualitative forecasting technique?
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Define a budget variance.
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What does a balance sheet show?
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Define working capital.
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Define liquidity.
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What does return on capital employed measure?
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How is a customer attitude survey used to measure performance?
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What is a decision tree?
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State two things critical path analysis tells a project manager.
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Explain why decision-making is central to business success.
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What is investment appraisal?
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Explain why discount factors get smaller the further into the future you go.
Numbers
State the formula used to work out the contribution a special order would earn.
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A firm's price elasticity of demand is −1.8. Explain what happens to its revenue if it raises the price.
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What is meant by sales forecasting?
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Name the components a time series is broken down into.
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Describe what would be plotted on a scatter graph relating advertising to sales.
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Explain what is meant by using intuition to forecast.
Numbers
State the formula for a variance.
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Explain the key difference between a balance sheet and an income statement.
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Explain one problem caused by holding too much working capital.
Numbers
State the formula for the current ratio.
Numbers
State the formula for return on capital employed.
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Explain what is meant by comparing accounts with previous years.
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How is an employee attitude survey used to measure performance?
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State what a square and a circle represent on a decision tree.
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What is meant by the earliest start time of an activity?
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Distinguish between scientific and intuitive decision-making.
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State how the fraction of a year in a payback period is converted into months.
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Define net present value.
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Explain the basic rule for deciding whether to accept a special order.
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Why is price elasticity of demand normally a negative number?
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State three decisions that depend on a sales forecast.
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Define the trend in a time series.
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Describe positive correlation.
Process
How is the angle of a pie chart segment calculated?
Process
How does a histogram differ from a bar chart?
Process
How is frequency density calculated for a histogram with unequal class widths?
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What is brainstorming?
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Define a favourable variance.
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Define current assets.
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Define capital employed.
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State the range in which a current ratio is often said to be comfortable.
Take Business Analysis and Decision-Making further
The same content, four other ways.
Commonly confused
Pairs that lose marks when they are blurred together.
Price elasticity of demand vs Income elasticity of demand
Price elasticity of demand: a measure of how responsive the quantity bought is to a change in what the product itself costs. Income elasticity of demand: A measure of how responsive the quantity bought is to a change in what consumers earn.
Correlation vs Causation
Correlation: a statistical relationship in which two variables move together, which may be coincidence or the work of some third factor. Causation: A relationship in which the change in one variable is what actually brings about the change in the other.
Balance sheet vs Income statement
Balance sheet: a snapshot on a single date showing what a business owns, what it owes and how it is financed. Income statement: A financial record covering a whole trading period, setting revenue against costs to show the profit made.
Questions from this topic
Each one with the model answer underneath.
- 1
Define price elasticity of demand.
Model answer
Price elasticity of demand measures how responsive the quantity demanded of a product is to a change in its price.
- 2
A firm's price elasticity of demand is −1.8. Explain what happens to its revenue if it raises the price.
Model answer
Demand is price elastic, so quantity falls by proportionally more than the price rises and total revenue falls.
- 3
Why is price elasticity of demand normally a negative number?
Model answer
Price and quantity demanded usually move in opposite directions, so one percentage change is positive while the other is negative.
- 4
A firm raises its price from £4.00 to £4.40 and weekly sales fall from 20,000 to 17,000 units. Calculate the price elasticity of demand.
Model answer
Price rises by 10% and quantity falls by 15%, so price elasticity of demand is −1.5.
- 5
A price elasticity of demand of −1.5 has been calculated for a product. State whether demand is elastic or inelastic and explain why.
Model answer
Demand is price elastic, because the value is greater than 1 when the sign is ignored, so quantity changes proportionately more than price.
- 6
A firm cuts its price from £20 to £18 and sales rise from 500 to 530 units. Calculate the price elasticity of demand.
Model answer
Price falls by 10% and quantity rises by 6%, so price elasticity of demand is −0.6.
What is inside Levo
Six ways to work the same material.
Business Analysis and Decision-Making revision questions
- What does Business Analysis and Decision-Making cover in WJEC A-Level Business?
- 19 subtopics: price and income elasticity of demand, sales forecasting and its reliability, moving averages and time-series analysis, correlation, scatter graphs and extrapolation, presenting and interpreting data: pie charts, histograms and index numbers, qualitative forecasting techniques, budgets and budget variances, the balance sheet, working capital, capital employed and depreciation, liquidity ratios: the current ratio and the acid test, return on capital employed and gearing, interpreting and comparing company accounts, non-financial measures and vision statements, decision trees, critical path analysis, cost benefit analysis and scientific decision-making, payback period and average rate of return, net present value and discounted cash flow and special orders and contribution. Each one has its own page with questions and model answers.
- How is Business Analysis and Decision-Making organised?
- By the WJEC 601-5238-2 specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in Business Analysis and Decision-Making, 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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