A Level Business AQA

This subject is broken down into 85 topics in 13 modules:

  1. What is Business? 6 topics
  2. Management Decision Making 4 topics
  3. Marketing Decisions 12 topics
  4. Operational Decisions 6 topics
  5. Financial Decisions 7 topics
  6. Human Resource Decisions 8 topics
  7. Analysing the Strategic Position of a Business 11 topics
  8. Choosing Strategic Direction 2 topics
  9. Strategic Methods: How to Pursue Strategies 9 topics
  10. Managing Strategic Change 4 topics
  11. Implementing Strategy 5 topics
  12. Analysing the External Environment 10 topics
  13. Maths Skills 1 topics
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  • 13
    modules
  • 85
    topics
  • 29,934
    words of revision content
  • 3+
    hours of audio lessons

This page was last modified on 28 September 2024.

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Business

What is Business?

Businesses and the External Environment

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Businesses and the External Environment

  • Definition: The external environment of a business refers to factors outside the business that influence its operations and success. It encompasses political, economic, demographic, technological, social, and legal factors, collectively referred to as the PESTLE analysis.

  • Political Factors: Involve changes in government policy, tax laws, trade tariffs etc. Businesses must adapt to operate effectively under new policies or political climates, making political awareness essential.

  • Economic Factors: Refer to conditions of the economic system within which the business operates. It includes interest rates, inflation, unemployment rates and GDP growth. If the economy is healthy, people have more money to spend and vice versa.

  • Social Factors: Look into societal trends and changes that can affect the demand for business products or services. These can include changes in lifestyle, consumer attitudes and behaviours, cultural shifts, population growth rate, age distribution etc.

  • Technological Factors: Reflect advances in technology that may affect the operations of a business, either by changing the process of production or through the emergence of new competitors. It includes R&D activity, technology incentives and the rate of technological change.

  • Legal Factors: Include laws and regulations that businesses need to follow. They can affect a business’s operations, its costs, and the demand for its product or service. Examples include labour law, environmental regulations, tax law, and company law.

  • Micro Environment: This includes competitors, customers, suppliers, and other business influencers. Understanding these components helps businesses thrive in the state of competition and make strategic decisions.

  • Macro Environment: Macro-environmental factors involve larger societal forces that impact the micro-environment. It includes factors like inflation rates, changes in foreign exchange rates, and other market dynamics.

  • SWOT Analysis: As part of evaluating the external environment, a business may conduct a SWOT analysis which details its Strengths, Weaknesses, Opportunities, and Threats. Opportunities and Threats are components that evaluate the external environment.

  • PESTLE Analysis: The external environment can be broadly evaluated using PESTLE Analysis which stands for Political, Economic, Socio-Cultural, Technological, Legal and Environmental factors.

  • Impact on Business Strategy: Businesses must adapt their strategies in response to the changes in the external environment. This involves product development, diversification, target market changes, and more. It allows the business to maintain or improve its competitive position.

  • The impact of the external environment is not static. The external factors are dynamic and keep changing. Thus, a periodical systematic analysis for these factors and adapting to these changes is vital for the survival and growth of the business.

  • Environmental audits: These can help businesses identify and assess external factors in their environment. They provide an in-depth understanding of those factors to provide a strong base for strategic planning.

Course material for Business, module What is Business?, topic Businesses and the External Environment

Business

Analysing the Strategic Position of a Business

Mission, Corporate Objectives and Strategy

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Mission, Corporate Objectives and Strategy

  • A mission can be defined as the overriding purpose of an organisation, often set by its top management, guiding its corporate activities. It reflects the organisation's core reasons for existence and its desired impact on society or the market.

  • Mission statements typically articulate the organisation's values, vision, and purpose. They communicate the organisation's strategic direction and serve as a guide for decision-making and strategizing.

  • Corporate objectives are specific goals that an organisation aims to achieve within a certain timeframe. They are derived from the mission and serve as a guide for the organisation's strategic and operational planning.

  • Corporate objectives must be SMART – Specific, Measurable, Achievable, Relevant, and Time-bound. They should be clearly communicated to all members of the organisation to ensure consistent understanding and implementation.

  • The process through which corporate objectives are achieved is known as strategy. A strategy outlines the methods, actions, and plans to be used to reach the organisation's objectives. It provides a roadmap to guide the organisation's operations while keeping in line with the mission.

  • Strategic objectives are long-term and have significant implications for the organisation's future. They need to consider both internal and external factors such as market trends, competition, and the organisation's strengths and weaknesses.

  • Strategy formulation usually involves senior management and is often informed by techniques such as SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats), PESTEL Analysis (Political, Economic, Socio-cultural, Technological, Environmental, Legal) and Porter's Five Forces Analysis.

  • A good strategy should consider the organisation's resources and capabilities, align with its mission and objectives, and reflect the realities and demands of its external environment.

  • Implementing a strategy involves making necessary changes in the organisation such as adjusting its structure, processes, or culture. Monitoring and controlling strategy implementation is important to ensure that the organisation is moving towards its objectives.

  • A common model used to implement strategy is the Ansoff Matrix, which offers four strategic options based on the market and products: Market Penetration, Market Development, Product Development, and Diversification.

  • Adjusting, revising, or even completely redesigning the strategy may be necessary if it's ineffective in achieving the desired goals or if there are significant changes in the organisation's internal or external environment.

Course material for Business, module Analysing the Strategic Position of a Business, topic Mission, Corporate Objectives and Strategy

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