Table Of ContentK Cambridge International AS and A Level
Y Business
M Coursebook
Third edition C
C
a
Peter Stimpson is an
Peter Stimpson and Alastair Farquharson m
R educational trainer, b
V This completely revised edition is thoroughly updated for the latest examiner and former rid
C Cambridge International AS and A Level Business syllabus (9609) for fi rst g
examination from 2016. Head of Business Studies. e I Peter Stimpson and Alastair Farquharson
He has over 38 years’ n
) t
l Written by experienced authors in an engaging and accessible style, e
e experience in teaching r
v this coursebook provides comprehensive coverage of the syllabus and n
a
Le rigorous and relevant content to support students throughout their Economics and Business tio Cambridge International AS and A Level
course and help them to prepare for assessment. Studies at A Level. n
A a
d Included in this book is a free Student CD-ROM containing revision Alastair Farquharson is l A Business
aids, further questions and activities. A Teacher’s CD-ROM is also S
n an educational trainer and
a available separately. a
n
experienced examiner. d
S Features include:
A He has taught A Level A
( • Support for exam practice with a whole chapter on preparing for Business Studies and Le
s examinations. v
e • Key concepts that are integrated throughout and contextualised in Economics for over 20 e
i l
d each chapter. years. Coursebook
u B
t • Key defi nitions to enhance understanding of important concepts. u
S • Learning objectives that set out the aims for each chapter. s
i
n
s • Practice questions at the end of each chapter that help with exam e
s s
preparation and aid self-assessment.
e s
n • Activities to build the key skills required by the assessment objectives:
Third edition
si knowledge and understanding, application, analysis and evaluation. C
o
u • Top tips offering bite-sized advice and pointing out common errors. u
B r
• International case studies placing the subject in the context of s
e
n real business situations. b
o o
• Summary points at the end of each chapter to consolidate learning. o
s
k
r
a Other titles available for Cambridge International AS
h and A Level Business
u
q Teacher’s Resource ISBN 978-1-107-64261-4 S
t
r im
a Completely Cambridge - Cambridge resources
F p
for Cambridge qualifi cations s
d o
n
n Cambridge International Examinations is the world’s largest provider a
a n
of programmes and qualifi cations for 5–19 year olds. Cambridge d
n
o University Press is the oldest publishing house in the world, having F
a
s been operating continuously since 1584, and is one of the largest r
p q
academic publishers globally. u
m
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Cambridge University Press works with Cambridge International a
i
t r
S Examinations and experienced authors to produce high-quality s
o
: endorsed textbooks and software that support Cambridge Teachers n
4 and encourage Cambridge Learners.
6
3 Visit education.cambridge.org/cie for information on our full range
7 of Cambridge International AS and A Level titles.
7
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Peter Stimpson and Alastair Farquharson
Cambridge International AS and A Level
Business
Coursebook
Third Edition
University Printing House, Cambridge cb2 8bs, United Kingdom
Cambridge University Press is part of the University of Cambridge.
It furthers the University’s mission by disseminating knowledge in the pursuit of
education, learning and research at the highest international levels of excellence.
www.cambridge.org
(cid:42)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:79)(cid:1)(cid:85)(cid:73)(cid:74)(cid:84)(cid:1)(cid:85)(cid:74)(cid:85)(cid:77)(cid:70)(cid:27)(cid:1)www.cambridge.org
© Cambridge University Press 2015
Th is publication is in copyright. Subject to statutory exception
and to the provisions of relevant collective licensing agreements,
no reproduction of any part may take place without the written
permission of Cambridge University Press.
First published 2002
Second published 2010
Th ird edition published 2015
Printed in the United Kingdom by Latimer Trend
A catalogue record for this publication is available from the British Library
isbn 978-1-107-67736-4 Paperback
Cambridge University Press has no responsibility for the persistence or accuracy
of URLs for external or third-party internet websites referred to in this publication,
and does not guarantee that any content on such websites is, or will remain,
accurate or appropriate.
notice to teachers in the uk
It is illegal to reproduce any part of this work in material form (including
photocopying and electronic storage) except under the following circumstances:
(i) where you are abiding by a licence granted to your school or institution by
the Copyright Licensing Agency;
(ii) where no such licence exists, or where you wish to exceed the terms of a licence,
and you have gained the written permission of Cambridge University Press;
(iii) where you are allowed to reproduce without permission under the provisions
of Chapter 3 of the Copyright, Designs and Patents Act 1988, which covers, for
example, the reproduction of short passages within certain types of educational
anthology and reproduction for the purposes of setting examination questions.
Th e questions, answers and commentary in this title are written by the authors and have
not been produced by Cambridge International Examinations.
Contents
Contents
Introduction v
Unit 1 Business and its environment 2
1: Enterprise 3
2: Business structure 15
3: Size of business 29
4: Business objectives 38
5: Stakeholders in a business 51
6: Business structure (A Level) 61
7: Size of business (A Level) 70
8: External infl uences on business activity (A Level) 76
9: External economic infl uences on business behaviour (A Level) 98
iii
Unit 2 People in organisations 124
10: Management and leadership 125
11: Motivation 137
12: Human resource management 159
13: F urther human resource management (A Level) 170
14: Organisation structure (A Level) 187
15: Business communication (A Level) 200
Unit 3 Marketing 212
16: What is marketing? 213
17: Market research 231
18: Th e marketing mix – product and price 252
19: Th e marketing mix – promotion and place 273
20: Marketing planning (A Level) 297
21: Globalisation and international marketing (A Level) 318
Cambridge International AS and A Level Business
Unit 4 Operations and project management 330
22: Th e nature of operations 331
23: Operations planning 339
24: Inventory management 366
25: Capacity utilisation (A Level) 376
26: Lean production and quality management (A Level) 385
27: Project management (A Level) 403
Unit 5 Finance and accounting 416
28: Business fi nance 417
29: Costs 434
30: Accounting fundamentals 443
31: Forecasting and managing cash fl ows 464
32: Costs (A Level) 476
33: Budgets (A Level) 486
iv
34: Contents of published accounts (A Level) 495
35: Analysis of published accounts (A Level) 505
36: Investment appraisal (A Level) 518
Unit 6 Strategic management 534
37: What is strategic management? (A Level) 535
38: Strategic analysis (A Level) 543
39: Strategic choice (A Level) 556
40: Strategic implementation (A Level) 568
41: Preparing for your examinations 587
Index 593
Acknowledgements 602
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Introduction
Introduction
Who is this book for? Diff erences between AS and
Th e third edition of this book accurately and comprehensively A Level
follows the new Cambridge International AS and A Level
Th ere are two important diff erences between the AS and
Business syllabus (9609).
A Level syllabus:
If you are a student studying this syllabus, or a
1 More subject content is examined at A Level than at AS.
teacher of the syllabus, you can be confi dent that the
2 The examination skills are weighted diff erently – much more
book provides complete coverage of the course to
emphasis is placed on subject knowledge at AS Level but
the appropriate level. Other students of Business or
A Level puts greater emphasis on analysis and evaluation.
Business and Management could also benefi t greatly
These diff erences are reflected in the types of questions
from the subject content, activities and advice that this contained in this book and in the suggested answers on the
book contains. Students following the AQA, OCR or Teacher’s CD-ROM that accompanies it.
EDEXCEL A Levels, the Cambridge Pre-U course or
Students who are only taking the AS Level examinations
the International Baccalaureate Higher and Standard
do not need to study the A Level chapters in this book
Diploma Programme will also fi nd this an invaluable
or the associated activities. A Level students and their
resource.
teachers must remember that the A Level syllabus includes
Th e fi rst and second editions were also used in
all AS content and, therefore, all sections of this book need
higher education institutions as an introductory text for
to be followed. A Level students should tackle both the
Management and Business Studies degree courses. Th e v
AS and the A Level questions in the book.
changes and additions made to this third edition will
reinforce its usefulness for this purpose.
What are the key features of
this book?
What makes this book diff erent?
■ Learning objectives – identifying the content and concepts
Th e key distinctive feature of this book is the covered in each chapter.
international perspective it gives to the study of ■ ‘Introducing the topic’ case studies – raising important
businesses, strategies and decisions. Th ere are many areas for discussion and giving context to the business
references to case studies, data and examples from applications of the material to be covered in each chapter.
countries all around the world. Th is is deliberate − very ■ Clearly laid-out text – with easy-to-follow subsections, many
tables of data and ‘key advantages and disadvantages’.
few large businesses operate today in a narrow national
■ Top tips – helping avoid common errors made by students.
marketplace and, as a Business Studies student, you are
■ Key concept links – explaining how the topics are integrated
encouraged to look at business organisations and business
with the key concepts for this subject.
decisions from an international viewpoint that accurately
■ In-chapter activities – giving practice at applying what is
mirrors the real world.
being learned, using evidence and data taken mainly from
Th e focus on business strategic decision-making in the
actual business examples.
fi nal unit means that the book also highlights some very
■ Learning outcomes – reinforcing the issues that should be
important aspects of business management:
understood by the end of each chapter.
■ Strategic decision-making is holistic and cannot be ■ Examination-style questions – testing the skills of
undertaken eff ectively by studying a series of unconnected knowledge and understanding, application, analysis and
subject areas. evaluation, using international business situations.
■ There is no one perfect solution to a business problem – ■ Examination-style essay questions – giving practice at
a variety of diff erent strategic solutions might exist writing longer, discursive answers.
that reflect the objectives of the business, the external ■ The timings given for each examination-style question are
environment and the cultures of both the organisation and intended as a guide to students to help them practice under
the country in which it operates. timed conditions; please note that they are a guide only.
Cambridge International AS and A Level Business
What is the CD-ROM for? Key concepts in Business
Th e CD-ROM attached to this book provides invaluable All Cambridge International AS and A Level syllabuses
support to students. It contains: contain certain key concepts that underpin them and bind
the subject together. Th e key concepts in Business are:
■ a full glossary of all the key definitions in the book
■ exemplar marking grids Change – is the only constant in business. New enterprises are
■ revision mind maps for every chapter oft en created in response to economic, cultural or technological
■ examination and assessment guidance changes. Existing businesses must adapt to change if they are
to survive and grow.
■ worksheets and answers
■ hundreds of multiple choice questions and answers Management – is relevant to every person in a business. Good
leadership, strong motivation in workers, eff ective systems and
■ revision advice and checklists for every chapter
clear communication are hallmarks of successful businesses.
■ sample exam papers and marks schemes.
Customer focus – means a business will design and produce
■ There is a teachers’ CD available too (ISBN 9781107677364,
goods and services that people want to buy. Customers provide
which provides detailed answers to all of the activities, case
the revenue that sustains a business. Successful businesses
studies and examination questions in the book along with
really understand their customers and strive to provide
suggestions for further reading.
products that their customers love.
Innovation – enables a business to reinvent itself and stay
Skills needed by students of Business
ahead of the competition. The business world is dynamic
Th e key skills you will develop during your course (and
and companies must seek to innovate through product
will ultimately be tested on in examination) are: development, more eff icient processes and finding better ways
to ‘do business’.
1 Knowledge and critical understanding of the syllabus
content. Creating value – is the core reason why any business exists.
2 Application of this knowledge and critical understanding Eff ective organisations aim to maximise stakeholder value. For
of problems and issues that arise from both familiar and many businesses this will be about maximising shareholder
vi unfamiliar situations. value, but social enterprises have other, non-financial aims.
Stakeholders also need to measure the value that is being
3 Analysis of problems, issues and situations. This skill can be
created.
demonstrated by:
Strategy – is about knowing where you are, where you want
■ distinguishing between statements of fact and opinion
to get to and how you are going to get there. Managers need
■ explaining trends in data and the likely causes of them
to think about, decide on and put into action major long-term
■ examining the implications of a suggested idea or plans – such as buying another business, entering a new market
strategy.
or developing a new technology.
4 Evaluation and judgement. This skill can be demonstrated Th ese concepts are the guiding principles on which the
by:
subject – at A Level and beyond – is based. A business
■ weighing up the reliability of data organisation could not be successful without its leaders
■ discussing and debating issues and arguing points to being conscious of, and responding to, these important
reach an appropriate decision ideas. Th ey are also inter-related and making eff orts to
■ discriminating between alternative explanations and link them in answer to questions shows that students
strategies
understand the complex and integrated nature of
■ judging the usefulness of the main concepts and models
successful business operations.
of Business Studies.
If students are able to develop the ability to see how
All of these skills will be developed as you progress diff erent strands of the syllabus can be pulled together
through this book, especially if you work through within one key concept then this a high level skill.
the many questions that are presented for your Th e ways in which these concepts can be used to
self-assessment. Th e student CD-ROM gives further bind together the subject of Business is referred to at
details of how the four skills are assessed and how to diff erent stages of this book through ‘Key concept links’.
prepare for examinations. It is important to make clear that there will no specifi c
IInnttrroodduuccttiioonn
assessment of the principle of key concepts – no questions, fi ndings into their studies. To this end, there is also the
for example, will use the expression ‘key concepts’. However, expectation that students will update their knowledge
an awareness of the interconnected nature of Business and through the frequent use of libraries, newspapers, business-
successful business decisions will help students to succeed oriented television programmes and the Internet.
in their course and provide a strong foundation for future
Peter Stimpson (coursebook author)
study or practical application of skills.
Peter Stimpson is former Head of Business Studies
at Hurtwood House School, Surrey. He has more than
Using the book
35 years’ experience in teaching Economics and
Even the keenest student is unlikely to read this textbook Business Studies to A Level standard. He is an
from cover to cover in one evening. Instead, it should be experienced examiner and he also trains teachers
used to support and guide your learning as you progress overseas in A Level course development, teaching
through the syllabus. Make use of the many activities and methods and examination skills.
revision questions to support and assess your learning.
Alastair Farquharson (CD-ROM author)
Th e authors hope that the book, as well as providing
essential subject support, will achieve two further Alastair Farquharson is a teacher at Torquay Boys’
objectives. First, that it will encourage students to be Grammar School and has taught A Level Economics
observant and curious about all forms of business activity. and Business Studies for more than 20 years. He is an
Second, that, as a consequence, they will be keen to experienced examiner and has provided training for
discover what is happening in business organisations, at teachers overseas in A Level course development, teaching
international, national and local levels, and to bring these methods and examination skills.
vii
2
Unit 1:
Business and its
environment
Introduction
This unit focuses on understanding the nature and
purpose of business activity. It identifies and analyses
the structures, functions and objectives of diff erent
business organisations. Central to an understanding of
business and its internal and external environments is a
recognition that the world in which businesses operate is
in a constant state of change. This key concept can also
be linked to the creation of value, as the most successful
businesses are able to continue to create value despite the
impact of political, economic, social, technological and
environmental changes.
