A Level Business Strong Foundations

A Level
Business
Strongfoundations
Revision Workshop
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Flying Start Strong
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2 A LEVEL BUSINESS STRONG FOUNDATIONS Revision Workshop www.tutor2u.net 3
Session 1
Awesome Application
In this session we are going to focus
on the key skill of application which we
are going to develop by looking at topics
such as PED and methods of financial
motivation.
WARM-UP – BUSINESS BLAST
WARM-UP – GIVE ME THREE!
Let’s start with a quick knowledge blast to warm us up for this session and today!
Tick what you think the answer is to the following questions when
they are displayed on screen:
Give me three:
EXAMPLES OF NICHE MARKETS
1
2
3
Give me three:
EXAMPLES OF PRODUCTS WITH A HIGH PED
1
2
3
Ladies and Gents – we split for this quick-fire application activity
1
A B C D
2
3
4
5
6
7
8
Which of these iconic venues has the highest capacity?
Which of these businesses employs the most people?
Which business has the highest value of inventory (stocks)?
Which of these products is likely to have the lowest PED?
Which product is now in the decline phase of its life cycle?
Which of these businesses has the highest market share?
Which of these businesses is a public, not a private company?
Which of these brands has suffered quality problems recently?
Gents Ladies
A LEVEL Business STRONG FOUNDATIONS
REVISION WORKSHOP
Welcome to our exam coaching workshop. Today’s event consists of 5 sessions
which are all designed to help reinforce key A Level Business content, including
topics from Year 1 as well as helping to build understanding and confidence in
the core assessment skills
Each session has a real focus on exam skills and exam technique as well as a dedicated session on
quantitative skills to help build your confidence in numerical questions and how to use calculations to
support analysis and evaluation.
At the end of each session is a range of extension activities which you can use as part of your revision at
home or at school/ college.
1 Awesome Application
2 Analyse This
3 Quantitative Skills
4 Effective Evaluation
5 Putting it All Together
The Key Exam Skills
A01
A02
A03
A04
Demonstrate knowledge of key terms, concepts, theories, methods and
models
Apply your knowledge and understanding to different business contexts
and situations
Analyse issues within the business and constructing logical chains of
reasoning
Evaluate quantitative and qualitative information to make informed
judgements

e.g. Revenues, Profits, Manufacturer, Service
High-performing answers in A Level Business make it easy for the examiner to identify the
assessment skills being demonstrated.
At tutor2u we encourage students to use the following acronym to develop their responses to
A Level Business questions.
Core Answer Technique Read the following short case study and then spend 2-3 minutes drawing out what you think
are the key context points using the SCORE system.
The POINT you are making
(Always use the words of the question)
Supporting Evidence
(Relevant examples to illustrate your point)
Link back to the question hooks
Explain How and Why your point is relevant
to the question
(Logical chain of argument using relevant business theory)
Analysis
Application
In this session we’ll focus on Application. Session Two will focus
on Analysis
Activity 1: Application: Spotting the Context
S
C
O
R
E
Size & Sector
Competition
Ownership
Resources
External Environment
e.g. Market share, Competitors
e.g. Private / Public
e.g. Finance, IP, People
e.g. Legislation, Economy, Technology
The ride-sharing service Uber is one of the world’s fastest-growing businesses. Formed as a
private company in 2011 to offer ride-sharing in San Francisco, Uber has spread like wildfire and
now operates in 58 countries, with a business value of around $70 billion.
Uber has raised significant share capital and debt finance to enable it to grow quickly, mainly from large
venture capital firms. Whilst Uber remains a private company, it is widely expected float on a US stock
market in the near future in order to raise further finance and the business valuation is expected to be
much higher than $70bn even though Uber is still unprofitable.
Uber’s growth has not been easy. It has faced intensive competition from local taxi operators in major
cities as well as from governments and regulators who have objected to Uber’s business model of using
self-employed drivers. In China, Uber came up against a direct competitor - Didi Chuxing – which itself
was backed by Apple. Uber was suffering losses of at least $1bn per year when it decided it could not
win in China, and it decided to sell its business there to its much stronger rival.
As global growth opportunities in the ride-sharing market start to slow, Uber is looking to expand into
new market segments. It recently launched UberEats, an on-demand food delivery service based on the
Uber app.
S
C
O
R
E
Size & Sector
Competition
Ownership
Resources
External
Environment
The skill of application is all about applying knowledge and understanding
to various business contexts to show how individuals and organisations
are affected by and respond to issues.
What do we mean by CONTEXT?
Context helps us understand the nature of a business, its market and its
competitive position. It helps us understand how a business makes decisions.
We can summarise the key context of any business using the acronym: SCORE

Activity 2: Issues, Issues, Issues Activity 3: Same Idea - But Different Business!
A key part of demonstrating the skill of application is being able to identify the key issues facing
a business and how they might respond to them.
Let’s explore how we might do this by looking at another mini case study!
Effective application requires you to reflect the nature of the business you are writing about.
Try to avoid what we call “Man on the Street” answers that could be written by anyone.
Always try to explain HOW and WHY your answer is relevant to the business in question.
Let’s try an exercise to help illustrate this skill. Here are two different businesses – but just one question:
Outline your thoughts below:
Table 1: Stadium Construction Costs (2016 prices (£m)
Stadium Construction Cost Capacity
Emirates Stadium (Arsenal) 535 million 60,000
Etihad Stadium (Man City) 234 million 55,000
Wembley Stadium (England) 1,160 million 90,000
The biggest clubs in football need big stadia both to accommodate the fans and help grow
revenues. Some clubs like Sunderland, Arsenal and Stoke City built entirely new stadia. Others
like Manchester United and Liverpool expanded capacity by building bigger stands. West Ham
and Manchester City moved into a larger stadium originally built for a different purpose!.
Chelsea FC, owed by Russian Billionaire Roman Abramovich, want to significantly increase their stadium
capacity from its present 42,000 seats.The Club has submitted ambitious development plans to transform
its Stamford Bridge ground into a 60,000 seat stadium at an estimated cost of £500 million.
As with any major development in London, Chelsea’s stadium proposals have proved controversial,
and the plans must still be approved by the local council. The construction of the stadium upgrade will
require Chelsea to find a temporary home; the onsite hotel will be demolished and local residents may
need to be reassured about increased noise and traffic.
Issues that Support Stadium Expansion
Business One
Business One
Business Two
Business Two
Counter-issues Against Stadium Expansion
What are the key issues that we might draw from the Chelsea FC case study?
Spruce Springclean...
operates an office cleaning service. It employs over
1,000 cleaners in London and five other major UK
cities working for major corporate clients. Each
cleaner is paid the national living wage and a small
annual bonus based on customer satisfaction
surveys carried out by an independent market
research firm.
Importance of financial motivation to
employees of Spruce Springclean
The Code Father...
is an industry-leading games designer specialising
in games console titles for the PS4. Based in central
London, TGF employs a team of 20 highly-skilled
designers and programmers who work on projects
with an average development cost of over £10m
each. Each employee is part of a profit-sharing
scheme and most also own shares in the company.
Importance of financial motivation to
employees of The Code Father
£
£
£
Analyse / Assess the
importance of financial
motivation to the employees
of the business
The Question

extension activities
1 Premier League What’s the Score?
Outline a SCORE summary for
each of these businesses:
S
C
O
R
A
B
C
D
E
F
G
H
I
J
E
Size and
Sector
Competition
Ownership
Resources
Greggs
Uber
Sports Direct
Royal Bank
of Scotland
Samsung
Apple
BMW
Tesco
Snapchat
Aldi
1
2
3
4
5
6
7
8
9
10
Criticised for working conditions and its use
of zero-hours contracts
As at June 2016 had had $239 billion in liquid
assets — including $203 billion in cash
Had a 6.1% share of the UK market in 2015
Made significant losses trying to expand into China
Has significantly increased market share in the
UK with its low-cost market positioning
Currently a nationalised business
Expected to become a public company in 2017
with a value of over £20bn
A vertically-integrated business trading from
almost 1,700 locations
Incurred substantial losses as a result of poor
production quality of a major new product
Industry regulators criticised the business for
poor treatment of suppliers
External
Environment
A Premier League
Football Club of Your
Choice
2 Low PED / High PED
List three different products in each column that you believe would have either a low or high
PED. Add your reason why.
Product Low PED High PED Reason
3 Application Detective
Can you match the business listed with the contextual clue provided?
Premier Inn (Part of
Whitbread plc)
A Premium-Priced
Product of Your
Choice
Business Business Clue Clue

Session 2
Analyse This
In this session we are going to focus
on the key skill of analysis which we
are going to develop by looking at some
core A Level Business topics such as
productivity, efficiency, training and
quality.
3 strategies from Ansoff’s Matrix
3 economies of scale
3 stages in the Product Life Cycle
What do you understand by the term, analysis?
Activity 1: Three x Three Content Blast!
Activity 2: What is Analysis?
1
1
2
2
1
2
3
3
3
Activity 3: Causes and Consequences
Cause Consequence
Training employees
Low capacity utilisation
Moving to a decentralised structure
Implementing a system of just-in-time
Reducing variable costs

Activity 6: Ready Steady Cook
Activity 4: How and Why Activity 5: Models and Theories
In exam answers, many students fail to fully develop their points leaving arguments under
developed and lacking depth i.e. lacking analysis!!!
One simple technique to help develop analysis is to think HOW and WHY.
Look at the example below relating to quality assurance.
‘One benefit of quality assurance is that it should lead to better quality. As a result, the business may be able to
increase the price.
This line of analysis isn’t really developed. An easy way to develop it further is to think HOW and WHY.
‘One benefit of quality assurance is that it should lead to better quality (HOW). This is because in a system of quality
assurance, everyone in the organisation is responsible for quality which should lead to a reduction in defective
products. As a result, the business may be able to increase the price (WHY). This is because customers may be
prepared to pay more for a product that is of higher quality as the product may last longer’.
‘One benefit of operating at high capacity utilisation
is that it results in lower unit costs. This means
that the business can reduce its prices to make
more profit’
One benefit of operating at high capacity utilisation is that it results in lower unit costs
(HOW)
This means that the business can reduce its prices to make more profit
(WHY)
Below is a simplistic line of analysis relating to a manufacturer
operating at 95% capacity utilisation. The manufacturer’s
products are price elastic.
In the box below, use HOW and WHY to develop it
further.
Give it a Go!
Just because a question doesn’t specifically refer to a specific business model or theory doesn’t mean that
you can’t use it!
Models and theories are an excellent way to build analysis within answers and this is frequently mentioned in
examiners reports.
We are going to look at a couple of examples to illustrate this; the Boston Matrix and Economies of Scale.
Economies of scale arise when unit costs fall as output rises.There are a number of economies of scale, for example:
Low
High
Market Share
MarketGrowth
High
Low
Examiners Tip! One way of writing arguments that are fully developed and in depth is to use
business concepts, models, theories and specialist terminology to help develop a point.
The use of the above can help to sharpen analysis and lead to more focused responses.
Question
Marks
Dogs
Stars
Cash Cows
Purchasing
economies of scale
Managerial
economies of scale
Technical
economies of scale
Ready Steady Cook is a simple strategy to help you write arguments that
are well developed and contain the use of relevant models, theories and
concepts.
The idea is simple! Before starting to write an answer, think about what
specialist terminology, models and concepts you can use in your answer.
This will help to ensure that not only are your answers fully developed,
but that they also use the language of business.
Read the short case study on the next page...

Moulton Bicycle Company
The Moulton Bicycle Company is the home of the original small wheel bicycle. Moulton was
founded in 1962 by Dr Alex Moulton and the bicycles have become famous for their unconventional
frame design, small wheels and front and rear suspension. Whilst not a folding bike, Moulton
bikes are designed for easy transport with a unique separable frame.
Moulton bikes are one of the few bicycle
manufacturers that make their bikes largely
by hand which has a big impact on the
costs of the business.
The bicycle market is highly competitive
and recently Moulton have found sales
falling due to increased competition,
especially from the likes of Halfords who
have their own range of cheap, folding
bikes. The estimated PED of the market
is thought to be -1.5.
Question
Moulton are investing heavily in training. How might this benefit the business?
In the box below, write down any model, theory, concept or specialist terminology that you think could
be used in an answer to the above question.
On screen you will be shown some ‘ingredients’. Use the ‘ingredients’ to ‘cook’ a well-developed paragraph
that analyses one benefit of investing in training to Moulton.
Remember to make sure that your answer is also in context
Activity 7: Stepping Stones
Stepping Stones is a technique that you can use to help you develop
the skill of writing answers that are well developed (in terms of
analysis), in depth and show a coherent and logical chain of argument
outlining cause and effect.
Imagine there are stepping stones across a river. One way to get across the
river is to leap across. Alternatively, you could use the stepping stones to take
a number of steps.
Many students make leaps in their answer whereas a much better approach is to take a series
of (logical) steps.
Spot the Difference between the following two answers in relation to a question about the
benefits of an ice cream parlour, I Scream, arranging an overdraft.
Answer 2 uses a Stepping Stones approach.
Answer 1
One benefit to I Scream of arranging an overdraft is that there will be less demand in the winter for ice cream
therefore an overdraft will be needed during this period to increase cash.
Answer 2
Step 5
Step 6
Step 1
Step 2
Step 3
Step 4
One benefit to I Scream of arranging an overdraft is that I Scream’s sales will largely
be seasonal.
This means that demand will be greater in the summer months whereas
sales may be lower in the winter. An overdraft may therefore be necessary because
in the Winter, I Scream will have reduced inflows but will still need to pay its fixed costs,
therefore
an overdraft will allow I Scream to cope with this potential shortfall in cash over the winter
period and
when sales increase again in the Summer, the overdraft can be reduced or paid off.

Boo-Tique is a large chain of fashion stores whose
core market segment is women aged between 20
and 35. Women’s fashion is highly competitive and
Boo-Tique’s main competitors include New Look,
Next and Top Shop.
Boo-Tique has a fairly traditional organisational structure
with each store having a number of different departments.
Each department has a department manager, two
assistant managers, 4 sales supervisors and 10 sales
staff. This has created several levels of hierarchy within
each store and as Boo-Tique have expanded, labour costs
have risen dramatically. Many sales staff have also
indicated that they are becoming increasingly frustrated
by the lack of responsibility.
The directors of Boo-Tique are looking at changing the
design and structure of the organisation by reducing the
number of departments in each store as well as removing
the role of sales supervisor, resulting in fewer levels of
hierarchy and increased responsibility for sales staff.
One benefit to Boo-Tique of changing the design and structure of the organisation is
Step 1
Step 2
Step 3
Step 4
Step 5
Selected data 2014 2015
Operating profit £35m £32m
Number of employees 3,200 3,260
Number of customer complaints per store (average) 140 200
Number of employees leaving 576 685
NOTES

1 Below is a table with a ‘cause’. Fully analyse each consequence
2 Connect Four!
Cause
Increase in variable
costs
Operating at 100%
capacity
A new competitor
entering the market
Reducing the selling
price of a product that
has a PED of -2
Consequence Consequence
Write a paragraph that connects these 4 different concepts:
Variable
Costs
Contribution Break-Even Profit
3 How and Why
One benefit of introducing a system of just in time is that it reduces stock holding
As a result, this reduces the businesses costs
(HOW)
(WHY)

Circle the correct answer below:
Activity 2: MCQ Madness!
Session 3
Quantitative Skills
In this session we are going to look at
some of the key quantitative skills and
numerical concepts including index
numbers, ratios, fractions, price elasticity
of demand, contribution, profit and
break-even.
You will be shown 4 calculation questions on the screen.
Can you complete them before the countdown music stops?
Activity 1: QS Countdown!
1
2
3
4
1 The price elasticity of demand for a product is -2. What happens if the business
increases the price by 5%?
A The quantity demanded will fall and sales
revenue will fall
B The quantity demanded will fall and sales
revenue will rise
C The quantity demanded will rise and sales
revenue will rise
D The quantity demanded will rise and sales
revenue will fall
2
4
5
3
A business has fixed costs of £1,000 per month. Variable costs per unit are £5.
Last month the business sold 5,000 units priced at £15 per unit. What was the
total contribution?
A £51,000
B £1,075
C £50,000
D £26,000
The correct formula for break-even is
A Total contribution / variable costs
B Variable costs/ total contribution
C Fixed costs/ total contribution
D Fixed costs/ contribution per unit
In 2013, a business had sales revenue of £20m. In 2014 their sales revenue was
£24m and in 2015 their sales revenue increased to £28.8m. In 2016, the total
market size by value of the market the business operates in is forecast to be
£691.2m. If the businesses rate of sales growth continues what will their market
share be in 2016?
A 4.17%
B 3.47%
C 5%
D 2.89%
Using the data below, relating to a café, identify the correct profit variance
A £4,000 favourable
B £4,500 favourable
C £500 favourable
D £3,000 favourable
Revenue
Food Revenue 11,000
Budget (£)
December
13,000
Actual (£)
3,000 4,000
14,000 17,000
Drink Revenue
Total Revenue
Costs
Wages 3,000
Budget (£)
December
4,000
Actual (£)
5,000 6,000
2,000
10,000
2,500
12,500
Stock
Other Costs
Total Costs

Activity 3: Challenging Charts!
A key quantitative skill is the ability to interpret (and construct) a range of standard graphical
forms. This next activity will help you to develop that skill
Question 1
‘I like to move it, move it’ is an estate agents based in Newcastle. The business monitors average
property prices across the region. Figure 1 below shows the index of average house prices for
the last 4 years.
The base figure in 2012 is £180,000. Calculate the average house price in 2014 and 2015.
Question 2
Below shows the sales (in thousands) of bottled water from two large UK based manufacturers.
In 2015, Company A achieved a total contribution of £79,500. The selling price was £0.75 per
bottle.
Question 3
Boxco is a plastic box manufacturer based in Sunderland. Boxco has fixed costs of £90,000 per
year. The variable cost per box is £2.00 and the selling price per box (to the retailer) is £5.
Fig 1 - Index of Average House Prices
114
112
110
108
106
104
102
100
98
96
20132012 2014 2015
Variable cost per
unit in 2015 for
Company A
Cost of producing
1 box in 2014
Percentage increase in
sales between 2014 and
2015 for Company B
Profit in 2013
Average house price in 2014
Average house price in 2015
Sales (in thousands) of bottled water from two large UK based manufacturers
160
140
120
100
80
60
40
2010
139
120
141
128
120
159
148
119
100 100
80
107
2011 2012
BottledWater(000’s)
Years
2013 2014 2015
A B
Examiners Tip! Remember to always show your working out as you may be awarded marks for this
even if your final answer is incorrect.
Production (in thousands) of plastic boxes by plastic box manufacturer, BoxCo
90
80
70
60
50
40
30
20
10
0
2007 2008 2009 2010 2011 2012 2013
Production(thousands)
Years
2014

India Bones and the Temple of Groom is a chain of dog grooming parlours.
Below is some of their selected financial information for 2015.
Activity 4: Ratio Recap
Activity 5: Break-even (and Profit)
INDIANA
BONES
TEMPLE OF
GROOM
AND THE
Sales Revenue £80,000
Operating Profit £15,000
Current Assets £140,000
Current Liabilities £80,000
Non-current liabilities £10,000
Total equity £50,000
Table 1 Heck’s selected financial data from 2015
Average Selling price per pack (to retailer) £2.20
Variable cost per pack £1.00
Fixed costs per year £720,000
Sales revenue £2,860,000
Operating Profit Margin
Current Ratio
Return on Capital Employed
Calculate the following:
By Heck! This is a Banger of a Business!
Many people would think that starting a business in a highly
competitive and established market would be a disaster, but in
the case of sausage and burger business Heck, it proves that small
businesses can take on big brand competition and succeed.
Heck is currently achieving multi-million revenues and topping supermarket listings with
their independent premium sausage brand which specialises in gluten-free recipes.
Heck’s fast-growing range also includes a line of vegetarian sausages made with goat’s cheese,
nuts and super greens.
Using its refreshingly honest approach, Heck has managed to attract the attention of several major
UK retailers which has seen its sausages and burgers on the shelves of ASDA, Morrisons, Waitrose
and Sainsbury’s, retailing at (on average) £3 a pack. Heck estimate that the price elasticity of
demand for their sausages is -0.8.
Heck use distinctive packaging on their products which accounts for 1/5th of the variable cost per
pack, however, they are in negotiations with another supplier who can produce their packaging for
10% less than they are currently paying, although they are contracted to their current supplier for
the remainder of this year.
Total contribution in 2015
Break-even for 2015
Profit for 2015
Question 1
Use the information in the case study and Table 1 to calculate the following:
New variable cost per unit
in 2017
Break-even point in 2017
Estimated profit in 2017
Question 2
Heck have decided to change packaging supplier in 2017 in order to reduce their costs. They
also estimate that sales will increase by 5% in 2017
Based on this, and the above information, calculate the following:

Using quantitative data and calculations in your exam answers is an excellent way to not only help ensure you
write contextualised responses, but to also support analysis and evaluation.
This next activity will help you practice these skills.
Activity 6: Using Quantitative Data and Calculations to
Support Analysis and Evaluation
World Furnishings
World furnishings, a UK upmarket furniture retailer with branches throughout Europe, is now
looking to expand and grow the business further by expanding into a new country.
Competition has intensified in Europe and World Furnishings found their profits falling from £220m in
2014 to £180m in 2015. World Furnishings has identified China as a potential market to expand into.
China is the world’s second largest economy and is a huge market with a population of around 1.38
billion which is forecast to increase by approximately 1.5% by 2020; this, combined with a growing
middle class, makes China a very attractive market for World Furnishings.
The directors are considering opening up a ‘test’ store in order to ascertain demand and gather some
first-hand information on the Chinese market with a view to opening up 5 more stores over the next
two years.
World furnishings has gathered some data on China as well as the cost and possible returns of the
initial test store which can be found below.
Cost of expanding into China £800,000
Probability of sales being £2,500,000 per year 0.6
Probability of sales being £1,200,000 per year 0.4
Africa 19
India 24
Latin America 46
Europe 194
Asia-Pacific 171
North America
105
China 109
Number of middle class adults (million), 2015, by region and country
Exchange Rate: 1 RMB = £0.12
China Urban Disposable Income (RMB)
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
20152010 2020 2025

Furniture Retail Sales (in billion RMB)
Exchange Rate: 1 RMB = £0.12
China Furniture Retail Sales (in billion RMB)
31
30
29
28
27
26
25
24
23
22
20252020 2030
Activity 1
What data and calculations can you use to support the decision to move into China? Write your
answers (and calculations) in the box below:
Activity 2
Write a paragraph in the box below analysing why World Furnishings should expand into China
which includes some of the data/ calculations from Activity 1:

Question 1 – Which of the following markets has the largest percentage growth?
Question 2 – Which of the following businesses has the highest gross profit margin?
Question 3 – Which of the following businesses has the lowest capacity utilisation?
Question 4 – Which business has the lowest break-even point?
Market A
Market B £8m
£15m £20m
2014
£13m
2015 % change
£28m £39.2m
£32m £44m
Market C
Market D
Answer
Business A
Business B £2m
£1.5m £300,000
Sales Revenue
£600,000
Cost of Sales GPM
£200,000 £45,000
£800,000 £120,000
Business C
Business D
Answer
Question 5 – Which business has the highest current ratio?
Question 6 – Which business has the highest market share?
Business A
Business B £210,000
£180,000 £100,000
Current Assets
£120,000
Current Liabilities Current Ratio
£90,000 £60,000
£110,000 £80,000
Business C
Business D
Answer
Business A
Business B £40m
£110m £5m
Market Size by Value
£1.5m
Total Sales Market Share
£500m £30m
£250m £17.5m
Business C
Business D
Answer
Business A
Business B 75,000
110,000 80,000
Total Capacity
65,000
Current Output Capacity Utilisation
450,000 300,000
140,000 85,000
Business C
Business D
Answer
Business A
Business B £190,000
£500,000 50p
Fixed Costs
25p
Contribution per unit Break-Even Point
£170,000 15p
£125,000 35p
Business C
Business D
Answer

Session 4
Effective Evaluation
In this session we are going to look at the
key skill of evaluation which we are going
to develop through topics such as venture
capital, retained profit, centralisation
and decentralisation.
Before that, a quick knowledge blast!
1
2
3
4
Activity 3: It Depends
Using the phrase, ‘it depends on’ is one way of developing your skills of evaluation, however,
it depends on how you use depends!
Simply inserting the words, it depends on, in your answer, followed by a list of depends on
points is not evaluation. You need to explain why it depends on something.
Look at this extract from the end of an evaluation, relating to
whether or not World Furnishings, which we looked at in
Session 3, should expand into China.
‘...so, overall, I believe that World Furnishings
should expand into China, however, it very much
depends on the success of the test store’.
This is weak as it doesn’t explain why the decision
to expand into China depends on the
success of the test store.
A useful framework to consider when evaluating is the ‘W’s’ of Evaluation’
2 benefits and 2 drawbacks of off-shoring
Activity 2: Boys v Girls
Boys - Benefits Girls - Drawbacks
The ‘W’s’ of Evaluation
What is Evaluation?
Evaluation is a difficult skill to master. However, practice makes perfect!
Evaluation is not simply repeating your previous arguments when making a decision
Effective evaluation is about weighing up your arguments, deciding which arguments are stronger, more
important or more significant given the specific circumstances of that particular business and then
making a fully supported judgement based on evidence
In summary, evaluation:
• Is about making a well-supported, logical judgement that is focused on (and fully answers) the
question
• Needs to be based on prior analysis and should show the significance/ weighing up of competing
arguments as well as the limitations of arguments
• Should show balance and be supported by quantitative and/ or qualitative information
What
Why
What
Why
What
is your decision? - Which option/ course of action have you chosen?
have you made that decision? - Justify
was the most significant reason/ What influenced your decision?
did you reject the alternative?
does your decision depend on?
World
Furnishings
Can you solve the 4 key word conundrums?
Activity 1: Key Word Countdown!

A Explain why it depends on the success of the test store
Or
B Think of your own depends on factor and explain why it depends on this
Give it a Go!
...so, overall, I believe that World Furnishings should expand into China, however, it very much depends
on the success of the test store.
...so, overall, I believe that World Furnishings should expand into China, however, it very much depends on
Activity 4: Chop’d
Chop’d is a retail chain of high quality salad bars targeting the healthy-eating segment. Founded
by three shareholders in 2004, Chop’d now has 12 outlets, all sited in busy Central London locations.
Chop’d competes directly with McDonalds, Pret, Costa and rival salad bar chains like Tossed
Chop’d has a centralised structure with all key decisions about marketing mix made by senior management.
This allows Chop’d to maintain close control over nearly every aspect of the business.
The market for healthy fast food in the UK is growing fast and is forecast to increase by 8% p.a. for the
next 3 years. There have been many new entrants into the market recently such as ‘Wrap it Up’ which
achieved a 50% increase in turnover in London and wants to open more outlets there. Established fast food
operators have also responded by altering their menus to include fresh salads and other healthy eating
options.
Chop’d’s corporate objectives are focused on organic growth by opening more outlets in London and
also other large UK cities. Two of the founding shareholders want to raise the finance for this expansion
using venture capital. However, the other owner has expressed some reservations about venture capital
and prefers to finance expansion using retained profits. The three shareholders are also considering
changing the organisational structure to make Chop’d more decentralised, giving outlet managers more
control over store menus, pricing and promotion.
Question 1
Should Chop’d use venture capital or retained profit?
What is your decision?
Why did you make this decision? - Justify
What was the most significant reason/ What
influenced your decision?
Why did you reject the alternative?
What does your decision depend on?

Question 2
Should Chop’d remain centralised or change
its organisational structure to become more
decentralised
What is your decision?
Why did you make this decision? - Justify
What was the most significant reason/ What
influenced your decision?
Why did you reject the alternative?
What does your decision depend on?
Activity 5: Rupert’s Recipes
Barnsley based food manufacturing company, Rupert’s Recipes is looking to increase production
capacity in response to soaring demand. The business, which specialises in making flour-based
coatings for chicken and fish as well as marinades and seasonings for other UK food production
businesses, has been in its current premises at Zenith Business Park for several years. However,
the 3,000 sq. ft. premises are no longer big enough to cope with demand.
Rupert’s recipes prides itself on its customer responsiveness and meeting the different needs of its
customers and their main aim is to deliver on taste, price and service.
Managing Director, Iftikar Azamis, is considering two
options in relation to increasing production capacity.
UK Slovakia
Initial cost £950,000
Yearly fixed costs £550,000
Variable cost per unit £0.45
Selling price per unit £1.50
Capacity 4 million units
Forecasted yearly output 3 million units
Forecasted defective
products per year 150,000 units
Average delivery time to
customers 1 day
Initial cost £650,000
Yearly fixed costs £350,000
Variable cost per unit £0.35
Selling price per unit £1.50
Capacity 3 million units
Forecasted yearly output 2.7 million units
Forecasted defective
products per year 220,000 units
Average delivery time to
customers 3 days
Option 1 Move to a new, purpose built 20,000 square foot factory in the UK near to the
existing factory
Option 2 Close the existing factory and relocate production to Slovakia
Iftikar has gathered some data on both options:

Question
Which option should Iftikar choose? Try and support your
answer with numerical calculations:
Working out/ planning
I believe that Iftikar should
NOTES

Write a full answer for the following the two Chop’d questions that we looked at
in the session.
A Should Chop’d use venture capital or retained profit?
B Should Chop’d remain centralised or move to a decentralised structure?

Session 5
Putting It All
Together
In this final session we’ll bring
together the key A Level Business
exam skills we’ve introduced and
developed during the day. We’ll
also look at what you need to
do to build on your Strong
Foundations from today!
Let’s bring together the skills of Application, Analysis and Evaluation in this final mini case study
of today’s workshop.
Information about the financial impact of each proposal is summarised below:
Activity 1: Decisions, Decisions!
Case Study: Simply Gyms
Simply Gyms operates a chain of 30 low-cost fitness clubs located in city centres around the UK. Simply
Gyms’ vision is to make it simple, affordable & convenient for everyone to achieve their personal health
goals. It does this by offering:
• No-contract – members can leave at any time
• Opening hours: all day & every day
• Equipment: state-of-the art
• Value added: over 50 fitness classes each week
The Board of Simply Gyms is considering two proposals to introduce extra
premium services to each gym:
• Professional physiotherapy services – these would be outsourced to
PhysioPro – a physiotherapy consultancy who would use existing gym
space
• Weight-loss clinics – these would be modelled on brands such as
Slimming World and Weight Watchers, but delivered by Simply Gyms
staff in newly-equipped areas
Physiotherapy Weight-loss
Gross profit margin 25% 40%
Return on capital employed 65% 20%
Estimated market size £50 million £2.6 billion
Overall assessment of competitor strength Weak Strong
We have five minutes to plan a response to this question:
Which of the two new premium services is the best option
for Simply Gyms in order to enable it to grow profits?
Let’s split into groups to build the plan.
Application Analysis Evaluation
Think: Context Think: Cause & Consequence Think: Five W’s

Descriptive vs Analytical Writing
This is an important skill to practice as you prepared for A Level Business exams. It takes practice!
Students whose writing style is analytical rather than descriptive will write less, but usually score
higher!
Building on Strong Foundations
Let’s finish by considering what a successful A Level Business Student will look like in June next
summer. What do you need to be working on?
Analytical
States what happened Explains why it happened
Outlines a specific theory Explains why the theory is
relevant / suitable
Says when something occured Identifies the importance of
the occurrence
List details Explains the significance of details
States links between examples Shares the relevance of links
between examples
Gives information Draws conclusions
Descriptive,,
Activity: Descriptive or Analytical?
Decide whether the following sentences are mainly descriptive or analytical in style:
If Moulton Bicycle Company decides to reduce the price of its bikes this will mean
a reduction in revenues due to the effect of price elasticity of demand which
shows how revenues change when prices are changed in a market
A likely consequence of Boo-Tique removing a layer from the store organisational
hierarchy is that store employees will be given greater responsibility to make
tactical marketing decisions as well as be empowered to handle customer
queries, which in turn should improve the standard of customer service and
therefore, customer satisfaction.
A change in the style and standard of packaging by Heck will involve the redesign
of the cover and other packaging elements in order to suggest to customers that
the product has been improved. The use of packaging in this way is a good
example of how the marketing mix can be changed to improve the market
positioning of a product.
One benefit to World Furnishings of expanding into China is that it will enable the
business to take advantage of the rapid growth in the size of the middle class in
China which in turn is creating a large potential source of demand from affluent
consumers who want to purchase products made outside China from recognised
global brands.
D A

QuantitativeSkills
keycalculationsandFormulas
In A Level Busines, you need to be familiar and competent in the following quantitative skills:
• calculate, use and understand ratios, averages and fractions
• calculate, use and understand percentages and percentage changes
• construct and interpret a range of standard graphical forms
• interpret index numbers
• calculate cost, revenue, profit and break-even
• interpret values of price and income elasticity of demand
• use and interpret quantitative and non-quantitative information in order to make
decisions
• interpret, apply and analyse information in written,
graphical and numerical forms
• Revenue = Number of units sold x Unit price
• Total costs = Fixed costs + Total Variable costs
• Total variable costs = Number of units sold v variable costs per unit
• Contribution per unit = Selling price per unit – Variable cost per unit
• Total contribution = Contribution per unit x Number of units sold
• Profit = Total revenue – Total costs or Total contribution – Fixed costs
• Break-even = Fixed costs/ Contribution per unit
• Variance = Actual – Budget
• Gross profit margin = Gross profit / Sales revenue x 100
• Operating profit margin = Operating profit/ Sales revenue x 100
• Profit for the year margin = Profit for the year/ Sales revenue x 100
• Capacity utilisation = Actual level of output/ Maximum possible output x 100
• Productivity (labour) = Output per period (units)/ Number of employees
• Market share = Sales of a product or business/ Total market sales x 100
• Price elasticity of demand = % Change in quantity demanded/ % Change in price
• Income elasticity of demand = % Change in quantity demanded/ % Change in income
NOTES

NOTES

A Level Business Strong Foundations

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