Edexcel Business A Level Revision

Investment Appraisal - The use of numerical techniques to predict the financial outcomes of potential capital investments. Payback - The length of time (payback period) required to recover the cost of an investment in a project. FORMULA  - PAYBACK NET CASH FLOW IN YEAR THE INITIAL INVESTMENT IS REPAID / 12 MONTHS = £?  REMAINING CASH TO BE PAID IN FINAL YEAR TO REACH THE REPAYMENT TOTAL / £? = DECIMAL = MONTHS A BUSINESS WANTS THE LOWEST PAYBACK TIME IN ORDER TO BECOME PROFITABLE QUICKER. Interpretarion of payback gives a prediction of when the investment will be paid back and more importantly the point at which it will start to  make a profit for the business. Businesses can use payback to consider a number of potential options and then choose the investment with the fastest payback. Alternatively, businesses may allow investment only if payback is within a maximum period of time, for example 24 months. Advantages Disadvantages ...

Mission Statement - is a short term statement of the company's vision and values which helps to set aims and objectives and also detail the overall reason for its existence. This enables employees, managers and customers and possible some suppliers to understand the conduct of the business. It is a statement of purpose, such as 'grow our market share in the UK'. Nike's mission statement is; "To bring inspiration and innovation to every world athlete". Corporate objectives - Measurable, clearly defined targets for how to achieve business aims. Effective objectives should be SMART (specific, measurable, achievable, realistic and time specific) A good mission statement should differentiate the business from its competitors, be relevant to all major stakeholders, define the market in which the business wants to succeed, and inspire and motivate stakeholders, especially employees. It should also be brief, realistic, based on a consultation with stakeh...

Performance-related pay - is a scheme where wages or salaries are linked to performance in the workplace. There are many different schemes... KEY FEATURES An appraisal (review of performance) is conducted by senior managers Payment may be based on specific targets Goals and/or targets are set for the next appraisal ADVANTAGES Senior managers can easily monitor and assess individual employee performance during appraisal process Setting of targets for employees can ensure they are all closely focused to company objectives DISADVANTAGES Discourages a team based approach - can create unhealthy rivalry between managers Can be difficult to accurately measure performance of some workers e.g. in service sector firms Incentives may not be large enough to motivate employees Employees may disagree with the appraiser

In terms of approaches to how management view human resources, a popular distinction is made between treating staff as an asset ("soft" HRM) and treating them as a cost ("hard" HRM). Staff as an Asset (SOFT HRM) ▪ Treats employees as the most important resource in the business and a source of competitive advantage. ▪ Employees are treated as individuals and then needs our plan accordingly. FOCUS = Concentrate on the needs of the employees - their roles, rewards, motivation etc Staff as a Cost (HARD HRM) ▪Treats employees simply as a resource of the business. ▪ Strong links with corporate business planning - what resources do we need, how do we get them and how much will they costs FOCUS = Identify workforce needs of the business and recruit and manage accordingly ( hiring, moving and firing) KEY FEATURES TO SOFT AND HARD HRM SOFT HRM Strategic focus on longer-term workforce planning Strong and regular two way communication Competi...