Edexcel Business A Level Revision

Tactical decision - A short-term response by a business to opportunities or threats. Strategic decision - A long-term plan of action to achieve business aims and objectives Strategic decisions on human resources may include long term plans to build up a workforce, for example hiring more staff to build cars on a production line. This scenario would impact on both the physical and financial resources of the business as it is likely it would have to invest in new machinery (physical) and train and house the new employees to ensure they were productive (financial). All this takes a great deal of planning and time, so cannot be easily reversed.

High failure rate of new business The highest rate of business failure is amongst new businesses (start-ups). It should be pretty obvious why this is the case: Difficult to test a business model without trading  Easy to be over-optimistic in the business plan Competitor response is often aggressive Management may lack experience Among the most common reasons why new businesses fail so frequently are: 1. No demand for the business idea Poor market research and unrealistic plan Competitor response Just a bad idea - was doomed to fail 2. Good idea, but poorly executed Wrong people; poor management Growth is too quick (over trading) or too slow Failure to manage cash flow A competitor grabs the good idea and does it better 3. External shocks Economic change e.g. sudden decline in market decline due to recession Legal and social change e.g. change in legislation impacting demand or increasing costs Why do Established Businesses fail? Interna...

Bonus - designed to motivate employees by rewarding them for achieving particular targets or standards set by the employer. KEY FEATURES  Can help to recruit, motivate and retain staff Can increase employee commitment to the business ADVANTAGES A bonus payment to an employee can be used as an incentive, especially in a field where employees must make sales or meet specific goals. Bonus payments do not have to be awarded on a holiday, at the end of the year or as an incentive. A bonus payment can also be used as a means of appreciation for an employee’s hard work throughout the year or in a specified amount of time in the year. Receiving a bonus payment will not only show the employee he was appreciated for his hard work, but it will motivate him to continue to work hard for further rewards. DISADVANTAGES Not all jobs show a clear link between performance and productivity or profit Employees may neglect other goals to concentrate on bonus targets. Because bonus...

Commission - based on the percentage of business generated by an employee such as a salesperson. Commission is a payment made to employees based on the value of sales achieved. KEY FEATURES An incentive to increase worker productivity Knowing that extra effort means more pay can motivate Depends on selling price of product ADVANTAGES  Enables high performing sales people to earn huge amounts.  The payroll cost is related to the value of business achieved rather than just the amount produced. Increased sales due to it being a motivator DISADVANTAGES No incentive to build relations with customers Income can be unreliable, especially in a recession May lose customers if employees are using aggressive sales techniques in order to secure commission which damages the business' reputation

Motivation - the will to work or ways in which businesses can encourage staff. Motivation comes from enjoyment of work itself and/or from desire to achieve certain goals e.g. earn more money or achieve promotion. An engaged employees is one that has emotional commitment to the organisation and its goals. This means that engaged employees actually care about their work and their company and are motivated to contribute to the company's success. Motivated employees are generally thought to be more productive and better able to communicate and collaborate. Business managers try to meet employee's needs in a way that will enhance their performance and productivity, so maximising efficiency. There are two broad approaches available to motivate employees FINANCIAL METHODS (salary, bonus) NON-FINANCIAL METHODS (passing on responsibility or praise) BENEFITS OF MOTIVATED STAFF INCLUDE: Higher labour productivity Lower labour turnover Higher retention rates Lower unit ...