The Examiners Report for the June 2013 sitting of AQA BUSS4 makes a very interesting comment.
It suggests that students who write a suitable introduction to each of their two essays can contribute to a better-performing and, therefore, higher-scoring essay.
This makes perfect sense and it follows from something that we emphasis on our exam coaching workshops for BUSS4. Good BUSS4 essays start with a plan. Good essays know what they are trying to argue.read more...»
Is it really 18 months since many of us were pouring over research sources for the 2010 AQA BUSS4 research task on strategies for handling an economic downturn? Well dust those notes off folks cos here we go again with a second looming UK recession. But this time, will UK industry be ready?read more...»
As we enter a period dominated by “cuts”, here is a profile of an industry which thrives on cuts. Some great business lesson material here on market segmentation, adding value and the nature of demand for a product.read more...»
Wake up to Money, which is broadcast every morning at 5.30 on Radio 5, is often a good source of stories and anecdotes. It was particularly good today - and the excellent news is that you don’t have to set the alarm for that unearthly hour to hear it as you can download the Podcast. It will be well worthwhile for all AQA unit 4 students spending 20 minutes taking notes from today’s programme - they will start with a useful preview of the release of the updated GDP figure for quarter 4 of 2010, giving some good background data.
The interview that follows, with the CEO of Pret a Manger is gold dust - he talks about the figures that Pret have just released which show a big rise in sales and profits, despite rising commodity prices and a tough climate on the high street. His description of the relations with suppliers and marketing mix strategies that Pret have followed to allow them to achieve this through the recession should be noted and quoted as evidence in BUSS4 essays.
Finally, figures out this morning from the Internet Advertising Bureau show online advertising grew nearly 13% last year and now accounts for 25% of all advertising spending in the UK, and some more background is given for that data. Here is another little nugget that could be useful to prove to the examiner that candidates really know what they are talking about when it comes to strategic management - so please do use the links below!
Wake up to Money 29th March on i-player - available for 6 days from now
Wake up to Money podcast
Brief TV interview with Clive Schlee of Pret a Manger (...but the radio interview covers more ground)
Report about the study by the Internet Advertising Bureau (IAB)
Business investment is a key part of economic activity. Firms invest in capital spending for a variety of reasons - for example to increase capacity, improve efficiency and take advantage of new technology. So what has happened to the value of business investment in the UK economy over recent years? The interactive chart below shows the quarterly value of business investment (in £ms) over recent decades. The chart updates once the latest ONS data is available, so bookmark this blog entry if you would like to be able to check latest trends in business investment.read more...»
A significant piece of research from accountants KPMG estimates that price discounting by UK firms cost them £20bn - and things may be getting worse as the economic conditions in 2011 worsen further…read more...»
The main topic of this story on the BBC website is a new report by the British Chambers of Commerce, which says that while the UK’s service sector is suffering domestically, many manufacturers are enjoying an export-led boom. It gives a great example of clockmakers Smiths of Derby, who were suffering from a lack of domestic demand in the recession for their expertise in renovating and maintaining clocks around the UK from St Paul’s Cathedral to Arsenal’s Emirates stadium.read more...»
This report on the BBC website highlights the shift, in times of austerity, away from browsing the High Street for luxuries towards browsing the web for bargains - one result is that on average 14% of shops in the UK are vacant, a massive increase from 10.5% a year ago. But, as ever, the answer to ‘Is the British high street a good location for retail businesses?’ is “It depends….”read more...»
Students of business strategy (and their teachers) will rarely find a better video resource than this one. In particular, it ought to be required viewing for anyone taking AQA A2 Business BUSS4 or IB Business Management…read more...»
Pontins is the latest household name to fall victim to recession and the credit crunch. They have been put into administration, meaning that the future of the company is uncertain, for both staff and customers. The problem is that the banks are no longer willing to give them credit – so although they have customers willing to buy, they face the possibility of business failure due to a lack of cash flow.read more...»
As A2 students start to broaden their thinking about the influences on a business’s decisions, they have to learn about local and national government revenue raising and spending. I often find that they don’t know the different roles of local and national government, but an interactive device which the Local Government Authority is about the roll-out to all councils websites might help with that. The idea is to ask the public to play the role of council leaders in deciding where to make cuts in spending, changes in employees pay and in the fees charged for various services, in order to achieve the required cuts and keep any rise in council tax to less than 5%. It has been trialled by Redbridge local council in London, and you can see it in operation on their website.
Here’s a term that ought to find itself into the next editions of the traditional business studies textbooks - micro-companies. Of course, it won’t (maybe in 2020) but it should. Because in the last five years there has been an increase of over 250,000 in their number in Britain.read more...»
The UK restaurant sector has endured a tough few years as it has struggled to respond to the recent recession. For those that have survived, attention is now turning to the competitive structure of the market, with many commentators expecting a consolidation of the market through a series of takeovers. It looks like the takeover process has begun…read more...»
An interesting statistic here which savvy students will add to their notes - particularly those who want to demonstrate real-life evidence to their examiner.
According to statistics from the Bank of England, the amount of bank loans outstanding to UK businesses is now £471 billion, down from a peak of £503 billion in September 2008 (the month in which Lehman Brothers went bankrupt). Thats a pretty significant change in absolute terms, although the percentage change is less pronounced.
Nevertheless, that’s a big chunk of bank finance which is no longer on the combined balance sheets of UK firms. Students ought to be able to identify several reasons for the shift, including:
- Reluctance of banks to lend to firms during the recession / credit crunch
- A strategy of cash conservation by many firms, who cut back on dividends, capital spending and operating costs in order to reduce their debt and gearing
An interesting short article in the Telegraph contains a suggestion that many businesses, particularly the small ones, are struggling to shake off the experience of surviving the recession.read more...»
A neat summary from the BBC of a trend developing during 2010 - the increase in the number and value of business takeovers as UK firms emerge from the economic downturn. This would make a useful lesson stimulus piece for students wanting to build their understanding of the rationale behind acquisitions as a means of business growth, and also to identify some real examples to supplement their exam research.read more...»
Here is a really useful new report from accountants PwC focuses on how the UK manufacturing sector has weathered the recent recession in the UK. Lots of great insights in there about how manufacturing firms have attempted to remain competitive during the downturn.read more...»
A huge hat tip to Geoff for spotting this amazing resource which could prove really useful - particularly for students undertaking research tasks such as BUSS4….read more...»
Cartching up on some extra research or AQA BUSS4, I really like this article in the Independent from a few weeks ago which summarises quite neatly the key strategies (mainly financial though) which UK firms undertook during the recession. Well worth students reading this one and adding a note or more to their revision sheets:
Key points (all of which we made in the BUSS4 workshops) include:
Strengthened balance sheets (more equity & cash; less debt)
Focus on reducing inefficiencies (i.e. minimising unit costs)
Exploit faster-growing economies in the emerging markets (particularly China & Asia)
Maximised cash flow by dramatically cutting back on capital spending
Action to reduce labour costs - but not just redundancies
After a period of dividend freezes or postponements, larger firms are now rewarding shareholders
Some good “macro” or big picture content there - the challenge for students is to identify and use more detailed, specific examples of these actions in their essays
A recession is typically associated with a reduction in business investment (capital expenditure). As students prepare their final research evidence, what does the data show in terms of the total capital spending by UK firms during the recent recession?read more...»
A fantastic piece of survey research from accountants Grant Thornton arrives just in time for AQA BUSS4 students preparing for the Section A essays in June 2010 & Jan 2011…read more...»
This BBC article is really useful for students researching how businesses responded to the recent recession - and it also features an entrepreneur who will be joining us for the Business Teacher Conference on 18 June 2010!read more...»
Watching this BBC news video is likely to make you want to apply to John Lewis for a job. The story looks at the range of perks which are being withdrawn by some employers during the recession and need to make cut-backs - topical in the light both of the new Prime Minister’s move to reduce the costs of chauffer-driven cars for ministers and also of the on-going BA dispute which now seems to centre around the withdrawal of perks. But at John Lewis the staff bonuses and other fringe benefits are still very much part of the package, and seem to work well for the employer that is regularly voted at the top of the customer service league tables - the suggestion is that here is an example of a fringe benefit really increasing the motivation to provide the service that the customer wants.
There is also an article here, written in March this year, which looks at precisely what benefits BA staff have become accustomed to. When the video report was shown on BBC Breakfast on Friday it was followed by a discussion with Laura Tennison, who will be speaking at the tutor2u Business Teachers Conference later this month, in which she gave a robust view of the need to give all employees the same perks, regardless of their grade or length of service, and had a clear preference for giving people more money as a reward rather than offering fringe benefits such as gym membership or health insurance which may not be equally highly valued by everyone. She also discussed the difficulty of removing a fringe benefit, which is not part of the employment contract, when the employer no longer wishes to provide it, but the employee has got used to it. Unfortunately this interview does not seem to be available from the BBC website - I will keep looking for it and post the link to it if it becomes available
Employees who held tight during the recent recession in the UK might be about to leave their employers very soon - according to a new survey.read more...»
Proof (if proof were needed) for business students wanting to understand the key to a profitable strategy for airlines during an economic downturn. Competitive advantage comes from keeping unit costs as low as they can go. Lots of press coverage on the news that Ryanair is proposing to make its first dividend payment - but the real story in the Ryanair coverage is how an airline can be so profitable despite almost impossibly tough trading conditions in the airline industry.
The answer lies in Ryanair’s obsession with effiency & productivity. It squeezes every pound of revenue it can from flexible pricing structures and pricing add-ons. But is also drives hard bargains with suppliers and minimises unit costs through industry-leading capacity utilisation (“load factors”). Love’em or hate’em, you have to admire Ryanair’s ability to make profits when the external environment is so hostile to all airlines.
This article in the Independent provides some useful context on Ryanair’s most recent, impressive results. Some good materials in there for BUSS4 students looking to add some research evidence to their essays. I liked this sentence which sums things up quite neatly:
“Cut-price airlines have withstood the recession better than their premium rivals, and Ryanair’s passenger numbers shot up by 14 per cent to 66.5 million in the year to 31 March. The group’s handling costs also fell by 9 per cent as airports fought hard to retain business in the face of cutbacks by non-budget carriers.”
A good economics piece in The Telegraph today which is of relevance for business students in their final revision.
The article explains that manufacturing output in the UK has grown in each of the last eight months. Britain’s factories are helping to lead the UK economy out of recession (whilst recent data suggests that the service sector has struggled to grow).
Successful exploitation of growth opportunities in emerging markets like China & India are part of the reason. Another reason is a reversal of the process of de-stocking (i.e. firms beginning to rebuild rather than reducing stock levels) which occured during the recession.
The third, and perhaps most important cause of strong demand for UK manufacturing is the low level of the Pound. Weaker sterling makes UK products relatively cheaper in international markets, although some will suffer from the flip-side - higher costs of imported raw materials and components.
As we emerge from the recession, expect to see a sharp increase in mergers and acquisitions activity. A great example announced yesterday - the acquisition by Asda or 193 Netto stores which enables Asda to claim that it is now the number two grocery retailer in the UK behind Tesco.read more...»
A terrific article on Dyson in The Guardian today which is pure gold dust for AQA BUSS4 students preparing for the Section A essays on the recent recession in the UK…read more...»
How much detail should students go into as they finalise their research findings for BUSS4 and prepare to provide well-evidenced essay paragraphs?read more...»
Looking back through some articles I flagged for follow-up, I came across this excellent piece from March 2010 reporting on the best-selling grocery brands in the UK during 2009. It is particulalrly useful for two reasons…read more...»
Grocery retailer Sainsbury’s have increased net profit by 17% and added 1 million customers since the start of the economic downturn. How did they do it?read more...»
A2 students who are looking at the strategies adopted by the car industry through the recession should find plenty of useful information in this article about General Motors, owners of Vauxhall/Opel.
Last year, in the wake of the huge falls in global demand for the car industry, GM was planning to sell off Vauxhall Opel in Europe. However in November they agreed to restructure the business instead. This has led to wide-ranging changes which cover several aspects in the A2 syllabus:read more...»
This is a streamed version of the presentation that was used in our BUSS4 revision workshops in April/May where we looked at two examples of the detailed strategies adopted by businesses in the recession. We focused on Dominos UK and ITV plc - businesses that experienced contrasting fortunes during the recession. The second link below is to a brief video resource that was used during the session.
Just under 3,000 BUSS4 students joined us last month for an intensive day preparing for the BUSS4 exam in June 2010. In the first session in the workshop we took a guided tour through the key macroeconomic changes in the UK economy during the recession, and the evidence of overall business response. The streamed presentation below was used during the session, alongside a series of quickfire revision activities. Obviously most of the key learning during the workshop was through the speaker commentary and student practice, but hopefully the presentation might be useful for other BUSS4 students ahead of the exam.
A hat tip to Geoff for spotting this useful BBC report on the problems being experienced by the overall UK hotel sector. 2009 saw a sharp rise in the number of hotel insolvencies in the UK, despite what many thought would be a helpful trend - UK consumers prefering to stay here in Britain for their holidays.
One issue was a drop in demand from overseas visitors, which fell by 6% in 2009. But it looks like the bigger reason was simply customers trading down and reducing their average hotel spend per visit. Guests ordered fewer hotel extras, and the important high-margin conference trade also suffered as businesses looked to reduce they spent on hotel meetings. One winner from this trend, which we reported on a few months ago, was branded coffee shop chains. Meeting customers and clients at a Starbucks or Costa Coffee has become more popular rather than hiring expensive (and often poorly equipped) hotel meeting rooms.
Students researching how the recent recession provided opportunities as well as threats would do well to watch this brief video from the BBC on why coffee shops (particularly the branded chains) seemed to turn the recession to their advantage.
Some additional links further below provide some extra background research reading.
Students of the recent recession in the UK will know that the UK advertising industry declined sharply during the downturn as businesses (on balance) trimmed their advertising spend to conserve cash and reduce costs. What might students expect to see as the economy exits the recession phase?read more...»
This short one-minute video report explains very clearly the problems a small or medium sized business faces when customers delay payments. It coincides with a report from BACS Payment Systems which says that typically businesses are receiving payment 41 days late - with many payments running over 90 days late. This means that businesses are effectively bank-rolling their customers, and are particularly worried as they find that increasingly the delay is caused not so much by a desire to pay later, but because of an inabilty to pay at all. One issue is the cost of administrative time spent chasing those customers, and another is the need to add an extra 20 and 30 days-worth of cash to the cash flow. All making it increasingly hard to businesses which have survived the recession to survive the recovery as well.
Any students who are investigating Corus as part of their preparation for the AQA BUSS4 paper in June should read this interview with Kirby Adams, the Managing Director and CEO of Corus in Europe.
There is analysis of the mothballing of the Corus plant in Teesside, the state of demand for steel in Europe as manufactuing closes down in this part of the globe, and the lack of investment in infrastructure in the UK.
For example, Adams is an American who says ‘I’ve lived in London for a year, and I travel around, and the one thing that strikes me is the aweinspiring investment in infrastructure that the Victorians made — isn’t it time for renewal?’
The article is from the Sunday Times - which is still free for download now, but won’t be later this year - and should be seen as a key addition to the resources about Corus suggested by Jim in his blog last month.
Over 600 AQA centres have now purchased our AQA BUSS4 research toolkit - the essential teaching and revision solution for the AQA BUSS4 exams in June 2010 and January 2011. Described by a senior AQA examiner recently as an “awesome piece of work”, the BUSS4 toolkit aims to support teachers and students by focusing their research on the UK recession, providing detailed guidance on exam technique for Section A, and explaining point by point how effective answers can be developed in this tough, new exam.
The BUSS4 Toolkit for June 2010 / January 2011 can be ordered in several ways:
A fascinating research report came out this morning which is really useful for students researching the UK recession and for teachers who want to top up their understanding of what really goes on inside small and medium-sized businesses in the UK…read more...»
Here’s a great chart from our Economics bloggers which is really useful in helping students researching the recent recession in the UK…read more...»
I came across a fascinating graphic which illustrates just how strong the cash flows are of the world’s leading technology businesses like Apple, Google, Cisco and Microsoft…read more...»
Here’s a neat 4 minute video with Paul Polman (CEO of Unilever) which would be useful for BUSS4 students researching recession strategies + perhaps some stronger AQA GCSE (legacy) candidates looking at the pre-released case study on Unilever plc…read more...»
I have just found this article on the BBC website which offers advice to small and medium sized businesses about strategies to help them to emerge from the recession into a fragile recovery in a strong and healthy state. It gives guidance about a range of government-backed schemes under these headings:
Delaying tax payments
How to handle redundancies
Securing a bank loan
Securing payment from other firms
As students learn about the impact of external economic influences such as inflation, it might be helpful to look at the changes the Office of National Statistics have just made to the way in which they calculate the average level of inflation for the UK. Each year they review the so-called ‘typical basket of goods’ that is bought by households, so that they can measure changes in the price of those goods over the coming year. This enables them to make sure that the prices they are monitoring are for the goods which are most relevant to the average household in the UK – the aim is to update the basket to reflect changes in our pattern of spending.
Here is a new version of Wipeout challenge. This time the task is for students to identify the businesses that entered administration during 2008-2009. A nice little lesson starter. The follow-up could be to discuss why the businesses that did go bust failed..and what happened to them since (not all disappeared altogether)
These news reports about the 10% rise in profits at John Lewis are valuable for students preparing for AQA BUSS 4, as they give plenty of material about how the group turned poor half year results into splendid full year profits in the midst of the recession and decline in high street spending. The report in the Guardian is particularly interesting as it examines the advantages brought by the unusual corporate structure, and the quality of management of the company which it concludes isn’t the best-run in Britain. While the article in Management Today compares the profits with those of Morrisons, and contrasts the growth strategies of the two businesses.
They are equally valuable for those preparing for the AS unit 2 papers, as they examine the way in which John Lewis uses profit sharing as a means of financial motivation, alongside a wide range of other fringe benefits, and in return have a labour turnover which is half that of most of their competitors. They should be viewed alongside the BBC’s series of three programmes about John Lewis and will be of greatest interest of all to any students who have part-time jobs at Waitrose or the department stores, as they stand to gain a 15% profit sharing bonus!
BBC News - John Lewis profits top £306m as staff share big bonus
The Guardian - At John Lewis, ‘happiness’ beats profit
Management Today - Booming Waitrose powers John Lewis to bumper profits
Putting to one side all the newspaper and tv stories of how consumers behaved during the recent recession in the UK, what does the data show? What were the real trends and how did consumers behave compared with the long preceding period of economic growth in the UK?read more...»
One more suggestion for colleagues looking to encourage students to pick a relevant case study for their BUSS4 research on the recent recession in the UK. Take a look at the Corus story over the last 18-24 months.read more...»