Different Measures of Performance

Research and explain what is

To consider other 1.
methods of assessing
overall business
performance you need
to know about;
meant by the ‘Balanced
Scorecard’?
Give a clear definition of the model,

its uses, benefits & drawbacks with
some real world business examples
of how this as been applied in
practice.

2. Research and explain what is

meant by the ‘ Triple Bottom Line’?
 Kaplan and Norton’s  Explain in detail what each of the 3
Balanced Scorecard bottom lines are by giving a clear
definition of the overall model, its
model uses, benefits & drawbacks with
some real world business examples
 Elkington’s Triple of how this as been applied in
practice.
Bottom line.
 A Level Business

AQA

YEAR 2

https://www.tutor2u.net/business/refe
rence/multinationals-and-their-ceos-
matchup-activity
 OVERALL
Performance of a business

 How to analyse data (non-financial)

 Value of different measures

A 'level only (Year 13)

 Different Measures of Performance

In what ways, other than financial analysis can a

business assess its ‘overall performance’?

Financial Marketing Operations People

 Different Measures of Performance

In what ways, other than financial analysis can a

business assess its ‘overall performance’?
Ways [Year 1]:
3.3.1 market share/size/growth

3.4.2 labour productivity, unit costs, capacity and capacity

utilization

3.6.2 labour turnover and retention rates, employee costs as a

percentage of turnover and labour cost per unit
 OVERALL
Performance of a business

 How to analyse data (non-financial)

 Value of different measures

A 'level only (Year 13)

 h at
r : W ake
at i e m
co l y o u s’
o s
Ch is can usine
ly s s b
ana m thi ta?
fro da
 Ta
ca xi: W
th n y ha
i s ou t
b u m an
sin ak aly
es e f sis
s’ rom
da
ta?
Remember data can be internal
to the organisation e.g. sales
volume or external e.g. market Analysing data
size.

 Over time  In comparison

 Year on year  Benchmark within
 Year to date business or against
competitors
 Trends over a
longer period of  Industry average
time  Between branches
 Monthly or product lines
 Geographically

How would analysing data over time and in comparison with

other businesses help a car manufacturer? Try to use
examples of operations, marketing and HR data.
 Different Measures of Performance

To consider other How to make a profit

methods of assessing while making a
overall business difference.
performance you need
to know about;

Making a profit / return

but making a
difference.
https://www.ted.com/talks/
audrey_choi_how_to_make_a_
profit_while_making_a_differen
ce
Different Measures of Performance
 Do you think that Britvic’s
overall performance puts it in
a strong position to protect
itself from the sugar tax?
 16 marks
 AO1 = 2, AO2 = 3, AO3 = 4 and AO4 = 7

Read the source opposite and

identify points that:
• Give reasons why Britvic is in
a strong position to protect
itself from the sugar tax.
• Give reasons why Britvic is not
in a strong position to protect
itself from the sugar tax
Different Measures of Performance
• Give reasons why Britvic is in a
strong position to protect itself
from the sugar tax.

• Give reasons why Britvic is not in

a strong position to protect itself
from the sugar tax
 Different Measures of Performance

Reasons why Britvic is in a strong position to Reasons why Britvic is not in a strong
protect itself from the sugar tax may include: position to protect itself from the sugar
tax may include:
 It has already established healthier
alternatives in the market e.g. sugar free  Sugar tax will mean that Britvic will have to
Pepsi Max change their recipes
 This suggests that it is able to target  This may cause costs and changes to the
health conscious consumers production process
 It has spent time and money promoting  Re-labelling of bottles
healthy drinking  Potentially, could hinder the taste of drinks,
 Potentially, it is in a better place than impacting on sales
some of its competitors
 It has a healthy set of accounts with ROCE
at 18.7% in 2015 suggesting that it has
finance available if required
 Its current ratio is 1.37 suggesting it has
no liquidity problems
 Branding likely to make the product more
price inelastic
 Different Measures of Performance

Explain what is meant by the

To consider methods of 1.
assessing overall
business performance
you need to know
about;
‘Balanced Scorecard’?
 Give a clear definition of the model,
its uses, benefits & drawbacks with
some real world business examples
of how this as been applied in
practice.

 Kaplan and Norton’s

Balanced Scorecard
model
 Elkington’s Triple
Bottom line.
 1. https://www.youtube.com/watch?v=M_IlOlywryw
2. https://www.youtube.com/watch?v=OZtNk__7Qyg

Give a clear definition of the

model, its uses, benefits &
drawbacks with some real world
business examples of how this
as been applied in practice.

A business has recently started to use a Balanced Scorecard to measure its performance. To what extent do
you think the business is likely to make better long-term decisions as a result of this? (25 marks)
 OVERALL
Performance of a business
 Kaplan and Norton’s
Balanced Scorecard model
What Is a Balanced Scorecard?
A balanced scorecard is a strategic management
performance metric used to identify and
improve various internal business functions and
their resulting external outcomes. Balanced
scorecards are used to measure and provide
feedback to organizations.
The model explains the limitations of financial
statements when assessing business
performance before outlining the value of the
balanced scorecard as a method of assessing
the assets and capabilities of a business
that financial statements can't quantify, such as
the value of customers, people within the
business, processes and culture.
 Explanation:
 A strategic planning and
management system used to
align business activities to the
vision statement of an organisation
 'To undertake a balance scorecard
a business must know the
following:
 The company's mission statement
 The company's strategic plan/vision
 Then
 The financial status of the organisation
 How the organisation is currently
structured and operating
 The level of expertise of their employees
 Customer satisfaction level
 Kaplan and Norton’s Balanced Scorecard

The main areas that the business looks at

are:
 Finance: Measuring financial capability e.g.
financial ratio analysis
 Internal business processes: Efficiency in the
organisation e.g. JIT and capacity utilisation
 Learning and growth: HR requirements e.g.
training, labour turnover/productivity and
communication
 Customer: Expectations being met e.g. customer
Balanced
Scorecard. service, satisfaction and retention
 OVERALL
Performance of a business

 Fixation on profit!!!!!
 Broader view of key
performance measures/
perspectives
 Financial – backward looking!
 Customer – is it working for them!
 Business process – internal audit
(SWot)
 Learning & growth –
improvement/capacity measures!
 Implement Card – Factor(s)
needed to succeed+ best
measure to use + collecting
 OVERALL
Performance of a business

Kaplan and Norton’s

Balanced Scorecard model

 Scored card presentation

 https://www.youtube.com/watch?
v=SV7FDpPdPVQ
 http://www.tutor2u.net/business/
presentations/strategy/
balancedscorecard/default.html

 Video – Robert Kaplan, the Balance

Scorecard
 https://www.youtube.com/watch?
v=oNy8kupW8oI&index=2&list=PLMYJ
uXb3F_KvhhlyyDdTjCsUzAEgKnu5U
 Pros & Cons
 Gives a more all-round view of
the company – feeding
naturally into a SWOT analysis
 Encourages the business to find
appropriate measures for the
present/future and not past
(historic)
 Measurement is management –
therefore effective management
can only occur if something can
be measured.
 Measurement systems risk
becoming targets – find ways to
hit/achieve these targets
ignoring the purpose of the
scorecard approach.
 Not proven successful when
initiative introduce to
companies – high failure rate.
 Time consuming process to
collect and analyse
 Inflexible approach
Exam Q – Balanced Score Card
 Do you think that all businesses
should use a balanced scorecard to
improve their strategic decision
making? Justify your view.
 [16 marks]
AO1 = 2, AO2 = 3, AO3 = 4 and AO4 = 7

Read the source opposite and

identify points and features
linked to the BSC.
 Exam Q – Balanced Score Card
 The focus of the question is on:
Do you think that all
 whether ALL businesses should use
businesses should use a a balance score card to improve long
balanced scorecard to run decision making

improve their strategic  Does not ALL have to be in the context

decision making? Justify of Anglia Bank

your view.  1. Introduction – Write one now

[16 marks]
 K & N balance score card is ……..
AO1 = 2, AO2 = 3, AO3 = 4 and AO4 = 7
How the assessment objectives are applied in this question:
- demonstrate knowledge and understanding of relevant issues such as
balanced scorecard(AO1)
- be applied to the context of Anglia Bank (AO2)
- analyse the possible impact on the use of a balanced score card in strategic
decision-making(AO3)
- evaluate qualitative and quantitative information to provide a solution to
whether a balanced scorecard will improve strategic decision-making (AO4).
 Exam Q – Balanced Score Card
 2. LIST THE BENEFITS OF USING  3. LIST THE DRAWBACKS OF USING
THE BSC FOR THE BANK + businesses THE BSC FOR THE BANK+ businesses
in general in general
 Exam Q – Balanced Score Card
 the balanced scorecard is a performance measurement
framework that adds non-financial performance
measures to traditional financial ones to give a more
balanced view of a business's performance
 the use of the balanced scorecard will, in theory,
encourage a business's senior managers to consider the
needs of all its stakeholders rather than just selected ones
such as senior employees or shareholders. It should result
in decisions that are fair to all stakeholders
 if businesses publish quantifiable targets within the
scorecard (as Anglia Bank has done) it will mean that
senior managers can be held to account publicly for any
failure to reach these targets. This should encourage the
implementation of decisions which meet all stakeholders'
needs
 in the case of Anglia Bank the introduction of the
balanced scorecard is an integral part of a decision to
reposition its brand. Other businesses may use it to
support major changes in strategy in this way as part of
stakeholder management
 it does not remove the need to make tough decisions
which may harm certain stakeholder groups. For
example, Anglia Bank has announced heavy job losses
within a short time of adopting the balanced scorecard
which suggests that the scorecard can have limited
impact on decision-making at a strategic level.
 + if a business is commercially successful and
generates high profits, it may be that the use of the
balanced scorecard will have a greater impact as
senior managers will have greater freedom in
decision-making.
 - senior managers may not really take the scorecard
into account. It may be simply a clever and well-
timed announcement designed to enhance the
business's corporate image. For example, Anglia
Bank may have introduced it to reduce some of the
criticism the bank expected as a result of announcing
a programme of job losses and branch closures.
 - senior managers in many businesses wish to avoid
adverse publicity or the threat of more government
legislation to control their activities and adopting
techniques such as the balanced scorecard may assist
in these aims.
 high quality strategic decision making depends upon
having sufficient information available to assess fully
the implications of decisions. The balanced scorecard
may not necessarily help in this regard.
 Exam Q – Balanced Score Card
 The focus of the question is on:
 whether ALL businesses should use a balance
score card to improve long run decision making

 USING ONE OF YOUR One benefit to a business like AB in

BENEFITS WRITE ONE using the BSC approach they
PARAGRPAH WITH A CLEAR is…………
CHAIN OF ANALYSIS THAT
EXPLAINS WHY USING THE
BSC WILL BENFIT THE
BANK IN MAKING
STRATEGIC DECISIONS
 Exam Q – Balanced Score Card

One benefit to a business like AB in using the BSC approach they is ……. they will
be able to consider other broader measures to judge its performance and
not just the focus on profits. By considering other (nine) quantifiable elements the
managers, and senior personal at the bank can add non-financial performance
metrics, such as measures to judge the creation of an environment in which the
employees of the bank can fulfil their potential, Having a focus on the employees
and internal operations of the bank would give a more balanced view of a
business's performance. This may increase the productivity of the employees,
who now feel more valued and motivated, therefore providing better service to
the banks customers and consequently seeing an increase in the brand
awareness of the business. This would enable a business like the bank to meet its
current strategic objectives, in terms of creating the right culture for the
employees and brand repositioning to target new and existing customers. This
reason can apply to ALL businesses.
 Exam Q – Balanced Score Card
 The focus of the question is on:
 whether ALL businesses should use a balance
score card to improve long run decision making

 NOW WRITE ONE REASON

WITH A CLEAR CHAIN OF
ANALYSIS THAT EXPLAINS
WHY USING THE BSC WILL
NOT BENFIT THE BANK IN
MAKING STRATEGIC
DECISIONS
 Exam Q – Balanced Score Card
 Four (4) paragraph / section
Do you think that all
approach
businesses should use a  Must be in the context of Anglia Bank

balanced scorecard to
 4. Evaluation – ATQ
improve their strategic
decision making? Justify  What is your strongest point for AO4?

your view.
[16 marks]
AO1 = 2, AO2 = 3, AO3 = 4 and AO4 = 7
 Exam Q – Balanced Score Card
Do you think that all
 4. Evaluation – ATQ
businesses should use a
balanced scorecard to  What is your strongest point for AO4?

improve their strategic  ATQ

decision making? Justify
your view.  WHY/JUSTIFY

[16 marks]  DEPENDS ON ..

AO1 = 2, AO2 = 3, AO3 = 4 and AO4 = 7 4

 Exam Q – Balanced Score Card
 senior managers may not really take the scorecard
into account. It may be simply a clever and well-  4. Evaluation – ATQ
timed announcement designed to enhance the
business's corporate image. For example, Anglia
Bank may have introduced it to reduce some of the  What is your strongest point for AO4?
criticism the bank expected as a result of announcing
a programme of job losses and branch closures.  ATQ

 senior managers in many businesses wish to avoid

 WHY/JUSTIFY
adverse publicity or the threat of more government
legislation to control their activities and adopting
techniques such as the balanced scorecard may assist
in these aims.  DEPENDS ON .. 4
 if a business is commercially successful and
generates high profits, it may be that the use of the
balanced scorecard will have a greater impact as
senior managers will have greater freedom in
decision-making.

 high quality strategic decision making depends upon

having sufficient information available to assess fully
the implications of decisions. The balanced scorecard
may not necessarily help in this regard.
 Exam Q – Balanced Score Card

The use of the balanced scorecard may, in theory, help this business improve its
strategic decision making because it will give the managers a broader framework
with which to make their decisions on. However, this approach may not be
beneficial for ALL businesses as the criteria for making judgements on
performance metrics may become too difficult to quantify.
Soils Energy – To what extent are they a successful company?

Main factor What to measure How to

measure
Financial
Perspective

Customer
Perspective

Business
(internal)
Perspective

Human
Reosurce
Perspective
Task: Textbook 407-408 – Churchill China plc

Main factor What to measure How to

measure
Financial
Perspective

Customer
Perspective

Business
Perspective

Financial
Perspective
 OVERALL
Performance of a business

 How to analyse data (non-financial)

 Value of different measures

A 'level only (Year 13)

 Different Measures of Performance

Explain what is meant by the

To consider methods of 1.
assessing overall
business performance
you need to know
about;
‘Elkington’s Triple Bottom Line’.
 Give a clear definition of the model,
its uses, benefits & drawbacks with
some real world business examples
of how this as been applied in
practice.

 Kaplan and Norton’s

Balanced Scorecard
model
 Elkington’s Triple
Bottom line.
https://www.youtube.com/watch?v=XOhKCNQ7YEY
 OVERALL
Performance of a business

 Elkington’s Triple  Explanation:

Bottom line (Profit, People,  
Planet).  The triple bottom line (TBL)
 Bottom line presentation consists of three Ps: profit,
 https:// people and planet. It aims to
www.youtube.com/watch?v=x9WvCJ3oO
L0 measure the financial, social
 https:// and environmental
www.youtube.com/watch?v=Iu7Er1yujW performance of the corporation
Y
 Nova Nordisk, the triple bottom over a period of time.
line  Only a company that produces
https://www.youtube.com/watch?v=xPuJKoDHrPY
a TBL is taking account of the
 Southwest Airlines – triple
full cost involved in doing
bottom line report
business.
 The economist – triple bottom
line
 Elkington’s Triple Bottom Line

A model designed to encourage

sustainability
Focus is on 3 key components to
measure performance
 Profit
John Elkington
explains his  People
concept of the
triple bottom line.  Planet

Forces a business to consider its social

responsibility
 Elkington’s Triple Bottom line
 So Profit, People and Planet aims to
measure the financial, social and
environmental performance of a business
over a period of time.
 Profit
 Familiar to managers
 Identified from income statement (profit and
loss account)
 Audited = reliable figure
 Planet
 Measures the impact of business activity on
the environment
 More tangible – e.g. emissions, use of
sustainable inputs
 People
 Measures extent to which business is socially
responsible
 Harder to calculate & report reliably &
consistently
 Benefits of Measuring the Triple
Bottom Line
 The potential benefits of measuring a
broader scope of business performance based
on Profit, Planet & People include:
 Encourages businesses to think beyond
narrow measure of performance (profit)
 Encourages CSR reporting
 Supports measurement of environmental
impact & extent of sustainability
 Criticisms of The Triple Bottom Line
 Not very useful as an overall measure of
business performance
 Hard to reliably and consistently measure
People & Planet bottom-lines
 No legal requirement to report it – so take-up
has been poor
 3 P’s
Using your
knowledge and
understanding
apply the
concept of the
‘triple bottom
line’ to an
analysis of the
6th Form
 Exam Q – Triple Bottom Line
 The focus of the question is on:
A business has recently
 whether introducing the use of
started to use Elkington’s Elkington’s Triple Bottom Line is likely
Triple Bottom Line to to reduce profits.

assess its overall  Four (4) paragraph / section approach

performance.  NO SOURCE INFO ….
 1. Introduction – Write one now
Do you think the
business is likely to have  Elkington’s Triple
lower profits as a result Bottom line is ……..
of this? Justify your view.
[16 marks]
 AO1 = 2, AO2 = 3, AO3 = 4 and AO4 = 7
 Exam Q – Triple Bottom Line
A business has
recently started to NO SOURCE INFO …….
use Elkington’s Elkington’s Triple Bottom line is an alternative means of
Triple Bottom Line assessing business performance by considering three
to assess its overall different factors. This approach contrasts with the way
performance. many businesses focus on their performance – prioritising
Do you think the the needs of shareholders and considering the financial
business is likely to aspects of the businesses operations such as profit or net
have lower profits as worth. This method judges business performance based on
a result of this? its social responsibilities (people), its environmental values
[16 marks] (planet) providing additional measures to just profit. For a
business that has recently starting to use this method I will
AO1 = 2, AO2 = 3, AO3 = 4 and AO4 = 7 consider the reasons why using this method might lead to
lower profits and then contrast it to reason why it
might lead to higher profits.
 Exam Q – Triple Bottom Line
 The focus of the question is on:
A business has recently
 whether introducing the use of
started to use Elkington’s Elkington’s Triple Bottom Line is likely
Triple Bottom Line to to reduce profits.

assess its overall  Four (4) paragraph / section approach

performance.
 2. One reason why using the ETBL
Do you think the approach might lead to lower profits is
business is likely to have ………………………………………

lower profits as a result  3. However, using the ETBL approach

of this? might lead to higher profits for a
business because …………………………..
[16 marks]
 Exam Q – Triple Bottom Line
 Benefits of Measuring the Triple  One reason why using the ETBL
Bottom Line approach might lead to lower profits
 The potential benefits of measuring a is ……………………………………………………..
broader scope of business performance based
on Profit, Planet & People include:
 Encourages businesses to think beyond
narrow measure of performance (profit)
Come up with two


Encourages CSR reporting
Supports measurement of environmental
three points /
impact & extent of sustainability reasons
 Criticisms of The Triple Bottom Line
 Not very useful as an overall measure of
business performance
 Hard to reliably and consistently measure
People & Planet bottom-lines
 No legal requirement to report it – so take-up
has been poor
 Exam Q – Triple Bottom Line
 Reasons WHY …. LOWER  One reason why using the ETBL
approach might lead to lower profits is
……………………………………………………..

 Come up with two three points /

reasons
Now write a simple Reasons why introducing this
paragraph, showing a approach might lead to lower profits:
chain of analysis – using • focusing on People and the Planet
can benefit stakeholders, such as
three/four connective employee and local communities,
words. Try to include but these benefits may involve
some real world business higher costs for the business and
thus lower profits
context. • decisions made may be good for
employees or the environment but
not for profits
 Exam Q – Triple Bottom Line
 Benefits of Measuring the Triple  However, using the ETBL approach
Bottom Line might lead to higher profits for a
 The potential benefits of measuring a business because …………………………..
broader scope of business performance based
on Profit, Planet & People include:
 Encourages businesses to think beyond
narrow measure of performance (profit)
 Come up with two
 Encourages CSR reporting
 Supports measurement of environmental three points / reasons
impact & extent of sustainability

 Criticisms of The Triple Bottom Line

 Not very useful as an overall measure of
business performance
 Hard to reliably and consistently measure
People & Planet bottom-lines
 No legal requirement to report it – so take-up
has been poor
 Exam Q – Triple Bottom Line
 Reasons WHY …. HIGHER  However, using the ETBL approach
might lead to higher profits for a
business because …………………………..

Now write a simple Reasons why this approach may

paragraph, showing a lead to higher profits:
chain of analysis – using • environmentally aware customers
may increase their demand for the
three/four connective business’s goods
words. Try to include • careful management of scarce
some real world business resources can lead to a reduction in
factor inputs and thus unit costs
context. • employees may be more
cooperative and productive as they
feel more recognised
 Exam Q – Triple Bottom Line
 The focus of the question is on:
A business has recently
 whether introducing the use of
started to use Elkington’s Elkington’s Triple Bottom Line is likely
Triple Bottom Line to to reduce profits.

assess its overall  Four (4) paragraph / section approach

performance.
 4. Evaluation
Do you think the
business is likely to have  ATQ: In my opinion a business that has
started to use the ETBL approach is/is
lower profits as a result not
of this?  Because ….. Why / Justify

[16 marks]
 Depends on
 AO1 = 2, AO2 = 3, AO3 = 4 and AO4 = 7
 Exam Q – Triple Bottom Line
 The focus of the question is on:
 whether introducing the use of
Elkington’s Triple Bottom Line is likely
to reduce profits.
 Four (4) paragraph / section approach
 4. Evaluation
 ATQ: In my opinion a business that has
started to use the ETBL approach is/is
not
 Because ….. Why / Justify
 Depends on
Evaluation may consider:
• In my opinion a business that has
started to use the ETBL approach is likely
to see a reduction in profits initially
because …… as the business is not purely
focused on profits the priorities and
resources of the business may now be
being focused on other areas linked to
improving the businesses position with
regards to people or plant. The resources
being used to make these improvements
will incur a cost, which is why there may be
an initial fall in profits for the business.
However, this may all depended on how
well is the business doing in its market at
the moment and the degree of competition
it is facing, which many mean there is no
need for any changes and no effect on
profits.
 Exam Q – Triple Bottom Line
 The focus of the question is on:
 whether introducing the use of
Elkington’s Triple Bottom Line is likely
to reduce profits.
 Four (4) paragraph / section approach
 4. Evaluation
 ATQ: I
 Because ….. Why / Justify
 Depends on
Evaluation may consider:
• the findings of the Elkington Triple
Bottom Line – how well is the business
doing on the various indicators at the
moment; may be the existing actions are
acceptable and there is no need for any
change and no effect on profits
• the actions taken as a result of using the
Elkington Triple Bottom Line; what are the
priorities of the managers and, how does
this affect decisions and profits
• the impact of any actions taken on
demand and costs
• profits may fall but the introduction of
the Elkington Triple Bottom Line may
suggest that the business is not only
focused on profits and so does not mind if
profits fall
 Overall Performance - Summary
Balanced Score Card
 The balanced scorecard is a
strategic planning and
management system that is used
extensively in business to align its
activities to the vision and
strategy of the organisation,
improve internal and external
communications, and monitor
organisational performance
against strategic goals.
Triple Bottom Line
 The Triple Bottom Line is a way
of measuring an organisation's
impact on people and the
environment as well as its finances.
 Some companies find that using it
to monitor more than just the
financial line helps them improve
the way that they treat people both
within and outside the
organisation, and reduce their
adverse impact on the
environment.
 AO4:
https://www.youtube.com/watch?v=3715wJqyPzM
 OVERALL
Performance of a business

Costa is striving to reduce

the impact they have on the
environment and become
more socially responsible. To
what extent will the use of
strategic tools like the
balanced score card and triple
bottom line help Costa in its
desire to achieve these
objectives. (16 marks)
A 'level only (Year 13)
 Your turn !!!!

Read the source information on ITV for

context.

To what extent will the use of strategic tools like the
balanced score card and triple bottom line help ITV
in its desire to achieve its transformation plan.
Justify your answer. [20]
ITC Case Study – BUS3

To what extent will the use of strategic tools like the

balanced score card and triple bottom line help ITV in
its desire to achieve its transformation plan. Justify
your answer. [20]
 To what extent will the use of strategic tools like the
balanced score card and triple bottom line help ITV in
its desire to achieve its transformation plan. Justify
your answer. [20]
 Performance of a business
Opportunities and Threats

 3.7.4 to 3.7.7
“
 Analysing the external environment
 PESTEL/SLEEPT Analysis

 Economic
 Environmental
 Political
 Social
 Legal
 Technological
 Competitive

A 'level only (Year 13)

 External Environment

 There are many external factors in the businesses

environment that have an influence upon the
operation and success of the business. It is
important to look upon these variables as either
‘constrainers’ or ‘enablers’.

 A constrainer stops the business carrying out

its objectives.
 An enabler will assist the business to meet its
objectives better.
What are the main external influences that could impact on a Businesses operations/performance?
The external environment

www.youtube.com/watch?v=4mkVc6ZZtJw
www.youtube.com/watch?v=v7pUv_ZWnyM
 External Environment

Operating business environment

is the specific market/industry within
which a business operates.

General business environment

is the broad framework within which
all businesses operate.
 PESTLE /SLEEPT/SLEEP/STEP Analysis
 Political (E.g. decision to spend more on public services such as
health care)
 Economic (E.g. Increase in income tax reduces amount customers
have to spend)
 Social (E.g. greater numbers of older and retired people in UK
population)
 Technological (E.g. effect of widespread use of ICT and growth of the
Internet)
 Ethical / Environmental (E.g. changing attitudes to environmental
issues and fair trade)
 Legal (E.g. Consumer protection – customers right for safe medicines)
Assessing the impact of change in the business environment

Political

Environmental/ethical Economic

PESTLE
Analysis

Legal Social

Technological
Conduct a PESTLE analysis for the information on Starbucks
Conduct a PESTLE analysis for the information on Thomas Cook (TUI).
 PESTLE /SLEEPT/SLEEP/STEP Analysis

FAVOURABLE NOT FAVOURABLE

Explain the key external influences that could impact on a Businesses operations?

Using the textbook produce a revision mind map for one of the external topic areas.

• Use the format provided to explain key terms

• Give ‘real world’ examples of businesses that relate to this topic area.
 PESTLE factors on a Business
Organisation
 The external environment consists of many key factors that
influence the behaviour of businesses and their customers.
 Working in pairs research the PESTLE topic allocated to you.
 Using the textbook prepare a 10 minute lesson to ‘teach’ the rest of the
group a topic area from this section.
 The lesson must not last more than 15 minutes.

 Must be accompanied with a suitable hand-out for notes as a summary of

your topic area.

 Topics are the relationship between:

 Business & its economic environment
 Business & its political/legal environment
 Business & its social environment Time: 2 lessons
 Business & its technological environment
 Business & its competitive environment
 In this topic you will learn about:
Assessing the effects of the following factors
on business organisations:
 Impact of economic factors
 Key economic variables (trends)

Evaluating the strategies businesses might

deploy in response to these changes.
 The Impact of Economic Variables on a
Business Organisation
Up until this point you have focussed on internal
factors affecting business behaviour. In this unit you are
going to look at the wider impacts starting with the
economic environment
The economic environment consists of many key
factors that influence the behaviour of businesses and
their customers. These include:
 The Business Cycle • What is it?
 Inflation • How does it affect
 Interest Rates businesses?
 Exchange Rates
 Unemployment www.youtube.com/watch?v=IF9YsVpZnSE
 Economic Growth www.youtube.com/watch?v=y65H3u1fJO8
 The Economic Environment

Shows how
businesses are
affected by:

1. Business cycle
2. Growth (GDP)
3. Interest Rates
4. Employment
5. Exchange Rates

www.youtube.com/watch?v=Je16sNCemPQ&list=PLf2yZ1IxVqxsShYXrNTzh2axeg2mTxWdD