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Volume 5
Number 1
September 1998
incorporating
Business Studies Magazine

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Management Gurus
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Igor Ansoff and corporate strategy

Bruce Jewell outlines the ideas of the godfather of corporate strategy
The AEB modular exams
Economics and Business Studies
Managing ination
Malcolm Surridge analyses some sample answers to Paper N, January 1998
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Nancy Wall studies recent trends and policy in the UK
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Strategy
Virgin territory
AZ introduction to Business Studies

Business Buzz Words
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Planning a Cambridge Research Assignment

David Dyer gives advice on how to gain marks
Mission statements
Gwen Coates on the visions some major companies have of themselves
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Marketing
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The offensive marketing approach
Business Crossword
Introduction to Business Studies

Andrew Gillespie proles Richard Branson and his ever-growing empire
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Case History
The reel world
Management talking
News and views from top executives
Charli Beale summarises some of Hugh Davidsons ideas in his latest book Even More Offensive Marketing
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Brain-teasers
Prot, contribution and break-even Stephen Romer looks behind the scenes of the lm industry
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Examination success
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External Inuences
The sick tiger syndrome

Chris Vidler charts the rise and fall of the Tiger economies
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Roger Williams assesses answers to a question on the November 1997 Cambridge double module
Please make all cheques payable to Philip Allan Publishers Ltd (Note: these subscription rates only apply for UK addresses.) Published by Philip Allan Publishers Limited Market Place, Deddington Oxfordshire OX15 0SE Philip Allan Publishers Ltd 1998 ISSN 1354-1110 Front cover: Richard Branson by Sheila Rock/Rex Features
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Welcome to A-level Business Studies
Future Options
Ian Marcous tells you whats in store
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Public relations in practice

Alison Theaker looks at the world of PR
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Publishing Editor: Penny Fisher Design and artwork: Jackie Coombs Reproduction by De Montfort Repro, Leicester
Human resource management

Catherine Sladen on how organisations motivate and train employees
In Focus
Human resource strategy
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Some points for discussion
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Management Gurus
Igor Ansoff corporate strategy

Starting with Ansoff s major work, Bruce Jewell traces the development of the ideas of the godfather of corporate strategy
orn in 1918, H. Igor Ansoff studied mathematics and engineering before pursuing a business career that took him to senior executive positions in the USA with the RAND Corporation and Lockheed. In 1963 he left industry for an academic career in a number of American and European universities. His first book, Corporate Strategy, was published in 1965. This groundbreaking work was followed by a number of other major books and over 90 articles, some written with his collaborator Edward J. McDonnell. Although Ansoff s ideas have evolved over the decades, the common subject of his works is corporate strategy. His ideas have inuenced generations of people in business and in business education. As a result, Ansoff can be regarded as the godfather of corporate strategy.
&
do not realise is that it was Ansoff who provided this framework for looking at business. Equally, they may not be aware that some key concepts and tools of analysis outlined below were either introduced or developed further by Ansoff.
whereas operational activity is about making sure that the thing is done right.
Corporate Strategy
In his most famous work, Ansoff sought to codify and generalise his experience at Lockheed by producing a model for deriving corporate strategy. This was a timely book as there was considerable enthusiasm for corporate planning in the 1960s. Ansoff provided: (1) A rational model by which strategies and planning decisions are made. (2) A series of checklists for: deriving objectives appraising competence analysing the environment assessing synergies deciding how to expand. The emphasis on dening objectives and analysis based on data is well known to A-level students as this is at the heart of business studies. What many students
Desired profit (b) Profit improvement
Gap analysis
As shown in Figure 1, the gap is the difference between where the rm is going and where it would like to go. The gap is analysed and courses of action to close the gap are proposed. Organisations then choose the action (strategy) which most effectively closes the gap.
Ansoffs matrix
Ansoff s matrix (a productmarket vector) is shown in Figure 2. Students preparing for a case study examination should consider the matrix because many
What is strategy?
The word strategy derives from strategia, Greek for generalship. Using a military analogy we say that tactics are immediate measures decided in the face of the enemy whereas strategy is decided out of sight of the enemy. It is the means by which organisations dene and seek to achieve their objectives. Strategic planning (the focus of his rst book) is the systematic and formal creation of strategies. Corporate strategy is the overall strategy for a diversied or multi-product organisation. In both cases the concepts relate to the overall approach to where the organisation is going in terms of its products and markets. Peter Drucker (see Vol. 2, No. 2, November 1995) stated that strategic activity is about doing the right thing
2 BUSINESS Review September 1998
PRODUCTS
Existing New
Existing
(a) Profit forecast
Market penetration
Product development
Time (a) Improvement gap scope for improving profits by alternative strategies in existing sectors (b) Strategic gap scope for improving profits by new strategies
MARKETS
New
Market development
Diversification
Figure 1 Gap analysis
Figure 2 Ansoffs matrix

Philip Allan Updates
case studies refer to the possibilities of either developing new products or developing new markets. The beauty of the matrix lies in its simplicity in analysing the direction that organisations should take. Reading the matrix shows the following: Market penetration selling more of the same to the same types of people. Product development selling new products to existing customers. Market development selling the existing products to new types of customers. Diversication selling new products to new customers. Market penetration is possible in a growing market or by increasing market share at the expense of rivals. This requires the organisation to develop a competitive advantage over its rivals. The scope for market penetration should be exhausted before moving to alternative strategies. A strategy of product development involves exploiting the rms marketing strength and its familiarity with customers and assumes that the rm has the necessary capacity in terms of creativity, technical prowess and manufacturing capacity. Product development might prove easier than market development because in business it is relations with customers and markets that make prot. A strategy of market development might be attractive because of familiarity with the product but it involves selling in an unfamiliar market (e.g. the export market). The nal strategy of diversication is considered particularly risky because the organisation is unfamiliar with both product and market.
Investment synergy Table 1 Strategic planning versus strategic management transfer of R and D from one product to another, Strategic planning Strategic management common technological base. Focused on optimal strategy Focused on producing strategic results Management synergy competent manageManagement by plans Management by results ment applying lessons An analytical process An organisational action process from similar situations in the past. Focused on business, economic A broader focus to include and technological variables psychological, sociological According to Ansoff, and political variables evaluation of the scope for Choosing things to do Choosing things to do and synergy should precede the people to do them decisions about the direction of growth, both internal and by acquisition. Carefully planned formulating strategies expansion based on synergies produces designing the rms capabilities better results than opportunistic expan- managing implementation of strategies and capabilities. sion with little scope for synergy. The distinction is illustrated by Table 1 which is adapted from Ansoff Criticisms of Corporate Strategy (1989). For Ansoff strategic manageCorporate Strategy is considered a classic ment is a comprehensive procedure in management studies. Ansoff was the which starts with a strategic diagnosis first academic to adopt this area of and guides a rm through a series of enquiry and to draw conclusions about additional steps. This culminates in new corporate strategy. The book has been products, markets and technologies, as very influential over the decades but well as new capabilities. modern critics argue that it is too preThese later writings of Ansoff emscriptive, structured and deterministic. phasise the degree of turbulence in the Ansoff has evolved his ideas since the market in terms of speed of change, books original publication. His own criti- intensity of competition, fertility of cism is that it produced paralysis by technology, and complexity of the enviranalysis. Executives were so busy col- onment. His conclusion is that the lecting and analysing data that plans firms capabilities and the aggressiveremained unimplemented. The more ness of its strategies must be aligned information they possessed, the more with the turbulence in the environment. they thought they needed. Moreover, Any mismatch between environmental effective analysis of the situation does not turbulence and strategic response will guarantee effective implementation of adversely affect the firms performance. strategies.
References and further reading From strategic planning to strategic management
Ansoff s later books tend to be less prescriptive and more contingent. In other words, there is no universal success formula but solutions should be devised which are best in the circumstances. Ansoff saw strategic planning as an incomplete tool and has shifted the emphasis towards strategic management. The aim is still rationality but management seeks to cope with twists in a turbulent market in which there are severe limits on what is known and what is controllable. Strategic management is a broader concept than strategic planning because it consists of: Ansoff, H. I. (1965) Corporate Strategy, McGraw Hill (Penguin Revised Edition, 1988). Ansoff, H. I. (1979) Strategic Management, Macmillan. Ansoff, H. I. (1989) Implanting Strategic Management, Prentice Hall. Crainer, S. (1996) Key Management Ideas, Pitman. Joyce, P. and Woods, A. (1996) Essential Strategic Management, ButterworthHeinemann.
Bruce Jewell teaches at Weald College in Harrow and is a former Chief Examiner for Edexcel A-level Business Studies. His Integrated Approach to Business Studies (3rd edn) is published by Longman.
BUSINESS Review September 1998 3
Synergy (2 + 2 = 5)
Ansoff introduced the idea of synergy which can be dened as the additional benets which accrue from linkages or fusions of business. Synergy results in 2 plus 2 equalling 5 rather than 4. In other words, the total return is greater than the sum of its parts. Ansoff identied a number of synergies: Operating synergy greater utilisation of facilities, spreading overheads, common learning curves. Sales synergy common distribution and sales administration, development of related products.
Strategy
territory
Andrew Gillespie proles Britains best-known and most popular entrepreneur and nds out how and why his ever-increasing group of companies has managed to take the world of business by storm
Box 1
Virgin companies by sector
I
4
n the space of just 30 years Richard Branson has become a celebrated household name. Ask most people for an example of a successful businessman and they will almost inevitably give his name as the answer. He is not only successful, he is popular a rare thing for a business person these days. As he approaches 50 you might expect him to be slowing up and taking life easy but he seems to be as full of ideas as ever. His companies are seemingly everywhere we go: there are Virgin Jeans, Virgin Cosmetics, Virgin Cinemas, Virgin Trains, Virgin Cola and so the list goes on, growing year by year (see Box 1). It is interesting to consider what holds these companies together. What
BUSINESS Review September 1998
Sector Travel and tourism Retail and cinema Media Consumer products Finance Design and modelling
Businesses Virgin Atlantic; Virgin Express; Virgin Clubs and Hotels Virgin Retail; Virgin Cinemas; Virgin Brides V2 Music Group; Virgin Communications Virgin Cola; Virgin Spirits; Virgin Jeans; Virgin Cosmetics Virgin Direct Storm model agency
provides the common thread which unies such diverse activities? In an age in which most management gurus tell us to stick to the knitting, get back to basics and return to the core Branson seems to be one of the few business people who is willing to develop numerous ventures which, on the surface, have very
little to do with each other. Read any textbook and it will tell sorry tales of the communication problems, the coordination difficulties and management problems which come with a growing empire of different organisations. Bransons ongoing success, therefore, seems to be the exception to the rule.
nance a venture that he believes will succeed over time. In the past, for example, he sold off other businesses to keep the airline going. Interestingly, Virgin has said that it does not actually keep consolidated accounts ( i.e. accounts for all the businesses as a whole) even for its own use; this serves to emphasise the fragmented nature of the organisation.
Dynamism and adventure

At heart Branson remains an entrepreneur rather than a company man. He likes to set up ventures and his business approach retains the sense of dynamism and adventure that can be seen in his other exploits such as attempting to go around the world by balloon. He creates new businesses with other partners and investors and together with his own companies they form a kind of virtual empire. When you visit the centre of this organisation you might expect an enormous, modern, high-rise office block bought to display the companys wealth and power. What you actually get is Richard Bransons old house in London. The main meeting room is his old living room full of family photos, videos, CDs and all the other things you would expect to nd in someones front room. Although Branson supposedly moved out of this house into another one nearby because it was being taken over by work it still feels as if he lives there. As you sit on his sofa looking out over his garden it feels very odd to think that this is the centre of Virgin. It is, in fact, where Richard Bransons own ofce and his corporate development team are based. This department consists of two analysts, a corporate development director, a strategic director and secretarial help, and along with the press ofce and group administrative personnel, these are some of the very few people who do actually belong to the Virgin Group as opposed to one of the separate businesses. The job of corporate development is to assess new ideas to see whether they are worth pursuing. Not surprisingly, they get bombarded with new ideas (over 30 a day); they then have to decide which of these have any potential value. In reality, most of the ideas which they are working on do not come from unsolicited letters they are mainly the result of direct contacts and ideas which Richard Branson has asked them to look at. In assessing a
A collection of independent companies

In fact, there is no such thing as the Virgin empire the group is a collection of independent companies which are unied by the brand and very little else. Whereas in most large organisations there are subsidiaries which report to an overall parent company, what Branson does is develop new businesses which are then expected to be run on their own. At the core is simply the brand, Virgins key values and Branson himself with a small team of advisers whose skill is establishing new businesses which enhance the brand. Each business unit is run separately beneting from the input of Branson but
responsible for its own prots. Branson is probably the only person with a real overview of the whole group; there is certainly far less strategic planning for the companies as a whole than one would usually nd in a group of businesses of this size. Even getting details on Virgin companies is not particularly easy since they are privately owned and often registered overseas, where it can be difcult to get much information on their activities. This year, however, The Economist published an article in which it claimed that the 200 odd companies which Richard Branson owns have combined sales of 1.3bn; in addition, there are other companies in which Virgin owns 50% or less of the equity which provide another 850m of turnover. Out of all these businesses The Economist claimed that Virgin Travel is the only one which makes a prot, mostly from the airline. There is no doubt that Branson aims for long-term rather than short-term prots and is willing to make losses to
project the corporate development team obviously looks at the fundamentals is the market worth entering? Is it likely to be profitable? What is the potential growth? Typically, Virgin will only enter markets which are growing and where consumers are looking for alternatives to the established products or services. However, there are two overriding concerns: (1) Does the business t with the brand? (2) What is the downside if the business fails? Whether the idea involves selling pensions or jeans, taking people from A to B or running hotels is not in itself important what matters is whether it fits with the Virgin brand and what the risk is to the brand if it goes wrong.
its formative stages until it is ready to run itself. In the case of Virgin Vie cosmetics, for example, Branson invested 1,000 for his 50% share of the company compared with the 20m raised by his partner, Victory Corporation. As a result of its own growth and its recent series of alliances and mergers, Virgin is now a collection of organisations in incredibly diverse areas, held together by a brand and by Branson himself.
Protecting the brand

Given this background, the need to protect the brand is vital; after all, this is the organisations greatest asset and if it is damaged in one area it will have a signicant knock-on effect on all the other businesses. This is why it is essential that the problems Virgin rail company has had are solved as quickly as possible and that customers understand that Virgin is trying to deal with them as best as it can. Interestingly, the recent Virgin rail adverts carry the slogan Light at the end of the tunnel which is obviously trying to reassure customers that the service Table 1 Bransons balances for latest nancial will improve. Branson readily admits year, m that all is not well but highlights the Company Revenues Prot/loss investment the company is making to before tax update the trains. There is clearly More than 50%-owned: much to do and commentators note Airlines* 678.5 45.2 that in this case Virgin is trying to Holiday tours* 176.7 8.5 Virgin Express Holdings 101.4 2.8 turn around an existing business Other 15.0 11.0 rather than create something new Total Virgin Travel Group 886.6 67.5 which may prove more demanding. But what will happen when -7.5 Virgin Retail (UK) 28.5 Richard Branson retires? Whilst the Virgin Retail (overseas) 300.0 na -1.3 Virgin Trading 0.4 separate organisations can no doubt -3.8 Virgin Hotels 14.9 continue in their own right, it will be -7.6 V Entertainment 30.6 interesting to see if anyone else can -7.6 Virgin Voyager group 9.6 be such a protector of the Virgin name -27.8 Total other Virgin Groups 384.0 or such a driving personality to take Less than 50%-owned: the brand forward. As Branson himself has said, without his skills at -19.7 Virgin Direct 315.7 -2.3 Virgin Cola 19.3 generating publicity, the group would -2.2 Virgin Spirits 1.9 also have to spend a great deal more -4.7 Virgin Cinema 84.4 on advertising. -11.2 West Coast Trains 297.1
Cross Country Trains Virgin Vie The Virgin Clothing Company Total 126.4 0.0 0.0 844.8 6.9 -2.0 -2.3 -37.5
The core values

What then are the core values of Virgin? According to Corporate Development Analyst, Alistair Johnston, they are quality, competitiveness, innovation and fun. Virgin also conveys a sense of freshness and Branson has shown his willingness to take on established players on a number of occasions. His entry into the cola market, for example, created a great deal of concern for the established market leaders (Coca-Cola and Pepsi) as did his start-up of Virgin Direct to sell Personal Equity Plans. According to The Sunday Times: to most people Branson remains the Robin Hood of business, a David battling Goliaths, the peoples friend. People clearly respect and trust the Virgin name which is why it provides such an attractive option when it enters markets which have been dominated by less popular brands. Its success in entering such a wide range of markets is an example to all other rms of the power of the brand; in many cases we are buying the values as much as the product or service. Given such success, people increasingly come to Virgin with an idea, the money and the specic skills needed to prosper in a particular industry or sector. What Virgin provides is the name, the personality, its own management skills and the Virgin ethos. They help nd senior managers and direct the enterprise in
* Intercompany sales 85.0 Figure provided by company Since merged with Virgin Retail Last published accounts before takeover by Virgin Rail Revenue and prots for whole rm, not just Virgins share Source: Company reports, reproduced in The Economist, 21 February 1998.
This article is based on an interview with Alistair Johnston, Corporate Development Analyst at Virgin and articles in The Sunday Times (22 February 1998) and The Economist (21 February 1998).
Andrew Gillespie is Director of Studies at DOverbroecks College, Oxford and Chief Examiner for AEB AS-level Business Studies.
Every Saturday, The Guardian features a brief telephone interview with a chief executive of an organisation. Some are business leaders, others run charities or public services. All have views on management, staff and the future. Here are some of their thoughts
What management wisdom is most overrated? The belief that people are a exible cost. Peter Mead If it aint broke, dont x it. Everything can be improved. Ian Martin That shareholders are the only group that matters. Mervyn Pedelty Which management guru do you believe in? Charles Handy Jim Harding Alex Ferguson Peter Mead Mr Morita of Sony, who refused to sack those who worked Peter Mead on the failed Betamax project. Julian Richer (of Richer Sounds) Peter Davis Tom Peters in Thriving on Chaos. I think he must have Barbara Young written it for me. Tom Peters keeps it simple and interesting. Allan Leighton Dilbert Mervyn Pedelty What one lesson would you pass on to young managers? Listen carefully. Jim Harding Do unto others as you would be done unto yourself. John Monks
Relationships are all-important. Peter Mead Select, encourage and trust your subordinates. Peter Davis What has been your best moment in management? The TUC achieving the Investors In People standard an excellent blueprint for improving management standards. John Monks Selling Intercontinental Hotels for $2 billion, then making the $5.8 billion Pillsbury/Burger King acquisition in the Ian Martin same 3 months of 1989. If you could change one aspect of British business, what would it be? To instil a belief that growing business and protecting jobs is our only hope for a fair and humane society. Peter Mead Find more managers who can take a broad view, are technically excellent, good with people and numerate. John Monks Business would take the environment seriously and see it as Barbara Young a business benet rather than a cost. Involve all the stakeholders in a company. Roger Lyons Make it less formal closer to its people. Allan Leighton
Peter Davis is Director General, RSPCA; Jim Harding is Chief Executive, NSPCC; Allan Leighton is Chief Executive, Asda; Roger Lyons is a trade union leader; Ian Martin is Chairman, Unigate; Peter Mead is Chairman, Abbot Mead Vickers (Advertising Agency); John Monks is TUC General Secretary; Mervyn Pedelty is Chief Executive, Cooperative Bank; Barbara Young is Chief Executive, Royal Society for Protection of Birds.
Prot, Contribution and Break-even Brain-teasers

1 Fill in the missing words
(a) _ _ _ _ _ _ _ _ _ _ _ _ minus xed costs equals prot. (b) On a break-even chart, the _ _ _ _ _ _ _ _ axis is measured in pounds and the _ _ _ _ _ _ _ _ _ _ in units. (c) Contribution per unit is _ _ _ _ _ minus _ _ _ _ _ _ _ _ / _ _ _ _ per unit. (d) _ _ _ _ _ _ _ is quantity times price. (ii) break-even and safety margin (iii) the change in prot if a 5% price rise cuts demand to 2,700 units. (b) Charit Ltd is selling 8,000 units a month at 4 each twice the variable cost. Average costs are 3.50 so the overall prot is 4,000 a month. Then a new customer offers to buy 2,000 units at a special price of 3 each. Charits right-hand man, Daniel, rejects the offer out of hand, laughing at a buyer trying to offer 50p below cost price. Comment, supporting your answer with calculations as necessary.
2 Anagrams
(a) At least costs are covered NERVE BAKE (b) Proportional to the level of business A BRAVE CLOT, SIS (c) Keeps you from the red SEAMY RAFTING
4 Denitions
Identify the business term dened by each of the following: (a) Expenses which are not affected by the level of output. (b) The value of the output needed to cover all costs. (c) Costs that vary as output changes, but not in direct proportion. For answers see page 19.
3 Calculator time
(a) BDC Co has xed costs of 2,000, variable costs of 1.40, a selling price of 3 and demand for 3,000 units. Calculate: (i) current prot
BUSINESS Review September 1998
External Influences
The
Chris Vidler explains what has happened to the Asian Tiger economies and considers what might happen as a result and the likely impact on British business
ook at back issues of the nancial press or check recent past A-level question papers and you will nd references to the success of the Asian Tiger economies. That is if your search ended before October 1997. If your research is more up to date you are more likely to find jokes about sick tigers. One after another, economies which were held up as models of how to do things have crashed, slid into recession, or even collapsed in the face of bloody revolution, as happened in Indonesia in May 1998. Just in case you did not know, the Asian Tigers are countries like South Korea, Taiwan, Singapore, Malaysia and Thailand. Until very recently they, and countries such as China and Indonesia, have had the fastest rates of economic growth in the world.
sicktiger
Close cooperation between business and government. High levels of innovation. Great value attached to training. Attention to quality. The outcome is that Japan now dominates key industrial sectors especially in motor vehicles and electronics and is continually developing its service sector, especially in banking and computer applications. Japanese business interests have been particularly keen to develop world markets for their products, and this involves the development of worldwide manufacturing facilities by companies such as Sony, Honda, and Mitsubishi.
From cubs to tigers
The economies of other Asian countries such as South Korea and Taiwan benefited greatly from economic growth in Japan. First, rising Japanese labour
syndrome
ESS P PR rts STOo alves expo il in Asia h
turm Economic
by almost Asia dropped cial gst ea th u So f to UK exports s of 1998. O rst 4 month South Korea, Thaie th in % 0 5 to UK exports ia down ures showed Philippines and Indones l 1998 pri sia, land, Malay 700 million in JanuaryA . 97 9 an 1 th in re d o io by m same per e th h it w compared
Back to the beginning

Fifty years ago the Japanese economy lay devastated: drained by a war effort, bombed by the Americans and British, many of its people homeless and some starving. Few would have anticipated the changes which have occurred. Today Japans is the second largest economy in the world and its population is among the best paid. The success of the Japanese economy has been the subject of extensive study. Among the reasons for its success have been: Long-term business and economic planning. A market-led strategy aiming at a world market as well as national markets. High levels of investment in up-todate technology.
costs led Japanese businesses to transfer production to their Asian neighbours where costs were lower. Second, the governments of these countries copied elements of the Japanese recipe for success. Governments and businesses worked together to chase world markets, invest in training and technology and plan for the future. Economic development rippled outwards from Japan, rst reaching South Korea, Hong Kong and Taiwan, then Thailand, Singapore and Malaysia. Success bred more success. As these economies expanded they provided bigger local markets. Greater levels of savings led to high investments. Better training led to higher productivity. This gave rise
to a virtuous circle of growth and developing prosperity to which some analysts saw no end. It seemed that nothing could stop the Asian Tigers springing forward. The impact on British business was mixed. Inefficient and old-fashioned industries like motor manufacture and shipbuilding suffered badly from Far East competition. UK electronics rms could not keep up and sold out or went under. But British banks beneted from lending to help nance growth. Projects like the new Hong Kong airport provided enormous opportunities for British architects and construction companies. Growing economies in the East provided growing markets for export-oriented UK businesses. British businesses were forced to become more competitive, and many companies copied Japanese business practices. It became possible for all to benet from the growth in world trade generated by the Asian Tigers. These gains from trade would only continue if the Asian economies continued to grow. But they havent. First, the Japanese economy has been in slow mode ever since wild property and stock market speculation turned into a crash in the early 1990s. Slow growth in the economy
Indonesia Thailand
exposed weaknesses in some businesses, and corruption and weaknesses in the banking sector. But the sheer size and economic muscle of the Japanese economy will probably see it through. It might not be the same with other Asian economies. Each has been hit by a variety of factors that together can have a devastating effect. The hand-over of Hong Kong to the Chinese caused unease. Ecological devastation in Indonesia has cast a cloud over the continued exploitation of natural resources. Worries of human rights in many Far Eastern countries have concerned more ethicallyinclined investors and businesses. The collapse of the speculative property market in Thailand has hit banks in Japan. But the real havoc appears to have followed a pattern, which has been repeated in country after country.
come under speculative pressures. Speculators and investors have rushed to sell their currencies, forcing down exchange rates. The value of the Indonesian rupiah has fallen by 80%. In July 1997 it traded at 2,400 to the US dollar. In February 1998 $1 would buy you 9,000 rupiahs. Falling currency values have the following knock-on effects: Imports become more expensive Indonesian firms have gone into liquidation because they can no longer afford to pay for imported raw materials. Imported food supplies rise in price. People are dying because imported medicines and baby milk powder are four times more expensive than they were a year ago. Exports become cheaper at one level this makes it easier to export, but the same thing is happening to the other Asian economies resulting in a much less secure and predictable trade. Foreign investments are worth less much development has been nanced by British, American and other foreign banks and investors. If the value of a particular Asian currency falls then so does the value of those share holdings or investments. Some foreign investors will take fright and sell shares or withdraw loans. This can cause a further crisis a stock market crash in the country that has been the victim of adverse speculation. And worse could follow. Falling share prices can lead to further loss of condence in the nancial sector and so on. Collapse of one currency and stock market can lead to failings in another. A chain reaction spreads from one country to another and threatens others as shown in Figure 1.
Treatment
This depressing chain reaction has happened before. In the late 1920s and early 1930s world recession spread like wild re between America and Europe. Contagion was also threatened by the collapse of the Mexican peso in 1994, and in the world stock market crash of 1987. World governments have long since realised the dangers of global nancial meltdown and
Reaching back to Japan and outwards to the economies of North America and Europe
Causes of the Far East crisis

Any of the above factors is sufcient to set up a currency crisis. If enough traders on the international money markets believe the value of a currency is likely to fall, it will fall. Thus, South Korea, Thailand and Indonesia have
Hong Kong South Korea
Figure 1 A chain reaction of crisis

Philip Allan Updates BUSINESS Review September 1998 9
have set up mechanisms to prevent global nancial collapse. This is where the International Monetary Fund (IMF) comes in. The IMF acts as an international bank that will lend to countries to help them through nancial crisis. Take South Korea. The IMF has agreed to lend this government 34 billion to help ensure that its banking system is not brought down by rms which have collapsed due to the nancial crisis. Some experts argue the approach of the IMF might iname a difficult social and economic situation. The IMF puts the blame for the problems
ditions has broken out in Indonesia. Here the poor have tended to blame Chinese business people for the collapse of their standard of living. Riots have brought the army onto the streets, and even President Suharto, ruler for the past 32 years, has been overthrown. So what will happen in the future? No one knows. This is especially true of
are all part of a global economy. Changes, either natural or man-made in one part of the globe can affect us all. These changes, in spite of the sophistication of our communication systems, are unpredictable. Todays crisis could become tomorrows history. There are two main types of effect that need to be considered: on international trade patterns and on international investment. International trade patterns For most UK companies, the Tiger economies represent a relatively minor export market. Therefore, a collapse in export demand will not be too troubling. Sales of Rolls Royces, Scotch whisky and UK engineering equipment may plunge by 50% in Indonesia. But as Indonesia accounts for less than 1% of the export sales of these goods, the impact on British rms is minimal. A much bigger issue is the effect of Tiger exports to Britain. These will become much cheaper, therefore threatening British jobs in industries such as clothing, footwear and electronics.
of South Korea not on the international pressures highlighted in this article but on shortcomings within its own economy. The IMF insists that in return for these massive loans the South Koreans have to agree to put in place a range of policies to ensure that debts to foreigners are paid. This usually means higher prices and lower government spending. Such changes hit the poorest sections of the population hardest, so it is little surprise when financial crisis leads to social unrest. At the time of writing, severe unrest resulting from the imposition of IMF con10 BUSINESS Review September 1998
global nancial markets. Rumour and expectations are all that is needed to generate a run on a currency or fall in stock market prices. No one predicted the recent collapse in Far Eastern nancial markets, and by the same token no one can predict the future. But we can make some educated guesses. Business analysts talk of the fundamentals how the real economies of these countries are doing. You could argue that countries like Taiwan and South Korea with their highly educated and skilled workforces and growing market shares in key markets are likely to prosper in the long run. Countries like Indonesia and the Philippines, however, whose main resource has been cheap, poorly educated labour, will always be faced with competition from even poorer countries. But then look back in time who could have predicted that such a bombed and attened country as Japan would, in the space of 50 years, become a world economic leader?
International investment British firms which bought assets in Indonesia in July 1997 have found their value cut by 80% when measured in British pounds. This will hit some British rms hard, but also points towards some important opportunities. For those willing to take a long-term view, now may be a clever time to buy up a Tiger company on the cheap. The giant Unilever is thinking of doing this in the near future. More worrying is the effect on British employment of the decisions of countries such as South Korea to slow down their investment programmes in Britain. Giant investments by LG and Hyundai have been put on ice because the parent companies are no longer sure they can afford to make them. Consequently, there is a cutback in spending in regions such as South Wales, the Northeast and Scotland. Which serves as a reminder that it is not only companies that can benefit from diversification. Countries and regions can also increase their security by reducing their dependence on one source of income.
Chris Vidler is an educational consultant. He has taught business and economics for over 20 years and has a particular interest in globalisation and development issues.
British business
What does it mean for Britain? One thing this article should illustrate is that we
The AEB modular exams

Malcolm Surridge, Principal Examiner for AEB Paper 1, analyses some sample answers to a question which appeared on Paper N in January 1998 Total for this question: 25 marks Study the information and answer all parts of the question which follows. SUCCESSES FOR THE UK ECONOMY IN THE 1990s One of the success stories of the UK economy in recent years has been the control of ination, which seriously damaged business prospects in the past, particularly in the eld of international trade. Retail price ination has moderated from 10% a year in 1990 to around 3% in 1995, and is expected to improve still further to 2.5% in 1996. Moderate wage settlements and falling raw material costs have dampened cost push ination. The need to maintain a tight control over price rises can be seen from the chart which compares UK ination with its major competitors.
Ination in these other key economies is even lower. For UK businesses to trade successfully overseas, it is desirable for prices of British goods to stay competitively priced. Low ination rates are the best way to achieve this though, in recent years, the falling external value of the pound has also helped. Another factor which is important for the UKs long-term competitiveness is the closing of the productivity gap with other countries. Back in 1979, Germany was 50% ahead of the UK in terms of productivity and France was 30% ahead. Huge improvements in UK productivity in recent years have cut Germany and Frances lead to 10%.
Source: adapted from Business Studies Update, 1996
(a) (i) What is meant by cost push ination? (ii) Explain two methods a government can use to attempt to control ination. (b) Analyse how the following might lead to an improvement in the UKs international competitiveness. (i) The falling external value of the pound. (ii) The closing of the productivity gap. (c) Evaluate the extent to which a UK business might be damaged by ination.
Permission to use the question has been granted by the AEB. The answers and comments are the sole responsibility of Business Review.
(2 marks) (4 marks) (5 marks) (5 marks) (9 marks)
This article is part of a series in which we consider the work of students answering the modular papers of the AEBs A-level Business Studies examination. The question reproduced on the previous page was the rst of the two questions which comprised Paper N from the January 1998 series of examinations. Paper N is different from the other modular papers in that it examines only a single module (module 5 external inuences) as opposed to two modules which is the case with the remaining two modular papers. This concentration means that topics are likely to be covered regularly as less material exists on which to set questions. You must, therefore, ensure that your revision for this module is particularly thorough. The answers are written by Claire, an imaginary student. Claires responses are shown in italics and my assessment of her answers is set out below.
prices, offsetting the benets received from the devaluation of the pound. (ii) If a rm closes the productivity gap it means that they can produce more and thus benet from economies of scale. By producing more the rms in question pay less for raw materials as they purchase in bulk. They may also be able to use technology and skilled labour that would not be available if they operated on a smaller scale. This would enable the rm to compete better on world markets as their prices would be more in line with the other, larger producers. This becomes important as markets are increasingly oligopolistic in structure.
Claires answer
(a) (i) Cost push ination occurs when prices are rising due to increases in items such as raw material costs, labour costs or fuel prices. When these costs rise businesses are forced to increase their nal prices which are paid by the consumer. (ii) Interest rates. The government (now the Bank of England) can raise interest rates encouraging people to save rather than spending thus reducing demand pull ination. The government can also increase income tax thus reducing consumers disposable income and again lessening inationary pressure.
This is an interesting and illuminating pair of opening answers that show some good examination technique and some which is not so good. In neither case is Claires subject knowledge in question. The rst element of the answer is in some respects a little disappointing given that Claire is likely to be a second-year student and should have developed her examination technique to a ne pitch. Her answer is too lengthy given that only 2 marks are available for the denition. It is interesting to compare the relative lengths of these two responses, bearing in mind that (a) (i) is worth half the number of marks available for (a) (ii). It would be a useful exercise for you to cross out the parts of this response which are unnecessary to achieve full marks. Claires answer to part (ii) is concise and relevant throughout. She exhibits good subject knowledge and sound examination technique. Her answer is well presented as two paragraphs highlighting the two components. She offers just the right degree of development to earn full marks without wasting time.
(b) (i) If the value of the pound falls against other currencies then this will make British goods cheaper in overseas markets. This is because fewer units of a foreign currency will be needed to purchase a pound making goods valued in pounds cheaper for foreigners. If British goods are cheaper overseas then this will make our products more competitive at least in terms of price. However, if the British rms import raw materials from abroad then the situation is confused. A fall in the value of the pound makes imports more expensive. This may raise the costs for raw materials. As a result British rms may have to increase their export
Once again the components of this answer vary in quality, but on this occasion Claires subject knowledge is found wanting. The rst answer is very good, and about the right length in response to a question worth 5 marks (which allows Claire about 5 minutes to write her answer). There is evidence of good understanding of the implications for businesses of exchange rate changes. Claire states the basic principle that a fall in the value of sterling reduces the price of exports overseas. The strength of her answer is the analysis following this statement. She recognises that this should improve the competitiveness (or at least the price competitiveness) of British rms. She develops her argument to say that rising import prices (also due to the devaluation of the pound) might offset some of the advantages British exporters have gained. Following a line of argument in developing your answer is good technique and attracts high marks. The second answer is of signicantly lower quality. Claire does not appreciate the distinction between production and productivity. (Can you dene these two terms correctly?) The important point to realise is that production merely refers to the quantity that is produced, whereas productivity is the amount that is produced in relation to the inputs used. The most common measure is labour productivity the amount produced per worker per hour or week. The question was therefore more subtle than Claire realised. The data showed that UK rms were not necessarily producing more but that they were using fewer inputs (labour, raw materials, etc.) per unit of output. In other words, they were becoming more efficient. Clearly, this would offer competitive advantages in terms of allowing price reductions, improved product quality or enhanced after-sales service. If Claire appreciated that she was unable to make headway with this question, the best technique would have been to move on and use her time effectively.
(c) If UK ination is rising then rms may nd that their costs are also rising, possibly more rapidly than those of competitors in other countries. This can put UK rms at a disadvantage in that their prices increase relatively and sales may decline. The extent to which this happens will depend upon the degree of price elasticity for the goods in question. If demand is price inelastic the rm will be better able to bear a rise in price. Ination can damage rms in that government can enact policies to reduce ination which may be harmful. A government might decide to raise interest rates to curb spending and restrict price rises. This policy may result in fewer sales particularly for rms who sell goods on credit (cars and washing machines).
Ination offers benets to some rms. Those that have borrowed large sums of money will nd that the value of repayments falls over time as ination is taken into account. This can help to reduce the burden at a time when interest rates may be rising. Firms with large borrowings might be viewed more favourably by nancial institutions in these circumstances. Not all rms will be equally affected by ination. Those who sell expensive products which are price inelastic (luxury cars and the like) may escape to some extent. Firms with substantial prot margins may absorb the cost increases for a while, others might relocate overseas. The impact will depend upon the rate of ination, how long it lasts and the policies the government introduces to cure it.
made effective use of the concept of price elasticity to distinguish between rms which would and would not be affected adversely by ination. I also liked the argument that it is not just the ination but the policies to cure it that can be harmful to businesses. The nal paragraph is a worthy attempt at evaluation. The whole tone of this nal section is correct that the impact of ination depends upon the type of business, the nature of the products it sells and the severity and duration of the bout of ination. There is rarely a denitive answer to such questions a useful line of argument is to say it depends .... Employing such an approach will assist you in writing evaluatively.
Overall assessment
With a single exception, these are answers of a high standard. Claire has written relevant responses to the questions and has made excellent use of paragraphs to highlight separate elements of her work. She has good subject knowledge and has generally used the time available with good effect. These positive elements mean that this response is of A-grade standard.
This answer from Claire reects good understanding of what is required by the examiner when answering this type of question. There are several features that are worthy of praise. First, she has not been overambitious in the scope of her response. She has chosen to develop two or three points fully. These points were clearly set out in separate paragraphs. There were some nice examples of analysis here Claire
A Z Introduction to Business Studies

A _ _ _ _ _ is the fastest growing sportswear brand in America. B _ _ _ S _ _ _ is a successful business which has grown by being innovative and by having a clear marketing message. C _ _ _ _ _ _ _ _ _ _ is the force that makes most rms keep their prices down. D _ _ _ _ _ is the factor which drives rms to produce. E _ _ _ _ _ _ _ _ _ _ _ _ take risks in building businesses. F _ _ _ _ _ _ _ _ _ _ is a way to buy into a successful business format such as KFC. G _ _ _ _ _ _ _ _ _ effect: the consequence of too many cars and too much waste? H _ _ _ : the only way to promote a new brand or a new product? I _ _ _ _ _ _ are goods brought into this country from overseas. J _ _ _ _ is the worlds leading country for producing consumer electronic goods. K _ _ _ _ _ _ _ : a multinational munched by more than 50% of the morning market. L _ _ _ _ _ _ liability ensures that investors can lose no more than their investment. M _ _ _ _ _ _ _ _ _ United provides an example of how to develop and build a strong brand. N _ _ technology provides new opportunities and challenges throughout business. O _ _ _ _ _ _ _ _ _ help identify the targets the business is aiming at. P _ _ _ _ _ _ Limited Companies have Ltd after their name. Q _ _ _ _ _ _ _ _ _ _ _ _ _ are used by interviewers in market research surveys. R _ _ _ _ _ _ _ _ run shops and other businesses which serve the public directly. S _ _ _ traders run one-person businesses that have unlimited nancial liability. T _ _ _ _ _ _ _ industries such as catering provide the economy with services. U _ _ _ _ _ / _ _ _ _ _ _ _ / _ _ _ _ _ (USP): the ideal way to distinguish your brand from competitors. V _ _ _ _ _ _ capital is risk capital; put into a rm by investors with a sense of adventure. W _ _ _ _ _ _ : the software on 90% of the worlds PCs. E x _ _ _ _ _ _ _ _ _ are a useful way to display your product to interested consumers. Y _ _ _ _ market: the one manufacturers most want to win. Z _ _ _ hours contracts may mean that staff are told they have no work in the coming week. For answers see page 19.
Business Buzz Words
Mission statements
In a recent publication by the Institute of Management, mission statements were identied as the most popular management tool in Britain. Gwen Coates explains how and why big companies use them
efore an organisation can start to address the task of planning and setting objectives, it must have a clear understanding of its overall purpose. This is expressed as a mission and is communicated via a mission statement. The mission of an organisation is its essential purpose and the mission statement a means of communicating to key stakeholders (e.g. shareholders, employees, suppliers, and customers) what the company is doing and what it ought to be doing. It should set out a clear view of the primary purpose of the organisation, its values and distinctive features and provide a rationale for its strategic plan. It should be presented in as clear, concise and memorable a way as possible. The mission statement of the Chrysler Corporation of America is: To produce cars and trucks that people will want to buy, will enjoy driving and will want to buy again. This states clearly what the company does and what it wants to do. Disneys vision or mission statement (the two terms can be used interchangeably) is To make people happy. It may be rather vague and it is doubtful that the company is really concerned about human happiness as such, but it has a certain ring to it. Other examples include BT which aims to provide world class telecommunications and information products and services, and Asda which intends to be Britains best value fresh food and clothing superstore, meeting the weekly
shopping needs of ordinary working people and their families who demand value.
Why use a mission statement?

If a company is small, employing, say, 100 people, all the employees are likely to know exactly what the business does and will have a reasonable idea of what its goals are. In a small company, everyone is involved, but in a large company, employing thousands or even tens of thousand of people, this is not the case. An organisation such as a large public limited company may have a varied range of activities with plants and ofces in different geographical locations. There is no reason to expect a manager from the manufacturing division in Scotland to share a sense of mission with the board of directors who are hundreds of miles away in the head ofce in London or with the human resource manager of a retailing division in the USA. So, for a large, diversied company, a mission statement is useful for dening what the company is trying to do in a way that all staff can understand and identify with.
Factors to consider in producing a mission statement

One difculty of drawing up a mission statement for a large organisation is that of ignoring parts of the business. How, for example, do you write a single sentence mission statement for a supermarket
that is also a bank? To counter this, companies such as The Body Shop and Imperial Tobacco have begun producing a sort of mission list. Others like Abbey National produce mission booklets. While these tend to cover all a companys activities they are less memorable than a single sentence. In general, when producing a mission statement, a company should start from the top and get everyone involved in thinking about what the statement is going to be. Once the statement is dened and understood by senior management, it needs to be disseminated effectively throughout the organisation ensuring that everyone within the company understands what the organisation is doing and what it wants to do. The statement can then be communicated to other stakeholders such as customers and suppliers. For example, a well-known advertising agency has the mission statement: To be the most valued by people who value brands. This is very specic in stating what it will be good at and has been valuable for the company both internally in ensuring that all staff understand the specic focus of the business and externally in indicating to potential customers and competitors what the particular focus of the business is. Once a mission statement has been written and communicated effectively in a company, it needs to be constantly monitored and altered as the nature of the business and its goals change. Fifteen years ago, Microsoft supplied the operating system for a major mainframe provider; its early vision was a computer on every desk and in every home. Today its range of activities has grown to encompass the Internet and related technologies.
Finally, the mission statement should be checked for any hidden meanings or negative implications before being allowed out into the public domain. This was clearly not the case when British Rail launched its Were getting there mission statement!
Conclusion
Despite the ndings of the Institute of Management that mission statements are the most popular management tool in Britain, they do have a bad reputation.
They often include words like quality, values and caring which in the context of a business may have little meaning and provide very vague messages which companies are unable to live up to. Scott Adams in his ofce satire The Dilbert Principle describes such statements as long awkward sentences that demonstrate managements inability to think clearly. In addition, mission statements have a bad reputation because many companies have launched them with a fanfare and then ignored them, leaving their employees to draw what conclusions
they will and other stakeholder groups to question what all the fuss was about. However, a mission statement can be an effective means of communicating the core activity or essential purpose of the business to both employees and other stakeholders, ensuring that all have a common overall understanding of the organisation they are working for/dealing with.
Gwen Coates is a Senior Lecturer at Staffordshire University Business School and one of the editors of Business Review.
Crossword Introduction to Business Studies

Across 1. A world class car; only for the high rollers. (5,5) 5. Management Information Systems, initially. (3) 7. Students and new products are _ _ _ _ _ _. (6) 9. Not likely to be shown by a cold-hearted leader. (7) 11. Lion King or the _ _ _ _ of a market? (4) 12. A red-faced prophet? (4) 14. The rst consumer of a golden delicious? (3) 15. Relating one gure to another, e.g. prot as a percentage of sales. (5) 16. Whats this Australian bird doing in Europe? (3) 17. The new low-cost airline being started by British Airways. (2) 19. The governments Managing Director? (5) 20. A rising one of these is every marketing managers dream. (4) 21. When money loses its value. (9) 23. Peace and quiet for taxpayers. (5) 24. An alternative to equity nance. (4) 25. An item you own which has a monetary value. (5)
1 2 3 4 5 6 7 8 9 10
11 12 13 15 16 17 18 19 20 21 22 23 14
24
25
Down 1. The service industry between wholesaling and the consumer. (9) 2. The place to avoid in the competitive race. (4) 3. Initially, small and medium-sized enterprises are called this. (3) 4. The force that constrains rms from pricing too high. (11) 6. Only one type of money in Europe. (6,8) 8. The way to ensure consumers have the opportunity to buy your products. (12) 10. The cost of servicing a bank loan. (8) 13. Factors a rm might consider, if only to avoid pressure group activity. (6) 18. You owe liabilities, you _ _ _ assets. (3). 20. Market _ _ _ _ _ is the proportion of sales held by one product or company. (5) 21. Commercial, terrestrial television. (3) 22. Another word for the energy needed to power machines and vehicles. (4) For answers see page 19.
Case History
From its beginnings in the major Hollywood studios of the 1920s to present-day blockbusters and independent movies, Stephen Romer takes a look behind the scenes to nd out how the lm industry works
hen studying the film industry, we are actually looking at three industries. First, there is the production sector which is involved in the manufacture of the master negative. This includes film studios, sound stages, actors, directors, producers, lights, cameras and action. Second, there are the lm distributors who draw up contracts for the distribution of lms to cinemas, television and video. Finally, there is the exhibition sector your local multiplex or Odeon where the films are shown to the public.
reel world
THE ILLUSTRATED LONDON NEWS
The
Vertical integration
Given this, it was logical that, as the lm industry established itself from the 1920s, the major Hollywood studios would develop on the basis of vertical integration. During the heyday of the studio system, the likes of MGM or Warner Brothers would have a production factory, mass producing as many as 50 lms a year which they could then distribute to their own chains of cinemas. By the 1940s, MGM, the wealthiest of the studios, had about 5,000 employees at its 180-acre Culver City studios and, with stars such as Greta Garbo, Spencer Tracy and Clark Gable under contract, boasted more stars than there are in the heavens. It had 30 sound stages, and ran a school for child stars, a full-scale orchestra and a private zoo. However, the Hollywood studio system crumbled in the 1950s. The coming of television to the average household during the 1940s and 1950s undermined the dominance of the Hollywood majors. Moreover, the monopoly power conferred by vertical integration was considered
undesirable under the US governments competition policy. In 1949, following a decision of the US Supreme Court in United States v Paramount Inc., the Hollywood majors were obliged to sell off their exhibition chains.
Todays pictures
Now, most of the famous studios exist in a rather different economic system. The organisation of the movie business in Hollywood is summed up rather well by a recent headline in the entertainment industry trade paper Variety: Legal eagles rule the roost Hollywood
lawyers cut the big deals, (but some doubt they deserve the big cuts). This headline refers to the way powerful Hollywood lawyers and agents package projects which they take to the studios. Complex deals are struck with the studios concerning taxation, the sharing of revenues and the nancing of the lms. The Hollywood majors have lost their exhibition arms, but one need not feel too sorry for the Hollywood studios. The majors have always been careful to retain control of lm distribution and it is distribution which is the key to protability in the lm industry. Distributors are entitled to 40% of the box ofce gross plus
recouping the outlay in purchasing the film and the costs of advertising it. In Hollywood today the average cost of production of a studio movie is $40 million and the average cost of marketing it is $20 million, but if, as a distributor, you are at the front of the queue at the box ofce, the risk implied by these huge costs is minimised. The key to success in the movie business is: (1) The control of distribution 90% of North American distribution is in the hands of the majors. (2) Plenty of lms in distribution the average studio has about 25 a year. (3) Pockets which are deep enough to withstand the occasional mega op. The famous Hollywood studios are now divisions of giant multinational conglomerates, e.g. Time-Warner, Sony (Columbia) or News Corp (Fox). Hollywood dominates the film business not only at home but in most territories around the world. In the UK, for example, ve rms account for about 80% of the box ofce: UIP (which represents Universal, MGM and Paramount), Fox, Warner, Buena Vista and Columbia. These are the distribution arms of the US majors.
British lms
In the UK, this dominance has had unfortunate consequences for local filmmakers. In the mid-1990s, there was something of a UK production boom. In 1995, 78 feature films were made; in 1996, 128. However, a year after completion, about half of these British lms still hadnt been released into cinemas. The strategy of the distributors is to rely on a handful of mainly American lms and to distribute the same half dozen or so movies into hundreds of cinemas up and down the country. This might seem surprising at a time when the exhibition sector has been expanding on both the demand and supply sides. Rather like attendances at football matches, cinema admissions went into freefall from the mid-1940s to the mid1980s. 1946 was the peak year of demand at the British cinema there were 1.6 billion admissions that year. By 1984, the number had fallen to a mere 54 million. However, since then there has been a recovery and, by 1996, annual admissions had risen to 124 million. Moreover, UK exhibition capacity has expanded with the
boom in the construction of multiplexes. In the UK in 1984, there were 660 cinemas with a total of 1,271 screens. By 1996, there were 742 sites and 2,166 screens. Nevertheless, despite the lack of access to exhibition, the British lm production boom will continue for some time to come following recent government measures. In his rst Budget statement in 1997, Chancellor Gordon Brown, announced that film-makers would be able to write off 100% of production costs against tax for lms costing less than 15 million. And three production franchises are to be awarded 92.25 million from the National Lottery. Indeed, the Lottery has already had a role in the expansion of British lm production: in 1996, about 32 million of Lottery nance found its way into 23 feature lms (about 28% of the total cost of these lms). However, it is interesting to ask whether these kinds of measures are appropriate. Is it sensible to nance the expansion of production but do nothing to increase the chances that the films made will be exhibited? In 1996, lms which were wholly British enjoyed only 4.7% of the British box ofce. This gure would fall to just 2% if Trainspotting, the only British lm in the top twenty, were excluded. But how is it that in the kind of business environment we have been describing, some British lms, such as Trainspotting and The Full Monty,
become highly successful? The Full Monty is expected to make prots which will eventually exceed $100 million. In fact, it is the most commercially successful lm worldwide for some years if its revenue is expressed as a proportion of its total cost (it has a revenuecost ratio of about 60). Although The Full Monty is a very British lm in terms of its subject matter and location (former steel workers put on a strip show in the North of England), from the nancial and distribution point of view, it is a Hollywood major studio movie. Independent (i.e. non-studio) lms, rather like independent rock music records, have a kind of street credibility, especially with young audiences. Naturally, the major studios have their own independent lm divisions. Disney, for example, owns Miramax which is the archetypal independent film company, and 20th Century Fox has Fox Searchlight. It was the latter which nanced the making of The Full Monty. A deal was struck at the Sundance Festival in Utah an important business market for the independent sector and Fox put up the lms production cost of 1.6 million. The important point is that as a major studio lm The Full Monty has had the benet of wide distribution (300 prints in the UK alone) based on heavy marketing expenditure. In 1998, the success of The Full Monty has coincided with another 20th Century Fox blockbuster, a lm which has broken almost every record in the history of the movie business. In a two-thirds to onethird partnership with Paramount, Fox financed James Camerons Titanic, the most expensive film ever made ($200 million), the most heavily marketed ($100 million) and the biggest box ofce grosser it is going to become the rst ever billion dollar box ofce movie. Titanic is an interminable love story (the film runs for half an hour longer than it took the real Titanic to sink) between a young couple who (and here we are going to use movie business jargon) meet cute shes travelling rst class, hes in steerage. But it all ends in tears when the ship sinks. Titanic may be a three hanky chick ick, but looking at the grosses ($750 million and counting), it sure does have legs.
Stephen Romer teaches economics at the University of Westminster.
Welcome to A-level Business Studies

For this start to the academic year, Ian Marcous, AEB Business Studies Chief Examiner gives advice on how to maximise your chances of success
So, youve just started Business Studies A-level. This article aims to tell you what you have let yourself in for. Knowing what lies ahead can help you to help yourself. And that can mean a better grade.
Making the jump from GCSE to A-level

GCSEs are hard work, largely because you have to cope with so many different subjects. A-levels are different. They are based on three different factors: (1) Because you are taking only three subjects, you will have the time to develop a rich understanding of the ideas and concepts. (2) Because you have chosen just three, you will have chosen those that interest you (or you thought would interest you!). (3) In moving to sixth-form teaching, you will be adopting a more responsible approach to your own development; after all, A-levels were devised to nd out who was ready for a university education. The net effect of these points is that Chief Examiners expect a huge amount more from you at A-level than at GCSE. We tend to write our exam papers on the assumption that you know the subject matter. Our interest is in testing your ability to apply your knowledge, to analyse business situations and to make judgements on their importance. To acquire these extra skills, the single most important factor is improving on your ability to write full, developed arguments, rather than brief points. The GCSE exam style is often to ask you to explain two reasons and then to mark out a few lines onto which you will write your brief answer. You may be awarded 4 marks for two sentences. At A-level, the bulk of the marks awarded are for 9-mark, 10-mark or 15-mark questions each one asking you to assess, discuss, or consider a quite complex issue. Success comes to those who can construct a detailed
argument; at its simplest, to those who can write a page of thoughtful analysis, rather than make a series of brief points. In the coming weeks, or perhaps already, teachers will be asking for homework requiring lengthy, well-developed answers. They may be case studies, essays or dataresponse questions. Whichever they are, you will maximise your long-term success by mastering the writing technique from the start.
Successful A-level writing

Although, at the time I am writing this, Manchester United has just been knocked out of the Champions Cup, it would still be valid to ask the question: What makes Man U so successful? The E/N-grade A-level candidate would give a series of possible reasons, probably presenting them in the form of a list (youthteam policy, great manager, clever nancial management, problems at the main rival clubs etc.). The C-grade candidate might mention the list in passing, but would concentrate on considering in more detail two or perhaps three key factors. He or she might be shrewd enough to distinguish between temporary factors and long-term ones. But what of the A-grade answer? This would be rooted in a more theoretical analysis. The A-grade candidate would need to know the theory of the subject well enough to analyse and evaluate Alex Fergusons success. For example, the best known theory in football is that goals come from the speed with which the ball gets into the opponents penalty box. This was the justication for Watford and Wimbledons long-ball tactics. But today, Manchester United may have achieved the ideal approach with their very fast breaks from defence getting the ball upeld quickly, but in a far more controlled way than hoong it up to a big striker. By introducing theory, the answer rises out of the ordinary. Theory provides a basis for analysis and for constructing an argument.
Developing breadth of understanding

When marking A-level exam papers, it is easy to tell the students who have developed a broad understanding of the subject. They make sensible judgements about a firms problems or opportunities; they show awareness of the background to business (such as the value of the pound) and they write with more maturity. They have realised that business studies may be taught in a classroom, but it happens all around us. To develop in this way, you have various options. Happily, there are many excellent TV programmes. Earlier this year was a ne series called Trouble At The Top. It told many stories of business disaster, from Gerald Ratner s disaster in the jewellery trade to Millwalls financial difficulties. It is always worth looking out for relevant, interesting TV. Reading articles is also invaluable. This magazine is an excellent source of business case studies and exam advice. Also valuable are The Observer and the Mail on Sundays business sections. By the time you get closer to your nal exams, The Financial Times should seem relevant and interesting. I often tell a story about two girls I taught a few years ago. They sat together, slightly removed from the rest of the class. The rest were enthusiastic and reliable, Amanda and Sonal were not. In the end-of-rst-year exams, Amanda and Sonal failed miserably. In the January second-year mock exams, the same happened. So I had a quiet chat with each. Amanda was relaxed. Oh, its not a problem, my dads paying for me to go on an Easter revision course about 300. Sonal was worried. We discussed a few alternative approaches she might adopt. That August, I went in to college on the results day. Amanda had an E. Sonal had a B. I phoned Sonal straight away. How had she achieved it? She came in to show me. She brought in a large lefull of articles chopped out of The Financial Times. Key sentences were underlined in each article, with some scribbled notes in the margin. Between January and June Sonal had been quietly getting on with developing her understanding of the subject. To great effect.
(3) Company objectives, management and decisionmaking. This section combines the rst two, by considering how rms pull together all the business functions (departments) so that all are aiming for the same goal and that the goal is achievable given the external situation. It also looks at decision-making methods which may be useful throughout the business. So, there we are. I hope this introduction to Business Studies A-level helps you see that success requires you not only to attend lessons and get homework done. It also requires you to respond to your teacher s urgings to read more, to do more research and to write much fuller answers to the questions set. A-level exams will still seem a long way off, but the development of A-level writing skills takes quite a time. The best time to start is now.
Ian Marcous, Chief Examiner AEB Business Studies, is an editor of Business Review. A prolic author, he has just published The AZ Business Studies Coursework Handbook, Hodder and Stoughton, 6.99. It is a step-by-step guide to successful A-level coursework.
Answers to Prot, Contribution and Break-even Brain-teasers (p. 7)

1 (a) Contribution (Total contribution) (b) vertical horizontal (c) price variable cost (d) Revenue 2 (a) Break even (b) Variable costs (c) Safety margin 3 (a) (i) Prot: 2,800. (ii) Break-even: 1,250. Safety margin: 1,750. (iii) New prot: 2,725 (falls by 75). (b)This type of question attempts to bafe you with lots of numbers. The key issue, though, is a simple one. What contribution will be generated by the extra order? After all, the xed costs have already been allowed for in the calculation of the rms current average costs. Quite simply, then, the order will increase prot by 2,000 units the 1 unit contribution (3 price - 2 variable costs), i.e. prot rises by 2,000. 4 (a) Fixed costs (b) Break-even revenue (c) Semi-variable costs
Looking ahead
At present, you may be studying Marketing, Finance or Business Enterprise. When wondering what to watch or read, it will be helpful to know what the whole course consists of. A-level Business Studies consists of three main sections. They can be studied in any order, though most schools and colleges take the following approach: (1) The internal functions of the rm. This is the biggest chunk of the course, studying what rms actually do (and why). The key functions are Marketing, Finance, Operations and People. The course looks at what managers do and what factors give rise to success or failure. (2) The external inuences on the rm. Having looked at business from the inside, this section looks at the outside factors that may help or hinder the rms progress. Key aspects include the economy, the government, Europe and the social, environmental and ethical impacts upon rms. Business Studies regularly asks questions about business morality, so allow yourself to follow any stories of business scandal.
Answers to AZ Introduction to Business Studies (p. 13)

Adidas, Body Shop, Competition, Demand, Entrepreneurs, Franchising, Greenhouse, Hype, Imports, Japan, Kelloggs, Limited, Manchester, New, Objectives, Private, Questionnaires, Retailers, Sole, Tertiary, Unique selling point, Venture, Windows, Exhibitions, Young, Zero.
Crossword Answers (p.15)

Across: 1. Rolls Royce, 5. MIS, 7. tested, 9. emotion, 11. size, 12. loss, 14. Eve, 15. ratio, 16. emu, 17. Go, 19. Blair, 20. star, 21. ination, 23. haven, 24. loan, 25. asset. Down: 1. retailing, 2. last, 3. SME, 4. competition, 6. single currency, 8. distribution, 10. interest, 13. social, 18. own, 20. share, 21. ITV, 22. fuel.
Web Page
Human resource management

Human resource management (HRM) is concerned with how employees are treated within organisations. Catherine Sladen, Coordinator for Biz/ed (Business Education on the Internet) focuses on Internet resources which show how organisations motivate and train their employees
aluing and invest- on the human resource aspects of ing in employees is their businesses. For example, Unilever one of the keys to answers the question: What do you look business success. for in potential employees? by outlining Many organisa- the key qualities it expects. Employee tions have personnel or motivation factors such as training, perhuman resources depart- formance appraisal, incentives and career ments which deal specically prospects can be found in the Unilever, with employee needs, whether Eurostar, BMW and The Body Shop that be training, appraisal or Company Facts. Some company websites promotion. One government-led offer similar information, but generally it initiative has been the creation is difcult to nd, variable in quality and of the Investors in People (IIP)1 aimed at marketing and recruitment. standard. IIP was established in There are many sites which deal 1993 to be a national quality stan- specifically with HRM, for example dard which sets a level of good Ray Lye, a lecturer at the Nottingham practice for improving an organi- Business School has developed Human sations performance through its Resource Management Resources on the people. The distinctive IIP logo Internet4 which contains a variety of subcan be used by organisations categories of the subject such as business which succeed in obtaining the psychology, employee relations, training standard. The website contains and development and organisation information about the stan- theory. Each sub-category contains an dard, including annual reports and annotated listing of relevant resources. details about the involvement of other Updated regularly, this site is well worth visiting to explore this subject in more organisations. The Institute for Personnel and detail. You might like to take a look at the Development (IPD)2 is the key professional association for those involved in wide range of HRM resources that are HRM. Indeed, on successful completion in Biz/eds Internet Resources Cataof many university courses on HRM, logue.5 Browse through the HRM listing graduates can obtain membership of the to nd other HRM gateways similar to IPD. The site offers details of training; the one described above or to locate access to full text of a number of policy more specific sites like the Australian documents and directives; details of Human Resources Institute for comparawhat is available from the IPD to both tive work6. Whatever your interest you members and non-members, including should nd something to help you. information about its library and information service. Internet references For company specific advice on 1 http://www.iipuk.co.uk/ HRM policies, try the Company 2 http://www.ipd.co.uk/ Facts section of Biz/ed3. Currently 3 http://www.bized.ac.uk/compfact/comphome.htm Amway, The Body Shop, BMW, BP, 4 http://www.nbs.ntu.ac.uk/staff/lyerj/hrm_link.htm Eurostar, Unilever and Virgin have 5 http://www.bized.ac.uk/listserv/listhome.htm supplied Biz/ed with the answers to 6 http://www.ahri.com.au/home.html frequently asked questions (FAQs)
STOP PRESS
Much more than just a lot of hot air

Cameron Balloons makes hot-air balloons in the shape of beer cans, shoes, telephones, etc. with as much air as it makes record-breaking balloons for round-the-world trips. With the Cameron factory based in Bristol, its not uncommon for locals to look up and see familiar objects (on an unfamiliar scale) oating elegantly across from the Avon Gorge. But now, from anywhere in the world, you can nd out more about these wonderful oating creations by logging onto the Cameron Balloons Virtual Factory on the Internet. The rst virtual factory on Biz/ed, this extensive educational resource which has been specifically designed for A-level and GNVQ Business Studies students, shows how each of the major business functions production, design, marketing accounts, and purchasing are carried out. The factory provides a range of materials including worksheets, a focus on key staff members, a photographic tour and a key business studies theory for each business area.
s The clickable factory is accessible at: http://www.bized.ac.uk/virtual/cb/
Economics and Business Studies
Annual percentage change
Nancy Wall looks at the way ination is measured, recent trends in the UK and how the government has responded
30
23.5
espite many years of variable ination, its causes and effects continue to be controversial. It has been the subject of much debate and provokes a wide range of opinions. Some see it almost as evil while others are relatively unconcerned about it. Because ination has far-reaching consequences and is subject to so much public debate, the measurement of it is most important.
20
10
Measuring ination
You can see how dramatic the changes in the rate of ination have been since 1970 in Figure 1. This shows the year on year rate of inflation, Table 1 i.e. the percentage The UK retail change in general price price index, level each year. During 198597 the 1970s and 1980s (1990 = 100) the rate of inflation uctuated considerably. Year RPI It became apparent 1985 75.5 that when inflation 1986 77.4 accelerated, it could 1987 81.2 also become very un1988 86.2 predictable. A large 1989 92.8 part of the general 1990 100.0 aversion to inflation can be explained by the 1991 105.8 fact that unpredictable 1992 111.1 rates of inflation can 1993 114.9 make it difficult for 1994 116.4 businesses to forecast 1995 118.8 trends and make plans 1996 122.4 for the future. 1997 125.6 The data on which Figure 1 is based are Source: National Institute Ecothe outcome of a nomic Review. lengthy process of
0 1970 1980 1990
Source: Eurostat.
Figure 1 The UK ination rate 197097
measurement from which the retail price index (RPI) is constructed. An index number is one which shows a time series using a base year which is given the value 100. Table 1 shows the RPI for the period 198597. The Office of National Statistics (ONS) is responsible for compiling the RPI. It is based on a vast amount of data. Prices are collected for a wide range of goods and services in different places and types of retail outlet. These prices are then weighted according to their relative importance in peoples budgets. An increase in the price of cars, for example, will have a bigger impact on the index than an increase in the price of potatoes. Expressing price changes in index numbers makes it easier to compare values over the years. The current base year is 1990. Each figure after 1990 shows the percentage increase in prices compared to 1990. It does not show the percentage increase in prices year by
year: that requires an additional calculation of each year s change as a percentage of the previous year s value. Of course, prices are changing all the time some go down. Think about air fares, or electronic products. Other products are subject to price falls due to diminishing demand. These changes too nd their way into the RPI because it is an average figure for the change in prices generally.
How ination develops

Inflation is closely connected to the business cycle. During an upswing, the rate of inflation will gradually accelerate. The most crucial resources needed to expand output become scarce because more and more businesses want to obtain them. In particular, employers will be looking for people with the scarce skills needed to help them expand. In time, most of these people will be in
work and the shortage of skills will become a supply constraint. Employers are then quite likely to try to attract employees through higher pay. In any case, a period of expansion with good profits will encourage employers to raise pay generally, perhaps with the intention of keeping valued employees. As pay is increased costs will rise and businesses will seek to recoup these through higher prices. At first this process is gradual. It causes little alarm. If consumer spending is growing, it may be possible to raise prices without losing customers. But by degrees price increases become more numerous and begin to show up in a rising rate of inflation. As people observe the increase in the ination rate, they build rising prices into their expectations. Pay negotiations are settled at higher levels.
accelerate as competition to obtain the available supplies intensies. Prices rise because people and businesses are trying to spend more, but the goods and services needed to satisfy demand cannot, in the short run, be produced.
Overheating
At some time in an upswing of the business cycle, a point will be reached at which the economy is nearing full capacity output. Further attempts to expand output will run up against supply constraints, principally in relation to skilled labour. The result will be that aggregate demand from all sources grows faster than aggregate supply, or the maximum output which the economy can produce with all available resources working at out. This is known as excess demand; another term used to describe it is overheating. If it persists, inflation will
indicate average earnings increases. It covers the period 199497 when output was growing strongly (as 1996 Quarter 1 2.9 shown in the last column). Quarter 2 2.2 In looking at the connections Quarter 3 2.2 between the figures, it is Quarter 4 2.5 important to remember that 1997 Quarter 1 2.7 there may be some time lags Quarter 2 2.6 between cause and effect. Quarter 3 3.5 There is therefore some Recent events evidence that in late 1997 Quarter 4 3.7 You could see this story the UK economy was getting 1998 Quarter 1 3.3 developing in the UK ecoclose to full capacity, and Source: The Economist. nomy during the course there would be some of 1997 and early 1998. Take a look at grounds for thinking that at that point Table 2 which gives quarterly data on ination might have risen further. the rate of ination. The overall trend is one of acceleration. What should be done? Table 3 shows the skill shortages developing. Every 3 months, the Con- Keeping ination down means, in pracfederation of British Industry asks tice, that the level of demand in the economy, in money a sample of comterms, must not panies whether they Table 3 Skill shortages, earnings and ination 199497 grow faster than expect that their its productive capoutput will be conExpected acity. The governstrained over the skill Average Output Half-year shortages earnings growth ment can inuence coming 4 months by % % % demand in the ecoskill shortages. A 1994: I 7 2.8 4.9 nomy as a whole rising percentage of II 10 3.3 3.4 (aggregate demand) afrmative answers 1995: I 11 3.6 1.6 by using monetary indicates that skill II 10 4.1 2.1 or scal policy. Monshortages are on 1996: I 9 3.5 2.4 etary policy works the increase. The II 11 3.0 3.4 mainly via changes figures show half1997: I 11 4.5 3.6 in interest rates. yearly data and, in II 17 5.0 3.7 Fiscal policy comes addition to expecSource: National Institute Economic Review, 1998/1. into play when ted skill shortages,
Table 2 Ination rates, quarterly
changes are made in taxes and govern- influence the level of demand. The ment expenditures. emphasis of counter-inflation policy Reducing the level of demand so that would have to be on raising interest rates. inationary pressures are diminished can Within a few weeks of coming to power, be done in one or more of three ways: Gordon Brown, the new Chancellor of the (1) Interest rates can be increased. This Exchequer in the Labour government, will make it expensive for businesses and announced a radical change. Until then, individuals to borrow. Businesses will the Bank of England had worked in partinvest less and individuals will consume nership with the Treasury. Now the Bank less. Cutting investment was to decide monetary and consumption will policy independently. The Table 4 Base rates (%) reduce the level of demand objective was to make the 1997 July 6.75 in the economy. control of inflation indeAugust 7.00 (2) Taxes can be increased. pendent of political issues. September 7.00 This will reduce private Acommittee of experts, the purchasing power and conMonetary Policy CommitOctober 7.00 sumption generally. tee (MPC), including the November 7.25 (3) Government expendiGovernor of the Bank of December 7.25 ture can be cut. England, would examine 1998 January 7.25 A combination of measures the evidence and decide on February 7.25 is possible. However, all an appropriate interest March 7.25 these measures take time rate. The target rate of Source: The Financial Times, and people take a while to ination was set at 2.5%. 30 April 1998. adjust to the changes. This You can see what the means it is important for MPC did in Table 4. At the government and the Bank of England rst, the Bank of Englands base rate was to act quickly once they are sure that raised. Then, in December 1997, some ination is becoming a problem. controversy developed within the committee. Some of the experts wanted to continue to raise rates, others felt that What actually was done? there was already evidence that the In the campaign leading up to the general economy was cooling down. At the time of election of May 1997, the Labour Party writing the latter view prevails. promised not to increase taxes. There were also promises not to increase spend- Over to you ing in ways which would involve the government in borrowing more. Effectively The concluding part of this article has to that ruled out the use of scal policies to be written by you. By the time you read
this, the economy will have moved on and monetary policy will probably have been adjusted several times. You can easily nd out what has happened. If in doubt about how, try these two strategies. Visit the Treasury site on the Internet. The address is: http://www.hm-treasury.gov.uk
Buy The Financial Times on a Thursday. It has recent data on the UK economy, inside in the national news section. It will give you an up-to-date birds eye view of the situation. You might nd useful articles in it too. Think about these questions. Did the Bank of England raise bases rates in time to keep ination from rising above the target rate? Has output growth slowed? Is unemployment falling, static or rising? Is the economy headed for another recession or is it stable with steady growth? The economy may not be quite like a soap opera but it is denitely a serial. Watch for the next episode. Try to predict what will happen. Make a note of your predictions, wait 3 months and see if you are right. Look again 6 months later. The time lags may be longer than you thought. In business, you often need to be able to see which way the wind is blowing.
Nancy Wall is co-Director of the Nufeld Economics and Business Studies Project and joint author of a forthcoming A-level Business Studies textbook, to be published by Hodder & Stoughton in early 1999.
Planning a Cambridge Research Assignment

When it comes to the Research Assignment, poor planning results in poor marks. David Dyer, Chief Examiner for the Cambridge Modular course, has some advice for better planning
In the Cambridge Modular examination you take six modules, one of which is a report following a specic and well-structured investigation. You hand in your work for this module in either November or April of year 2 but it is a module which you must begin much earlier than you think. This is the module where you are in control, the one where the planning you do and the care with which you complete it has a big effect on the mark gained.
At the outset
A good starting-point is to read past assignments. This will give you a clearer idea of what an assignment entails. Then take a look at the syllabus and from it gain three things: (1) Awareness of the formal requirements Page 10 of the syllabus states that an assignment must be between 4,000 and 5,000 words long, be about a dened business problem and use business studies knowledge. (2) Understanding the criteria The criteria are outlined on page 12 of the syllabus (see also Box 1) and are the framework the examiners use for awarding marks. Get your teacher to explain them to you more fully. Observe the mark allocation. (3) Guidance There are notes for guidance on page 11 which tell you how your teacher can help, and on page 12 which tell you the form in which the assignment is best presented. I have read many assignments which, though good in themselves, lose marks because they are not written in accordance with the Cambridge requirements. General guidance on writing assignments can be obtained from some textbooks and articles in back copies of Business Review. Specic guidance is available in a book I have written, The Research Assignment, published by the Cambridge Business Studies Project.
rms often makes the investigating processes too difcult. It leads to rather general and descriptive approaches. The rst step is to nd an organisation with which to work. This can come from your own links, maybe through a weekend job or through work experience undertaken at school. It can come through family contacts or can be an organisation of which you are a member. You can also do a perfectly good assignment without a formally arranged attachment by looking at some aspect of the workings of a leisure centre, for example, or a problem like pedestrianisation which affects businesses in an area. In such cases you will have to ensure that you can get primary evidence to help in dening and solving your problem.
Your choice of problem

You must nd a problem to solve (a decision which needs to be made) and focus almost exclusively on it. General reports on
Box 1
Criteria 1 2 3 4 5 6 7 8
The Research Assignment assessment criteria

Maximum marks 10 15 15 15 15 20 5 5 100
Finding a place
The problem-solving approach is not difcult to develop in small organisations, whereas the whole ethos and organisation of big
The skill with which the problem has been put into context and considered Evidence of personal research Evidence of understanding of relevant business studies concepts and ideas Application of business studies concepts and ideas to the problem The logic, depth and breadth of the analysis undertaken Evaluation of alternatives and conclusion related to problem set Quality of language Other aspects of presentation, including appropriate use of tables, graphs and charts, etc.
Box 2
Difcult investigations
The problem in context

Before you can solve a problem there are two essential steps you must take: (1) Dene the problem Make sure the problem exists in a form which will enable you to meet the criteria. Too many students start an investigation and only discover half way through that the problem doesnt exist as such or doesnt need to be solved in the organisation they are looking at. Until you know what the problem really is how can you possibly nd meaningful solutions to it? (2) Put the problem into its context Examiners are not looking for glossy introductions to the rm; they want an explanation of the context within which your problem has to be solved and within which sensible solution alternatives are to be pursued. Write on a need-to-know basis. Remind yourself what sort of problem you have and in what area of the organisations activities and use these points as the context you present to the examiner.
How can Firm X increase its protability? Protability is not the same as prots. What is under investigation is the extent to which prots can be increased. This also has difculties because, on the cost side, Firm X may not make available information which is precise enough or extensive enough. On the marketing side (to generate income) there is a lot of work to do. You must be sure you can get all the information you will need, and that you can cover all of the ground required by the rigours of A-level. It would probably be better to focus on increasing net turnover alone and forget the rest. How can Firm Y increase motivation? What is motivation? How can you measure changes in it effectively? Unless you are sure you can answer these questions dont start on this topic. Will the rm allow sufcient access to employees to determine their motivation? Is motivation in fact low and will an increase improve the rms prots? If not, why is it a problem? The real problem is measurement. Perhaps morale, which is measurable, would be better. The practical problem is very often that students write up thousands of words of unused and therefore unrewarded theory.
Your objectives
Why does the problem need solution and what is the outcome you are seeking? Any report really has three elements. (1) Terms of reference Dene what it is your are trying to do, focus on and explain the context of the problem and dene the methodology you intend to apply. For a business studies assignment the terms of reference also determine the theory and concepts which will form of the framework of the study. They focus on criteria 13 (Box 1). (2) Evidence You will collect a lot of information, but unless you can use it effectively it is not evidence. Some of this data will come from primary sources and some from secondary ones. If you do this well you will be meeting criteria 24. (3) Findings and recommendations In order to make recommendations you have to make the evidence work for you in a logical way. This involves the skills of analysis and evaluation assessed through criteria 56. You need to develop objectives which enable you to complete each of these stages successfully and state them as intended outcomes at each stage and not as a set of procedures you are going to undertake. Example I am going to use cluster sampling This is not an objective. It is, however, an important statement of method which you will need to justify by explaining why that particular sampling method is the best. to determine the information requirements and develop an appropriate method of obtaining it. This is an objective because it sets out the intentions and the outcome which is the information required. It also shows understanding that you will need both to select a method and show why it is appropriate. All of the above, if well undertaken, will both satisfy the requirements of criterion 1 and, more importantly, set a sound foundation for meeting the subsequent criteria. In the next issue I will focus on ways in which primary information can be obtained and how to ensure that it is both sufcient and usable.
organisations and broad-based enquiries which skip over a number of issues in a largely descriptive way will not meet the requirements. The decision should be one which has not yet been made, is small but important, can be explained, and for which you can collect and/or the rm will give you the information you need. In The Research Assignment I discuss a range of topics explaining why they may cause problems if you deal with them as the criteria require you to. Box 2 gives examples of two investigations which are commonly undertaken but often fail. Your title will be the best focus you can nd at the start of the investigation. However, as you get to know more about the situation, or when you discover that certain information is not available, you will have to adapt your title so that it becomes the best short statement you can make about the nature and focus of you investigation. Getting the title right is crucial. Box 3 looks at two titles and explains why they are poor. The original title is your starting-point and the nal one is your nishing-point. In many instances they are not the same.
Box 3
Poor titles
How can XYZ improve its marketing mix? This is a poor title because it does not focus on the real issue which is why the rm needs to improve its marketing strategy. This will either be to survive or to grow so How can XYZ survive? would be a more focused title. The problem may also be too big if the rm is large. The above title is also weak because it relates to the ingredients of a strategy (the mix) rather than a strategy. See Marketing from the right perspective in Business Review, Vol. 3, No. 2 How can ABC improve its communications? This could be a very good assignment but only where there is evidence that the rm needs to improve communications and that it could afford to make any realistic changes which are suggested. This is a clear example of the need to demonstrate that there is a problem in the rst place, and then to only make recommendations which are realistic.
Marketing
The offensive marketing approach

In 1997 Hugh Davidson brought out a new, expanded version of his classic Offensive Marketing. Charli Beale summarises some of the marketing wisdom in Even More Offensive Marketing
n this age of ever-increasing technology and competition, a thriving business is no longer good enough and market leadership is the ultimate. Marketers are under attack. Expected to produce short-term cures with instant, miraculous results, they are blamed for the lack of innovation, lack of protable growth and high failure rate of new products. Firms ask themselves, what value is added by our marketing department? Feeling under pressure to achieve results, many have turned to IT wondersolutions such as servicing and selling to customer databases. This may boost short-term demand, but is telephone selling a substitute for intelligent, innovative marketing? Surely not. So the tedious business game of follow my leader persists. A handful of companies have realised there is more to marketing than meets the eye and have turned to the offensive marketing approach. Offensive marketing goes way beyond conventional marketing. It is a set of approaches, attitudes and processes, designed to: (a) help marketing release its full potential, and
(b) transform businesses into successful, expanding market leaders rather than followers. A good example of an offensive (rather than defensive) approach to marketing is Richard Bransons Virgin. During the mid-1990s, Virgin made a series of bold strategic moves. Each was launched in a wave of favourable press and TV publicity. From its twin base in the music business and in air travel, Virgin moved into the soft and alcoholic drinks markets and with huge success the nancial services industry. The offensive marketing approach can be summed up as follows: Offensive marketing involves every employee in building superior customer value, very efciently, for above average prots. Offensive because offensive marketing involves taking risks, devising long-term strategies (with few instant gains), and heavy investing. It can be summed up by the clich that attack is the best form of defence. Many big-shot tycoons nd this offensive to the ear. They also nd the heavy investment offensive to their shortterm protability. Marketing is a difcult term to dene, as it describes both an internal department and an approach to business. Perhaps a better term for the approach to business would be effective consumer value management. Marketing isnt just about making people want the product you are selling, its about selling them the quality product they want. Involves every employee most people, and indeed most marketers, assume marketing is a function solely performed by the marketing department. Offensive marketers understand that marketing is something which everyone, irrespective of internal position or rank, must accept as his or her responsibility. It is the responsibility of the marketing department to persuade others of their involvement as they have a clear view of both external customer needs and internal skills. The whole organisation should work as a team to produce consistently superior customer value and aboveaverage prots. In building offensive marketers encourage growth. Staff cutbacks often
result in a loss of market share and do nothing for working atmosphere. The now overloaded remaining employees, petried by the possibility of losing their jobs, cut corners to squeeze out a precarious and non-sustainable prot increase. Prices are pushed up and customer service standards allowed to slip. This can be disastrous for a business. Superior customer value the importance of good customer relations cannot be stressed enough. Its no good just saying your product is superior to that of your competition. Customers are the judges, and if dissatised will soon take their business elsewhere. The product or service advantage has to be real, such as a same quality/lower price product, or same price/better quality. Frequent quality checks and improvements are essential to prevent falling behind competitors. Often customers arent easy to please. Their experience with similar categories makes them expect the impossible, but customer loyalty can make or break a business, and its the long-term, existing customers who spend the most. Very efficiently involves matching strengths with opportunities (strength + right opportunity = happy customer and happy share holder) and requires low cost operations with high productivity and relentless checking of extra expenditure related to extra quality. Matching strength with opportunity is also a sound denition of asset-led marketing. For above average prots offensive marketers strive to achieve a fair prot. As the former boss of Hewlett Packard, John Young said: Yes, prot is a cornerstone of what we do but it has never been the point in and of itself. The point, in fact, is to win, and winning is judged in the eyes of the consumer and by doing something you can be proud of. You cannot judge the success of a company by prot alone. For example, two companies may be producing a similarly good prot. But the company achieving high profit by sacrificing future investment may fall behind, lose customers and market share and, in short, not have a future. Its rival, meanwhile, may have a long-term plan to sustain or build on that same prot. Davidson thinks that a better measure of a companys success is prot and investment as a percentage of sales.
A long-term plan usually takes 25 years but, in the meantime, the rm needs also to hit short-term objectives. Failure to do so means it wont be around in 25 years. A good balance, in time, will more than pay off. Davidson summarises offensive marketing by the word POISE: Protable the object of marketing is to achieve a proper balance between the firms needs for profit and customer s needs for value. This requires skill as the two elements are often opposing. Offensive the willingness to accept that todays successes will become tomorrows failures unless risks are taken; the worst marketing sin is to wait for other rms to make the rst move. Integrated marketing must permeate the whole company, ensuring that all employees and not just the marketing department are challenged to contribute. Strategic probing analysis leading to a winning (long-term) strategy. After careful consideration of the alternatives the strategy must be turned into a well-conceived marketing plan. Effectively executed all efforts will be wasted if the plan is not carried out effectively. Effective day-to-day execution is vital. Success here is affected by departmental cooperation, and how far common strategies and objectives exist. A good 1998 example of the offensive approach is the launch by Brooke Bond of Hot Drinks in Cans. This required the development of a range of tea, coffee and chocolate drinks which would stay freshtasting despite being stored for up to 5 months at 55C. It also required heavy investment in the hot drink cabinets that can now be found in many petrol stations and convenience stores. The potential reward for the company? Selling a cup of tea for 60p instead of a teabag for 2p. And a move into the fast-growing market for eating and drinking on the hoof. If offensive marketing is so efcient and beneficial to a business, why isnt
every firm an offensive marketer? The answer is simple. Some rms dont understand offensive marketing, but most just lack the guts and the vision to convert. Many fumble from one year to the next, just keeping their heads above water, with no clear vision of their future. They fail to realise the importance of customer relations, so they cut costs, delay investments and avoid taking risks. They are too busy trying to keep up with rival rms to ever see how to get a step ahead. Firms may feel their problems are too short-term to benet from the long-term plans offensive marketing has to offer. They want increased prot for their effort and they want it now. There is a need to go beyond conventional marketing, with new and original ideas and concepts. As did Hagen-Dazs when its UK launch based on high prices, quality ingredients, large amounts of money spent on free samples and raunchy advertising landed it a 22% share of a 50 million ice-cream market. Marketing has to get offensive, i.e it has to be active and creative; anything but passive. Risks can result in failure, but complacency always does. Success comes from carefully planned, well researched risks taken by an active, integrated organisation. Even More Offensive Marketing is published by Penguin Books for 12.99, ISBN 0-14-025691-1.
Examination success
Roger Williams identies good practice by looking at four student answers to part of Q5a on the November 1997 Cambridge double module
This question required candidates to consider whether a rm, Paladin Ltd, should accept an order from a customer. The case study outlined the customer s terms (1,000 TY 438s at a unit price of 16, to be delivered in 30 days) and gave detail regarding the rms production planning. Using this information, and other aspects of the case, candidates were expected to offer a reasoned answer. The quality of the answer would be determined by the skill being demonstrated by the candidate. Hence, an answer which was evaluative in nature would gain top marks. In contrast, an answer which merely offered a view would be rewarded poorly.
Annas position is, presumably, that although both DL 244s and TY 438s take 5 minutes of manufacturing time (we know this from the detail contained in Table 1), for some reason the DL 244 is nonetheless preferable. It is not at all clear though what this reason is. The TY 438 order generates 16,000 of revenue compared to 7,500 for the DL 244. The examiner would therefore have to assume that revenue wasnt Annas criterion for rejection. Similarly, in terms of contribution, the TY 438 is again more attractive. In the absence of any explicit reasoning, Anna has offered a view which is not supported. The skill which she has demonstrated is therefore L1. Anna would therefore be awarded 2 marks out of 10.
Anna Barry
Paladin shouldnt accept the proposed offer because it takes longer to produce. They are paying less because if you look on Table 2 a DL 244 uses the same time even though they are paying 1 less than the proposed offer. Also, they are asking for 500 of them which is only half of the order from the other customer. If they accept it they will probably lose money than gaining it. I think Paladin should not accept the offer. The offer seems profitable but in fact it isnt. Also, the rm doesnt have the time to make the order.
Item Quantity Time needed Price Cost Contribution Bath time Total prot BRM 212 800 4 13 6 7 53.3 5,600 DL 244 500 5 15 6 9 41.6 4,500 IM 15 1,100 3 17 11 6 55 6,600 NF 179 1,500 2 11 6 5 50 7,500 TY 438 1,000 5 16 8 8 83 8,000
This is a poor answer. It is too brief and very confused. It may well be that Anna could have explained herself more clearly if she had been given the chance to discuss her answer with the examiner. But this is not possible. The examiner has to judge her on what she has actually written down. For example, the subject of the second sentence, they, appears to change from the DL 244 customer to the TY 438 customer. (This confusion will also mean that Anna gains few marks for quality of language.) The most positive feature of the answer is that there is a clear decision: Paladin shouldnt accept .... This enables the examiner to offer some reward. The issue then becomes which of the four skills in the levels of response hierarchy is demonstrated in the answer. Working down the skills hierarchy there is no evidence of evaluation or analysis; there simply isnt the depth of reasoning. The mark awarded must therefore reect L2 (application) or L1 (knowledge). The decision as to which skill is being shown depends upon how the examiner assesses Annas attempt to support her view.
My table shows that TY 438s give the biggest prot. But it also shows that if it is taken then there isnt enough time to make these and all of the others. To me the NF 179 suggests the most prot because it has a low need for time. If you exclude the TY 438 you have 4 orders that can be completed within the 200 hours capacity which Paladin has. If these four orders are taken then the rm makes more prot than if it did take the new order. So I dont think they should accept the offer.
Even the most cursory glance shows that Barrys answer is better than Annas. The question is, how much better? By taking
evidence from the case study and calculating the unit contribution for each product Barry has engaged in analysis, i.e. L3. This skill is repeated by his calculations, labelled bath time in his table, which shows the time needed to full each of the ve orders. On both counts, unit contribution and time, the TY 438 order is unattractive and so his decision to reject the order is justied. Is there any evidence of L4? Regrettably not. The answer is a good, one-sided consideration of the situation, but there is no balance Barry doesnt consider the reasons for both acceptance and rejection one would expect of a L4 answer. He has analysed the case material and arrives at his justiable view. The issue for the examiner now becomes where in L3 to reward Barry. He achieved 7 of the 10 marks. It is worth noting two weaknesses in Barrys answer. The rst is the lack of precision in using subject terminology. Barrys answer discusses prot. This is inaccurate because there is no inclusion of xed costs. Revenue minus variable costs gives contribution. Confusing the important concepts of prot and contribution is an all too common error. The second disappointment is the lack of evidence to support the comment: If these four orders are taken then the rm makes more prot than if it did take the new order. Had he shown this to be the case by further analysis then the additional L3 mark would have been awarded.
already going to be fully used and so the TY 438 cant be made. If they want to take the order then they have to do one of two things. Firstly try to negotiate the time for the products to be nished with each customer. This might allow Paladin to coat the TY 438s next week. But I get the impression that this will not be an easy option. Maybe another one of the products could be delayed. If this can be done then they need a big enough delay for 83.33 hours as this is how long it takes to complete the TY 438 order. To decide which product to delay then I will work out the contribution made by each. Contribution is price less variable costs giving
BRM 212 DL 244 IM 15 NF 179 TY 438 7 9 6 5 8 5,600 4,500 6,600 7,500 8,000
Charlotte
I dont think that Paladin should accept the terms proposed by the customer for the TY 438. I think this because the TY 438 order is not protable enough. It would take 83.3 hours to nish this order in the electrostatic baths but at the moment the existing orders mean these are working to their full capacity. These baths can be used for 200 hours each week and from table 1 they are going to be used for 199.99 hours next week. They would have to reason whether to buy another bath and work out the rate of return on capital and after that order they would have an other order which utilises all of the baths efciently.
This answer just gets into L3 and so gains 6 marks. This is because of the two sections which contain implied analysis. The rst is in calculating the time needed to manufacture the TY 438 order. The second is the amount of time the baths are already scheduled to be used during the coming week. The candidate gains the marks because of the skill shown. Although one might question the degree to which this has been achieved, the candidate is given the benet of the doubt. Again, attention is drawn to the confusion between contribution and prot. Further, it is disappointing that the comment about the order not being profitable enough is not developed.
This shows that the new order is the best. Therefore, because the TY 438s contribute the most it should take the place of the worst products. This means that Paladin shouldnt make BRM 212 and the DL 244. Dropping these two gives 95 hours which is enough to make the TY 438 order giving 22,100. But it also takes the longest time to make in the bath. At the moment Paladin are expecting to make 24,200 so taking the order will mean a loss of 2,100. Dropping products from the schedule might mean legal problems from the customers for BRM 212 and DL 244. Also, if Paladin let these two customers down they might not come back and we know from the case study that Paladin are trying to win back customers not to lose them. I believe that the best way to do this is to extend the time available and to work overtime. Or if this problem is going to reoccur again perhaps the hours could be extended permanently or have shift work in order to operate the baths 24 hours a day or even buy a new bath.
Davinder
To answer this question I will work out a number of things. Firstly I will work out whether the rm can t the order into its schedule. Each BRM 212 takes four minutes to make so to make all 800 will take 3,200 minutes. This is 53.33 hours. To make 500 DL 244 needs 41.67 hours. To make IM 15 needs 55 hours. To make 1,500 NF 179 takes 50 hours. This means that altogether the bath is being used for 200 hours. This shows that the bath is
Davinder s answer is comprehensive and accurate. There is clear numerate analysis of the case material and so it already gains access to the higher skill range. What is more pleasing is the degree of qualitative analysis which is apparent. This sound foundation enables Davinder to consider the benets of accepting the order. Rather than conclude the answer at this stage Davinder continues by discussing how the order can be accommodated within the exiting schedule. It is at this stage that the answer becomes evaluative by clearly demonstrating that accepting the order would result in a loss of contribution, i.e. there is clear balance. The nal two paragraphs expand upon this by discussing how Paladin might develop a strategy whereby it can overcome the already shown capacity problems. Because Davinder s answer contains evaluation it is rewarded within L4. Although the answer is not perfect (the examiners recognise the difculties of writing under the pressures of examinations) it is good enough to gain all of the 10 marks available.
Roger Williams is the Principal Examiner for the Cambridge Business Organisation Module and is on the editorial board of Business Review.
FUTURE OPTIONS
Public relations in practice

Alison Theaker outlines what public relations is, who does it and how to become part of the PR machine
There are two things that public relations (PR) is not. It is not Absolutely Fabulous, and its not Max Clifford. The rst may be amusing but PR practitioners dont get to drift to work after a morning in Harvey Nics, and the latter may be good at what he does but hes the rst to admit that he doesnt let the truth get in the way of a good story. In fact, the term public relations is rather misleading because a practitioner may have very little to do with the general public at all. Working as the press ofcer for the National Museum of Photography, Film and Television, which has an annual visitor gure of 750,000, the only time I saw the public was on my way to my ofce in the morning and on my way home again at night. So what is it? The Institute of Public Relations (IPR) has recently extended its denition, which originally read the planned and sustained effort to establish and maintain goodwill and mutual understanding between an organisation and its public. Now it adds: public relations is about reputation, which is the result of all you say, all you do and what others say about you. A company communicates whether it wants to or not just think what kind of message no comment gives and PR is concerned with managing that communication.
At its best, PR not only tells an organisations story to the people it wants to reach, but also helps to shape the way that organisation acts. The PR practitioner needs to nd out the concerns of those audiences that are important to an organisation and explain them to the management, advising it on the impact of its actions. PR can only give you the reputation you deserve. It is impossible to promote a chemical companys environmental policy if it is pouring poisonous efuent into the local river. So contrary to what you may see in the media, public relations is about reality, not gloss.
Who needs it?

There are two kinds of PR operation inhouse and consultancy. An in-house PR department consists of people employed by an organisation specically to work for that company. A PR consultancy may be either an individual or a group of external specialists, brought in to carry out specic tasks, and they may work for a variety of organisations. All kinds of organisations need PR, from charities like the British Heart Foundation, to public bodies like the NHS Executive and local authorities, as well as
professional institutes like the British Medical Association and the Institute of Public Relations itself, and of course commercial concerns
like The Body Shop and Virgin. Some individuals also engage practitioners or consultancies to do their own PR, none more visibly than the royal family. So what kinds of things do PR people do? A lot of PR is concerned with writing. In trying to reach large groups of people, the printed word is most used. This can be in the form of shareholder reports, information for journalists,
leaets, speeches, articles, newsletters or annual reports. Developing and maintaining contact with journalists, speaking to groups and individuals and organising a variety of events like exhibitions, awards, tours and meetings are all part of the working day. PR practitioners also have responsibility for developing and maintaining an organisations corporate identity, presenting the companys policies and reputation rather than its products. Marks & Spencer is an example of a company which has a strong corporate identity, associated with quality. Virgin, on the other hand, wants to be seen as vital and youthful, providing value for money. In order to make all their activities work, PR practitioners have to start by carrying out research, nding out the facts, possibly using surveys, so that they can plan effectively. PR works only when it is (as the IPR stated) planned and sustained, not ad hoc and intermittent. The other side of the equation is evaluation, and practitioners must critically investigate the success of what they do, so that they can use this as a basis for planning in the future.
student Viv Bailey says: When I worked in industry, chances for promotion werent available for people without higher qualications. The course will give me a head start because Im gaining both the theory and the practical experience in public relations that the industry wants.
PR in the future
On top of this, it takes common sense, exibility, creativity and stamina to succeed. Terry Gilligan, Account Manager at Whitakers PR in Leeds, says: I nearly ended up working in a bank, but I get bored very easily. I enjoy the variety in public relations, and the fact that I can inject some of my own personality into whatever Im doing. Whether Im writing a newsletter or dealing with different personalities I can make the job as interesting as I want to. I also like working in a consultancy that combines public relations with other disciplines like advertising and design, so that Im involved with all stages of the creative process. Susan Goss is Head of Marketing Communications at Ventura, part of Next plc. I have responsibility for PR, advertising, direct mail, design, print, exhibitions and conferences, as well as internal communications for the companys 2,000 staff. I still get a tremendous buzz from media coverage every press clipping, radio or TV tape gives me as much pleasure as my rst stories. There is tremendous satisfaction from making such a signicant impact, whether it is changing market perception, raising brand awareness or generating sales leads.
Getting into PR
There are several ways to get into the PR industry. One is simply trying to get work after leaving school with a consultancy or an in-house department. This is easier if you have some relevant work experience. However, in order to get into the Institute of Public Relations, an academic qualication is needed. This can be either the CAM Diploma in Public Relations or one of an approved list, including degrees in PR at Leeds Metropolitan and Bournemouth Universities or the College of St Mark and St John in Plymouth, a combined honours degree at the University of Central Lancashire and a BA in Communication at Napier University in Edinburgh. There is also a requirement of 4 years experience for full membership. Several companies operate graduate training schemes, such as Hill & Knowlton and Burson-Marstellar. Graduates from a wide variety of disciplines may be recruited. However, what the vocational degree courses all offer is a combination of theory and practice to enable you to hit the ground running. The BA Hons at Leeds Metropolitan University (LMU), for instance, has a successful graduate employment rate of 85%. Second-year LMU
PR people
What kind of people work in public relations? A recent survey by Craneld School of Management found that the following qualities are important: advising management, identifying problems, planning and organising, prioritising, getting results, working with others and resolving conict. Important skills are: good presentation, keeping to a budget, preparing news releases and organising news conferences.
As companies have become more concerned with communicating with their audiences, the need for public relations has increased. There are important issues which organisations have to deal with in todays world, such as taking responsibility for what they do, environmental concerns, involving their employees, dealing with crises and becoming corporate citizens. The government is encouraging supermarkets to use their power as purchasers of goods from Third World countries to stop unethical working practices like child labour. Shells problems over the disposal of Brent Spar and its practices in Nigeria showed that it is no longer enough to make a prot. In the long run, companies have to demonstrate corporate responsibility. Local councils are having to demonstrate their responsiveness to local people. Public relations is the management function and moving force behind all these. It can only grow in importance into the twentyrst century.
Alison Theaker is a Member of the Institute of Public Relations and Course Leader of BA Hons Public Relations at Leeds Metropolitan University. She is also coauthor with Michael Bland and David Wragg of Effective Media Relations published by Kogan Page in 1996.
IN FOCUS Human resource strategy

Figure 1 What form does the human resource strategy take?
No written strategy 17% More than 5 years 4%
Figure 3 How far ahead does your human resource strategy look?
No formal strategy 14% 1 year 16%
Stand alone document 19% Part of the business plan 64%
25 years 66%
Figure 2
The main benets of a formal HR strategy

0 10 20 30 40 50 60 70 80 90 % 100
Discussion points
(1) Why may so many rms incorporate the human resource strategy into the overall business plan? (2) Critically examine the responses shown in Figure 2, given that this research was conducted among HR professionals. (3) What are the pros and cons of restricting an HR plan to the coming year, as compared with looking 25 years ahead?
Facilitates achievement of business objectives Communicates corporate culture Promotes employee development Provides measurable standards Builds confidence among employees Aids recruitment process
Source for all gures: Managing Best Practice, No. 22, Industrial Society 1997.
Forthcoming in Volume 5, Number 2, 199899

Articles Segmentation Ruth Ashford Benchmarking Marie Brewer Marketing on the Internet Mark Smalley Richer Sounds Andrew Gillespie Management guru: Kotler Bruce Jewell Investment appraisal Ian Swift The power of stakeholders Lee Zhuang Upgrade Marketing strategy Stephen Barnes Coursework David Dyer Getting essay-writing right Ian Marcous AEB Paper 1 Malcolm Surridge The double module Roger Williams

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Volume 5

Business Studies Magazine

Igor Ansoff and corporate strategy

The AEB modular exams

Economics and Business Studies

Malcolm Surridge analyses some sample answers to Paper N, January 1998

Nancy Wall studies recent trends and policy in the UK

AZ introduction to Business Studies

Planning a Cambridge Research Assignment

The offensive marketing approach

Introduction to Business Studies

The reel world

The sick tiger syndrome

Welcome to A-level Business Studies

Ian Marcous tells you whats in store

Public relations in practice

Human resource management

Human resource strategy

Some points for discussion

Printed by Raithby, Lawrence & Company Ltd, Leicester

Igor Ansoff corporate strategy

(a) Profit forecast

Figure 1 Gap analysis

Figure 2 Ansoffs matrix

Virgin companies by sector

Dynamism and adventure

A collection of independent companies

Protecting the brand

The core values

Prot, Contribution and Break-even Brain-teasers

Philip Allan Updates

BUSINESS Review September 1998

Back to the beginning

Philip Allan Updates

Causes of the Far East crisis

Figure 1 A chain reaction of crisis

The AEB modular exams

(2 marks) (4 marks) (5 marks) (5 marks) (9 marks)

Philip Allan Updates

BUSINESS Review September 1998 11

A Z Introduction to Business Studies

Philip Allan Updates

BUSINESS Review September 1998 13

Business Buzz Words

Why use a mission statement?

Factors to consider in producing a mission statement

14 BUSINESS Review September 1998

Crossword Introduction to Business Studies

Philip Allan Updates

BUSINESS Review September 1998 15

Welcome to A-level Business Studies

Making the jump from GCSE to A-level

Successful A-level writing

Developing breadth of understanding

Answers to Prot, Contribution and Break-even Brain-teasers (p. 7)

Answers to AZ Introduction to Business Studies (p. 13)

Crossword Answers (p.15)

BUSINESS Review September 1998 19

Human resource management

Much more than just a lot of hot air

s The clickable factory is accessible at: http://www.bized.ac.uk/virtual/cb/

20 BUSINESS Review September 1998

Philip Allan Updates

Economics and Business Studies