Business Practice

Level 3

Information Pack

Contents: Sample Paper 1

Model Answers & Examiner’s Report &
Syllabus
Sample Paper 2
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 Sample Paper 1

SERIES 3 EXAMINATION 2005

BUSINESS PRACTICE

THIRD LEVEL

(Code No: 3309)

THURSDAY 27 JUNE

__________

Instructions to Candidates

(a) The time allowed for this examination is 2 hours 30 minutes.

(b) Answer 4 questions.

(c) All questions carry equal marks.

(d) Candidates are advised to spend the first 15 minutes of the examination reading through the
questions and making appropriate notes.

(e) Write clearly using appropriate business and commercial language.

(f) The use of standard English dictionaries and cordless non-programmable calculators is
permitted. Candidates whose first language is not English may use a bilingual dictionary.

Scenario

For the purposes of this examination you are an employee of Athena House Group, a management
consultancy firm providing a range of services to the business community.

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QUESTION 1

Worldwide (Farming) International Ltd specialises in the shipping of foodstuffs throughout the world.
The company is concerned about the recent poor publicity regarding the safety of certain foods and
how this adverse publicity will impact upon its business.

Task: Draw up a briefing sheet for the management team of Worldwide (Farming) International Ltd
showing clearly:

(a) the possible impact on the company of changes in market conditions

(10 marks)

(b) how the marketing mix could be used to influence the level of consumer demand.
(15 marks)

(Total 25 marks)

QUESTION 2

Top Flight plc sells discounted air tickets via the Internet to business travellers. Due to the rapid
growth in sales, the company is considering whether to establish an Administration Department which
would support other functional areas within the organisation.

Athena House has been employed to write a report for the Board of Directors of Top Flight plc which
will assist the company in formulating its views on this matter.

Task: Prepare a report for the Board of Directors of Top Flight plc identifying:

(a) why it is important to engage in business planning when considering major changes to business
operations
(10 marks)

(b) the range of activities undertaken by the Administration Department with specific reference to:
(i) communication systems and procedures within the company (5 marks)
(ii) management information (5 marks)
(iii) secretarial support. (5 marks)

(Total 25 marks)

QUESTION 3

The Athena House Group has developed a computer software package which can be used by small
firms to effectively plan their business activities and monitor their finances. The company is planning
to launch the new computer software at a series of promotional events held at the offices of the local
Chamber of Commerce.

Task: Devise a briefing sheet which will accompany the promotional material sent out to prospective
purchasers of the software. Your briefing sheet should include the following:

(a) an explanation, with appropriate examples, of 2 of the following financial terms: gross profit, net
profit, assets, liabilities, turnover
(5 marks)

(b) an explanation of break-even analysis and 2 ways in which it can assist the business organisation.
(20 marks)

(Total 25 marks)

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QUESTION 4

The Association of Human Resources and Development provides career guidance and advice for
those people who are considering a career in personnel management.
The Association is working with Athena House to promote a campaign based around the theme ‘In
Business, People make a Difference’.
Task: Produce a fact sheet which will support the campaign highlighting the following areas:
(a) why employees should be regarded as human resources
(5 marks)
(b) the benefits of multiskilling to the individual and the business
(10 marks)
(c) the main features of an effective staff training programme which covers all levels of staff within
the business organisation.
(10 marks)
(Total 25 marks)

QUESTION 5

The Personnel Department of Alfresco Ltd, a company which operates a chain of city centre coffee
shops, has identified that there has been an increase in staff absenteeism and staff turnover during
the last year.

Athena House was employed to conduct a series of interviews with staff and they have found that staff
lack motivation in their jobs and are not committed to the company.

Task: Write a report to the Manager of the Personnel Department highlighting the following:

(a) 5 practical ways in which staff motivation can be improved

(10 marks)

(b) how different management styles can influence the motivation and commitment of staff.
(15 marks)

(Total 25 marks)

QUESTION 6

Complete Construction Ltd is a small building firm which specialises in supplying materials to the
building and construction industry. The company plans to introduce a computerised system to replace
its current paper-based system for both the ordering of stock and the processing of customer orders.

Athena House has been asked to prepare a report to identify how the company’s plan could be
implemented.

Task: Prepare a report for the Managing Director of Complete Construction Ltd highlighting the
following areas:

(a) the importance of management information to the business organisation

(5 marks)
(b) examples of the management information that could be generated from:
(i) a stock control system (5 marks)
(ii) processing customers’ orders. (5 marks)
(c) the advantages which the company could gain from the introduction of the proposed computer-
based system. (10 marks)
(Total 25 marks)

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Model Answers & Examiner’s Report
Business Practice Level 3
Series 3 2005

GENERAL COMMENTS

The answers presented by most candidates in this examination indicated that they are becoming more
familiar with the format and requirements of the examination. Credit for this rests with centre teaching
staff who have obviously taken account of the recommendations made in previous Chief Examiner's
Reports. It is also evident that increasing use is being made of the support material published by the
Board including Model Answers, the Extended Syllabus and the accompanying How to Pass
Business Practice Level 3textbook.

Some excellent scripts were produced and an increasing number of candidates are being awarded
Credit passes. Scripts produced by these candidates were characterised by:

• a sound knowledge and understanding of the subject matter

• use of relevant and up-to-date examples of contemporary business practices
• well structured answers directly related to the question
• good use of English including spelling, grammar and punctuation.

Notwithstanding these positive comments, there are a number of points which need to be addressed
which would go some way to improving examination performance, particularly of marginal candidates.
The main recommendations arising from this examination paper are as follows:

• Candidates should ensure that they take account of the format of the response required within the
various tasks associated with each question. For example, a question that requires a response in
the form of a Business Report should take the form of normal business conventions and include
various sections, including any recommendations made by the candidate.

• Credit is given in the examination to those candidates who relate their responses directly to the
scenario. In too many cases candidates ignore the scenario as well as the instructions identified
within the specific tasks, choosing instead to write all they know about a topic rather than
addressing what the question is specifically asking.

• The use of tables, diagrams and bullet points can enhance the quality of the scripts presented by
candidates.

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QUESTION 1

Model Answer to Question 1

(a) (i) Prices in a competitive market are determined by demand and supply. Changes in the
conditions of demand will influence the price of a particular product, in this case the specific
foodstuffs that have been the subject of safety concerns.

(ii) In such circumstances the actions of consumers will serve to reduce demand regardless of
the price and such an action will result in lower market prices for the foodstuffs in question.

(iii) A reduction in market demand results in less foodstuffs being shipped by the company
leading to less business and a reduction in turnover.

(iv) Less business also results in lower profit margins and the company may need to instigate
efficiency savings in order to maintain profit levels. They might choose to consider reducing
labour cost that may result in possible redundancies.

(v) Worldwide (Farming) International Ltd may also come under pressure from the food
producers as they too see their profit margins fall. As a result, they may seek to persuade
Worldwide (Farming) Ltd to reduce their contract costs for shipping the foodstuffs, thereby
putting greater pressure on profit margins.

(vi) Organisations involved in the production and shipping of foodstuffs may consider
re-structuring their business activities in order to switch to more profitable areas of business
activity.

(b) (i) Successful marketing involves a combination, or ‘mix’, of 4 critical elements:

• price
• product
• promotion
• place

(ii) Commonly referred to as ‘the 4 p’s’, the marketing mix is used by business organisations as
a management tool to monitor market conditions and adapt their marketing strategy in such
a way as to meet sales targets.

(iii) Worldwide (Farming) International Ltd and the producers of the foodstuffs in question, can
use the components of the marketing mix to influence market demand in a number of ways:

1 Reduce price to increase demand. Worldwide (Farming) International is not a direct

producer or manufacturer of foodstuffs. The impact of ‘food scares’ will therefore have
an indirect impact on its business due to the reduction in volume of specific foodstuffs
demanded in the global market. The company may offer special discounts on the
distribution of other products in order to stimulate market demand. This may include
giving discounts for bulk orders and special rates for repeat contracts.

2 Organise publicity campaigns to alleviate consumer concerns over the safety of

foodstuffs. For example, Worldwide (Farming) International could issue press releases
and organise special promotions at trade fairs.

3 Engage in a dialogue with the Government in order to obtain their support for the
campaign. The Government has important economic and political links with
international organisations throughout the world that it could use to influence the
policies of other countries towards alleviating the concerns over food safety.

4 Promote business networking activities with other organisations facing similar problems
(farmers, suppliers, manufacturers, and distributors) in order that these activities can be
co-ordinated on a national/international basis. Such networking activities could involve

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 identifying new markets on the basis of in-depth market research, mounting a vigorous
advertising campaign which emphasises the quality and brand image of the foodstuffs
and organising targeted marketing activities on the basis of disposable income and
market segmentation.

5 A network of organisations could also employ specialist food scientists who may be able
to provide technical advice and research that identifies the safety of foodstuffs in the
face of consumer fears.

Examiner’s Report on Question 1

This was a topical question providing candidates with the opportunity to show their understanding of
the workings of the market in a practical setting. Unfortunately, far too many candidates did not relate
their answers to the scenario presented in the case study, choosing instead to write a series of
general comments on how the price mechanism operates.

Most candidates understood the impact of falling demand on profit levels but few candidates were able
to identify how the business organisation could respond to such an outcome.

The second part of the question was generally well answered with most candidates able to describe in
detail the role and importance of the marketing mix. However few candidates related the concept of
the marketing mix to the specific problems faced by the business organisation identified in the
scenario.

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QUESTION 2

Model Answer to Question 2

REPORT PREPARED FOR THE BOARD OF DIRECTORS OF TOP FLIGHT PLC

1 Brief

1.1 To explain the importance of business planning.

1.2 To identify the activities undertaken by the administration function.

2 The importance of business planning

2.1 Business planning involves a systematic analysis of business operations, activities and
structure in order to identify the long-term development plans of the business organisation.

2.2 A well-structured planning process will incorporate 3 inter-related plans:

2.2.1 a strategic plan will identify the long-term goals and objectives of the organisation.

2.2.2 an operational plan details how these long-term plans will be implemented during the
period of the plan.

2.2.3 an administrative plan details the business support needs which will need to be
developed in order to ensure the successful implementation of the overall strategic
plan.

2.3 If a business organisation does not engage in planning activities there is likely to be an
adverse impact upon business performance for the following reasons:

2.3.1 no control of business operations

2.3.2 no understanding of market needs

2.3.3 no targets established to monitor performance

2.3.4 no quality standards established

2.3.5 no financial performance indicators identified.

2.4 A business organisation planning to implement major changes to its business operations will
require the following:

2.4.1 up-to-date, accurate and reliable management information that will inform
management decisions

2.4.2 targets will need to be established which are based upon accurate research and
information, presented in a format that promotes understanding

2.4.3 effective communications between the functional areas within the business in order
to co-ordinate the planning process

2.4.4 monitoring systems will need to be established in order to assess business

performance against the set targets

2.4.5 consultation with key stakeholders such as individual employees, their

managers/supervisors and staff teams will enable them to understand their
contribution to the overall success of the business.

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3 Activities undertaken by the Administration function

3.1 The administration function ensures that the business establishes systems and procedures
that allow its activities to operate as smoothly as possible.

3.2 The administration function also has an important role to play in ensuring that systems are in
place which promote effective and efficient communications throughout the business.
Towards this end, the administration function can take the lead in establishing a
communications strategy and monitoring its implementation. This will allow the
administration function to ensure that systems are in place which support the needs of the
other functional areas including:

3.2.1 secretarial and administrative support

3.2.2 production of management reports and other business communications
3.2.3 arranging meetings including the distribution of agenda and minutes
3.2.4 producing staff newsletters and other methods of communications which provide
general information for staff.

3.3 The administration function should also ensure that systems and procedures are controlled
and monitored in order to meet the changing needs of the organisation. As such, the
function will be responsible for such areas as telecommunications, information technology,
security and transport.

3.4 The administration function has an important role to play in ensuring that management
information systems generate up-to-date and reliable information for managers. It will
therefore be involved in drawing-up plans for the introduction, development and replacement
of computer hardware and associated software packages.

3.5 The administration function will also ensure that the business has systems in place to meet
its statutory duties and responsibilities including Health and Safety, the production of the
Annual Report and any information that may be required by the government including the tax
authorities.

4 Recommendations

4.1 Top Flight plc should establish a planning process that clearly identifies its long-term
business goals and objectives.

4.2 The planning process should clearly identify the administrative support needs of the
business and draw-up an administrative plan that will assist the implementation of the
strategic plan.

4.3 The establishment of an Administrative Support Department would be an effective way of

ensuring that the administrative plan was implemented.

Examiner’s Report on Question 2

Answers to this question tended to be too general. In part (a) many candidates described in detail the
components of a Business Plan when, in fact, the question required them to identify the importance of
business planning. As a result their responses did not relate specifically to the scenario.

Part (b) required candidates to describe the various activities undertaken by the Administration
function. The majority of candidates produced acceptable responses but some answers were rather
vague and generalised.

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QUESTION 3

Model Answer to Question 3

(a) Financial terms

(i) All business organisations involved in the buying and selling of goods and services require
an efficient and effective finance function to enable them to monitor the performance of the
business against its targets.

(ii) The finance function is particularly concerned with the following indicators of business
performance:

• Gross profit – sales revenue minus the cost of those sales

• Net profit – gross profit minus expenses
• Assets – items or property owned by the business which have a money value
• Liabilities – money owed by the business, ie business debts
• Turnover – the value of a firm’s sales (price x number of sales)

(b) Break-even analysis

(i) Break-even analysis is a management tool which is used by management accountants to

provide the business oganisation with information regarding the inter-relationship between
cost, price and profits/losses.

(ii) Break-even analysis is based on the principle that costs can be classified as either fixed
costs (FC) or variable costs (VC). Whereas fixed costs do not vary with output and therefore
have to be paid regardless of the level of production, variable costs are directly related to
levels of production and will rise or fall in relation to production levels.

(iii) Total costs (TC) are equal to fixed costs plus variable costs.

(iv) In order to calculate profit/loss at a particular level of sales, the business needs to calculate
total revenue (TR) which is found by multiplying the total number of sales by the price,
ie TR = sales x price.

(v) Calculating total costs and total revenue allows the business to determine the level of sales
that will equate TC and TR – the so-called break-even point. Any sales below this level will
result in losses and any sales above this level will result in profits.

(vi) The break-even point can be illustrated in a graph format as shown below:

Costs/Revenue
Total revenue (TR)

Total costs (FC + VC)

Fixed costs (FC)

Losses Profits
Output/Sales

Break-even point

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How break-even analysis can help the business

(i) Effective business planning relies upon accurate management information in order to make
decisions. Since all business activity involves making choices and taking risks, the better the
quality of management information, the lower the risk of making the wrong or inappropriate
business decision.

(ii) Effective break-even analysis allows the business to make informed decisions regarding prices
and those measures which will promote efficiency savings, ie the ways in which fixed/variable
costs might be able to be reduced.

(iii) Reductions in cost structure will lower the break-even point, ie profitable business activity will
commence at a lower sales volume.

(iv) Effective break-even analysis will be informed by market research that will identify consumer
demand at different price levels. The marketing function could use this management information
to draw up a marketing plan that seeks to increase market demand at the various price levels
thereby influencing the break-even point.

(v) Break-even analysis also allows the business to establish targets relating to sales and costs. For
example, the business might choose to embark on an unprofitable product line in the short-term
on the basis that, over time, if targets are met, it will move into profit – based upon information
provided in the break-even analysis.

(vi) Computer software designed to assist the small businesses to monitor their finances will allow
them to engage in financial modelling, effectively using the computer software to determine the
break-even point from a number of different costs, sales, outputs and prices.

Examiner’s Report on Question 3

This was not a popular question. Those candidates who did attempt it sometimes did not follow
instructions. In part (a) only 2 of the financial terms were required to be defined. Many candidates
chose instead to define all five of the financial terms. Most candidates understood gross profit, net
profit, assets and liabilities but only the better prepared candidates were able to define and explain
sales turnover.

Break-even analysis was generally understood but many candidates were unable to relate the concept
to the decision-making process within the business.

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QUESTION 4

Model Answer to Question 4

(a) (i) It is now generally accepted that employing staff is not simply a matter of paying wages and
salaries. Employing staff should be seen as an investment in skills and that on-going
investment in staff via staff training and development will bring ‘investment returns’ to the
business.

(ii) Investment in staff incorporates every aspect of company activity including:

• initial recruitment
• ongoing training and development
• consultation and 2-way communication
• the involvement of staff teams in the quality systems operated by the company
• career and promotion enhancement opportunities within the company which will serve to
enhance retention rates in areas of skill shortage.

(b) (i) One of the most important factors that can prevent a business organisation from achieving
its targets and business goals is the shortage of skilled labour.

(ii) One strategy which some organisations hope will alleviate the problem of this so-called ‘skills
gap’ is to incorporate an element of ‘multiskilling’ into their staff training programme.

(iii) Multiskilling provides staff with the opportunity of gaining new skills that are not directly
related to the specific job for which they were employed thereby enabling them to acquire a
range of skills which can be transferred to a number of job roles.

(iv) This multiskilling approach to training recognises that the development of such ‘transferable
skills’ will be of benefit to both the individual employee and the business organisation:
• Employees become more flexible, which means that the business can save time in
recruiting new members of staff to the organisation
• ‘Bottlenecks’ in production will be reduced or prevented as employees can be switched
more easily into new job roles
• Staff have more confidence in the business and the contribution which they can make to
overall business performance
• Individuals become more ‘employable’ and will be able to access a greater range of
employment opportunities
• Allows the business to feel more in introducing new technology into its operations and
activities
• Staff teams will have access to a broader range of skills that can be used to contribute
towards meeting team targets

(c) (i) In order for staff training to be effective it must relate to the planning process. Business
planning allows the business the opportunity to identify its short-, medium- and long-term
goals and objectives. These goals and objectives can then be subject to specific targets that
will determine the organisation’s resource requirements, including the skills required by its
employees.

(ii) A training needs analysis conducted as part of the planning process will enable the business
to ascertain the current skill levels of staff and identify any ‘skills gap’ which may prevent the
business from achieving the targets.

(iii) It is therefore important that the training needs analysis covers all levels of staff within the
organisation including managers, supervisors, operatives along with those involved in other
specialist job functions.

(iv) Staff training and the development needs of individual members of staff are best determined
by a formal review conducted on a regular basis as part of the business organisatons human
resource strategy. In most organisations, this formal review takes the form of a staff

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 appraisal scheme that involves individual members of staff discussing their job roles and
performance with their line manager. Such discussions can often identify staff training
needs.

(v) The staff training programme will be subject to regular reviews in order to ascertain its
relevance and effectiveness in meeting company policies and to enable new priorities to be
planned, developed and delivered.

Examiner’s Report on Question 4

A popular question which produced some excellent responses from candidates, particularly in respect
of the benefits of multiskilling to the individual and the business organisation. Better prepared
candidates were able to identify the importance of staff training and development within the context of
the planning process and the importance of target setting within a staff training programme.

The candidates who achieved Distinction grades were able to identify the importance of review and
evaluation analysis at the completion of staff training programmes.

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QUESTION 5

Model Answer to Question 5

Report to the Manager of the Personnel Department, Alfresco Ltd

Brief

1 To make practical suggestions regarding the motivation of staff

2 To show how management styles can influence the motivation of staff

(a) Practical Ways in which staff motivation can be improved

Staff motivation can be influenced in a number of ways and, in general terms, these can be
classified in two main ways:

Financial motivational factors include those aspects which include monetary rewards.
Examples include:
• pay structure, including merit payments for positions of responsibility
• bonus schemes
• incentive schemes
• staff discounts

Non-financial motivational factors will be mainly concerned with such factors as working
conditions, management styles, fringe benefits and workplace organisation. Examples include:
• delegation
• encouragement, praise and appreciation of employees by their managers
• empowerment of staff
• involvement in decision-making

(b) How management styles can influence the motivation and commitment of staff

1 It is generally accepted that three types of management styles can be identified within
business organisations:

1.1 an autocratic management style is associated with telling staff what to do and actively
discouraging contributions and suggestion

1.2 a consultative management style will actively encourage contributions from staff

1.3 a participative management style will seek to ensure that staff have responsibility for
making decisions.

2 Differences in organisational culture represented by business operations and practices, are

usually associated with style of management practised within the business and the impact
that this has on management-staff relations including the motivation and commitment of staff.

3 Most people like to be involved in those decisions which impact on their job roles and work
activities and are therefore likely to support an organisational culture which is based upon
consultative or participative management styles.

4 A business organisation which promotes participative or consultative management is likely to

incorporate some of the following features:
• team work
• quality circles
• emphasis on two-way communications
• suggestion schemes
• formal committees to promote participation
• single status companies

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Recommendations

1 The Personnel Department of Alfresco Ltd should undertake a thorough analysis of workplace
organisation and practices.

2 The Personnel Manager should work with other senior managers within the organisation to
determine a corporate management style best suited to promote consultation and participation of
the workforce in a range of appropriate business decisions.

Examiner’s Report on Question 5

Candidates were able to identify a wide range of practical strategies to improve staff motivation,
including both financial and non financial elements.

The majority of candidates were able to describe the range of management styles exhibited within
business organisations and were able to show the impact of such styles on staff motivation. In
addition, many candidates were able to provide examples of those business practices usually
associated with different styles of management. Candidates were given credit for showing the
relationship between staff motivation and overall business performance.

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QUESTION 6

Model Answer to Question 6

REPORT PREPARED FOR THE MANAGING DIRECTOR OF COMPLETE CONSTRUCTION LTD

1 Brief

1.1 To explain the role and importance of management information.

1.2 To identify the management information which can be delivered from specific business
operations and functions.
1.3 To highlight the advantages of a computer-based management information system.

2 The role and importance of management information

2.1 Management information is the information derived from the processing of raw data that can
assist those managers who are engaged in the decision-making process.

2.2 Management information is important since it can allow the business to:

2.2.1 plan its activities

2.2.2 monitor its targets
2.2.3 evaluate its performance
2.2.4 inform decisions regarding its future development
2.2.5 co-ordinate the main business functions.

3 The management information derived from specific business activities and operations –
ordering stock and processing customer orders

3.1 Management information can be derived from all activities that are undertaken by the
business organisation. In terms of ordering stock and processing customer orders, a range
of data is produced including:
3.1.1 customer details – name, address, and telephone number
3.1.2 credit terms – amount, payment period, and interest rate
3.1.3 methods of payment – cash, cheque, credit card
3.1.4 stock re-order levels
3.1.5 delivery schedules – dates, days, times, frequency
3.1.6 supplier details – name, address, telephone no, fax, and e-mail
3.1.7 discounts available for suppliers – bulk purchases
3.1.8 stock valuation
3.1.9 financial records and budgets – financial and management accounting functions
3.1.10 invoice reconciliation – identifies any outstanding invoices which have yet to be paid.

3.2 The management information derived from this data allows the management team to:

3.2.1 produce up-to-date management account reports to managers regarding their

budgets
3.2.2 produce an up-to-date customer/supplier database
3.3.3 set and monitor targets including those relating to sales, profits, and new business
3.3.4 engage in market analysis, identifying trends from the monthly/annual sales figures
based upon market segmentation and regional sales figures
3.3.5 ensure that supplies are readily available to the consumer to meet the needs of
current business projects
3.3.6 monitor trends in business activity and performance in areas such as sales turnover,
customer satisfaction, and completion rate of business projects.

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4 Advantages of a computer-based management information system

4.1 The advantages of a computer-based management information system centre upon the
speed, accuracy and efficiency of information which can be produced by the system in a
variety of formats and how this information can be analysed and interrogated by the
managers in order to make informed decisions concerning business operations and
planning.

4.2 These advantages can be identified in a number of specific areas including:

4.2.1 automatic creation of management information from raw data

4.2.2 less paperwork and fewer opportunities for mistakes compared with paper-based
4.2.3 the quality, efficiency and effectiveness of business communications improve within
the organisation
4.2.4 an efficient management information system can have a direct impact on corporate
image and identity and the expectations of customers and suppliers
4.2.5 greater opportunities will exist for the development of e-commerce and e-business
activities. This could incorporate automatic re-ordering systems which will eliminate
time-delays associated with paper-based stock re-ordering systems
4.2.6 efficient identification and collection of business debts will improve cash flow within
the organisation
4.2.7 the skills required to operate and manipulate a computerised management
information system will lead to an overall improvement in the skill levels of both
managers and their staff that may be useful in other areas of business activity
4.2.8 the production of computer-generated management reports can improve the level of
co-ordination between the different functional areas within the organisation. Teams
of managers representing different departments within the company can take
important business decisions.

5 Recommendations

5.1 Complete Construction Ltd should undertake a needs analysis in order to ascertain its
management information requirements in respect of stock ordering and control and customer
orders.

5.2 Following the outcome of the needs analysis, Complete Construction Ltd should undertake
research into the costs of installing a suitable computer-based system which best meets its
needs within the available budget.

Examiner’s Report on Question 6

This was a popular question that produced a number of excellent responses. Candidates were able to
describe the importance of management information to the business and provided a comprehensive
range of advantages associated with computerisation.

Some candidates struggled to identify the management information provided from a computerised
stock control system, but most candidates understood the range of management information that
could be generated from processing customers' orders.

Candidates achieving Distinction grades were able to show clearly the relationship between
management information and the role and activities of the functional areas.

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Extended Syllabus
Business Practice Level 3

Aims

The aims of this syllabus are to enable candidates to develop:

• a knowledge and general understanding of the nature of business activity

• an understanding of the influences on the business organisation and what the

success factors of the business might be

• an understanding of the contribution which the individual can make to the

success of the business organisation.

Assessment Objectives

The examination will assess the candidate’s ability to:

• demonstrate a general understanding of the influences on the business

organisation

• understand the importance of specialisation in a business context

• appreciate how business planning helps identify organisational aims and

objectives.

Target Audience and Candidate Progression

This qualification is intended for candidates who are seeking to increase their
awareness and understanding of contemporary business practices and organisation.
It is expected that candidates from all the main functional areas represented within
the business or those seeking to find employment in any of these areas will be able
to develop their understanding of business activity and practices.

Successful candidates may go on to complete the LCCIEB Private Secretary’s

Diploma, Level 3or the LCCIEB Diploma in Business Administration, Third Level.

Levels of English Required

Candidates should have a standard of English which enables them to make

themselves understood in a business context and which is equivalent to LCCIEB
English for Business Third Level.

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Syllabus Topics

1 Influences on Business Activity

2 The Functions and Organisation of Business

3 Business Management

4 Personal Contribution to Business Effectiveness

5 Business Values and Culture

6 Communication in Business

Coverage of Syllabus Topics in Examinations

The examination will consist of one question from each topic area. Candidates may be
expected to draw upon related syllabus topics when answering questions.

Examination Format

• The time allowance for the examination is 2 hours 30 minutes

• Candidates will be required to answer 4 questions from a choice of 6

• All questions carry equal marks

• Candidates are advised to spend the first 15 minutes of the examination reading
the questions and making notes

• Marks are not deducted for spelling or grammatical errors

• Questions will be presented in the format of a business situation, problem or

issue with a number of tasks to be completed

• Candidates will not be expected to have specialist knowledge of the syllabus

topic areas. interpretation of financial data will not be required.

• Candidates may choose to produce their answers on a word processor or

computer. Please refer to regulations for word processed or computer produced
scripts in the ‘Guide to LCCIEB Examinations’.

20
Guided Learning Hours

LCCIEB recommends that 140-160 Guided Learning Hours (GLHs) provide a

suitable course duration for an ‘average’ candidate at this level. This figure includes
direct contact hours as well as other time when candidates’ work is being supervised
by teachers. Ultimately, however, it is the responsibility of training centres to
determine the appropriate course duration based on their candidates’ ability and level
of existing knowledge. LCCIEB experience indicates that the number of GLHs can
vary significantly from one training centre to another.

Candidate Answer Guidance

Answer Formats

Unless otherwise requested, candidates will be asked to provide answers in one or more of
the following formats:

• fact sheets

• briefing sheets

• short reports

• short notes

• diagrams or charts

• bullet points

• essay style

Some questions may ask for relevant examples to be provided. Appropriate

business language should be used and any relevant charts or diagrams should be
properly labelled.

If requested to answer in the form of a report, candidates will need to structure their
report with heading and sub-headings. The report should have at least three
sections: an introduction, a main section and a conclusion. The introduction should
indicate the purpose of the report and who the report is intended for. The main
section should use a concise essay style, numbered points or bullet points. The
report needs to finish with a conclusion, which should include candidate
recommendations.

Candidate Performance Measurement

Pass Mark Information

Pass 50%
Credit 60%
Distinction 75%

21
Mark Allocation

A positive marking approach is used.

Recommended Reading List and Support Material

Title Author(s) Publisher ISBN Code

How to Pass Business Stephen Jakubowski LCCIEB 1-86247-080-4

Practice, Third Level

Support Material

Examiners’ Reports and Model Answers and past questions papers can be purchased from
the LCCIEB Customer Service Department.

22
Syllabus Topic Items Covered

1 Influences on Business Activity Candidates must be able to:

1.1 Purposes of business 1.1.1 Identify the purposes of business

organisation organisations:

• profit
• growth
• innovation
• recognition
• satisfaction of consumer/market
demand
• production
• combining resources to meet
market demand

1.2 Public and private sectors 1.2.1 Describe the differences between the
public and private sectors

1.3 Business activity and 1.3.1 Describe what is meant by business

opportunity cost activity and the importance of
opportunity cost

1.4 How consumer spending 1.4.1 Explain how the pattern of consumer
patterns influence business spending influences business activity
activity

1.5 Factors which affect the 1.5.1 Describe how the following affects the
size
size of firms and organisation of firms:

• mergers
• takeovers
• different types of integration
• internal economies and
diseconomies of scale
• external economies of scale

1.6 Importance of small firms 1.6.1 Explain why small firms are important

1.7 Role and importance of 1.7.1 Describe the role and importance of the
the financial sector financial sector to business organisations
and how they influence business activity:

• commercial banks
• merchant banks
• insurance companies

23
 1.8 Business insurance 1.8.1 Explain different types of insurance which
business organisations can take out:

• business interruption
• liability insurances
• key person insurance

1.9 Chambers of Commerce 1.9.1 Describe the role and functions of

and business networks Chambers of Commerce and business
networks

1.10 Influence of the 1.10.1 Describe how and why the Government
Government on business may seek to influence the activities of
business organisations:

• Government expenditure
• taxation policies
• changes in interest rate
• measures to promote international
trade

1.11 The Global Market 1.11.1 Explain what is meant by the term global
market

1.12 Economic indicators and 1.12.1 Explain the main economic indicators and
their influence on business how they can have an effect on business
activity activity:

• standard of living
• cost of living
• national income
• economic growth
• inflation
• exchange rates

2 The Functions and Organisation Candidates must be able to:

of Business

2.1 The main functional areas 2.1.1 Describe the main functional areas within
within business organisations organisations:

• personnel/human resources
• production/operations
• purchasing
• finance/accounts
• sales and marketing
• administration
• research and development

24
 2.2 Objectives of the main 2.2.1 Identify the objectives associated with the
functional areas main functional areas and the duties of
principal staff

2.3 Organisation charts and 2.3.1 Explain how organisation charts can aid
the separation of understanding of specialisation and
responsibilities separation of responsibilities of staff

2.4 Advantages of 2.4.1 Describe the advantages of specialisation

specialisation to the business organisations

2.5 Business functions in 2.5.1 Compare and contrast the organisation of

small and large business functions in small and large
organisations organisations

2.6 International business 2.6.1 Explain why an international

organisation
organisations may need to organise itself in different
ways as a result of:

• legal systems
• Government policy
• international communications
needs

2.7 Major groups involved in 2.7.1 Identify the roles played by the major
the business organisation groups involved with the business
organisation:

• shareholders
• Board of Directors
• managers
• employees
• customers and clients

2.8 Importance of new 2.8.1 Describe the importance of new

technology to the functional technology to the main functional areas
areas

3 Business Management Candidates must be able to:

3.1 Business planning 3.1.1 Describe the purpose of business planning

3.2 The planning framework 3.2.1 Describe the planning framework:

• role of mission statements

• SWOT and PEST analysis
• target setting
• timescales

25
 • quality guidelines
• resource implications
• finance
• reviewing and monitoring activity

3.3 Business plans 3.3.1 Describe the main components of a business

plan

3.4 Strategic and operational 3.4.1 Describe the differences between a

plans strategic plan and an operational plan

3.5 Strategic and operational 3.5.1 Identify the differences between strategic
management and operational management

3.6 The functional areas and 3.6.1 Identify the contributions made by the
the strategic planning functional areas to the strategic planning
process process

3.7 Financial information 3.7.1 Explain why companies need financial

information

3.8 Financial and management 3.8.1 Distinguish between financial and

accounting management accounting and the contribution
of each to the decision-making process

3.9 The trading and profit and 3.9.1 Understand the purpose of the trading and
loss account profit and loss account

3.10 Financial terms 3.10.1 Describe key financial terms:

• gross profit
• net profit
• depreciation
• assets
• liabilities
• turnover
• cash flow

3.11 Importance of management 3.11.1 Describe the importance of management

information information as a means of controlling and
monitoring business activity

4 Personal Contribution to Candidates must be able to:

Business Effectiveness

4.1 How business performance 4.1.1 Explain the ways in which business
can be improved performance can be improved by:

• target setting
• customer service

26
 • maximising efficiency
• multi-skilling of staff
• training and development of staff
• motivation of staff

4.2 How the individual can 4.2.1 Identify the ways in which the
contribute to business individual can contribute towards
performance business performance:

• effective communications
• knowledge of company and company
products/services
• customer service

4.3 Individual targets and 4.3.1 Understand the importance of individual

performance targets and performance

4.4 How teamwork can 4.4.1 Describe the contribution teamwork can
contribute to business make to improving communication and
performance overall business performance:

• commitment
• innovation
• quality
• co-operation

5 Business Values and Culture Candidates must be able to:

5.1 Business culture 5.1.1 Describe how the following can influence an
organisation's business culture:

• mission statements
• corporate image
• corporate identity
• style of management

27
 5.2 Different organisational 5.2.1 Describe different organisational
cultures cultures:

• consultative
• participative
• performance or goal driven

5.3 Internal and external clients 5.3.1 Understand what is meant by internal
and external clients

5.4 How the business can 5.4.1 Describe the ways in which the
seek to promote quality business organisation can identify and
improvements seek to improve the quality of its
systems, products and services:

• survey standards and target setting

• quality circles
• staff appraisal
• research and development
• customer satisfaction surveys

6 Communication in Business Candidates must be able to:

6.1 Forms and types of 6.1.1 Understand the different forms and
communication types of communication and their
advantages and disadvantages:

• formal and informal

• internal and external
• verbal/written/other forms

6.2 Communication systems 6.2.1 Identify the criteria applied to

and business needs determine the appropriateness of
different communication systems to
meet specific needs:

• fitness for purpose

• costs
• perceptions
• security
6.3 Impact of new technology 6.3.1 Understand the impact of new
on business technology on internal and external
communications communications:

• to and from customers

• between the functional areas
• between individuals and teams
• in multi-site and international
organisations

28
6.4 Effective communication 6.4.1 Describe how effective
and business goals communications can assist the
achievement of business goals through
information flows

6.5 Business communications 6.5.1 Analyse how communications can

company objectives and impact upon the understanding of
business performance company objectives and the affect
they may have upon individual and
team performance

6.6 Administrative systems 6.6.1 Understand the need for administrative

and procedures systems and procedures and how they
affect business communications

6.7 IT and the development of 6.7.1 Understand the need for IT in the
business communications development of business
communications:

• electronic mail/intranet
• Internet
• teleconferencing

29
 Sample Paper 2

SERIES 4 EXAMINATION 2004

BUSINESS PRACTICE

LEVEL 3

(Code No: 3309)

__________

Instructions to Candidates

(a) The time allowed for this examination is 2 hours 30 minutes.

(b) Answer 4 questions.

(c) All questions carry equal marks.

(d) Candidates are advised to spend the first 15 minutes of the examination reading through the
questions and making appropriate notes.

(e) Write clearly using appropriate business and commercial language.

(f) The use of standard English dictionaries and cordless non-programmable calculators is permitted.
Candidates whose first language is not English may use a bilingual dictionary.

Scenario

For the purpose of this examination you are an employee of Athena House Group, a
management consultancy firm providing a range of services to the business community.

30
1 The Confederation of Exporters represents the interests of business organisations involved in
exporting goods abroad. It is planning to produce a series of fact sheets which can be used as
part of a publicity campaign to promote its activities.

Athena House has been asked to contribute towards the production of the first fact sheet which
will focus on the importance of international trade.

Task: Prepare a fact sheet which covers the following:

(a) An explanation of the term the global economy.

(10 marks)

(b) The advantages of international trade.

(15 marks)

(Total 25 marks)

2 The local branch of the Federation of Accountants wishes to recruit new members and has
organised a conference at the offices of the Chamber of Commerce.

The theme of the conference will be to show how the finance function within an organisation
benefits the other functional areas.

Athena House has been asked to help prepare some briefing papers for the conference.

Task: Prepare a briefing paper which covers the following aspects of the finance function:

(a) Why managers need management information.

(10 marks)

(b) The main functions of a Finance Department showing clearly the differences between
financial accounting and management accounting.
(15 marks)

(Total 25 marks)

3 The local Chamber of Commerce wants to form a ‘New Business Partnership Network’ made up
of specialist organisations such as banks, insurance companies and business consultants. The
New Business Partnership Network would provide help and assistance to people who are
starting up their own businesses.

Athena House is keen to join the new organisation and wishes to prepare a fact sheet on
‘Business Planning and the Small Business’.

Task: Prepare the fact sheet concentrating on the following areas:

(a) Why business planning is important.

(5 marks)

(b) The main sections included in a Business Plan, with examples.

(10 marks)

(c) 5 sources of finance which may be available to a small business.

(10 marks)

(Total 25 marks)

31
4 Following a recent merger, the management team of The Bradbury Corporation is keen to
organise employees into teams. It asks Athena House to present a series of seminars to junior
managers to highlight the advantages of teamwork to the company and its employees.

Task: Prepare a set of briefing notes which can be used by the staff at Athena House who will
lead the seminars. The briefing notes should include the following:

(a) 2 activities in which a team could be involved.

(5 marks)

(b) A description of the role and functions of quality circles.

(10 marks)

(c) How teamwork can improve business performance.

(10 marks)

(Total 25 marks)

5 Athena House Group will be represented at a business conference and will contribute to a series of
discussion groups looking at factors which affect customer loyalty.

Task: Prepare a series of notes which you can refer to at the conference which highlight the
following:

(a) The meaning of the term customer loyalty and its importance to the business.
(10 marks)

(b) The importance of corporate image and corporate identity in establishing customer
loyalty.
(15 marks)

(Total 25 marks)

6 Bramley Foods Ltd, a manufacturer of processed foods, wishes to expand its product range and
wishes to develop a marketing plan. It engages the services of Athena House to help the company
devise the plan.

Task: Produce a report for the management team of Bramley Foods Ltd highlighting the following
features of a marketing plan:

(a) An explanation of the terms the marketing mix and the product life cycle.
(10 marks)

(b) 3 examples of how information technology can be used to communicate

information from the marketing plan to the management team.
(15 marks)

(Total 25 marks)