GCE A2 Applied Business
Unit 8: Business Planning
An introduction for students
Overview
· This unit is worth 1/3 of your overall A2 Applied Business grade. It is worth 70 marks
· It will be assessed by an internally assessed portfolio.
· The deadline for Section A 1st draft is July 11th
· The final deadline for Section A is Sept 7th
· The deadline for sections B&C 1st draft is November 16th
· The final deadline for section B&C is December 14th
· The deadline for Section D 1st draft is Jan 25th 2013
· The deadline for the completed portfolio is February 22nd 2013
Content Overview
· In this unit, you will have the opportunity to produce a structured business plan for a business proposal.
· A business plan is the essential document that is required to evaluate whether a business proposal will work. The business proposal could be for a new business or an existing business that wishes to expand or diversify its product range (goods or services).
· This unit is a synoptic unit which gives you the opportunity to apply enterprise, team working and presentation skills, as well as applying the skills and knowledge learnt through other units in the specification.
Assessment evidence - You need to: Produce a business plan for a business proposal, which:
A Explains the activities of the business proposal, its aims and objectives, form of ownership and key personnel required.
B Develops the marketing, operations and financial plans, explaining how these achieve the aims and objectives of the
business proposal.
C Analyses key research findings of the following to quantify and develop an integrated business plan:
• marketing plan
• operations plan
• financial plan.
D Evaluates the viability of the business plan in order to support a case for funds, based on an assessment of:
• relevant financial ratios
• pay-back period
• what if analysis
• contingency plans.
The plan should be suitable to present to an external lender, such as a bank, who might provide finance to a new or existing business, or to an internal stakeholder, such as a senior manager, who may have the authority to give the go-ahead for the business proposal.
Requirement A
For this Requirement each candidate needs to explain the foundations of his/her business plan, i.e. the proposal the business
plan aims to implement. This evidence forms the platform for the other Requirements.
Candidates should carefully explain the nature of the business proposal. It is important to note that the business proposal could be:
1 For a new business
or
2 A new product or expansion of a product range offered by an existing business.
Candidates could, for example, produce a business plan for a local retailer who would like to enhance customer care by offering a
delivery service.
When candidates are considering a proposal for an existing business, they should focus on how the new proposal fits in with the current products offered by the business. Less time will be spent explaining the form of ownership, unless the proposal involves establishing a separate legal entity (but this is unlikely).
However, in both cases (options 1 and 2), candidates must provide explanations of the proposal’s aims and objectives and key
personnel required.
Requirement B
It is required that candidates produce a business plan that details the delivery and viability of the proposal. The completed plan should explain how the aims and objectives of the proposal would be achieved.
Candidates should develop marketing, operations and financial plans that clearly support the proposal explained in Requirement A.
Ideally, these plans will support each other, i.e. the marketing plan will inform the operations plan which, in turn, will be accurately
reflected in the financial plan.
Requirement C
This Requirement is focussed upon the use of appropriate methods to obtain, select and analyse relevant research.
A wide range of opportunities will exist for research and analysis.
Candidates should ensure that their research and analysis is focused on delivering coherent marketing, operations and financial plans.
Evidence for this Requirement is likely to be embedded within the completed business plan, possibly as a set of appendices, as well as part of the marketing, operations and financial plans.
Candidates should understand the purpose of financial documents and should be able to interpret them. They should collect the data required to complete these documents.
Candidates will carry out relevant research, process their findings and then enter key totals into the templates. For example, candidates could forecast sales and enter total sales into the spreadsheet template. Candidates will be provided with templates for the relevant financial documents.
The proposal will require capital investment and will generate a stream of income. Candidates could, therefore, investigate the pay back period for the project and analyse the consequences of tying up capital in the proposal.
When investigating a proposal for an existing business, candidates are not required to construct Profit and Loss accounts and Balance Sheets. However, they should consider the proposal as a profit centre and investigate the contribution offered by the proposal.
Requirement D
For this Requirement, the candidate should reflect on his/her completed business plan and consider its viability in order to support a case for funds. Candidates could consider analysis such as ratio analysis, calculating pay back periods and what if analysis.
It is advised that the candidate should carry out a sensitivity analysis on his/her business plan, i.e s/he should consider what might happen to the viability of the plan if key components are altered. For example, it should be considered what might happen to the viability of the business plan if:
· The sales forecast is adjusted up or down by 10%
· Unit costs increase or fall
· Capital costs alter
· A key component of the marketing plan fails.
Contingency plans could then be developed based on the results of their sensitivity analysis.
What you will examine
Business Aims and ObjectivesHow and why it is important to: define clear aims and SMART objectives (Specific, Measurable, Achievable, Relevant and Time-specific) before constructing the marketing, operations and financial plans of the business idea. / · Define clear aims and SMART objectives (Specific, Measurable, Achievable, Relevant and Time-specific)
· before constructing the marketing, operations and financial plans of the business idea.
Market Research
The methods used by businesses to identify target markets and competitors through primary and secondary research (defined in Unit 1).
How findings from market research can be analysed and presented, including the use of tables, diagrams and graphs. / · Market segment
· Target Audience
· Primary research
· Secondary research
Marketing Planning
The importance of a marketing plan, designed to attract customers to a business, including: / • customers . who they are and why they would be prepared to buy the product; the projected number of customers and their buying behaviour
• competitors . the level of competition for the product and how your business proposal might establish a competitive advantage
• marketing mix . the application of the four Ps (Price, Product, Promotion and Place) to the product.
How a sales forecast, quantifying expected monthly revenues & based on a chosen marketing mix, can be produced by considering likely customer and competitive behaviour.
Operations Planning
The importance of an operations plan to consider: / • the monthly quantity produced, both volume and timing in order to meet customer demand predicted by the marketing plan and its sales forecast
• the different stages of production and how established quality levels might be assured
• the human and physical resources required, including:
Human:
− the personnel essential to operate a business and their cost
− the skills required, training needed and the cost of training.
Physical:
− the types of premises, equipment and stock required and their cost
− how premises, equipment and stock can be acquired,
e.g. lease, rent, hire purchase and trade credit
− how stocks of goods are managed, e.g. minimum, maximum and
re- order levels. Just in time (JIT) ordering.
Financial Analysis and Planning
How a business can plan its financial requirements, based on the requirements of the marketing and operations plans, considering: / • size, duration and rate of interest of bank loan required
• start-up budget with estimates of buying or renting premises, purchases of machinery, office equipment and fixtures and fittings
• break-even forecasts, including contribution and margin of safety
• cash flow forecasts
• projected profit and loss statement and balance sheet.
Evaluating the Business Plan
How the viability of a business can be assessed through: / • return on capital employed
• projected profit margins, e.g. gross profit margin
• measures of liquidity, eg current ratio
• pay-back period on loans and owners. investment
• the use of .what if. analysis, possibly based on a computer spreadsheet model, to carry out a risk assessment. Include a consideration of how sensitive the success of the business is to changes in the marketing, operations and financial plans.
How the construction of contingency plans is an essential component of a viable business plan, / e.g. how the business could respond to adverse demand or meet better than expected demand.
Assessment objectives
Each unit is assessed using the below criteria;
AO1 Knowledge, skills and understanding / learners demonstrate knowledge and understanding of
the specified content and relevant business skills
AO2 Application of knowledge, skills and understanding / learners apply knowledge and understanding of the
specified content and relevant business skills
AO3 Research and analysis / learners use appropriate methods in order to obtain
and select information from a range of sources to analyse business problems.
AO4 Evaluation / learners evaluate evidence to reach reasoned
judgements
Mark Band 1* / Mark Band 2 / Mark Band 3 / Mark Band 4
AO1 / A description of the business proposal’s activities, aims and objectives, form of ownership and key personnel.
Outlines examples to illustrate some of these.
(1 - 4 marks) / A partial explanation of the business proposal’s activities, aims and objectives, form of ownership, and key personnel.
Examples are used in context to illustrate some of these.
(5 - 8 marks) / An explanation of the business proposal’s activities, aims and objectives, form of ownership, and key personnel.
Realistic examples are used in context to illustrate these.
(9 - 12 marks) / A thorough explanation of the business proposal’s activities, aims and objectives, form of ownership, and key personnel.
Realistic and detailed examples are used in context to illustrate these.
(13 - 16 marks)
A basic description
The evidence presented is fragmented and likely to be or brief list of references. However, it is sufficient to convey generic understanding.
Examples are collated
The examples are relevant but have not been explicitly used to illustrate the task. They are generalised and are not drawn directly from the investigation. / A description
The evidence presented is sufficient to convey a general understanding of the task in the context of the investigation or activity.
Examples are used
The examples are relevant and have been used to illustrate the task but they are generalised and are not drawn directly from the investigation. / A detailed description
The description is characterised by an attention to individual components and is not generalised.
Realistic examples are
used
The examples used to illustrate the description are drawn directly from the investigation. / A detailed and comprehensive
description
The description is characterised by an attention to individual components and is not generalised. It is sufficient to convey an accurate understanding of the task.
Realistic & detailed examples are used The examples used to illustrate the description are drawn directly from the investigation. They are extended examples containing a range of information.
Mark Band 1* / Mark Band 2 / Mark Band 3 / Mark Band 4
AO2 / A business plan which includes aspects of the marketing, operations and financial plans.
A description of how these support the aims and objectives of the business proposal. (1 - 5 marks) / A business plan which contains marketing, operations and financial plans.
A basic explanation of how these contribute to achieving the aims and objectives of the business proposal. (6 - 10 marks) / A business plan which contains developed marketing, operations and financial plans.
An explanation of how these could achieve the aims and objectives of the business proposal. (11 - 16 marks) / A business plan which contains comprehensive marketing, operations and financial plans.
An in-depth explanation of how these could achieve the aims and objectives of the business proposal.
(17 - 22 marks)
A description
The evidence presented conveys a superficial understanding of the task in the context of the investigation or activity. / A basic explanation
An explanation that omits or
conflates key aspects of a logical account. / An explanation
A logical account of the task using a structured argument. / A thorough explanation
The explanation covers all aspects of the task.
An in-depth explanation
A logical account of the task using a structured argument.
Mark Band 1* / Mark Band 2 / Mark Band 3 / Mark Band 4
AO3 / Collects some up-to-date data from a limited range of sources.
Uses numerical and/or non-numerical techniques on the collected data to provide a partial analysis of the requirements of:
• the marketing plan
• the operations plan
• the financial plan.
Uses the results of the analysis to identify some relevant elements of the business plan.
(1 - 3 marks) / Selects some up-to-date data from a limited range of sources.
Uses numerical and/or non-numerical techniques on selected data to provide a partial analysis of the requirements of:
• the marketing plan
• the operations plan
• the financial plan.
Uses the results of the analysis to outline a relevant business plan.
(4 - 6 marks) / Selects relevant and up-to-date data from a range of sources.
Uses appropriate numerical and/or non-numerical techniques on selected data to provide a partial analysis
of the requirements of:
• the marketing plan
• the operations plan
• the financial plan.
Uses the results of the analysis to develop a relevant business plan, which considers the aims and objectives, form of ownership and key personnel required.