Professional Documents
Culture Documents
Most businesses have aims and objectives about how they are going to
make their business successful. Most businesses have different aims
and objectives. For example a schools main aim will be getting as
many students to a high educational standard. Some businesses may
state official aims in a statement that is part of the business’s policy.
The mission statement of First Direct, the telephone banking arm of
HSBC, is to `create harmony between the services it provides and the
way people live their lives with simple, straightforward products`.
Another example is BUPA, the private health care and insurance
company, has a vision statement of `taking care of the lives in our
hands.
Aims
The main aim of every business is to survive. The only way it can do
this is to make a profit. Its turnover, the goods or services it sells
must be bigger than its operating expenses, or the day to day cost of
running the business.
Making a profit
Being environmentally friendly
Improving product quality
Expanding, providing goods and services to a wider community
Maximising sales
Providing excellent service
Providing charitable or voluntary service
Objectives
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Business objectives are what the business will set itself to complete
the aims. To achieve your aims you will need to take specific steps
towards them. First, you have to decide what these steps are, and
then you have to keep on doing them.
Tesco’s objectives
Tesco also need to decide what steps to take to achieve their aims and
to set targets or objectives along the way. Tesco may try to:
Customers
Community
Operations
People
Finance
Tesco’s aims
Tesco welcome all types of customers, which is why they have set
their aim to produce all different types of food to suit different people’s
needs. They also aim their food to different types of products. They
have `Tesco Finest` food for people looking for something special.
`Value food`, which are for people on a tight budget or are shopping
cheaply. They also have `healthy living` food for their healthy
customers. This aim brings in more custom meaning more capital for
the business expand. They also make sure all their prices are low
enough to attract more customers into the store. This is important as
the customers bring in income into the business.
Tesco has a long term strategy for growth, based on four key parts:
growth in the Core UK business, to expand by growing internationally,
Their success depends on people. The people who shop at Tesco and
the people who work for them.
If the Tesco customers prefer what Tesco offer to them, they are more
likely to come back and shop with them again.
If the Tesco team find what they do rewarding, they are more likely to
go that extra mile to help their customers.
Shopping trip
Year Number
Sales area Planned store
of of
(million sq openings
entry stores
ft) 2006/07
UK 1,897 25.9 153
Czech This
1996table shows35 2.5 44
Republic that Tesco have
opened new
Hungary stores
1994 around the87 4.3 30
world. So this
Poland means
1995 Tesco 105 4.8 39
will increase
Rep. of their
1997sales by 91 2.1 8
Ireland opening more
stores.
Slovakia 1996 37 2.3 10
Nokia believe that many opportunities for growth exist in the mobile
voice market, and they plan to continue to focus on this area. The
markets on which we intend to focus include markets with low mobile
subscription rates relative to the size of the population, geographic
areas where it is more cost-effective to build wireless infrastructure
than fixed-line networks, and heavily populated areas, where factors
such as poor housing infrastructure or theft of materials tilt the scales
in favour of wireless solutions. Nokia also intend to focus on markets
where the need for network capacity is growing as a result of mobile
network operators promoting the replacement of fixed networks with
wireless.
Nokia intend to enter new product and service niches, which we expect
will emerge as technologies from various industries start to join,
especially in the area of consumer multimedia. Our strategy is to
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explore, identify and extract revenue from the most profitable and
fastest growing segments of the consumer multimedia business and its
value chain by anticipating consumer needs in this area, and
developing new products and services. In the near term, they intend
to focus on imaging and games, where they have already introduced a
number of products.
Nokia believe that their three main strategies will position our business
favourably as different digital technologies and industries converge.
They also aim to drive open standards, specifications and
interoperability, for the purpose of ensuring the introduction of new,
interoperable mobile services worldwide. In this context, they intend to
continue our pursuit of new business areas in the world of mobility,
while continuing to build on our leadership in mobile voice. This in turn
means that we must cultivate a strong local presence in all growing
markets and pursue collaboration and investment opportunities in
order to obtain complementary technologies and a strong market
position.
Nokia objectives
Business Ownership
Sole trader
Partnerships
Co-operatives
Franchise
Public sector
Company
– Private Limited Company
– Public Limited Company
Sole Trader
There are many businesses in the UK which are sole traders. The
owner has complete control of the business, and is totally responsible
for its success or failure. Running your own is business in extremely
hard work because you working on your own. The risks are great, but
so are the rewards in job satisfaction.
Advantage
There are many advantages of a sole trader and the main one is that
the owner keeps all the profits. Though the owner must save enough
money to pay tax, interest charges on loans and Vat. It is simple and
inexpensive to set up as sole traders as start up costs are usually low.
However, before starting your own business you must notify the
income tax authorise and the department of social security, as you will
be taxed and will pay self employed national insurance contributions.
The business will be very flexible because if the business is not
profitable, the owner has the choice to close. Also the working hours
and days worked can be flexible.
Disadvantage
Partnership
Advantages
Disadvantage
Partnerships have unlimited liability, so they are responsible for all the
debts of the business.
Co-operatives
Worker co-operative
Consumer co-operative
Marketing co-operative
Worker co-operative
Consumer co-operative
Marketing co-operative
Advantage
Each worker in the business has an equal share in the business. Also
each person has an equal share of the profits. All decisions are made
jointly by the owner and in the collective interest of everyone. Jobs
can be rotated so people can extend their skills and the least popular
jobs can be shared. Workers are not forced to be owners, so each
worker can make an independent decision.
Disadvantage
Co-operatives must make a profit or they will fail, that is the same for
all ownerships. Poor management, planning and financial controls have
closes some co-operatives.
Franchise
A franchiser is a firm which allows another person to use its tried and
tested product, and to trade under its name, for a fee. A franchisee is
a person who pays an initial fee and payments for the privilege of
trading under another firm’s name. A Franchise is an agreement
between two businesses which allows one to use the other businesses
name and reputation. An example of a franchise is Pizza Hut. There
are more than 300 pizza Hut restaurants around the UK. Pizza Hut is
owned and controlled by Whitbread and with Tricon Global
Restaurants, but many of the outlets are often franchise operations.
This means that there is a manager in charge who operates the
business with the agreement of Pizza Hut. Therefore Pizza Hut has
used franchising as a way to enable their reputation to grow faster and
more cheaply rather than buying all the restaurants itself.
Advantage
Disadvantage
qualities are lacking, the business may fail. The franchisee will not be
able to sell the business without the franchiser’s agreement.
Public Sector
Organisations and businesses from the public to the private sector and
also allowing the private sector to provide public services. Public
sectors are services provided by the government and the local council.
The people who run the council are nominated by the public to serve
as their councillors. They are not paid for the work they do but they
can claim expenses for their voluntary work.
Public corporations
The public sector is a very large employer in the UK, but it used to be
even bigger. This was because the state used to own a large number
of public corporations. There are few public corporations. The main
organisations still owned by the state are:
Disadvantage
Local Authorities
Part of the company’s profits may be kept back, or retained, to pay for
improvements to the business, and some is distributed to shareholders
in the form of dividends.
Advantage
The founders of the business are usually the main shareholders and
directors of the form. The chairperson of the board of directors takes a
leading part in deciding the company’s policy. He or she is often also
the managing director who carries out the policy day by day. Therefore
the people who started the business actually own the company and
control it.
So all the shareholders have the protection of limited liability and can
lose only the amount they have invested no matter how much money
is owed. Banks are more willing to lend money to limited companies,
both for start up capital and for expansion.
Also the company has a separate legal identity from the owners. This
means that it:
All the profits after tax belong to the shareholders. This is usually
distributed according to the proportion of shares held but it is usually
to keep some back as reserves for financing future developing.
Disadvantage
Advantage
Disadvantage
The shareholders often have different aims from the directors. The
shareholders want quick results so that the share value increases,
whereas the directors may be looking at the long term prospects of the
company. Most of the share holders in a PLC are institutional investors
who hold large blocks of shares and can easily outvote smaller
shareholders. The original owners of the company will lose much of
their control over the company, even if they retain some shares.
Advantage
Tesco
Tesco is the main type of shop as it has 277 large and 81 compact
Superstores around the UK, as well as 224 other supermarkets. Many
trade 24 hours a day and all have a sharp customer focus. It offers a
large food range, and many have great non food ranges as well.
Superstores tend to be large and on the edge of town, with free
parking and facilities that include cafes and petrol stations.
Tesco Extra
Tesco Express
Tesco Express is a convenience store serving local neighbourhoods. It
meets customer demand for longer trading hours and greater
convenience. Express stores are usually found at petrol stations and
are aimed at local customers who want a convenient place they can
trust when doing their shopping or replace home essential. Each Tesco
Express is a single unit of up to 3000 sq ft, stocking around 2800 lines,
including fresh and frozen food, a bakery and wines and spirits. The
stores are very busy and it’s a very fast moving, on a busy
environment.
Tesco Metro
Tesco Metro is a compact store located in busy areas. Metro is like a
smaller version of Tesco as it brings grocery shopping back to the high
street. It’s a modern day version of the convenience store which is
brought up to date as it offers customers a wide range of products.
There are an estimated 45 Metro stores, with more developments
planned.
If Tesco need more money to expand by building a new store or
refurbishing an existing store, they can get more money by selling
their shares to the public. Therefore it is easier for a PLC to raise easy
money by selling shares and is also there is less risk compared to a
sole trader.
Another benefit of Tesco being a PLC is that its owners are its
shareholders. So the amount of capital for expansion and development
is increased rapidly because there are thousands of shareholders. So if
the company is successful the value of the shares increases. Therefore
this increases the overall value of the company. Tesco’s shareholders
have limited liability so if the business is in debt they’re only liable up
to the value of their shares. So it is easier for a PLC to raise capital as
a PLC has less of a risk compared to a sole trader.
As Tesco is a PLC its owners are its shareholders, and they have
limited liability so they won’t have to pay any more money and still
carry out all the business activities if the business were in debt.
However a Sole trader is personally liable for all of the company’s
debt.
As Tesco is a PLC, they can find it easy to borrow money from banks
as they limited liability.
Disadvantage
Tesco is a PLC, so this means that there are many managers and
board of directors. If someone had an idea to improve Tesco’s sales
they would need to discuss this board of directors, as they have to
decide if the idea is going to take place before anything can happen.
Therefore a lot of decisions would be made before anything can
happen. So decision making is a disadvantage in a PLC such as Tesco
as it would take long time to decide on.
PLC’s do not have a strong communication links between their
shareholders and employees because they have a large organisation.
So this means that information has to travel through a certain amount
of people before getting to the owner. So if there was a complaint
from a Tesco store. The complaint should be reported to the owner. In
order to get the report to the owner, the complaint would go from the
employee, the manger of the store, the directors and finally to the
owner.
Another disadvantage for Tesco being a PLC is that it can take a long
time to set up. Also shares can continuously being bought, so in the
end the business could end up being taken over as shares can easily
be bought on the internet. Therefore PLC’s such as Tesco should keep
a record on how much shares are sold so the business is not
completely taken over.
A PLC can be very risky as the business needs to spend lots of money
before they actually receive income. So to protect the business they
can use insurance companies.
and easy capital by selling more shares to the public. This gives Tesco
a chance to expand the business and most importantly to achieve their
aim of getting more customers to their store. It also gives Tesco a
chance to expand on their non-food products which can lead to more
sales. Tesco have located their stores in the middle of large populated
areas, where their customers are. A busy area is perfect for a PLC such
as Tesco as this will attract more customers to the store and also
people may be interested in buying their shares. Therefore Tesco will
be achieving their aims of gaining more customers as they have
located their store in the ideal environment. A PLC suits Tesco as they
can employ professionals to run each department through their
recruitment agency. Another benefit of Tesco being a PLC is because it
suits Tesco’s activity of being a retail sales store as they can gain
capital easily to buy large stores to display goods for customers to
buy.
The reason for Tesco being a public limited company (PLC) is because
it is the easiest form of ownership in regards to their business and also
the most suitable. Tesco cannot be a sole trader because it will be
difficult for one person to run Tesco as because of the shier size of
company and a sole trader will not have enough money to start up the
business. They can’t be suitable for a partnership ownership as there
would be too many implications in decision making and also the
liability for each partner is a large amount which isn’t advisable as it
could ruin the business by lack of funds or lack of co-operation of the
partners. Finally Tesco couldn’t become a public sector run business as
public sectors aim not to make profits and the direct contrast is that
Tesco aim to make very large profits so there interests and aims
conflict to much for them to be run as public sector.
market new products in the business and if some fail and do not sell
they make losses and the reputation goes down which is not very
advisable for such a large business. So in conclusion Tesco being a PLC
is a very wise choice as they have limited liability there funds are
mostly generated by the public in return also act as customers to
Tesco and through this they have many opportunities to expand and
so the shareholders are very beneficial to the company. Tesco can
expand and continue to make money and have limited liability and at
the same time have a many customers and attractions to their
company by being a PLC so through all the ownerships this is the best
suited for Tesco as it will let them achieve high profits in a simpler
more efficient way.
Advantage
Also as Nokia is a private limited company, this means that they can
only sell their shares privately to other people. Therefore Nokia can
restrict the amount of shares sold so the business can not be taken
over by its stakeholders.
If they have good valuable shares they will achieve more shareholders.
At the end of the year they have to produce an account showing the
financial year and as Nokia is exceeding in terms of performance and
profit, others may be interested in Nokia and want to invest there
money into the business not only does Nokia have other shareholders
and sources of money this way there business gains a better
reputation.
Another advantage of Nokia being a PLC is that the owners only have
limited liability as the shareholders have to pay back the rest however
they only pay the amount they put into the business. This is a safer
way of managing debts or financial problems Nokia come into instead
of one person having the cost it is shared around and if they want to
they can sell shares to cover costs.
Disadvantage
A PLC business such as Tesco will be able to sell their shares on the
stock market. However private limited companies such as Nokia are
forbidden to sell their shares on the stock market. This would mean
that it would be very hard to find someone to sell the business to.
Nokia is a very large business that has many sectors and many
placements of their business and so it needs to be split up and
managed bit by bit by certain people so it being a sole trader would be
impossible as they wouldn’t be able to handle the responsibility of the
company and also the liability for them would be far to great.
Nokia could go into partnership but yet again like Tesco they are faced
with the problem that there are too many decisions that have to be
made by partners and this will result in disagreement over things and
it will result in failure of the business or decrease in profits due to lack
of co-operation and other factors like partners leaving the company.
If Nokia went into the ownership of Public sector they would have their
profit margin reduced enormously as they are funded by government
and so they won’t have the option of expanding when they want to
and introducing new products. Also the biggest factor would be that
Public sectors don’t aim to make much profit and just like Tesco, Nokia
has the same aim as they want the money to invest and expand so
this ownership isn’t suitable.
Location of a business
Primary
Secondary
Tertiary
Primary Business
This is when getting raw material such as oil, fish or coal from the land
or sea.
Secondary Business
Tertiary Business
Many factors may effect where a business is placed. These are some
factors which could influence where a business is located:
Skilled workers
Cost of labour
Financial help
Cost of premises
Transport Links
Government
Suppliers
History
Sales technique
Competitors
Customers
Skilled workers
Skilled workers are those who are experts in a particular trade, such
as electronics. Businesses need to locate an area where there is low
unemployment as this gives the business a chance of employing more
workers, or where there are people with high skills in the labour force.
Also if there are employees who have worked in the same type of
business and are experienced, so this means that the business would
not need to send them away for training.
Cost of labour
Financial help
The type and amount of financial assistance will depend upon the
business proposal and the proposed location.
For business projects costing more than £500,000. The amount of the
grant varies, depending upon the number of jobs likely to be created
or protected.
This is for small and medium sized companies who are employing
under 250 employees with investment projects under £50,000.
Enterprise Zones
Cost of premises
Transport Links
Government
Suppliers
History
Sales technique
This is the way in which companies interact with their customers also
affects their location. A company which does its business mainly using
ICT or even traditional mail services can locate almost anywhere.
need good transport links and skilled staff but, apart from that, it can
choose the region in which it wants to locate.
Competitors
Customers
Tesco Location
Tesco is a large tertiary business so they will want to locate their store
in a highly populate area near to its customers. This way they have a
better chance of increasing their revenue as there are more customers
nearby. The location of Tesco is also important because they need to
transfer its goods with its delivery service, therefore if the customers
lived too far away then the food might deteriorate during the distance.
Tesco has different stores all over the world. Each different store is
different and has a different purpose, and is located in different places.
Tesco has to make sure that stores are spread out they attract new
customers not share them.
Tesco has four different types of stores and each one is located in
different areas:
Tesco
Tesco Extra
Tesco Express
Tesco Metro
Tesco
Tesco is the main store and is mainly found just outside main town
centres, as lorries need to have easy access to the stores as the lorries
will be coming very often. This type of Tesco store is known as a
superstore as they sell all the main food, clothing, electronics etc.
They have a big car park for their customers. These Tesco shops affect
the community by offering lots of jobs to unemployed people, while
they take up a lot of land. The government will influence Tesco to be
placed within enterprise zones. Tesco stores have a petrol pump where
car users use every day therefore they must have clear roads or the
roads would be congested. Tesco would be the most busy compared to
Tesco extra, Tesco metro and Tesco express as Tesco is located just
outside the town therefore it would be easy for their customers to get
to.
Tesco Express
Tesco Metro
Tesco Extra
Tesco Extra is similar to Tesco but it is larger and better and it has a
wide variety of products. They are normally found in large towns as
they offer a wide range of food and non food items. They need to be
easy to access for lorries as the stores will need to restock regularly.
Tesco Extra would be great for large families as Tesco Extra has a wide
range of products to choose from. The government will influence these
stores as they can offer many jobs within enterprise zones.
Nokia location
Nokia usually send out their items to their separate stores they don’t
sell things from their company they sell it through branches such as
carphone warehouse and phones 4 u. They need people near by for
recruiting purposes and also to promote their company and it be good
to host local events. Below is an example of a store which Nokia
supply their phones to.
Barking
Unit 4, Vicarage London - Woolwich
Fields 36 Powis Street
Barking Woolwich
This is 5 examples of
Essex SE18 6LQ Phones 4 U stores where
IG11 8DG 0208 316 2638 Nokia supply phones to.
020 8594 8102
Stratford - Essex
85, The Mall
Stratford
Essex
E15 1NG
020 8534 8242
Nokia would have chosen this location as they have many main roads
around them which they need the most for transporting goods and
receiving materials. They don’t need their customers to be near to
them as they ship out their good to shops or transport them to other
retailers. They have got residents close to their business as they can
be used as recruiting purposes or even as shareholders for the
business and also if Nokia hold events it could boost their promotion
and so they will attract customers to their products if their business
seems reputable. Nokia can achieve this all through their good location
as they have strong transport links and also communities near them. A
reason that Tesco may have picked to locate here is that the premises
would have been cheap as it isn’t in a tourist or business so there
wouldn’t be much government tax either. They will have to pay a lot of
money for disposal of there rubbish and waste as it has to be
transported a distance before it can be disposed off.
Nokia also have their own branch in the UK. Below is their location.
Business Activity
Manufacturing of goods
Sales of goods
Client of goods
Client services
Other services
Sales of goods
Supermarkets
Specialist retailers
Most high streets have a wide range of specialist retailers, with many
being part of a multiple organisation.
Restaurants
opticians
bakers
travel agents
estate agent
banks
Internet sales
Most high street shops set up sales link through their own website on
the internet. Supermarkets such as Tesco also sell their goods through
the internet.
Mail order
Mail order businesses are the ones most likely to suffer from the new
in use of the internet for purchasing goods and services, although
there is no obvious downward trend.
Cash and carry wholesalers seemed to be a growth area for the sale of
goods. These large warehouse organisations still exist and help to
supply small retailers, but the growth in size of most types of retail
business has limited their progress. Wholesale businesses such as
Costco and Makro continue to operate by breaking down bulk
purchases from the manufacture into smaller quantities for sale both
to retailers and directly to consumers.
Tesco’s Activities
Tesco’s main activity is retail sales. This is when selling goods directly
to the public. One of the main activities of a business is to make profit.
Therefore Tesco’s main aim would be to make profit to provide a
satisfactory return for its shareholders, as its shareholders would want
to a share from the profit made. As there are a lot of supermarkets,
there would be a lot of competition against each other. Therefore
Tesco should provide an excellent standard of customer service and
offer a wide range of goods and services to satisfy the customer’s
needs. This is an attempt to gain more customers as Tesco are selling
a wide range of products and it can increase Tesco’s market share.
credit cards
loans
mortgages
savings
travel
Car Insurance
Tesco insist they provide great offer for car insurance which won’t put
a dent in your wallet. Tesco say their insurance quote is up to £150
cheaper than other leading insurers. Tesco advertise their motor
insurance offers on the internet and on leaflets in store. Tesco also
have a separate website for their financial services.
http://www.tescofinance.com/personal/finance/home.jsp
Value insurance
Tesco try to flatter the public by using key information to get the
public interested. They say:
Up to 50% discount for our named drivers when they take out a
policy of their own with us
Tesco also let customers get an insurance quote online therefore their
customers will save time.
Home insurance
Tesco say they will give the customers great value for your building
and contents insurance. You can chose if you want just your building
covered or both the building and its condense. Tesco also say you can
claim up to £25 if your current mortgage lender charges you for
switching insurers. Tesco also have 24 hour household emergency
helpline so they can get a tradesman to their customers urgently. All
their repairmen are vetted by Tesco for the customer’s peace of mind.
Tesco also say they give 30% discount in your first year when you buy
over the phone OR 35% discount in your first year when you buy
online.
Credit card
Tesco gives you 0% balance transfer for 12months. 0% on Tesco
purchases for 12 months. Also 0% on non Tesco purchases for 3
months. They also offer club card points when using the Tesco credit
card. They provide three types of credit card:
Pet insurance
Life insurance
Tesco say that life insurance with them is one of the most affordable
forms of cover. Fixed term life insurance provides a fixed cash sum
payment if you die during the period of cover. Life cover with critical
illness gives a one-off cash sum payment, if you're either diagnosed
with a critical illness that meets our policy definitions, or you die.
Travel insurance
Tesco say that to get travel insurance with them is very easy. In this
offer Tesco say they can save you up to 50% compared to other travel
agents. Tesco also provide a helpline for legal advice, emergency
travel, and medical assistance.
Savings
Tesco also offer a great range and price on mobile phones. They have
pay as you go mobile phones and also contract mobile phones. Tesco
also say they can save you at least 50% on calls because we charge
you a low rate of just 10p a minute. This will help attract more
customers and also increase the income into the business.
Tesco also have great internet offers to the public. They say whether
you’re a constant web surfer, a regular internet shopper or just like to
keep in touch with your friends by e-mail, we’ve an internet access
package that will fit your needs perfectly. So they have different
packages to suit people’s needs.
All these services are great for the public to use, as they are cheap
and useful for people who haven’t got a lot of money. Also their
services are easy to use and set up and Tesco also provide after sales
service on all their products and services.
Functional Areas
Human Resource
Human resources aim to attract and retain high quality staff. However,
if staff have to be dismissed, human resources must take certain that
this is done legally as there are many laws which relate to employing
and dismissing staff. A major task of the human resources department
is to ensure that the business has the right employees for future
success. In order to be successful, they may involve a number of
activities such as:
Dismissing employees
Drawing up a shortlist
Interviewing applicants
Retention
Firms such as Tesco would not want to lose experienced and highly
trained staff. Recruiting new workers and training them to the required
level can be a very expensive process. Human resources staff are
often responsible for checking and analysing staff turnover the rate at
which people leave the organisation. Reasons for leaving may be
unconnected with the workplace, such as someone moving to another
part of the country. However, if many people are leaving because they
are dissatisfied or because there are no promotion prospects, then this
will be investigated, particularly if too many good staff are leaving.
and sick pay are reasonable and similar to those offered by other
employers.
Dismissing employees
This occurs when an employee cannot carry out his or her job
effectively. It is when an employee is sacked and told to leave their
job. When an employee gets sacked they usually have to fill out a
notice, which ends their contract with the business. Sometimes
dismissed employees are given their months wage early before they
leave. This is called payment in lieu of notice. Employees are normally
dismissed with notice, with notice if they were good at their job.
Employees can be judged as bad at their job if they are usually late, or
their attendance is low. They could also be dismissed if their attitude
to their work or behaviour very bad.
Redundancy
Working Conditions
Job content
Training opportunities
Working conditions have an impact on how well workers carry out their
jobs. They are normally a subject for negotiation between trade unions
and the human resources department.
A large organisation such as Tesco may have its own training facilities
and run many of its own training courses and events. Its human
resources department may have a training officer or even a separate
training section.
Many companies such as Tesco will pay for staff development activities
and may run them in the workplace. These include activities such as
how to work effectively in a team, time management to enable staff to
work more efficiently.
The human resource department is responsible for making sure that all
the employees and the employer have to abide by the Health and
Safety at Work Act and the various regulations which have followed
this Act. Under the law, the responsibility for safety is that of each line
manager and, ultimately, the chief executive or head of the
organisation.
Large organisations such as Tesco have a health and safety officer who
has overall responsibilities for health and safety policies and training.
In others, there may also be a safety committee, made up of
representatives from management and employees. This group is
responsible for checking that legal requirements have been met. Tesco
would also have safety representatives who attend meeting of the
safety committee. They provide risk assessments and set up Health
and safety rules. If an accident at work takes place, it is recorded
down in an accident book. The rules advise all employees to make sure
any hazardous things are clearly noted with clear signs.
From the application form, Tesco wants to find out as much as they
can bout their future employees to see if they hold the right attitude to
become a member of the `Tesco family` and help achieve their aim of
gaining customer loyalty.
Tesco treat all their employees fairly and honestly. They have the right
to have a contract of employment, which is then stored within the
human resource department. Tesco will have strict procedures
regarding employee behaviour if an employee does something wrong,
so the human resource department will issue warnings which if ignored
may eventually lead to the person being sacked. The main method of
communication in a business such as Tesco would be by written or
verbal, so they must carry out the disciplinary procedure. Tesco always
make sure that there is no discrimination at work and that all laws are
taken seriously.
All employees in Tesco are given the right to have holidays and are
allowed breaks and lunch breaks. The human resource department has
also made sure that every employee gets fair wages for the job they
are doing. They have also made sure that the number of working
hours are not excessive. Also Tesco’s minimum age requirement of
getting a job is 16.
Finance
The finance department keeps track of all the money being earned and
spent by the organisation and knows exactly how much profit or loss is
being made for each item or service sold. Businesses such as Tesco
may consider finance to be the most important functions of all, as a
firm such as Tesco will need to record a lot of profit and loss because
Tesco’s main way of making money is by selling items. Financial
information enables critical and rapid decisions to be made about the
business which can make the difference between financial success and
failure.
The finance function is very important for the staff because wages and
salaries are paid from this department. All employees have a legal
right to be paid and to receive an itemised pay statement.
Obtain capita
The finance department
Accounts
Record
Pays external
wages and
Finance clerks
so
Record
financ
Prepar
salaries to employe
financ transact
Preparing accounts Balanc
transact
Mayur Patel Exam No: 2272 Centre ID: 13216
Profit
Page 61
Unit 1 – Investigating Business
UK GAAP IFRS
2004
2002 2003 53 2005 2005 2006
wks
Financial statistics
Revenue excluding
VAT
Operating profit
Underlying profit - UK
1,221 1,401 1,708 2,029 NA NA
GAAP
Below is Nokia’s profit and loss accounts for 2003,2004 and 2005.
Tesco has been developing its sales every year therefore there profits
are increasing each year as well. Below is a table of Tesco’s sales
throughout the past 5 years. You could see the sales are increasing
each year.
Below is Tesco’s profit chart throughout the past five years. You could
see that each year the profit is increasing.
Payroll records are kept for each employee. These show how much
each person earned as basic salary and in overtime or bonus
payments, how much tax and national insurance is deducted and the
net amount which must be paid to the person.
Once the entries have been made, the payroll staff must check them
carefully before sending the instructions to the bank, to ensure there
are no errors. They also need to ensure that each employee will
receive an itemised pay slip showing all the current payments and
deductions and giving a running total for that tax year.
Finally, at the end of each tax year which April 5th, the payroll staff
must produce end of year payroll summaries for the Inland Revenue
and issue P60s, which detail the year’s earning and tax paid, to all
staff.
Tesco’s Finance
set budgets and helps it know how to reach its aims of expanding or
how to bring in new non-food products to gain more of a non-food
market. From Tesco’s steering wheel objectives their finance
objectives are:
Audit – The auditing team makes sure that all the operations of
the management and financial controls and sufficient and that
the business is protected against risk.
Clerical Work
Keeping records
Organising meetings
Responding to enquiries
Outgoing mail items must be collected and processed towards the end
of the day. This includes routine documents and parcels, some of
which may be urgent or need sending abroad. Very urgent items may
also be sent by courier. Within any business they will receive mail in
two ways, these ways are:
Keeping records
Organising meetings
Responding to enquires
Names of witnesses
The accident form help improve the businesses health and safety
system by making sure the same accident doesn’t happen again.
Sometimes the form can be used as a report in legal action.
Security
In Tesco, security guards are located at the main entrance to the site
to keep the store secure and to make sure nothing gets stolen. Tesco
has to have constant security as there are some very expensive items
in the store. Also as the store would be crowded it will be very easy for
someone to steal something from the store, therefore Tesco have a lot
of CCTV cameras around to store. Also if the store is under attack from
a robber, there must be a panic buttons under the desks.
Support for software applications are people who help firms use
computers. This is very important in a business that uses IT. In any
organisation, computer failure causes serious problems. In a company
which uses a networked computer system for the creation, storage and
transmission of electronic information, computer failure can be
catastrophic. Every moment when the computers are down, the
business loses money as mainly everything is done on the computer.
The basic functions carried out by IT support staff may include the
following:
Tesco’s mail is delivered to the sorting office in the head office. This is
where all the letters are sorted out into piles so they could g be sent
off to the right departments or to the right person.
Tesco keep their records in a variety of ways. Paper based records are
kept neatly and clearly so it can be easily found in the future. This
consists of letters which have been received into the business, memos,
faxes and reports e.g. financial reports. Tesco also keep most of their
reports on computers. The computer records may contain customer
emails and also important documents. Computer records are easy to
find because it is easy to organise all the records.
Operations
The main resources a business would want to use the best of are:
Some businesses have quality checks where they can find out if their
products have become better. To do this they usually give out
questionnaires to customers. All their answers are then entered into a
system where they can workout where they have improved. To show
to customers that their products are good quality some businesses will
obtain quality standards of the ISO 9002. While businesses that want
to show that they are good at managing staff and training will be
awarded with Investors in People award. The business will then be able
to place the symbol of the awards on their products, advertisements
and documents. The business will be continually checked if these
qualities are being met.
Market Research
Primary Research
Using ICT- now businesses mainly use ICT to send out their
questionnaires to people by email. Also some businesses have
their questionnaires on their website so people can take the
survey online. This is very convenient for both the business and
the public. This is also the cheapest method.
They can also ask employees to test new products, such as food
and clothing.
Designing a questionnaire
Secondary research
Business can also buy information from other company databases and
obtain government statistics about consumer expenditure and details
of their competitors.
Qualitative research
Product
Price
Promotion
Place
Product
Price
Price is how much the customer is prepared to pay for the product,
whether discounts or credit terms would help sales, the price of
competitor’s products.
Promotion
Place
Businesses such as Tesco need to take the 4Ps into account when
meeting the needs of their customers because a successful marketing
mix boosts sales. The marketing mix is likely to be slightly different for
every product or service, even those that seem similar.
Promotion
Advertising
Sales promotions
Publicity campaigns
Personal selling
Advertising
customers who don’t want hype but the facts. For that reason, these
are usually longer advertisements.
Sales promotion
Publicity campaigns
Sales
Sales people can build strong links with customers which help to
keep them loyal to a particular brand. Many customers like
having an individual to look after them.
Tesco often give vouchers out at the till when a customer spends a
certain amount of money. Tesco also have a magazine which also has
a lot of vouchers to spend in store. This can influence more people to
shop at Tesco, as Tesco provide a lot of vouchers to the public.
To achieve their aim to gain customer loyalty Tesco also support their
local communities by holding charity fundraising and vouchers for
schools. This includes, computer for schools, recycling, supporting
farmers, etc.
Customer Service
Many businesses sell the same types of goods, for example Tesco and
Asda, so customers have a choice where to go. If they have a positive
experience when they visit the store, this will influence them not just
to buy, but to return back to the store. Customer service is all about
providing this positive experience. These include:
Providing information
Giving advice
Providing information
Giving advice
General complaints
Technical queries
Returned goods
Goods may be returned because the buyer has simply hanged their
mind, or because the goods are faulty. Organisations vary in their
policies on returned goods and customer service staff needs to know
exactly what the policy is.
Many types of goods can break down after a period of use – from
watches to washing machines. Sellers of such items usually operate a
service facility. Small items will be taken to the shop where they were
purchased. Large items, such as domestic appliances, are repaired in
the buyer’s home. The customer calls the service centre; customer
service staffs check the details on the database find out details of the
fault and arrange for a technician to call. Spare parts which are
regularly needed are carried in the technicians van to minimise delays.
Complaints must be dealt with promptly and any serious issues must
be investigated properly. If necessary, steps must be taken to ensure
that the problem doesn’t occur again.
4. Maturity- this is when the product has reached its peek and is
selling all the time.
When producing a new product businesses have used the 3 P’s, which
are:
The 3 P’s often tie with lots of other functional areas within a business
such as the financial department for providing them with a budget.
The human resources department to hire them specialists to carry out
research and the marketing department and manufacturing section for
advertising and producing the product.
Most businesses use computer aided design (CAD), which allows them
to research product designs on computers. This saves a lot of time and
allows diagrams and plans to be produced easily and quickly.
Computer aided manufacture (CAM), helps the process by operating
machines. Machines such
Use of IT
The facilities available for staff on email include the ability to send
messages to one person or to a named group or even to everyone in
the company. You could also attach any type of file to transmit with an
email. Security systems also control the content which is sent or
received on a company email system.
Tesco may also use intranet to store all types of data. This allows all
members of staff to save data and view it on a different computer in
the business. So if a member of staff wanted to give a word document
to another member of staff, they would not need to email it to them.
They would just save it on the computer and then other members of
staff can access the file. Therefore this saves time.
Customer records
Product lines
Spare parts
Staff records
Suppliers
Order files
However, each database can also be linked to others and this is called
relational database. So when an entry is updated in one database,
entries in linked databases are also automatically updated. So in
Tesco, if a customer placed an order for a product, this would be
entered on the customer record. The product record and the order
record would also be updated automatically.
Security systems
Virus protection
Viruses can also be downloaded from the internet and can be received
through email attachments. Therefore certain types of files may be
blocked on a network system.
External communications
Electronic transactions
Business communication
Internal communications
External communications
Below is an example:
eting manager’s assistant tells her boss she is leaving and hands in her notice.
Obtaining up-to-date information.
esources that there is a vacancy. Human resources advertise the job and arrange interview.
Both of these will influence the type of communication and its tone.
Methods of communication
Oral communication
Video communication
Written communication
Graphical communication
Tesco has many adverts displaying items for sale, which are at a low
price. To persuade people to visit they normally use celebrities to go
shopping round their store and pick out items which they’d like to buy
and exclaim how cheap they are. Tesco also use graphical
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Unit 1 – Investigating Business
External influences
Businesses can manage much of their own world but there are
external influences to which they have to respond and over which they
have less control. These are:
business competitors
Economic conditions
Environmental constraints
Business competitors
Economic conditions
Economic conditions can affect the price of goods and the ability of
customers to buy goods and services. Customers are tempted to buy
more goods when they have money to spend or when borrowing is
cheap because interest rates are low. Equally, businesses are more
likely to increase production and to expand their operation when sales
are high and when they think this situation is likely to continue. If
people are worried about jobs or about their future prospects, they
may stop sending. Goods remain on the shelves; businesses such as
Tesco receive less money so produce fewer goods and may lay off
some workers. This means people have less to spend. In this situation,
there may be an economic downturn. All governments are keen to
avoid and economic downturn and try to take action to manage the
economy to keep it buoyant.
Environmental constraints
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Unit 1 – Investigating Business
Many towns have more than one supermarket and each one of them
will try to advertise its special offers regularly to attract more people
by using posters, local newspapers and also hand out door to door
leaflets near the area. This can lead to a price war between the
supermarkets as all the supermarkets are competing for customers. By
competing against other supermarkets the other supermarket may
even reduce its profits by having a low price, so Tesco need to put the
price of their products at a reasonable price so it can benefit them and
their customers.
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Unit 1 – Investigating Business
Value added tax (VAT) can also affect Tesco’s sales. Also if income tax
or the interest rates increased rapidly, customers might not have a lot
of money to spend in Tesco therefore sales may decrease.
The government can also influence Tesco because of where the
business can locate their large and small stores. The government can
influence Tesco by providing grants to strengthen or expand the store.
The government will also try to influence Tesco by locating their larger
stores in enterprise zones where there are more unemployed people.
This is a benefit of Tesco as the people can fill in the jobs within the
store at a low wage.
Business competitors
The main tactic used by businesses such as Tesco is to make their own
product or service slightly different in some way. However when they
do this, it depends on:
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Unit 1 – Investigating Business
Competitive competitors
Importance of price
All organisations have a pricing policy for the goods or services. They
may choose to sell at:
Or they may produce or sell goods at all three prices. Tesco also sell
goods at three prices. Tesco have a value rage which is at a low price,
a finest range which is at a high price and sells other goods in the
middle range. In this way, Tesco tries to satisfy the needs of a variety
of customers.
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Unit 1 – Investigating Business
The chart above shows the main internal and external factors affecting
price.
Importance of quality
Quality can relate to the raw materials used, the type of service
offered and to the reputation of the business. Generally, the best
quality costs money, so high quality goods or services will be more
expensive. However even if consumers are buying a cheap product
they expect it to be of satisfactory quality as this is a legal
requirements.
Importance of availability
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Unit 1 – Investigating Business
Location of competitors
The use of new technologies such as telephone sales and the internet
have made it possible for businesses around the world to compete for
customers who have IT access. With this in mind you need to identify
possible competitors for the businesses you investigate. These
competitors could be:
Local competitors
National competitors
International competitors
Local competitors
National competitors
Many businesses compete with other organisations all over the UK for
their customers business, particularly those that sell goods by mail
order or over the internet. Although these types of sales are currently
less than 10% of total sales, they are increasing.
International competitors
Economic conditions
However well a business manages its own activities, its success will
depend on conditions in the economy as a whole. A business can be
affected by changes in the economy. These are:
Interest rate can affect business activities as for how high the rates
are in a particular area.
If, during the five years, interest rates are 12%, then the cost of the
loan is greater. At the end of year 1, if interest rates are 12%, then
interest for that year is now £120,000 not the £100,000 which was
calculated originally. If at the end of year 2, interest rates have
increased again, then the cost will be even higher. The business either
has to repay more money than it forecast each year or arrange to
repay the loan over a longer period.
The problem for many businesses is that increases in interest rates will
also affect the behaviour of other businesses and consumers. Many
people have mortgages which become more expensive if interest rates
rise. This leaves people have mortgages which become more
expensive if interest rates rise. This leaves people with less money to
spend. People are also less keen to borrow money to make expensive
purchases when interest rates are high.
Businesses are also affected if interest rates fall. In this case, the
original loan will cost less and sales may increase at the same time.
For this reason, most businesses prefer interest rates to be low.
Changes in prices
Prices of goods and services can increase or fall. If the general level of
prices is rising, this is known as inflation and causes problems for both
businesses and individuals. People on fixed incomes cannot keep pace
with the increasing cost of living because the goods they need are
more expensive. People who work often expect employers to give
them pay rises each year to cope with the increase. Trade unions often
bid for pay rises to match any rises in the cost of living.
Businesses such as Tesco are likely to find that taw material prices
have increased. In addition, their workers are demanding pay
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Unit 1 – Investigating Business
Environmental constraints
Air pollution
Noise pollution
Water pollution
Wasteful use of resources
Air pollution
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Unit 1 – Investigating Business
The Pollution Prevention and Control Act 1999 covers businesses not
regulated under the Environmental Protection Act. It also covers
several new areas, such as energy, water and raw material efficiency,
waste minimisation and recovery, in addition to minimising pollution.
Noise pollution
Water pollution
Since 1999, the Environmental Agency has recorded and classified all
water pollution incidents. Water pollution occurs when undesirable or
hazardous into rivers, lakes or the sea. Legislation strictly controls the
substances which can be discharged in Britain. Under the Control of
Pollution act 1974 it is an offence, without consent, to allow the
discharge of any pollutant in controlled waters. Businesses must also
check location and routes of drains used to take away storm and
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Unit 1 – Investigating Business
Waste minimisation
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Unit 1 – Investigating Business
– 10 million active
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Unit 1 – Investigating Business
First of all the rivalry amongst existing firms shows the form of
competition, the head to head rivalry between firms offering similar
loyalty cards, below you can see a table showing competitors of Tesco
who has their own similar loyalty cards.
Figure showing Tesco competitors who has their own loyalty card
scheme -1999-2004
Grocery schemes:
Tesco Clubcard
Sainsbury’s Reward Card
Co-op Dividend/other Co-op card
Any other grocery retailer scheme
Non-grocery schemes:
Boots Advantage Card
WH Smith Clubcard
Homebase Spend & Save Card
The Body Shop People Reward Card
Any other retailer loyalty card
Multi-issue schemes:
Argos Premier Points Card
Nectar
Store cards:
Marks & Spencer Account Card/&More card
Debenhams Account Card
John Lewis/Waitrose Account Card
Bhs Gold Card/Choice
House of Fraser FraserCard
Any other retailer payment card/store card that offers points
Threat of entry:
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Unit 1 – Investigating Business
Threat of Substitutes:
Power of buyers:
Powerful buyers can bargain away potential profits, they can cause
firms to undercut each other to gain the buyer’s business and they can
use their power to extract other benefits, such as quality
improvements or credit terms. Buyers tend to be powerful when there
are relatively few of them buying a large proportion of the total output.
Power of suppliers:
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Unit 1 – Investigating Business
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Unit 1 – Investigating Business
Weaknesses
of the – Not – Cannot – Can’t rely
Market necessary rely 100% 100% on
analysis that all on the this as it
techniques products SWOT doesn’t
will go analysis. cover
through the internal
product life strengths &
cycle as weaknesses
stated on for example.
the
diagram.
– Can’t rely
100% on
theory, as
the diagram
is just a
marketing
tool.
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Unit 1 – Investigating Business
as well, such as product life cycle, PESTLE analysis etc, it will get a
better idea of the internal and external environment.
Businesses can use five forces as this will help the marketer to
contrast a competitive environment. This technique has similarities
with other tools for environmental audit, such as PEST analysis, but
tends to focus on the single, stand alone, business or SBU (Strategic
Business Unit) rather than a single product or range of products. For
example, Dell would analyse the market for Business Computers i.e.
one of its SBUs. Five forces analysis looks at five key areas namely the
threat of entry, the power of buyers, the power of suppliers, the threat
of substitutes, and competitive rivalry.
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Unit 1 – Investigating Business
1) Ansoff’s Matrix
2) Development of Product life cycle analysis
3) Differentiated marketing and the product life cycle
4) Segmentation, targeting product positioning & plc
5) application of the marketing mix
Ansoff’s Matrix
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Unit 1 – Investigating Business
Brand building is also important in the growth stage for Tesco, as the
acquisition of a significant market share during this phase will generate
profits in the long term. When the product enters the maturity and
saturation stage, it will be the strong brands that will dominate the
market and today Tesco is the most dominant retailer in the UK,
overtaking Sainsbury. In addition if Tesco product enters the decline
stage and if sales are falling, it will be the strong brand like Tesco that
will survive and produce profit.
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Unit 1 – Investigating Business
• promotion
Place describes how the consumers can obtain the product, whether its
through retailers or wholesalers.
Tesco’s strategy
• Differentiated strategy
• Ansoff’s Matrix
• Development of Product life cycle analysis
• Differentiated marketing and the product life cycle
Differentiated strategy:
The marketing strategy which is used by Tesco is ‘Differentiated
strategy, it can be seen that Tesco uses differentiated strategy as they
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Unit 1 – Investigating Business
have products and services to meet the needs and wants of every
individual consumer, as they stock and sell a wide range of products
and services in its stores.
Ansoff’s Matrix
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Unit 1 – Investigating Business
The product life cycle can increase demand for Tesco as it can show
the marketing manager what stage Tesco products are at and whether
it has reached maturity stage or how well the product is doing.
Brand building is also important in the growth stage for Tesco, as the
acquisition of a significant market share during this phase will increase
demand for Tesco. When the product enters the maturity and
saturation stage, it will be the strong brands that will dominate the
market and today Tesco is the most dominant retailer in the UK,
overtaking Sainsbury. In addition if Tesco product enters the decline
stage and if sales are falling, it will be the strong brand like Tesco that
will survive and produce profit.
however it can be seen that this can also have a negative affect on
Tesco as they can lose out on profit but de to bulk buying the cost is
easily covered.
This marketing strategy can increase demand for Tesco in many ways
including:
• Differentiated strategy
• Ansoff’s Matrix
• Development of Product life cycle analysis
• Differentiated marketing and the product life cycle
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Unit 1 – Investigating Business
Advantages of Disadvantages of
Differentiated strategy Differentiated strategy
Profit level for the company can Customers can buy the wrong
increase as consumers have a product due to the confusion
wide range of products to choose from the wide range of display
from, as when they come in the and then the customer will come
store they will find at least one in for a refund which will be a
product to suit their needs and lost for the company.
wants.
Putting new products into new
By Tesco producing their own markets, this is a risky strategy
value products increases the because if Tesco diversifies it
range of products available at means they are moving into
Tesco. areas in which it has little or no
experience.
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Unit 1 – Investigating Business
Advantages of Disadvantages of
Development of Product Development of Product
life cycle analysis strategy life cycle analysis strategy
The product life cycle can
increase demand for Tesco as it Tesco needs a balanced product
can show the marketing portfolio, capable of sustaining it
manager what stage Tesco satisfactorily into the future as if
products are at and whether it its not balanced then problems
has reached maturity stage or can be created.
how well the product is doing.
Brand building is also important The ideal portfolio should contain
in the growth stage for Tesco, as neither too many new nor too
the acquisition of a significant many declining products.
market share during this phase
will increase demand for Tesco
Extension strategies and brand Extension strategies and brand
building is used by Tesco for building can have a negative
example, that Tesco sells their affect on Tesco as they can lose
own label product and services out on profit, if they decrease
for a cheap price compared to there prices too much.
other products which are sold in
store.
Advantages of Disadvantages of
Differentiated marketing Differentiated marketing
and the product life cycle and the product life cycle
strategy strategy
In terms of Undifferentiated In terms of Undifferentiated
strategy, Tesco aims to produce strategy, this is not always
a single product and acquire as successful as not every target
many customers as possible and market will like this one product
if they are successful then Tesco produced.
can make a lot of profit.
In terms of Concentrated In terms of Concentrated
marketing Tesco aims to marketing, it is not necessary
segment their products for that segmentation can work for
example their value range is not example a person who’s main
aimed at wealthy people but to concern is not price may still
people who’s main concern is purchase a value range product
price, this is a good way to as they might like the taste of
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Unit 1 – Investigating Business
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