IGCSE BUSINESS STUDIES Topic : Employers association

Employers association

Employers association are groups of employers who join together to give benefits to their member. Businesses join together to form their own association, and members pay an annual subscription fee in return for the benefits they would receive.

Examples include

• National Farmers Union
• Society of British Aerospace Comapnies
• Federation of Samll Businesses
• National Federation of Builders

Advantages of joining an employers association

• They represent employers and negotiate with the trade unions on behalf of their members.
• Provide services to members for example statistical information, and advice or help with recruitment, training, health, safety and industrial relations problems
• Act as pressure groups on the goovernment to try to influence their policies.

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IGCSE BUSINESS STUDIES Topic : Worker participation

Worker participation

Worker participation refers to the influence that workers had on decision-making at management level. Representative workers of influence achieved this through their work on the various management-employee committees.

Advocate workers of influence used formal, individual meetings with management to influence their thinking. Informal workers of influence give input to management thinking in informal arenas such as articles in the newsletter and informal discussion where they exchange information with management.
Participation requires that management share information about the operation of the plant, the marketplace and the needs of customers and suppliers.
Worker participation, is defined as

a situation in which workers have obtained or been given the right to take part in managerial decision-making

It includes management seeking worker input to decision-making and workers offering input to managers for consideration in decision-making.

Benefits of workers participation

Worker participation, may be expected to have the following benefits

• Effect of dampening employee grievances
• Lower labour turnover
• Improved motivation levels
• Increased Productivity and efficiency
• Less conflict between management and employees and thus better employer-employee relations
• Contribution to decision making

Ways of Participation

One view is that workers or the trade unions should, as equal partners, sit with the management and make joint managerial decisions.The other view is that workers should only be given an opportunity, through their representatives, to influence managerial decisions at various levels.I
In practice, the participation of workers can take place by one or all the methods listed below:
1.Board level participation
2.Ownership participation
3.Complete control
4.Staff or work councils
5.Joint councils and committees
6.Collective Bargaining
7.Job enlargement and enrichment
8.Suggestion schemes
9.Quality circles
10.Empowered teams
11.TQM
12.Financial participation

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IGCSE BUSINESS STUDIES Topic : Industrial actions

Types of Industrial Actions

• Strike: when employees refuse to work
• Picketing: When employees stand outside the workplace and prevent the smooth functioning of the firm. E.g. they may stop the movement of Lorries in and out of factory.
• Work to Rule: It is when workers purposely follow all the rules in order to delay the progress of work.
• Go slow: It is when the employees work at a very slow pace.
• Non-cooperation: It involves workers refusing to follow a new procedure or rule.
• Overtime ban: It is when the employees refuse to work overtime or for additional hours of work apart from their normal working hours.

How a conflict could be resolved?

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IGCSE BUSINESS STUDIES Topic ; Types of training and its objective

What is training?

Training involves improving the skills, knowledge and attitudes of employees so as to become more efficient and productive.

Objectives of Training

• Improve the efficiency of workforce
• Make workers multi-skilled and flexible
• Introducing a new process or new machinery
• Reduce wastage of material and time
• Adapt to change

Types of Training

Induction Training

It involves introducing a new employee to its work environment. Usually, it includes

• introduction to colleagues,
• explaining the firm’s activities,
• procedures followed in the organisation,
• explaining the organisational structure,
• place of working etc.

On the Job training

A worker gets training by watching a more experienced worker doing the job. It is common for unskilled and semi-skilled jobs. Thus the worker gets trained while he is performing his regular duties.

Off the job training

This is when a worker goes away from the place of work to attend a special course. The training can be in the form of a seminar, workshop or a college course. Off the job training is usually conducted for managerial level employees.

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IGCSE BUSINESS STUDIES Topic : Recruitment and Selection Process

Recruitment and Selection Process

The recruitment process starts with a vacancy arising.

Job analysis and description

Once a vacancy arises the human resource manager will first identify and record the responsibilities and tasks which are related to the job. After analysing the responsibilities and tasks they are noted down which becomes the Job description for the job. It includes:

• A job title
• Department of the business in which the new employee would work
• Details of the tasks to be performed
• Responsibilities involved
• Place in the hierarchical structure
• Methods of assessing the performance

Job Specification

On the basis of Job description, a job specification is made. It is a document which outlines the requirements, qualifications and qualities, skills and knowledge required for the job. It is also known as person specification.

Job Advertisement

After completing the person specification (job specification) the vacancy is advertised. It can be advertised internally (on the company notice board or newsletter) or may be advertised externally in a newspaper or magazine. The advertisement will usually contain the elements of a person specification with additional information like the name and profile of the company, date and time of interview, address of the company and the contact person etc.

Applications received and shortlisted

Once a job is advertised, there might be hundreds of application received. All of the applications received might not be suitable for the job. Thus a short listing of the applications will be done. The applications most near to the job specification will be called for interview and those who do not qualify the criteria will be rejected.

Interview

The shortlisted candidates will be called for an interview to verify their qualifications, personal qualities and aptitude for the job. It may involve a face to face discussion between the interviewer and interviewee. The firm may also conduct skill test, aptitude tests or personality test if it deems fit so.

Selecting the suitable candidate

The candidate who scores the maximum in the interview will be selected for the job and given an appointment letter.

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IGCSE BUSINESS STUDIES Topic : Manpower Planning

Manpower Planning

It involves the planning for the future and finding out how many employees will be needed in the future by the business and what types of skills should they possess.
It depends on the following factors

• The number of people leaving the job
• The projected growth in sales of the business
• Technological changes
• Productivity level of the workers

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IGCSE BUSINESS STUDIES Topic : Functions of Human Resource Department

Functions of Human Resource Department

A typical Human Resource Department is carries out the following functions:

Manpower Planning

It involves the planning for the future and finding out how many employees will be needed in the future by the business and what types of skills should they possess.

It depends on the following factors

• The number of people leaving the job
• The projected growth in sales of the business
• Technological changes
• Productivity level of the workers

Job analysis and Job description

HR Department is also involved in designing the Job analysis and Job description for the prospective vacancies.

A job analysis is the process used to collect information about the duties, responsibilities, necessary skills, outcomes, and work environment of a particular job.

Job descriptions are written statements that describe the:

• duties,
• responsibilities,
• most important contributions and outcomes needed from a position,
• required qualifications of candidates, and
• reporting relationship and co-workers of a particular job.

Determining wages and salaries

HR Department is also involved in conducting market surveys and determining the wages and salaries for different position in an organization. These decision may be taken in consultation with top management and the Finance department.

Recruitment and Selection

One of the most important jobs HR department is to recruit the best people for the organization. This is of crucial importance as the success of any organization depend on the quality of its workforce. Details regarding the recruitment and selection procedure can be found here.

Performance Apprasial

Once the employees are recruited , the HR Department has to review their performance on a regular basis through proper performance appraisals.

Performance appraisal is the process of obtaining, analyzing and recording information about the relative worth of an employee. The focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee. Its aim is to measure what an employee does.

On the basis of performance appraisal the HR Department will set up an action plan for each employee. If the employees needs any training then he provided that.

Training and Development

HR department is constantly keeping a watch over the employees of the organisation. In order to improve the efficiency level of the employees they have go undergo regular trainings and development programmes. All trainings and development needs are carried out by this department. Training might include on the job or off the job training. Find more information on training here.

Employee welfare and motivation

Happy employees mean a healthy organization. HR Department conducts various employee welfare activities which might include employees get together, annual staff parties etc. HR department also reviews organizational policies and its impact on the motivation of the employees.

Addressing employees grievances

HR department is the link between the workers and the management. Employees grievances related work environment are usually entertained and resolved by the HR Department.

Labour management relations

For the smooth operation of any organization, it is crucial to have good labour management relations. HR department has to ensure that these relations are cordial. In case of any labour-management conflict the HR Department will play a vital role in bringing both management parties to the negotiation table and resolving the issue.

Implementing organizational policies

HR Department has to coordinate with line manager and see that the organizational policies are being implemented in a proper manner. Disciplinary action can be initiated against employees who are not following organizational rules and regulations. All these actions are conceived and implemented by the HR department.

Dismissal and redundancy

HR Department has to take firm actions against employees who are not following the organizational code of conduct, rules and regulations. This can result in the dismissal of the employee.

Sometimes, an organization may no more require the services of an employee. The employee may be made redundant. HR Department has to see that organizational and government regulations are being followed in this process.

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IGCSE BUSINESS STUDIES Topic : What is a Recession?

What is a Recession?

Recession is defined as a period of reduced economic activity, a business cycle contraction.

The U.S.-based National Bureau of Economic Research (NBER) defines economic recession as:

"a significant decline in [the] economic activity spread across the economy, lasting more than a few months, normally visible in real GDP growth, real personal income, employment (non-farm payrolls), industrial production, and wholesale-retail sales.”

In macroeconomics, a recession is a decline in a country's gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year. 

A recession has many attributes that can occur simultaneously and can include declines in coincident measures of activity such as employment, investment, and corporate profits.

A severe or prolonged recession is referred to as an economic depression.

During a recession

• There will be reduced customer confidence and a reduce consumer spending.
• Businesses will reduce production levels as they find it difficult to sell their goods and services.
• In order to sustain growth, businesses will cut cost and will lay off employees.
• Economy will see an increased rate of retrenchment and more money is spent by the government on unemployment benefit.
• Government will get less revenue from income tax and VAT.
• Stock exchanges will see reduced activity.

How can government tackle the situation

In order to boost economic growth, governments may resort to several strategies. These strategies for moving an economy out of a recession vary depending on which economic school the policymakers follow.

Fiscal policy moves involve increase government spending to boost aggregate demand in the economy. Government may also reduce taxes. Tax cuts will promote business capital investment. Lower-bracket tax reductions are more effective and serve a double purpose including relieving the suffering caused by a recession.

Monetary policy involves increased money supply and reducing the price of money i.e. interest rates. Reduced interest rates will promote capital investment and spark economic growth.

Supply side policies involve giving subsidies and increasing the level of education of the work force.

Global recessions

According to International Monetary Fund (IMF) global recessions are periods when global growth is less than 3%. The IMF estimates that global recessions seem to occur over a cycle lasting between 8 and 10 years. During what the IMF terms the past three global recessions of the last three decades, global per capita output growth was zero or negative. By this measure, three periods since 1985 qualify: 1990-1993, 1998 and 2001-2002.

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IGCSE BUSINESS STUDIES Topic : Business Cycle or Trade cycle

Business Cycle

The business cycle or economic cycle refers to the fluctuations of economic activity about its long term growth trend. The cycle involves shifts over time between periods of relatively rapid growth of output (recovery and prosperity), and periods of relative stagnation or decline (contraction or recession). These fluctuations are often measured using the real gross domestic product.
There are four main stages in a trade cycle or business cycle.

Growth	GDP is rising Unemployment is falling Business are experiencing rising profits ‘Feel good’ factor among the people as their incomes are rising.
Boom	Results from too much spending. Economy experiences rapid inflation Factors of production become expensive
Recession	Results from too little spending. GDP is falling Demand in the economy will fall leading to closure of firms and unemployment
Slump	High level of unemployment. Business will rapidly close down creating serious consequences for the economy.

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IGCSE BUSINESS STUDIES Topic : Social Cost and Social Benefits

Social Cost and benefits

Every business activity which takes place has some benefits and costs attached to it. The benefits go both to the owners of the firm as well as to external stakeholders. In the same way the owners and the external stakeholders have to pay a cost for the activities of the business.

Talking about…

Private cost

It is the cost of setting up the business. The owner(s) pay for the hire of machinery, buying of materials, payments of wages. This is termed as Private Cost.

Private benefit

The monetary benefits i.e. the revenue earned by the firm is a benefit for the owner and is termed as Private benefit.

External Cost

The problems that the external stakeholders have to bear due to the firm’s activity are known as external cost. Example: cleaning a river which has been polluted by a firm’s waste products. Private firms usually ignore external cost.

External benefits

Some firms can cause external benefits. These are the benefits to the external stakeholders due to the activity of firm. For example, a firm may train workers, which might get them better wages in other firms. These external benefits are free.

Social cost is the total cost paid for by the society due to the activities of a firm. It is the sum of all the external cost and private cost.

Social benefit is the total benefit arising due to the production of goods and services by a firm. This is equal to the total of private benefits and external benefits.

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IGCSE BUSINESS STUDIES Topic : Cost Benefit Analysis

Cost Benefit analysis

Cost Benefit Analysis is typically used by governments to evaluate the desirability of a given intervention in markets. The costs and benefits of the impacts of an intervention are evaluated in terms of the social benefits or social cost. The guiding principle is to list all of the parties affected by an intervention, and place a monetary value of the effect it has on their welfare.

The process involves monetary value of initial and ongoing expenses vs. expected return. Constructing plausible measures of the costs and benefits of specific actions is often very difficult.

For example, governments can use the technique to decide whether to introduce business regulation, build a new road or offer a new drug on the state healthcare. In this case, a value must be put on human life or the environment, often causing great controversy.

The cost-benefit principle says, for example, that we should install a guardrail on a dangerous stretch of mountain road if the dollar cost of doing so is less than the implicit dollar value of the injuries, deaths, and property damage thus prevented.

Cost-benefit analysis is also used to assess the value for money of very large private and public sector projects. This is because such projects tend to include costs and benefits that are less amenable to being expressed in financial or monetary terms (e.g. environmental damage), as well as those that can be expressed in monetary terms.

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IGCSE BUSINESS STUDIES Topic : Government macroeconomic objectives and policies

Economic Objectives of the Government

Most of the governments round the world have four main objectives. These are

• Keep inflation under control
• Maintain a low level of unemployment
• Achieve a high level of growth rate
• Maintain a healthy balance of payments.

Government Economic Policies

Government influences the economy through its economic policies. These are

Fiscal Policy

It is related with taxes and government spending. This policy is there to control inflation and demand in the economy. Usually government collects money in the form of taxes and spends money through its development expenditure such as building roads, bridge, defence, transports etc. Government constantly monitors the aggregate demand in the economy. Inflation rate gives the correct measure of the aggregate demand in the economy.

When the aggregate demand in the economy is high, prices rise, this shows that the economy is spending too much. In this case, the government will lower is expenditure budget and cut back on investment spending, such as on road construction and hospital equipment. On the other hand the government might also increase the taxes, which would take spending power out of the economy by leaving consumers and businesses with less income to spend.

In the opposite scenario, when the economy is heading for a recession and unemployment is rising, the government might increase its expenditure plans. There might be a reduction in taxes so as to leave consumers and businesses with higher disposable incomes.

Monetary Policy

Monetary Policy is related with a change in interest rates by the government or the Central bank. When the forecast for inflation is that it will rise above the targets set by government, then the Central Bank will raise its base rate and all other banks and lending institutions will follow. It is usually done when the economy is at the boom stage of the business cycle.

A higher interest rate will result in

Business will not be able to expand as they have to pay more interest to the bank for their loans and they have less profit left.
Businesses that are planning to take loan for expanding may postpone their decisions and wait for a cut in interest rates.
Consumers demand will also fall as they will not be getting cheap loans to pay for the buying new houses and luxury items.

If inflation is low and is forecasted to remain below governments targets, then the Central Bank may decide to reduce interest rates.

Supply side policies

It includes all those policies which aim at improving the efficient supply of goods and services. These might include:

• Privatisation
• Imparting training and improving the education level of the workforce resulting in higher skills.
• Increase competition in all industries by removing entry barriers, thus leading to more efficiency.

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IGCSE BUSINESS STUDIES Topic : Governments control over business activity

Why government controls business activities?

• Businesses are usually profit motivated. Many times in order to gain more profit the business might neglect issues like environmental protection and production of harmful and dangerous products.
• Large business might take the advantage of their size and exploit consumers, employees and even use unfair tactics to overcome competition from small businesses.
• Business might use media to portray a wrong image of their product or may even mislead customers to buy products.

How government controls business activity?

Governments control the business activities is many ways both direct and indirect. We have already covered government’s economic policies. However, government can control business activities in a more direct way. These are as follows:

Controlling what to produce

In order to safeguard the interest of the community government may ban or limit the production of certain goods and services. For example, selling of guns, explosive and dangerous drugs are illegal in many countries. Moreover, Goods which harm the environment are also totally banned or strictly controlled in many countries, e.g. aerosol cans that use CFCs which has been banned because of their damaging effect on the ozone layer.

Employees Protection legislations

Government may pass laws to protect the interest of employees such as

Laws against unfair discrimination at work and when applying for jobs. There is no unfair discrimination on the basis of Race, religion, sex, age, or colour.

Legislations for health and Safety at work: 

 

• To protect workers from dangerous machinery.
• Workers should be provided with proper safety equipments and clothing.
• A reasonable workforce temperature is maintained for workers.
• Proper hygienic conditions and washing facilities are provided.
• Workers get adequate breaks between shifts.

Protect employees against unfair dismissal 

Business can not dismiss the workers because they have joined a trade union or for being pregnant. There should be proper warning before dismissing a worker otherwise it will be treated as unfair dismissal.

Ensure fair wages for the employees

In many countries, government makes it mandatory to have a written contract of employment. It contains the details of the wage rate; working hours, deductions (if any) and other necessary details regarding working conditions. Minimum wages paid to different types of workers are also determined by the government.

Consumer Protection legislations

Most of the countries have consumer protection laws aimed at making sure that businesses act fairly towards their consumers: A few examples are

Weight and Measures Act: goods sold should not be underweight. Standard weighting equipments should be used to measure goods.

Trade Description Act: deliberately giving misleading impression about the product is illegal.

Consumer Credit Act: According to this act consumers should be given a copy of the credit agreement and should be aware of the interest rates, length of loan while taking a loan.

Sale of Goods Act: It is illegal to sell products with serious flaws or problems and goods sold should conform to the description provided.

Environment protection

In the recent years government across the globe have passes legislations to control business activities from harming the environment. This includes setting limits to the pollution, making it mandatory for businesses to treat their wastes etc.

Location decisions

Government often influences location of business through

• Planning controls involve restricting the business activities that can be undertaken in certain areas.
• Provide regional assistance to businesses which involves encouraging them to locate in underdeveloped regions of the country.

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