OCR GCSE Business: Business Activity, Marketing and People (J204)

This guide covers Component 1 Business activity, marketing and people, one of two equally weighted components in OCR GCSE (9-1) Business (J204), for first teaching from 2017. This component introduces business concepts and issues, exploring the purpose and role of a business from spotting an opportunity through to growth, with a closer look at marketing and human resources.

Where this fits in J204

Component 1 pairs with Component 2 (Operations, finance and influences on business); Component 1 content is assessed in this paper, and candidates draw on it again for the synoptic questions in the Component 2 paper, but Component 2 content is not assessed back in this paper.

Syllabus coverage

OCR GCSE BUSINESS (J204) — COMPONENT 1 BUSINESS ACTIVITY, MARKETING AND PEOPLE

• Section 1 Business activity — the role of business enterprise and entrepreneurship, business planning, business ownership, business aims and objectives, stakeholders in business, and business growth
• Section 2 Marketing — the role of marketing, market research, market segmentation, and the marketing mix
• Section 3 People — the role of human resources, organisational structures and different ways of working, communication in business, recruitment and selection, motivation and retention, training and development, and employment law

How to approach it

Business activity (Section 1) introduces core vocabulary – enterprise, stakeholders, business aims and objectives – that recurs throughout the whole specification, so treat it as a foundation to revisit rather than a topic to learn once and move past. Marketing (Section 2) and People (Section 3) both reward being able to apply concepts to a specific business scenario, since exam questions typically present a case study business and ask students to analyse or evaluate a decision in that context rather than describe concepts in the abstract. Because Component 1 has three roughly equal sections covering distinct areas of business, plan revision time across all three rather than favouring one, since each is drawn on independently across the exam paper.

Official syllabus

OCR GCSE (9-1) Business (J204) specification, for first teaching from 2017 — ocr.org.uk.

Business activity and enterprise

Businesses exist to satisfy needs and wants by combining the factors of production and adding value — the difference between the cost of inputs and the selling price. Value is added through brand, quality, convenience, design and service, not price alone.

An entrepreneur organises the other factors and bears risk. Motives include profit, independence, filling a gap in the market, and personal or social goals. Business activity carries risk of failure, loss of capital and long hours, set against reward in profit and control.

Objectives differ by stage: a start-up prioritises survival and cash flow, while an established firm pursues profit, growth or market share.

Ownership and stakeholders

Sole traders and partnerships have unlimited liability — personal assets are at risk. Private and public limited companies have limited liability, so shareholders can lose only what they invested. That protection is what makes raising external capital feasible, and it is the most examined idea in the topic.

Stakeholders — owners, employees, customers, suppliers, government and the local community — have interests that frequently conflict. Higher wages please employees but reduce profit; expansion pleases owners but may disturb the community.

Marketing

Market research divides into primary (surveys, interviews, observation, focus groups — specific but slow and costly) and secondary (existing reports and data — quick and cheap but not tailored). Quantitative data gives numbers; qualitative gives reasons.

Segmentation groups customers by age, income, gender, location or lifestyle so the marketing mix can be targeted.

The marketing mix is the four Ps:

• Product — features, quality, the product life cycle, and extension strategies when sales decline.
• Price — cost-plus, competitive, penetration for entering a market, skimming for a new technology, and promotional pricing.
• Place — the distribution channel, increasingly direct through e-commerce.
• Promotion — advertising, sales promotion, personal selling and public relations.

The elements must be consistent: premium pricing with poor-quality packaging and discount retailers will fail regardless of how good each decision looks alone.

People

Recruitment may be internal (cheaper, faster, known quantity, but no fresh ideas and leaves another vacancy) or external (wider pool and new perspectives, but slower and costlier).

Motivation theory is usually examined through Maslow’s hierarchy, Herzberg’s hygiene factors and motivators, and Taylor’s focus on pay. Financial methods include wages, salaries, commission, bonuses and profit sharing; non-financial methods include job rotation, enrichment, teamworking and delegation.

Organisational structure may be tall (many layers, narrow span of control, clear progression, slower communication) or flat (fewer layers, wider span, faster communication, more delegation).

Worked example

Not Business 1 content. Added value is not a J204 term, and break-even is topic 5.4 of Business 2 (J204/02), which is where synoptic questions are set. This example is kept as background for Business 2; Business 1 (J204/01) does not examine it.

A bakery pays 80p in ingredients and packaging per loaf and sells at £2.20. It sells 500 loaves a day with fixed costs of £400 a day.

Added value per loaf = 2.20 - 0.80 = £1.40
Total contribution   = 1.40 x 500  = £700
Profit               = 700 - 400   = £300 per day

Break-even output = fixed costs / contribution per unit
                  = 400 / 1.40 = 286 loaves (to the nearest whole loaf)

Common mistakes

Saying limited liability means limited debt. Describing primary research as “better” rather than more specific but slower and dearer. Listing the four Ps without explaining how they must work together. Confusing span of control with chain of command.

Quick revision checklist

• Explain organic and external growth (horizontal, vertical, diversification) with an example of each (1.6).
• Explain the role of the entrepreneur and how objectives change with business stage.
• Compare forms of ownership, focusing on liability.
• Distinguish primary from secondary and quantitative from qualitative research.
• Explain each element of the marketing mix and why consistency matters.
• Compare internal and external recruitment, and financial with non-financial motivation.