BTEC Nationals in Business Student Guide to Unit 7 Business Decision Making

Unit 7 (Business Decision Making) is one of four externally assessed components in the btec Level 3 Nationals Extended Diploma in Business (Unit 7) and of the btec Level 3 Nationals Extended Diploma in Enterprise and Entrepreneurship (Unit 6).

This unit is assessed by the completion of a set task under supervised conditions in a three-hour single session. This includes reading and planning time.

At the beginning of the session, you will be given an unseen case study. This will give you information and data on a business and on two future business options it could decide upon.

The set task never changes, the accompanying case study changes each time.

You are not expected to have any prior knowledge of the market in the case study, but you will be awarded for using your own knowledge.

What will I have to do?

You will produce two documents on a computer:

- a report

- a presentation of slides with speaker notes or script.

You have two activities to complete:

Activity 1

This requires you to study the data provided, extract relevant information, and write a report.

You will examine the two options the owner (or a potential investor) is considering for developing the business.

You will produce a structured report for the business owner, recommending which one of these two options would be best for the business.

The report must be set within the context of the business and its goals.

The decision you make on which option to choose in this activity is carried forward into the presentation summary, (Activity 2).

Activity 2

This requires you to create a presentation with speaker notes or script for the owner in the form of a business pitch.

You will summarise your choice using data from your report and provide a rationale (give reasons) for choosing option one or option two to convince the owner that this is the best choice for the business.

Image summary: An illustration depicting four people engaged in a collaborative activity, featuring a man presenting content from a screen, a woman holding a tablet, another woman reviewing a document, and a person writing on a piece of paper. The image serves as a decorative graphic for an educational guide, with no data or analytical results to report.

How is the set task assessed?

The set task is marked externally by examiners. They use a marking grid to reward you for showing what you can do. The marking grid for this unit never changes.

The marking grid has nine assessment foci (a.f), each showing the marks available across four bands.

The descriptor for each band describes what a piece of work will look like at the top of the band.

The Marking Grid - 70 marks

Activity 1

Marked using assessment foci (a.f) 1 - 6 on the marking grid

Has 52 available marks

What is this set task assessing?

Marked using assessment foci (a.f) 7 - 9 on the marking grid

Has 18 available marks

The assessment for this unit is synoptic. This means that you will need to apply your learning from across the units you have studied to make appropriate business decisions for a given business.

You will need to use the knowledge and skills you have gained from studying this and other units, for example ownership, financial planning, liquidity, performance and profitability ratios, marketing, business models, resourcing, trends, legislation and quality.

Image summary: An illustration depicting three people collaborating on data analysis. One person points to a line chart on a whiteboard, another person observes, and a third person takes notes on a clipboard, with a pie chart and a bar chart also visible in the background. The image is a conceptual graphic representing teamwork and data presentation.

Table summary: Grading criteria across six assessment focuses, each categorized from Band 0 to Band 4. For Band 0, all focus areas receive 0 points and are marked as having no rewardable material. High scores in Band 4 are awarded for comprehensive, logical, and detailed work, specifically 8 points for Information/ database selection and interpretation, Implications for resources based on decisions made, Financial forecasting, and Supported decision making; 14 to 16 points for Key factors, risks and alternative approaches; and 4 points for Presentation and Structure. Intermediate bands correlate with increasing levels of detail and relevance. For example, in Supported decision making, Band 1 provides simplistic or generic decisions for 1 to 2 points, while Band 2 provides partially justified decisions for 3 to 5 points, and Band 3 provides justified, convincing decisions for 6 to 7 points.

Table summary: Grading criteria for three assessment focuses: Business proposal overview, Reference to costs, finance key factors and risks, and Presentation design and structure. Each focus is scored across five bands, ranging from Band 0 for no rewardable material to Band 4 for an articulate, professional, and convincing pitch. Band 0 receives 0 marks. Band 1 receives 1 mark, reflecting limited summaries or basic structure. Band 2 receives 2 marks for coherent summaries and basic professionalism. Band 3 receives 3 to 4 marks for detailed and sustained references. Band 4 earns the highest score of 5 to 6 marks, requiring a clear, concise, and professional presentation with no communication errors.

Source: Pearson Educational Limited – Unit 7 Mark Scheme

Unpacking the case study

• Take time to read the case study carefully - don't skim, don't scan - read it!

The case study is yours to use, so write on it!

underline, circle or highlight key words

make notes on points you think are important

Think about the context you will be reporting on:

what type of business is it?

what service does it provide or what goods does it sell?

what is its goal?

Remember that you must use the data you identify to build an argument for one of the two options - you must consider both options before coming to a conclusion

Unpacking the activities

Activity 1

This activity is in the form of a report.

Remember that you are writing in a professional capacity, helping a business owner to decide on the future direction of their business.

You will use given data and your own calculations to weigh up both options and come to a decision on which of the two given options the business should take (a.f.1, a.f.2, a.f.3, a.f.4, a.f.5).

Your report must be well written and logically structured (a.f.6)

Activity 2

This activity is in the form of a presentation the owner, summarising the decision you have made in your report. A business proposal overview (a.f.7) and references to costs/finance and key factors/risks (a.f.8) form the body of your presentation.

Remember that you are helping a business owner to decide on the future direction of their business. This pitch is your opportunity to bring together the key points and essential features for the owner of choosing one of the given options.

It needs to be designed and structured so that it looks professional and engages and convinces the owner (a.f.9).

Assessment Focus 1 (a.f.1)

Information/Data Selection and Interpretation 8 marks available

You are to produce a report that examines the two options the owner is considering for developing the business.

What is the assessor looking for?

You will need to extract appropriate data about the business and the two proposed options from the case study you are given and apply it in your report.

This does not mean simply retyping the information from the case study but showing your selection and interpretation skills.

Once you have selected your data you will show your application skills by using this throughout your report to support the points you make and provide reasons for your choice of one option over another.

For Example

Data in case study

Business type and ownership

Current size

Goals/aims

Location

Structure

Turnover

Owner's capital

Target market

Top Tips!

Customer loyalty

Mass/neesh market

Pricing strategy

u.s.p

Reputation

Competitors

Impact of economic, market, and social trends

Timelines

Remember you need to select appropriate data for your report and use this to support the points you make. do not simply repeat or reword the points.

You will find some points in the case study that you feel that are good/bad for the business, but just stating something is good/bad or is an advantage/disadvantage is not enough. The assessor will want to know why it is good or bad. Use the data provided in the case study to justify why each of the two options may be appropriate as new business opportunities.

Apply the 'So What?' Test: The number one mistake students make is simply repeating data from the case study. To get high marks, you must explain the impact of that data. Every time you select a piece of evidence, ask yourself: "So what?"

Example: Don't just say: “The case study shows the market is forecast to grow by 10%.”

Instead, ask “So what?” and write: “The market is forecast to grow by 10%, which means there is a significant opportunity for the business to attract new customers and increase revenue. This supports Option 1 because...”

Assessment Focus 2 (a.f.2)

Implications for Resources Based on Decision Making

8 marks available

What does the set task say?

Your report must address both options and include an assessment of:

- the implications for resources

What is the assessor looking for?

You will need to identify the key resources required for the business option you have chosen, plus the impact of any timescales, and assess the implications of these on the business.

For Example

Physical resources

Rent, buy or lease:

- Premises

- Equipment

- Vehicles

- it hardware and software

Human resources

- Owner's experience

- Staffing requirements

- need for new or existing staff

- payment of wages/salaries

- hours worked - full time/part time

- time and cost of recruitment process

- costs of redundancies

- training requirements and cost

- staff motivation

Time as a resource

Timeline for being ready to set up the business/being ready to trade:

- Having physical resources in place

- Having human resources in place

- Having financial resources in place

Financial resources

Sources of finance

Start-up costs

• Running costs

You may wish to use Physical, Human, Financial and Time as sub-headings in your report to remind you to write about each.

Your report must address both options and include:

- appropriate financial forecasts an interpretation of financial information using ratio analysis

What is the assessor looking for?

You will need to produce detailed and accurate financial information using the information given in the case study across a range of financial concepts (three or more).

Think about the context of the business you are writing about. Remember that some ratios would be irrelevant. For example, a business in the service sector would be unlikely to carry a significant amount of inventory and so the inventory turnover calculation would be irrelevant.

Although you will be given limited information which means that you will only be able to calculate some of the examples below, you must show your calculations for both options.

Remember that templates will not be given for the financial forecasts, nor formulas for the calculations and ratios - you must learn these.

Key Formulas You Must Learn

Unit 7 Examiner reports show that the most common calculations are for profitability. You must know these formulas by heart:

Gross Profit Margin (%): (Gross Profit / Revenue) x 100

- What it means: This shows the percentage of revenue left after paying for the direct costs of the goods or services. A higher GPM is better.

Net Profit Margin (%): (Net Profit / Revenue) x 100

• What it means: This shows the percentage of revenue left after all costs have been paid. It is a key indicator of overall profitability.

Return on Capital Employed (%): (Net Profit / Capital Employed) x 100

- What it means: This measures how efficiently the business is using its investment money to generate profit. A higher roce is more efficient.

Common Pitfalls to Avoid

- Incorrect Net Profit: Forgetting to subtract all the running costs listed in the case study before calculating Net Profit.

- Mixing up GPM and n.p.m: Using the wrong profit figure in your calculation. Double-check your work.

- Not showing your workings: Always show how you arrived at your answer.

Top Tips!

Don't simply copy out the data given in the case study - use it to gain marks. Demonstrate your ability to interpret the figures you have calculated and show how these figures may impact on each option. You need to carry out your own financial forecasting for example on profitability or return on capital employed to achieve the highest marks.

The break-even point is the number of units the business needs to sell. This could be the number of candles, umbrellas, hotel rooms or cakes, but the break-even point is never shown as money!

Remember to always round up your break-even number - you can't sell 5.2 hotel rooms; you would have to sell 6.

Using a spreadsheet for your calculations can help as it can calculate formulae and the results can be cut and pasted into your report.

The largest section of the report weighs up the key factors and risks using decision making tools and comes to a justified conclusion. This section of the report is most likely to be assessed together with supported decision making (using a.f.4 and a.f.5 of the marking grid).

Assessment Focus 4 (a.f.4)

Key Factors, Risks, and Alternative Approaches 16 marks available

What does the set task say?

Your report must address both options and include:

an assessment of the key factors and risks

What is the assessor looking for?

You will need to identify and weigh up the key factors, risks and alternative approaches for both options. Which are the most significant, important or relevant for this business and its goals?

Use this to help you to make a business decision as to which is the best option for the given business.

For Example

Key factors and risks

For example:

Financial for example, start-up and running costs, loans/overdrafts/funding required, revenues, profits and losses

Market trends, forecasts for growth/decline, gaps in the market, threats from competitors, supply and demand

Customers for example, target market, new or existing customer base, customer loyalty, disposable income

Location for example, footfall, passing trade, accessibility, car parking, trading capacity

Staffing, skills and training required

Legislation

Reputation, branding, u.s.p's, marketing and pricing policies

Business goals

For example:

Start-up a successful business

Break-even in the first year

Develop/grow a business

Change from sole trader to limited company

Diversification

Survival

Alternative approaches

There is no requirement for you to come up with your own alternative approach, but if you do so you can achieve credit for your ideas.

Remember to give reasons for your decisions that are linked to the goal of the business for example to break-even, to expand, to be profitable.

Assessment Focus 5 (a.f.5)

Supported Decision Making 8 marks available

Your report must address both options and include:

- use of appropriate decision-making tool(s) to support your recommendation to the owner

What is the assessor looking for?

You will need to use decision-making tools to draw together evidence to provide a final decision on which option to choose.

Remember that your conclusion must be for one of the given options, not for an alternative option that you have created or the business.

For Example

Decision-making tools

Use of tools such as:

- pestle (Political, Economic, Social, Technological, Legal, Environmental) analysis

- swot (Strengths, Weaknesses, Opportunities, Threats) analysis

- Porter's five forces model

- 5c's analysis

- Boston Matrix

- Ansoff Matrix

Top Tips!

Be sure to use a minimum of two tools and justify each point you make.

Write in paragraphs - avoid using tables that show selection of data but not analysis and interpretation.

Make Your Models Meaningful: Using a swot or pestle analysis is not a box-ticking exercise. Every point you make must be directly linked to the evidence in the case study. Generic points will score very low marks.

Weak analysis: “A weakness for the business is poor cash flow.”

Strong analysis: “A key weakness is the business's low cash balance of £5,000, as shown in Appendix B. This makes Option 2, with its higher start-up costs, a significant risk because...”

Assessment Focus 6 (a.f.6)

Presentation and Structure 4 marks available

Your report should be presented in an appropriate format for the owner.

You should present your report as a word-processed document in a minimum of 12-point font.

What is the assessor looking for?

You are writing a report to give advice to a business owner.

Remember that you are presenting this report in a professional capacity and so it must have a professional layout showing clarity and a logical structure. It must include business management principles and concepts to support the decision made and appropriate business terminology.

For Example

Professional layout showing clarity and a logical structure

- Headings, subheadings, and clear paragraphs.

- Easy to follow.

Business management principles and concepts

For example:

• Financial concepts

Competition

Trends

Top Tips!

Business terminology

For example:

- Ownership type

- Resource management

- Decision-making tools

- Supply and demand

- Risk assessment

- Business culture

- Motivation

- Be logical and make sure the report is easy to follow - use headings to help with this Use a consistent formatting (for example same font and size, emboldened text) for headings and subheadings.

- Write in paragraphs - huge blocks of text are off-putting to the reader and unprofessional.

- Be clear and consistent - when you are talking about the owner use 'he', 'she' or 'they'.

- When you are talking about the business use 'it'.

- Use headers with your details.

- Use a footer with page numbers.

- Proofread your writing to ensure consistency and accuracy in spelling, grammar and punctuation.

btec National Business Student Guide to Unit 7

Assessment Focus 7 (a.f.7)

Business Proposal Overview 6 marks available

Using appropriate software prepare a presentation to the owner. The presentation should:

summarise the recommendations made in your report

• give your rationale for the recommendations made

What is the assessor looking for?

In your report for activity 1 you considered all the information given in the case study and concluded which was the best of the two options for the business.

In this presentation you are going to pitch the decision you made for a.f.5 to the owners. This is your business proposal. The owner needs to be made clear on which option you have chosen and why.

For the owner to understand your choice it is important that you use evidence from your report to support each point you make.

Remember to use data from a.f.1, information on resources from a.f.2 and key factors and risk from a.f.4.

For Example

A coherent and articulate business proposal

A clear, well-written, logical explanation and justification of the decision made in your report to choose option 1 or option 2.

Example Presentation Structure: To create a convincing pitch, consider structuring your slides like this:

- Slide 1: The Recommendation: Start with a clear, confident title, for example, “Recommendation: Why Option 1 is the Path to Growth”. State your chosen option immediately.

- Slide 2: Meeting Your Goals: Remind the owner of their key business goals (from the case study) and explain how your chosen option directly helps to achieve them.

- Slide 3: The Financial Justification: Present the key financial data. Focus on the most persuasive numbers (e.g., higher roce, better profit margin) that prove your choice is financially sound.

- Slide 4: Managing the Key Risk: Acknowledge the single biggest risk or drawback of your chosen option and briefly explain how the business could manage or reduce it. This shows balanced judgement.

- Slide 5: Conclusion & Next Steps: Briefly summarise why you rejected the other option and end with a powerful concluding statement that reassures the owner.

Top Tips!

There is a skill to understanding what is important to include in your presentation and what information to leave out. A good business pitch gets to the point quickly. It does not repeat the whole of the report but gives an overview using the key points.

Assessment Focus 8 (a.f.8)

References to Costs/Finance and Key Factors/Risks

6 marks available

What does the set task say?

Using appropriate software prepare a presentation to the owner. The presentation should:

summarise the recommendations made in your report

• give your rationale for the recommendations made

What is the assessor looking for?

Your aim is to convince the owner that the option you are presenting is the best option.

For the owner to understand your choice it is important that you use evidence from your report to support each point you make.

Remember to use a range of given and calculated data from a.f.1, financial information from a.f.3 and key factors and risks from a.f.4 to justify your choice of venture.

For Example

Costs and Finance

From a.f.1 and a.f.3 for example:

• Financial data and forecasts given in case study/statements

Your own calculations

Key Factors and Risks

From a.f.1 and a.f.4 for example:

Need for a loan

Competition

Forecasts

Break-even point/margin of safety

Customer base

• Footfall/capacity

Impact of given timescales

Staffing issues

Changes in culture

Top Tips!

Remember to use financial data and other key factors to support your option choice - it is very unlikely that you will convince the owner that this is the best option without showing the financial benefits!

Do not change the decision at this stage.

Assessment Focus 9 (a.f.9)

Presentation Design and Structure 6 marks available

Using appropriate software prepare a presentation to the owner. The presentation must be accompanied by speaker's notes or a script that will engage and convince the client of the viability of your recommendation.

What is the assessor looking for?

You must show a high level of professionalism. Your presentation slides and speaker notes must be coherent (clear, logical and reasoned) and without any communication errors.

Your presentation must engage and have a clear message that would convince potential investors (the owner) to go with the option you are suggesting.

Remember that your presentation notes or script are where you write what you would say in the presentation. The slides should have bullet points only.

For Example

A presentation

- Slides and speaker notes/script

Purpose

- To engage the owner and convince them to choose one of the two options given in the case study

Coherent structure

- The business proposal is explained in a clear, ordered and logical way, and the message is easy to understand

Professionalism

- Uncluttered slides

- Use of clear headings, has easy to read information, the correct details and accurate financial data

- Refers to the key points throughout

Top Tips!

Give Me Five!!

No one wants to read a wall of text on each slide.

Remember the rule of five:

- No more than five bullet points on a slide

Simplicity is key

- Be sure your presentation has a clear aim - to convince the owner to choose one of the two given options

- Don't have too many slides or try to put all the information on one slide

- No need for whizz-bangery or bells and whistles. Avoid:

- fussy backgrounds and designs - large chunks of text or figures

- use of jargon and/or slang overuse of exclamation marks

Some Dos and Don'ts for Activity 2

Be selective in the data you use from your reporttion, the correct details and accurate financial data

Make sure that slides and speaker notes are professional and error free

Back up your decision by using relevant information from the case study and financial data from a.f.3

Make sure the presentation is engaging and able to convince the owner that your chosen option is the best Spend too long choosing a background

Paste large sections of the report onto the slides and speaker notes/script

Give a different decision to the one made in the report

Give alternative choices the business could make instead of the option chosen in the report