This is a solution of Unit 1 Business Environment Assignment Help that describes about Developing business

Unit 1 Business Environment Assignment Help

Week:  1Course: HND Level 4Subject: BUSINESS


Room: 301
Date:30/09/2015Last week session:New Group and New semesterUnit:1Class size: 20-30
Time: 10:00 amTutor: Israel OyedelePrior Learning:HNC L4 Btec Business CertificateCohort: SEPT-2015
Lesson Aim: AC 1.2a: Describe the extent to which an Organisation meets the objectives of different stakeholders
Links to other units:With all other business management units within the HND specification
Learning objectives:Detail of objectives:Assessment Strategies (tick as applicable)
All willDescribe the extent to which an Organisation meets the objectives of different stakeholdersQuestion & Answer —quizü
Revision Exercise
All willIndividual Learning Review.ü
All willGroup/ Individual Presentationü
Assignment / homeworkü
Tests / exercises
Teaching and Learning Techniques Planned (tick as applicable)
Whole class teachingüPractical demonstration
Pair / group worküUsing video / TV
Individual project workRadio / audio tapes
Role-play exercisesData projectorü
Case studyWhiteboardü
PresentationComputer / ITü
Practical exerciseüFlip chartü
Other generic issues to be addressed – None
Health & Safety Risk Assessment:None, but the basics were explained.
Inclusion / differentiation / Diversity
Needs:Differentiated learning activity: Separate worksheet for dyslexic learner







Teaching Methods


Student Activity

Method of              Assessment 



Key Skills



To create an active business environment

Whole class

Case study

Q & A

White board

Problem solving



To ensure understanding of last lesson


white board

Question for Tutor from last lesson

White board



Discussion on-

Understanding of how to access information and knowledge needs

AC 1.2aDescribe the extent to which an Organisation meets the objectives of different stakeholdersLecture notes on the white board

-PowerPoint presentation

Question for Tutor from this lecture

Q & A




11:30-12noon Break Break Break Break Break Break Break
12noon-12:35pmGroup activities/Group discussionsHow information can be gatheredPowerPoint presentationQuestions from learners

Group work

PPT slides


12:35-13:25Lecture/Discussions on LO 1Group ActivityGroup workGroup feedbackFlip chartTeam work
13:25-13:40 Short Quiz
13:40-13:45Open sessionFor questionsOn the two

AC 1.1&1.2

13:45-14:00 [Summary and Guided learning/reading for next lesson]

End of Session

Mission Statement and Core Values

This portion of the business plan states the company’s mission statement and core values. The mission statement describes the purpose or mission of your organization—its reason for existence. It tells the reader what the organization is committed to doing.

For example, one mission statement reads, “The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit.” August 31, 2011.

AC 1.2a:Describe the extent to which an Organisation meets the objectives  of different stakeholders

Mission Statement

The mission statement describes the purpose of your organization—the reason for its existence. It tells the reader what the organization is committed to doing. It can be very concise,

For example:like the one from Mary Kay Inc. (the cosmetics company): “To enrich the lives of women around the world.”

Or it can be as detailed as the one from Harley-Davidson: “We fulfill dreams inspired by the many roads of the world by providing extraordinary motorcycles and customer experiences. We fuel the passion for freedom in our customers to express their own individuality.”

Mary Kay Inc. Web site, Employment at Mary Kay section, (accessed September 21, 2011).

Harley-Davidson Web site, Company/Student Center section, (accessed September 21, 2011).


Core values are fundamental beliefs about what’s important and what is (and isn’t) appropriate in conducting company activities. Core values are not about profits, but rather about ideals. They should help guide the behavior of individuals in the organization. Coca-Cola, for example, intends that its core values—






quality, and

accountability—will let employees know what behaviors are (and aren’t) acceptable.

“Workplace Culture,” The Coca-Cola Company, (2011).

Knowing the purposesof your business would probably work a lot better if there was someone to oversee the operations:

A manager—someone like you—to make sure that the operations involved in were performed in both an effective and an efficient manner. You’d make the process effective by ensuring that the right things got done and that they all contributed to the success of the enterprise.You’d make the process efficient by ensuring that activities were performed in the right way and used the fewest possible resources.

That’s the job that you perform as a manager: making a group of people more effective and efficientwith you than they would be without you.

Corporate Social Responsibility

The growing sense that something hasn’t been ‘right’ in the way companies do things – whether in how they interact with the environment, other businesses, society and their own employees – has been leading to ever stronger calls for fundamental reforms.

Many argue that making short-term profit and shareholder value the core of business strategy at the exclusion of all else has brought our current crop of woes upon us – from the global economic downturn to environmental catastrophes to societal breakdown.

Some of this may be overstated, but there’s no doubt that trust in corporations and business leaders has taken quite a knocking recently. Many organisations have responded to the problem and are trying to change. Corporate social responsibility (CSR) seeks to foster sustainable growth while taking account of the needs of other stakeholders beyond just shareholders, particularly employees and relevant communities.

Research shows that CSR is not only creating opportunities for revenue growth, but is also strengthening relationships with and between customers, investors, suppliers and employees.

Perhaps it is counter-intuitive, particularly during a difficult economic period, but investment in CSR has been found to boost competitiveness and increase levels of morale, loyalty and engagement in employees – which is known to have a significant impact on the bottom line.

A recent report from the Chartered Institute of Personnel Development points out that to be truly effective and to rebuild trust, CSR has to be more than a publicity stunt. It has to ‘run throughout business strategy and practices’ and be part of the ‘”DNA” of the organisation’.

The Five Faces of Corporate Responsibility

Faced with public criticism of a particular practice, how does a company respond? What actions does it take to demonstrate a higher level of corporate responsibility? According to Harvard University’s Simon Zadek, exercising greater corporate responsibility generally means going through the series of five different stances

  1. Defensive.When companies are first criticized over some problem or issue, they tend to take a defensive, often legalistic stance. They reject allegations of wrongdoing and refuse to take responsibility, arguing that fixing the problem or addressing the issue isn’t their job.
  2. Compliant.During this stage, companies adopt policies that acknowledge the wishes of the public. As a rule, however, they do only what they have to do to satisfy their critics, and little more. They’re acting mainly to protect brands or reputations and to reduce the risk of litigation.
  3. Managerial.When it becomes clear that the problem won’t go away, companies admit that they need to take responsibility and action, so they look for practical long-term solutions.
  4. Strategic.At this point, they may start to reap the benefits of acting responsibly. They often find that responding to public needs gives them a competitive edge and enhances long-term success.
  5. Civil.Ultimately, many companies recognize the importance of getting other companies to follow their lead. They may promote participation by other firms in their industries, endorsing the principle that the public is best served through collective action.

Simon Zadek, “The Path to Corporate Responsibility,” Harvard Business Review, December 2004, 1–9. Market Share-This is a Key to Profitability It is now widely recognized that one of the main determinants of business profitability is market share.

Under most circumstances, enterprises that have achieved a high share of the markets they serve are considerably more profitable than their smaller-share rivals. This connection between market share and profitability has been recognized by corporate executives and consultants,

There is no doubt that market share and return on investment are strongly related. Exhibit 1 below shows average pretax ROI figures for groups of businesses. On the average, a difference of 10 percentage points in market share is accompanied by a difference of about 5 points in pretax ROI.  Why Market Share Is Profitable

The data shown in Exhibit I demonstrate the differences in ROI between high- and low-market-share businesses. This convincing evidence of the relationship itself, however, does not tell us why there is a link between market share and profitability.

There are at least three possible explanations:

  • Economies of scale: The most obvious rationale for the high rate of return enjoyed by large-share businesses is that they have achieved economies of scale in procurement, manufacturing, marketing assignment , and other cost components. A business with a 40% share of a given market is simply twice as big as one with 20% of the same market, and it will attain, to a much greater degree, more efficient methods of operation within a particular type of technology.
  • Market power:Many economists, especially among those involved in antitrust work, believe that economies of scale are of relatively little importance in most industries. These economists argue that if large-scale businesses earn higher profits than their smaller competitors, it is a result of their greater market power: their size permits them to bargain more effectively, “administer”prices, and, in the end, realize significantly higher prices for a particular product.
  • Quality of management: The simplest of all explanations for the market-share/profitability relationship is that both share and ROI reflect a common underlying factor: the quality of management. Good managers (including, perhaps, lucky ones!) are successful in achieving high shares of their respective markets; they are also skilful in controlling costs, getting maximum productivity from employees, and so on. Moreover, once a business achieves a leadership position—possibly by developing a new field—it is much easier for it to retain its lead than for others to catch up.

These explanations of why the market-share/profitability relationship exists are not mutually exclusive. To some degree, a large-share business may benefit from all three kinds of relative advantages.

It is important, however, to understand from the available information how much of the increased profitability that accompanies high market share comes from each of these or other sources.

Ref:  “Pyrrhic Victories in Fights for Market Share,” HBR September–October 2012.

Market Growth

Establishing Market Growth will start with:

  1. Know your purpose– you can’t have another growth in the market unless you know who you serve and who you are;you can just lead the front business, you also have to create the next one

You can do this by a good DESIGN – design is what you need to learn and discover very practically. Design is more than the product.

  1. Figure out what you need to learn– commit the business to a process of identifying the unique ability you have now and the ones you want to grow with in the future
  2. Learn to unlearn– a common mistake in business is to measure a new project by the old metrics
  3. Pilot, Invest and Experiment – this is a discovery driven planning
  4. Reward learning and cooperation – always tie bonuses to growth advancement. But performance is crucial and inevitable.

Customer Satisfaction

“The gulf between satisfied customers and completely satisfied customers can swallow a business.” –HBR, November/December 1995

As markets shrink, companies are scrambling to boost customer satisfaction and keep their current customers rather than devoting additional resources to chase potential new customers. The claim that it costs five to eight times as much to get new customers than to hold on to old ones is key to understanding the drive toward benchmarking and tracking customer satisfaction.

To be successful, companies need a customer satisfaction surveying system that meets the following criteria:

  • The system must be relatively easy to design and understand.
  • It must be credible enough that employee performance and compensation can be attached to the final results.
  • It must generate actionable reports for management.

Defining customer satisfaction

Customer satisfaction is the state of mind that customers have about a company when their expectations have been met or exceeded over the lifetime of the product or service. The achievement of customer satisfaction leads to company loyalty and product repurchase. See more : BTEC Higher National Diploma In Mechanical Engineering- VT720

Because the concept of customer satisfaction is new to many companies, it’s important to be clear on exactly what’s meant by the term.

There are some important implications of this definition:

  • Because customer satisfaction is a subjective, non-quantitative state, measurement won’t be exact and will require sampling and statistical analysis.
  • Customer satisfaction measurement must be undertaken with an understanding of the gap between customer expectations and attribute performance perceptions.
  • There should be some connection between customer satisfaction measurement and bottom-line results.

“Satisfaction” itself can refer to a number of different facts of the relationship with a customer.

For example, it can refer to any or all of the following:

  • Satisfaction with the quality of a particular product or service
  • Satisfaction with an ongoing business relationship
  • Satisfaction with the price-performance ratio of a product or service
  • Satisfaction because a product/service met or exceeded the customer’s expectations

Each industry could add to this list according to the nature of the business and the specific relationship with the customer. Customer satisfaction measurement variables will differ depending on what type of satisfaction is being researched.

For example,manufacturers typically desire on-time delivery and adherence to specifications, so measures of satisfaction taken by suppliers should include these critical variables.

Clearly defining and understanding customer satisfaction can help any company identify opportunities for product and service innovation and serve as the basis for performance appraisal and reward systems. It can also serve as the basis for a customer satisfaction surveying program that can ensure that quality improvement efforts are properly focused on issues that are most important to the customer.

Objectives of a customer satisfaction surveying program

In addition to a clear statement defining customer satisfaction, any successful surveying program must have a clear set of objectives that, once met, will lead to improved performance.

The most basic objectives that should be met by any surveying program include the following:

  • Understanding the expectations and requirements of all your customers
  • Determining how well your company and its competitors are satisfying these expectations and requirements
  • Developing service and/or product standards based on your findings
  • Examining trends over time in order to take action on a timely basis
  • Establishing priorities and standards to judge how well you’ve met these goals

Before an appropriate customer satisfaction surveying program can be designed, the following basic questions must be clearly answered:

  • How will the information we gather be used?
  • How will this information allow us to take action inside the organization?
  • How should we use this information to keep our customers and find new ones?

Morals, Ethics, the Law

These three terms are sometimes used interchangeably when in fact they describe different and fundamentally independent concepts. Clarifying the terms will clarify what type of dilemma you might be facing.

Morals are those values or core beliefs that guide your decisions and are the output of your culture, how you were raised, and your experiences along the way. They are what allow you to determine right from wrong. What is moral and what is not is an internal judgment and varies from person to person, culture to culture, and society to society.

Ethics are standards of behaviour within a group or society that indicate how we should behave to achieve the moral goals upon which the society places importance.

Ethics are related to how we act and interact with others, and so are external in nature. These vary from society to society, but individuals within the society are expected to maintain these standards. If they do not, there is often a social price to pay.

Laws are the minimum code of conduct to which the group has agreed to adhere. Breaking laws means breaking the social contract to which you agreed in becoming a member of that society. In turn this means that the society has the right to punish you by revoking some or all of the rights granted by that society.

The most difficult ethical problems (i.e., how to act) are when one is faced with a conflict between two or more conflicting morals (i.e., what we see as right and wrong). What may be a moral choice is not always an ethical one, and what may be an ethical choice is not always a moral decision, as seen in figure 1 below. Let’s say that you get test results indicating that your product fails to meet its specification limits. The CEO tells you to pass it anyway. What do you do?

Notice that the law may or may not apply to any of these decisions.

Identifying Ethical Issues in Business Organisation

Make no mistake about it: When you enter the business world, you’ll find yourself in situations in which you’ll have to choose the appropriate behavior. How, for example, would you answer questions like the following?

  • Is it OK to accept a pair of sports tickets from a supplier?
  • Can I buy office supplies from my brother-in-law?
  • Is it appropriate to donate company funds to my local community centre?
  • If I find out that a friend is about to be fired, can I warn her?
  • Will I have to lie about the quality of the goods I’m selling?
  • Can I take personal e-mails and phone calls at work?
  • What do I do if I discover that a co-worker is committing fraud?

Obviously, the types of situations are numerous and varied. Fortunately, we can break them down into a few basic categories:


Conflicts of interest,

Conflicts of loyalty,

Issues of honesty and integrity, and


Let’s look a little more closely at each of these categories.

  1. Bribe versus Gifts in Business

It’s not uncommon in business to give and receive small gifts of appreciation. But when is a gift unacceptable? When is it really a bribe? If it’s OK to give a bottle of wine to a corporate client during the holidays, is it OK to give a case of wine? If your company is trying to get a big contract, is it appropriate to send a gift to the key decision maker? If it’s all right to invite a business acquaintance to dinner or to a ball game, is it also all right to offer the same person a fully paid weekend getaway?

The cost of the item, the timing of the gift, the type of gift, and the connection between the giver and the receiver will say it all. If you’re on the receiving end, it’s a good idea to refuse any item that’s overly generous or given for the purpose of influencing a decision. But because accepting even small gifts may violate company rules, the best advice is to check on company policy.

Note: for example-JCPenney’s “Statement of Business Ethics,” for instance, states that employees can’t accept any cash gifts or any noncash gifts except those that have a value below $50 and that are generally used by the giver for promotional purposes. Employees can attend paid-for business functions, but other forms of entertainment, such as sports events and golf outings, can be accepted only if it’s practical for the Penney’s employee to reciprocate. Trips of several days can’t be accepted under any circumstances.

JCPenney Co., “Statement of Business Ethics for Associates and Officers: The ‘Spirit’ of This Statement,” 2006

2. Conflicts of Interest

Conflicts of interest occur when individuals must choose between taking actions that promote their personal interests over the interests of others or taking actions that don’t.

A conflict can exist, for example, when an employee’s own interests interfere with, or have the potential to interfere with, the best interests of the company’s stakeholders (management, customers, and owners). Visit Now : Business Decision Making Assignment

For example: Let’s say that you work for a company with a contract to cater for events at your college and that your uncle owns a local bakery. Obviously, this situation could create a conflict of interest(or at least give the appearance of one—which, by the way, is a problem in itself). When you’re called on to furnish desserts for a luncheon, you might be tempted to throw some business your uncle’s way even if it’s not in the best interest of the catering company that you work for.

What should you do?You should probably disclose the connection to your boss, who can then arrange things so that your personal interests don’t conflict with the company’s. You may, for example, agree that if you’re assigned to order products like those that your uncle makes, you’re obligated to find another supplier. Or your boss may make sure that someone else orders bakery products.

The same principle holds that an employee shouldn’t use private information about an employer for personal financial benefit. Say that you learn from a co-worker at your pharmaceutical company that one of its most profitable drugs will be pulled off the market because of dangerous side effects. The recall will severely hurt the company’s financial performance and cause its stock price to plummet.

Before the news becomes public, you sell all the stock you own in the company. What you’ve done isn’t merely unethical: It’s called insider trading, it’s illegal, and you could go to jail for it.

  1. Conflicts of Loyalty

Sometimes you find yourself in a bind between being loyal either to your employer or to a friend or family member. Perhaps you just learned that a coworker, a friend of yours, is about to be downsized out of his job.

You also happen to know that he and his wife are getting ready to make a deposit on a house near the company headquarters.

  • From a work standpoint, you know that you shouldn’t divulge the information.
  • From a friendship standpoint, though, you feel it’s your duty to tell your friend.

Wouldn’t he tell you if the situation were reversed? So what do you do? As tempting as it is to be loyal to your friend, you shouldn’t. As an employee, your primary responsibility is to your employer. You might be able to soften your dilemma by convincing a manager with the appropriate authority to tell your friend the bad news before he puts down his deposit.

Issues of Honesty and Integrity

Master investor Warren Buffet once told a group of business students the following:

“I cannot tell you that honesty is the best policy. I can’t tell you that if you behave with perfect honesty and integrity somebody somewhere won’t behave the other way and make more money.

But honesty is a good policy. You’ll do fine, you’ll sleep well at night and you’ll feel good about the example you are setting for your co-workers and the other people who care about you

If you work for a company that settles for its employees’ merely obeying the law and following a few internal regulations, you might think about moving on. If you’re being asked to deceive customers about the quality or value of your product, you’re in an ethically unhealthy environment.

Ethical Dilemma/Case study: Should Levi Strauss Go into Business with Wal-Mart?

Study carefully and analyze


For years, the words jeans and Levi’s were synonymous. Levi Strauss, the founder of the company that carries his name, invented blue jeans in 1850 for sale to prospectors in the gold fields of California. Company sales peaked at $7 billion in 1996 but then plummeted to $4 billion by 2003.

Management has admitted that the company must reverse this downward trend if it hopes to retain the support of its twelve thousand employees, operate its remaining U.S. factories, and continue its tradition of corporate-responsibility initiatives.

At this point, Wal-Mart made an attractive offer: Levi Strauss could develop a low-cost brand of jeans for sale at Walmart. The decision, however, isn’t as simple as it may seem: Wal-Mart’s relentless pressure to offer “everyday low prices” can have wide-ranging ramifications for its suppliers’ stakeholders—in this case, Levi Strauss’s shareholders, employees, and customers, as well as the beneficiaries of its various social-responsibility programs.

Assume that, as the CEO of Levi Strauss, you have to decide whether to accept Wal-Mart’s offer. Again, ignore any decision already made by your real-life counterpart, and instead work toward an independent recommendation.

( and read the article “The Wal-Mart You Don’t Know.”

Think about this story:

“A chef put two frogs in a pot of warm soup water. The first frog smelled the onions, recognized the danger, and immediately jumped out. The second frog hesitated: The water felt good, and he decided to stay and relax for a minute. After all, he could always jump out when things got too hot (so to speak). As the water got hotter, however, the frog adapted to it, hardly noticing the change. Before long, of course, he was the main ingredient in frog-leg soup.”

Quoted by Adrian Gostick and Dana Telford, The Integrity Advantage (Salt Lake City: Gibbs Smith, 2003), 103.

How to Maintain Honesty and Integrity

4.  Whistle-Blowing

The story

The misdeeds of Betty Vinson and her accomplices at WorldCom didn’t go undetected. They caught the eye of Cynthia Cooper, the company’s director of internal auditing. Cooper, of course, could have looked the other way, but instead she summoned up the courage to be a whistle-blower—an individual who exposes illegal or unethical behaviour in an organization. Like Vinson, Cooper had majored in accounting at Mississippi State and was a hard-working, dedicated employee. Unlike Vinson, however, she refused to be bullied by her boss, CFO Scott Sullivan.

In fact, she had tried to tell not only Sullivan but also auditors from the huge Arthur Andersen accounting firm that there was a problem with WorldCom’s books. The auditors dismissed her warnings, and when Sullivan angrily told her to drop the matter, she started cleaning out her office. But she didn’t relent. She and her team worked late each night, conducting an extensive, secret investigation.

Two months later, Cooper had evidence to take to Sullivan, who told her once again to back off. Again, however, she stood up to him, and though she regretted the consequences for her WorldCom co-workers, she reported the scheme to the company’s board of directors. Within days, Sullivan was fired and the largest accounting fraud in history became public.

Whistle-blowing often means career suicide.A survey of two hundred whistle-blowers conducted by the National Whistle-blower Centre found that half of them had been fired for blowing the whistle. Even those who get to keep their jobs experience painful repercussions.

Refusing to Rationalize

Despite all the good arguments in favour of doing the right thing, why do many reasonable people act unethically (at least at times)? Why do good people make bad choices? According to one study, there are four common rationalizations for justifying misconduct:

  1. My behaviour isn’t really illegal or immoral. Rationalizers try to convince themselves that an action is OK if it isn’t downright illegal or blatantly immoral. They tend to operate in a grey area where there’s no clear evidence that the action is wrong.
  2. My action is in everyone’s best interests. Some rationalizers tell themselves: “I know I lied to make the deal, but it’ll bring in a lot of business and pay a lot of bills.” They convince themselves that they’re expected to act in a certain way, forgetting the classic parental parable about jumping off a cliff just because your friends are.
  3. No one will find out what I’ve done. Here, the self-questioning comes down to “If I didn’t get caught, did I really do it?” The answer is yes. There’s a simple way to avoid succumbing to this rationalization: Always act as if you’re being watched.
  4. The company will condone my action and protect me. This justification rests on a fallacy. Betty Vinson may honestly have believed that her actions were for the good of the company and that her boss would, therefore, accept full responsibility (as he promised). When she goes to jail, however, she’ll go on her own.


ISO 9001’s effect on sales

Although an argument could be made that ISO 9001 indirectly affects sales as a whole, we can only truthfully narrow the direct positive effect to a few areas. The table below provides a list of key ISO 9001 requirements and their ultimate effect on sales.

ISO/Quality RequirementPurposeEffect in operationsEffect On sales
Quality policySet company directionIncrease employee’s pride
Quality manualSummary of processes and proceduresBetter presentation of processesShowcase of company processes
External auditsMonitor QMS and keep certificationEliminate deviations and promote adherence to policies and proceduresMaintain orders or obtain new orders from customers who require ISO 9001
Focus on customer satisfactionMonitor customer satisfactionMake decisions to support improvementsIncrease in repetitive business
Tracking objectivesMonitor QMS performanceImprove efficiency of processesIncrease profit margins
ProceduresNormalize processesImprove consistency and reduce process errorsIncrease profit margins
Corrective and preventive actionCorrect or prevent systemic issuesImprove overall processDecrease customer returns or complaints

Mapping the sales process

So are you ready to include your outside sales processes in your product realization processes? The first thing you need to do is map your processes. Here is a good example of what a simple sales process may look like. The inputs and the outputs are depicted in black. The outside sales process steps are depicted in blue. The arrows show the sequence and interaction. In this case we are assuming the process happens in a straight line.

The benefits of a straight line is that you are forcing the process to go a certain way, and although adjustments may be made if you get the contract after the inquiry handling step, the idea of mapping the process is that you do not submit a proposal unless you have conducted a presentation—and not after the first inquiry handling step.

In order to explain this better, let’s look at each step in detail. This will help you create a robust procedure for your sales process.

Inquiry handling – Here you can explain what you expect to be said upon receipt of a call or how you expect to answer an e-mail.  Obviously every case is different and every customer is different, however having some guidelines will help even the receptionist become a good sales call handler. Here are a couple of things you can also prepare:

  • Scripts: Prepare scripts for answering calls by product or service type or for answering e-mails.
  • Forms: Prepare forms that can be filled out by anybody who is receiving a call, such as an inquiry form, pre-quote, etc.

Presentation Depending on what kind of sales you do, presentations will most of the time work to your advantage. So this step should allow for either face-to-face presentations or online presentations. In either case you can let each sales person do some customization; however, having a consistent and basic presentation is key to ensuring everyone will show what is considered important.

Proposal This step should provide guidelines for providing a good proposal. Of course, templates will also be necessary to ensure that your sales team looks professional. Even if you submit proposals as part of an e-mail, having a template will help maintain consistency.

Closing Follow-up in the form of e-mails, phone calls, and so forth could be covered in this step. You could also implement logs to keep track of follow-ups. Of course if you own a sales software package, then the software should help you keep track of the follow-up steps.

Return on Capital Employed [ROCE]

The return on capital employed measures the proportion of adjusted earnings to the amount of capital and debt required for a business to function.

For a company to remain in business over the long term its return on capital employed should be higher than its cost of capital; otherwise, continuing operations gradually reduce the earnings available to shareholders. It is commonly used to compare the efficiency of capital usage of businesses within the same industry.

The return on capital employed is a better measurement than return on equity, because ROCE shows how well a company is using both its equity and debt to generate a return.

How to Calculate ROCE

Both the numerator and denominator of the return on capital employed are subject to a variety of definitions.

The main elements are:

  1. Numerator. This is most commonly earnings before interest and taxes, though you can also strip out any earnings from investments, in order to focus more clearly on the return from operations.
  2. Denominator. This is total assets minus current liabilities. It is essentially all of stockholders’ equity plus debt.

The ROCE formula is:

Earnings before interest and taxes
Total assets – Current liabilities

The measure should be tracked on at least an annual basis and plotted on a trend line, to spot long-term changes in corporate performance.

Example of ROCE

Bovey Corporation has earnings before interest and taxes of $500,000, total assets of $4,500,000, and current liabilities of $200,000. Bovey’s return on capital employed is:

$500,000 EBIT
$4,500,000 Assets – $200,000 Current liabilities

= 11.6% Return on capital employed

Another version

Return on Capital Employed

Return on capital employed or ROCE is a profitability ratio that measures how efficiently a company can generate profits from its capital employed by comparing net operating profit to capital employed. In other words, return on capital employed shows investors how many dollars in profits each dollar of capital employed generates.

ROCE is a long-term profitability ratio because it shows how effectively assets are performing while taking into consideration long-term financing. This is why ROCE is a more useful ratio than return on equity to evaluate the longevity of a company.

This ratio is based on two important calculations: operating profit and capital employed. Net operating profit is often called EBIT or earnings before interest and taxes. EBIT is often reported on the income statement because it shows the company profits generated from operations. EBIT can be calculated by adding interest and taxes back into net income if need be.

Capital employed is a fairly convoluted term because it can be used to refer to many different financial ratios. Most often capital employed refers to the total assets of a company less all current liabilities. This could also be looked at as stockholders’ equity less long-term liabilities. Both equal the same figure.


Return on capital employed formula is calculated by dividing net operating profit or EBIT by the employed capital.

If employed capital is not given in a problem or in the financial statement notes, you can calculate it by subtracting current liabilities from total assets. In this case the ROCE formula would look like this:

It isn’t uncommon for investors to use averages instead of year-end figures for this ratio, but it isn’t necessary.

REFERENCES for BTEC Higher Nationals in Business Edexcel – Pearson Education



Sawyer M, (ed) – The UK Economy: A Manual of Applied Economics, 16th edition (OUP Oxford; 2004) ISBN: 9780199266517 Begg D – Foundations of Economics, 4th edition (McGraw-Hill Higher Education, 2009) ISBN: 9780077121884 Morrison J – International Business Environment: Global and Local Marketplaces in a Changing World (Palgrave Macmillan, 2006) ISBN: 9781403936912 A & C Black Publishers Ltd – Whitaker’s Almanack 2010, 142nd Revised edition (A & C Black Publishers Ltd, 2009) ISBN: 9781408113646 Journals

Harvard Business Review (Harvard Business Publishing) The Economist (The Economist Newspaper Ltd) The broadsheet newspapers have daily business sections. Many business stories will appear in the news sections.

Websites : the government’s portal has sections on business support, Europe, Business Law and regional development as well as other materials Online journal for British Economy Survey Competition Commission’s web site regulates competition between companies in the UK by conducting in-depth inquiries is a directory of materials that can be used for teaching and covers a broad spectrum of business and economics aspx is the web site of the Office of the Gas and Electricity Markets. Each industry regulator has a similar site Bized provides a selection of teaching and learning resources the BBC web site’s business section The website of the European Union includes a number of business and economics oriented case studies Videos

Television news, current affairs and business programmes will also provide useful additional and up to date material on business and the economy often ith special features on particular business environment subjects. Many programmes are archived and can be viewed on demand.

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