BUSINESS STUDIES

2011-AL-BUS STUD ADVANCED LEVEL

OBJECTIVES
1. To provide a basic knowledge of the business environment and business activities in Hong Kong.
2. To develop an understanding of the integrated and changing nature of modern business problems.
3. To develop skills of analysis, synthesis and evaluation in the context of business decisions.

THE EXAMINATION
The examination will consist of two papers of 3 hours each.
Paper 1 (50%) − This paper will consist of
(a) short questions to test basic concepts and knowledge; and
(b) questions on case studies to test comprehension and application of knowledge.
Paper 2 (50%) − This paper will consist of essay questions. It will give candidates an opportunity to deal in depth with the topics
of the syllabus.
The content of the syllabus will be tested in both papers.

THE SYLLABUS

SYLLABUS EXPLANATORY NOTES

Section 1 Business in the Hong Kong economy

Definitions of business

The role of business in Hong Kong economy (i) Production of goods and services
 SYLLABUS EXPLANATORY NOTES

2011-AL-BUS STUD (ii) Provision of employment opportunities

(iii) Improvement of living standards, etc.

The industrial structure in Hong Kong and its (i) Lack of primary industries, concentration on secondary and
particular characteristics tertiary industries
(ii) Scope and development of the service sector

The factors affecting Hong Kong’s (i) The risks of operating a business in Hong Kong
international trade (ii) Its dependence on international trade
(iii) The susceptibility of Hong Kong business to world economic
and political conditions

Legal considerations (i) The effects of international legislation on Hong Kong business
(ii) Effects of local legislation on Hong Kong business:
employee protection and consumer protection

Business and government relations Government authorities which exist to assist and control business
operations, trade and industry

Business ethics and social responsibilities (i) The relationship of business organization to the community
(ii) The business response to environmental pollution problems

Section 2 Forms of business ownership and their objectives

The formation and characteristics of different (i) Objectives of each form

forms of business ownership: sole trader, (ii) Procedures for formation
partnership and limited company (iii) Advantages and disadvantages
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2011-AL-BUS STUD Other forms of business ownership Cooperatives, joint-venture, franchise and public enterprise

The problems of setting up a business organization (i) Internal e.g. factors of production
(ii) External e.g. political and government restrictions, market
environment

The challenge of small business (i) Reasons for survival and failure
(ii) Its economic roles and contributions

Multi-national firms (i) Definition

(ii) Characteristics

Section 3 Management and operating functions within firms to achieve objectives

Management

Functions of management (i) Definition of management

(ii) Basic understanding of planning, organizing, staffing,
co-ordinating, leading, controlling and decision making

Means to effective management e.g. Division of work, subordinating individual goals, encouraging
individual effort, balancing responsibility with authority, and
developing team spirit

Types of formal organizational structure and (i) Line, staff, line and staff
control (ii) Departmentalization
(iii) Centralization and decentralization
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2011-AL-BUS STUD (iv) Span of control

The need for effective communication (i) Means of communication

(ii) Importance of vertical/horizontal communication
(iii) Ways to overcome communication barriers

Human Resource Management

The importance of manpower Its significance in achieving company objectives

Functions of human resource management (i) Job analysis which includes job description and job
specification
(ii) Manpower planning
(iii) Recruitment, selection, placement and orientation
(iv) Training and development programmes
(v) Evaluation: performance appraisal, transfer, promotion and
discharge
(vi) Compensation: remuneration and fringe benefits
(vii) Maintenance: employee health and safety, morale, absenteeism
and turnover

Factors influencing motivation, morale and (i) Basic understanding of Maslow’s Hierarchy of Needs Theory
productivity and Herzberg’s Dual-factor Theory
(ii) Basic understanding of McGregor’s Theory X and Theory Y
(iii) Financial and non-financial rewards

Industrial relations (i) Framework of industrial relations system: factors affecting the
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2011-AL-BUS STUD system

(ii) Agencies involved: employers’ associations and trade unions
(iii) Collective bargaining
(iv) The use of conciliation and arbitration

Financial Management

Sources of capital (i) Short term capital

(ii) Long term capital
(iii) Factors affecting choice of the above

Financial markets (i) Primary and secondary markets

(ii) Capital and money markets

The nature of financial statements Basic understanding of financial statements: balance sheets and
income statements (study of basic bookkeeping is not required)

The nature and significance of key financial ratios Types of financial ratios: liquidity, profitability, activity, leverage and
equity ratios

Current assets management (i) Cash flow and its importance

(ii) Stock control
(iii) Debtors management

Capital budgeting (i) The concept of discounted cash flow

(ii) Methods, their advantages and disadvantages: NPV, IRR,
average rate of returns, payback method
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2011-AL-BUS STUD
The use of budgets for management guidance Planning and control

Revenue and cost (i) Capital and revenue

(ii) Fixed and variable costs
(iii) Linear breakeven analysis and its limitations

Operations Management

Production processes (i) Production concepts

(ii) Types: extractive, analytic, fabricating, synthetic, assembling

Product innovation/development Steps in product innovation/development

Operations systems (manufacturing and service (i) Manufacturing processes: standard and custom production,
industries) continuous and intermittent production
(ii) Production planning and control
(iii) Materials management: purchasing, storage, stock control
(simple calculation of EOQ is required)
(iv) Concept of quality in manufacturing and service industries
(v) Basic concepts of Total Quality Management and Re-
engineering (details of implementation are not required)

Mass production (i) Characteristics: mechanization, specialization of labor,

standardization, and automation
(ii) Advantages and disadvantages
(iii) Favorable factors that make mass production possible
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2011-AL-BUS STUD
Marketing Management

The marketing concept Definition

The role of marketing Planning, organizing, implementing and controlling marketing

activities for goods and services

Marketing research (i) Process of marketing research

(ii) The role of marketing research

Buyer behaviour (i) Factors affecting consumer buying behaviour

(ii) Factors affecting industrial buying behaviour

Marketing strategy for goods and services (i) Selecting and analyzing target markets
(ii) Developing a marketing mix: product/service, channels of
distribution, price and non-price competition, promotion
(iii) Applying various marketing mix strategies for different stages
of the product life cycle
(iv) Basic concepts of relationship marketing

Consumerism Rights, complaints and responses

International marketing (i) Environmental forces in international markets

(ii) Adaptations versus standardization of international marketing
mixes
(iii) Methods of developing international marketing involvement
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2011-AL-BUS STUD
Risk Management

General features of business risks (i) Types of business risks

(ii) Risk management: risk identification, evaluation, measurement
and treatment, programme of implementation
(iii) Instruments for risk reduction: futures and options

Insurance (i) Principles

(ii) Functions
(iii) Types of insurance protection: life, property, liability, marine
and credit insurance

Business Information

The importance and use of information in business (i) The significance and usefulness of business information
(ii) Basic understanding of the importance of information systems
in business

Statistical data in business (i) Application of the arithmetic mean, mode and median
(ii) Interpretation of tables, graphs, histograms, bar charts and pie
charts
(iii) Basic understanding of trend interpretation

The role of information technology in business (i) Its applications

(ii) Advantages and disadvantages