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Think Business
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Think Business
Programme 5: Planning for Growth

Aims

'Think Business' consists of five TV programmes. Each programme comprises a number of short case studies describing the activities of a wide range of real-life successful Scottish organisations including a range of different forms of business from the small-scale sole trader to larger limited companies. A Scottish charity and a workers' co-operative are also represented.

The five programmes use the real case studies to focus on particular areas of interest. These areas are described in each programme's title.

Programme 5 Planning for Growth: focuses on the growth of three Scottish organisations over the last twenty years. Innovation and product development are highlighted as drivers of growth.

The programme aims to introduce learners to:

  • business growth;
  • the importance for an organisation to think ahead strategically to secure survival / growth.

Learning Outcomes

Learners will:

  • understand what is meant by the term 'business growth' and know how it can be measured;
  • know how businesses can grow, eg organically or by acquisition;
  • understand how strategic planning is important to ensure the survival / growth of an organisation;
  • understand how an organisation can grow by meeting the needs of customers through innovation and new products;
  • know the impact that business growth can have on employees, the structure of the organisation, its managers and processes;
  • identify and select relevant information from the programme to support coursework.

The programmes will be useful to support learning in Standard Grade Business Management, Intermediate 1, 2 and Higher Grade Business Management. Similar GCSE and AS /A level courses in England and Wales and Ireland could also use the programmes to enhance learning.

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Outline

Short case studies examine the strategic growth of three Scottish organisations, Harlequin Restaurants, The Edinburgh Bicycle Co-op, a workers' co-operative, and Mathew Algie, the tea / coffee supplier, over the last two decades. Each organisation is essentially a service provider although each also undertakes some production.

0.00–6.50: in Case Study 1, Aim to Win, Charan Gill, Managing Director of Harlequin Restaurants, describes the growth of his Indian restaurants over the last twenty years. The importance of planning the future / direction / vision of the organisation is emphasised along with the need to keep changing / evolving to be better than competitors.

6.50–12.00: in Case Study 2, Get on the Right Track, Ged Holmyard, Secretary, (and others), describe the working of the Edinburgh Bicycle Co-op, a workers' cooperative. Details of the growth of the organisation are given and the case study shows how growth can be sustained by having a highly specialised and successful product (a bike designed specifically for Edinburgh roads).

12.00–18.23: in Case Study 3 Think Business, David Williamson, Managing director of the specialist tea / coffee trader, Mathew Algie, explains how a very traditional organisation can enter a new market and grow successfully. The importance of developing partnerships and alliances with other organisations is highlighted along with the potential to maintain growth by looking for opportunities to exploit the idea / product overseas.

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Curriculum Relevance

In Scotland

Standard Grade Business Management

Area of Study 2 How Businesses Develop and Perform?
Section 2.2 How do businesses grow?

Intermediate 1 Business Management

Business in Society

Learning Outcome 1 Describe the nature and importance of Business Activity in Contemporary Society. (Reference is made to Growth under the heading 'Objectives' and also in the section dealing with 'The Changing Nature of Business' where issues such as development of new products, changes in consumer demand, etc. are to be covered)

Intermediate 2 Business Management

Business Enterprise

Learning Outcome 1 Explain the role of Business Enterprise in Contemporary Society. (Reference is made to Growth under the heading of 'Objectives' and also in the section dealing with 'Changes in the Business Environment' where issues such as development of new products, changes in consumer demand, competition etc. are to be covered.

Higher Grade Business Management

Business Enterprise

Learning Outcome 1 Analyse Business Enterprise in Contemporary Society (Business Growth will be dealt with under the headings of 'Objectives', 'Business as a Dynamic Activity' and 'Decision-Making in Business')

In England

GCSE Double Award in Applied Business: Investigating Business
AS / A Business Studies: Objectives and the Business Environment

In Northern Ireland

GCSE Double Award in Applied Business: Investigating Business
AS / A Business Studies: Objectives and the Business Environment

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Background Information

Meaning of Business Growth

Organisations often have 'Growth' as a strategic objective. This is often referred to as 'growing the business'. Business growth can be measured by:

  • Increases in the value of sales. This is the simplest and most common way of measuring growth. If sales are increasing, the organisation is growing.
  • Increases in the value of the assets the organisation owns. This usually means that the organisation is growing because it is using more equipment, expanding its premises, opening new sites, etc.
  • Increases in the number of employees. If the business is growing it will require more employees to function.

Causes of Business Growth

Business growth can be achieved by being in the right place at the right time and (i) developing an idea that meets the needs of consumers and (ii) supplying products or services for which demand is rising. This can be done by offering the existing product / service in a new market or devising a new product / service for the existing or a new market. Organisations have to protect their survival in a competitive market by ensuring that their products / services are meeting the current / future needs of customers and that they are using innovation / product development / quality control to retain competitive advantage and so 'grow the business' and safeguard their future. The current and future needs of customers can be determined through active market research.

For manufacturing and service providers, maintaining the consistency of output is essential to customer loyalty. This is particularly true for organisations that have a number of outlets and supply products / services to customers, eg McDonald's. In the case of McDonald's, it is vital that customers experience the same quality of burger in Edinburgh as they do in Elgin or in the case of BP, that the level of service in the BP garage in Helensburgh is the same as that offered at the garage in Hawick. To guarantee consistency of service, rigorous quality control systems have to be installed across the organisation.

To ensure their own growth and survival, organisations often form alliances or partnerships either with their suppliers (to guarantee supplies at reasonable cost) or with organisations to whom they sell their goods (to ensure their market is secure). This approach is known as 'managing the supply chain'.

How organisations grow

Broadly speaking, there are two ways that an organisation can grow over time. The first way is by simply increasing its sales, expanding assets and / or employees. This type of growth is known as organic or internal growth. It is probably the simplest way for small organisations to grow and the increasing revenue from rising sales gives the organisation a positive cash flow which can be used to increase the assets / employees and 'grow the business'. The second way to grow would be by acquisition, ie buying / merging with another organisation. Acquisition simply means buying another organisation's assets and gaining control of its decision-making process. Making an offer to the original owner(s) to buy the organisation does this.

Organisations can acquire other organisations by means of a merger or a take-over. A merger occurs when the process is friendly and both parties agree to come together for mutual benefit, e.g. economies of scale, obtaining a particular skill / asset / market that one organisation has and the other one needs. A take-over is less friendly and usually results in vigorous resistance on the part of the organisation to be taken over. This often results in the predator organisation having to increase its offer.

Making long-term decisions for the organisation

Decisions that affect the future direction / vision of an organisation are known as strategic decisions and have the following characteristics:

  • They will have a long term and significant impact on the organisation, its employees, managers, and processes.
  • They will require the gathering of much information and careful consideration of that information before taking the decision.
  • They can take a long time to reach because gathering the relevant information, analysing it to devise alternative solutions and reaching the final decision can be a lengthy process.

Strategic decisions are vital for any organisation since they will affect its future success or failure. Taking a wrong decision can mean failure for the organisation while a correct analysis of the information resulting in a sound decision can lead to substantial growth, eg the decision taken by EasyJet and Ryanair to enter the low-cost / no frills market resulted in huge growth of sales for these two organisations.

Changing the strategic directions of the organisation, eg entering a new market, producing a new good / service is likely to impact on:

  • employees and managers by changing their work and requiring them to acquire new skills;
  • the structure and processes of the organisation as new roles / jobs / departments are set up.

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Activities

NOTE:

Two types of activities / tasks suggested for learners have been laid out below.

  • Activities / tasks based on information given in the case studies and requiring the learners to view the case studies.
  • Other activities / tasks that can be done without viewing the case studies.

Also

  • The activities / tasks available at Standard Grade and Intermediate 1 are often similar.
  • Learners can use the activities / tasks at lower levels for reinforcement.

Activities and Tasks using the Case Studies

Standard Grade Business Management

Case Study 1 (Harlequin Restaurants)

  1. Identify the successful product(s) / services(s) that enabled the Harlequin Restaurant group to grow over time.
  2. By what method did the Harlequin Restaurant group grow?
  3. Identify 3 new products/services that the Harlequin Restaurant group developed for their customers. Why were they determined to develop these new products / services?
  4. With a number of 'Ashokashaks' now operating in different parts of the country, how is the organisation ensuring that the quality of service offered to customers across the different outlets is consistent.

Case Study 2 (Edinburgh Bicycle Co-op)

  1. Discuss the advantages and disadvantages to employees of working in a workers' co-operative.
  2. What were the key factors that allowed the Edinburgh Bicycle Co-op to grow quite rapidly since it was set up in 1977?
  3. Discuss why the strategic decision to buy bike shops in Newcastle and Aberdeen took a lot of time to make.

Case Study 3 (Mathew Algie)

  1. Identify why Mathew Algie, a traditional tea / coffee supplier to the catering industry, decided to focus on supplying beans to specialist coffee shops.
  2. Mathew Algie entered into a number of partnerships / alliances with its customers, ie the shops it was supplying with coffee beans. Identify two advantages to (i) Mathew Algie and (ii) its customer shops of this arrangement.
  3. Why do you think that Mathew Algie is now looking to take its business idea overseas?

Intermediate 1 Business Management

Case Study 1 (Harlequin Restaurants)

  1. Identify the successful product(s) / services(s) that enabled the Harlequin Restaurant group to grow over time.
  2. By what method did the Harlequin Restaurant group grow?
  3. Identify three new products / services that the Harlequin Restaurant group developed for their customers. Why were they determined to develop these new products / services?
  4. With a number of 'Ashokashaks' now operating in different parts of the country, how is the organisation ensuring that the quality of service offered to customers across the different outlets is consistent.

Case Study 2 (Edinburgh Bicycle Co-op)

  1. Discuss the advantages and disadvantages to employees of working in a workers' co-operative.
  2. What were the key factors that allowed the Edinburgh Bicycle Co-op to grow quite rapidly since it was set up in 1977.
  3. Discuss why the strategic decision to buy bike shops in Newcastle and Aberdeen took a lot of time to reach.

Case Study 3 (Mathew Algie)

  1. Identify why Mathew Algie, a traditional tea / coffee supplier to the catering industry, decided to focus on supplying beans to specialist coffee shops.
  2. Mathew Algie entered into a number of partnerships / alliances with its customers, ie the shops it was supplying with coffee beans. Identify two advantages to (i) Mathew Algie and (ii) its customer shops of this arrangement.
  3. Why do you think that Mathew Algie is now looking to take its business idea overseas?

Intermediate 2

Case Study 1 (Harlequin Restaurants)

  1. Describe how the market for Indian food has changed since Harlequin Restaurants began in the 1980s.
  2. What evidence is there in the case study to suggest that (i) Harlequin Restaurants set Growth as one of its key objects and (ii) that it was successful in achieving the objective.

Case Study 2 (Edinburgh Bicycle Co-op)

  1. Identify examples of the Edinburgh Bicycle Co-op growing organically and by acquisition. List some of the advantages it gained through growing by acquisition.

Case Study 3 (Mathew Algie)

  1. Identify possible changes in the future business environment that might slow down the growth rate achieved by Mathew Algie to date.

Higher Grade Business Management

Case Study 1 (Harlequin Restaurants)

  1. State how the following stakeholders might benefit from the growth of Harlequin Restaurants?

    1. employees at Harlequin;
    2. the Government;
    3. local communities in which the restaurants are sited;
    4. suppliers of food, etc. to Harlequin.

  2. State the main opportunities and threats that might have been considered when deciding whether to establish the Ashokashak restaurants.

Case Study 2 (Edinburgh Bicycle Co-op)

  1. Identify possible opportunities in the current / future business environment that should continue to allow the company to grow.

Case Study 3 (Mathew Algie)

  1. Explain the risks to Mathew Algie of relying on 65% of its revenue coming from the sale of one product – the beans for espresso coffee.

Other activities

Standard Grade Business Management

  1. Identify three current products / services for which you know there has been a large demand recently and which is likely to have resulted in rapid growth for the organisation offering them. Why do you think demand has been so large?
  2. What can an organisation do to encourage its own growth? Identify a national / local organisation that seems to have been very successful recently and try to identify what it has done to promote its own growth.
  3. During 2004, the supermarket operator William Morrison & Co will take over Safeway.

    1. Explain why William Morrison & Co might want to buy Safeway.
    2. Indicate whether the take over is an example of horizontal or vertical integration.
    3. Explain how the takeover might affect:

      • employees at Safeway and William Morrison & C;
      • customers of the new integrated organisation.

  4. Innovation and Product Development can enable an organisation to grow. Select an example of a national / local organisation that you know has innovated or developed a new product and state how effective the innovation / product development has been in encouraging the organisation's growth.

Intermediate 1 Business Management

  1. Identify three current products / services for which you know there has been a large demand recently and which is likely to have resulted in rapid growth for the organisation offering them. Why do you think demand has been so large?
  2. What can an organisation do to encourage its own growth? Identify a national / local organisation that seems to have been very successful recently and try to identify what it has done to promote its own growth.
  3. During 2004, the supermarket operator William Morrison & Co will take over Safeway.

    1. Explain why William Morrison & Co might want to buy Safeway.c
    2. Indicate whether the take over is an example of horizontal or vertical integration.
    3. Explain what the effect of the takeover might be on:

      • employees at Safeway and William Morrison & Co;
      • customers of the new integrated organisation.

  4. Innovation and Product Development can enable an organisation to grow. Select an example of a national / local organisation that you know has innovated or developed a new product and state how effective the innovation / product development has been in encouraging the organisation's growth.
  5. The number of local sports / leisure centres has increased recently and many of these have shown substantial growth in membership, etc. What factors in the business environment have encouraged this growth.

Intermediate 2 Business Management

  1. A local waste disposal organisation has an objective to 'grow the business' by extending its premises in a residential area and installing equipment that will receive waste delivered by lorry from the surrounding area, process the waste, and take it by road to land-fill sites for burying. The expansion programme will double the amount of waste the organisation is able to handle. Identify at least four stakeholders in this organisation and consider how they may be affected by the organisation's proposal and their likely reaction.

Higher Grade Business Management

  1. Suggest the information that would need to be gathered by a local fast food operator intent on taking a strategic decision to expand the business through increasing sales.

Suggested Solutions

  1. Often in the area of Business Management there is no one correct answer but a number of plausible solutions may exist. The solutions offered here are simply suggestions; teachers and learners may well be able to identify other plausible alternatives.
  2. A number of activities involve learners in investigating local businesses, etc. In such cases, no suggested solutions can be offered.

Activities and Tasks based on the Case Studies

Case Study 1 (Harlequin Restaurants)

1. Successful product: Indian cuisine / meals.
2. Method of Growth: By acquisition and internal / organic growth through innovation.
3. Three new products: Product 1

Product 2

Product 3
Curry and eating out Indian Meals in the early days
Curry Karaoke – Indian meals with entertainment
Ashokashaks – fast food Indian meals.
  Harlequin developed these products to keep ahead of the competition – an example of product innovation.
4. Ensuring consistent quality: The basic meals are prepared in a central kitchen, and sent out to each Ashokashak for final preparation and cooking.

Case Study 2 (Edinburgh Bicycle Co-op)0

5. Advantages/Disadvantages of workers' co-operative to employees Advantages Surpluses shared
Workers involved in strategic decisions
Personal commitment to aims of organization
Workers own the business.
  Disadvantages Difficult to meet to take strategic decisions.
6. Key factors encouraging growth: Absence of many cycle repair shops in Edinburgh
Trend towards bikes for travelling – environmentally friendly
Healthy living campaigns/exercise campaigns supported growth
Increasing demand for specialised bike(s) and accessories, etc.
7. Time taken for strategic decision to acquire: Decision took a long time to take because strategic decisions, involving the future of the organization need to be taken carefully.
Reasons for lengthy process:
  • Gathering information
  • Analysing information
  • Discussing alternatives
  • Presenting the case to meeting of workers
  • Agreeing the way forward.

Case Study 3 (Matthew Algie)

8. Why go into specialist coffee shops? Matthew Algie identified a growing market in which the basic competences / skills of Algie could be utilised.
9. Advantages of partnerships: To Algie: Outlets guaranteed to take its coffee beans
Close relationship with customers makes production / distribution of coffee easier particularly when the beans have to be so fresh on delivery.
  To Shops: Guaranteed regular supply of fresh coffee
Advice and help in making the coffee can be provided by expert, Algie.
10. Why go overseas? Coffee drinking is big in Europe and a market may exist there for the kind of specialist service that Algie provides in UK.

Intermediate 1 Business Management

Case Study 1 (Harlequin Restaurants)

1. Successful product: Indian cuisine / meals.
2. Method of Growth: By acquisition and internal / organic growth through innovation.
3. Three new products: Product 1
Product 2
Product 3
Curry and eating out Indian Meals in the early days
Curry Karaoke – Indian meals with entertainment
Ashokashaks – fast food Indian meals.
  Harlequin developed these products to keep ahead of the competition – an example of product innovation.
4. Ensuring consistent quality: The basic meals are prepared in a central kitchen, and sent out to each Ashokashak for final preparation and cooking.

Case Study 2 (Edinburgh bicycle Co-op)

5. Advantages/Disadvantages of workers' co-operative to employees: Advantages Surpluses shared
Workers involved in strategic decisions
Personal commitment to aims of organization
Workers own the business.
  Disadvantages Difficult to meet to take strategic decisions.
6. Key factors encouraging growth: Absence of many cycle repair shops in Edinburgh
Trend towards bikes for travelling – environmentally friendly
Healthy living campaigns/exercise campaigns supported growth
Increasing demand for specialised bike(s) and accessories.
7. Time taken for Strategic decision to acquire: Decision took a long time to take because strategic decisions, involving the future of the organization need to be taken carefully.
Reasons for lengthy process:

  • Gathering information
  • Analysing information
  • Discussing alternatives
  • Presenting the case to meeting of workers
  • Agreeing the way forward.

Case Study 3 (Matthew Algie)

8. Why go into specialist coffee shops? Matthew Algie identified a growing market in which the basic competences / skills of Algie could be utilised
9. Advantages of partnerships: To Algie: Outlets guaranteed to take its coffee beans
Close relationship with customers makes Production / distribution of coffee easier particularly when the beans have to be so fresh on delivery.
  To Shops: Guaranteed regular supply of fresh coffee
Advice and help in making the coffee can be provided by expert, Algie.
10. Why go overseas? Coffee drinking is big in Europe and a market may exist there for the kind of specialist service that Algie provides in UK.

Intermediate 2 Business Management

1. How has the market for Indian food changed? Customers now want:
  • entertainment and high quality product/service
  • a fast food facility that allows them to eat quickly/conveniently prior to theatre / cinema visit
  • consumers have more disposable income, particularly younger consumers.
2. Evidence in case study of success:
    1. Between 1990-2000 one restaurant was acquired on average growth / every year.
    2. Strategic decision to develop into new markets, entertainment with meal, and Fast Food Ashokashaks.
  1. Evidence of success in numbers of customers purchasing the services and turnover increasing.

Case Study 2 (Edinburgh Bicycle Co-op)

3. Organic Growth and Growth by acquisition:
  1. Organic growth:
    Increased sales of bicycles and clothing, accessories and repairs.
  2. Acquisitive Growth:
    Purchasing shops in Newcastle and Aberdeen
  Advantages of growth by aquisition:
  • Purchase of established business with customer base
  • Purchase of skills / knowledge of the local market
  • Potential for economies of scale through bulk buying
  • of supplies for all the shops.

Case Study 3 (Matthew Algie)

4. Factors likely to reduce future growth rate: New suppliers of coffee beans entering the market
Change in trend away from cafes and coffee drinking
Economic slowdown reducing disposable income.

Higher Grade Business Management

Case Study 1 (Schuh)

1. Benefits to stakeholders: Employees: Secure employment if Harlequin is growing
Stable/rising incomes if turnover increasing.
  Government: Increased tax revenues from increased profits
Reduced employment benefit from increased employment possibilities at Harlequin.
  Local Communities: Increased revenue to council from business rates
Potential for passing trade for local shops as customers come to the local restaurants.
  Suppliers: Increased turnover/prosperity as Harlequin demands more supplies
Stable future for supplier organizations.
2. Opportunities and Threats facing Ashokashaks Opportunities: Prosperity and rising incomes
Increasing trend to eat out and to eat Indian
Little competition in the Indian fast food sector.
  Threats: Potential for other Indian Restaurants to imitate
Future economic climate, eg rising interest rates, rising unemployment, reducing disposable incomes
Change in trend towards Mexican / Chinese food.

Case Study 2 (Edinburgh Bicycle Co-op)

3. Current / Future opportunities: Traffic congestion in towns will encourage alternative transport of which the bicycle is one.
Healthy lifestyles with exercise / activity, supports bicycle transport
Increased leisure time and rising disposable incomes encourage families to cycle
Increasing demand for activity / cycling holidays.

Case Study 3 (Matthew Algie)

4. Reliance on coffee income With 65% of income coming from one product, Matthew Algie is in vulnerable position. Even a small fall in coffee bean income would have a significant impact on total income. This could be seen as a risky position to be in.

Other Activities

Standard Grade Business Management

1. No solution offered
2. How can an organization promote its own growth? By continually monitoring its market to ensure that its product/ promote its own growth? service is still meeting customers needs/satisfying customers
Looking for ways to improve the product and make it more acceptable for existing and/or new customers
By innovating and developing new products for existing/new Markets.
3. Why does Morrison want Safeway? To enable Morrison to become one of the big three – Tesco, Asda and now Morrison
To earn more by managing the assets of Safeway than the Safeway Directors could
To gain economies of scale, eg bulk purchasing / sharing overhead costs, eg head office / computing / staffing costs.
  Type of integration: This is an example of horizontal integration where two organizations at the same stage of production come together.
  Effect on: Employees: Safeway Uncertain, management staff might lose jobs as Morrison managers move in

Some staff might lose jobs as a number of Safeway outlets will close.
  Morrison Staff probably relatively safe in their jobs.
  Customers: Safeway customers likely to find lower prices after integration.
4. No solution offered.

Intermediate 1 Business Management

1. No solution offered
2. How can an organization promote its own growth? By continually monitoring its market to ensure that its product / service is still meeting customers needs / satisfying customers
Looking for ways to improve the product and make it more acceptable for existing and/or new customers.
By innovating and developing new products for existing / new markets.
  A National Organization: No solution offered.
3. Why does Morrison want Safeway? To enable Morrison to become one of the big three – Tesco, Asda and now Morrison
To earn more by managing the assets of Safeway than the Safeway Directors could
To gain economies of scale, eg bulk purchasing / sharing overhead costs, eg head office / computing / staffing costs.
  Type of integration: This is an example of horizontal integration where two organizations at the same stage of production come together.
  Effect on: Employees: Safeway Uncertain, management staff might lose jobs as Morrison managers move in

Some staff might lose jobs as a number of Safeway outlets will close.
  Morrison Staff probably relatively safe in their jobs.
  Customers: Safeway customers likely to find lower prices after integration.
4. No solution offered.
5. Growth of Sports Centres: Factors promoting growth:

Trend towards healthy living and exercise
Hospitals/doctors referring patients to exercise programmes
Higher disposable income supports memberships
Ageing population but wishing to remain active: grey market.

Intermediate 2 Business Management

1. Impact on four stakeholders Employees of Waste Disposal organization:
Favourably affected: Will generate employment / rising incomes.

Local Community:
Unfavourably affected: Will cause noise, congestion, pollution.

Shareholders of Waste Disposal Organization:
Favourably affected: Potential for increased profits / dividends.

Suppliers of Waste Disposal Equipment:
Favourably affected: Increased sales of equipment could increase profits.

Higher Grade Business Management

1. Information for strategic decision: Find out:

Will the market support increased sales?
What is the output capacity of the business now and by how much will it need to grow?
How much will it cost to increase capacity to meet any future increase in demand?
Does the organization have / can it get / afford the human resources / physical resources needed to expand sales?
How great is the threat of current / potential competition?
Does the organization have the management ability to 'grow the business' in the future?


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Links

The websites of the various companies featured in the programmes offer some useful information about the workings of the companies.

This web page contains links to other websites that are not under the control of and are not maintained by Channel 4 Television. Channel 4 Television is not responsible for the content of these sites and does not necessarily endorse the material on them.

Programme 4 Human Resource Management (HRM)

www.bized.ac.uk – offers a wide range of business education information
www.bbc.co.uk/schools/gcsebitesize/business
www.harlequingroup.net
www.edinburgh-bicycle.co.uk
www.matthew-algie.co.uk



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