Magazine article Teaching Business & Economics

Coming of Age

Magazine article Teaching Business & Economics

Coming of Age

Article excerpt

Slightly unbelievably it is now 36 years since the first exam paper entitled business studies landed on a candidate's desk. Since most courses in the subject take two years, we're 18 full cycles down the line and it seems like time for a coming of age.

Back in the 1980s it was strange how one word - studies - did so much damage to my credibility in a grammar school staffroom. "It's more vocationally biased," colleagues might politely enquire. Perhaps it was associations. Courses for the less able had been created European studies instead of French, environmental studies instead of geography, social studies instead of almost anything. Anyway there was a distinct feeling that business studies was down-market.

In this sense, the Cambridge Linear course (discussed by Ian Marcousé in the Autumn 2005 issue) was both an asset and a liability. It was certainly hard: you needed help from colleagues in the maths department just to understand it. And it did have a kind of academic rationale in the idea of decision-making. But it was too transparently a set of techniques mostly numerate - being applied towards severely corporate goals. And it lacked any critical stance towards its own rather instrumental agenda.

The course was a child of its time. This was a corporatist era with boundless faith in scientific reasoning and new technology. Business as rational decision-making was all the rage, driven by Herbert Simon's groundbreaking book, The New Science of Decision-Making published in 1960. In the US business schools were expanding, while as the 1960s moved on, computer power was beginning to be applied within the social sciences. Mathematical equations and flow diagrams were often thought able to model almost everything that mattered.

All our business studies courses today are to some extent direct descendants of that singularly defined Cambridge world. Its style and language still resonate through the QCA subject criteria currently in force. Even business research has been frozen in time. Ever wondered why there appear to be so few theorists after Herzberg published in 1959? WeU, when the Cambridge course was on the drawing board, it was 1966. Pity that the great majority of business books have been written since 1982. Enough said.

There are now some important genetic defects in our subject. There is a hole in its heart. AQA has rightly led the way from decision-making techniques to the broader idea of strategy, but it has left the essential inner logic of business enterprise largely unexplored. What ultimately - drives a business decision? Why innovate? Why expand? Why invest? Why merge? Why do some succeed? And why do others fail? The answers are found, of course, in competitive markets. For better or for worse, this is the global form of economic organisation within which we live. From this premise it is possible to highlight some absolutely vital ideas.


The market forces model embraces the basic ideas of demand from consumers and supply by business enterprises. It captures the concept of price in bringing buyer and seller together, and ensuring a surplus for both parties. It also illuminates the way in which profit (and loss) attracts (and releases) resources for the uses in which they are expected to add most value.


Added value represents the underlying purpose of all business activity. It means the additional value arising from a business process net of all corresponding input costs. It can be applied effectively to any stage in a value chain or to the totality of a business activity. It does not exclude stakeholder perspectives or the inclusion of social cost.


The condition of competitive advantage is prerequisite to adding value. In a competitive market economy, every business seeks to earn returns on its use of resources that exceeds their opportunity cost. This can only be achieved through some proprietary conditions that resist replication by competitors. …

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