Syllabus: SQA - Higher Course Spec Business Management
Module: Understanding Business
Lesson: Internal Factors

Introduction

This article supports delivery of the “Understanding Business – Internal Factors” topic from the SQA Higher Business Management course. Internal factors are a core part of the “Understanding Business” unit, one of three in the Higher course. This topic equips students with the ability to analyse how decisions and performance are influenced by the internal workings of an organisation.

This content is syllabus-aligned and designed for Scottish Higher teachers seeking practical guidance, engaging real-life examples, and clarity on how students will be assessed. It’s also relevant to SLT, careers leads, and headteachers looking to map curriculum content to employability skills, student progression, and whole-school outcomes.

Key Concepts

Students should be able to explain and analyse the following internal influences on a business:

• Human Resources: The impact of staff skills, motivation, training, and leadership style on business objectives.

• Finance: The availability of finance and how budgeting, cash flow, and profitability shape decision-making.

• Technology: Use of IT systems, automation, and digital communication, and their effects on efficiency and competitiveness.

• Corporate Culture: The values and behaviours that influence how employees interact and how decisions are made.

• Management Structures: Organisational structures (tall, flat, matrix) and how these affect communication, control, and speed of decision-making.

• Policies and Procedures: The internal rules that guide employee behaviour and maintain operational consistency.

• Current Staff Skills and Availability: How the existing workforce impacts productivity and flexibility.

Real-World Relevance

Students connect most when theory reflects their lived experience. Use local or recognisable businesses to bring this topic to life:

• Human Resources: BrewDog’s expansion challenged its internal culture and HR structure, especially when scaling globally. This is a good discussion point on staff engagement versus rapid growth.

• Finance: Consider the collapse of Wilko in 2023, where poor cash flow management and financial planning contributed to the business’s decline. A clear example of finance as a limiting internal factor.

• Technology: Aldi’s investment in self-service checkouts is a practical case of internal decisions to boost productivity and reduce staffing costs—students often have direct experience here.

Encouraging students to analyse their part-time workplaces or family-run businesses also grounds abstract ideas in familiar contexts.

How It’s Assessed

Assessment of internal factors typically appears in both the question paper and assignment components of the Higher course.

Question paper (70 marks):

• Expect short-answer, extended-response, and scenario-based questions.

• Key command words include: describe, explain, analyse, discuss, and evaluate.

• Example: “Discuss the impact of poor staff motivation on a business’s performance” (6 marks).

Assignment (30 marks):

• Students investigate a real business and analyse internal and external factors affecting it.

• Strong responses use up-to-date data and apply internal factor concepts accurately, with referenced examples.

Top tips:

• Reinforce the differences between identifying, explaining, and evaluating.

• Students often over-describe and under-analyse. Focus on consequences and link back to business objectives.

Enterprise Skills Integration

Internal factors are a natural way to explore enterprise skills in action:

• Decision-making: Weighing financial trade-offs or restructuring teams demonstrates real leadership choices.

• Problem-solving: Responding to poor morale or skills shortages encourages structured thinking.

• Communication: Exploring how flat or tall structures affect information flow taps into communication and collaboration skills.

Use role-play or simulations—such as “You’re the HR manager faced with a drop in motivation”—to make abstract concepts tangible. These activities help students feel the pressures and trade-offs leaders navigate daily.

Careers Links

This topic supports Gatsby Benchmarks 4 (linking curriculum learning to careers) and 5 (encounters with employers):

• HR Assistant or Manager: Understanding how motivation and training impact performance is core.

• Finance Officer: Analysing budgets, managing cash flow, and ensuring financial sustainability.

• Operations Manager: Applying knowledge of structure, technology, and workflow efficiency.

• Entrepreneur: Every internal decision, from hiring to tech investment, affects your success.

Invite alumni or local business owners to speak about the real consequences of these decisions. If time is short, video clips or case studies can also bring credibility and clarity.

Teaching Notes

What works:

• Start with a simple business case students know (e.g. Greggs, JD Sports).

• Use mind maps to show the interplay between internal factors.

• Link internal factors to business objectives early—students need to understand the “so what”.

Common pitfalls:

• Confusing internal and external factors. Use visual sorting tasks or quizzes to reinforce the difference.

• Neglecting analysis in extended answers—use sentence scaffolds to guide students (e.g. “This affects the business because…”).

• Over-focusing on one factor (often HR) without covering the others.

Extension activities:

• Assign students a failing business and ask them to recommend internal changes.

• Create a “business board meeting” where teams pitch how to solve an internal challenge (finance crisis, tech failure, staff walkout).