Short answer: An agile business is one that can change direction quickly when conditions change. The AQA 7138 course names four ways to build one: a flat organisational structure, empowerment, transformational leadership and cross-functional teams [1]. It pairs agile business with scenario planning as two ways to manage uncertainty. The topic is 3.3.4, A-level only, and is examined on Paper 3 [1].
What the 7138 specification asks
Topic 3.3.4 is about managing change. It covers why people resist change, types of risk and how to manage them. It then asks how a business can manage uncertainty, and names two methods: scenario planning and developing an agile business [1].
Agile business is new to 7138. It does not appear in the old 7132 course. But some parts are familiar. The 7132 course already covered empowerment as a way to motivate staff, and delayering (removing layers of management) as part of managing change [2]. See AQA A-Level Business is changing for the full list of changes.
Risk and uncertainty: what is the difference?
A risk is something that might go wrong where you can estimate the chance and the cost, such as a warehouse fire. Insurance can cover it.
Uncertainty is harder. You cannot list every outcome, or put a probability on it. A new trade war, a pandemic or a sudden change in technology are examples. So a business needs two things: to think ahead, and to react fast.
Scenario planning: thinking ahead
Scenario planning means describing several possible futures and asking "what would we do if this happened?" A scenario is not a forecast. It is a story used to test a plan.
A business usually follows four steps:
- Pick the big forces it cannot control, such as interest rates, energy prices or consumer demand.
- Build two to four different, believable futures from them.
- Test the current strategy against each one. Where does it fail?
- Prepare responses in advance, and watch for early warning signs.
The benefit is speed: managers have already discussed the problem, so they act faster when it arrives. The cost is time, and the real event may be one nobody imagined.
Agile business: the four parts
Scenario planning prepares for futures you can imagine. An agile business is built to react well to ones you cannot. The specification lists four ways to develop one [1].
| Method | What it means | How it helps under uncertainty | Possible drawback |
|---|---|---|---|
| Flat organisational structure | Few layers of management between the top and the front line. | Information and decisions travel faster. | Wider spans of control, so managers may be overloaded. |
| Empowerment | Staff are given the authority to make decisions in their own area. | People closest to customers can act without waiting for approval. | Poor decisions if staff lack training or information. |
| Transformational leadership | A leader inspires staff with a vision and develops them to aim higher. | A shared vision guides decisions when the rules do not cover a new situation. | Depends heavily on one person. |
| Cross-functional teams | One team with people from different departments, such as marketing, finance and operations. | Problems are solved in one place, not passed between departments. | Unclear who is in charge; staff may answer to two managers. |
These four work best together. Removing managers without empowering staff leaves decisions stuck. Empowering staff without a clear vision sends teams in different directions. For what makes a team work, see our guide to Hackman's model of team effectiveness.
Real example 1: the Bank of England's stress test
The Bank of England (the UK's central bank) uses scenario analysis to test the biggest UK banks. On 24 March 2025 it set out its 2025 Bank Capital Stress Test [3]. The imagined scenario included:
- UK GDP (the size of the economy) falling 5%;
- unemployment peaking at 8.5%;
- house prices falling 28%;
- Bank Rate (the UK's main interest rate) rising to 8%.
Seven groups took part, including Barclays, HSBC, Lloyds Banking Group and Nationwide. Together they made 75% of lending to the UK economy [3]. The Bank stated plainly that the scenario "is not a forecast" [3].
The results came out on 2 December 2025 [4]. The banks' combined CET1 ratio (a measure of how much loss-absorbing capital a bank has) started at 14.5%. It fell to a low point of 11.0% in the first year of the scenario. No bank was required to strengthen its capital as a result [5].
Real example 2: Bayer cuts its layers
Bayer is a German pharmaceuticals and crop science company. On 5 March 2024, at a press conference in London, its chief executive Bill Anderson said the firm was "badly broken in four places" [6]. One of the four was a hierarchical bureaucracy. His answer was a new model called Dynamic Shared Ownership. It aimed to cut hierarchy and speed up decisions, and to save €2 billion a year in costs from 2026 [6].
Bayer says the model has cut management layers by half and management roles by two-thirds. Thousands of teams now work in a "self-organized, cross-functional way", and 90-day planning cycles replace the annual plan [7]. These are Bayer's own figures.
The results are mixed. By December 2024 the change had involved around 5,500 job cuts, mostly managers, and Bayer's market value had fallen more than 44% that year [8]. Fortune also pointed to other problems: high debt, US lawsuits and a top drug losing patent protection in 2026 [8]. So agility can speed up decisions, but it cannot fix every problem.
Real example 3: UK government test and learn
On 19 October 2026 the Cabinet Office published a Test and Learn playbook. It tells teams to work in short cycles and to set up the team "as a group of equals where no one dominates" [9]. It also says teams need authority to make day-to-day decisions [9]. That is a flat structure, empowerment and cross-functional teams in one place.
Practice question, in our own words: A UK fashion retailer faces fast-changing trends and rising costs. Evaluate whether developing an agile business is a better way to manage this uncertainty than scenario planning.
Analysis (for agile): Trends change faster than any plan. If store and buying teams are empowered, they can drop a slow line within days, because they do not wait for head office. So less stock is sold at a discount, so margins improve.
Analysis (for scenario planning): Rising costs, such as energy or wages, can be modelled in advance. So the retailer can set price and supplier responses before costs rise, which protects cash flow.
Evaluation: The two methods do different jobs. Scenario planning suits shocks you can describe; agility suits shocks you cannot. Agility also takes years to build, as Bayer shows.
Judgement: For a fashion retailer, agility is more valuable, because demand changes too fast to model. But it depends on staff skills and on the retailer's cash position. The strongest answer uses both.
Notice the structure. Each chain is joined by "so" or "because", both sides are developed, and the judgement names what it depends on.
Practise the new 7138 topics
Our free Business starter pack covers strategy, people, marketing and finance with real UK businesses and practice questions.
Get the free packFor quizzes on risk, uncertainty and the rest of Paper 3, see the CC Business platform, Year 12 track. Most tutors teach the subject. We teach the criterion.
Sources
- AQA (2025). AS and A-level Business 7137/7138 specification, version 1.0, October 2025.
- AQA (2023). AS and A-level Business 7131/7132 specification.
- Bank of England (2025). Stress testing the UK banking system: key elements of the 2025 Bank Capital Stress Test, 24 March 2025.
- Bank of England (2025). Bank Capital Stress Test (results published 2 December 2025).
- Bank of England (2025). Financial Stability Report, December 2025.
- Bayer UK (2024). Bayer aims for enhanced agility and performance by 2026, 5 March 2024.
- Bayer (2026). Bayer's operating model: Dynamic Shared Ownership.
- Fortune (2024). A year after Bayer got rid of bosses and asked staff to self-organize, 24 December 2024.
- Cabinet Office (2026). Test and Learn playbook: ways of working, GOV.UK, 19 October 2026.