CAIE A-Level Business A2 6.2 Business Strategy Questions

Please refer to the marking grid at the start of the mark scheme

Indicative content

Responses may include:

AO1 Knowledge and understanding

Knowledge (max 1 mark) can be awarded for any relevant business knowledge about business strategy and Ansoff's Matrix as well as the alternative strategies including:

- The meaning and purpose of business strategy

- The meaning and purpose of strategic management: analysis, choice and implementation

- Approaches to develop business strategy, including:

- blue ocean strategy

- scenario planning

- PEST analysis

- Porter's five forces

- core competence framework

- SWOT

- force field analysis

- decision trees.

Award DEV for any explanation of relevant business knowledge, up to a max of 2 marks.

2

AO2 Application

Application ${ }^{[m]( } 1$ mark) can be awarded for applying knowledge of Ansoff's matrix/business strategy, to KF.

Application ${ }^{\square=\square}$ (2 marks) can be awarded for applying knowledge of HR strategy, to KF between 2018 and 2023:

- Delivery market is shrinking back to pre-pandemic levels, limiting growth opportunities.

- Changes in legislation change the model of using zero-hours/gig-economy workers.

- Any element of the case study/appendices including:

- Small staff - one office manager, 15 kitchen support workers

- Use of full-time contracts and flexi-time contracts

- Objectives of growth and profit maximisation

- New delivery service - 45 riders hired, increasing to 75

- Use zero-hours contracts

- Use of tracking software for staff performance

- Tracks speed, efficiency of deliveries

- Unreasonable time targets

- Bad timing within the app

- Bonuses and performance judged unfairly

- Compliance with new legislation banning zero-hours contracts

- Staff moved to self employed and will operate as part of the gig economy

- Use of performance data to judge staff for restructure.

2

AO3 Analysis
Analysis of the usefulness of Ansoff's matrix to help KF develop a growth strategy ( A and and ${ }^{\mathrm{A} 2}$ ) including:
- The current market for deliveries is shrinking - will Ansoff lead them to discuss options that are not viable when other
options may need exploration?
- What is Liam and Samir's attitude to risk? - This may fuel which direction they choose to go in.
- Where will financing come from? - The business has rationalised recently so do they have the money to expand?
Candidates may offer alternative approaches:
- May want to use the blue ocean strategy to identify a market where they can dominate - as they did when they
originally set up the KF/delivery business.
- Scenario planning could help map what may happen with the current business model - to help identify where they
should move to.
- SWOT analysis may help identify strengths that can be transferred to a new project - whilst highlighting the problems
they may face in a different model to how they currently operate.
- PEST analysis could help understand the changing environment after the global pandemic - which has changed many
elements of this.
- Five forces would help understand the rivalry they face in a very crowded food/restaurant/takeaway market.
- Core competency framework would allow them to identify what they do well and could transfer to any growth option
chosen - especially if this is not an expansion of the current food delivery model.
- Force field analysis could help Liam to understand the constraining and driving forces in developing the new strategy -
This may help him to identify actions that need to be taken to reduce constraining forces.
- Decision trees could be used to help make a quantitative led decision between the different options for expansion - but
would need to have much more financial information to be worthwhile.

PUBLISHED

2

AO4 Evaluation

Evaluation will largely depend on the points raised in the analysis of the approaches needed to develop the new strategy other than Ansoff's Matrix.

Evaluation ( ${ }^{\mathrm{N} 1}$ and ${ }^{\mathrm{N} 2}$ and ${ }^{\mathrm{N} 3}$ ) including:

- Candidates must state that Ansoff's Matrix is/isn't sufficient or acknowledge that something else is better for first N1 mark.

- Each option requires much more data and research to understand the risk, financial constraints and success probabilities to help make the final decision.

- Should KF be using a combination of other methods - decision trees to help make the decision, core competency framework to identify strengths to transfer to new business etc.?

- How important is growth to the new strategy moving forward, do they need to consolidate after the pandemic and focus in on what they do best given new HR implications?

- Is the whole structure of their business model changing given changes to ZHC legislation - is this model even still viable?

- Advice to KF should make clear whether Ansoff's matrix is sufficient or whether it should be supported by other models, and if so which?

Accept all valid responses.

Z branch.

AO1 Knowledge and understanding

Knowledge □ (max 1 mark) can be awarded for any relevant business knowledge about a corporate plan / corporate planning, including, including:

- Knowledge of the contents of a corporate plan, including:

- mission/vision

- objectives

- strategic planning

- external influences on a business: social, legal, economic, environmental, ethical, political, technological

- functional data: marketing, operations management, human resources management, financial management

- contingency planning, risk management

- Knowledge of the process of corporate planning, including:

- a corporate plan is similar to a strategic plan

- used for businesses with multiple business units or subsidiaries/parts

- defines business direction

- and business strategy to get there

- usually refers to the broader business as a whole, not individual parts/functions

- steps involved in corporate planning, such as assess your current strategy/position, identify objectives, develop your strategic plan and determine performance metrics, implement and share plan, revise and amend.

Award ${ }^{[\mathrm{DEV}}$ for any explanation of relevant business knowledge, up to a max of 2 marks.

2

AO2 Application

Application ${ }^{[m]}$ (max 2 marks) can be awarded for applying knowledge of a corporate plan or corporate planning, to CA and/or the city Z branch, including:

- Nala has experience as a cleaner, Operations Manager with CA and planning and management of a branch of CA.

- Nala has contacts that she built up (employees, customers, local information) in her role with CA.

- Data from the timeline.

- Data from the appendices.

- A corporate plan is required by the bank to finance her new start-up.

AO3 Analysis

Analysis is likely to be based on the elements of a corporate plan or corporate planning ( A and ${ }^{\mathrm{A} 2}$ and ${ }^{\mathrm{A} 3}$ ) for CA and/or the city Z branch.

Arguments of what should (or should not) be included in Nala's corporate plan for a new cleaning business, including:

- Mission/vision - to give the business direction - important for a new business and to convince the bank to provide finance for the new business - however this might not be useful as the separate business has not been set up yet.

- Objectives - likely to be Nala's own objectives, unless she is planning to bring in shareholders - a new business is likely to focus on survival and/or providing Nala with enough income to survive.

- Strategic planning - likely to be one of the most important elements of Nala's corporate plan as this will give the bank an idea of how she plans to achieve her objectives and repay any finance loaned - Nala may have more experience of her strategy than many start-up businesses as she has managed the city Z branch for the past four years (she has expertise).

- External influences on a business - may be less important to inform the bank/Nala as these will be common to all businesses in city Z and/or market. However, Nala may need to provide evidence to the bank (and other stakeholders) that she has recognised these influences.

- Functional data:

- Marketing - to prove that Nala understands the cleaning market in city Z and to show that she has a plan to reach her target market in sufficient numbers to meet her objectives.

- Operations management - Nala's area of expertise (as a previous Operations Manager of CA) and important to show that she is able to deliver a service sector product.

- Human resources management - as a business offering a service in city Z, the management of people will be important to allowing Nala to meet her objectives and implement the business strategy.

- Financial management - important as Nala's main purpose in preparing a corporate plan is to raise finance to fund her business.

2

AO4 Evaluation

Evaluation $\left({ }^{\mathrm{N} 1}\right.$ and ${ }^{\mathrm{N} 2}$ and ${ }^{\mathrm{N} 3}$ ) including:

Evaluation will largely depend on the points raised in the analysis.

- A judgement over what Nala should include in a corporate plan for her new cleaning business.

- What the judgement may depend upon;
further data about the market in city Z for cleaning services, external influences, such as the economy, legal issues, fashions/trends, demographic changes, ethical influences, environmental influences, political influences, technological influences, the prior history of Nala with CA and other stakeholders whom she may need to interact with in her new business.

- Weighing up of the relevant pieces of data needed for Nala's corporate plan and its use in financing the new business.

- Weighing up of the relevant arguments for the use of other data instead of (or in tandem with) the corporate plan.

Accept all valid responses.

2

Exemplars for awarding evaluation

L □

including: (limited supporting evidence)

L2 □ including: (developed supporting evidence)

(developed supporting evidence with context)

No credit

The most

important

element to be

included in a

corporate plan for

the future of the

city Z branch is

the objective.

\end{tabular}

The most important element to be
included in a
corporate plan for the future of the city
Z branch is the objective to survive the first few months.

The most important element to be
included in a corporate plan for the future of the city Z branch is the objective to survive the first few
months. Without this, Nala is unlikely to be able to make the branch successful.

The most important element to be
included in a corporate plan for the future of the city Z branch is the objective to survive the first few
months. Without this, Nala is unlikely to be able to make the branch successful because she is too inexperienced.

It is important to
include all of the sections such as
marketing, production, HRM and finance.

It is most important to include all of the sections such as
marketing, production, HRM and finance.

It is most important to include sections on marketing, production, HRM and finance, because they all
influence one another and the business as a whole.

It is most important to include sections on marketing, production, HRM and finance, because they all
influence one another and the business as a whole so it is the best way to get finance from the bank.

Level

3

A01 Knowledge
and understanding 3 marks

AO2 Application 2 marks

AO3 Analysis 8 marks

AO4 Evaluation 7 marks

Description

Description

Description

Description

7-8 marks
Developed analysis of the overall strategy that
identifies connections between causes, impacts and/or consequences.

6-7 marks Effective evaluation

A developed judgement/conclusion is made in the business context that draws together developed evaluative comments which balance some key arguments in the business context.

2

2-3 marks
Developed
knowledge of relevant key term(s) and/or factor(s) is used to answer the question.

2 marks
Developed
application of relevant point(s) to the business
context.

4-6 marks
Developed analysis of
individual strategic element(s) that identifies
connections between
causes, impacts and/or
consequences.

3-5 marks Developed evaluation

- A developed judgement/conclusion is made.

- Developed evaluative comments which balance some key arguments.

1 mark
Limited knowledge of relevant key term(s) and/or factor(s) is used to answer the question.

1 mark
Limited
application of relevant point(s) to the business
context.

1-3 marks
Limited analysis that
identifies connections between causes, impacts and/or consequences.

1-2 marks

Limited evaluation

- A judgement/conclusion is made with limited supporting comment/evidence.

- An attempt is made to balance the arguments.

0

0 marks

No creditable response.

0 marks

No creditable response.

0 marks

No creditable response.

0 marks

No creditable response.

2

Indicative content

Responses may include:

AO1 Knowledge and understanding

Knowledge can be awarded for any relevant business strategy knowledge.

- The purpose of business strategy.

- The meaning and purpose of strategic management.

- What a core competence framework is

- Alternative approaches to develop business strategy, including:

- blue ocean strategy

- scenario planning

- SWOT analysis

- PEST analysis

- Porter's five forces

- Ansoff matrix

- force field analysis

- Decision trees

AO2 Application

- Lack of growth in the current market

- Growth in city/business hotels

- The three competences identified

- Human resources - strong leadership and communication

- Marketing - customer loyalty

- Operations - delivering exceptional customer service

- Any element of the timeline

- Any element of the appendices

AO3 Analysis

Analysis for core competence framework ideally and then up to two alternatives but award for analysis of ANY models up to three $\square^{\square \mathrm{a}}$ and $\square^{\square 2}$ for a one-sided argument and $\square^{\square \square}$ for a two-sided argument or contrast):

- RHR operate all-inclusive holiday hotels - how much of this can be transferred to the running of a city hotel?

2

- Core competencies around running the hotel and delivering a good customer experience may be transferable but how will their marketing need to change for the new strategy?

- There seems to be just 3 areas for the framework - is this sufficient to ensure the success of the city hotels? What other information is needed?

- Is the development of the new strategy at the expense of the Asian expansion? - which would be more aligned with the core competencies than city hotels. How does Juan feel about the change of direction after his work on the Asian market and potential for growth (appendix 3)?

Candidates may offer up alternative approaches:

- May want to use the Blue Ocean Strategy to help with move to city hotels as they redefine what the company delivers across a number of new locations.

- Scenario planning could help map what may happen in city locations and how they differ/are similar to what they know from running resort hotels.

- SWOT analysis may help identify strengths that can be transferred to city hotels whilst highlighting the problems they may face in a different model to how they currently operate.

- PEST analysis could help if they are operating in countries where there is no RHR for example in the UK or Northern Europe and they need an understanding of how those countries work.

- Five forces would help understand the rivalry they face in a very crowded city hotel market.

- Ansoff's matrix may be useful in weighing up whether they should focus on market or product development moving forward - or if there are other possibilities for growth.

- Force field analysis could help Carmen to understand the constraining and driving forces in developing the new strategy. This may help her to identify actions that need to be taken to reduce constraining forces.

- Decision trees could be used to help make a quantitative led decision between Asia or urban hotels expansion.

AO4 Evaluation $(\square)$ and $\square$ and $\square$ and □ )

Evaluation will largely depend on the points raised in the analysis of the approaches needed to develop the new strategy other than the core competency framework.

- Candidates should state that the Core Competency Framework is/isn't sufficient for L1 Eval.

- RHR clearly have a set of core competencies that will help them set up hotels but is this enough for the new city hotels format? Should Carmen be using a combination of the strategic approaches?

- How quickly does Carmen expect this to happen? Is there time to test the waters with the city hotel strategy?

2

- Has Carmen over-simplified what they do? Without using other models she may take too much of a risk while the Asian growth would be easier to implement given their current business model.

- Many of the approaches rely heavily on the accuracy of forecast data - Does Carmen have the data?

- Core Competence Framework is enough as it gives managers the direction they need as they implement the strategies related to it throughout the new hotels. This is an established business that should be able to deliver a hotel experience wherever they set up.

- Advice to Carmen should make clear whether the core competence framework is sufficient or whether it should be supported by other models, and if so, which?

Accept all valid responses.