Practise external influences and business strategy through economic, political, technological, international and environmental change, strategic analysis and implementation.
Advise KF whether using Ansoff's matrix is sufficient to develop a successful growth strategy. [20]
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 □=□ (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 A2 ) 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 ( N1 and N2 and N3 ) 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.
Refer to lines 69-70. Analyse how the two changes in the economic environment will impact CQ.
Refer to lines 69-70. Analyse how the two changes in the economic environment will impact CQ.
Note:
- If more than two impacts are referred to, reward the best two.
All annotation ( K APP AN L2) should be in the left margin.
1
Indicative content
Responses may include:
AO1 Knowledge and understanding
Definition of relevant terms from lines 69-70 (max K1 mark):
- Depreciation of exchange rate - a fall in the value of one currency in terms of another.
- Inflation - an increase in the general price level.
- Taxation includes income and corporation tax and indirect taxes such as VAT. Changing levels of taxation is an element of fiscal policy.
Knowledge of impact of changes in the economic environment on CQ:
- Decreased demand for goods (increase in taxation).
- Higher costs (inflation and/or depreciation of exchange rate).
- Increased export earnings (depreciation of the exchange rate).
AO2 Application
Max one APP for application for the first element and max one APP for application for the second element.
- Linking ER depreciation to imports of bamboo from the US or exports of shoes to the US.
- CQ objective is to increase sales to US.
- Linking taxation to demand for shoes and/or CQ's premium prices.
- Linking inflation to wage demands of workers at factory in country P.
- Linking taxation to CQ's proposed investment in sustainability.
AO3 Analysis
Limited analysis AN - candidate shows one link in the chain of analysis.
Developed analysis L2AN - candidate shows two or more links in the chain of analysis.
- Depreciation will make imports of bamboo from the US more expensive therefore increasing CQ costs AN and increasing price or reducing gross profit margin. L2 AN
- Depreciation will reduce price of CQ shoes to US importers and therefore result in an increase in sales volume (and value) AN helping to meet CQ objective of growth. L2 AN
1
- Inflation may result in an increase in wage demands from workers at the factory in country P increasing costs of CQ AN and therefore reducing profit margins. L2 AN
- An increase in income tax will reduce consumers' disposable income leading to a decrease in demand for goods and therefore a decrease in sales revenue AN resulting in a decrease in profits. L2 AN
- Unique nature of CQ's product may mean that changes in price and income may have only a limited impact on sales and profit. AN
- Increase in corporation tax will reduce retained profit and could therefore result in delay in CQ's plans such as the investment in sustainability AN limiting future profit of the company. L2 AN
Accept all valid responses.
Advise Nala on the most important elements to be included in a corporate plan for the future of the city Z branch.
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 [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 A2 and A3 ) 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 (N1 and N2 and N3 ) 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.
Evaluate whether DL should consider corporate social responsibility in its decision-making.
Use Table B to mark candidate responses to this question.
AO1 out of 2 marks.
AO2 out of 2 marks.
AO3 out of 2 marks.
AO4 out of 6 marks.
Indicative content
Responses may include:
A01 Knowledge and understanding
- Definition of CSR: considering the interests of society by taking responsibility for the impact of decisions and activities on stakeholders not only shareholders.
- Benefits and limitations of CSR approach:
Improved public image
Impact on costs of production
Impact on pricing - higher prices possible
Use as a promotional tool - unique selling point (USP) for business
Impact on employee recruitment and labour turnover
Reduces risk of legal action.
AO2 Application
- DL donates a share of profits to environmental charities.
- Use of palm oil in producing ice cream.
- High sugar content of ice cream and health issues in country Y .
- Pressure group activity.
- Likely government response to health problems and pressure groups.
- PED estimated to be elastic.
- DL uses school sponsorship as a form of promotion.
- New production line project might lead to redundancies.
5
AO3 Analysis
- CSR can enhance brand image and therefore gain control over pricing to consumers enabling an increase in profit in the long term.
- Greater brand loyalty from consumers can increase sales and profit.
- It differentiates DL from competitors therefore protecting sales from activities of global brands in country Y.
- Reducing sugar content now, could give DL a first mover advantage in the market ahead of any government regulation or avoid negative impact of tax if introduced.
- Removing palm oil from ingredients could give a USP to DL and boost sales.
- If alternatives to palm oil are used then this will increase cost of production and reduce the profit margin of DL. Intense competition may prevent an increase in price (note that PED estimated to be elastic).
- Using different ingredients might affect the taste of the ice cream and consumers could switch to competitors' products.
AO4 Evaluation
Overall supported judgement based on a balance of arguments, including:
- How important is CSR to consumers? Will they care more about taste and price rather than the impact of the palm oil industry on deforestation?
- Businesses do not operate in a vacuum and must take account of impact of decisions on society to avoid negative publicity and harm to image.
- Increased costs in the short term may reduce profit but in the long term increased brand loyalty will enable a higher price to be charged.
- DL might benefit from responding to pressure group activity in the short term rather than being forced to make changes in response to government action.
Accept all valid responses.
AO1
AO2
AO3
AO4