[ { "Question": "
\n

Pelican Pies (PP)

\n

Pelican Pies (PP) produces high-quality pies that have limited brand loyalty outside of their local market. The prices of the pies are higher than those of PP’s competitors.

\n

Table 1: Selected financial information for PP for the year ending 30 April 2017.

\n

\n

For 2018, PP’s owner, Austin, is looking to increase sales beyond the local market by lowering prices and spending a greater proportion of PP’s promotional budget on above-the-line methods such as regional newspaper advertisements. To finance this type of promotion, Austin will have to increase his loan amount by $10 000.

\n

Table 2: Selected financial information for the year ending 30 April 2018.

\n

\n
\n

Describe one reason why brand loyalty would be important to PP.

\n
[2]
\n
a.
\n
\n

Construct a profit and loss account for PP for the year ending 30 April 2017 based on the figures in Table 1 (show all your working).

\n
[4]
\n
b.
\n
\n

Construct a forecasted profit and loss account for PP for the year ending 30 April 2018 based on the figures in Table 2 (show all your working).

\n
[4]
\n
c.
\n
", "Markscheme": "
\n

Brand loyalty would be important to PP given that they operate in a local market with a number of competitors and that the prices they charge are higher. Given this fact, it would be critical for PP to have brand loyalty or their sales could fall (although not on the stimulus, sharp-eyed candidates may spot that PP’s pies are price inelastic given the additional information for 2018).

\n

Accept any other relevant description.

\n

Award [1] mark for conveying some understanding that PP has considerable competition or that it charges higher prices than most of its competitors. If a candidate conveys an understanding of both of those ideas, award [2] marks.

\n

A candidate can achieve one or two marks by making other accurate assertions about brand loyalty, provided they are relevant and logically reasonable (for example, brand loyalty assures some continuity of revenue or stable revenue). Award up to a maximum of [2].

\n
a.
\n
\n

Profit and loss account for PP for year ended 30 April 2017:

\n

\n

Award marks as follows:

\n

\n

Candidates do not have to list all types of expenses (electricity, rent, promotion) under expenses, as the IBO format does not specify different items. Therefore, working of electricity and rent per year are not expected.

\n

Supporting working is expected with the calculation of total revenue/costs /interest/tax are given.

\n

 

\n
b.
\n
\n

Profit and loss account for PP for year ended 30 April 2018:

\n

\n

N.B. Do not double penalize candidates if they use the same incorrect format from part (b).

\n

Award marks as follows:

\n

\n

Candidates do not have to list all types of expenses (electricity, rent, promotion) under expenses, as the IBO format does not specify different items. Therefore, working of electricity and rent per year are not expected.
Supporting working is expected with the calculation of total revenue/costs /interest/tax are given.

\n

Please note:
If the candidate was penalised for inappropriate structure or headings/format in part (b) and repeats the same in part (c) provided that the working is correct and shown, do not double penalise and award full marks.

\n

Generally, do not double penalise any wrong headings/ omission presented in part (b) and repeated in part (c). Question (c) is more about the manipulation/ calculation of the old figures.

\n

However, be aware that sometimes a candidate makes a mistake in question (b) (for example, in calculating income tax) and also miscalculates income tax in question (c) but makes a different kind of error (in one instance multiplies 25 % by net profit before tax but makes a mathematical error and then, in the other instance, multiples 25% by net profit before interest), then each should be counted as an error.

\n

 

\n

 

\n
c.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
", "question_id": "17N.2.SL.TZ0.1", "topics": [ "2023-unit-3-finance-and-accounts", "2023-unit-4-marketing" ], "subtopics": [ "3-4-final-accounts", "4-5-the-four-ps-(product-price-promotion-place)" ] }, { "Question": "
\n

Moverse

\n

Moverse operates in the health and fitness sector. Moverse is not a traditional gym with machines (equipment) and fitness instructors (trainers). The instructors themselves travel and run fitness classes in the buildings of large companies. Instructors all work part-time and are paid wages on a time rate basis.

\n

Moverse currently sells its services to several large companies. They have a total of 727 employees enrolled on its programme.

\n\n
\n

Describe the time rate method of paying wages.

\n
[2]
\n
a.
\n
\n

Calculate the break-even quantity for Moverse (show all your working).

\n
[2]
\n
b.
\n
\n

Construct a fully labelled break-even chart, to scale, for Moverse if 800 employees enroll on Moverse’s training programme.

\n
[4]
\n
c.
\n
\n

Calculate the profit or loss if 800 employees enroll on Moverse’s training programme (show all your working).

\n
[2]
\n
d.
\n
", "Markscheme": "
\n

Employees are remunerated based on the duration of time that they work.

\n

Accept any other relevant description.

\n

Award [1] for a vague description. Award [2] for a clear description similar to the answer above.

\n
a.
\n
\n

Break-even level of output \n=\n\n\n\nFixed costs\n\n\n\n\nSelling price \n\n−\n\n\n\nvariable cost per unit\n\n\n\n

\n

\n\n\n60\n\n000\n\n\n145\n−\n45\n\n\n

\n

= 600 employees / units / members.

\n

 

\n

Award [1] for correct working and [1] for the correct answer. Award up to a maximum of [2]. Do not penalize candidates who omit the word “unit” from their answer.

\n
b.
\n
\n

\n

Award marks as follows:

\n\n

Award a maximum of [2] if the chart is not neat, not drawn with a straight edge, or is not to scale. If a candidate “free hands” their break-even chart, the maximum they can receive is [2]. For two marks, the break-even chart should be largely correct – axes correctly labelled. Total revenue and Total cost lines identified and largely correct. For example, Total revenue line should start at (0,0) and total cost line should start where the Fixed cost line intersects the y axis.

\n

If a candidate produces a table rather than a chart, award [0].

\n
c.
\n
\n

Number of enrolled participants x contribution – fixed costs = profit
800 x 100 – 60 000 = $20 000

\n

OR

\n

Revenue (800 x 145)         116 000
Variable costs (800 x 45)    36 000
Fixed costs                          60 000
Profit                                    20 000

\n

Award [1] for correct working (any method is acceptable as long as working is shown) and [1] for the correct answer. Award up to a maximum of [2].

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "17N.2.SL.TZ0.2", "topics": [ "2023-unit-2-human-resource-management", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "2-4-motivation", "3-3-break-even-analysis" ] }, { "Question": "
\n

Davenport Electronics (DE)

\n

Davenport Electronics (DE) is a small company that manufactures remote control electronic devices that open garage doors. The devices are kept in owners’ cars. For years, DE devices operated in a fashion similar to those of its three competitors. When an owner activated the remote control, a unique password was transmitted and the garage door opened.

\n

Unit sales and revenue had not grown for several years until, four years ago, some computer hackers discovered how to steal passwords when remote controls are activated. With the passwords, hackers could later open garage doors and steal their contents. For DE and its competitors (whose products operated in a similar manner), sales began to decline.

\n

DE responded by developing a way to change the unique password every time a remote control is activated. Thus, by the time a hacker successfully steals a password, the password no longer works. DE’s innovation significantly enhanced the security of a DE remote control.

\n

The three competitors are all larger than DE.

\n

\n

As a result of this innovation, DE’s market share and scale of operation have increased. However, DE is now experiencing diseconomies of scale. Some managers also worry that, with the pressure to meet increased orders, the company will lose its focus on quality. Other managers believe that future success in the industry will depend on frequent innovation.

\n
\n

Define the term diseconomy of scale.

\n
[2]
\n
a.
\n
\n

Using the table, construct a product position map/perception map for all four companies.

\n
[4]
\n
b.
\n
\n

Using the table, construct a product position map/perception map for all four companies.

\n
[2]
\n
c.i.
\n
\n

Explain how DE’s innovation is an extension strategy.

\n
[2]
\n
c.ii.
\n
\n

With reference to DE, discuss the merits of small organizations compared to large organizations.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Diseconomy of scale refers to an increase in average unit cost as a business increases in size.

\n

Accept any other relevant definition.

\n

Candidates are not expected to word their definition exactly as above.

\n

N.B. no application required. Do not credit examples.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding of the idea that a business can develop inefficiencies as it grows in size.

\n

Award [2] for a full, clear description that conveys knowledge and understanding similar to the answer above. To receive [2], candidates must express the idea of an increase in per unit cost as a business increases in size. In some instances, a candidate does not have literally to say “per unit”. For example, if a candidate says “average cost” and the response is otherwise sufficiently strong so that a reader can know from context that the candidate intends per unit or average unit cost, award [2].

\n
a.
\n
\n

\n

Award [1] for the overall layout of the map with both axes correctly labelled (price: high or low; quality: high or low).

\n

N.B. It does not matter which one is horizontal / vertical.

\n

The correct positioning is as shown above. Adjust appropriately if a candidate makes price the horizontal axis and quality the vertical axis.

\n

Award [2] for a correctly labelled position map with two of the companies properly placed.

\n

Award [3] for a correctly labelled position map with three of the companies properly placed.

\n

Award [4] for a correctly labelled position map with all four companies properly placed.

\n

If a candidate correct produces a position map, correctly labels the axes, places DE correctly on the x axis (if the position map is oriented as above), and has companies A, B, and C correctly placed in terms of price but slightly off-center in terms of quality, award [3] provided that A, B, and C are vertically aligned (or horizontally aligned if the map is oriented the other way).

\n

In this case, the candidate has made one conceptual error – where to place medium quality – and repeated it two more times. Do not double and triple penalize. In effect, the candidate has drawn a correct position map and placed three companies correctly, assuming a “conceptual OFR”.

\n
b.
\n
\n

\n

Award [1] if the candidate demonstrates some understanding of the product life cycle curve. Award an additional [1] if the candidate has correctly drawn the product life cycle curve, labelled both axes correctly, and identified at least four of the following stages: development, induction, growth, maturity, and decline (candidates do not have to use precisely those terms but they should be terms of roughly equal meaning). Award a maximum of [2].

\n

N.B. If a candidate has at least four stages correctly drawn and identified and labeled correctly the x axis but labels the y axis “market share”, award [2].

\n
c.i.
\n
\n

DE’s sales appears to have been at a maturity. Then, after the hackers, sales began to decline industry-wide. By developing an innovation that prevented the hackers from affecting the security of their product, DE was able to extend the life of its product. Sales not only returned to prior levels but actually began to increase.

\n

Award [1] if candidates convey some understanding of an extension strategy. Award [2] for a clear explanation.

\n

If a candidate merely draws and labels an extension curve on their product life cycle, award [1] for 3 (c) (ii).

\n
c.ii.
\n
\n

In general, advantages of large businesses include:

\n\n

In general, advantages of being small include:

\n\n

In the case of DE, the above advantages would in general apply. However, the circumstances can be further nuanced based upon the stimulus. Traditionally, the company was small and had a focus on quality, arguably its unique selling point. As the company grew, many insiders worried that DE would lose its focus on quality. Now, if it is to have cachet, it will have to rebrand itself and base its USP more on the security that its product offers.

\n

Although the company probably also experienced a number of economies of scale, it was also experiencing some diseconomies, which invariably reflect that some inefficiencies from growth have crept into the business. With growth, DE has probably expanded its workforce. An increase in employees could change the character of the organization. Communication would be more difficult, both in the literal sense (having to communicate to a larger number of people) and in the figurative sense (new employees do not know the “unwritten” rules and norms of an organization, so greater care has to be taken in all communications).

\n

An increase in size brings both advantages and disadvantages. In general, the larger the organization, the more it can benefit financially from size – more product lines and products and, with a diversity of revenue streams, an enhanced ability to survive. However, in DE’s case, it still has only one product. If the company grows and it increases its fixed costs, it takes some risks. If one of its competitors develops an ability to provide comparable security to the product of DE, DE’s sales could fall – but it may now be committed to higher fixed costs.

\n

Candidates are expected to provide conclusions and judgment.

\n

Accept any other relevant answer.

\n

Marks should be allocated according to the Paper 2 markbands for May 2016 forward with further guidance below.

\n

A balanced response is one that provides at least two arguments for and two arguments against the option.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.i.
\n
\n[N/A]\n
c.ii.
\n
\n[N/A]\n
d.
\n
", "question_id": "17N.2.SL.TZ0.3", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-5-operations-management", "2023-unit-4-marketing" ], "subtopics": [ "1-6-growth-and-evolution", "5-6-research-and-development", "4-5-the-four-ps-(product-price-promotion-place)" ] }, { "Question": "
\n

Grunsburg Textiles (GT )

\n

Grunsburg Textiles (GT ) is a textile company founded by the paternalistic leader Henrik Steiner. As the company grew, it became very committed to corporate social responsibility (CSR). “Our aims,” GT says on its website, “include making profits, providing safe and secure employment, contributing to society through investment in environmentally friendly production practices and supporting ethical causes”. Many people believe that GT’s success is tied to its reputation for taking care of its employees and for its commitment to CSR.

\n

In 2015, GT purchased €44 million in new environmentally friendly equipment. It financed the purchase with a bank loan. GT originally forecasted that the new equipment would generate €8 million in annual net cash flow. Instead, the actual increase in GT’s annual net cash flow from the new equipment was only €6 million. The Chief Financial Officer (CFO), Elaine, warned Henrik that unless net cash flow increased significantly, the average rate of return (ARR) would be significantly lower than originally forecasted.

\n

GT is struggling to make the loan payments and to have sufficient working capital. Elaine determined that one way to shorten the working capital cycle is debt factoring. However, when she approached several (debt) factors, she was discouraged by their proposed discount rates.

\n

Elaine knows that the situation is worse than she had warned. If the economy were to weaken and revenue to decline, she believes that the company could go out of business. Proposals for a solution include cutting back on GT’s commitment to its employees and CSR practices.

\n
\n

State any two stages of the working capital cycle.

\n
[2]
\n
a.
\n
\n

Calculate for GT:

\n

the payback period for the €44 million investment in new equipment based on the forecasted increase in net cash flow (show all your working).

\n
[2]
\n
b.i.
\n
\n

Calculate for GT:

\n

the average rate of return (ARR) based on an annual increase in net cash flow of €6000 and assuming an asset life of the new equipment of eight years (show all your working).

\n
[2]
\n
b.ii.
\n
\n

With reference to GT, explain one advantage and one disadvantage of debt factoring.

\n
[4]
\n
c.
\n
\n

Examine Elaine’s proposals to cut back on GT’s commitment to its employees and CSR practices.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Typically, stages of the working capital cycle include:

\n\n

Candidates are not expected to label the stages exactly as above. These responses may be brief and still get marks. Candidates need merely state the stages with no further description or elaboration.

\n

Award [1] for each stage of the working capital cycle stated up to a maximum of [2].

\n
a.
\n
\n

Payback period \n=\n\n\n\ninitial investment costs\n\n\n\n\nAnnual cash flow from investment\n\n\n\n=\n\n\n\n€ \n\n44\n\n000\n\n000\n\n\n\n€ \n\n8\n\n000\n\n000\n\n\n

\n

                      = 5.5 years

\n

Award [1] for working and [1] for the correct answer, up to a maximum of [2].

\n
b.i.
\n
\n

Average rate of return (ARR) \n=\n\n\n\n(\n\n\nTotal returns\n\n\n\n−\n\n\n\ntotal cost\n\n\n)\n\n\n\n\n\n\nyears of usage\n\n\n\n\ncapital cost\n\n\n\n\n\n×\n100\n

\n

\n\n\n\n(\n\n48000000\n\n\n−\n\n\n44000000\n\n)\n\n\n\n\n8\n\n44000000\n\n\n\n\n×\n100\n=\n1.14\n\n\n% \n\n   Accept 1.1%

\n

 

\n

Award [1] for working and [1] for the correct answer, up to a maximum of [2].

\n
b.ii.
\n
\n

Advantages of debt factoring. The business (GT):

\n\n

The disadvantages of factoring include:

\n\n

Accept other relevant advantages and disadvantages.

\n

Mark as 2 + 2.

\n

Accept any other relevant advantage / disadvantage.

\n

Accept any other relevant explanation.

\n

Mark as 2 + 2.

\n

Award [1] for each correct advantage / disadvantage identified or described and [1] for a relevant explanation with application to GT. Award up to a maximum of [2].

\n

[2] cannot be awarded per advantage / disadvantage if the response lacks either explanation and / or application.

\n

For example:

\n\n
c.
\n
\n

The main thrust of this question is for candidates to consider the difficult financial situation that GT has gotten itself into and how the company may try to resolve the issue. The CFO’s idea to cut back on GT’s commitments to employees and to CSR rests on the notion that commitments to employees and CSR are costly and that saving those expenses could help pay for the commitment and generate profits to support much needed working capital. However, the stimulus makes clear that commitments to employees and CSR are core values of the company and possibly the very basis for the success of the company. To eliminate them or weaken them may cause other (costly) issues for the business.

\n

Candidates should distinguish between commitments to employees and commitments to CSR. Cutting commitments to employees would erode trust and loyalty, bringing long-term damage to the company, whereas cutting CSR for a
short period of time is more justifiable and explainable. Candidates may want to propose other solutions – selling assets, other sources of finance, etc.

\n

Balance in the context of this question means nuanced advantages and disadvantages of cutting back on GT’s commitments to employees and to CSR. If candidates do not treat commitment to employees and commitment to CSR separately, award a maximum of [7].

\n

Candidates are expected to provide conclusions and judgment.

\n

Accept any other relevant answer.

\n

Marks should be allocated according to the SL Paper 2 markbands on page 5 with further guidance below.

\n

A balanced response is one that provides at least two arguments for and two arguments against the proposal.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n

\n

If a candidate does treats the two issues as one, maximum award [4].

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "17N.2.SL.TZ0.4", "topics": [ "2023-unit-3-finance-and-accounts", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "3-7-cash-flow", "3-8-investment-appraisal", "1-3-organizational-objectives", "3-1-sources-of-finance" ] }, { "Question": "
\n

Green Clean (GC)

\n

Green Clean (GC) is a private limited company controlled by the Hitta family. Its unique selling point (USP) is offering high-quality, reliable cleaning services by teams of professional cleaners who clean offices and houses.

\n

GC has strong ethical objectives. They only use eco-friendly cleaning products and pay their employees fair wages. Labour turnover is low and many cleaners have worked for the company for over two decades.

\n

However, the cleaning market has become very competitive. GC has been slow to react. Other cleaning companies are beginning to offer a wider range of services. GC’s management has decided to introduce a gardening service to maximize profit.

\n

GC will recruit professionally trained gardeners. As it is very difficult to find professional gardeners in the market, GC will pay them 20 % more than its cleaners. GC prefers to use external recruitment. GC’s management will also offer cleaners the opportunity to become gardeners even though off-the-job training costs are very high. If most of GC’s cleaners choose training, the company could fall short of workers to meet the demand for cleaning services.

\n

The cleaners are becoming demotivated because they are unhappy about the difference in pay between cleaners and future gardeners. They believe that gardeners are not more skilled than cleaners but just have a different skill set. Human resource managers are concerned about the potential impact of demotivated cleaners and are looking for ways to improve morale. One option they are considering is to offer cleaners an employee-share ownership scheme. Shareholders, however, are opposed to this proposal.

\n
\n

Define the term ethical objective.

\n
[2]
\n
a.
\n
\n

Explain one advantage and one disadvantage for GC of recruiting gardeners externally.

\n
[4]
\n
b.
\n
\n

Explain one advantage and one disadvantage for GC of using off-the-job training for the cleaners who would like to become gardeners.

\n
[4]
\n
c.
\n
\n

With reference to two motivation theories, examine the motivation of cleaners at GC.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Ethical objectives are the goals of a business based on a set of values or moral beliefs. They should cover all the actions of an organization and guide its decision-making process and strategies. Ethical objectives at GC: using
environmentally friendly products to reduce pollution; paying fair wages.

\n

Accept any other relevant definition.

\n

N.B. no application required. Do not credit examples alone. The candidate must provide a definition.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding (Ethical objectives are the goals of a business based on a set of values or moral beliefs).

\n

Award [2] for a full definition that conveys knowledge and understanding similar to the answer above, especially the idea that ethical objectives are more expansive than doing some ethically upstanding act (giving to a charity, paying for employees’ attendance at night school, etc.)

\n
a.
\n
\n

Advantages could include:

\n\n

Disadvantages of recruiting gardeners externally:

\n\n

Accept any other relevant advantage or disadvantage.

\n

Mark as 2 + 2.

\n

Award [1] for identifying or describing the advantage / disadvantage of recruiting gardeners externally and a further [1] for a development with respect to GC. Award a maximum of [2].

\n

[2] cannot be awarded per advantage / disadvantage if the response lacks either explanation and / or application.

\n

For example:

\n\n
b.
\n
\n

Advantages include:

\n\n

Disadvantages include:

\n\n

Mark as 2 + 2.

\n

Award [1] for identifying or describing the advantage / disadvantage of off-the-job training and a further [1] for a development with respect to GC. Award a maximum of [2].

\n

[2] cannot be awarded per advantage / disadvantage if the response lacks either explanation and / or application.

\n

For example:

\n\n
c.
\n
\n

GC wants to recruit professional gardeners and pay them higher wages. This decision is causing resentment among current cleaners at GC.

\n

Candidates may refer to the following motivation theories: the works of Taylor, Maslow, Herzberg, Adams, Pink.

\n

Candidates are expected to use two theories in order to examine the motivation of cleaners. Candidates are tested on their ability to apply theories with constant use of, and reference to, the information from the stimulus.

\n\n

Candidates should demonstrate an understanding that paying gardeners a higher wage is causing insecurity and a feeling of injustice among cleaners. It is likely that they are scared of the change. Some of them have worked for GC for over two decades. Consequently, the cleaners are becoming demotivated and may reduce their efforts. Some employees might not be interested in training to become gardeners but want to be treated fairly.

\n

Accept any relevant theory that is applied to the information given in the stimulus material.

\n

Theorists and theories should be applied not just mentioned. If a candidate does not apply the theories, maximum award [2].

\n

Accept any other relevant examination.

\n

A conclusion with judgment is expected.

\n

A balanced response is one that covers two motivation theories.

\n

Marks should be allocated according to the SL Paper 2 markbands on page 3 with further guidance below.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "17N.2.SL.TZ0.5", "topics": [ "2023-unit-2-human-resource-management", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "2-1-functions-and-evolution-of-human-resource-management", "1-3-organizational-objectives", "2-4-motivation" ] }, { "Question": "
\n

Tasty Cupcake (TC)

\n

Luis and José have set up a partnership, baking and selling cupcakes directly to consumers and supermarkets. They called the business Tasty Cupcake (TC). They used their savings of $3000 as starting capital. The partners need an overdraft agreement from the local bank. The bank manager asked for a cash-flow forecast.

\n

Luis has forecasted the following sales and cost figures for the first six months of operation, beginning in January.

\n

Sales

\n\n

Costs

\n\n
\n

State two features of a partnership.

\n
[2]
\n
a.
\n
\n

Prepare a monthly cash-flow forecast for TC for the first six months of operation.

\n
[6]
\n
b.
\n
\n

Calculate TC’s forecasted net profit at the end of June (show all your working).

\n
[2]
\n
c.
\n
", "Markscheme": "
\n

Possible features include:

\n\n

Accept any other relevant feature.

\n

Do not accept shares – they cannot be sold on the stock market as there are no shares.

\n

Accept shares cannot be issued.

\n

Award [1] for each correct feature stated. Award a maximum of [2].

\n

Application is not expected.

\n
a.
\n
\n

\n

N.B. Allow candidate own figure rule (OFR): if a candidate makes an error in one row and carries it through the remainder of the forecast that is only one error. This provision includes both mathematical errors and conceptual errors (for example, if a candidate has the rent in the incorrect month then candidates should only lose [1] for that error.

\n

Award [1] if the candidate conveys some understanding of what a cash flow forecast is, but otherwise the forecast is largely inaccurate, incomplete, or illegible.

\n

Award [2–3] if a cash flow forecast is drawn, but either it is not in a generally accepted format or it is untidy, and/or the forecast contains three or more errors, which could include, in addition to number placement problems and mathematical errors, conceptual errors (using the word “profit” rather than “net cash flow”) or omissions, such as not having a line like “closing balance” or totals.

\n

Award [4–5] if the cash flow forecast is drawn essentially correctly and neatly in a generally accepted format, but there is one error for [5] or two errors for [4].

\n

Award [6] if the cash flow forecast is drawn accurately and neatly in a generally accepted format, and is error free.

\n

If the candidate provided a heading of total inflow/outflow without using another heading above of inflow or outflow – do not penalise as an omission.

\n

If the candidate omitted both headings of outflow/inflow = one error

\n

Substituting the term “net profit in the cash flow forecast for “net cash flow” is inaccurate and [1] should be deducted.

\n

If the candidate has only one row for all cash outflows, subtract [1] from the total mark awarded.

\n

Full working is not expected.

\n
b.
\n
\n

Closing balance in June - opening balance in January plus credit sales = 5050 − 3000 + 2550 = $4600.

\n

2550 are added as there was an additional amount of cash due which was credit before but should be added to the total revenue.

\n

Accept any other relevant working provided the workings are clear and logically presented.

\n

Award [1] for working and [1] for the correct answer. Award up to a maximum of [2]. If the credit sales are not added then this counts as one error and [1] should be awarded.

\n

Award [1] for working correctly either the total revenue or the total costs.

\n

\n

Total Revenue = 1300 × $5 + 1700 × $5 × 5 months = $49 000.

\n

Credit candidates who included the labor costs under direct costs.

\n

 

\n
c.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
", "question_id": "17N.2.HL.TZ0.2", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "1-2-types-of-organizations", "3-7-cash-flow" ] }, { "Question": "
\n

Pedro

\n

Pedro is a farmer who operates as a sole trader in a developing country. Like other farmers in his community, he grows oranges, which are sold to buyers in developed communities and large cities. Working in the primary sector often results in very low income and poverty for some of the farmers. Most children do not go to school, as they are needed in the fields for manual work. Cooperation between the farmers in this community is very limited due to linguistic and cultural differences.

\n

Recently, farmers’ incomes have fallen further. Pedro has conducted social, technological, economic, environmental, political, legal and ethical (STEEPLE) analysis and identified two main external threats that are impacting on farmers’ incomes:

\n\n

Pedro would like to improve productivity as an orange producer. Investing in new technology is risky and would require extensive research and development. The internet is unreliable and Pedro is unable to raise funds for this investment himself to change current production methods.

\n

Pedro has arranged an emergency meeting of local farmers. He proposes that all farmers in his community create an agricultural cooperative and collectively raise funds to invest in new capital-intensive farming methods. The investment in technology could allow them to diversify into the manufacturing of bottled orange juice drinks.

\n
\n

Define the term productivity rate.

\n
[2]
\n
a.
\n
\n

Explain how each of the two external threats arising from the STEEPLE analysis would have impacted on farmers’ incomes in the developing world.

\n
[4]
\n
b.
\n
\n

Explain one cost and one benefit to Pedro of conducting extensive research and development.

\n
[4]
\n
c.
\n
\n

Examine Pedro’s proposal to create an agricultural cooperative in his community rather than continuing to operate as a sole trader.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Productivity rate is a relative measure of how efficiently inputs are converted into output/the ratio of outputs to inputs during production in percentage. A productivity rate gives an indication of how well resources are used in the
production process.

\n

eg \n\n\n\nTotal out in a given time period\n\n\n\n\nTotal workers employed\n\n\n\n×\n100\n=\n\n\n\nOutput\n\n\n\n\nCapital employed\n\n\n\n

\n

Do not credit students who define the term as level of production or capacity utilization.

\n

Formula is given so please do not credit the presentation of the formula

\n

Accept any other relevant definition.
N.B. no application required. Do not credit examples.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding. Possibly without mentioning the measurement in percentage.

\n

Award [2] for a full definition that conveys knowledge and understanding similar to the answer above. For [2] there should be some indication that the organization converts inputs into outputs effectively or efficiently measured in percentage/ rate.

\n

 

\n
a.
\n
\n

The question is about the process of the external factors. If orange producers from the developed communities employ new technology with higher productivity rates, the prices of oranges are likely to fall for the customer. Developing communities will likely experience a decrease in demand for their oranges and thus, even if prices of oranges do not change, will see a reduction in income.

\n

A sustained and severe drought affecting the level of orange production in developing countries will likely lead to a shortage of oranges and thus higher prices for Pedro’s stock. Customers are unlikely to purchase from higher price
producers and coupled with the falling prices from the developed producers who are competitors, the developing farmers’ incomes are likely to fall further.

\n

Mark as 2 + 2.

\n\n

Explicit reference to the demand and supply of oranges is not expected.

\n
b.
\n
\n

The question is essentially about researching and developing new technology rather than market research of customers’ opinions etc.

\n

Costs

\n

Harvesting in the developing community is labour intensive, children will need supervising and the internet is unreliable. Pedro may not have the time and the resources to carry out research and development into new technology. The time taken to undertake research and development will lead to significant expenses for
Pedro. Moreover, the opportunity costs in terms of not working in the field could be considerable for Pedro.

\n

As the technology is untested, the poorer community can ill afford for this technology not to work as they have limited funds. There are significant risks/costs of failure for the developing communities at a time when incomes
are falling.

\n

Accept any other relevant/ applicable cost

\n

Benefits
The potential benefits for the community of research and development are the productivity benefits allowing developing communities a more level playing field with respect to competition with the developed farmers. Unit costs could fall, and therefore prices to customers, increasing the demand for oranges. Perhaps it is a risk worth taking in terms of time and resources.

\n

By conducting research and development, Pedro could attract an angel investor/innovator who for marketing or ethical reasons may be willing to allow Pedro to try new, untested technology at a deep discount or even for free as a public relations exercise. This could benefit Pedro and other community members especially if the cooperative is formed.

\n

Accept any other relevant cost/benefit.
Mark as 2 + 2.

\n

For an identification or a description of one benefit/ cost with or without application [1].

\n\n

Application must refer to researching technology.

\n
c.
\n
\n

There are a few issues that the candidates can cover and evaluate. Issues could include the advantages of being a sole trader in terms of control over decision making, for example, as opposed to operating as a cooperative. It is expected that the candidates show understanding of, if not explicit explanation as to what a cooperative is/relevant reference to cooperative, not just to the name. Creation of a cooperative is much more than just pooling resources, etc. While a cooperative is a for-profit organization, it will have the much-needed social objective to solve the problem of child labour, lack of education and poverty. Something that each individual sole trader is clearly unable to do given the information in the case study. One may judge the above as a very strong argument in favour of the creation of cooperative as the issue of poverty and children working in the fields are acute.

\n

It should be noted that creating a cooperative could enable Pedro and the other farmers to raise the much-needed finance as well as diversifying and engaging in secondary sector activity.

\n

Being a sole trader, Pedro (and the other farmers) experience a lack of financial power and engage in a high-risk operation due to the nature of the business and living in a harsh environment. The stimulus indicates that these farmers are experiencing a high level of uncertainty, low income and even poverty, with little or no opportunity to improve. With no support, all can be lost as each farmer is facing unlimited liability.

\n

By creating an agriculture/producers’ cooperative, the farmers will pool resources together in order to raise the finance needed for investment in new technology, market their products to compete with international competitors and possibly diversify and produce an orange juice drink. Pedro, and the other farmers in the cooperative, through a division of labour, shared responsibility and mutual support might be able to negotiate better loans, better prices for crops and reduce the reliance on basic primary, unpredictable weather dependent crops if they diversify in the medium to long term. If the option of diversification is pursued it will guarantee a higher and steady income rather than a seasonal income. One may judge this issue as highly significant given the current harsh conditions and external threats.

\n

Moreover, the farmers might be more motivated due to their ability to collaborate and make decisions in a democratic manner. The quality of the decision making may be better.

\n

The financial gain will also be transferred into a social gain, which the community needs. Priority can be given to the children’s education instead of the children supporting each sole trader in the fields. One may judge this issue/benefit as highly significant.

\n

While there are theoretical and practical disadvantages of operating as cooperatives, like some disincentives to work due to low wages, slower and dependent decision-making processes compared to independent and fast
decision making by Pedro and the other farmers. The main disadvantage is the cultural and linguistic differences among the farmers that might create some misunderstanding and possibly a clash as well as the long decision-making process in the short term. Moreover, the movement into the secondary sector might be too difficult for the farmers. Lots of training will be needed in terms of production and marketing and investment in different technology. This operational shift might be a hindrance but the farmers can decide that short term investment in farming methods is of the highest priority and perhaps in the longer term, when farming methods are more efficient, they can move into the secondary sector.

\n

Some judgment:

\n

Still, in this case, one may judge that the arguments for the proposal are more significant and outweigh the arguments against. Linguistic and cultural differences with training and wider community support can be overcome in the medium to long term, especially if profit is made and can be further invested into some social projects. Remaining as sole traders will leave the farmers with little or no power at all. Decision making power is highly theoretical here given the level of poverty.

\n

Pedro should seriously consider creating the cooperative.

\n

Accept any other relevant issue.

\n

Accept any other relevant examination.

\n

A conclusion with judgment is expected.

\n

A balanced response is one that covers at least two arguments for and at least two arguments against.

\n

Marks should be allocated according to the Paper 2 markbands for May 2016 forward with further guidance below.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n

Candidates cannot reach the top marks if there is no relevant reference/ application to the nature of a cooperative and its social context/relevance to the current life of the farming community.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "17N.2.HL.TZ0.3", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-5-operations-management" ], "subtopics": [ "1-5-external-environment", "5-6-research-and-development", "5-5-production-planning", "1-2-types-of-organizations" ] }, { "Question": "
\n

With reference to an organization of your choice, examine the impact of innovation on operations management strategy.

\n
", "Markscheme": "
\n

Marks should be allocated using the SL Paper 2 assessment criteria on pages 4 to 5 with further guidance below.

\n

N.B. examiners should include a breakdown of each mark awarded per criterion and a brief note explaining the mark awarded at the end of each candidate’s response.

\n

The main aim of paper 2 (SL or HL) section C is to assess candidates’ understanding of the six major concepts (change, culture, ethics, globalization, innovation, strategy) within a business context. Candidates are to demonstrate their understanding through an organization of their choice. The expectation of the use of an organization is to allow assessment of the depth of candidates’ understanding through their ability to apply the concepts and their knowledge.

\n

Assessment of candidates’ knowledge of the organization itself is not an aim of the assessment. If a candidate makes minor factual errors and these minor errors have no genuine bearing on whether the candidate understands the concepts, examiners should not penalize. For example, a minor error of historical fact (the year when a company was founded, for example, or the year in which a change was implemented) that has no genuine bearing on candidates’ understanding of the concepts does not warrant penalty.

\n

It is expected that the candidate explains the chosen theoretical direction / content of their response.

\n

Additional guidance in relation to the assessment criteria

\n

For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be
met for that mark to be awarded.

\n\n

If only one concept is addressed:
Criteria A, B, C and E: award up to a maximum [3].
Criterion D: full marks can be awarded.

\n

Where the question asks for impacts of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

In section C, the question rubric explicitly states that “organizations featured in sections A and B and in the paper 1 case study may not be used as a basis” to candidate’s answers to questions 6, 7 and 8. When this happens please award marks as follows:

\n\n

Criterion B

\n\n

Criterion C

\n\n

Criterion D

\n\n

Criterion E

\n\n
", "Examiners report": "", "question_id": "17N.2.SL.TZ0.6", "topics": [], "subtopics": [] }, { "Question": "
\n

With reference to an organization of your choice, discuss the ways in which globalization can influence organizational culture.

\n
", "Markscheme": "
\n

Marks should be allocated using the SL Paper 2 assessment criteria on pages 4 to 5 with further guidance below.

\n

N.B. examiners should include a breakdown of each mark awarded per criterion and a brief note explaining the mark awarded at the end of each candidate’s response.

\n

The main aim of paper 2 (SL or HL) section C is to assess candidates’ understanding of the six major concepts (change, culture, ethics, globalization, innovation, strategy) within a business context. Candidates are to demonstrate their understanding through an organization of their choice. The expectation of the use of an organization is to allow assessment of the depth of candidates’ understanding through their ability to apply the concepts and their knowledge.

\n

Assessment of candidates’ knowledge of the organization itself is not an aim of the assessment. If a candidate makes minor factual errors and these minor errors have no genuine bearing on whether the candidate understands the concepts, examiners should not penalize. For example, a minor error of historical fact (the year when a company was founded, for example, or the year in which a change was implemented) that has no genuine bearing on candidates’ understanding of the concepts does not warrant penalty.

\n

It is expected that the candidate explains the chosen theoretical direction / content of their response.

\n

Additional guidance in relation to the assessment criteria

\n

For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be
met for that mark to be awarded.

\n\n

If only one concept is addressed:
Criteria A, B, C and E: award up to a maximum [3].
Criterion D: full marks can be awarded.

\n

Where the question asks for impacts of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

In section C, the question rubric explicitly states that “organizations featured in sections A and B and in the paper 1 case study may not be used as a basis” to candidate’s answers to questions 6, 7 and 8. When this happens please award marks as follows:

\n\n

Criterion B

\n\n

Criterion C

\n\n

Criterion D

\n\n

Criterion E

\n\n
", "Examiners report": "", "question_id": "17N.2.SL.TZ0.7", "topics": [], "subtopics": [] }, { "Question": "
\n

Music Mania (MM)

\n

Music Mania (MM) is an independent store selling new and used music compact discs (CDs), DVD films and music vinyl records. It is a sole trader business owned by André, who has 25 years of experience in the retail and music business. MM has loyal customers but its total revenue is falling. The store currently has a low market share in DVDs and vinyl records.

\n

André decided to conduct some primary and secondary market research, as the entertainment industry is changing rapidly. He discovered that:

\n\n

André is accustomed to variations in sales but the current sales forecasts are, in his experience, the most worrying. He has decided to create an e-commerce website to increase his sales of new and used vinyl records and CDs. André is also aware that new free online music streaming and gaming sites are being launched.

\n

André has only limited internal sources of finance to set up the website. Two new tactics to ensure future success for MM being considered are:

\n\n
\n

Define the term secondary market research.

\n
[2]
\n
a.
\n
\n

Explain one advantage and one disadvantage for MM of using sales forecasting.

\n
[4]
\n
b.
\n
\n

Explain one cost and one benefit for MM of setting up an e-commerce website.

\n
[4]
\n
c.
\n
\n

Using the Boston Consulting Group (BCG) matrix, discuss the two new tactics André is considering to ensure MM’s future success. 

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Secondary market research or desk research refers to the collection of second hand data by a business for decision-making that is derived from second hand sources /published sources by a third party. It has not been collected first hand by the business themselves.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full definition that conveys knowledge and understanding similar to the answer above. For [2] there should be some indication that the organisation is actually carries out a research/ action.

\n

Some students are likely to define secondary sources while the definition is about research.

\n

No examples are needed

\n

No application is required.

\n
a.
\n
\n

One advantage of using sales forecasting is that it will allow a firm such as MM to look at future sales forecasts of its product portfolio and make changes where necessary. This will save the business considerable expense, stocking costs and influence future cash flow needs. Forecasting allows MM to plan ahead and can also impact on human resource planning and finance needs if cash flow forecasts indicate that there may be a shortage. There is evidence form the case study that MM’s product portfolio revenue streams are changing. MM is experiencing changing sales of all of its stock so is planning by using forecasts, André can avoid over stocking and tying up valuable capital in unsold DVDs or CDs for example or can transfer more resources towards the fast selling computer games. Decision making at MM may be more accurate. To be forewarned is to be forearmed.

\n

Disadvantages for MM are linked to the inevitable fact that sales forecasts are merely that – future predictions are based on past data, which, given the existence of external factors some of which are mentioned in the stimulus and unexpected events, cannot be fully accurate. There is evidence from the stimulus that André expects sales to be variable (possible cyclical or seasonal variations) and even with all relevant future economic and social data at his disposal, forecasts can still be widely inaccurate. For example, vinyl record sales are expected to rise but what if another musical format is created within the next five years? André also has considerable experience in this industry and is aware that sales are changing rapidly. Sales forecasts may be out of date by the time the data has been collected if they are every month or quarter. Sales forecasts in this context may be of little value to MM in such a fast changing industry.

\n

Mark as 2 + 2.

\n

[2] cannot be awarded per advantage / disadvantage if the response lacks either explanation and/or application.

\n

For example:

\n\n

Candidates are expected to show some understanding of sales forecasting methods.

\n
b.
\n
\n

The benefits to MM from setting up an e-commerce website will be linked to increasing customer awareness and sales.

\n\n

The costs are linked to the inevitable restructuring of the business that e-commerce will demand and could be considered to be both short term and long term.

\n\n

If the e-commerce site is to be fully functional then new distribution channels around delivery of vinyl records and newly released CDs that are both growing in sales to the customer will need to be identified, researched and set up. This will also take time and André will have to find additional resources. The stimulus indicates that finance is limited.

\n

An e-commerce website will add a new layer of complexity to MM’s operations and logistics and MM has not got the right experience therefore more finance will have to be raised for training, hiring people and so on.

\n

Please note:
Whatever relevant costs that a candidate explains or describe needs to be applied specifically to MM’s lack of finance / lack of experience.

\n

Mark as 2 + 2.

\n

Award [1] for identifying or describing the cost / benefit for MM of setting up e-commerce and a further [1] for a development with respect to MM. Award a maximum of [2].

\n

[2] cannot be awarded per cost / benefit if the response lacks either explanation and/or application.

\n

For example:

\n\n
c.
\n
\n

Revenue is falling, computer games sales are rising and now André is considering the possibility of setting up an e-commerce business website. Although MM and André have been in the business for 25 years, external factors are changing the nature of his business model. The two tactics are to stop selling DVDs and start increasing below-the-line promotional spending on vinyl records.

\n

By applying the BCG matrix, we could argue that:

\n\n

Removing or divesting the dog will free up shelf space in the retail store. DVD sales could be transferred and sold via the e-commerce site so that MM is able to make some form of contribution. More space for games is now possible. However, removing a product line from the portfolio is a risk, as some of MM’s loyal customers will be unhappy.

\n

Keeping DVDs – although a dog – may block potential new retail rivals if it creates MM’s USP. It is also indicated in the stimulus that computer games are not MM’s core business.

\n

So perhaps it is worth keeping the core product for a little longer until MM is clear whether the new product is doing well. If e-commerce is to be used, MM can potentially use a market development strategy and find some segment in less technologically advanced economies that are still interested in DVDs.

\n

Increasing spending on below-the-line promotion seems like an appropriate tactic. Although MM has not got sufficient internal sources of finance, the product is in a question mark position with a potential to grow and be profitable. Profit that MM needs. One, therefore, may judge this tactic as highly appropriate especially as below-the-line promotional tactics are cheaper than above-the-line promotional tactics. Moreover, external sources of finance can be used. André needs to use below-the-line promotion methods to move the vinyl records to a star and hopefully a cash cow position so in the medium term, he will be able to milk the potential cow. Short term spending versus medium to long term benefits/ profit seems like a good tactic.

\n

It is expected that the candidates show a clear understanding/application of below the line methods rather than just promotion generally.

\n

Moreover, below-the-line methods can be considerably cheaper than above the line methods of promotion which are currently very appropriate to MM. MM can use short-term sales promotion to encourage buying the product. Below-the-line promotion can complement the decision to use e-commerce. MM can generate viral marketing and or/ use social media for promotion.

\n

Candidates should be credited for classification of the vinyl as a dog given the low growth of the market share and for suggesting to use below-the-line promotion to extend the life cycle or not to spend money on above-the-line promotion.

\n

Judgment

\n

The BCG provides some clues as to what André should consider but there are some difficult choices to be made. Removing DVDs will allow for a greater stock of vinyl but removing a product line and replacing it with a problem child is risky. It may be sensible in the short term to keep the DVDs, as they will still contribute to growth. Spending more on below-the-line promotion seems more sensible given his loyal customer base and the future potential. If André can’t keep both options and has to choose one tactic, perhaps the second tactic is more viable as there is more longer term potential as the market is growing and MM will more responsive to changes in the external environment.

\n

Accept any other relevant issue.

\n

Accept any other relevant discussion.

\n

A conclusion with judgment is expected.

\n

Accept any substantiated judgment.

\n

A balanced response is one that covers at least two arguments for and at least two arguments against.
As there are two tactics to discuss, a balance response is one that covers one argument for and one argument against each option.

\n

Marks should be allocated according to the HL Paper 2 markbands on page 3 with further guidance below.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

For a lack of balance for both option award up to a maximum of [4]

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n

If the candidate only considers one tactic then award [5] if the answer is balanced with a judgment.

\n

If the candidate does not use the BCG matrix then award a maximum of [4] even if the response is fully balanced.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "17N.2.HL.TZ0.4", "topics": [ "2023-unit-4-marketing" ], "subtopics": [ "4-4-market-research", "4-3-sales-forecasting", "4-8-e-commerce", "4-5-the-four-ps-(product-price-promotion-place)" ] }, { "Question": "
\n

With reference to an organization of your choice, discuss the ways in which ethics and change can influence human resource management.

\n
", "Markscheme": "
\n

Marks should be allocated using the SL Paper 2 assessment criteria on pages 4 to 5 with further guidance below.

\n

N.B. examiners should include a breakdown of each mark awarded per criterion and a brief note explaining the mark awarded at the end of each candidate’s response.

\n

The main aim of paper 2 (SL or HL) section C is to assess candidates’ understanding of the six major concepts (change, culture, ethics, globalization, innovation, strategy) within a business context. Candidates are to demonstrate their understanding through an organization of their choice. The expectation of the use of an organization is to allow assessment of the depth of candidates’ understanding through their ability to apply the concepts and their knowledge.

\n

Assessment of candidates’ knowledge of the organization itself is not an aim of the assessment. If a candidate makes minor factual errors and these minor errors have no genuine bearing on whether the candidate understands the concepts, examiners should not penalize. For example, a minor error of historical fact (the year when a company was founded, for example, or the year in which a change was implemented) that has no genuine bearing on candidates’ understanding of the concepts does not warrant penalty.

\n

It is expected that the candidate explains the chosen theoretical direction / content of their response.

\n

Additional guidance in relation to the assessment criteria

\n

For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be
met for that mark to be awarded.

\n\n

If only one concept is addressed:
Criteria A, B, C and E: award up to a maximum [3].
Criterion D: full marks can be awarded.

\n

Where the question asks for impacts of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

In section C, the question rubric explicitly states that “organizations featured in sections A and B and in the paper 1 case study may not be used as a basis” to candidate’s answers to questions 6, 7 and 8. When this happens please award marks as follows:

\n\n

Criterion B

\n\n

Criterion C

\n\n

Criterion D

\n\n

Criterion E

\n\n
", "Examiners report": "", "question_id": "17N.2.SL.TZ0.8", "topics": [], "subtopics": [] }, { "Question": "
\n

Green Clean (GC)

\n

Green Clean (GC) is a private limited company controlled by the Hitta family. Its unique selling point (USP) is offering high-quality, reliable cleaning services by teams of professional cleaners who clean offices and houses.

\n

GC has strong ethical objectives. They only use eco-friendly cleaning products and pay their employees fair wages. Labour turnover is low and many cleaners have worked for the company for over two decades.

\n

However, the cleaning market has become very competitive. GC has been slow to react. Other cleaning companies are beginning to offer a wider range of services. GC’s management has decided to introduce a gardening service to maximize profit.

\n

GC will recruit professionally trained gardeners. As it is very difficult to find professional gardeners in the market, GC will pay them 20 % more than its cleaners. GC prefers to use external recruitment. GC’s management will also offer cleaners the opportunity to become gardeners even though off-the-job training costs are very high. If most of GC’s cleaners choose training, the company could fall short of workers to meet the demand for cleaning services.

\n

The cleaners are becoming demotivated because they are unhappy about the difference in pay between cleaners and future gardeners. They believe that gardeners are not more skilled than cleaners but just have a different skill set. Human resource managers are concerned about the potential impact of demotivated cleaners and are looking for ways to improve morale. One option they are considering is to offer cleaners an employee-share ownership scheme. Shareholders, however, are opposed to this proposal.

\n
\n

Explain one advantage and one disadvantage to GC of having low labour turnover.

\n
[4]
\n
b.
\n
\n

Explain two possible steps in the recruitment process of gardeners for GC.

\n
[4]
\n
c.
\n
", "Markscheme": "
\n

There is sufficient information in the stimulus for the candidates to apply. See below. The use of GC or a reference to “cleaners” does not constitute an application.

\n

Low labour turnover has created a loyal workforce at GC. Recruitment costs are reduced and induction training will be minimal. Given that some workers have been at GC for nearly two decades. This kind of working environment creates a culture of trust and thus productivity and motivation. Evidence from the stimulus clearly show that GC’s USP is based on the reliability and quality of its employees.

\n

However, low labour turnover may not allow for fresh new thinking or ideas to be introduced. This very advantage may render GC as an organization where some employees and their representatives may have become complacent and clearly there is evidence of inertia as GC was slow to react to the competitive forces. Also, there is the perception of resistance to change perhaps given the current culture of employees who have been working together for two decades. Given the new competition and slow reaction times, GC is in danger of stagnating.

\n

Mark as 2+2

\n\n
b.
\n
\n

Establish the nature of the job and create job analysis/job description/person specification – it is very important for GC to carry out a detailed job analysis/description and person specification as this will be the first time that gardeners’ jobs have been created. In order to attract the most suitable gardeners such analysis is required. This makes the recruitment process quicker and more efficient and is likely to attract only the most suitable candidates.

\n

Prepare a job advertisement:
As GC is going to recruit gardeners from wide geographical areas, they will have to advertise their new positions in a number of different media locations. Local job centres close to GC will not be suitable. GC should advertise nationally or even internationally through the internet or through gardening associations, as it is looking for professionally trained gardeners.

\n

As GC has limited experience in this area, GC may have to find a recruitment agency external to the business to guide and manage the recruitment process. As GC is paying new gardeners 20 % more than cleaners and possibly spending on a recruitment agency, GC will want to ensure that they hire the most professionally trained gardeners. The agency will be able to screen potential candidates and select the best for GC’s management to consider. This will minimize possible recruitment mistakes. Accept this point even if it seems more like a method rather than a step. This is more like subcontracting the process:

\n

Short list applicants.

\n\n

Accept any other possible step in recruitment as long as it is applicable.

\n

Candidates must fully explain and find some relevant application to the nature of the job/ the types of employees/ experience of the organisation of recruiting new types of employees and so on.

\n

The later examples above are more generic so credit candidates who refer to the gardeners or the nature of the job.

\n\n
c.
\n
", "Examiners report": "
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
", "question_id": "17N.2.HL.TZ0.5", "topics": [ "2023-unit-2-human-resource-management" ], "subtopics": [ "2-1-functions-and-evolution-of-human-resource-management" ] }, { "Question": "
\n

With reference to JAC, describe two advantages of internal growth (line 52).

\n
[4]
\n
a.
\n
\n

With reference to John, explain the key functions of management.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Internal growth: selling more; widening product range; expanding facilities

\n

• JAC is a relatively small enterprise relative to Utopia so it would not be too difficult to raise the resources to grow JAC internally.
• John Ariki’s philosophy is for internal growth.
• Because of the emphasis on local culture, specialised coffee, etc, it is important for JAC to retain control – control might be diluted with external growth.
• With outside influences the vision for JAC might be diluted.
• JAC is part of Utopia so the vision for Utopia is relevant.
• Gaining economies of scale e.g. bulk buying coffee for the whole business
Remember: JAC is owned as a sole trader

\n

Mark as 2+2.

\n

Award [1] for each advantage identified, and [1] for the development of each of these key aspects in the context of JAC/Utopia/John, up to a maximum of [2].

\n
a.
\n
\n

Key functions of management are:
• setting objectives and planning
• organising resources to meet objectives, including staff recruitment
• directing and motivating staff
• coordinating activities
• controlling and measuring performance.

\n

With reference to John:
• He created the original business plan.
• He made decisions about reflecting local culture and resisting external stakeholders.
• He organises local suppliers.
• It was his decision to open café.
• He creates crisis management and contingency plans.
• He decides on options.
• He delegates to his children but keeps the reigns.
• He organised and managed a meeting between himself, Liza and Paul.
• He monitors performance.
• He sets organisational structure and manages changes.
• He makes the final decision.

\n

Accept any other relevant analysis.

\n

Marks should be allocated according to the Paper 1 markbands for May 2016 forward, section A.

\n

Award a maximum of [3] for a theoretical answer.

\n

Award a maximum of [5] if the explanation of functions is mainly descriptive but in context.

\n

For full marks the explanation needs to be developed and in context.

\n
b.
\n
", "Examiners report": "
\n

Some candidates confused ‘internal growth’ with ‘internal sources of finance’. Contextual ideas that were developed well included John wanting to retain control and reject external influences and the danger of external influences diluting the business model including ethics.

\n
a.
\n
\n

A surprising number of candidates confused ‘management’ with ‘leadership’ and answered a question about John’s leadership style. The best answers developed the main functions of management (setting objectives, organising resources, directing and motivating staff, coordinating, controlling and measuring) linking the answers with the roles played by John (and others) in the business.

\n
b.
\n
", "question_id": "17M.1.SL.TZ0.2", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-2-human-resource-management" ], "subtopics": [ "1-6-growth-and-evolution", "2-3-leadership-and-management" ] }, { "Question": "
\n

Paul’s idea for 3D printing takes Utopia into a secondary sector activity that contrasts with its usual tertiary sector activities. In order to produce a sufficient number of souvenirs, Utopia would need to buy ten 3D printers at $1000 each. There would be material costs and significant operating costs, as well as time and additional labour. Paul has produced a net cash flow forecast for the project (Table 1) assuming a five year life for the printers. He likes the idea that each souvenir produced could be of a unique design and personalized. Some of the materials would be from recycled plastics obtained from waste at the resort. Recycling would reduce variable costs and it would be good for the resort’s environment and for Utopia’s caring image.

\n

Liza does not like the idea of 3D printing. She is concerned that the souvenirs may damage Utopia’s exclusive brand. She can see difficulties with recruiting someone with both the necessary IT skills and the ability to make decisions about which types of souvenirs to produce. She is particularly concerned about the impact on Utopia’s current suppliers of souvenirs. She thinks that 3D printing is more suited to larger organizations.

\n

John believes that the 3D printing technology will bring other benefits to his businesses. He can imagine decorations and other useful items being produced for the resort and its offices.

\n

Table 1: Net cash flow for the 3D printing project

\n

\n
\n

Define the term variable cost.

\n
[2]
\n
a.
\n
\n

With reference to Utopia, explain the differences between secondary sector activities and tertiary sector activities.

\n
[4]
\n
b.
\n
\n

Using the information above, calculate the payback period and the average rate of return (ARR) for the 3D printing project (show all your working).

\n
[4]
\n
c.
\n
\n

Using information from the case study, additional information above and your results from part (c), recommend whether Utopia should proceed with the 3D printing project.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Variable costs are costs that vary in direct proportion to change in output/level of production.

\n

 

\n

Candidates are not expected to word their definition exactly as above.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full, clear definition that conveys knowledge and understanding similar to the answer above.

\n
a.
\n
\n

Secondary sector: manufacturing – converting raw materials. Usually capital intensive, often B2B – 3D printing.
Tertiary sector activities – providing services. Usually labour intensive, often B2C. Predominant in developed economies – serving coffee, providing resort facilities.

\n

Award [1] for each difference identified, and [1] for the development of this difference in the context of Utopia.

\n

Award a maximum of [2] if the answer is not about differences but only provides definitions.

\n
b.
\n
\n

\n

The project breaks even after 3 years and 3 months (3 ¼ years).

\n

ARR \n=\n\n\n\n(\n\n\ntotal returns \n\n−\n\n\n\ncapital cost\n\n\n)\n\n\n/\n\n\nyears of use\n\n\n\n\ncapital cost\n\n\n\n×\n100\n

\n

\n=\n\n\n\n(\n\n17\n−\n10\n\n)\n\n\n/\n\n5\n\n\n10\n\n\n×\n100\n=\n 14%

\n

Mark as 2+2.

\n

For each calculation:
Award [2] for correct answer with working and correct unit.
Award [1] for correct answer with working but incorrect unit or no unit, or for correct answer with correct unit but no working.

\n
c.
\n
\n

For:
• Paul likes the idea
• Unique souvenirs
• Cost reductions
• $10k is not large in the scale of the operation
• Use of recycled materials fits in with Utopia’s ethos and image
• ARR reasonable (14 %) – allow OFR

\n

Against:
• Payback period quite long (OFR) for such a small project
• Does this market really do souvenirs?
• Liza does not like
• Recruitment difficulties
• Impact on local people – part of the ethos
• Costs of recycling unclear
• Not suited to niche market?
• This is a very small investment (10K) and the returns at 14% actually amount to quite a small sum – if it is a success it actually adds very little to annual revenue streams. For such a small return is the risk that it perhaps cheapens the image of the business worthwhile? Such souvenirs could be regarded as “tacky” and do not fit the profile of the target market.

\n

Decision depends on John and whether other alternatives are better, eg doing nothing, leaving the money in the bank, etc. John believes the technology will bring other benefits, which may swing him that way; however, the impact on local craftsman would weigh heavily.

\n

 

\n

Marks should be allocated according to the Paper 1 markbands for May 2016 forward, section B.

\n

Award a maximum of [4] for a purely theoretical answer or with no effective use of case material.

\n

Award a maximum of [5] if only one side of argument is considered in context.

\n

Award a maximum of [6] if both sides are considered but there is limited use of data.

\n

Award a maximum of [8] if both sides considered, and there is good use of data.

\n

For full marks two sides of the argument should be considered, data used effectively, and the recommendation supported.

\n

Note – a recommendation that a decision cannot be made due to lack of information (eg market research) can be regarded as a decision provided the arguments are supported.

\n
d.
\n
", "Examiners report": "
\n

Candidates were asked to define the term “variable costs”. Many candidates did well, scoring 2 marks with relatively concise answers. Examiners however saw many answers that were too superficial or tautological, such as “variable costs are costs that do not vary” or “variable costs are costs that are not fixed”; this is not enough to fully convey knowledge and understanding.

\n
a.
\n
\n

Candidates were asked to explain the differences between secondary sector activities and tertiary sector activities. Many candidates misread the question as “define secondary sector and then define primary sector”; few candidates duly wrote about the differences and consequently scored top marks.

\n
b.
\n
\n

Candidates were asked for two calculations. Most answers were correct; examiners however noted two “typical” errors: firstly, the absence of units for the ARR (i.e. 14 instead of 14%); secondly, the absence of working (i.e. just the final result, although the instructions explicitly stated “show all your working”).

\n
c.
\n
\n

Candidates were asked to recommend whether Utopia should proceed with the 3D printing project. Many answers were cogent, well-structured and balanced, with a clear recommendation at the end. The best responses referred to information from the case study, from the additional information given and also from the results from 4(c); OFR (Own Figure Rules) was then allowed i.e. candidates could use and interpret their own results (i.e. they were not doubly penalised if their calculations were wrong, for example with a payback period too short or too long). The main weakness in some candidates’ answers is the fact that some were solely one-sided: all the arguments were either “for” or “against”. For the final question of section B, which assesses A03 command terms such as “discuss”, “evaluate” or “recommend”, candidates should be reminded of the importance of covering contrasting viewpoints.

\n
d.
\n
", "question_id": "17M.1.SL.TZ0.4", "topics": [ "2023-unit-3-finance-and-accounts", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "3-8-investment-appraisal", "3-2-costs-and-revenues", "1-1-introduction-to-business-management" ] }, { "Question": "
\n

With reference to Utopia, describe the importance of two external stakeholders (line 12).

\n
[4]
\n
a.
\n
\n

With reference to Utopia, explain the role of promotion (line 6).

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

External stakeholders could be:
• Suppliers – the local business in particular and coffee suppliers. The business relies on the quality of these products
• Local craftsmen – can be considered different from suppliers
• Customers – this is in the service industry and customers are critical. Word-of-mouth is so important in this industry and these will tend to be influential people
• Banks, etc – unlikely to be important as the business does not use external finance
• The government – very important for regulations such as H&S. Also collects taxes so has an impact on profits.
• Local community – Utopia provides work, has focus on local suppliers
• Pressure groups/media – no obvious importance although bad publicity to be avoided
• Competitors are allowed as external stakeholders

\n

 

\n

N.b.: shareholders are not external. Do not reward comments about stakeholders in general – there has to be references to specific stakeholders

\n

Mark as 2+2.

\n

Award [1] for each correct stakeholder identified and [1] for a description of how that stakeholder relates to Utopia. Award a maximum of [2] per stakeholder.

\n
a.
\n
\n

Promotion will have to be very focused to be effective.

\n

Two aspects of promotion:
• Providing information: This is an upmarket business offering quite a different kind of tourist service. Potential customers will want to know a great deal about the specialities, such as locally produced goods and services, local cuisine, local culture, luxurious facilities and services
• Persuasion: Probably important early in the life of the business but less so as word-of-mouth promotion will now be a critical way to get new customers (C2C). How many customers are return visitors? Advertising through public relations may well be important, as tourist destinations often appear in travel pages of newspapers.

\n

Creating, maintaining, reinforcing the ‘upmarket’ brand and image is important. Promotion may not be quite as important as for other tourist destinations because its focus is going to be on a niche market.

\n

Accept any other relevant application.

\n

Marks should be allocated according to the Paper 1 markbands for May 2016 forward, section A.

\n

Award a maximum of [3] for a theoretical answer.

\n

Award a maximum of [5] if the explanation of promotion is mainly descriptive but in context.

\n

For full marks the explanation needs to be developed and in context.

\n
b.
\n
", "Examiners report": "
\n

Most candidates answered this well with customers and suppliers often chosen as the stakeholders. Some candidates confused ‘stakeholders’ with ‘shareholders’ who were not allowed as shareholders are not external stakeholders. Some candidates confused internal and external stakeholders. A few candidates were unable to contextualise their answers.

\n
a.
\n
\n

A lot of candidates attempted to answer a slightly different question, which was to analyse Utopia’s promotion strategy. The question set was about the ‘role’ of promotion. The best answers developed the ideas of informing and persuading within the context of Utopia’s reliance on word-of-mouth and viral marketing.

\n
b.
\n
", "question_id": "17M.1.SL.TZ0.1", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-4-marketing" ], "subtopics": [ "1-4-stakeholders", "4-5-the-four-ps-(product-price-promotion-place)" ] }, { "Question": "
\n

Paul’s idea for 3D printing takes Utopia into a secondary sector activity that contrasts with its usual tertiary sector activities. In order to produce a sufficient number of souvenirs, Utopia would need to buy ten 3D printers at $1000 each. There would be material costs and significant operating costs, as well as time and additional labour. Paul has produced a net cash flow forecast for the project (Table 1) assuming a five year life for the printers. He likes the idea that each souvenir produced could be of a unique design and personalized. Some of the materials would be from recycled plastics obtained from waste at the resort. This example of lean production would be good for the resort’s environment and for Utopia’s caring image. The cost of recycling is uncertain.

\n

\n

Liza does not like the idea of 3D printing. She is concerned that the souvenirs may damage Utopia’s exclusive brand. She can see difficulties with recruiting someone with both the necessary IT skills and the ability to make decisions about which types of souvenirs to produce. She is particularly concerned about the impact on Utopia’s current suppliers of souvenirs. She thinks that 3D printing is more suited to larger organizations.

\n

John believes that the 3D printing technology will bring other benefits to his businesses. He can imagine decorations and other useful items being produced for the resort and its offices.

\n
\n

Describe one method of lean production other than recycling.

\n
[2]
\n
a.
\n
\n

With reference to Utopia, explain two benefits of having a strong brand.

\n
[4]
\n
b.
\n
\n

Using information from Table 1 and Table 2, calculate the net present value (NPV) for the 3D printing project.

\n
[4]
\n
c.
\n
\n

Using information from the case study, additional information above and your results from part (c), discuss whether Utopia should proceed with the 3D printing project.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Lean production can include JIT inventory control, JIT production, capacity management, TQM, improved efficiency to improve capacity utilization, involving workers in internal markets, supply chains, flexible systems. Kanban, Kaizen, Andon. Allow quality assurance., Cradle to Cradle, ‘right first time’

\n

‘Decreasing waste’ can only reach one mark since it is a definition of lean production rather than a method.

\n

Award [1] for a description that shows partial understanding. Award [2] for a description that shows full understanding.

\n
a.
\n
\n

Brand: an identifying name, symbol, image or trademark that distinguishes a product/service from its competitors.

\n

The nature of Utopia is an upmarket expensive tourist destination. There are lots of alternatives, so Utopia has to market its uniqueness. Utopia’s marketing relies on word of mouth and social media. In order for these to be successful, the name (which is the brand) has to have an impact on potential customers. John believes that the beautiful location, the local craftsmen and materials, and the local food and coffee, together form the basis for the Utopia brand. So these each need to be strong for the brand to work.

\n

Benefits could include: emphasizing the uniqueness of service; reinforcing word of mouth; strengthening name; creating and maintain a strong image; easier to introduce new products through family branding; competitive edge.

\n

 

\n

Accept any other relevant benefits

\n

Award [1] for each reason identified, and [1] for the development of each of these reasons in the context of Utopia.

\n
b.
\n
\n

\n

Total NPV = $2510 (12,510 – 10,000)

\n

Lots of possibilities of rounding differences – allow especially if DCFs calculated with calculator rather than using given ones.

\n

 

\n

Award [4] for correct answer, correct units or no units (e.g. just 2510) (including different answers due to rounding).
Award [3] for correct answer, but wrong units or for simple arithmetic error.
Award [2] for right approach but significant errors e.g. omitting capital cost or not totalling the NPVs.
Award [1] for attempt that shows limited understanding.

\n
c.
\n
\n

In favour:
• Positive NPV (but allow OFR)
• Paul likes the idea
• Unique souvenirs
• Cost reductions
• $10k is not large in the scale of the operation
• Use of recycled materials fits in with Utopia’s ethos and image

\n

Against:
• Does this market really do souvenirs?
• Liza does not like
• Recruitment difficulties
• Impact on local people – may damage part of the ethos
• Costs of recycling unclear
• Not suited to niche market?

\n

According to Ansoff this might be diversification or new product depending on your point of view, but it does carry risks whichever.

\n

Decision depends on John and whether other option(s) are better. John believes the technology will bring other benefits, which may swing him that way, however the impact on local craftsman would weigh heavily.
Accept any other relevant discussion of the issues

\n

 

\n

Marks should be allocated according to the Paper 1 markbands for May 2016 forward, section B.

\n

Award a maximum of [4] for a purely theoretical answer or with no effective use of case material.
Award a maximum of [5] if only one side of argument is considered in context.
Award a maximum of [6] if both sides are considered but there is limited use of data (e.g. no use of NPV). However, if limited statement(s) are made about NPV/Cash Flow could achieve [7]
Award a maximum of [8] if both sides considered, there is good use of data, but an unsupported recommendation.
For full marks two sides of the argument should be considered, data used effectively, and the recommendation supported.

\n

Note – a recommendation that a decision cannot be made due to lack of information (eg market research) can be regarded as a decision provided the arguments are supported.

\n
d.
\n
", "Examiners report": "
\n

Most candidates described a lean production method which was usually just-in-time (JIT) but sometimes kaizen and other possible methods.

\n
a.
\n
\n

Most candidates knew the meaning of ‘brand’. Many candidates could describe Utopia’s brand. The best answers explained that the brand helped differentiate the business and how it built up consumer awareness and loyalty.

\n
b.
\n
\n

Many candidates got the correct answer. Some candidates forgot to deduct the initial investment.

\n
c.
\n
\n

The best answers used the results of the NPV calculation (and some candidates also calculated ARR and Payback) and then linked these in with other information from the case, examining pros and cons. Questioning of assumptions also helped the best answers. To gain full marks candidates had to produce a justified/supported conclusion/recommendation. Weaker answers tended to focus either on the numerical aspects or the qualitative information without synthesis.

\n
d.
\n
", "question_id": "17M.1.HL.TZ0.4", "topics": [ "2023-unit-5-operations-management", "2023-unit-3-finance-and-accounts", "2023-unit-4-marketing" ], "subtopics": [ "5-3-lean-production-and-quality-management", "3-8-investment-appraisal", "4-5-the-four-ps-(product-price-promotion-place)" ] }, { "Question": "
\n

With reference to Utopia, describe two suitable sources of finance for the 3D printers (line 60).

\n
[4]
\n
a.
\n
\n

Explain the role of ethics in John’s businesses.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Relative to the size of Utopia, the cost of the printers is not large.

\n

Sources could include:
• retained profits – but are these sufficient after the problems of 2016?
• sale of assets – but are there any? The villas are only just being rebuilt and the café is growing
• reductions in working capital – impossible to say but it does seem an efficient organization
• loans – although John does not want external influences, he is thinking that he will have to look outside. Loans would dilute his control the least. Debentures are unrealistic. Debt factoring
• joint ventures, strategic alliances, franchising would seem rather unsuitable for the 3D printing as it is a small project. Would anyone be interested?
• Shares: Unlikely to be suitable as John owns 100% of shares and does not want external influences
• Hire purchase/leasing – would this be available from 3D printer manufacturers?
• Can also consider grants

\n

Shares not acceptable as John owns 100% of shares. Remember, Utopia is a private limited company

\n

Accept any other relevant point.

\n

Mark as 2+2.

\n

Award [1] for each source identified, and [1] for the development of each of these sources in the context of the project, up to a maximum of [2].

\n
a.
\n
\n

Ethical objectives are difficult to define and vary from culture to culture; however, the following might be regarded as ethical/socially responsible:
• using local craftsmen
• focussing on local culture
• using local ingredients
• using ethically produced fair trade coffee and paying above market prices.

\n

Importance relates to:
• maintaining the goodwill of the community
• maintaining the goodwill of suppliers, employees
• maintaining the brand image (perhaps the most important).
• Aiming to improve long term success and profitability of the business

\n

Accept any other relevant analysis.

\n

Marks should be allocated according to the Paper 1 markbands for May 2016 forward, section A.

\n

Award a maximum of [3] for a theoretical answer.

\n

Award a maximum of [5] if the analysis is mainly descriptive but in context.

\n

For full marks the explanation needs to be developed and in context.

\n
b.
\n
", "Examiners report": "
\n

Candidates general knew two sources of finance but many had difficulty contextualising their answers.

\n
a.
\n
\n

The subject of ethics is generally well understood and most candidates were able to extract examples of ethical behaviour from the case material. However, many candidates saw this as an opportunity to analyse/evaluate the ethical behaviour of John’s businesses rather than answer the question which was about the role of ethics in the business. The best answers related ethics to the ideas of creating and maintaining brand image, customer loyalty, the goodwill of the community and good relationships with employees.

\n
b.
\n
", "question_id": "17M.1.SL.TZ0.3", "topics": [ "2023-unit-3-finance-and-accounts", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "3-1-sources-of-finance", "1-3-organizational-objectives" ] }, { "Question": "
\n

John felt that the decision about expanding JAC into the international markets of the Pacific Islands did not depend on the decision about the 3D printing project. However, he decided that they should not enter the markets at the same time, so they had to choose between starting with Fiji, Samoa or New Zealand. John stressed to Liza that, as with the construction of the Utopia villas, the choice of a new international market should strongly consider cultural influences and norms. For this reason, John favoured Fiji and Samoa over New Zealand, arguing that they are more culturally similar to Ratu. However, the final decision not being made, John asked Liza to do some more research into the idea and into the two markets. The results of her ideas are summarized in Tables 1, 2 and 3.

\n

Table 1: Liza’s market research results

\n

\n

 

\n

\n

 

\n

Liza drew up the following decision tree to help clarify the decision process and try to quantify the issues involved in the decision.

\n

\n

Using the case study and the additional information above, recommend which of the Pacific Island markets JAC should enter. Completing the decision tree and using the results could help you in your answer.

\n
", "Markscheme": "
\n

X=$1.7 million, Y= $3.2 million

\n

Fiji
Positives:
• Larger population so theoretically larger market
• Many more tourists who are likely to use the coffee shops
• Better predicted value than Samoa ($2.9m compared with $1.7m)
• Stronger growth
• Higher chance of success, lower chance of failure
Negatives:
• Locals are tea drinkers
• Failure leads to a loss
• Lower GDP
• Spread out – 330 islands

\n

Samoa
Positives:
• Only two islands
• High proportion of tourists
• Coffee drinkers
• Politically stable
• Ideal workforce
• Good for overseas investment
• No loss if it fails
• Higher GDP
Negatives:
• Higher chance of failure
• Lower growth

\n

 

\n

Marks should be allocated according to the Paper 1 markbands for May 2016 forward, section C.

\n

Criterion A: Knowledge areas include: risk, decision trees and predicted outcomes, location decisions, use of data, strategic decision making. PEST (not necessarily formally), Ansoff and other appropriate ideas.. No understanding of decision trees/predicted outcomes, marks limited to [3]. Not all knowledge areas required, we are looking for tools that can be expected to help make a recommendation.
Criterion B: Application will be judged by the use of the stimulus material, in particular the extra material. If only one option considered, award a maximum of [2]. If both options considered but no use of additional material, award a maximum of [3].
Criterion C: Reasoned argument. For full marks there needs to be a comparison between the two options and a supported recommendation. If analysis of only one, award a maximum of [3]. If no comparison but analysis of both options awards a maximum of [2].
Criterion D: Structure – see criterion.
Criterion E: Likely issues include: impact on communities, workers, cultural differences, views of the shareholders/management, other stakeholders.

\n

Note – a recommendation that a decision cannot be made due to lack of information (eg market research) can be regarded as a decision provided the arguments are supported.

\n
", "Examiners report": "
\n

There was, as expected, a wide range of answers to this question. The best answers systematically explored the range of data and developed ideas that helped them towards a recommendation. In these better answers the decision tree was used not only for its predicted outcomes but also to assess risk and likely outcomes through use of the probabilities. This was particularly convincing when risk was also explored with the use of Ansoff Matrix. Most candidates used most of the data but this was often in terms of simply repeating the information rather than develop it. A variety of ‘tools’ were employed including PEST/STEEPLE, SWOT and these were rewarded when their use helped to support a recommendation. Very few candidates addressed criterion E, the perspectives of groups and individuals and many candidates overlooked the need for an introduction, conclusion and fit-for purpose paragraphs for Criterion D.

\n
", "question_id": "17M.1.HL.TZ0.5", "topics": [ "2023-unit-4-marketing" ], "subtopics": [ "4-7-international-marketing" ] }, { "Question": "
\n

Sotatsu Electronics (SE)

\n

Sotatsu Electronics (SE) manufactures electronic products and is famous for its innovative televisions. In late 2015, SE introduced a new high-definition television with twice the quality of the best-selling television of its chief competitor. Determining that it would be two years before its competitors could have a similar product, SE adopted a price skimming strategy.

\n

Table 1: Select financial information for SE for 2015 and 2016.
Figures in $000 000.

\n

\n

 

\n
\n

Define the term price skimming.

\n
[2]
\n
a.
\n
\n

Calculate the values of X and Y in Table 1 (no working required).

\n
[2]
\n
b.i.
\n
\n

Construct a profit and loss account for SE for 2015 and 2016.

\n
[4]
\n
b.ii.
\n
\n

Calculate net current assets (working capital) for 2016 (show all your working).

\n
[2]
\n
c.
\n
", "Markscheme": "
\n

Price skimming is setting prices high when introducing a new product to the market. This strategy typically works only for a limited time, as competitors will respond to the new product with innovations to their own products. As competitors introduce new products in response, demand for the original company’s product (the company price skimming) falls, and prices must be lowered.

\n

 

\n

Candidates are not expected to word their definition exactly as above.

\n

Award [1] for a basic definition conveying the idea that price skimming involves setting a high price for a new product. Award and additional [1] mark for extra relevant information, such as the idea that the product is unique or differentiated from competitors’ products or that the price will fall over time. Maximum award: [2].

\n
a.
\n
\n

X = $2200 (millions of dollars)
Y = $1500 (millions of dollars)

\n

Award [1] mark for each correct answer up to a maximum of [2].

\n
b.i.
\n
\n

\n

Award [4] if both profit and loss accounts are correct. Award [3] if the candidate correctly formats both profit and loss accounts, but has one mathematical error.

\n

If a candidate does not correctly format the profit and loss accounts or has two mathematical errors, award [2]. Award [1] if the candidate demonstrates some understanding of a profit and loss account but otherwise has numerous errors.

\n

Own figure rule applies. Many candidates will probably rough out a P & L on scratch paper to produce answers for 1(b)(i) and then neatly reproduce the P & L on the examination paper. If a candidate makes a mathematical error in (b)(i) and makes the same error in (b)(ii), apply the OFR.

\n
b.ii.
\n
\n

Net current assets (working capital) is calculated by subtracting current liabilities from current assets (all in millions of dollars):

\n

Current assets − Current liabilities = Net current assets

\n

$700 − $300 = $400

\n

 

\n

Writing out “current assets – current liabilities = net current assets” is not sufficient for getting the [1] for correct working. Candidates must write out $700 – 300 = 400.

\n

Award [1] for the correct working and [1] for the correct answer. Award up to a maximum of [2].

\n
c.
\n
", "Examiners report": "
\n

Responses varied. Some students had no understanding, some partial, and some gave strong definitions

\n
a.
\n
\n

Many students attempting this question produced correct answers.

\n
b.i.
\n
\n

Most students who answered question 1 (b) (i) correctly also were able to produce accurate profit and loss accounts.

\n
b.ii.
\n
\n

Most students attempting this question answered it correctly.

\n
c.
\n
", "question_id": "17M.2.SL.TZ0.1", "topics": [ "2023-unit-4-marketing", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "4-5-the-four-ps-(product-price-promotion-place)", "3-4-final-accounts" ] }, { "Question": "
\n

Anubis

\n

Tom operates Anubis as a sole trader, selling cell/mobile phone cases on the internet. The market is increasingly competitive. The retail price of phone cases is predicted to fall in the second quarter of 2018. Employees at Anubis will receive a 3% rise in wages starting from 1 April 2018.

\n

Tom has forecasted the following monthly cash outflows for January through March 2018:
• Heating and lighting: $4000.
• Wages: $50 000.
• Packaging: $15 000.
• Delivery charges: 5 % of sales revenue.
• Cost of goods sold: $220 000.

\n

Additional information:
• Opening balance on 1 January 2018: $8000.
• Sales revenue: $300 000 each month.
• Rent of $2000 paid quarterly: first payment in January 2018.
• Receipt of a tax refund in February 2018: $3000.

\n
\n

Outline two appropriate external short-term sources of finance for Anubis other than loans from family and friends.

\n
[2]
\n
a.
\n
\n

Using the information above, prepare a fully labelled cash-flow forecast for Anubis from January to March 2018.

\n
[5]
\n
b.
\n
\n

Comment on the predicted cash flow for Anubis for 2018.

\n
[3]
\n
c.
\n
", "Markscheme": "
\n

The sources of finance suggested must be external and short term – therefore the only four rewardable answers are:
• Trade credit
• Factoring
• Overdraft
• Short-term bank loan

\n

 

\n

Award [1] per correct source identified up to a maximum of [2]. However, if a candidate outlines overdraft and short-term bank loan, maximum award [1].

\n

Award [1] per correct source identified up to a maximum of [2].

\n
a.
\n
\n

\n

Award [1] if the candidate has some idea of an annual cash-flow forecast but otherwise has numerous errors. Award [2] if the cash flow has three or more errors or has a largely inaccurate format. Award [3] if it is largely formatted correctly and/or has two errors. Award [4] for a correctly formatted forecast with just one error. Award [5] for a correctly formatted and mathematically correct forecast.

\n
b.
\n
\n

The cash flow forecast is a cause for concern. The forecast covers the first three months of 2018 but the closing balance worsens each month and is forecasted to be negative in March. Thereafter, Anubis faces lower gross profit margin because of lower retail prices of phone cases and higher wages costs. Given that the market is increasingly competitive, Anubis may not be able to generate sufficient additional sales revenue to offset the lower gross profit margin. Thus, the situation for Anubis is not promising.

\n

 

\n

Award [1] for recognition that the business’s cash flow position is predicted to deteriorate.

\n

Award [1] for each additional relevant comment related to the stimulus and specifically referring to it, up to [2]. Maximum award: [3].

\n

 

\n

N.B. The candidate’s commentary should be based upon the cash flow numbers that were produced in 2(b). Examiners should follow a procedure similar to the Own Figure Rule. Even if the candidate’s cash flow numbers are extremely inaccurate, the candidate can still comment on them. The comment should be logically dependent on the numbers produced in 2 (b).

\n
c.
\n
", "Examiners report": "
\n

Some students identified inappropriate sources of finance (for which they received no marks), even though it did indicate that they understood the concept of a source of finance. Many students could identify at least one appropriate source of finance.

\n
a.
\n
\n

Though marks varied, they tended to cluster, with students producing very good cash flows or having little to no idea of what one was.

\n
b.
\n
\n

The quality of responses varied, though most students received at least one or two marks.

\n
c.
\n
", "question_id": "17M.2.SL.TZ0.2", "topics": [ "2023-unit-3-finance-and-accounts" ], "subtopics": [ "3-1-sources-of-finance", "3-7-cash-flow" ] }, { "Question": "
\n

Dales

\n

Dales is a public limited hotel chain operating in a highly competitive tourism market. Dales is positioned as a high-price and high-quality chain. The majority of its staff are on permanent contracts, but wage rates at Dales are below the average for the hotel industry. Consequently, staff turnover is high. Recruitment is difficult due to the number of hotels in the areas where Dales hotels are located and the wages paid.

\n

In 2010, in order to remain competitive, Dales outsourced the cleaning of hotel rooms to Wire.
Outsourcing reduced the cost of cleaning rooms for Dales from 5 % of total revenue per room to 2 %. Net profit after tax and interest increased and share prices rose by 10 %.

\n

Initially, Wire paid cleaners at Dales a low wage of:
• $6 per hour for 8 hours, 5 days per week.
• Cleaners cleaned, on average, 13 rooms per day.

\n

In 2016, Wire introduced a piece rate system:
• $2 is paid per room cleaned.
• Cleaners have a target of 20 rooms per day, 5 days per week.

\n

In recent years, newspaper reports highlighting poor pay and working conditions have damaged Dales’s brand image. Recent customer feedback has also highlighted concerns about food quality, room cleanliness and poor customer service at Dales hotels. Room bookings fell during the same period. Profits in 2016 decreased from $24 m to $4 m.

\n

The current contract with Wire is up for renewal. Dales is considering insourcing.

\n
\n

Outline two common steps taken by a business in recruitment.

\n
[2]
\n
a.
\n
\n

Explain two disadvantages for Wire of introducing a piece rate system of wages for its cleaning staff.

\n
[4]
\n
b.i.
\n
\n

Calculate the financial impact on cleaners employed by Wire from the introduction of the piece rate system in 2016 (show all your working).

\n
[2]
\n
b.ii.
\n
\n

Calculate the change in cleaning costs per room from the introduction of the piece rate system used by Wire.

\n
[2]
\n
b.iii.
\n
\n

Recommend if Dales should stop outsourcing the cleaning of hotel rooms.

\n
[10]
\n
c.
\n
", "Markscheme": "
\n

Common steps taken by a business in the process of recruitment include:
• identifying position
• evaluating the requirements for the position
• developing a job description
• determining recruitment plan
• determining search committee
• advertizing position
• reviewing applicants and developing a list to interview
• conducting interviews
• selecting the candidate that best fits the description
• offering position and negotiating terms.

\n

 

\n

Accept any other relevant step in the process of recruitment.

\n

Award [1] for each step identified up to a maximum of [2].

\n
a.
\n
\n

• Housekeepers may stop worrying as much about the quality of the job they do, instead only worrying about the number of rooms they can clean per hour to achieve greater earnings.
• The piece rate method may also discourage teamwork in the workplace because individual housekeepers simply want to complete more of their own work.
• The increased stress that results from having to clean more rooms may result in increased staff turnover and make it more difficult to recruit housekeepers in the future.
• Staff may become demotivated because they now have to clean more rooms for less pay.
• The piece rate system could damage Wire’s relationship with its customers such as Dales as the bad press could lead Wire’s customers not to renew contracts.

\n


N.B. Piece rates are usually considered a motivator, not a de-motivator. Candidates may be awarded marks for saying piece rates demotivate provided that have a clear and logical explanation based upon the circumstances of the case.

\n

Mark as 2+2.

\n

Award [1] for stating a disadvantage and an additional [1] for its explanation with reference to Wire. Award a maximum of [2].

\n
b.i.
\n
\n

Wages earned in time-based system = $6 × 8 × 5 = $240 per week [1].

\n

Wages earned using new piece rate system = $2 × 20 × 5 = $200 per week [1].

\n

Financial impact on cleaners = $40 per week. The question does not specify a time frame. Therefore, accept any time frame as long as the candidate is consistent. For example, $6 x 8 = $48 and $2 x 20 =$40. Financial impact on cleaners =$8 per day.

\n
b.ii.
\n
\n

Cleaning wage cost per room in old system = $6 × 8 divided by 13 rooms = $3.69 per room [1].

\n

New system: $2 per room, therefore the change in cleaning costs = $1.69 per room [1].

\n

Own Figure Rule applies.

\n
b.iii.
\n
\n

If Dales stops outsourcing its cleaners then costs will rise. Outsourcing did cut costs per room from 5 % of room revenues to 2 % – this is likely to be reversed if they stop outsourcing, unless of course they operate the same system as used by Wire: a piece rate system. Costs could, in the short run, increase – Dales will now be responsible for training and recruitment costs, which are unavoidable. These costs could be significant, especially since in 2016 Dales’s profits decreased from $24 m to $4 m. This increase in costs could cause them to make a loss at least in the short term.

\n

However, stopping outsourcing will not deal with Dales’s other problems – wage rates at Dales are below the average for the hotel industry. Consequently, staff turnover is high. Recruitment is difficult due to the number of hotels in the area and the wages paid.

\n

Cessation of outsourcing of cleaners will have no impact on these issues.

\n

Hotel guests may find that their rooms are cleaned to a higher standard if Dales returns to having cleaners only clean 13 rooms per day rather than 20. However, if Dales sticks with the piece rate system adopted by Wire then nothing will really change and poorly cleaned rooms may continue to be an issue.

\n

Hotel guests are critical not just about room cleanliness but also about food quality and poor customer service across the hotel. Cleaner rooms may help reduce the fall in room bookings but unless other concerns such as food quality and customer service are challenged then insourcing of cleaners may do little to arrest the decline in bookings.

\n

Certainly, it is a step in the right direction, but Dales’s problems appear deeper than just poorly cleaned rooms and unless these are dealt with the future looks grim.

\n

Dales operates in a highly competitive market and unless it offers wages on par with rival hotels then staff turnover will remain high. Continued high labour turnover will not help it establish better customer care and may be a significant factor in the poor quality of food sold in the hotel. Dales is positioned as a high-price and high-quality hotel – guests that pay high prices expect good food, polite staff and a clean room.

\n

 

\n

In order to reach the top bands of the markscheme candidates must demonstrate that insourcing will only solve one of Dales’s problems and must discuss the importance of the other factors in contributing to their falling room occupancy rates.

\n

 

\n

Accept any other relevant evaluation.

\n

The table below should be followed (along with the markbands \"Paper 2 markbands for May 2016 forward\").

\n

These mark awards in the table below should be viewed as maximums. That is, just because a candidate has one argument for outsourcing and one argument against does not mean that they will automatically get a 4. One strong argument for one side and merely a weak or nominal argument for the other side might result in a 3.

\n

 

\n

\n

 

\n

Marks should be allocated according to the Paper 2 markbands for May 2016 forward.

\n
c.
\n
", "Examiners report": "
\n

Many candidates could identify two common steps in recruitment. Students often wrote more than they need to. A few students misunderstood the question and outlined two ways that a business can attract new employees and suggested such things as competitive wages and job enrichment. These responses were not answering the question.

\n
a.
\n
\n

Many students could offer one disadvantage with explanation and application. Some struggled to have a second disadvantage with application.

\n
b.i.
\n
\n

Many students correctly answered this question.

\n
b.ii.
\n
\n

Many students could answer this question as well, though probably fewer than could answer 3 (b)(ii).

\n
b.iii.
\n
\n

Compared to the responses to 4 (d) and 5 (d), responses to 3 (d) often had less balance. Students clearly saw outsourcing as the source of Dales’ problems and argued to end outsourcing. Balance was possible, however, and some students achieved it.

\n
c.
\n
", "question_id": "17M.2.SL.TZ0.3", "topics": [ "2023-unit-2-human-resource-management", "2023-unit-3-finance-and-accounts", "2023-unit-5-operations-management" ], "subtopics": [ "2-1-functions-and-evolution-of-human-resource-management", "2-4-motivation", "3-2-costs-and-revenues", "5-4-location" ] }, { "Question": "
\n

Bart Furniture (BF)

\n

Bart Furniture (BF) is a wholesaler that stocks furniture. In 2015, BF purchased more stock than usual in order to take advantage of discounts that several furniture manufacturers were offering. However, much of this new stock did not sell.

\n

Table 1: Financial information, for BF, for 2015 and 2016

\n

\n
\n

Describe one feature of a wholesaler.

\n
[2]
\n
a.
\n
\n

Using information in Table 1, calculate for BF stock turnover in days for 2015 (X) (show all your working).

\n
[2]
\n
b.i.
\n
\n

Using information in Table 1, calculate for BF current ratio for 2015 (A) (show all your working).

\n
[2]
\n
b.ii.
\n
\n

Using information in Table 1, calculate for BF debtor days for 2016 (Y) (show all your working).

\n
[2]
\n
b.iii.
\n
\n

Referring to information in Table 1 and your calculations, explain the change in BF’s liquidity between 2015 and 2016.

\n
[2]
\n
c.
\n
", "Markscheme": "
\n

Common features of wholesalers include:
• An intermediary along a distribution channel that breaks large quantities of product into small stock quantities for retail businesses.
• generally offering stock for predominantly one industry (furniture, fruit, electronic parts, auto parts, etc) and building up product knowledge to help retail businesses increase the opportunities for retail success.
• allow retail businesses to purchase on credit or even allowing retail business to purchase stock on a sale or return basis.
• given the large quantities of stock purchases, being able to experience significant purchasing and marketing economies of scale.

\n

Accept any other relevant feature.

\n

 

\n

Award [1] for a relevant feature with appropriate description up to a maximum of [2].

\n

It is not expected that candidates explain the benefits to any stakeholder

\n

Application to the organisation is not required.

\n

Do not credit an example of BF or any other organisation.

\n
a.
\n
\n

\n\n\n\nStock\n\n\n\n\nCOGS\n\n\n\n×\n365\n=\n stock turnover in days

\n

\n\n\n4000\n\n\n12166\n\n\n×\n365\n=\n 120.006 days (assuming 4000 is average stock)

\n

Accept 121 days

\n

Accept 120 days

\n

Do not credit for the use of a correct formula as it is given.

\n

 

\n

Award [1] for some minimal understanding like at least two figures used are correctly.

\n

Award [1] for a final correct answer without working

\n

 

\n

Award [2] for correct use of formula with clear working with no mathematical errors and the correct answer is given in days from working shown.

\n

For [2], “days” must be present, as this is the standard unit used.

\n

Do not accept a response that calculates the times it takes the stock to be turned over.

\n
b.i.
\n
\n

\n\n\n\nCash  +  Debtors  +  Stock\n\n\n\n\nCurrent liabilities\n\n\n\n = current ratio

\n

\n\n\n2000\n+\n1973\n+\n4000\n\n\n800\n+\n1000\n\n\n = 4.43

\n

Accept 4.4

\n

Award [1] for some minimal understanding like all the figures/total for CA or CL are correct

\n

Award [2] for correct use of formula with no mathematical errors/the calculations are clear and correct.
[2] cannot be awarded if the candidates expresses the figures in times/ units etc.

\n
b.ii.
\n
\n

\n\n\n\nDebtors\n\n\n\n\nTotal sales revenue\n\n\n\n×\n365\n=\n Debtor days

\n

\n\n\n6134\n\n\n26000\n\n\n×\n365\n=\n86.11\n days

\n

If a leap year figure is used, please accept 86.34 days.

\n

Accept 87 days.

\n

Accept 86 days.

\n

Do not credit for the use of a correct formula as it is given.

\n

 

\n

Award [1] for some minimal understanding like at least two figures used are correct.
Award [1] for a final correct answer without working

\n

Award [2] for correct use of formula with no mathematical errors. Units (days) are required for full marks.

\n
b.iii.
\n
\n

Given the changes in the current ratio from 4.4 to 5.47, one can say that BF’s liquidity has increased. Candidates may term this increase as an improvement or deterioration as BF’S ratios are high. The important issue is the increase in liquidity.

\n

The application should refer to the possible reasons/contributors for the changes like:
An increase in stock from $4000 to $6164
An increase in debtors from $1973$ to $6134. Possibly due to some difficulties of shifting the stock as evident in 2016 of an increased stock turnover and the level of stock despite a fall in cash from $2000 to $500.

\n

 

\n

Award [1] if the candidate comments that the liquidity of the company has increased.

\n

Award [2] for a clear explanation of one possible reason for the changes with a use of actual figures.
It is expected that the candidates refer to some actual changes like debtors/stock for full marks.
Candidates need to explain the changes- why/ the possible contributors to rather than just ‘what’.

\n

It is expected that the candidates comment on the direction of the change not just say it has changes.

\n

Allow for OFR.

\n

 

\n
c.
\n
", "Examiners report": "
\n

Many candidates confused the role of a wholesaler with that of bulk retailers e.g. Costco in the US, and hence believe it is the role of a wholesaler to sell in bulk. Even if this is true, such a wholesaler cannot do this profitably unless it first buys in bulk, to enjoy purchasing economies of scale, and then breaks bulk to the next level of buyers.

\n
a.
\n
\n

Many candidates found this question a straightforward calculation. However, a few candidates tried to apply a strict interpretation of the formula and tried to calculate the ‘average stock’. Without the opening balance for 2015 this is not possible. Therefore, from a teaching perspective students should assume that if such an opening balance is not given then they should assume that all stock values are an average. Had the question asked for the 2016 stock turnover then the average stock could have been calculated, and would have been expected.

\n

The question specifically asked for the stock turnover in days and a large number of candidates lost a mark for not stating ‘days’ [days only needed to be in some part of the calculation, not necessarily at the end – so candidates who reproduced the formula (including ‘days’) still got full marks.

\n
b.i.
\n
\n

Candidates had problems with this question. Whereas parts i) and iii) simply required candidates to pick the required numbers and apply to the formula, in this question, candidates had to arrive at the inputs by adding together several numbers. This required a basic understanding of what items make up ‘current assets’ and ‘current liabilities’, and clearly many (the vast majority) did not know this. This is somewhat disappointing given that it is a fundamental part of ‘final accounts 3.4 and ‘profitability and liquidity ratio analysis’, 3.5. This lack of understanding became further apparent in part c) (see later)

\n
b.ii.
\n
\n

As in part i) application to the formula was quite straight forward – once again omission of ‘days’ prevented full marks from being achieved.

\n
b.iii.
\n
\n

This was a straightforward question asking candidates to comment on the change in liquidity. As alluded to above, the vast majority of candidates could not understand this, and many proceeded to write long explanations about changes in profitability, stock turnover etc. As the syllabus makes quite clear, ratios fall into three distinct groups, profitability, liquidity and efficiency. Only 2 liquidity ratios are present therefore there should have been no reason to refer to any other ratios or figures. It was simply necessary to state the liquidity had increased – nothing more. For application, candidates were required to refer to any of the underlying figures supporting the increase in liquidity, namely the increase in debtors or the increase in stock. It was apparent that many candidates wrongly interpreted a reduction in cash as a reduction in liquidity, which in this case was not correct. Also many candidates seemed to think that if ratios were not in the ‘ideal’ range, then somehow this was very bad. Teachers should note that ‘ideal ranges’ for ratios are essentially ‘relative’ and what is good for one industry may not be good for another. Students therefore should not be encouraged to view these ratio ranges in ‘absolute’ terms.

\n
c.
\n
", "question_id": "17M.2.HL.TZ0.1", "topics": [ "2023-unit-4-marketing", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "4-5-the-four-ps-(product-price-promotion-place)", "3-6-efficiency-ratio-analysis", "3-5-profitability-and-liquidity-ratio-analysis" ] }, { "Question": "
\n

Health Star (HS)

\n

Health Star (HS) is a private limited company providing management consultancy services for public sector organizations like hospitals. HS is well known for its creativity and for helping customers achieve budget targets. HS’s consultants are all shareholders, receive high salaries and profit-related pay. HS also gives its consultants freedom and encouragement to be intrapreneurs. The consultants’ work performance is appraised on a monthly basis using formative appraisal.

\n

Recently, several pressure groups have protested against the high fees charged by HS. “The high fees are outrageous!” said Elaine Hall in a local news report. “Public sector hospitals need to use their resources for patient care and not for employing expensive consultants.”

\n

In response to the pressure groups, HS is considering two options proposed by two senior consultants, Dan and Lauren:
• Option 1: Dan has suggested that HS should set up a charity to create educational services for children with long-term health problems. The charity will be funded partly through donations and partly through HS’s own profits. The charity, Health Star Education (HSE), will finance qualified teachers to visit hospitals. HS’s consultants are also expected to volunteer to read to sick children.
• Option 2: Lauren has suggested that reducing the high fees should be the priority. She suggests that new, untested software could be developed by her project team to significantly reduce the costs of treatment for patients. Consequently, HS could charge public sector hospitals a lower fee.

\n
\n

Describe one possible objective of a public health organization.

\n
[2]
\n
a.
\n
\n

Explain two characteristics of an intrapreneur at HS.

\n
[4]
\n
b.
\n
\n

Explain one advantage and one disadvantage for HS of using formative appraisal.

\n
[4]
\n
c.
\n
\n

Recommend which of Option 1 and Option 2 HS should implement.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

A possible objective of a public health organization – an organization in the public sector owned and controlled by the government – is to provide essential (medical)services to the community either free of charge or at a low or affordable price at the point of consumption.

\n

Accept any other relevant objective.

\n

Candidates are expected to explicitly mention the provision of health care/services, not just refer to a public organization for [2].

\n

Award [1] for identifying an appropriate objective and [1] for an appropriate description up to a maximum of [2].
Do not credit an example.

\n
a.
\n
\n

Possible characteristics of an intrapreneur in HS may include the following:

\n

The main characteristic of an intrapreneur at HS is to work within an established organization and to come up with new, creative and innovative ideas or concepts to reduce the costs of operation in order to adhere to budgetary constraints. The intrapreneurs should enable HS to create a USP and increase its customer base. HS is known for its creativity, hence indication of the success of the consultants as intrapreneurs for HS.

\n

A consultant, intrapreneur, does not risk his/her own capital in case of failure but takes risk for the organization for which he or she works. Nor does he or she come up with a new business venture, but the characteristic is to demonstrate the same traits of an entrepreneur, like being an independent thinker, proactive, flexible, innovative, turning ideas/projects into a profitable medical service for an organization within which he or she works, in this case, HS while working for an existing organization.

\n

 

\n

Accept any other relevant/applicable role.
Please note: For full marks the candidates should demonstrate an intrapreneur is an employees / works in a business otherwise some of the characteristics like risk taking, could be equally applicable to an entrepreneur.

\n

Mark as 2 + 2.

\n

Award [1] for each relevant characteristic explained and [1] for appropriate application to HS to a maximum of [2].

\n

[2] cannot be awarded for each reason used if the response lacks either explanation and / or application.
For example:
For an identification or a description of a characteristic with or without application [1].
For explanation of a characteristic with no application [1].
For explanation of a characteristic and application [2].

\n
b.
\n
\n

Do not penalise candidates for not defining or describing formative appraisal. However, the explanation must show understanding of the nature of this type of appraisal as specified below or the difference between formative and summative.

\n

The possible advantages for HS of using formative appraisal:

\n

As an ongoing, continuous process of appraisal, the management of HS provides monthly feedback for consultants regarding their performance. Constant and regular feedback can be highly rewarding / motivating when good performance is commented on and some weaknesses can be improved with constructive feedback. As HS expects the consultant to be creative and ready to let them take a risk, one may argue that constant formative appraisal can be very effective in terms of identification of strengths and weaknesses of individual consultants and adjustment can often/frequently be made before major and costly problems occur. HS is therefore reducing the risk of failure as well as increasing motivation of its employees.

\n

Accept any other relevant / applicable advantage.
Do not credit a statement on improving performance unless it is connected to the issue of formative/ on- going/ frequent / continuous feedback. Needs a reference to a time frame.

\n

 

\n

The possible disadvantages for HS of using formative appraisal:

\n

Consultants may feel stressed, especially as they are likely to be highly skilled and possess the main characteristics of an intrapreneur.
Formative appraisal, especially as it is done monthly, might take unnecessary time/resources/money and interrupt the consultant as well as the management work. Inefficiency and demotivation may emerge as consultants may feel that there is some inconsistency between the expectation to be intrapreneurs and constant monitoring.
Projects may take longer than one month to carry out; constant monitoring might reduce the efficiency and quality of the service and stifle the much-needed creativity.

\n

Accept any other relevant / applicable disadvantage.
It is not expected that the response will be as detailed as above but should cover the main issues.

\n

N.B. Candidates should refer to and show understanding of formative appraisal, not just appraisal.

\n

 

\n

Mark as 2 + 2.

\n

Award [1] for each relevant advantage/disadvantage explained and [1] for appropriate application to HS to a maximum of [2].

\n

[2] cannot be awarded for each reason used if the response lacks either explanation and / or application.
For example:
For an identification or a description of an advantage/ disadvantage with or without application [1].
For explanation of an advantage/ disadvantage with no application [1].
For explanation of an advantage/ disadvantage and application [2].

\n
c.
\n
\n

Possible arguments for HS setting up a charity to create educational services to children with long-term health problems:

\n

• Dan’s suggestion fits the nature of the work that the consultancy actually does. A synergy can be created between HS and HSE.
• HS can successfully market their ethical behaviour and their CSR, especially given that their consultants will visit the sick children and get personally involved. Moreover, the creation of the HSE name can further enhance HS’s brand image. Despite short-term costs of setting up the charity and the injection of part of the profit into it, in the medium to long term, HS’s brand image may be enhanced. Public support, recognition, trust and the demand for its services may rise. Profit may be the reward and opposition to the high fees will be reduced. One may judge this argument as highly significant as currently there is a public outcry about the fees the consultants are paid by a public sector organization.
• HSE should be able to claim some tax exemption, but this argument cannot be judged as a significant one.

\n

 

\n

Possible arguments against HS setting up a charity to create educational services to children with long-term health problems:

\n

• Some hospital managers/potential clients may look at the suggestion as a cynical attempt to raise publicity and increase profit. Setting up a charity might not outweigh the negative perception of HS due to the high price it charges public hospitals and the drain on the hospitals’ budget that could have been spent on sick patients.
• Internal conflict may arise within HS. The employees might feel obliged and perhaps overworked. Their much-needed creativity/intrapreneurial spirit may be damaged as demotivation sets in.
• Some of the shareholders with the short-term view of receiving dividends may object to the use of part of HS’s retained profit as funds for the charity.
• Candidates might use other textbook disadvantages like inefficiencies, fraud and disincentive effects due to a lack of profit.

\n

Accept any other relevant argument for or against.

\n

 

\n

Given the above, perhaps Lauren’s suggestion that reducing the high fees should be the priority.

\n

HS will still use the talent/skills of its employees/project teams to develop new untested software to significantly reduce the costs of operation; in turn HS could charge public sector hospitals a lower fee. Still, the lower fees might still be perceived as high or unjustified by the pressure groups protesting against the high fees charged by HS.
However, this solution may be judged as a sustainable one as the use of public money on software to improve the hospital efficiency and keeping the hospital budget on target might be judged as a worthwhile expenditure.

\n

Although the development of the software is likely to incur time and costs for HS in the short run, the challenge might further motivate the consultants and complement or even enhance the intrapreneurial spirit that already exists.

\n

Being able to charge the hospital lower fees can be seen as a long-term competitive advantage and will be more likely to pacify the pressure group as it directly addresses the issue the pressure groups complained about. Creating a charity, while likely to be generally welcome, might not reduce the pressure from the pressure group if fees remain high.

\n

However, the process might be long and very expensive and the software is untested. Is there a contingency plan if the tests do not lead to the benefits claimed?

\n

Accept any other relevant argument for or against.

\n

 

\n

Conclusions/judgment:
It appears that venturing into the creation of a charity may take HS away from its core competency and there are more significant arguments against. Using its core competency and the talent of the consultants to create software will enhance creativity and motivation as well as directly address the concern of the pressure group and hospital manager and it will benefit more stakeholders.

\n

It is expected that candidates provide a conclusion with a substantiated judgment.

\n

Candidates can provide any conclusion and judgment as long as it is substantiated.

\n

Accept any other substantiated judgment.

\n

Examiners’ judgment should be based not just on the number of the arguments in terms of balance but on the quality/ clarity /relevance of the argument.

\n

Marks should be allocated according to the Paper 2 markbands for May 2016 forward.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

If a candidate evaluates / addresses only one option in a balanced manner award a maximum of [5].

\n

A balanced response is one that provides at least one argument for and one argument against each option.

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n
d.
\n
", "Examiners report": "
\n

This question was largely well answered. However, some candidates referred to HS as a public organisation and consequently assumed that one possible objective was to help customers to budget.

\n
a.
\n
\n

Some good and applicable responses were evident. However, many candidates lost marks mainly due to a lack of application, and the description rather than the explanation of a specific characteristic. For example, it was not sufficient to write that an intrapreneur is a risk taker. It was expected that the candidates explain that no personal risk or own capital risk is involved.

\n
b.
\n
\n

It was very disappointing to see that the majority of candidates did not produce relevant and accurate responses. All too often zero marks were awarded. This topic was tested for the first time during this examination session. Candidates referred to formal appraisal, informative appraisal or just appraisal.

\n

Only a small number of candidates demonstrated understanding of the continuous, ongoing, constant nature of the appraisal process and the nature of the process in order to identify strengths and weaknesses regularly and to take action.

\n

Needless to say that candidates who did not understand the nature of formative as opposed to the summative appraisal process, did not apply the stimulus well.

\n
c.
\n
\n

Many candidates demonstrated a good understanding the suggested options that HS can use. It was pleasing to see candidates present balanced responses which applied the stimulus. Nevertheless, a significant number of candidates were not able to reach the two highest markbands due to:

\n

• Repeating the same information from the stimulus with little or often no full explanation as to why the arguments are a positive or negative argument.

\n

• Not going beyond the ideas or information presented in the stimulus.

\n

• A nominal conclusion presented as a summary of points or issues for and against the methods without substantiation

\n

Please note that substantiation of the arguments and the significance of the arguments presented in relation to the organisation, different stakeholders, short term impact as opposed to the long term impact should be evident throughout the response or towards the end.

\n
d.
\n
", "question_id": "17M.2.HL.TZ0.3", "topics": [ "2023-unit-2-human-resource-management", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "2-1-functions-and-evolution-of-human-resource-management", "1-3-organizational-objectives", "1-2-types-of-organizations", "1-1-introduction-to-business-management" ] }, { "Question": "
\n

Secco Vineyards (SV)

\n

Secco Vineyards (SV) is a family-owned business producing wine in Sonoma, California. In 1947, SV opened using cost-plus (mark-up) pricing. For SV’s customers, the wines were medium priced and available in local grocery stores.

\n

In 1977, Joe Secco, grandson of the founder, created a new strategy. He re-branded SV ’s wine for a niche premium market.
• SV began to sell directly to customers at its winery instead of in local grocery stores.
• SV stopped using cost-plus (mark-up) pricing and began charging much higher prices.
• Regular wine tastings and promotional events were held at its winery. At these events, wine experts would promote SV’s wines by creating an elegant experience based on a luxurious culture of wine consumption. SV’s physical evidence in its marketing mix became much more important.

\n

However, SV has recently faced intense competition and sales have fallen. Local wine producers and overseas competitors have entered the market with similar market positioning. In order to maintain its brand image, SV has not changed its pricing strategies.

\n

SV conducted secondary market research about other possible markets in the US for its premium wines. The research suggested that other possible markets for high-quality wines, such as those of SV, exist. As a result, SV is considering two new options to increase sales in addition to its current distribution channel:
• Option 1: open a business-to-consumer (B2C) e-commerce store
• Option 2: sell SV wines to wholesalers serving the whole of the US market for premium wines.

\n
\n

Describe one characteristic of a niche market.

\n
[2]
\n
a.
\n
\n

With reference to SV, explain one advantage and one disadvantage of using secondary market research.

\n
[4]
\n
b.
\n
\n

Given the intense competition, explain two pricing strategies SV might consider.

\n
[4]
\n
c.
\n
\n

Recommend which of Option 1 and Option 2 SV should consider in order to increase sales.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Characteristics of a niche - a segment within a segment - market include:
• Highly differentiated well defined, small/narrow market with specific identifiable common needs and characteristics.
• High end, highly differentiated products/ services being sold at a high price for a small/narrow group of consumers.

\n

Candidates must refer to the small size of the niche/ segment otherwise the answer can fit the characteristics of a segment.

\n

Accept other relevant characteristics of a niche market. Candidates are not expected to word their responses exactly as above.

\n

Award [1] for identification of a characteristic of a niche market.

\n

Award [2] for a full, clear description of the characteristic.

\n

Do not credit an example.

\n
a.
\n
\n

Advantages of secondary market research include:
• Efficient in terms of time – the data on wine consumption patterns, for example, has already been collected by someone else and is available. SV needs to react quickly to the increased competition and therefore it is vital that the relevant information is collected quickly.

\n

• Effective in terms of cost – often secondary research is free and, when it is not, is typically less expensive than the process of gathering primary research. As SV is looking for other possible markets, it would be very time consuming and expensive to sample many regions. Often, sample secondary research already exists. It has allowed SV to consider new geographical markets /new segments which it may not have considered before.

\n

• SV researchers can conduct a STEELPE analysis on different regions to evaluate social, economic and legal factors before a decision is made.

\n

• Low cost to gather conflicting information/ opinions.

\n

• Given the question that should be answered- the decision about suitable regions, the scope for primary research is very limited.

\n

Disadvantages of secondary research include:
• Lack of precise focus on the issue or problem concerning the business. The stimulus refers to potential markets. SV may have to consider carrying out primary market research in these “potential markets” to get specific responses to specific issues like the perceptions of its premium wines.

\n

• Lack of most up to date information– often secondary research is outdated. If SV is going to target different markets they need to be confident that this secondary research is relevant and up-to-date. What if external factors have changed since the data was collected?

\n

• Uncertainty about the quality of the data collection/research. Some information, perhaps put by the government on the health of the population/ the prosperity of some segment etc may be inaccurate and biased.

\n

Accept any other relevant/ applicable advantage/ disadvantage.

\n

Mark as 2+2.

\n

Award [1] for each relevant advantage/disadvantage explained and [1] for appropriate application to SV to a maximum of [2].

\n

[2] can- not be awarded for each reason used if the response lacks either explanation and / or application.

\n

For example:
For an identification or a description of an advantage/ disadvantage with or without application [1].
For explanation of an advantage/ disadvantage with no application [1].
For explanation of an advantage/ disadvantage and application [2].

\n
b.
\n
\n

SV is currently charging a relatively high/ premium price and the competition is increasing.
Pricing strategies that SV might consider include:
• Cost-plus (mark-up) – SV may want to return to this pricing strategy, with a lower mark up to remain competitive. This pricing strategy will guarantee that for each bottle of wine it sells the business is covering its per unit costs and making some profit.
• Promotional prices
• Loss leader – SV could try a loss-leader strategy as a short- term strategy, whereby it sells one of its wines at very low prices in an attempt to get consumers to buy SV wines. Other varieties of SV wines, however, would be priced in a fashion to compensate for the losses on the one type. This strategy, and other such as attracting customers through low prices, could weaken SV’s brand identity.
• Price discrimination – SV might consider price discrimination. SV sets the prices based upon the market that it is entering. For example, SV might charge more for wines in New York City than in Charlotte, NC. Both cities (major banking centres in the United States) have affluent buyers. Nevertheless, prices of virtually all types of goods and services cost less in Charlotte than in New York. But rely on ‘separable’ markets. Third parties could buy the wine in Charlotte and sell in NY for a profit or for less than SV are selling it.
• Penetration – SV could use this pricing strategy only if or when it enters a new market or introduce new types of wines It is important that the candidates demonstrate understanding of the suitability of this strategy for new markets or different products only. Penetration pricing would allow SV to attract first-time customers in new suggested markets with lower than the average market pricing. It is not an innovative product so perhaps this is a suitable strategy Also, there might be a possibility that once some brand loyalty develops, SV could then raise prices.

\n

Please note: Do not fully credit penetration strategy if the reference to new product/ or entering new markets is not made.

\n

If predatory pricing is used award full marks only if the candidate makes the assumption of a market leadership position and financial strengths of SV ‘s ability to use this strategy as it is a family business after all.

\n

Premium price/ price skimming are not relevant strategies given the competition and the fact that the wine is not an innovative product.

\n

Accept other relevant pricing strategies if there is a clear indication of why this may be acceptable to SV, given the increased competition and the nature of the premium market.
For full marks If psychological pricing is used, the candidates should apply by explaining how the pricing strategy is relevant in relation to the competitors.
Psychological pricing cannot be used as a source of competitive advantage as the competitors are likely to do the same.

\n

Candidates are not expected to provided counter arguments to their chosen pricing strategy as the command word is ‘explain’.

\n

Mark as 2 + 2.

\n

Award [1] for each relevant /appropriate pricing strategy explained and [1] for appropriate application to SV to a maximum of [2].

\n

[2] cannot be awarded for each pricing strategy used if the response lacks either explanation and / or application.
For example:
For an identification or a description of a pricing strategy with or without application [1].
For explanation of a relevant pricing strategy with no application [1].
For explanation of a relevant pricing strategy and application [2].

\n
c.
\n
\n

SV is considering two options:

\n

Option 1: open a business-to-consumer (B2C) e-commerce “store”.

\n

This option would involve selling wines online to consumers. They currently sell directly to customers at the vineyard.

\n

Benefits of this approach include:
• SV can reach a wide market to guarantee more revenue and reduce the risk on relying on its current local market at a relatively short time and minimal investment.
The set-up is relatively quick and the investment in an e-commerce store is relatively inexpensive. It is important for a company like SV trying to enter new markets to keep costs of entry low so it can compete on price, given the current competition.
• Using e-commerce will enable SV to constantly adjust some of its marketing mix like pricing and promotion in line with the competitors or in more creative ways. Promotion and advertising can easily be extended via social network sites.
• From a consumer perspective, B2C e-commerce also has benefits, especially the convenience and ability to compare prices and explain the differences between wines sold to make an informed decision which is important in a premium market.
• Customers find the use of e-commerce easy and convenient. If SV ensures cheap/ free and efficient delivery, SV has a good chance of increasing its geographical or otherwise customer base. It is also utilising more of the ‘process’ aspect of the extended marketing mix.
• It will be easier for SV to withdraw this option compared with signing contracts with different wholesalers.

\n

B2C e-commerce also has disadvantages, which include:
• Initially, customers who would have bought directly from the vineyard could go online instead. Overall sales may increase marginally.
• SV would have to address consumer concerns that its site is secure
• SV would have to incur costs making sure that the site is secure.
• Competitors can easily track what SV is doing to promote and sell its products.
• Selling small orders to individual throughout the US could increase the administration costs.
• SV has to come up with a suitable and efficient physical distribution strategy How will the wine reach potential customers from all over the wold or even just the US?
• New supply chains to reach new customers may have to be created adding to short-term costs. Wholesalers will have to be used to deliver the wine.
• Alcohol is a heavily regulated product, especially in the United States, and it could be complicated and cumbersome for SV making sure that it complies with federal and state laws (laws regarding alcohol vary from state to state) and it might be even more legally complicated if selling abroad.
• By selling online SV will lose its process and physical evidence of the marketing mix created by the interaction between the buyers and SV. A mix that was possibly one of its USPs given the information in the stimulus re: events, luxurious experience and so on.
• SV would also have to make sure that selling wines online did not conflict with the premium brand identity that SV otherwise tries to maintain.

\n

 

\n

Option 2: sell SV wines to wholesalers serving the whole of the US market for premium wines.

\n

Advantages of this approach include:
• The wholesaler is likely to have a well-established network of other intermediaries and retail outlets. SV is likely to be able to penetrate many markets compared to the unknown chance of success using e-commerce.
• The wholesaler stores the product, thereby reducing storage costs of wine for SV.
• The wholesaler purchases in bulk and then breaks the bulk purchases into smaller batches for the retailers. This process means that SV does not have to concern itself with small orders from individuals or retailers as is likely to be the case when selling online. This may be important in a premium market.
• SV wants to sell to long distance markets – the entire United States – this approach pushes much of the complicated processes of distribution onto wholesalers.

\n

However, working with wholesalers has disadvantages:
• Wholesalers sell the products of many companies, and their loyalties and highest priorities may be with other established brands.
• Working with wholesalers adds another intermediary and mark-up, which can lead to higher prices to consumers (who may respond by purchasing other products) or to thinner margins for SV. However, research revealed that there are other markets for high quality wine.
• Working through wholesalers and distributing across the United States, SV may not be able to afford national promotion. If it cannot, it will have to rely on the wholesalers and retailers for much of its promotion. SV cannot be confident that the wholesales will position SV’s new wines positively. Delays can seriously affect the quality and hence the reputation of SV which can undermine its current positioning/ brand image. Perhaps not a risk worth taking. Withdrawing some contracts can incur heavy legal costs to SV. Costs that are possibly unaffordable in a very competitive environment.
• Lacks important customer feedback that existing distribution allows.

\n

Accept any other relevant argument for and against each option.

\n

Overall, option 2 is possibly the longer- term option, which involves considerable costs, it is potentially the greater risk, but the profits could be considerable compared to option 1. Perhaps SV should start with the option of e-commerce and if successful use wholesalers to distribute the wine.

\n

It is expected that candidates provide a conclusion with a substantiated judgment regarding the best option.

\n

 

\n

Candidates can provide any conclusion and judgment if it is substantiated.

\n

Accept any other substantiated judgment.

\n

Examiners’ judgment should be based not just on the number of the arguments in terms of balance but on the quality/ clarity /relevance of the argument.

\n

Marks should be allocated according to the Paper 2 markbands for May 2016 forward.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

If a candidate evaluates / addresses only one option in a balanced manner award a maximum of [5].

\n

A balanced response is one that provides at least one argument for and one argument against each option.

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n
d.
\n
", "Examiners report": "
\n

Most candidates were awarded at least 1 mark. Some candidates produced descriptions that could fit the definition of a market segment.

\n

Examples were not credited.

\n
a.
\n
\n

Nearly all candidates showed a good theoretical understanding of the advantages and the disadvantages of using secondary market research. This was pleasing. However, a significant number of candidates did not appropriately apply arguments to SV.

\n

Writing the name of the organisation SV, was not considered as application. Consequently 1 mark per issue was lost despite clear and relevant explanation. Some candidates lost 1 mark for a descriptive response despite application.

\n

The candidates who were awarded full marks were those who clearly explained the nature of secondary market research followed by a clear explanation of one relevant advantage/disadvantage which is applicable to SV in terms of the type of product, the industry, the positioning and more importantly what the research was for.

\n
b.
\n
\n

It was disappointing that most candidates did not pay attention to the question. It was expected that candidates would suggest pricing strategies that are suitable for a highly competitive market. Moreover, a full explanation of the nature of the strategy and ways in which it is suitable for SV was expected.

\n

The main issues/limitations were:
• Some candidates did not refer to an exact name of possible pricing strategies. Some wrote increase price or reduce price as a strategy.
• Inappropriate pricing strategies were suggested e.g. premium price or price skimming.
• Even when the suggested pricing strategy could have been appropriate, many candidates did not explain the nature of the strategy or did not properly apply it to SV.
• Some candidates referred to a potentially relevant strategy but the explanation was wrong. The most notable confusion was about ‘loss leader’. Some confused price skimming with price penetration. Most candidates did not show an understanding that price skimming or penetration pricing is applicable to new products or new markets.
• Some candidates attempted to balance their suggested pricing strategy by arguing for and against. For [2] marks per strategy, candidates should save valuable time.

\n
c.
\n
\n

Most candidates were familiar with the theoretical arguments for and against the use of e-commerce and the use of a wholesaler. The candidates who expanded on the theoretical arguments and went beyond just the printed information in the stimulus were able to provide a better response.

\n

Better still, those candidates who followed the points above and ended with a substantiated judgment achieved the top two mark bands.

\n

However, the main weaknesses were:
• Some candidates repeated some relevant issues from the case without explanation and elaboration, just stating that this issue or point is an advantage or otherwise. Their responses were very descriptive and lacked depth.
• Some candidates produced a one-sided response for each option.
• Some candidates were keen to show theoretical knowledge but did not apply it to the question.
• Some candidates responded that SV does not have to worry about distribution or that it is a zero channel option. However, this overlooked how the wine will be distributed if SV chose e-commerce.
• Some candidates ended responses with a conclusion and judgment, however the judgment was not substantiated. See general comments on conclusions and judgment.

\n
d.
\n
", "question_id": "17M.2.HL.TZ0.4", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-4-marketing" ], "subtopics": [ "1-3-organizational-objectives", "4-2-marketing-planning-(including-introduction-to-the-four-ps)", "4-4-market-research", "4-5-the-four-ps-(product-price-promotion-place)" ] }, { "Question": "
\n

Gen Y Limited

\n

Gen Y Limited is an internet start-up business owned by Zack Johnson. Zack owns 80 % of the shares and venture capitalists own the other 20 %. Gen Y has specialist programmers and coders who create innovative market research data reports for clients. These data reports have revolutionized Gen Y’s clients’ ability to understand and respond to customers in their markets.

\n

To retain the best programmers, employees are given cognitive training and are empowered to make decisions and take risks. They are also regularly praised for the impact that their reports are having on their clients’ decision making. One day a week, employees can work on their own “dream, but risky, projects”. Intrapreneurship is strongly encouraged at Gen Y. However, Gen Y lacks the capital to develop some of these projects into future revenue streams.

\n

Virtually all of Gen Y’s costs are fixed – salaries. As of 2017, Gen Y has not yet generated a profit. Without more revenue they will have to reduce the number of programmers. Petra, a new investor, is being considered to provide fresh capital to invest in Gen Y. Ownership of Gen Y will change to:

\n

\n

Petra believes in intrapreneurship but is concerned that “dream” projects are not generating profits.
She has said that if she is going to invest in Gen Y two conditions must be met:
• Management at Gen Y will change to an autocratic leadership style.
• Programmers will be expected to meet sales targets.

\n

As a result, programmers will have no autonomy.

\n
\n

Outline two features of an autocratic leadership style.

\n
[2]
\n
a.
\n
\n

Apply Daniel Pink’s motivation theory to the programmers at Gen Y.

\n
[6]
\n
b.
\n
\n

Explain one reason, other than increased sales revenue, why it is important that Gen Y generates new revenue streams.

\n
[2]
\n
c.
\n
\n

Discuss whether Zack should sell Petra half of his shares with her conditions.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

• Decision making in an organization is restricted to a very small group of select individuals.
• No consultation and discussion between management and employees. Employees are told about the decisions which are taken by an autocratic leadership.
• Communication tends to be downward and one-way only.

\n

Award [1] for each correct feature identified.

\n
a.
\n
\n

Daniel Pink’s motivation theory identifies that there are three key drivers, or factors, that influence motivation for cognitive or thinking tasks leading to improved performance for a business. The three key drivers are:
• mastery
• autonomy
• purpose.

\n

From the stimulus we can argue that, before Petra’s potential involvement, Gen Y allows for:
• Autonomy – Gen Y allows for employees to work on individual dream projects. They are also empowered to make their own decisions. The autonomy is evident in terms of time especially extra time given to work on dream projects, tasks, techniques to be used as well as trust, empowerment and delegation by the management.
• Mastery – there is evidence from the stimulus that Gen Y has used cognitive training. This would presumably build or enhance capacity to develop and refine the programmers’ skills. The programmers and the coders are encouraged to be intrapreneurs and to take risks. as stated above, Gen Y supports employees to eliminate fear and anxiety about failure and boosting motivation according to Pink and allowing them to be more creative. The ‘dream’ project time also adds to this.
• Purpose – the meaning of purpose in the stimulus is connecting to something larger than oneself that drives the highest motivation. The programmers and the coders develop the required sense of purpose that enhances motivation. Their ability to create high-quality reports providing innovative market research for other people. Work for its clients possibly creates purpose maximisation rather than just profit maximization. The employees can clearly see their contribution to the wider community, more than just themselves. This would act as a motivator for Gen Y programmers as they are carrying out ground-breaking work.

\n

 

\n

Mark as 2 + 2 + 2.

\n

Award [1] for each relevant factor/drive explained and [1] for appropriate application to the organization to a maximum of [2].

\n

[2] cannot be awarded for each factor/drive used if the response lacks either explanation and / or application.
For example:
For an identification or a description of a factor/drive with or without application [1].
For explanation of a factor/drive with no application [1].

\n

For explanation of a factor/ drive and application [2].

\n

Just mentioning the name of the business does not constitute application.

\n
b.
\n
\n

The question is about new revenue stream. Gen Y’s core business is the creation of innovative market research data reports. The business also allows employees to work on “dream projects” during the working week and provides cognitive training, which are all very expensive

\n

To remain innovative and sustainable Gen Y will need to secure new finance through new revenue streams as the current single revenue stream is not profitable.
Gen Y should also find other sources of revenue generators, diversify into other markets or products to reduce the risk of relying on just one service/ product.

\n

Accept any of the above as one valid reason.

\n

Mark as 2
Award [1] for each relevant reason explained and [1] for appropriate application to Gen Y to a maximum of [2].

\n

[2] cannot be awarded for each reason used if the response lacks either explanation and / or application.
For example: For an identification or a description of a reason with or without application [1].
For explanation of a reason with no application [1].
For explanation of a reason and application [2].

\n
c.
\n
\n

By selling his shares to Petra, Zack faces concerns not only of ownership but also that the culture of Gen Y – which by assumption has led to the success and motivation of employees – will have to be systematically changed. It is uncertain at this stage whether this change in culture will bring forward any improvements.

\n

In common with many other start-ups, profit for Gen Y remains elusive despite the considerable sums invested. Zack has tried to finance dream projects to turn inventions into innovation but without success. The harsh reality is that without funding coming into the business, the long-term sustainability of Gen Y is in doubt. If he does not take some action now and invite Petra into the business, then all jobs and intellectual property at Gen Y are under threat. Some programmers may leave the company if they sense that for some reason the opportunity to work on dream projects is cut back. Taking on Petra as a partner will-weaken Zack’s control. Both will have equal power in decision making. However, it will ensure in the short term that Gen Y remains viable. Gen Y is in urgent need of finance so perhaps Zack does not have much of a choice.
The importance of the venture capitalists’ view is also valid as with the sale they would now have the swing votes on important decisions. Does their exit strategy look better with Petra or Zack?

\n

However, to receive this funding, Petra has added conditions that Zack must accept. These conditions will not be popular in an organization that has strong links to Daniel Pink’s motivational theory. A leadership style change to autocratic will impact on the autonomy currently enjoyed by the employees. The purpose may also be affected, as Petra will wish to have a strong influence in the type of vision or direction she wishes to see Gen Y move to. The ending of innovative and revolutionary dream projects may be the first casualty. Motivation could be destroyed. Given the culture and the level of motivation one may judge this issue as extremely significant. The stimulus states ‘To retain the best programmers...’. Those departing may turn into competitors.

\n

Further, the insistence on specific targets for programmers may impose deadlines/restrictions, which may be too much for the employees to take as they have been empowered to make their own decisions. A change of culture which will impact on creativity, innovation and motivation may have dire consequences in the medium to long term. Autocratic leadership styles and setting targets are opposing factors according to Pink compared to being motivated. Gen Y relies on its employees’ creativity, innovation and motivation for success.

\n

Accept any other argument for and against.

\n

 

\n

Overall, the short-term situation is difficult for Zack. He has to balance the financial issues present in the case study with the idealism and motivation of his workforce. Petra’s conditions, whilst restrictive, may save Gen Y. Zack may be forced to sell this idea of Petra receiving half his shares to his employees. Some employees may quit and be hired by competitors but perhaps they may not have been committed to Gen Y and Zack’s purpose. Either way, Zack will find it difficult to turn down Petra’s offer.

\n

Candidates might offer different solutions like not accepting Petra’s offer and look for venture capitalists with different views on what motivates employees. Or simply ask the existing VC’s to increase their stake in return for a more gradual focus on strategies emphasising the bottom-line.

\n

It is expected that candidates provide a conclusion with a substantiated judgment.

\n

Candidates can provide any conclusion and judgment as long as it is substantiated.

\n

Accept any substantiated judgment.

\n

 

\n

Marks should be allocated according to the Paper 2 markbands for May 2016 forward.

\n

Examiners’ judgment should be based not just on the number of the arguments in terms of balance but on the quality/ clarity /relevance of the argument.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

A balanced response is one that provides at least one argument for and one argument against each the option.

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n
d.
\n
", "Examiners report": "
\n

This question was well answered. However, some candidates discussed the organisational structure associated with a particular style of leadership. As in previous questions students should be encouraged not to look at these structures in absolute terms. A flat or decentralised structure may well give the opportunity for more democratic leadership but it is not always the case. Many other factors come into play, such as, the type of industry, size of the company, prevailing internal culture etc.

\n
a.
\n
\n

The main area of difficulty for candidates lay in applying the Purpose element of Pink’s theory. Purpose in any job role is suggestive of something bigger than self and the immediate surroundings, namely something external. In this question’s context therefore, some reference to the clients (external) and what the programmers were achieving for them, was necessary for the full marks.

\n
b.
\n
\n

The main reason was diversification of risk. Application was expected to identify that Gen Y had only one revenue stream or that this was unprofitable, hence the need to find more profitable streams. Some credit was given to the fact that additional revenue might protect the jobs of those currently employed as it helped to offset fixed overheads.

\n
c.
\n
\n

Unlike the previous Section B questions, this question did not have 2 options to compare but needed to weigh up the advantages and disadvantages of a single decision. With a decision to sell came several preconditions set by Petra. Whilst many candidates discussed the advantages and disadvantages in a generic manner very few explicitly addressed the conditions that Petra was setting. Obviously, these conditions only had relevance in the event that Dan sells his shares so it might be expected that this side of the argument be perhaps longer than the other. Candidates were not expected to discuss the reasons behind Petra wanting to invest, however it was a reasonable assumption that Petra would wish for a financial return on her investment and therefore the question of profitability needed to be addressed. As in previous questions, substantiated judgments were lacking and therefore candidates rarely achieved level 4 or 5 of the markband for this question.

\n
d.
\n
", "question_id": "17M.2.HL.TZ0.5", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-2-human-resource-management", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "1-2-types-of-organizations", "2-3-leadership-and-management", "3-2-costs-and-revenues", "2-4-motivation" ] }, { "Question": "
\n

With reference to Medimatters, describe two steps in setting up a new business.

\n

Refer to case study: Medimatters

\n
[4]
\n
a.
\n
\n

Explain suitable sources of finance in order for Medimatters to finance the additional setup cost of $50 000 (line 92).

\n

Refer to case study: Medimatters

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Possible steps include:

\n\n

Others steps could include:

\n\n

Mark as 2+2.

\n

Accept any other relevant step.

\n

Award [1] for each correct step identified and [1] for a description of how that step relates to Medimatters. Award a maximum of [2] per step.

\n
a.
\n
\n

They require $60 000 to start trading.

\n

They are each able to contribute some finance, but this will be insufficient.

\n\n

To what extent would they want to retain control? If this is not an issue there may be possibilities from venture capitalist sources.

\n

Accept any other relevant application.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward, section A.

\n

For a theoretical answer award a maximum [3]. For only explaining one source of finance award a maximum of [3].

\n

If it answers the question “What source?” without explaining sources, award a maximum of [4].

\n

If the explanation is mainly descriptive, but in context, award a maximum [5].

\n
b.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
", "question_id": "16N.1.SL.TZ0.1", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "1-1-introduction-to-business-management", "3-1-sources-of-finance" ] }, { "Question": "
\n

The Indian manufacturer has made a test batch of 100 IBAT lenses and these are being checked by Falit.

\n

Didi has further investigated costs and Emma has conducted market research to identify potential customers. Didi is concerned at how many IBATs Medimatters would need to sell for the venture to be worthwhile. He forecasts the following:

\n\n

Ahmed considered his role as leader.

\n\n
\n

Define the term vision statement.

\n

Refer to case study: Medimatters

\n
[2]
\n
a.
\n
\n

Calculate the forecasted break-even quantity per month for the IBAT (show all your working).

\n

Refer to case study: Medimatters

\n
[2]
\n
b.i.
\n
\n

Calculate the forecasted monthly profit or loss if Medimatters sells 400 IBATs per month (show all your working).

\n

Refer to case study: Medimatters

\n
[2]
\n
b.ii.
\n
\n

Explain two relevant secondary market research methods (sources) that Emma could have used to identify potential customers.

\n

Refer to case study: Medimatters

\n
[4]
\n
c.
\n
\n

“Ahmed considered his role as leader.” Recommend an appropriate leadership style for Ahmed.

\n

Refer to case study: Medimatters

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

The vision statement is a sentence that refers to the ultimate goal of an organisation, what it wants to achieve in the future. It is expressed as a long-term aspiration.

\n

Candidates are not expected to word their definition exactly as above.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full, clear definition that conveys knowledge and understanding similar to the answer above.

\n
a.
\n
\n

Break-even quantity = \n\n\n\nfixed costs\n\n\n\n\ncontribution\n\n\n\n

= \n\n\n9000\n\n\n\n(\n\n80\n−\n50\n\n)\n\n\n\n

= \n\n\n9000\n\n\n30\n\n\n

= 300 IBATS

\n

Award [1] for the correct answer and [1] for working, award a maximum of [2].

\n

Award only [1] if wrong units stated (but allow no units).

\n

Do not award any mark for the formula alone.

\n
b.i.
\n
\n

This would be 100 IBATs per month more than break even, so profit would be 100 x $30 = $3000

\n

OR

\n

Profit or loss = sales revenue – (fixed cost – variable cost)
= 32 000 – 9000 – 20 000
= $3000

\n

Award [1] for the correct answer and [1] for working, award up to a maximum of [2].

\n

Award only [1] if wrong units stated or no units.

\n
b.ii.
\n
\n

Possible methods (sources) of secondary market research include:

\n\n

Note: the word “internet” alone is not a research method.

\n

Mark as 2+2.

\n

Award [1] for each method (source) identified and award [1] for a relevant explanation of that advantage.

\n

Non-contextual answers award a maximum of [2] in total.

\n
c.
\n
\n

Evidence in the additional stimulus material suggests he:

\n\n

In addition:

\n\n

It would seem, therefore, that:

\n\n

The best style of leadership is likely to be to adjust to circumstances and people ie, situational leadership.

\n

There are three aspects to this choice; the nature of the tasks, the nature of his colleagues, his own personal qualities.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward.

\n

Purely theoretical answers or with no effective use of stimulus material in range [3] to [4] with better answers award a maximum of [4].

\n

If only one leadership style is considered award a maximum of [4].

\n

Two or more styles considered with more than one aspect, but limited use of evidence award a maximum of [6].

\n

Two or more styles considered, good use of evidence, particularly from Section B, but limited contrast award a maximum of [8].

\n

For full marks two or more styles contrasted, aspects, evidence, particularly from section B, used effectively.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "16N.1.SL.TZ0.4", "topics": [ "2023-unit-3-finance-and-accounts", "2023-unit-4-marketing", "2023-unit-2-human-resource-management", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "3-3-break-even-analysis", "4-4-market-research", "2-3-leadership-and-management", "1-3-organizational-objectives" ] }, { "Question": "
\n

S4U

\n

S4U is a private limited company that provides a storage facility to households and small businesses. S4U is considering constructing an additional new warehouse.

\n

S4U’s management has forecasted the following annual net cash flows for the new warehouse:

\n

\n
\n

Describe one feature of a private limited company.

\n
[2]
\n
a.
\n
\n

For the new warehouse, using information from the table, calculate the average rate of return (ARR) (show all your working).

\n
[2]
\n
b.i.
\n
\n

For the new warehouse, using information from the table, calculate the payback period (show all your working).

\n
[2]
\n
b.ii.
\n
\n

For the new warehouse, using information from the table below, calculate the net present value (NPV) at a discount rate of 6 % (show all your working).

\n

\n
[2]
\n
b.iii.
\n
\n

Explain one disadvantage for S4U of using the NPV method of investment appraisal.

\n
[2]
\n
c.
\n
", "Markscheme": "
\n

Features of a private limited company may include:

\n\n

Award [1] for stating an appropriate feature and [1] for an appropriate description (application not required), up to a maximum of [2].

\n
a.
\n
\n

ARR = \n\n\n\n(\n\n\ntotal returns\n\n−\n\ncapital cost\n\n\n)\n\n\n/\n\n\nyears of use\n\n\n\n\ncapital cost\n\n\n\n×\n100\n

Total return over 6 years = $208500

\n

Total returns over 6 years: $58 500

\n

Average annual profit: \n\n\n58500\n\n\n6\n\n\n = $9750

ARR = \n\n\n9750\n\n\n150000\n\n\n x 100 = 6.5%

Do not credit the formula

\n

Award [1] for working and [1] for the correct answer.

\n

Award a maximum of [2].

\n

Do not credit candidates for just presenting the formula as it is given.

\n

Do not fully credit a figure that is not expressed as a percentage.

\n
b.i.
\n
\n

Capital/investment cost: $150 000

\n

25 000 + 30 000 + 35 500 + 37 000 + (22 500/39 800) x 12

\n

Payback period = 4 years, 6 months and 24.18 days/4 years and 7 months or 4.56
years or 4 years and 6.78 months.

\n

There is no need to calculate the number of days for full marks.

\n

Award [1] for working and [1] for the correct answer.

\n

Award a maximum of [2].

\n
b.ii.
\n
\n

Using discount tables:

\n

\n

Total present value = $168 187.04
NPV = TPV – capital cost
NPV = $18 187.04

\n

Accept $18 188 Accept $18 187

\n

Given that only [2] are available, on this occasion, full headings and full calculation for each year are not expected.

\n

Full marks can be awarded if there is some evidence of calculation especially the movement from the total DCF to NPV, if the DCF for each year is not shown but it is clear that the candidate understands the method.

\n

N.B. Allow candidate own figure rule (OFR)

\n

Award [1] for working and [1] for the correct answer.

\n

Award a maximum of [2].

\n

Do not credit candidates for just presenting the formula as it is given.

\n
b.iii.
\n
\n

A disadvantage for S4U of using the NPV method of investment appraisal is that the method relies on the use of a realistic discount factor. S4U has chosen 6 % but could have chosen a higher or lower discount rate depending on the current level of interest rates present in the country in which S4U is located. It might be difficult for S4U’s management to decide on the most accurate discount factor for a project that last for at least six years and the interest rate and inflation rate is likely to change. The interest rate is likely to change the longer the project takes, making a selection of a single discount rate of 6 % very difficult. An accurate rate is crucial for S4U as a low discount factor will overestimate the return and a high discount factor will underestimate the return. The net cash flows are forecasted and they may be inaccurate.

\n

Accept any other relevant disadvantage and explanation.

\n

Do not credit a response that says that the all figures are forecasted as this limitation is relevant for all. The question is about a limitation for the NPV method.

\n

Do not credit a response that says that the method does not take non- financial issue into consideration as this limitation is relevant for all. The question is about a limitation for the NPV method. Award [1] for a relevant and correct disadvantage identified and [1] for a relevant and correct explanation with application to S4U, up to a maximum of [2].

\n
c.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
b.iii.
\n
\n[N/A]\n
c.
\n
", "question_id": "16N.2.HL.TZ0.1", "topics": [ "2023-unit-3-finance-and-accounts", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "3-8-investment-appraisal", "1-2-types-of-organizations" ] }, { "Question": "
\n

Gen Y Limited

\n

Gen Y Limited is an internet start-up business owned by Zack Johnson. Zack owns 80 % of the shares and venture capitalists own the other 20 %. Gen Y has specialist programmers and coders who create innovative market research data reports for clients. These data reports have revolutionized Gen Y’s clients’ ability to understand and respond to customers in their markets.

\n

To retain the best programmers, employees are given cognitive training and are empowered to make decisions and take risks. They are also regularly praised for the impact that their reports are having on their clients’ decision making. One day a week, employees can work on their own “dream, but risky, projects”. Intrapreneurship is strongly encouraged at Gen Y. However, Gen Y lacks the capital to develop some of these projects into future revenue streams.

\n

Virtually all of Gen Y’s costs are fixed – salaries. As of 2017, Gen Y has not yet generated a profit. Without more revenue they will have to reduce the number of programmers. Petra, a new investor, is being considered to provide fresh capital to invest in Gen Y. Ownership of Gen Y will change to:

\n

\n

Petra believes in intrapreneurship but is concerned that “dream” projects are not generating profits.
She has said that if she is going to invest in Gen Y two conditions must be met:
• Management at Gen Y will change to an autocratic leadership style.
• Programmers will be expected to meet sales targets.

\n

As a result, programmers will have no autonomy.

\n
\n

Outline two features of an autocratic leadership style.

\n
[2]
\n
a.
\n
\n

Apply Daniel Pink’s motivation theory to the programmers at Gen Y.

\n
[6]
\n
b.
\n
\n

Explain one reason, other than increased sales revenue, why it is important that Gen Y generates new revenue streams.

\n
[2]
\n
c.
\n
\n

Discuss whether Zack should sell Petra half of his shares with her conditions.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

• Decision making in an organization is restricted to a very small group of select individuals.
• Limited consultation and discussion in an organization given by autocratic leadership.
• Communication tends to be downward and one-way only.

\n

Award [1] for each correct feature identified.

\n
a.
\n
\n

Daniel Pink’s motivation theory identifies that there are three key drivers, or factors, that influence motivation for cognitive or thinking tasks leading to improved performance for a business. The three key drivers are:
• mastery
• autonomy
• purpose.

\n

From the stimulus we can argue that, before Petra’s potential involvement, Gen Y allows for:
• Purpose – high-quality reports providing innovative market research. The business is providing revolutionary work for its clients. This would act as a motivator for Gen Y programmers as they are carrying out ground-breaking work.
• Autonomy – Gen Y allows for employees to work on individual dream projects. They are also empowered to make their own decisions.
• Mastery – there is evidence from the stimulus that Gen Y has used cognitive training. This would presumably build capacity to develop and refine skills of the programmers, again boosting motivation according to Pink and allowing them to be more creative.

\n

 

\n

Award [1] if there is some or partial understanding shown of Pink’s motivation theory, the answer is not complete and not applied to Gen Y.

\n

Award [2] if there is a much better understanding of Daniel Pink’s theory. All three drivers of motivation are identified. There is no application to Pink with the answer being merely theoretical. Just mentioning the name of the business does not constitute application.

\n

Award [3] when three drivers are identified and one is applied to the stimulus or two drivers identified and both applied to the stimulus.

\n

Award [4] when three drivers are identified and two applied to the stimulus.

\n

Award [5] when three drivers are identified and three applied to the stimulus.

\n

N.B. For mark awards in the [3-5] range, the application does not have to be exactly as above. For example, some candidates may argue that the ability to work on their dream projects may provide purpose and/or also means autonomy.

\n

Award [6] when three drivers are identified and three are applied to the stimulus largely as outlined above. Each application must be to a different element of the stimulus.

\n
b.
\n
\n

Gen Y’s core business is the creation of innovative market research data reports. The business also allows employees to work on “dream projects” during the working week. In order to remain innovative and sustainable, Gen Y will need to secure new finance through new revenue streams to ensure that the creative and innovative energy continues to flow. New revenue streams will also allow Gen Y to continue to motivate workers through their Pink motivational model, which could be expensive to finance given the cognitive training required. The company has not yet made a profit, so generating alternative revenue streams would be essential, especially if salary costs need to rise to attract new talent in the future.

\n

Award [1] if a reason other than increasing sales revenue is given and explained, with reference to Gen Y for [2].

\n
c.
\n
\n

By selling his shares to Petra, Zack faces concerns not only of ownership but also that the culture of Gen Y – which by assumption has led to the success and motivation of employees – will have to be systematically changed. It is uncertain at this stage whether this change in culture will bring forward any improvements.

\n

In common with many other start-ups, profit for Gen Y remains elusive despite the considerable sums invested. Zack has tried to finance “dream projects” to turn inventions into innovation but without success. The harsh reality is that without funding coming into the business, the long-term sustainability of Gen Y is in doubt. If he does not take some action now and invite Petra into the business, then all jobs and intellectual property at Gen Y are under threat. Some programmers may leave the company if they sense that for some reason the opportunity to work on dream projects is cut back. Taking on Petra as a partner may weaken Zack’s control but will ensure in the short term that Gen Y remains viable.

\n

However, to receive this funding, Petra has added conditions that Zack must accept. These conditions will not be popular in an organization where there are strong links to Daniel Pink’s motivational theory. A leadership style change to autocratic will impact on the autonomy currently enjoyed by the employees. The purpose may also be affected, as Petra will wish to have a strong influence in the type of vision or direction, she wishes to see Gen Y move to. The ending of innovative and revolutionary “dream projects” may be the first casualty. Motivation could be destroyed.

\n

Further, the insistence on specific targets for programmers may impose deadlines/restrictions, which may be too much for the employees to take who have been empowered to make their own decisions.

\n

The short-term situation is difficult for Zack. He has to balance the financial issues present in the case study with the idealism and motivation of his workforce. Petra’s conditions, whilst restrictive, may save Gen Y. Zack may be forced to sell this idea of Petra receiving half his shares to his employees. Some employees may quit and be hired by competitors but perhaps they may not have been committed to Gen Y and Zack’s purpose. Either way, Zack will find it difficult to turn down Petra’s offer.

\n

\n

Marks should be allocated according to the Paper 2 markbands for May 2016 forward.

\n
d.
\n
", "Examiners report": "
\n

Many students could identify two features of an autocratic leadership style.

\n
a.
\n
\n

Many students could name the three key ideas in Pink’s motivation theory and many applied it well.

\n
b.
\n
\n

Many students could have been more precise in their response. Many students received one mark and some earned two.

\n
c.
\n
\n

Responses varied, as is to be expected, but on balance were rather good.

\n
d.
\n
", "question_id": "17M.2.SL.TZ0.5", "topics": [ "2023-unit-2-human-resource-management", "2023-unit-3-finance-and-accounts", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "2-4-motivation", "2-3-leadership-and-management", "3-2-costs-and-revenues", "1-2-types-of-organizations" ] }, { "Question": "
\n

Secco Vineyards (SV)

\n

Secco Vineyards (SV) is a family-owned business producing wine in Sonoma, California. In 1947, SV opened using cost-plus (mark-up) pricing. For SV’s customers, the wines were medium priced and available in local grocery stores.

\n

In 1977, Joe Secco, grandson of the founder, created a new strategy. He re-branded SV’s wine fora niche premium market.
• SV began to sell directly to customers at its winery instead of in local grocery stores.
• SV stopped using cost-plus (mark-up) pricing and began to sells its wines at much higher prices than before.
• Regular wine tastings and promotional events were held at its winery. At these events, wine experts would promote SV’s wines by creating an elegant experience based on a luxurious culture of wine consumption: stylish wine glasses, classical music and food that complements the wine.

\n

However, SV has recently faced intense competition and sales have fallen. Local wine producers and overseas competitors have entered the market with similar market positioning. In order to maintain its brand image, SV has not changed its pricing strategies.

\n

SV conducted secondary market research about other possible markets in the US for its premium wines. The research suggested that other possible markets for high-quality wines, such as those of SV, exist. As a result, SV is considering two options to increase sales in addition to its current distribution channel:
• Option 1: open a business-to-consumer (B2C) e-commerce store
• Option 2: sell SV wines to wholesalers serving the whole of the US market for premium wines.

\n
\n

Describe one characteristic of a niche market.

\n
[2]
\n
a.
\n
\n

With reference to SV, explain one advantage and one disadvantage of using secondary market research.

\n
[4]
\n
b.
\n
\n

Given the intense competition, explain two pricing strategies SV might consider.

\n
[4]
\n
c.
\n
\n

Recommend which of Option 1 and Option 2 SV should consider in order to increase sales.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Characteristics of a niche market include that they:
• are narrow
• are smaller than most markets or a fraction of a market
• often require specialized processes (marketing or operations) to fill the niche
• more specific in terms of features or quality of the product or service
• given the above niche markets or segments may be characterized as having higher final prices to consumers.

\n

Accept other relevant characteristics of a niche market. Candidates are not expected to word their responses exactly as above.

\n

Award [1] for identification of a characteristic of a niche market.

\n

Award [2] for a full, clear description of the characteristic. Meaningful exemplification would qualify as a description deserving two marks.

\n
a.
\n
\n

Advantages of secondary market research include:
• Efficient in terms of time – the data on wine consumption patterns, for example, has already been collected by someone else and is available.
• Effective in terms of cost – often, secondary research is free and, when not, is typically less expensive than the process of gathering primary research.
• Often, ample secondary research exists. On certain topics or related to certain markets, secondary research can be extensive. It has allowed SV to consider new geographical markets which it may not have considered before.
• Others have often thought through many of the core issues and a business can benefit from the insights of experts of collated data and written about them.

\n

Disadvantages of secondary research include:
• Lack of precise focus on the issue or problem concerning a business
• Lack of timeliness – often secondary research is outdated
• Uncertainty about the quality of the data collection/research.

\n

 

\n

Mark as 2+2.

\n

Award [1] for each advantage and disadvantage identified and award an additional [1] each if explained with application to SV.

\n
b.
\n
\n

Pricing strategies that SV might consider include:
• Cost-plus (mark-up) – SV may want to return to this pricing strategy, which guarantees that for each bottle of wine it sells the business is covering its per unit costs. However, SV’s brand identity might suffer if it lowered prices.
• Penetration – SV could use this pricing strategy as it enters new markets. Penetration pricing would allow SV to attract first-time customers in new markets with lower-than-normal pricing. Once some brand loyalty develops, SV could then raise prices.
• Psychological – Whereas psychological pricing sometimes refers to pricing below certain thresholds ($9.99 rather than $10.00) for a psychological effect, another form of psychological pricing is pricing a product high as a way of suggesting that the product is of high quality or value. SV might try to strengthen its brand identity with psychological pricing along this line, especially as the competition is intense.
• Loss leader – SV could try a loss-leader strategy, whereby it sells one of its wines at very low prices in an attempt to get consumers to buy SV wines. Other varieties of SV wines, however, would be priced in a fashion to compensate for the losses on the one type. This strategy, like others involving attracting customers through low prices, could weaken SV’s brand identity.
• Price discrimination – SV might consider is price discrimination, where SV sets the prices based upon the market that it is entering. For example, SV might charge more for wines in New York City than in Charlotte, NC. Both cities (major banking centres in the United States) have upscale buyers. Nevertheless, prices of virtually all types of goods and services cost less in Charlotte than in New York.
• Premium pricing – Though premium pricing is not in the guide, candidates are free to use it if they wish. Premium pricing occurs when a business inflates its prices precisely to enhance brand value. Consumers think that, by paying more, they are getting a better product.
• Promotional pricing – setting pricing very low for a short period to get customers to buy your product, often for the first time.
• Value-based pricing – setting a price based upon what consumers perceive the value of the product to be rather than on the actual cost to produce.

\n

Accept other pricing strategies as long as there is a clear indication of why this may be acceptable to SV. Do not accept predatory pricing.

\n

N.B. Candidates must actually name pricing strategies. “Lowering prices” and “Increasing prices” are not pricing strategies.

\n

 

\n

Mark as 2+2.

\n

Award [1] for each appropriate pricing strategy explained and [1] for application to the stimulus.

\n
c.
\n
\n

SV is considering two options:

\n

Option 1: open a business-to-consumer (B2C) e-commerce “store”.

\n

This option would involve selling wines online to consumers. They currently sell directly to customers at the vineyard.

\n

Benefits of this approach include:
• SV can reach a wide market area.
• The website and consumer traffic on the website is relatively inexpensive advertizing. It is important for a new company trying to enter new markets to keep costs of entry low.
• Promotion and advertizing can easily be extended via social network sites.
• Online offers can reach much wider target markets.
• From a consumer perspective, B2C e-commerce also has benefits, especially the convenience and ability to compare prices and explain the differences between wines sold to make an informed decision. Important in a premium market. 

\n

B2C e-commerce also has disadvantages, which include:
• SV would have to address consumer concerns that its site is secure.
• SV would have to incur costs making sure that the site is secure.
• Competitors can easily track what SV is doing to promote and sell its products
• Setting up the website and establishing the procedures for fulfilling orders could be expensive. New supply chains to reach new customers may have to be created adding to short-term costs.
• Alcohol is a heavily regulated product, especially in the United States, and it could be complicated and cumbersome for SV making sure that it is in compliance with federal and state laws (and laws regarding alcohol vary from state to state).
• SV would also have to make sure that selling wines online did not conflict with the premium brand identity that SV otherwise tries to maintain.

\n

 

\n

Option 2: sell SV wines to wholesalers serving the whole of the US market for premium wines.

\n

Advantages of this approach include:
• The wholesaler stores the product, thereby reducing storage costs for SV.
• The wholesaler purchases in bulk and then breaks the bulk purchases into smaller batches for the retailers. This process means that SV does not have to concern itself with small orders by individual retailers. This may be important in a premium market.
• Because SV wants to sell over long distances – the entire United States – this approach pushes much of the complicated processes of distribution to wholesalers.

\n

However, working with wholesalers has disadvantages:
• Wholesalers sell the products of many companies, and their loyalties and highest priorities may be with other brands.
• Working with wholesalers adds another intermediary and mark-up, which can lead to higher prices to consumers (who may respond by purchasing other products) or to thinner margins for SV.

\n

• Working through wholesalers and distributing across the United States, SV may not be able to afford national promotion. If it cannot, it will have to rely on the wholesalers and retailers for much of its promotion. Can SV be confident that the wholesales will position SV’s new wines positively? How will they check?

\n

Overall, option 2 is possibly the longer term option, involves considerable costs, is potentially the greater risk, but the profits could be considerable over option 1. Option 1 is a market penetration strategy effectively trying to sell the same product in the same market via an online channel. Initially, customers who would have bought directly from the vineyard could go online instead. Overall sales may increase marginally. This will change over time as the e-commerce store becomes more sustainable but from the information given in the stimulus, option 2 would
seem to have the greater market potential for growth. (Market development to use the Ansoff terminology but direct application to the matrix is not expected.)

\n


Balance in the context of this question means having at least one advantage and one disadvantage for each option (and, thus, addressing both options).

\n

Accept any other relevant evaluation.

\n

These mark awards in the table below should be viewed as maximums.

\n

\n

Marks should be allocated according to the Paper 2 markbands for May 2016 forward.

\n
d.
\n
", "Examiners report": "
\n

Many responses earned one mark but relatively few earned two marks. Many candidates’ responses hewed toward a target market or market segment rather than a niche market.

\n
a.
\n
\n

Most candidates knew one advantage and one disadvantage, but many did not apply to the stimulus.

\n
b.
\n
\n

Most students could name two pricing strategies, but often then were not appropriate to the context or were not explained and/or applied.

\n
c.
\n
\n

Responses varied, as is to be expected, but on balance were rather good. Some students did not really know what a wholesaler is, which weakened their responses. Many candidates seemed to know what to do: consider both options with balance.

\n
d.
\n
", "question_id": "17M.2.SL.TZ0.4", "topics": [ "2023-unit-4-marketing", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "4-2-marketing-planning-(including-introduction-to-the-four-ps)", "4-4-market-research", "4-5-the-four-ps-(product-price-promotion-place)", "1-3-organizational-objectives" ] }, { "Question": "
\n

With reference to Medimatters, describe two benefits of having a marketing plan.

\n

Refer to case study: Medimatters

\n
[4]
\n
a.
\n
\n

Explain the factors influencing a suitable promotional strategy for the IBAT app.

\n

Refer to case study: Medimatters

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Possible benefits include:

\n\n

Mark as 2+2.

\n

Award [1] for each benefit identified, and [1] for the development of each of these key aspects in the context of Medimatters. Award up to a maximum of [2] per benefit.

\n
a.
\n
\n

This question is about factors.

\n

The factors influencing a suitable promotion/advertising strategy are likely to be:

\n\n

Accept any other relevant factors related to promotion strategy and explanation.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward, section A.

\n

For a theoretical answer award a maximum of [3]

\n

If it answers the question ‘What promotional strategy’ limit to [4] if it does not explain the factors

\n

If there is no recognition that there are two possible markets award a maximum of [5].

\n

If the explanation of factors affecting promotion is mainly descriptive, but in context award a maximum of [5].

\n
b.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
", "question_id": "16N.1.SL.TZ0.2", "topics": [ "2023-unit-4-marketing" ], "subtopics": [ "4-2-marketing-planning-(including-introduction-to-the-four-ps)", "4-5-the-four-ps-(product-price-promotion-place)" ] }, { "Question": "
\n

Café Lucchini (CL)

\n

Fabi Lucchini will open the only café, selling hot and cold drinks only, in her small village. The economy is weak so the local government will pay 50 % of the rent for the premises in which CL will operate.

\n

Fabi has forecasted the following figures for the first six months of operation, beginning on
1 July 2016:

\n

\n

An option is to install cooking facilities and serve meals to increase CL’s sales revenue. Fabi estimates that she could sell 40 meals per day at an average variable cost of $5 and at an average sales price of $10. Serving meals would increase her fixed costs by $3000 per month.

\n
\n

Define the term fixed cost.

\n
[2]
\n
a.
\n
\n

Calculate the break-even quantity of meals that CL must sell to pay for the increase in fixed costs of $3000 to provide these meals (show all your working).

\n
[2]
\n
b.
\n
\n

Using the information in the table only, prepare a monthly cash flow forecast, for CL, for the first six months of operation.

\n
[6]
\n
c.
\n
", "Markscheme": "
\n

A fixed cost is a cost that does not change with the level of production/output.

\n

Candidates are not expected to word their definition exactly as above.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding similar to the above answer. The first mark would typically come from awareness that the payment does not change.

\n

Award [2] for a full, clear definition that conveys knowledge and understanding similar to the answer above. Candidates should receive a second mark if they convey the idea that it does not change according to the level of production/output.

\n

Do not credit an example.

\n
a.
\n
\n

Just to pay for the increase in fixed costs of $3000, CL must sell 600 meals per month, calculated as follows:

\n

Average sales price per meal – average variable costs per meal = contribution

\n

$10 – $5 = $5 contribution

\n

\n\n\n3000\n\n\n5\n\n\n = 600 meals per month/units

\n

For full marks all stages of the calculation – the two stages – are expected.

\n

An alternative method would be:

\n

Total revenue (TR) = total costs (TC), where total revenue = Price x quantity sold and TC = Total fixed cost + total variable costs

\n

10 [price] x Q [quantity sold] = Total fixed cost + ($5 [variable cost per unit] x Q)

\n

10Q = 3000 + 5Q

\n

5Q = 3000

\n

\n\n\n3000\n\n\n5\n\n\n = 600 meals per month/units

Award [1] for correct working and [1] for the correct answer. Award up to a maximum of [2].

\n

For a correct response that demonstrates understanding and application of the formula, even if no specific headings are presented, award full marks.

\n
b.
\n
\n

All figures in $

\n

\n

N.B. Allow candidate own figure rule (OFR): if a candidate makes an error in one row and carries it through the remainder of the forecast, that is only one error. This provision includes both mathematical errors and conceptual errors (for example, if a candidate has the electricity fee monthly rather than every other month, it is one error) and candidates should only lose [1] for that error.

\n

Candidates who only show net rent payment should be penalised as one error as they have omitted the inflow.

\n

[1] if the candidate has some idea of the structure of a cash flow forecast.

\n

[2] for a cash flow forecast that has more than three mistakes or omissions in layout/ heading/ calculations (apply OFR).

\n

[3] for a largely correct cash flow forecast that has three mistakes or omissions in layout/headings and/or calculation (apply OFR).

\n

[4] for a largely correct cash flow forecast that has some minor mistakes with layout and /or headings and which has one mistake (apply OFR) or the candidate does not produce a mathematically correct cash flow.

\n

[5] for a largely mathematically correct cash flow forecast that has one omission of one category or one mistake in calculations or headings.

\n

[6] for a fully correct cash-flow forecast with a generally accepted format and lines/headings for total inflows/receipts, total outflows/payments (or some other acceptable wording), a line/ headings for net cash flow / inflow, etc and lines/ headings for opening and closing balance.

\n
c.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
", "question_id": "16N.2.HL.TZ0.2", "topics": [ "2023-unit-3-finance-and-accounts" ], "subtopics": [ "3-2-costs-and-revenues", "3-3-break-even-analysis", "3-7-cash-flow" ] }, { "Question": "
\n

Flussbiegung CityRoller (FC)

\n

Flussbiegung CityRoller (FC) is a private limited company that sells scooters in a large German city. Its shop is situated in an excellent location near the city centre. In 2014, FC sold 1200 scooters at a sales price of €2200 per scooter. The business has few variable costs.

\n

\n

FC only sells one brand of scooter, called Rasen, which consumers regard as high quality. Rasen’s competitors are:

\n

\n

Elegante and Zoom have both become popular in the last five years. Despite some problems with quality, both are seen as fashionable scooters. Elegante has successfully built a brand identity as a stylish scooter. Electrico scooters are electric-powered and are popular with people concerned about pollution. Rasen, Elegante and Zoom scooters all use petrol (gas).

\n

Despite Rasen’s reputation for quality, in the last five years FC’s market share has decreased. Rasen’s manufacturer has also been losing market share across Germany. The problem, according to FC, is that the manufacturer does not invest enough to update the brand’s image. Rasen scooters appeal to an older generation in Germany, but younger people prefer products that are fashionable. FC uses below the line promotions. These promotions do not have the same influence on market perception as the manufacturer’s above the line promotions, which emphasize Rasen’s quality. Another possibility for Rasen is, rather than update its brand image, to maintain
its current brand identity but try to sell its product in different geographic markets where its current brand identity may have more appeal, such as in eastern Europe or Africa.

\n
\n

Describe one feature of a private limited company.

\n
[2]
\n
a.
\n
\n

Construct a position/perception map for all four brands of scooter.

\n
[4]
\n
b.
\n
\n

Explain the relationship between Rasen’s product life cycle and FC’s marketing mix.

\n
[4]
\n
c.
\n
\n

Discuss the importance of branding for FC and for Rasen.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Features of a private limited company may include:

\n\n

Award [1] for identifying an appropriate feature and [1] for an appropriate description (application not required), up to a maximum of [2].

\n
a.
\n
\n

Award [1] for the overall layout of the map with both axes correctly labelled (price: high or low; Quality: high or low).

\n

N.B. It does not matter which one is horizontal / vertical.

\n

\n

Correct positioning:

\n
    \n
  1. Zoom in the quadrant “Low and Low”. The placement should be very low and very low.
    2. \n
  2. Elegante in the quadrant “low and low”. N.B. Elegante is described as “low quality” and its price should put it near the x-axis, which needs to be graphically or textually indicated. It should not be considered correct if this aspect is not clear.
    3. \n
  3. Electrico on the axis of price (thus medium quality), at the very high end of price.
    4. \n
  4. Rasen in the low price, high quality quadrant. Quality should be very high and price fairly close to the x-axis but lower than Elegante.
    5. \n
\n

Award [2] for a correctly labelled position map with two of the brands properly placed.

\n

Award [3] for a correctly labelled position map with three of the brands properly placed.

\n

Award [4] for a correctly labelled position map with all four brands properly placed.

\n

If a candidate orients the perception map differently (that is, has price as the x-axis, use the map below and follow the same scoring mark-award scheme:

\n

\n

A – Zoom
B – Elegante
C – Electrico
D – Rasen

\n

Also, if a candidate uses “consumer opinion” rather than quality, accept.

\n
b.
\n
\n

Based upon the evidence from the stimulus, the place of Rasen on the product life cycle curve is at the beginning of the decline phase. The perception of Rasen in the market place no longer matches the needs and wants of consumers, despite the fact that it is an excellent product (high quality product at a middle-low price). This
situation puts FC in a difficult position. FC has an excellent location, so changing place will probably not impact on sales. The product is out of FC’s hands in that it sells Rasen scooters but has meaningful voice in the changes to the product (like all dealers, it can suggest and Rasen probably asks its dealers their opinion). Finally, FC probably would not want to change price, as Rasen scooters are very reasonably priced as it is. Given the quality of the product, the price appears to be excellent. The main area where FC can try to change the situation is by new forms
of promotion. However, brand perception is determined largely by above the line promotion, which is probably too expensive for a little business like FC. Perhaps FC can try new forms of below the line promotion than the ones it currently uses, or try to influence Rasen to alter the product and/or the brand perception. Given that people want scooters that are fashionable and “cool,” perhaps FC can with other dealers try to persuade Rasen to modify the design of the product slightly and launch a new promotion campaign aimed at changing the perception of Rasen.

\n

If a candidate says that Rasen is in the decline phase rather than the beginning of the decline phase, accept if the explanation reasonably justifies.

\n

Accept any other relevant explanation.

\n

Mark as 2 + 2.

\n

Award [1] for some understanding of the product life cycle and [2] if the candidate both demonstrated an understanding and makes the assertion that Rasen appears to be at the end of the maturity phase or the beginning of the decline phase.

\n

With respect to the marketing mix, award [1] for each P of the marketing mix that the candidate addresses up to [2].

\n
c.
\n
\n

Branding creates a perception of Rasen in the marketplace. Once brand perception exists, it influences consumers, who come to associate certain characteristics with the product. Branding can create customer perception and loyalty, but brand perception can also lead consumers to misunderstand a product as well. The power of the old branded identity endured. Rasen seems to benefit significantly from the power of its branded identity. Even though consumer tastes have changed, FC was still able to sell 1200 scooter sales per annum, which represents 20 scooters per week. The impression from the stimulus is that, though market share is declining, it is not doing so too rapidly. Rasen and FC probably have time to make changes.

\n

Branding, or in this case rebranding, would be important to both Rasen and FC but arguably more important to FC. Rasen has more control over the situation: more financial resources, more power over product, price, and promotion. Rasen also has control over the markets where the product is sold. Well off young Germans may be more interested in fashionability and coolness than their parents’ and grandparents’ generation, but perhaps Rasen needs to look to new markets – in eastern and southern Europe, South America, Africa, or Asia – where quality and
reasonable price may be more valued (though Rasen may also have to sell scooters at lower prices in these markets). FC, as noted in the response to marketing mix above, has relatively little control over than the marketing mix, unless it were to drop Rasen altogether and start selling a different brand. Thus, to FC, Rasen’s branded identity is exceptionally important.

\n

Accept any other relevant discussion.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "16N.2.SL.TZ0.3", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-4-marketing" ], "subtopics": [ "1-2-types-of-organizations", "4-5-the-four-ps-(product-price-promotion-place)", "4-2-marketing-planning-(including-introduction-to-the-four-ps)" ] }, { "Question": "
\n

With reference to Medimatters, describe two features of batch production.

\n

Refer to case study: Medimatters

\n
[4]
\n
a.
\n
\n

Assuming the production of the lenses is outsourced, explain the differences in how Medimatters would manage  operations for its products/goods (the lens) and its service (the app).

\n

Refer to case study: Medimatters

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Possible features could include:

\n\n

Accept any other relevant feature.

\n

Mark as 2+2.

\n

Award [1] for each feature identified, and [1] for the development of each of these features in the context of Medimatters, up to a maximum of [2].

\n
a.
\n
\n

If the product/good is to be outsourced as a manufacturer has been identified.

\n

This needs to be managed by:

\n\n

There will be little control by Medimatters.

\n

The app will be in-house. Operations will include:

\n\n

Medimatters will retain full control

\n

Accept any other relevant analysis.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward, section A.

\n

For a theoretical answer award a maximum of [3]. Award a maximum of [3] for only explaining one difference. N.B.: One major difference eg, the extent of control, can lead to a number of consequential differences. In these instances marks are not limited to [3].

\n

If ONLY outsourcing OR the app are explained award a maximum of [3].
If explanation does not effectively bring out the differences award a maximum of [4].
If the explanation of more than one difference is mainly descriptive, but in context, award a maximum of [5].

\n
b.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
", "question_id": "16N.1.SL.TZ0.3", "topics": [ "2023-unit-4-marketing", "2023-unit-5-operations-management" ], "subtopics": [ "4-5-the-four-ps-(product-price-promotion-place)", "5-1-the-role-of-operations-management" ] }, { "Question": "
\n

Chan Manufacturing (CM)

\n

20 years ago, Chi Chan set up Chan Manufacturing (CM) to produce electrical components on a just-in-time (JIT) basis for car manufacturers.

\n

High quality and quick delivery have increased CM’s market share and profit. CM’s manual-skilled employees are loyal, productive, motivated and feel secure in their jobs. Employees admire Chi as a leader. Labour turnover at CM is low. Chi is paternalistic. He believes in a top-down approach to management. He cares for the financial welfare of his employees. Employees are paid a basic wage and receive additional financial rewards for working overtime. Proud of CM, employees regularly work harder than expected so that CM always meets client demand, which changes often. Chi and union representatives successfully negotiate pay and work conditions through collective bargaining.

\n

Mei, Chi’s daughter, joined CM as Chief Operations Manager. She relies on new business theory to guide her management decisions. Many current workers are approaching retirement age. She wants to restructure CM and use job enlargement, job enrichment and empowerment. Individual employment contracts are to be determined annually based on individual performance appraisal. Some employees do not like the proposal and speed of the change and are becoming demotivated. For the first time, they are considering industrial action (industrial/employee relations methods).

\n

Mei insists that these changes are required, but wants to avoid conflict. She is considering approaches to conflict resolution.

\n
\n

Define the term market share.

\n
[2]
\n
a.
\n
\n

With reference to Mei and Chi, explain two differences between a manager and a leader.

\n
[4]
\n
b.
\n
\n

Applying Maslow’s theory of needs, explain two reasons why the workers at CM are becoming demotivated.

\n
[4]
\n
c.
\n
\n

Examine two industrial/employee relations methods other than strike action that workers could use at CM.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Market share is the measurement of one organization’s sales (total revenue) in relation to the total industry sales (total revenue). The market share is presented as a percentage.

\n

Market share = \n\n\n\norganization's sales revenue\n\n\n\n\nindustry's sales revenue\n\n\n\n x 100

Candidates are not expected to word their definition exactly as above.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding. For example, only the formula is given.

\n

Award [2] for a full, clear definition that conveys knowledge and understanding similar to the answer above. The candidate must demonstrate understanding that the market share is measured as a percentage or portion.

\n

Do not credit an example.

\n
a.
\n
\n

A leader of an organization will probably be the overall strategic and goal setter. Based on experience, a leader will determine the vision for a business and if required, changes which will need to be made if the vision is in danger of not being realized. The leader therefore establishes direction, aligning employees, motivating, mentoring, inspiring as well as producing change. A leader inspires employees.

\n

The main role of a manager is achieving specific organisational goals. A manager will attempt to put the vision of the business into daily practice looking more at shortterm goals and day to day tactics. Managers will inevitably be involved with planning and budgeting and monitoring financial and individual performance more closely. Managers may micro-manage works including organizing resources and staffing to ensure that individual job performance is being maintained consistent with the goals of the organization. A manager also creates predictability and order.

\n

From the stimulus it appears that Chi normally sets the vision of the business. He set up CM; he had the right business idea and has contributed considerably to the growth and success of CM. It also appears that Chi inspires and motivates many employees to follow a shared vision and indeed they are very loyal. His span of control is seemingly quite large. Implicit in the case is that his paternalistic leadership style is in contrast to Mei’s more ‘autocratic’ approach and resultsfocused approach.

\n

A leader normally emerges while managers are appointed. Mei as the manager has the official skills to manage while Chi has natural leadership ability.

\n

Mei was appointed by Chi and seems intent on modernizing the organisation and therefore has the power to make some changes, but has not yet earned the trust of employees. Chi who was the founder of CM naturally emerged as a leader and inspired and motivated employees.

Leaders build trust using their charisma. At the moment, Chi is the one who is trusted and admired and followed and has control over the strategic direction while Mei is responsible for implementing changes although change is inevitable.

\n

Managers follow rules and expectations. Mei is a manager who uses her theoretical knowledge to manage and set new objectives. With her use of new business theory and desire to restructure the organisation, Mei is probably looking to bring the organization up to date to boost efficiency. There is evidence that Mei is micro-managing employees through her desire to introduce job enlargement and enrichment schemes – real sources of tension leading to potential conflict. It is very likely that Mei is monitoring individual performance very closely in contrast to Chi’s paternal approach.

\n

As a manager, Mei is listened to due to her official title not her personality. While Chi is listened to due to his charisma, personal qualities and paternalistic attitude towards employees.

\n

Mei also plans to implement an official performance appraisal system and thinks systematically but it alienates the employees.

\n

Accept any other relevant difference between a manager and a leader and if that difference is supported by the stimulus.

\n

A role / characteristic can be applied to both roles but must be explained from different perspectives to be seen as two differences.

\n

Mark as 2 + 2.

\n

Award [1] for each relevant difference between a manager and a leader explained and [1] for appropriate application to the organization to a maximum of [2].

\n
b.
\n
\n

It is expected that the candidates describe the Maslow theory of needs in terms of the hierarchy and the progression from the lower level of needs to the higher ones.

\n

It is not expected that the response is divided into two explicit parts. The candidates can introduce theory while applying / linking / explaining an argument from the stimulus.

\n

The application may include the following:

\n

The proposed annual individual contracts based on annual appraisal may stop the employee from even reaching the lower level of needs like safety / job security. Not being able to satisfy such a need will definitely create demotivation and stop the employee from reaching higher levels of needs.

\n

(Candidates may apply this issue to the lowest level of needs.)

\n

Due to the proposed changes like the introduction of job enlargement, job enrichment and empowerment, employees might not even be able to reach the higher levels of needs, more specifically esteem and possibly self-actualization as they are not used to such practices and challenging tasks as well as a general fear of the unknown, hence may be demotivated. They are manual-skilled employees who have never been appraised before.

\n

The retirement of many of their peers, may negatively affect the motivation level of the remaining employees. They may no longer be able to fulfil love or belonging needs as the social structure and group support may have disappeared.

\n

Accept any other relevant application.

\n

N.B.: do not penalize if the pyramid of needs is not drawn, provided that the theory is explained.

\n

Mark as 2+2 (Theory and Application)

\n

The theory

\n

Award [1] for a brief/partial description of Maslow’s theory. Some levels of needs may be missing or only the pyramid may be presented/drawn with no explanation.

\n

Award [2] for a clear explanation of the theory.

\n

The application to the case

\n

Award [1] for application to the case, which is superficial for both reasons OR only one reason is clearly explained and applied.

\n

Award [2] for a relevant, clearly explained application of both reasons why workers are becoming demotivated.

\n

Up to [2] can be awarded for a good explanation as to why workers are demotivated even if the Maslow theory is not used.

\n
c.
\n
\n

It is expected that the candidate incorporates theoretical knowledge of two industrial/employee relations methods with direct application and judgment that is relevant to CM.

\n

One of the possible options is to use negotiation through the process of collective bargaining. It is the least disruptive form of industrial action both to the employees and to the CM. Moreover, the employees are already members of a trade union. Hence, the infrastructure for negotiation has already been established. Given the successful outcome of past collective pay negotiations, it appears that some trust has been established between the management of CM and the employee representatives. The manual-skilled employees probably need the support of a trade union representative and for no extra cost to the employees, negotiation can be started.

\n

However, Mei is not paternalistic like her father and she may resist the involvement of a union representative especially her proposed movement towards individual contracts based on individual performance appraisal. Collective bargaining might be of little use given the proposed change. She might prefer individual bargaining. Still
a door for communication can be opened with the use of a representative which also reduces the time and resources for CM if individual bargaining is used.

\n

The negotiation process may be long and time consuming. Mei seems to want the change to happen soon. One may see this option as a very significant / good option.

\n

Other options are:

\n

Go slow/slowdowns: the employees at CM will work at the minimum speed allowed under their contract.

\n

Work-to-rule: the employees of CM follow their contract / rules and regulations without giving any goodwill to CM.

\n

Overtime bans: refuse to work overtime when asked to by management.

\n

Clearly, all of the above will reduce the current well established goodwill of employees; create a very negative and unproductive atmosphere / working relationship especially between Chi and his employees.

\n

CM may lose the high quality of the product and quick delivery to customers. Both seem to be CM’s USP. Flexibility and hard work clearly enable CM to meet fluctuating demand. CM may lose its customers if demand is not met on time and the products are not delivered punctually.

\n

Clearly, JIT manufacturing will be severely affected given the short time from order to delivery expected by the car manufacturers.

\n

One may judge the consequences of the above on CM as severe given the past success and the nature of production.

However, given the severe negative effects on CM’s productivity and quality, Mei might be willing to speed up negotiations as well as to compromise. The employees are likely to be successful as they actually do not break any rules or the law and work according to their contract. Counter action on behalf of CM is unlikely to happen.

\n

Moreover, employees might be negatively affected as well. Currently, they rely on and receive additional payments for overtime. Many employees might suffer a considerable loss of earnings especially when fluctuating demand is very high. Employees might experience financial difficulties given the nature of their employment — manual skilled.

\n

Although the three options above (apart from negotiation) are similar in the nature of the action taken and the effects both on the employees and CM, accept any response that incorporates two methods, provided the discussion is not identical.

\n

Overall, given the possible and the more significant consequences of the last three options, for both the employees and CM (especially overtime bans among the last three), perhaps it is recommended that CM’s management especially Mei accept the collective negotiation / bargaining option that proved successful in the past, even if her strategic direction is towards individualism.

\n

The negative effects on CM and the employees are minimal. The employees can intensify their action if the negotiation fails, but it is worth a try to start with the most moderated action and to see if Mei is willing to compromise once the benefits of the proposed changes are explained to the employees.

\n

Accept any other substantiated judgment.

\n

N.B. do not credit strike action.

\n

It is expected that candidates provide a conclusion with a substantiated judgment.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

If a candidate evaluates / addresses only one method, award a maximum of [5].

\n

A balanced response is one that provides at least one argument for and one argument against each option.

\n

Candidates may contrast one option with another for a balance as long as at least two arguments are given for each option.

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "16N.2.HL.TZ0.3", "topics": [ "2023-unit-4-marketing", "2023-unit-2-human-resource-management" ], "subtopics": [ "4-1-the-role-of-marketing", "2-3-leadership-and-management", "2-4-motivation", "2-6-industrial/employee-relations" ] }, { "Question": "
\n

Refer to Afghan Sun case study SL/HL P1 May and Nov 2018.

\n

With reference to Table 2, describe two advantages for Su of using a cash-flow forecast.

\n
[4]
\n
a.
\n
\n

Refer to Afghan Sun case study SL/HL P1 May and Nov 2018

\n

With reference to Su and her managers at HH and AS, explain the differences between leadership and management.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Possible advantages include:
• it shows when there is expected to be cash shortfall (especially late 2018, early 2019)
• it is suitable for “what if”. For example, if a bigger loan was sought there might not be a cash shortfall.
• for use as a planning tool
• to inform stakeholders (e.g. banks when finance is needed)

\n

Do not reward ideas such as:
• predicting future costs
• calculating/assessing profits

\n

NB Cash flow, profit, liquidity, working capital are all different concepts so do not reward profit or liquidity or working capital unless the candidate demonstrates that cash flows indicate areas for improvement and that improving management of cash flow could lead to improved profits or improved liquidity.

\n

Context will usually be achieved by using information from the table.

\n

Any other relevant advantage.

\n

Mark as 2 + 2.
Award [1] for each advantage identified, and [1] for the development of each of this advantage in the context of AS. Award up to a maximum of [2] per advantage.

\n
a.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental resources.

\n

Su shows distinct leadership qualities. She:
• inspires
• sets missions
• takes responsibility for strategic decisions
• takes on the role of spokesperson
• delegates, advises, guides
• shows features of McGregor Theory Y.

\n

Her managerial roles are somewhat limited but include organizing at a corporate level. Most of the management functions are delegated.

\n

Managers, for example David and Salima, fulfil management functions including:
• making day-to-day decisions
• making tactical decisions
• organizing resources, directing, coordinating staff.

\n

Accept any other relevant difference.

\n

Marks should be allocated according to the Paper 1 markbands for May 2016 forward, section A.

\n

Award a maximum of [3] for a theoretical answer
Award a maximum of [4] if no reference to David/Salima (managers)
Award a maximum of [5] if the explanation of differences is mainly descriptive, but in context.
To achieve 5 or 6 marks there has to be a comparison.

\n
b.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
", "question_id": "18M.1.SL.TZ0.1", "topics": [ "2023-unit-3-finance-and-accounts", "2023-unit-2-human-resource-management" ], "subtopics": [ "3-7-cash-flow", "2-3-leadership-and-management" ] }, { "Question": "
\n

It is now mid-2019. Production of solar power systems has been going for over a year and sales have exceeded forecasts and reached 5000 systems for the year. Profits have been reinvested into developing new outlets and distribution channels for solar power systems in Afghanistan. Lean production techniques have enabled AS to keep costs low, but AS has had some quality issues: some cells produce lower quality systems than others. AS has found faults in components bought from suppliers. Some solar power systems have been damaged in the supply chain. Salima is thinking of instituting total quality management (TQM). She also needs to forecast sales for 2020 but has decided the situation is not suitable for a four-part moving average.

\n

In a separate development, Doorway Foundation (DF), a multibillion-dollar charity established by the owners of one of the world’s largest IT businesses, has approached Su. The foundation has a major IT initiative to bring IT to schools in Afghanistan, Myanmar and Bangladesh. By forming a joint venture, DF could use AS’s expertise and local knowledge to help solve some of the electricity supply and IT problems in Afghanistan.

\n

The possibility of a joint venture encouraged managers and investors to think about whether AS should grow. In response, Su decided to analyse the possibility of growth through change using a force field analysis of AS.

\n

[Source: © International Baccalaureate Organization 2018]

\n

Table 3: Force field analysis for growth through change at AS

\n

\n

[Source: © International Baccalaureate Organization 2018]

\n
\n

Refer to Afghan Sun case study SL/HL P1 May and Nov 2018. 

\n

Define the term four-part moving average.

\n
[2]
\n
a.
\n
\n

Refer to Afghan Sun case study SL/HL P1 May and Nov 2018.

\n

With reference to AS, explain the difference between commercial marketing and social marketing of the solar power systems (line 53).

\n
[4]
\n
b.
\n
\n

Refer to Afghan Sun case study SL/HL P1 May and Nov 2018.

\n

Explain how total quality management (TQM) could help AS improve the quality of its products.

\n
[4]
\n
c.
\n
\n

Refer to Afghan Sun case study SL/HL P1 May and Nov 2018.

\n

Using information from the case study, the resource and appropriate business tools, discuss the value to Su of the force field analysis in deciding whether to grow through change.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

PLEASE NOTE: This content is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

A four-part moving average is the average of four adjacent terms in a time series. The starting point progresses gradually through the time series.

\n

Candidates are not expected to word their definition exactly as above. All three are not needed. Although it is “define”, an example can help.

\n

Award [2] for a full definition. Award [1] for some understanding of the term.

\n
a.
\n
\n

PLEASE NOTE: This content is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

• Commercial marketing focuses on the potential buyers of a product/service.
• Social marketing considers the effects of the product/service on the whole of society.

\n

For the solar panels, commercial marketing would focus on the customers, persuading them to buy the panels in order for AS to make a profit. It would attract customers through the benefits and through available finance. Social marketing will focus on the benefits the systems have on the Afghan communities, in particular poor and remote communities. Social marketing may focus on long-term benefits and more general issues such as bringing stability to Afghanistan.

\n

Award a maximum of [2] for a theoretical answer or for an answer that explains without drawing out differences.

\n

Award [4] for an answer that explains one or more difference in context.

\n
b.
\n
\n

Total quality management seeks to ensure the highest quality standards throughout a business. AS is having quality issues, in particular with some cells performing less well than others. There are problems with the supply chain and there are problems with some suppliers. By employing TQM, the whole process from supplier to delivery will be reassessed with the aim of zero defects throughout.

\n

Mark as 2 + 2.

\n

Award a maximum of [4] for an explanation in context.

\n

For non-contextual answers award a maximum of [2].

\n
c.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental resources.

\n

Positive benefits:
• AS needs to make some long-term decisions. FFA will help in the process of deciding whether to change or whether to remain the same.
• The basic question is: should AS remain the same or grow? The subsidiary question is how best to grow.
• Driving forces will support the arguments for growth, whereas restraining forces will support staying the same.
• The driving forces in the table are a useful starting point. How can you distinguish between the value of Su’s beliefs and needs with the needs of the people in other parts of Asia? How can you compare the team’s needs with Su’s?
• At best scores in the table will be subjective.
• The FFA helps to clarify thinking, identify the factors involved in the decision and point to the issues that need to be balanced. It cannot make the decision but can help clarify the issues.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward, section B.

\n

Purely theoretical answer or with no effective use of stimulus material in range [3] to [4] with better answers award a maximum of [4].

\n

If discussion is one-sided award a maximum of [5].

\n

Both sides considered, good use of evidence, particularly from section B, but no effective conclusion award a maximum of [8].

\n

For full marks a fully supported conclusion with good use of evidence, particularly from the resource.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "18M.1.HL.TZ0.4", "topics": [ "2023-unit-4-marketing", "2023-unit-5-operations-management", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "4-3-sales-forecasting", "4-1-the-role-of-marketing", "5-3-lean-production-and-quality-management", "1-7-organizational-planning-tools" ] }, { "Question": "
\n

Refer to Afghan Sun case study SL/HL P1 May and Nov 2018

\n

With reference to AK Bank, describe two features of for-profit microfinance providers.

\n
[4]
\n
a.
\n
\n

Refer to Afghan Sun case study SL/HL P1 May and Nov 2018

\n

Su is considering two possible locations for the production facility (lines 51–52). Explain the factors (reasons) that Su may consider when deciding between the two locations.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Features include:
• they provide small amounts of capital
• they provide finance to people who might otherwise not get finance (eg, poorer people, specific groups such as women)
• they often help business start-ups
• they lend to people without collateral
• they often operate in developing economies.

\n

Candidates may interpret AK Bank as being a social enterprise and this is a reasonable assumption. Although it is unusual to assume it is not a social enterprise this will also be allowed.
Comments such as ‘low’ or ‘high’ interest rates are too vague unless developed.
Context will come from the information given about AK Bank. Two different contexts are needed. Context includes the activities in Bangladesh, the fact that it will work with a social enterprise such as AS, support for other social causes.

\n

Do not reward answers that say “it’s for profit” and/or “it provides finance” unless these are developed.

\n

Mark as 2 + 2.

\n

Accept any other relevant feature.

\n

Award [1] for each correct feature identified and [1] for a description of how that feature relates to AK. Award a maximum of [2] per feature.

\n
a.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental resources.

\n

This is not an AO3 question so there does not have to be a recommendation.

\n

Factors/reasons include:

\n

For country B:
• This is a social enterprise, so a developing economy may be important.
• Distribution could be a problem, so simple transport links are favourable.

\n

But:
• One party state may be high risk and seen as unethical.
• Quality is an issue, so skills are important.

\n

For Country A:
• Free market economy, high skills.
• Trading easier.
• Stable currency, stable government.

\n

But:
• Does it need the work?
• Costs likely to be higher.
• Finance not so important so how relevant are grants, low rents?

\n

NB A decision is not required. However, an answer that works towards a decision may discuss factors and can be rewarded.

\n

Accept any other relevant analysis.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A. 

\n

Award a maximum of [3] for a theoretical answer.

\n

Award a maximum of [4] if explanation does not effectively bring out the factors/reasons or only considers one country

\n

Award a maximum of [5] if the explanation of more than one factors/reasons is mainly descriptive, but in context.

\n

For full marks, the explanation needs to be developed and in context and both countries considered.

\n
b.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
", "question_id": "18M.1.SL.TZ0.2", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-5-operations-management" ], "subtopics": [ "1-2-types-of-organizations", "5-4-location" ] }, { "Question": "
\n

Six months has passed and Medimatters is now ready to launch IBAT. Medimatters will recruit new staff to set up a customer services department. Ahmed has spent some time thinking about the people he would need to recruit. The staff would need to possess IT skills and an understanding of medical issues.

\n

The manufacturer Falit found in India has produced the first batch of 1000 IBAT lenses. Unfortunately, the IBAT lenses were delivered later than expected and some were faulty. As a result, the group is considering whether to make or buy the IBAT lenses. Ahmed has suggested setting up a manufacturing facility using lean production. His calculations are as follows:

\n\n

Ahmed considered his role as leader.

\n\n
\n

Define the term lean production.

\n

Refer to case study: Medimatters

\n
[2]
\n
a.
\n
\n

With reference to Medimatters, explain two steps in the process of recruitment to the customer services department.

\n

Refer to case study: Medimatters

\n
[4]
\n
b.
\n
\n

Calculate the cost to make and the cost to buy IBAT lenses (show all your working).

\n

Refer to case study: Medimatters

\n
[2]
\n
c.i.
\n
\n

Briefly comment on your results in (c)(i).

\n

Refer to case study: Medimatters

\n
[2]
\n
c.ii.
\n
\n

“Ahmed considered his role as leader.” Recommend an appropriate leadership style for Ahmed.

\n

Refer to case study: Medimatters

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Producing goods and services efficiently/ minimum wasted resources/improving quality.

\n

Candidates are not expected to word their definition exactly as above. All three are not needed. Although it is “define”, an example can help.

\n

Award [1] for a basic definition that conveys partial knowledge.

\n

Award [2] for a clear definition that conveys knowledge with some reference to the key issues in the answer above.

\n
a.
\n
\n

Possible steps include:

\n\n

For Medimatters the recruitment is for customer services possessing IT skills and understanding of medical issues and this should be referred to in order to gain context marks.

\n

Mark as 2+2.

\n

Award [1] for each correct step identified, award [1] for explanation of that step in context.

\n

Non-contextual answers award a maximum of [2] in total.

\n
b.
\n
\n

Cost to make:

\n

(1000 x 25) + 20 000 = $45 000 alternatively $45 each

\n

Cost to buy: 1000 x 50 = $50 000 alternatively $50 each

\n

Award [1] for $45 000 (or $45), [1] mark for $50 000 (or $50) whether or not
there is working.

\n

Alternatively award [2] for $95 000 whether or not there is workings (in the
question “and” could be interpreted as “add them together”).

\n

Do not attempt to award method marks. Don’t penalize for lack of $.

\n

If you see the right answer then reward it, no need to check workings.

\n
c.i.
\n
\n

Award [2] for a comment that indicates some understanding that the difference is small and this means that because they have no experience of ‘making your own’, and the figures are only estimates, they should think very carefully before doing things themselves.

\n

Award [1] for simple statements such as “making is cheaper than buying”.

\n
c.ii.
\n
\n

Evidence in the additional stimulus material suggests he:

\n\n

In addition:

\n\n

It would seem, therefore that:

\n\n

The best style of leadership is likely to be to adjust to circumstances and people ie situational leadership.

\n

There are three aspects to this choice; the nature of the tasks, the nature of his colleagues, his own personal qualities.

\n

Marks should be allocated according to the Paper 1 markbands for May 2016 forward, section B.

\n

Purely theoretical answer or with no effective use of stimulus material in range [3] to [4] with better answers award a maximum of [4].

\n

If only one leadership style is considered award a maximum of [4].

\n

Two or more styles considered with more than one aspect, but limited use of evidence award a maximum of [6].

\n

Two or more styles considered, good use of evidence, particularly from Section B, but limited contrast award a maximum of [8].

\n

For full marks two or more styles contrasted, aspects, evidence, particularly from section B, used effectively.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.i.
\n
\n[N/A]\n
c.ii.
\n
\n[N/A]\n
d.
\n
", "question_id": "16N.1.HL.TZ0.4", "topics": [ "2023-unit-5-operations-management", "2023-unit-2-human-resource-management" ], "subtopics": [ "5-3-lean-production-and-quality-management", "2-1-functions-and-evolution-of-human-resource-management", "5-5-production-planning", "2-3-leadership-and-management" ] }, { "Question": "
\n

Su is considering two options.

\n

Option 1: The joint venture

\n

If AS goes ahead with the joint venture in 2019, there will be consequences it will need to face. DF would have majority ownership in the joint venture, provide most of the senior managers, and is likely to expect changes in the way AS operates. AS would have to significantly increase the production of solar power systems and would have to restructure. Some managers may lose influence over decisions. Su is worried that her Afghanistan project (AS) would take second place.

\n

Having a close working relationship with DF would reduce AS’s risk of failure. Employees at AS have heard rumours about the joint venture and are unhappy with the idea. They fear a loss of identity, being overwhelmed by a much larger organization and possibly losing their jobs. Su is concerned that resistance to change, particularly by employees and managers, is going to be an important consideration in the decision. However she sees the situation as a huge opportunity to make a real change in young people’s lives.

\n

AS would invest $1 million. The net cash inflows to AS (ignoring inflows to DF and before deduction of the investment cost) are forecast to be $0.4 million per year, giving a net present value (NPV) at 6 % discount rate of $0.68 million and a payback of two years and six months. Su gives the project a life of five years.

\n

Option 2: Diversification into biomass

\n

The research and development section of AS has developed a portable electricity generation system based on biomass, a biomas power system (BPS), as an alternative to solar power systems. A new factory costing $3 million will be needed. BPS will be particularly useful to those communities that keep cattle − the dung* produced provides the fuel for BPS. Su has assembled some relevant information.

\n

[Source: © International Baccalaureate Organization 2018]

\n
\n

* dung: animal waste from the cattle

\n

Table 4: Information relevant to the BPS project

\n

\n

[Source: © International Baccalaureate Organization 2018]

\n
\n

Refer to Afghan Sun case study SL/HL P1 May and Nov 2018.

\n

Using the case study, resource and appropriate planning tools, recommend whether Su should choose Option 1, Option 2, or neither. You will find it useful to calculate the ARR for Option 1.

\n
", "Markscheme": "
\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward, section C, available under the \"Your tests\" tab > supplemental resources.
Note – a recommendation that a decision cannot be made due to lack of information (eg, market research) can be regarded as a decision provided the arguments are supported.

\n

Doing nothing:
• No additional investment.
• Successful – no need for change.
• Resistance to change.
• Su can still manage effectively.
• Low risk, but will market become saturated?

\n

But:
• Missed opportunities.
• Will Su be satisfied?
• Businesses will naturally want to grow.
• Loss of motivational opportunity.

\n

Joint venture with DF:
• Big opportunity to have an impact on a wider/larger scale.
• Positive NPV, good ARR, relatively short payback.
• Suits Su’s objectives.
• Risk smaller because of joint venture.

\n

But:
• Could be overwhelmed.
• Restructuring needs.
• Large investment.
• Managers lose influence.
• Demotivating.
• Possible job losses.
• Are investment appraisal results realistic eg, 6% discount rate?

\n

Biomass:
• Smaller investment.
• Retains autonomy.
• Provides a valuable service to wider community.

\n

But:
• Fairly large investment. Source of finance?
• High risk.
• Smaller NPV, ARR, larger payback.

\n

ARR for Option 1:
The calculation is annual net cash flow/investment × 100.
The investment is $1m.
The cash inflow is $0.4m.
The project takes 5 years. The ARR is ((5 × 0.4) − 1) 5/1 × 100 = 20%

\n

Do not penalize candidates who do not consider the 'do nothing' option

\n

Criterion A: possible theories, planning tools and techniques include: Investment appraisal, Management issues such as management of change,, HRM issues such as motivation,, risk (including Ansoff), joint ventures, production problems, force field analysis, the importance of assumptions. Planning tools include those in Section 1.7 of the syllabus plus Ansoff and investment appraisal.

\n

No understanding of investment appraisal max [3]

\n

For [4]: Correct investment appraisal calculation plus at least one other tool, technique or theory understood and developed well with some relevance to the additional stimulus material.

\n

For [2]: some understanding of at least two tools, techniques or theories, but not developed.

\n

Criterion B: the tools, techniques, theories and stimulus applied to the decision. Application will be judged by the use of the stimulus material in particular the extra material especially Table 4.

\n

For [4]: relevant tools, techniques and theories are applied well to the case study (including OFR) context and additional stimulus material, the application is convincing and relevant.

\n

If only one option considered max [3].

\n

Limited use of Table 4 max [3].

\n

For [2]: some limited context/application but not developed. Use of tools limits candidate’s ability to make reasoned arguments.

\n

If a candidate calculates ARR but then does not use it reward can only be made in Criterion A.

\n

Criterion C: Options discussed in a balanced way, conclusions drawn as to whether they work. Remember, ‘do nothing’ can be a recommendation.

\n

For [4]: There needs to be a comparison between the two options using Section C and other material and a recommendation (Option 1, Option 2 or do nothing) made and supported.

\n

For [2]: Only one option considered or some limited arguments but not justified. No comparison limited analysis but candidate arrives/draws a reasoned conclusion.

\n

Criterion D: Structure. This criterion assesses the extent to which the student organizes his or her ideas with clarity, and presents a structured piece of writing comprised of:
• an introduction
• logical structure
• a conclusion
• fit-for-purpose paragraphs. This means: not too long, focused on distinct issues, sequenced well, guides the reader.
• BEWARE OF UNDER_REWARDING WEAK SCRIPTS WHICH, NONETHELESS, HAVE SOME OR ALL OF THE ELEMENTS. The candidate will lose marks in the other criteria so they should not be double-penalized.

\n

For [4]: all four elements present, clearly organized and there is clarity in the student’s answer.

\n

For [2]: No logical structure but other elements present or logical structure with other elements missing.

\n

Criterion E: Stakeholders:
• individuals: Su, individual households
• groups: Managers, employees, customers, communities, governments, NGOs, stakeholders at DF.

\n

For [4]: two or more individuals and groups are considered in a balanced way.

\n

For [2]: one group or individual considered appropriately, or several individuals or groups considered superficially.

\n
", "Examiners report": "
\n[N/A]\n
", "question_id": "18M.1.HL.TZ0.5", "topics": [ "2023-unit-3-finance-and-accounts" ], "subtopics": [ "3-8-investment-appraisal" ] }, { "Question": "
\n

Fishers

\n

Fishers manufactures baseball caps. In 2017, it sold 75 000 caps. The variable cost per cap was $6. 70 % of Fishers’s annual sales occur from April to September. Starting in March, Fishers experiences a significant increase in current assets and current liabilities, which start to decrease in October.

\n

Table 1: Selected data for Fishers for 2017 (figures in $000s)

\n

\n

Table 2: Selected forecasted financial information for Fishers for 2018

\n

\n

Sales price per cap will remain the same as in 2017.

\n

[Source: © International Baccalaureate Organization 2018]

\n

 

\n
\n

Define the term current assets.

\n
[2]
\n
a.
\n
\n

Using Table 1, calculate Fishers’s net profit before interest and tax for 2017 (show all your working).

\n
[2]
\n
b.
\n
\n

Using Table 2, calculate the following forecasted figures for 2018:

\n

sales revenue

\n
[1]
\n
c.i.
\n
\n

Using Table 2, calculate the following forecasted figures for 2018:

\n

total variable costs

\n
[1]
\n
c.ii.
\n
\n

Using Table 2, calculate the following forecasted figures for 2018:

\n

income tax

\n
[1]
\n
c.iii.
\n
\n

Using Table 2, calculate the following forecasted figures for 2018:

\n

net profit after interest and tax.

\n
[1]
\n
c.iv.
\n
\n

Explain why Fishers experiences a significant increase in current assets and current liabilities from March to October.

\n
[2]
\n
d.
\n
", "Markscheme": "
\n

Current assets are items either owned by a business or owed to that business with a life of less than twelve months.

\n

Candidates are not expected to word the definition exactly as above.

\n

N.B. no application required. Do not credit examples on their own, though correct examples can provide reinforcement to answers.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full definition.

\n
a.
\n
\n

Sales revenue − variable costs − fixed costs = net profit before interest and tax
900 000 − (6 × 75 000) − 55 000 = $395 000

\n

To receive [2], candidates must show workings.

\n
b.
\n
\n

$990 000

\n

Accept responses if candidates do not include 000s: $990

\n

Apply OFR where applicable. Candidates are not required to show workings.

\n
c.i.
\n
\n

$577 500

\n

Accept responses if candidates do not include 000s: $577.5

\n

Apply OFR where applicable. Candidates are not required to show workings.

\n
c.ii.
\n
\n

PLEASE NOTE: Income tax is not included in the syllabus for 2024 exams onward (although tax is included in the profit and loss exemplar in the Business Management Guide for first exams 2024).  Related parts of this multi-part question may be used.

\n

$65,500

\n

If a candidate calculates tax before deducting interest expense, award [0]. The answer is incorrect.

\n

Accept responses if candidates do not include 000s: $65.5

\n

Apply OFR where applicable. Candidates are not required to show workings.

\n
c.iii.
\n
\n

PLEASE NOTE: 3.4.2 Net profit after tax is not included in the syllabus for 2024 exams onward. It is now referred to as profit per period for a for profit organization. Related parts of this multi-part question may be used.

\n

$262,000

\n

If a candidate calculates tax before deducting interest expense in question (c)(iii), award [0]. The answer is incorrect. However, if the candidate then produces the answer $256 000 for (c)(iv), award [1] for that question based upon the OFR.

\n

Accept responses if candidates do not include 000s: $262

\n

Apply OFR where applicable. Candidates are not required to show workings.

\n
c.iv.
\n
\n

In anticipation of increased sales during the period April through September, Fishers must increase production starting in March. Thus, it buys more stock, which increases both current assets (stock, which later become debtors) and current liabilities (short-term borrowings and creditors). Fishers maintains this higher volume of trading (and levels of current assets and current liabilities) until sales start to contract in October. In anticipation of lower sales from October through March, the reverse of the process above occurs.

\n

If candidates simply say that the increase is “due to peak sales” (or something very similar), do not award credit.

\n

N.B. Application may be limited or nominal, which is acceptable, provided that the response is relevant.

\n

Award [1] for a basic explanation that conveys partial understanding.

\n

Award [2] for a full explanation that conveys knowledge and understanding similar to the above.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.i.
\n
\n[N/A]\n
c.ii.
\n
\n[N/A]\n
c.iii.
\n
\n[N/A]\n
c.iv.
\n
\n[N/A]\n
d.
\n
", "question_id": "18M.2.SL.TZ0.1", "topics": [ "2023-unit-3-finance-and-accounts", "2024-unit-3-finance-and-accounts" ], "subtopics": [ "3-4-final-accounts", "3-2-costs-and-revenues" ] }, { "Question": "
\n

Refer to Afghan Sun case study SL/HL P1 May and Nov 2018

\n

Describe two advantages for AS of using cellular manufacturing in the production of its solar power systems.

\n
[4]
\n
a.
\n
\n

Refer to Afghan Sun case study SL/HL P1 May and Nov 2018

\n

Explain the advantages for Su of forming AS as a private limited company.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

PLEASE NOTE: Cellular production is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

• Cellular production relies on team work, which helps motivation. Tasks are completed by the team.

\n

• This could help AS achieve its desired high quality, efficient use of resources, reduction of waste.
• Complexity of assembling solar panels which may require teams.

\n

Context includes: AS is based on teamwork (volunteers), good way to empower employees which is what Su wants to do, quality is important to AS.

\n

Accept any other relevant advantage.

\n

Mark as 2 + 2.

\n

Award [1] for each advantage identified, and [1] for the development of each of these advantages in the context of AS, up to a maximum of [2].

\n
a.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental resources.

\n

Advantages:
• Limited liability – the business is fairly high risk so Su may need protection of her personal finances.
• Limited number of shareholders – may be important to retain the high ethical values.
• Difficult to takeover – Su will want to keep this project hers.
• Separate legal entity.
• Able to raise additional finance without losing control.
• Continuity assured.

\n

Context includes:
• Protects Su’s other assets.
• Afghanistan is high risk, incorporation reduces the risks to Su.
• AK Bank may not want to work with an unincorporated business.
• May be easier to arrange finance as shown in cash flow.

\n

Accept any other relevant advantage.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward, section A.

\n

Award a maximum [3] for a theoretical answer.

\n

Award a maximum [4] if only one advantage, in context, is considered.

\n

Award a maximum [5] if the explanation is mainly descriptive, but in context.

\n
b.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
", "question_id": "18M.1.SL.TZ0.3", "topics": [ "2023-unit-5-operations-management", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "5-2-production-methods", "1-2-types-of-organizations" ] }, { "Question": "
\n

Visionary Toys (VT)

\n

Visionary Toys (VT) produces highly innovative toys for children. VT began operation in January 2017 and its unique selling point/proposition (USP) is producing toy parts with a 3D printer. The financial director presented financial information for VT at the end of 2017. He was concerned about VT’s liquidity.

\n

Table 1: Revenue and expense information for the year 2017 and balance sheet items at 31 December 2017

\n

\n

[Source: © International Baccalaureate Organization 2018]

\n
\n

Define the term unique selling point/proposition (USP).

\n
[2]
\n
a.
\n
\n

Construct a fully labelled balance sheet for VT for the end of 2017.

\n
[5]
\n
b.i.
\n
\n

Calculate the acid test (quick) ratio for VT for 2018.

\n
[1]
\n
b.ii.
\n
\n

Explain one way VT could improve its liquidity.

\n
[2]
\n
c.
\n
", "Markscheme": "
\n

A unique selling point is any aspect of the organization, brand or product that enables differentiation in consumers’ minds from the competitors.

\n

N.B. no application required. Do not credit examples.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full definition that conveys knowledge and understanding similar to the answer above.

\n
a.
\n
\n

Balance sheet for VT for the end of 2017:

\n

\n

Accurate presentation refers to the correct heading, sub-heading and to the inclusion of all and only the relevant figures.

\n

Allow OFR.

\n

[0]
The B/S does not reach a standard described below.

\n

[1–2]
The B/S is not accurately constructed, and/or the calculations within and between the various components are not presented or largely incorrect. However, there is limited evidence of a general understanding of the format

\n

[3–4]
The principal elements of the B/S are constructed, but may not be entirely accurate. The calculations under each heading/component/part are largely correct.

\n

Allow up to two mistakes in calculations and/or presentation for [3].
Allow for either one error in calculation or one error in presentation [4].
For an accurately constructed B/S with incorrect calculations, award up to a maximum of [3].

\n

Allow OFR.

\n

For example, if one irrelevant figure that belongs to the P/L account is added, obviously the rest will not match.

\n

[5]
The B/S is accurately constructed in the expected IBO format. All the relevant headings of each component/ parts are used and correctly classified. Do not penalise for internal order of classification. All and only the relevant figures are presented. No extra irrelevant figures that belong to the P/L are included.

\n

Deduct [1] for one omission including the overall heading provided the B/S is accurately balanced.

\n

N.B. If the candidate did not follow the IBO format award up to [3] marks.

\n

 

\n
b.i.
\n
\n

Current assets: $9000
Stock: $4500
Current liabilities: $7 500

\n

Acid test ratio: \n\n\n\n$ \n\n9000\n−\n\n$ \n\n4500\n\n\n\n$ \n\n7500\n\n\n=\n0.6\n

\n

Apply OFR where applicable. Candidates are not required to show workings.

\n

Award [1] for a correct answer.

\n
b.ii.
\n
\n

Ways VT could improve liquidity include:
• attempt to operate with a lower re-order level of stock
• sell fixed assets and lease long-term assets
• pay less in dividends
• raise capital, either more share capital or long-term debt.

\n

Accept any other acceptable and relevant means to improve liquidity.

\n

If a candidate proposes negotiating longer trade terms with VT’s creditors, award [1]. This response is theoretically correct if all of the funds generated by the longer payment terms are used for no other purpose than building cash. Thus, while theoretically correct (the ATR would go up), it is not a particularly useful approach to the problem.

\n

N.B. The question provides no real opportunity for application and thus application is not expected. However, a response must be relevant to receive full marks.

\n
c.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
c.
\n
", "question_id": "18M.2.SL.TZ0.2", "topics": [ "2024-unit-4-marketing", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "4-2-marketing-planning", "3-4-final-accounts", "3-5-profitability-and-liquidity-ratio-analysis" ] }, { "Question": "
\n

With reference to an organization of your choice, examine the impact of globalization on innovation.

\n
", "Markscheme": "
\n

Marks should be allocated according to the Paper 2 markbands for May 2016 forward, section C.

\n

Candidates can use any change in the organization provided the nature of the change is well explained and applied.

\n

It is important that the candidate explain what existed before the change rather than just assert that change has occurred.

\n

In Q7 and Q8, the exact content is not specified. It is expected that the candidates select their content like their chosen strategy or the exact change and fully and clearly explain and apply the relevant theoretical terms and content throughout.

\n

Additional guidance in relation to the assessment criteria

\n

For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be met for that mark to be awarded.

\n

• The highest level descriptors do not imply faultless performance and should be achievable by a candidate.
• A candidate who attains a high level of achievement for one criterion will not necessarily reach high levels of achievement for the other criteria and vice versa.

\n

If only one concept is addressed:
Criteria A, B, C and E: award up to a maximum [3].
Criterion D: full marks can be awarded.

\n

Where the question asks for the impact of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

It is expected that under the introduction, the candidates introduce the chosen organisation, explain nature of the relevant concepts to be use when discussing the impact.

\n


Criterion A

\n

It is expected that the candidate use the relevant concepts throughout the response to demonstrate the understanding of the concept. It is not sufficient just to define/ describe the concept in the introduction.

\n

 

\n

Criterion B

\n

For [2]: “…connection is not developed” should be treated the same as superficial.

\n

 

\n

Criterion C

\n

1+1 arguments are expected per concepts.
• Questions 6 to 8 require consideration of the impact of one concept on a second concept – therefore accept 2+2 arguments for a balanced response.
• Justification is through logic or data.
• For [2] there is no balance as there are no counter arguments at all, or the arguments are all one-sided then this would be unjustified.
• For [3] there is some balanced arguments – some of which are justified.

\n

The arguments and the counter arguments must be relevant/ appropriate for the question. Do not accept any counter argument which does not address the question.

\n

 

\n

Criterion D

\n

• Introductions need to be concise and related to the question.
• The candidate’s response does not to have explicit headings for each structural element.
• A body is the area in which the substance of arguments occur. It is usually located between the introduction and the conclusion.
• Fit-for-purpose paragraph means that ideas are presented in a clear academic way. For example, one idea per paragraph.

\n

 

\n

Criterion E

\n

• One example of an “individual” could be an individual consumer or an individual manager. However this could not be considered with a “group” of consumers or a management team.
• For [4], a balanced response: need to look at the perspectives of both individual and group(s). The chosen individual, group needs to be applicable and relevant to the question with specific explanation.
• Candidates need to go beyond stating the stakeholder.
• Candidates need not explicitly say “stakeholder”.
• Candidates should support their assertions on the impact on or the impact of their chosen stakeholders. The support does not have to come in real figures but with some evidence of impact for example, ‘the market share increased’ ‘staff turnover decreased’, ‘fewer defects were evident’.

\n

 

\n

In the event that, when answering paper 2, section C, a candidate chooses an organization from some other part of the exam (for example, an organization in the stimulus of section B), their response should be marked as follows:

\n

A – 1 mark maximum, as the candidate might understand the essence of the two concepts but the content selected is irrelevant
B – 0 marks, as there is no connection to a real organization.
C – 0 marks, as statements cannot be even superficial as the statements are not about a real organization.
D – 2 marks maximum. Even with technically perfect presentation, the ideas are not about a real organization. Award [2] if the response is well written with an introduction, fit-for-purpose paragraphs, and a conclusion. Award [1] mark if the essay is missing one of those elements, provided that the response is otherwise of a reasonable standard of writing and organization.
E – 1 mark, for inappropriate consideration of stakeholders. Award [1] if a candidate demonstrates some understanding of what a stakeholder is through either definition or exemplification.

\n
", "Examiners report": "", "question_id": "17M.2.SL.TZ0.6", "topics": [], "subtopics": [] }, { "Question": "
\n

Adventures for All (A4A)

\n

Tama Toki founded Adventures for All (A4A), which owns four adventure parks employing 342 people. The parks offer adventure activities such as high wire and mountain biking. A4A’s target market is teenagers and adults. A4A’s mission statement is “safety and affordability at A4A are the most important reasons for a great time for all”.

\n

\n

A4A uses predatory pricing. Its competitors are theme parks and adventure centres. However, social trends are
changing. Many teenagers prefer social networking rather than adventure activities. A4A’s sales revenue and profits are falling.

\n

Tama discussed with senior managers two possible growth strategies:

\n

Option 1. Through extensive promotion, attract children and adults with disabilities and access requirements to the parks. This approach would require specialized training for existing staff. No modifications to the parks would be required.

\n

Option 2. Offer corporate team-building activities. A4A would develop specially designed programmes for senior leadership teams to spend three days in newly built conference centres located at the parks. Corporate teams would engage in adventure activities together and then discuss strategic options for their organizations.

\n

Option 2 could be highly profitable. A4A could charge high prices for these programmes. However, some of Tama’s senior managers argued that A4A should continue to provide “adventures for all” and not just to a group of highly paid senior leadership teams.

\n

The two options created major disagreements. Two senior managers, working with Tama since the creation of A4A, threatened to resign if Option 2 was implemented. Two other senior managers argued that without Option 2 many jobs at A4A were under threat.

\n
\n

Define the term target market.

\n
[2]
\n
a.
\n
\n

Explain two roles of A4A’s mission statement.

\n
[4]
\n
b.
\n
\n

Explain one advantage and one disadvantage for A4A of using a predatory pricing strategy.

\n
[4]
\n
c.
\n
\n

Using the Ansoff matrix, evaluate the two possible growth strategies for A4A.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

A target market is defined as a group of consumers with similar needs and wants/characteristics (demographic) that a business decides to focus on in terms of its operations and/or marketing. A4A’s target market for its adventure parks has been families.

\n

Candidates are not expected to word their definition exactly as above.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full, clear definition that conveys knowledge and understanding similar to the answer above.

\n

Award [0] if the candidate writes “target market is when an organization targets a particular part of a market”. Or a similar answer where the candidate repeats the question using the same terminology in the answer.

\n

Do not credit an example.

\n
a.
\n
\n

A mission statement is a way of communicating to its stakeholders the current purpose of a business, what the organisation is for. It is clear from the mission statement that A4A exists to provide great adventures for teenagers and adults which are safe and affordable.

\n

It can be used to guide current objectives. For A4A, the mission is to provide fun, safe and affordable adventures hence predatory pricing is being used.

\n

A mission statement can provide a sense of purpose and direction and act as a motivational force for employees. It is stated that many of the managers are long serving ones who have been at A4A with Tama since its creation. Moreover, employees’ motivation is important for any provision of any service especially when teenagers are the recipient of the service.

\n

The mission statement could also act as an incentive to encourage ethical external sources of finance by investors who are motivated by A4A’s objective (or mission) to provide adventures for all. A4A may be able to raise finance for the implementation of its chosen option particularly option 2 which has a capital spending requirement.

\n

Accept any other relevant explanation.

\n

Mark as a 2+2.

\n

Award [1] for each role identified and an additional [1] for development with application to A4A. Award a maximum of [2] per role.

\n

[2] cannot be awarded per role if the response lacks either explanation and / or application.

\n

For example:
For an identification or a description of a role with or without application [1].
For explanation of role with no application [1].
For explanation of a role and application [2].

\n
b.
\n
\n

Predatory pricing (also undercutting. Some textbooks may refer to destroyer pricing which is illegal and anticompetitive) is a pricing method where a product or service is set at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors.

\n

Predatory pricing has the advantage for A4A as a competitive tool given that its target market is teenagers and adults who we assume would be price sensitive given that there are other competing forms of adventure activity entertainment. Therefore A4A is trying to get rid of the competitors by using this pricing strategy.

\n

“Affordable” pricing is enshrined in its current mission statement and predatory pricing thus also deemed to be appropriate and ethical. A reference to competitors should be accepted as application as there is not much more info in the case about the competitors.

\n

However for disadvantages:

\n\n

Accept any other relevant explanation.

\n

Mark as a 2+2.

\n

Award [1] for an appropriate advantage/disadvantage identified and an additional [1] for development of the explanation illustrating the appropriateness of predatory pricing with respect to A4A. Award a maximum of [2].

\n

[2] cannot be awarded per advantage/disadvantage if the response lacks either explanation and / or application.

\n

For example:
For an identification/description of an advantage/ disadvantage with or without application [1].
For explanation of an advantage/ disadvantage with no application [1].
For explanation of an advantage/ disadvantage and application [2].

\n
c.
\n
\n

The two possible growth strategies are linked to two cells of the Ansoff matrix.

\n

Catering for children and adults with disabilities and access requirements could be considered as market development as there is a new market to be catered for with an existing product (A4A’s current facilities).

\n

The corporate team building market, which would require A4A creating a new product to cater for a new target market could be referred to as diversification.

\n

The Ansoff matrix would highlight that the latter diversification option would be the riskiest given the lack of familiarity and experience in servicing the corporate senior leadership team market.

\n

The first growth strategy is likely to be cheaper and quicker for A4A to organize. It is assumed that no modification will be required as opposed to the diversification strategy. There will possibly be additional health and safety concerns given that the market development strategy is focusing on children and adults with disabilities and
access requirements. A4A might have to adapt the facilities after all hence more costs than currently are expected. Moreover, additional training costs will be necessary but one may judge this extra cost as short term only and relatively minor. This option is classified as a medium-risk strategy on the Ansoff matrix, as A4A is not familiar with the market only but very familiar and experienced with the product. This risk can be reduced by training and accumulated experience hence this argument can be judged as of lower significance.

\n

The mission of A4A need not be damaged and might even be improved. A4A will be able to dispose of its predatory pricing strategy, which is risky as there will be none or fewer competitors. One may argue that A4A cannot continue with its predatory pricing for long due to losses if sold below production costs or due to government
intervention. Still, a different higher pricing strategy might deter the clients.

\n

However, staff training across all four centres will be an important consideration in both options but especially in this market development given that safety is part of A4A’s mission. Tama will need to ensure that he has clear guidelines in place to run this service for children and adults with disabilities and access requirements. As said above, this is likely to increase costs.

\n

Profit growth may be small and there are issues of sustainability for the whole of A4A’s workforce if this market development strategy is not successful as highlighted by two of the senior managers.

\n

The second growth strategy, diversification, is riskier, as A4A will not be familiar with the product/service and the market. The expected profitability of the second option will protect all 342 jobs across the 4 centres and therefore assumes greater significance than the market development option. Set up costs are likely to be higher given that A4A is moving into a higher valued/priced niche market, but higher prices and thus revenues should compensate. The new pricing method is likely to be more sustainable in the long run than predatory pricing that might end soon when A4A starts to make a loss or is sued by competitors/attracts government intervention. This new pricing method may confuse some potential customers given A4A’s mission and knowledge of A4A’s predatory pricing strategy. Still, organisations that pay for corporate team building activities are unlikely to expect predatory prices. Hence, this argument can be judged as rather insignificant.

The significant costs of building the centre should also not be overlooked. This can put enormous financial strain on A4A especially in the short term. However, given the pricing strategy above and the new positioning, A4A can become profitable in the medium to longer term.

\n

The second option, diversification, also damages A4A’s mission statement, as some senior managers think so. Resentment is already growing and Tama can ill afford conflict at a difficult financial time especially as long serving managers with experience are the ones who seem to be the most concerned. Tama’s loyalty to his senior staff will be tested and he may have to make some managerial changes if this resentment grows and if the diversification option is selected.

\n

It is expected that candidates provide a conclusion and a final judgment that is substantiated. For example: on balance, the second growth strategy is recommended despite the higher level of risk.

\n

Accept any other relevant evaluation.

\n

For the top markband, candidates must apply the Ansoff matrix correctly to their
discussion.

\n

Do not penalize if the matrix is not drawn provided it is well explained/ used.

\n

If the Ansoff strategic options are not used or not used correctly but the response
covers some relevant and balanced arguments for each option award up to [4] even
if evaluation is evident.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

If a candidate evaluates / addresses only one growth strategy, award a maximum of [5].

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "16N.2.HL.TZ0.4", "topics": [ "2023-unit-4-marketing", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "4-2-marketing-planning-(including-introduction-to-the-four-ps)", "1-3-organizational-objectives", "4-5-the-four-ps-(product-price-promotion-place)" ] }, { "Question": "
\n

With reference to an organization of your choice, discuss the ways in which culture can promote or inhibit change.

\n
", "Markscheme": "
\n

Marks should be allocated according to the Paper 2 markbands for May 2016 forward, section C.

\n

Candidates can use any change in the organization provided the nature of the change is well explained and applied.

\n

It is important that the candidate explain what existed before the change rather than just assert that change has occurred.

\n

In Q7 and Q8, the exact content is not specified. It is expected that the candidates select their content like their chosen strategy or the exact change and fully and clearly explain and apply the relevant theoretical terms and content throughout.

\n

Additional guidance in relation to the assessment criteria

\n

For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be met for that mark to be awarded.

\n

• The highest level descriptors do not imply faultless performance and should be achievable by a candidate.
• A candidate who attains a high level of achievement for one criterion will not necessarily reach high levels of achievement for the other criteria and vice versa.

\n

If only one concept is addressed:
Criteria A, B, C and E: award up to a maximum [3].
Criterion D: full marks can be awarded.

\n

Where the question asks for the impact of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

It is expected that under the introduction, the candidates introduce the chosen organisation, explain nature of the relevant concepts to be use when discussing the impact.

\n


Criterion A

\n

It is expected that the candidate use the relevant concepts throughout the response to demonstrate the understanding of the concept. It is not sufficient just to define/ describe the concept in the introduction.

\n

 

\n

Criterion B

\n

For [2]: “…connection is not developed” should be treated the same as superficial.

\n

 

\n

Criterion C

\n

1+1 arguments are expected per concepts.
• Questions 6 to 8 require consideration of the impact of one concept on a second concept – therefore accept 2+2 arguments for a balanced response.
• Justification is through logic or data.
• For [2] there is no balance as there are no counter arguments at all, or the arguments are all one-sided then this would be unjustified.
• For [3] there is some balanced arguments – some of which are justified.

\n

The arguments and the counter arguments must be relevant/ appropriate for the question. Do not accept any counter argument which does not address the question.

\n

 

\n

Criterion D

\n

• Introductions need to be concise and related to the question.
• The candidate’s response does not to have explicit headings for each structural element.
• A body is the area in which the substance of arguments occur. It is usually located between the introduction and the conclusion.
• Fit-for-purpose paragraph means that ideas are presented in a clear academic way. For example, one idea per paragraph.

\n

 

\n

Criterion E

\n

• One example of an “individual” could be an individual consumer or an individual manager. However this could not be considered with a “group” of consumers or a management team.
• For [4], a balanced response: need to look at the perspectives of both individual and group(s). The chosen individual, group needs to be applicable and relevant to the question with specific explanation.
• Candidates need to go beyond stating the stakeholder.
• Candidates need not explicitly say “stakeholder”.
• Candidates should support their assertions on the impact on or the impact of their chosen stakeholders. The support does not have to come in real figures but with some evidence of impact for example, ‘the market share increased’ ‘staff turnover decreased’, ‘fewer defects were evident’.

\n

 

\n

In the event that, when answering paper 2, section C, a candidate chooses an organization from some other part of the exam (for example, an organization in the stimulus of section B), their response should be marked as follows:

\n

A – 1 mark maximum, as the candidate might understand the essence of the two concepts but the content selected is irrelevant
B – 0 marks, as there is no connection to a real organization.
C – 0 marks, as statements cannot be even superficial as the statements are not about a real organization.
D – 2 marks maximum. Even with technically perfect presentation, the ideas are not about a real organization. Award [2] if the response is well written with an introduction, fit-for-purpose paragraphs, and a conclusion. Award [1] mark if the essay is missing one of those elements, provided that the response is otherwise of a reasonable standard of writing and organization.
E – 1 mark, for inappropriate consideration of stakeholders. Award [1] if a candidate demonstrates some understanding of what a stakeholder is through either definition or exemplification.

\n
", "Examiners report": "", "question_id": "17M.2.SL.TZ0.8", "topics": [], "subtopics": [] }, { "Question": "
\n

It is now mid-2019. Production of solar power systems has been going for over a year. Sales have exceeded forecasts and reached 5000 systems for the year. All profits have been reinvested into developing a portable biomass source of electricity* (PBS) as an alternative to solar power systems.

\n

The PBS technology is now fully developed and tested. Su has data to help her decide whether to go into production. The new production facility will cost $1 million.

\n

The costs and the price of the product once production has begun are estimated in Table 3.

\n

Table 3: Estimated cost and price data for PBS

\n

\n

In a separate development, Doorway Foundation (DF), a multibillion-dollar charity established by the owners of one of the world’s largest IT businesses, has approached Su. The foundation has a major IT initiative to bring IT to schools in Afghanistan, Myanmar and Bangladesh. By forming a joint venture, DF could use AS’s expertise and local knowledge to help solve some of the electricity supply and IT problems in Afghanistan. DF would have majority ownership in the joint venture, provide most of the senior managers, and is likely to expect changes in the way AS operates. AS would have to significantly increase the production of solar power systems and would have to restructure. Some managers may lose influence over decisions. Su is worried that her Afghanistan project (AS) would take second place. However, she sees this as a huge opportunity to make a real change in young people’s lives.

\n

[Source: © International Baccalaureate Organization 2018]

\n
\n

* portable biomass source of electricity: a means of generating electricity using the heat obtained from burning plant material and/or animal waste

\n
\n

Refer to Afghan Sun case study SL/HL P1 May and Nov 2018.

\n

Define two characteristics of a charity.

\n
[2]
\n
a.
\n
\n

Refer to Afghan Sun case study SL/HL P1 May and Nov 2018.

\n

Using the information in Table 3, calculate the break-even output for portable biomass sources of electricity (show all your working).

\n
[2]
\n
b.i.
\n
\n

Refer to Afghan Sun case study SL/HL P1 May and Nov 2018.

\n

Comment on the usefulness to AS of break-even analysis.

\n
[6]
\n
b.ii.
\n
\n

Refer to Afghan Sun case study SL/HL P1 May and Nov 2018.

\n

Recommend whether AS should enter into a joint venture with DF.

\n
[10]
\n
c.
\n
", "Markscheme": "
\n

PLEASE NOTE: The term charityis not included in the syllabus for 2024 exams onward. The question could be adapted for use with 1.2.4 Non governmental organizations. There will be no future questions however on charities.

\n

• A charity usually performs useful social/environmental functions.
• Charities usually have a tax advantage.
• Charities usually do not seek to make a profit.

\n

Candidates are not expected to word their answer exactly as above.

\n

Award [1] for each characteristic identified.

\n
a.
\n
\n

\n\nB/E\n\n=\n\n\n\nFC\n\n\n\n\nprice\n\n−\n\nunit variable cost\n\n\n\n=\n\n\n\n$ \n\n200\n\n000\n\n\n\n$ \n\n90\n−\n\n$ \n\n70\n\n\n=\n\n\n\n$ \n\n200\n\n000\n\n\n\n$ \n\n20\n\n\n

\n

= 10 000 PBS

\n

Award [2] for 10 000 units per year.
Award [1] if either no units or no working.

\n
b.i.
\n
\n

• It gives a minimum target for sales. Is 10 000 PBS per year (OFR) achievable?
• It is useful for “what if”.
• It could help in setting prices.
• It could help in production planning.
• However, is the data realistic?
• Will all units be sold?

\n

Award a maximum of [4] for a theoretical answer.

\n
b.ii.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental resources.

\n

Factors in favour:
• Fits in with Su’s need to make the world a better place – it offers a real opportunity to save lives.
• A nice fit with DF’s project.
• Increased world profile for AS.
• Opportunities for changes in jobs for employees/managers.
• Opportunity to expand and restructure.
• A form of diversification.
• Further benefits to more communities in Afghanistan.

\n

However:
• Managers would not like the changes – smaller span of control, less empowerment.
• Possible production problems – diseconomies of scale?
• Dangers of growing too quickly.
• Afghan project comes second?
• AS would have to change the way it operates.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward, section B.

\n

If discussion is one-sided award a maximum of [5].

\n

Both sides considered, good use of evidence, particularly from section B, but no effective recommendation contrast award a maximum of [8].

\n

For full marks a fully supported recommendation with good use of evidence, particularly from section B.

\n
c.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
c.
\n
", "question_id": "18M.1.SL.TZ0.4", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "1-2-types-of-organizations", "3-3-break-even-analysis", "1-6-growth-and-evolution" ] }, { "Question": "
\n

Six months has passed and Medimatters is now ready to launch IBAT. Medimatters will recruit new staff to set up a customer services department. Ahmed has spent some time thinking about the people he would need to recruit. The staff would need to possess IT skills and an understanding of medical issues.

\n

The manufacturer Falit found in India has produced the first batch of 1000 IBAT lenses. Unfortunately, the IBAT lenses were delivered later than expected and some were faulty. As a result, the group is considering whether to make or buy the IBAT lenses. Ahmed has suggested setting up a manufacturing facility using lean production. His calculations are as follows:

\n\n

Ahmed considered his role as leader.

\n\n
\n

The group are considering two target markets.

\n

Option 1: enter the Asian market

\n

Emma strongly prefers this option. She recently presented IBAT at a medical conference in Asia. Great interest was shown and some attendees wanted to purchase samples at the conference. However, sales in Asia are not possible, because IBAT has not yet met regulatory quality standards there.

\n

Falit also prefers this option because significant economies of scale could be gained. He also fears that other businesses will launch a similar product in Asia. The costs of entering the market would be relatively small for Medimatters. A suitable medical equipment wholesaler who could market and distribute the product operates in the region.

\n

Ahmed and Didi are concerned. Quality issues with the lens manufacturer in India are worrying and should be resolved. They would like market research to be conducted to assess the suitability of Asian, as well as European and American, markets.

\n

Option 2: continue to sell in Brazil

\n

Didi favours this option. Always cautious, he thinks that current difficulties should be resolved before further expansion. He forecasts a reasonable first-year profit – far more than most new businesses. Ahmed likes the fact that he would not have to take on any additional workload or travel across the world: he is already struggling to manage his responsibilities. Carlo prefers this option because he wants to avoid the problems of growing too quickly, because many overambitious new businesses fail.

\n

In preparation for the next group meeting, a decision tree showing both options has been produced.

\n

\n

Using the case study and the additional information in this question, recommend whether Medimatters should implement option 1 or option 2.

\n

You will find it useful to calculate the predicted outcome for option 2 in the decision tree.

\n

Refer to case study: Medimatters

\n
", "Markscheme": "
\n

Option 1:

\n\n

However:

\n\n

Predicted outcome from decision tree is $40 000 compared to $19 000 for option 2, however, much higher risk of failure, much smaller chance of great success. How reliable is data in the tree?

\n

Option 2:

\n\n

However:

\n\n

Other reasoned arguments relevant to the situation accepted.

\n

Decision largely hinges on Medimatters’ attitude to risk. Either decision is rewardable if
effectively argued.

\n

Marks should be allocated according to the assessment criteria in paper 1 markbands May 2016 forward, section C.

\n

Note – a recommendation that a decision cannot be made due to lack of information (eg market research) can be regarded as a decision provided the arguments are supported.

\n

If there are simple errors in calculating the predicted outcomes, they should be OFR in subsequent discussion but 4+3 for A and B, e.g. $29k.

Criterion A: possible theories, management tools and techniques include: decision trees and predicted outcomes, risk, diversification/market development/ penetration (Ansoff), joint ventures, strategic decision making, stakeholders, marketing issues, economies of scale. HRM issues can also apply.

\n

No understanding of decision trees max [3].

\n

For [4]: Decision tree plus at least one other tool, technique and theory understood and developed well with some relevance to the additional stimulus material.

\n

For [2]: Some understanding of at least two tools, techniques or theories, but not developed.

\n

Criterion B: the tools, techniques, theories and stimulus applied to the decision. Application will be judged by the use of the stimulus material in particular the extra material especially the decision tree.

\n

For [4]: Relevant tools, techniques and theories are applied well to the case study context and additional stimulus material, the application is convincing and relevant.

\n

If only one option considered max [3].

\n

If no effective use of decision tree max [3].

\n

For [2]: Some limited context/application but not developed. Use of tools limits candidate’s ability to make reasoned arguments.

\n

If a candidate calculates predicted values for the decision tree but then does not use them reward only in Criterion A.

\n

Criterion C: Options discussed in balanced way, conclusions drawn as to whether they
work.

\n

For [4]: There needs to be a comparison between the two options using the Section C and other material and a recommendation made.

\n

For [2]: Only one option considered or some limited arguments but not justified. No comparison limited analysis but candidate arrives/draws a reasoned conclusion.

\n

Criterion D: Structure
This criterion assesses the extent to which the student organizes his or her ideas with
clarity, and presents a structured piece of writing comprised of:

\n\n

For [4]: All four elements present, clearly organized.

\n

For [2]: No logical structure but other elements present or logical structure with other elements missing.

Criterion E: Stakeholders: Individuals: each team member, individual doctors. Groups: The team, other business (wholesalers, manufacturers), customers (doctors, the general public), the Asian conference, government.

\n

For [4]: Two or more individuals and groups are considered in a balanced way.

\n

For [2]: One group or individual considered appropriately, or several individuals or groups considered superficially.

\n
", "Examiners report": "
\n[N/A]\n
", "question_id": "16N.1.HL.TZ0.5", "topics": [ "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "1-7-organizational-planning-tools" ] }, { "Question": "
\n

Thorns Hill (TH)

\n

Thorns Hill (TH) is a hotel. Its mission statement is “to provide the highest standard of customer service and to be the best employer”. TH has three profit centres, each with its own manager:

\n\n

The function room offers entertainment facilities and purchases catering from the hotel restaurant. The function room employees are mostly students working in their spare time. They have flexible contracts that do not guarantee hours of work nor provide benefits such as paid sick leave or holidays.

\n

The use of flexible contracts has reduced the function room’s annual wage cost by 40 % over the last five years. The de-layering of supervisory posts (positions) has further reduced the cost of wages. With these cost savings, the profits of the function room have increased significantly. Recently, issues with punctuality, absenteeism and labour turnover increased.

\n

30 % of the restaurant’s sales revenue comes from catering for the function room. The restaurant recently won an award and, in the summer season, is always full of diners. In summer the restaurant has difficulty meeting the catering demands of the function room. Meals ordered often arrive late from the restaurant.

\n

Competition in the market for function rooms is high. The owners are considering a proposal to improve the reputation of the function room by outsourcing all the services of the function room to a private contractor. The private contractor will charge TH more than the direct cost of the function room.

\n
\n

Define the term de-layering.

\n
[2]
\n
a.
\n
\n

Explain two advantages for TH of having three separate profit centres.

\n
[4]
\n
b.
\n
\n

Explain one benefit and one negative consequence for TH of an increase in labour turnover.

\n
[4]
\n
c.
\n
\n

Discuss the proposal to outsource all function room services to a private contractor.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

De-layering is the action of removing a level in a business hierarchy in order to reduce the size of a business hierarchy, especially in terms of a reduction in management. This creates a flatter (less layered) organizational structure.

\n

Candidates are not expected to word their definition exactly as above

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full, clear definition that conveys knowledge and understanding similar to the answer above. Candidates need to refer to the action/decision of…not necessarily mentioning the word action but “removing”, or “moving”.

\n

Do not credit an example.

\n
a.
\n
\n

A profit centre is run as a separate business centre within a business which generates revenue and costs that can be attributed to the activities of the centre hence profit can be calculated. For example, in this case, the function room buys meals from the hotel restaurant. The capacity of the function room may be limited in terms of revenue hence the management can concentrate on costs reduction to increase profit. It gives the function room the flexibility to make a decision and outsource their costs somewhere else which in turn, is likely to encourage the
restaurant to stay more competitive.

\n

The real advantage is that senior management, the centre managers and employees know which segments/centres/ activity/ parts of TH are profitable and which are not. In addition, the directors are able to evaluate which centre contributes most to the business’s profits and this helps to inform decision-making.

\n

By using profit centres it makes the managers of each profit centre more responsible and accountable for the costs they incur and the sales they make – their positions in the business may be dependent on making a profit. Changes in the profits made by each centre may be used to judge the efficiency of each part of the hotel. Also, the
efficiency of all parts of the hotel can be monitored and compared. Creative competition may increase efficiency and act as a driver to generate more revenue which may act as a motivator.

\n

Senior management could easily realize that a decision in the past to delay and offer flexible contracts clearly reduced costs and improved profitability of the function rooms. Hence, financially an effective decision. Moreover, the impact of the recent problems of demotivation are likely to become more evident in the near future when
profitability is likely to decrease.

\n

TH’s mission is to be the best employer and offer the highest quality of customer service. By utilizing profit centres, incentives could be created for managers striving to offer the highest levels of customer service.

\n

Do not accept “spreading the risk”, as the risk is spread by having a larger portfolio not by operating as profit centre.

\n

Accept any other relevant advantage and explanation.

Mark as 2+2.

\n

Award [1] for each correct advantage identified and [1] for a relevant explanation with application to TH. Award up to a maximum of [2] per advantage explained. [2] cannot be awarded per advantage/disadvantage if the response lacks either explanation and / or application.

\n

For example:
For an identification/description of an advantage/disadvantage with or without application [1].
For explanation of an advantage/disadvantage with no application [1].
For explanation of an advantage/disadvantage and application [2].

\n
b.
\n
\n

Positive benefits include:

\n\n

Accept any other relevant benefit.

\n

Negative consequences include:

\n\n

All of the extra costs mentioned above will reduce the effects of other cost-cutting measures, such as delayering and the use of flexible contracts.

\n\n

Accept any other relevant consequence.

\n

Mark as 2+2.

\n

Award [1] for a correct benefit / negative consequence identified and [1] for a relevant explanation with application to TH. Award up to a maximum of [2] per benefit / negative consequence explained.

\n

[2] cannot be awarded per benefit /negative consequence if the response lacks either explanation and / or application.

\n

For example:
For an identification/description of a benefit /negative consequence with or without application [1].
For explanation of a benefit /negative consequence with no application [1].
For explanation of benefit /negative consequence and application [2].

\n
c.
\n
\n

Outsourcing is when a business ceases to run a functional area of its business and instead contracts this out to a third party. This third party provides the staff to run these functional areas of the business. They are responsible for recruitment, training and disciplinary matters.

\n

One assumes that TH management will conduct thorough market research in order to find the most suitable outsourcer /subcontractor with a good reputation. The quality of the service can be significantly improved which will outweigh the increase in the direct cost due to the relatively high price that the outsourcer/subcontractor charges. TH is in critical need to improve efficiency and quality.

\n

The function room has been suffering from absenteeism and punctuality problems and this is likely to have reduced the standards of customer care at weddings and conferences. The outsourcer/subcontractor company will ensure it has sufficient staff to provide the correct levels of customer care and the contract between the hotel and the outsourcer would outline the staffing levels that are needed.

\n

TH will no longer need to recruit; train or discipline function room workers and this will cut its indirect costs.

\n

The problems with food being delivered late from the hotel restaurant may be solved as the outsourcer is likely to use its own food supplier.

\n

However the outsourcer /subcontractor will charge more than the direct costs. Still a slight increase in costs might be worthwhile if it results in improved customer care. The outsourcer’s/subcontractor’s employees might not share the hotel’s mission statement? Will customer care improve? Will the outsourced/subcontracted staff embrace the hotel’s philosophy?

\n

The hotel will have to draw up a contract with the outsourcer/subcontractor and it is likely that service standards will be written into this – if the outsourcer/subcontractor fails to meet the standards then the hotel will be able to terminate the contract at short notice. However this would result in even further upheaval for the business with consequences for customer care.

\n

Furthermore, there will be another impact on restaurant sales – currently 30 % of restaurant sales are to the function room – the outsourcer/subcontractor may use its own supplier of meals and if so restaurant sales and profits will fall. Also, if the outsourcer/subcontractor does not provide a good service, it may negatively impact
on the two other profit centres.

\n

The reduced problems with absenteeism and punctuality should improve customer care, but the doubt remains as to whether these staff will feel part of the business and be committed to the hotel’s mission statement. It may lead to an improvement in basic customer care but not to the level that the hotel’s mission statement aspires.

\n

However, there is no guarantee that the current managers will either get jobs with the outsourcer or will want to work for them. This may lead to a period of transition and their knowledge of how the business runs will be lost. The owners might consider that other solutions might be more effective and less risky, such as operating a rewards system that improves attendance and punctuality amongst the lower paid staff.

\n

In conclusion, outsourcing should lead to fewer problems with absenteeism and punctuality as the outsourcer/subcontractor should have sufficient staff to deploy on any given day. It will relieve the hotel of the need to recruit and train staff and this will cut the hotel’s costs. However outsourcing is more expensive than providing the function room “in-house” – whether it is cheaper depends on how much is saved in recruitment and training of function room staff.

\n

Accept any other relevant discussion.

\n

It is expected that candidates provide a conclusion with a substantiated judgment.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

If a candidate evaluates / addresses only one issue, award a maximum of [5].

\n

A balanced response is one that provides at least two arguments for and two arguments against the option.

\n

Candidates may contrast one option with another for a balance as long as at least two arguments are given for each option.

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "16N.2.HL.TZ0.5", "topics": [ "2023-unit-2-human-resource-management", "2023-unit-3-finance-and-accounts", "2023-unit-5-operations-management" ], "subtopics": [ "2-2-organizational-structure", "3-9-budgets", "2-1-functions-and-evolution-of-human-resource-management", "5-4-location" ] }, { "Question": "
\n

Geo Dynamics (GD)

\n

Geo Dynamics (GD) is an engineering company. On 1 January 2016, GD purchased new machinery at a cost of $50000 rather than leasing it. GD’s financial manager researched further information:
• The machinery has a useful life of four years.
• Its residual or scrap value will be $8000.
• The engineering industry uses a 40 % depreciation rate per annum.
• Technology in this industry is changing rapidly.

\n

GD’s financial manager has not yet decided on which depreciation method (such as straight line or reducing/declining balance) to use for the new machinery.

\n
\n

Describe one disadvantage for GD of leasing.

\n
[2]
\n
a.
\n
\n

Calculate the value (also known as net book value) of new machinery at 31 December 2017 using the straight line depreciation method (show all your working).

\n
[2]
\n
b.
\n
\n

Calculate the value (also known as net book value) of new machinery at 31 December 2017 using the reducing/declining balance method, applying the industry depreciation rate of 40% per annum (show all your working).

\n
[4]
\n
c.
\n
\n

Explain one advantage for GD of using the straight line balance depreciation method.

\n
[2]
\n
d.
\n
", "Markscheme": "
\n

One of the disadvantages for GD of leasing rather than buying the machinery is that the machine will not be recorded as part of its fixed assets. Hence, GD will show lower fixed assets on its balance sheet with some financial consequences, like fewer assets being available for collateral.

\n

By leasing, GD will have to pay for the machines throughout the time used but will never own the machines.

\n

Accept any other relevant description.

\n

Application is not expected.

\n

Do not credit examples

\n

Award [1] for identifying an appropriate disadvantage and [1] for an appropriate description up to a maximum of [2].

\n
a.
\n
\n

\n\n\n\nPurchase costs\n\n−\n\nResidual value\n\n\n\n\nLife span\n\n\n\n = Annual depreciation

\n

All figures are in $

\n

\n\n\n50000\n−\n8000\n\n4\n\n = 10500 per year

\n

By the end of 2017, the new machinery will have a book value of 50000 − (10500 × 2 years) = $29000

\n

 

\n

Candidates do not have to present the formula in words as long as the figures are correct.

\n

Award [1] for a correct use of the formula and clear working.
Award [1] for a correct final figure of net book value.

\n

Award a maximum of [1] if the final figures are correct but no working shown.

\n
b.
\n
\n

Net book value using reducing balance method:
Original costs − accumulated depreciation
All figures are in $.

\n

\n

It is expected that the candidates produce for each year a clear working of the depreciation allowance as well as the calculation of the net book. Marks to be awarded for the two stages.

\n

For the end of 2016:
Award [1] for a correct working method and a figure of the depreciation allowance, and [1] for the correct working and figure of the net book value.
Candidates can be awarded the marks even if the terms NBV or depreciation allowance are not explicitly written as long as the calculations are clear
If only a correct figure is presented without working award a maximum of [1].

\n

The exact year or year 1 or year 2 for which the calculations are done should be written for full marks.

\n

For the end of 2017:
Award [1] for a correct working method and a figure of the depreciation allowance and [1] for the correct working and figure of the net book value. Candidates can be awarded the marks even if the terms NBV or depreciation allowance are not explicitly written as long as the calculations are clear
If only a correct figure is presented without working award a maximum of [1].

\n

If the net book value is correct but there is no working/r evidence of the calculation of the depreciation allowance award [1]

\n

Producing a final correct figure of net book value for 2017 using a short cut mathematical formula with a use of graphic calculator is not sufficient for full marks as it is judged as using a one stage approach.

\n

Award [2] If mathematically the candidates arrived at the correct net book value for end of 2017 by using a mathematical formula which is stated/ presented with no interim explicit calculations/ expression of the depreciation allowance or the net book value for 2016.

\n


Allow OFR.

\n
c.
\n
\n

• The straight line method is simpler and therefore easier for GD to calculate and less time consuming. As GD is an engineering company rather than an accounting company as well as new company, perhaps the easier method will be chosen.
• It allows for a constant expense to be accounted for in the profit and loss account. GD’s accountant might want to show a higher profit level to attract more investors. The use of a straight line depreciation method will result in lower expenses compared with reducing balance depreciation allowance. For example, 10,500 as opposed to 20,000 using the reducing balance methods.
• The use of a straight line method will result in the same figure $8000 as estimated as residual value hence make the process easier/ more accurate/ more straightforward for GD’s accountant.

\n

 

\n

Award [1] for an advantage of the straight line method.
Award [1] for some application to GD that goes beyond just mentioning the name GD.

\n
d.
\n
", "Examiners report": "
\n

Most candidates were able to answer this question well. Those candidates awarded 1 mark only listed or outlined a potentially relevant disadvantage but did not describe the disadvantage.

\n
a.
\n
\n

Many candidates produced a clear and correct responses with full working shown. However, a noticeable number of candidates just calculated the depreciation allowance. Some calculated the net book value for 2016 rather than 2017.

\n
b.
\n
\n

Few candidates were awarded full marks. Some candidates produced a clear calculation of both the depreciation allowance and the final net book value for each year. Some candidates who opted for this question did not show all of their working or stopped at 2016. A number of candidates continued beyond the request of the question to stop at 2017 and some candidates had no idea how to use any of the depreciation methods, yet opted for Q2.

\n
c.
\n
\n

A significant number of candidates were not awarded full marks due to not specifically referring to the advantage of the method in relation to GD. Otherwise, most candidates provided a relevant theoretical advantage. Some referred to a disadvantage.

\n
d.
\n
", "question_id": "17M.2.HL.TZ0.2", "topics": [ "2023-unit-3-finance-and-accounts" ], "subtopics": [ "3-1-sources-of-finance", "3-4-final-accounts" ] }, { "Question": "
\n

JVS

\n

JVS is a successful manufacturer of designer clothing. A marketing expert described JVS’s brand name, Izzys, as one of the business’s major strengths. Because of its market orientation approach, JVS spends significantly more on market research than its competitors.

\n

JVS’s products are:
• Izzys, a range of high-quality fashion jeans, which contributes 70 % towards JVS’s revenue and profit. The market for this range is not growing.
• IzzDen, a range of denim jackets, which is near the end of the product life cycle. Manufacturing of this product will cease later this year.

\n

Izzys and IzzDen are sold through high-end independent retailers throughout countries in Europe. JVS uses a price leadership strategy for these two products. Consumers perceive JVS as fashionable. They also believe that JVS’s products are worth the premium price.

\n

JVS is considering launching a new product, a range of fashionable shorts – Izzless – aimed at the 15–19 age group. With this product, JVS would reach a different, but highly competitive, market. Focus groups revealed that many low-income young consumers want to purchase fashion shorts. JVS would sell the new shorts to mass market discount retail stores. Consumers would also be able to order online for next-day delivery.

\n

[Source: © International Baccalaureate Organization 2018]

\n
\n

State two stages of the product life cycle.

\n
[2]
\n
a.
\n
\n

Apply the Boston Consulting Group (BCG) matrix to JVS’s current product portfolio.

\n
[4]
\n
b.
\n
\n

Explain one advantage and one disadvantage for JVS of using focus groups for its market research.

\n
[4]
\n
c.
\n
\n

Recommend whether JVS should launch the new product, Izzless.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Award [1] per stage identified. Acceptable answers are:
• Introduction
• Growth
• Maturity (or Saturation)
• Decline
• Withdrawal.

\n
a.
\n
\n

Award [1] for a basic answer that shows some understanding of the Boston Consulting Group matrix.

\n

Award [2] for an answer that shows a good understanding of the Boston Consulting Group matrix. This may be descriptive or in the form of a drawn diagram.

\n

Award [3] for an answer that shows a good understanding of the Boston Consulting Group matrix and places both of JVS’s products (Izzys and IzzDen) in their correct segments in a BCG matrix or explains their positions. Izzys is a cash cow, IzzDen is a dog.

\n

If a candidate correctly links the products to the BCG matrix but provides no explanation. Award [1] for each correctly linked product up to a maximum of [2].
Example:
Izzy – cash cow
IzzDen – dog
Award [2].
For Izzy – star
IzzDen – dog
Award [1].

\n

If a candidate draws the matrix but does not label the axes but otherwise draws it correctly and correctly links and explains both products to the matrix, award [3]. If a candidate draws the matrix but does not label the axes but otherwise draws it correctly and correctly links one product, award [2].

\n

N.B. Candidates are asked to apply the matrix to JVS’s current product range – do not penalize if a candidate also includes their proposed product (IzzLess) and places this as a question mark (problem child).

\n

Award [4] for an answer that shows a good understanding of the Boston Consulting Group matrix and places both of JVS’s products (Izzys and IzzDen) in their correct segments in a BCG matrix (or explains their positions) AND explains clearly why they are in these segments.

\n
b.
\n
\n

Advantages of focus groups include:
• They can provide detailed information about customer feelings, perceptions and opinions. The introduction of Izzless would represent a risky move by JVS, as the mass-market product could undermine Izzy’s established reputation as “high end”.
• They are cheaper than performing individual interviews. Already, JVS spends more on market research than its competitors. By relying on focus groups rather than individual interviews, JVS can get detailed information at a lower cost than individual interviews.
• They provide opportunities to clarify any issues or problems. The target market of Izzless is 15 to 19-year-olds, many of whom have low incomes. JVS has limited to no experience with this group. Focus groups, which allow for dialogue and back-and-forth, can allow JVS to get a clearer idea of issues and potential obstacles.

\n

Disadvantages of focus groups include:
• They can be hard to control and manage. JVS will probably have two different types of focus groups: its traditional customers and the new 15 to 19-year-old group who would buy Izzless. Especially with the latter group, controlling and managing them could prove challenging.
• the results are difficult to analyse. Focus group feedback can be inconsistent and contradictory, a problem made worse because of the young age of participants.
• Members may not reveal their own feelings but are swayed by the majority view. This potential problem is true of any focus group but is especially heightened for the product Izzless. Teenagers tend to be more swayed by peer pressure than other groups.
• They may not be representative of the target market as a whole. Unless JVS is willing to go to considerable expense to have focus group participants flown in from across its market area (all of Europe), participants are likely to come from a handful of cities, or as few as one or two cities. These participants may not be representative of the whole market.

\n

Accept any other relevant advantage/disadvantage. However, advantages and disadvantages that could apply to any form of market research should not be credited.

\n

Accept any other relevant explanation.

\n

N.B. Just using the name JVS does not constitute application to the stimulus.

\n

Mark as 2 + 2.

\n

Award [1] for each correct advantage/disadvantage identified or described and [1] for a relevant explanation with application to JVS. Award up to a maximum of [2].

\n

Candidates should not be awarded [2] per advantage/disadvantage if the response lacks either explanation or application.

\n
c.
\n
\n

JVS currently only has two products in its portfolio and will cease production of one of them, IzzDen, later this year. A business with just one product puts itself in a dangerous position, as if demand for that product falls the business could faces losses and possibly failure.

\n

The launch of the new product would take the business into a new market targeting low-income young consumers want to purchase fashion shorts. It would also broaden JVS's distribution channels as it would now use mass market retail discount stores and online delivery – at present the business only sells through high end independent retailers. Low-income consumers may relish the chance to buy shorts that have a brand name that is associated with high quality and designer fashion at affordable prices – this may give JVS a competitive edge in this highly competitive market.

\n

However, the move is not without risk. The market is very competitive and JVS’s products may not be able to establish a foothold in the market. There is also the danger that this new product may impact of the sales of their cash cow, Izzys. This down-market product may damage its brand image, which, according to a marketing expert, is one of the business’s major strengths. It would end up with two products aimed at very different markets using premium prices for one product and competitive pricing for the other – this clash of images may not work. Perhaps JVS should consider launching a range of shorts at their current target market and work to its strengths.

\n

Marks should be allocated according to the Paper 2 markbands for May 2016 forward with further guidance below.

\n

A balanced response is one that provides at least two arguments for and two arguments against the option of launching the new range of shorts, Izzless.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "18M.2.SL.TZ0.3", "topics": [ "2023-unit-4-marketing" ], "subtopics": [ "4-5-the-four-ps-(product-price-promotion-place)", "4-4-market-research" ] }, { "Question": "
\n

Healthy Start (HS)

\n

Tom Donat started Healthy Start (HS), a national chain of stores preparing and selling healthy snacks, which are produced in batches. HS’s target market is teenagers and young adults. Tom was concerned about high levels of fast food consumption and youth unemployment. His vision statement for HS is: “To encourage life-long healthy eating habits and to train school leavers (drop outs) in acquiring work skills”.

\n

HS hires many school leavers without qualifications. Because of the valuable social service that HS provides, an independent online media provider will feature HS in a new online reality TV show.

\n

All employees, including managers, start at the lowest level of the organizational hierarchy and train on the job. Job enlargement, job enrichment and intrapreneurship opportunities are available. 20 % of all profits earned are put back into HS to finance these opportunities. Staff turnover is lower than the industry average.

\n

Competition from global fast food restaurants has intensified. Their economies of scale mean that HS struggles to increase its market share. Online reviews indicate that some customers perceive HS’s snacks as healthy but overpriced and with small-sized portions.

\n

Tom is considering two options:

\n\n

[Source: © International Baccalaureate Organization 2018]

\n
\n

Describe one role of a vision statement for HS. 

\n
[2]
\n
a.
\n
\n

Explain how the following can benefit HS:

\n

job enlargement

\n
[2]
\n
b.i.
\n
\n

Explain how the following can benefit HS:

\n

intrapreneurship.

\n
[2]
\n
b.ii.
\n
\n

Explain two possible economies of scale available to global fast food restaurants but not HS.

\n
[4]
\n
c.
\n
\n

Discuss the two options that Tom is considering for HS in response to the intense competition.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

A vision statement for HS is likely to help the organization set its short-term and long-term objectives. It is likely to act as an important driver for recruitment, selection and motivation of its young unskilled workforce made up of school leavers.

\n

Award [1] for describing one role of a vision statement. Award an additional [1] when candidates apply their response to the stimulus.

\n

N.B. Do not reward responses suggesting that one of the roles of a vision statement is to promote the business.

\n
a.
\n
\n

Job enlargement will increase the range of skills and tasks able to be performed by the school leavers who may lack direct experience of working in a national chain and/or batch production. As recruits will hopefully become future managers, it will be important for effective future leadership in the stores to have experience in all jobs offered by HS.

\n

Award [1] for identification of an appropriate benefit and an additional [1] for an explanation of the benefit and application to the stimulus. Application may not be merely nominal. Be sure that the candidate is explaining the benefit to HS.

\n
b.i.
\n
\n

PLEASE NOTE: Intrapreneurship is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

Intrapreneurship allows for risk taking, creativity and innovation within HS. Given the intense competition from the global fast food restaurants, the opportunity to develop new healthy snacks will be vital to maintain market share.

\n

Award [1] for identification of an appropriate benefit and an additional [1] for an explanation of the benefit and application to the stimulus. Candidates do not have to define what a vision statement is. Rather, they should describe a role. For [2], candidates must also link that role to goals or aims.
Application may not be merely nominal. Be sure that the candidate is explaining the benefit to HS.

\n
b.ii.
\n
\n

Possible economies of scale available to the global fast food restaurants include:

\n

Marketing economies of scale: the global fast food companies are likely through their global reach to experience significant economies of scale in marketing/selling across a whole range of markets. HS is a national chain and will not be able to spread advertising costs, for example, across a whole range of markets. Unit costs of marketing will be much lower for the global restaurants.

\n

Bulk-buying economies of scale: to develop and meet global demand and to fill supply chains, global fast food manufacturers are likely to achieve significant economies through the bulk-purchase of raw ingredients (a number of fast food manufacturers have vertically integrated with suppliers to ensure that logistics are in place). Again, unit costs of operations are likely to be lower than HS’s.

\n

Financial economies of scale: being present in global markets allows global fast food manufacturers to borrow funds for expansion at much lower rates than a national chain. It is indicated in the stimulus that HS finances its training and professional development through retained profits.

\n

Accept any other relevant economy of scale.

\n

N.B. Economies of scale may be without the exact name. For example, “bulk buying discounts” is rewardable.  Candidates do not have to say purchasing economies of scale.

\n

Mark as a 2 + 2.

\n

Award [1] for identification of an appropriate economy of scale and an additional [1] for an explanation and application to the stimulus. Application may not be merely nominal.

\n

Maximum award per economy of scale: [2]

\n
c.
\n
\n

The first option, which is to implement flow production, is likely to lead to an increase in production and productivity because of the new technology and specialized roles. Currently, HS uses batch production. With improved productivity, HS can increase its portion size without raising prices. As a result, HS may be able to compete more effectively with the global fast food manufacturers.

\n

However, the introduction of flow production may result in a reduction in the opportunities for job enrichment and intrapreneurship. If the new production process is going to lead to specific jobs on the production, then apart from job enlargement or rotation, the current employees may become demotivated through a restriction on personal growth and development opportunities. Staff turnover may increase as employees seek more innovative or challenging work. It is likely to be expensive to implement flow production both in terms of the financing and inevitable changes in organizational culture at HS.

\n

The second option may be quicker to organize and much cheaper. The online reality TV show will have established HS firmly in the minds of existing and potential customers. A social media campaign will amplify the brand value of HS and should increase market share.

\n

However, measuring the success of social media on market share will be difficult even though the target market should be familiar with this method of promotion. The biggest factor against this campaign, however, is that as a competitive tool against the global manufacturers there will still be this perceived difference in portion size. A social media campaign will not address this aspect. In fact, there is a danger that negative response to the campaign make reduce market share even further.

\n

Both of the responses have some merit, but it would appear that the first option is the most appropriate to tackle the issue of competition with the global fast food manufacturers. The changes in the production process will take some time to bed in and a few staff may leave to work for other snack food manufacturers who have more dynamic or challenging roles. However, the social media campaign will not close the perceived gap between the products offered by HS and those offered by their competitors and, thus, could backfire.

\n

While the candidates are not expected to recommend an option (the question does not ask them to), they should come to conclusions and judgments (for top marks). Candidates may conclude that either option is better or they may conclude that HS should do both, given that Option 2 would not be very expensive.

\n

\n

Marks should be allocated according to the Paper 2 markbands for May 2016 forward.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "18M.2.SL.TZ0.4", "topics": [ "2023-unit-2-human-resource-management", "2023-unit-1-business-organization-and-environment", "2024-unit-1-introduction-to-business-management" ], "subtopics": [ "2-4-motivation", "1-1-introduction-to-business-management", "1-5-external-environment", "1-5-growth-and-evolution", "1-3-organizational-objectives" ] }, { "Question": "
\n

Valley Gardens (VG)

\n

Valley Gardens (VG) is a large garden retailer that sells flowers, plants, trees and other garden supplies. In 2016, in an attempt to gain market share and increase sales, VG introduced a loss leader pricing strategy for several varieties of trees. The strategy had an impact on both sales and profitability.

\n

Selected financial information for VG, all figures in $000s:

\n

\n
\n

Define the term loss leader pricing strategy.

\n
[2]
\n
a.
\n
\n

Using information from the table, calculate the missing figures V, W, X and Y (no working required).

\n
[4]
\n
b.i.
\n
\n

Using information from the table, calculate the gross profit margin for 2015 and 2016 (no working required).

\n
[2]
\n
b.ii.
\n
\n

Using the quantitative information in the table and your answers to part (b), comment on the impact of a loss leader pricing strategy on VG.

\n
[2]
\n
c.
\n
", "Markscheme": "
\n

A loss leader pricing strategy occurs when a business sells a product or products at a low price, often at a loss, to attract more customers. The approach can increase awareness of the business, lead to sales of other products, and lead to higher market share.

\n

Candidates are not expected to word their definition exactly as above.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding similar to the above answer. The first mark would typically come from conveying the idea that a loss leader pricing strategy involves very low prices.

\n

Award [2] for a full, clear definition that conveys knowledge and understanding similar to the answer above. Candidates should receive a second mark if they convey the idea that the intention of the low prices is some other benefit to the business (awareness, sales of other items, market share, etc).

\n
a.
\n
\n

V: 3500
W: 1500
X: 300
Y: 300

\n

Award [1] for each correct answer V, W, X, and Y up to a maximum of [4].

\n
b.i.
\n
\n

2015: 34.88 %
2016: 31.37 %

\n

Accept 34.9 % for 2015 and 31.4 % for 2016.

\n

N.B. allow candidate own figure rule.

\n

Award [1] for each correct answer (no working required) up to a maximum of [2].

\n
b.ii.
\n
\n

The primary two impacts of the loss leader pricing strategy appears to be (1) an 18.6 % increase in sales revenue, which rose from $4 300 000 in 2015 to $5 100 000 in 2016, and (2) a decrease in the gross profit margin, which fell from 34.88 % in 2015 to 31.37 % in 2016. The net profit before interest and tax remained unchanged. If the intention of the loss leader pricing strategy was to increase sales revenue, the strategy appears to have worked: the low prices on certain items led to increased sales revenue. If it were to increase overall profitability, it did not.

\n

N.B. allow candidate own figure rule.

\n

Award [1] if the candidate links the loss leader strategy to a decrease in gross profit margin. Award an additional [1] if the candidate makes some other relevant comment related to pricing, profits, or profitability. Award up to a maximum of [2].

\n
c.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
c.
\n
", "question_id": "16N.2.SL.TZ0.1", "topics": [ "2023-unit-4-marketing", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "4-5-the-four-ps-(product-price-promotion-place)", "3-4-final-accounts", "3-5-profitability-and-liquidity-ratio-analysis" ] }, { "Question": "
\n

Creative Software Systems (CSS)

\n

Creative Software Systems (CSS), a private limited company, designs custom software packages for public sector organizations. Ebru Aga is the sole shareholder, though she is considering an employee share ownership scheme.

\n

For years, CSS managed its employees closely, setting individual targets for performance and requiring regular progress reports. Following Adams’s equity theory, CSS tied financial rewards to frequently measured performance outcomes. Though managers clearly explained to individual employees how additional financial rewards were linked to specific contributions they made, many employees still felt the system was unfair.

\n

After reading Daniel Pink’s theory of motivation, Ebru reconsidered her management style and CSS’s system of financial rewards. She liked when Pink reported that a major American company allowed employees to work 20 % of their time on projects of their choice. Ebru implemented the following three changes:
• Change 1: Adopting a project-based organizational structure for CSS projects.
• Change 2: Eliminating performance-related pay (PRP).
• Change 3: Allowing employees to spend 20 % of their time on any project they wish, either one of CSS’s or their own “dream project”.

\n

Employees’ reactions were mixed. Some employees were thrilled. They had many ideas of their own that they wanted to explore. Other employees, however, did not like the change. In the 20 % of their time given to any project they wished, they chose to work on projects given to them by CSS. They felt it was unfair. Although they were advancing important projects of the company, they would no longer get performance-related pay (PRP), while others spent their time on projects that might not contribute to CSS’s profitability.

\n

[Source: © International Baccalaureate Organization 2018]

\n
\n

Define the term public sector.

\n
[2]
\n
a.
\n
\n

Explain one advantage and one disadvantage for CSS of introducing an employee share ownership scheme.

\n
[4]
\n
b.
\n
\n

Explain one advantage and one disadvantage for CSS of implementing a projectbased organizational structure (Change 1).

\n
[4]
\n
c.
\n
\n

With reference to Adams’s equity theory and Daniel Pink’s motivation theory, discuss Ebru’s decision to eliminate performance-related pay (PRP) (Change 2) and to allow employees to spend 20 % of their time on any project they wish (Change 3).

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

The public sector involves those areas of the economy that are provided by the government and typically include what is deemed government itself (local, regional, state, national) and the various services provided by government, including education, health care, public transportation, police, fire brigades and other functions.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding or if the candidate merely writes the formula for calculating contribution.

\n

Award [2] for a full, clear definition that conveys knowledge and understanding.

\n
a.
\n
\n

Advantages of introducing an employee share ownership scheme include:
• employees have a greater economic stake in the business and, thus, may be more motivated
• CSS has a means to offer additional compensation to employees that does not increase salary/bonus expenses
• employee share ownership plans usually decrease labour turnover and make it easier to recruit people.

\n

Disadvantages of introducing an employee share ownership scheme include:
• management of CSS, Ebru, will have to answer to shareholders other than herself
• once the plan is in place, it will have administrative and legal costs
• if the business is not publicly traded, valuation of shares may prove difficult.

\n

Accept any other relevant advantage or disadvantage.

\n

Mark as a 2 + 2.

\n

Award [1] for identification of an appropriate advantage/disadvantage and an additional [1] for an explanation and application to the stimulus. Application may not be merely nominal.

\n

Maximum award per advantage/disadvantage: [2]

\n
b.
\n
\n

PLEASE NOTE: Project based organizational structure is not included in the syllabus for 2024 exams onward, but question could be adapted for use with Matrix organization (2.2.1 Different types of organizational structure).

\n

Advantages for CSS of implementing a project-based organizational structure include:
• improved communication between people with different areas of expertise
• sense of teamwork, which can increase motivation.

\n

Disadvantages for CSS of implementing a project-based organizational structure include:
• blurred lines of authority, which may create confusing circumstances for employees
• often, project-based structures are more expensive than traditional structures, as there may be dual levels of management, one on the team and one over groups of teams
• potential for internal conflict within a team.

\n

Accept any other relevant advantage or disadvantage.

\n

Mark as 2 + 2.

\n

Award [1] for identification of an appropriate advantage/disadvantage and an additional [1] for an explanation and application to the stimulus. Application may not be merely nominal.

\n

Maximum award per advantage/disadvantage: [2]

\n
c.
\n
\n

PLEASE NOTE: For 2024 exams onward, 2.4.2. Adams equity theory appears as Equity and Expectancy Theory and is HL only. Daniel Pink's motivation theory is not included in 2024 exams onward.  Related parts of this multi-part question may be used.

\n

 

\n

Adams’s equity theory asserts that employee motivation emerges out of employees’ perceived sense of fairness, both between the employee and the firm and among the employees. With respect to the firm, employees must believe that an equitable relationship exists between their inputs (hours work, effort, etc) and outputs (compensation, benefits, etc). With respect to other employees, an employee must believe that fairness exists: that there is an equitable relationship between the inputs of other employees and their outputs.

\n

Daniel Pink’s theory of motivation rests on the notion of autonomy, mastery, and purpose. Money is not the chief motivator of professional level employees, but rather their desire for autonomy (or near autonomy) in the workplace, their ability to master their profession or skill set, and their sense of doing something with purpose beyond themselves.

\n

The elimination of PRP could affect some employees’ sense of equity. If, before the elimination, employees had considered that an equitable relationship existed between inputs and outputs, they now might think that the relationship is no longer equitable, especially if they continued to work on CSS-assigned projects during their 20 % dream project time. Though elimination of PRP would save CSS money, it may negatively affect the motivation of some employees.

\n

On the other hand, Daniel Pink’s theory helps to explain why some employees like the changes, especially the introduction of the 20 % dream project time. To these employees, money was not the most important consideration, but having the freedom and flexibility to pursue their own ideas. They would have, at least during the 20 % time, autonomy. The time would allow them to strengthen their skill set in areas where they were weak or to work on issues that played to the skills they had already mastered. And, by working on a dream project, they had a greater sense of purpose. Giving employees 20 % of their time to work on whatever they wanted has the potential to be costly in terms of CSS’s core activities. The question is whether it will sufficiently improve employee motivation to make up for the time lost or if it will lead to some valuable new products and services.

\n

Accept any other relevant evaluation.

\n

Marks should be allocated according to the Paper 2 markbands for May 2016 forward with further guidance below.

\n

For one of the two motivation theories that is one-sided, award up to [3]. For more than one relevant motivation theories that is one-sided, award up to a maximum of [4].

\n

If a candidate evaluates / addresses only one motivation theory, award a maximum of [5].

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "18M.2.SL.TZ0.5", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-2-human-resource-management", "2024-unit-2-human-resource-management" ], "subtopics": [ "1-2-types-of-organizations", "2-4-motivation", "2-2-organizational-structure" ] }, { "Question": "
\n

Jill Anderson

\n

Jill Anderson operates a restaurant. Although Jill’s meals are viewed as being excellent quality, sales are slowing. Jill is considering replacing existing meals with gluten-free meals. The following financial and forecast information is for the month of May 2018. Jill’s restaurant can only produce either existing or gluten-free meals.

\n

Table 1: Existing meals

\n

\n

Table 2: Estimated costs and price if Jill produces the gluten-free meals

\n

\n

A local gluten-free manufacturer, which is not part of Jill’s existing supply chain, has offered to supply already prepared gluten-free meals at $8 per meal. Jill is unsure whether to make or buy the gluten-free meals.

\n

[Source: © International Baccalaureate Organization 2018]

\n
\n

Define the term supply chain.

\n
[2]
\n
a.
\n
\n

Calculate:

\n

the total contribution of existing meals sold per month (show all your working).

\n
[2]
\n
b.i.
\n
\n

Calculate:

\n

the total profit or loss on existing meals for May 2018 (show all your working).

\n
[1]
\n
b.ii.
\n
\n

Calculate:

\n

the forecast profit or loss if Jill decides to make and sell gluten-free meals (show all your working).

\n
[2]
\n
b.iii.
\n
\n

Calculate:

\n

the contribution per unit of a gluten-free meal if Jill decides to buy-in the gluten-free meals (show all your working).

\n
[1]
\n
b.iv.
\n
\n

Using your answer from (b) (iii) and (iv), explain whether Jill should buy-in or make the gluten-free meals herself.

\n
[2]
\n
c.
\n
", "Markscheme": "
\n

The term supply chain refers to a system, a process of organising people, activities, information and resources to move a product or service from supplier to customers/end users.

\n

Award [1] if the definition is only partial or considers supply chain as the same as distribution channel.

\n

Award [2] for a definition similar to the one above, which looks as supply chain as the whole mechanism of production from raw material purchase to final delivery.

\n
a.
\n
\n

The contribution per unit of existing meals = $8 − $5 = $3

\n

Number of meals sold = 800

\n

Total contribution of existing meals sold per month = 800 × $3 = $2400

\n

Award [2] for a correct final answer of $2400 with full working.

\n

Award [1] for a correct answer without working.

\n

Do not credit when only contribution per unit is presented as a final answer.

\n
b.i.
\n
\n

TR − TC = profit
$8 × 800 − [$2400 + $5 × 800]
$6400 − [$2400 + 4000]
$6400 − $6400 = 0

\n

Accept any other method of working.

\n

Candidates are not expected to set out their answer in this manner.

\n

Award [1] for a correct answer with working. Candidates do not need to state that Jill is breaking even. (As the question asks for working)

\n
b.ii.
\n
\n

NOTE FOR 2024 EXAMS ONWARD: Break even or Total Contribution calculation is expected with forecast profit. There is no requirement to produce a forecasted profit and loss account.

\n

Contribution = $14 − $10 = $4 per meal
Total contribution = 1200 × $4 = $4800
Total forecast profit = 4800 − (2400 + 400 extra fixed cost for gluten meals)
Total forecast profit = $2000

\n

OR

\n

Profit = TR − TC
Profit = (14 × 1200) − (2800 + (1200 × 10))
Forecast profit = 16800 − 14 800
Forecast profit = $2000

\n

Award [1] if there is one error in calculation, eg forgetting to add the extra fixed cost component, or the correct answer is given but there is no working.

\n

Award [2] for both the correct answer and clear and suitable working.

\n
b.iii.
\n
\n

The contribution per meal if Jill decides to buy-in = $14 − $8 = $6

\n

Award [1] for the correct answer only with working shown.

\n
b.iv.
\n
\n

Buys in:
1200 × $14 − [2400 + 1200 × $8]
$16800 − [2400 + 9600]
$16800 − $12000
4800 profit

\n

Which is $2800 higher than in (iii) - the cost to make with profit of $2000
Candidates do not have to repeat all of the working above if presented in the previous answers especially in (b)(iii).

\n

Or:
Buys in:

\n

12000 × $6 − 2400 (using contribution method)

\n

$16800 − [2400 + 9600]                   $7200 − $2400= $4800 profit

\n

$16800 − $12000

\n

$4800 profit

\n

Which is $2800 higher than the profit of $2000 if she makes them herself in part (iii).

\n

Accept any other method.

\n

Given the nature of the question regarding reference to (b)(iii) and (iv) it is expected that the candidates incorporate references to the change in contribution and or profit

\n

Award [1] for just using the extra contribution to support but without reference to/ or calculation of profit before and after.

\n

Award [1] for a response that mentions some relevant qualitative issues with reference to or comparison with the option to make.

\n

Award [2] for a correct numerical answer with some references to the exact figures of profit before and after.

\n

Do not credit a response that just says that Jill should accept the offer without any calculation or reference to profit or contribution when buying.
Please note:
Some candidate just referred to a fall in fixed cost- not to contribution or profit. Do not award.
Do not credit a response that does not demonstrate some attempt to calculate the option of buying or refer to profit after buying.

\n

Allow OFR

\n
c.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
b.iii.
\n
\n[N/A]\n
b.iv.
\n
\n[N/A]\n
c.
\n
", "question_id": "18M.2.HL.TZ0.2", "topics": [ "2023-unit-3-finance-and-accounts", "2024-unit-5-operations-management", "2023-unit-5-operations-management" ], "subtopics": [ "3-3-break-even-analysis", "5-5-break-even-analysis", "5-5-production-planning" ] }, { "Question": "
\n

With reference to an organization of your choice, examine the impact of globalization on human resources strategy.

\n
", "Markscheme": "
\n

Mark the candidate response using the Paper 2 markbands for May 2016 forward, section C.

\n

N.B. When the question asks for the application of one concept on another, it is still expected that Business Management content will be aligned with the concepts especially the second concept (the one being acted on).

\n

Please note that candidates can conclude that there was a minimal impact, however it has to be based on balanced arguments and evaluation.

\n

Additional guidance in relation to the assessment criteria
For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be met for that mark to be awarded.

\n

• The highest-level descriptors do not imply faultless performance and should be achievable by a candidate.
• A candidate who attains a high level of achievement for one criterion will not necessarily reach high levels of achievement for the other criteria and vice versa.

\n

If only one concept is addressed:
• Criteria A, B, C and E: award up to a maximum [3].
• Criterion D: full marks can be awarded.

\n

Where the question asks for impacts of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

Criterion B
For [1]: “…connection is inappropriate” – ignore superficial.
For [2]: “…connection is not developed” should be treated the same as superficial.

\n

Criterion C
1 + 1 arguments are expected per concepts.
• Questions 6 and 7 require consideration of the impact of one concept on a second concept – therefore accept 2 + 2 arguments for a balanced response.
• Justification is through logic or data.
• For [2] there is no balance as there are no counter arguments at all, or the arguments are all one-sided then this would be unjustified.
• For [3] there are some balanced arguments – some of which are justified.

\n

Criterion D
• Introductions need to be concise and related to the question.
• The candidate’s response does not to have explicit headings for each structural element.
• A body is the area in which the substance of arguments occurs. It is usually located between the introduction and the conclusion.
• Fit-for-purpose paragraph means that ideas are presented in a clear academic way. For example, one idea per paragraph.

\n

Criterion E
• One example of an “individual” could be an individual consumer or an individual manager. However, this cannot be considered with a “group” of consumers or a management team.
• For [4], a balanced response: look at the perspectives of both individual and group(s).
• The chosen individual, group needs to be applicable and relevant to the question with specific explanation.
• Candidates need to go beyond stating the stakeholder.

\n

Candidates need not explicitly say “stakeholder”.
If a candidate chooses an organization from another part of the exam (for example, an organization in the stimulus of section B), their response should be marked as follows:

\n

Criterion A – Award a maximum of [1], as the candidate might understand the essence of the two concepts but the content selected is irrelevant as the organisation is fictitious but the candidate may display some understanding of the concepts.

\n

Criterion B – Award [0], as there is no connection to a real organization.

\n

Criterion C – Award a maximum of [1]. The arguments cannot be relevant and justified as the organisation is fictitious.

\n

Criterion D – Mark as normal.

\n

Criterion E –Award [0]. The individual and/or group perspective(s) cannot be relevant if the organisation is fictitious.

\n

Specific comments

\n

Accept application to human resource strategy. Do not accept operations strategy.

\n
", "Examiners report": "", "question_id": "18M.2.SL.TZ0.6", "topics": [], "subtopics": [] }, { "Question": "
\n

Piper Industrial (PI)

\n

Piper Industrial (PI) manufactures pipe. The company is highly profitable and its corporate tax rate is 20 %. PI is forecasting major capital expenditure for 2019.

\n

Table 1: Selected forecast financial information for the year ending 31 December 2019

\n

\n

Table 2: Annual cash flow forecast for the year ending 31 December 2019

\n

\n
\n

Define the term capital expenditure.

\n
[2]
\n
a.
\n
\n

(b) Using Table 1, calculate for PI:

\n

(i) gross profit (X);

\n

(ii) tax (Y).

\n

 

\n

(c) Using Table 1 and your calculations in (i) and (ii), construct a profit and loss account for PI.

\n
[4]
\n
b.
\n
\n

Using Table 2, calculate the net cash flow (Z) for PI for 2019 (show all your working).

\n
[2]
\n
d.
\n
\n

Explain the difference between profit and cash flow. 

\n
[2]
\n
e.
\n
", "Markscheme": "
\n

Capital expenditure refers to the purchase by a business of long-term assets (assets that have a useful life longer than one year).

\n

Award [1] mark for partial understanding and knowledge and [2] for a complete definition as the above (though candidates do not have to use the precise wording above).

\n
a.
\n
\n

(b)(i) Gross profit is $10 000 000. Candidate is not required to show workings.

\n

Award [1] for the correct answer.

\n

 

\n

b(ii) Tax is $860 000.

\n

Candidate is not required to show workings. Award [1] for the correct answer.

\n

If a candidate provides NR or some other answer that appears incorrect but then calculates tax correctly in (c), award [1].

\n

 

\n

(c)

\n

If the candidate has some idea what a profit and loss account is, award an additional [1] mark. If the candidate produces a profit and loss account that is correct and conforms to the IB format (as above), award [2].
Maximum award: [2].

\n

N.B. The candidate must follow the IB format. However, be flexible if candidates use slightly different wording, such as “Pre-tax profit” rather than “Net profit before tax,” as long as the correct meaning is conveyed.

\n
b.
\n
\n

Net cash flow is $1 500 000 calculated as follows:
$24 000 000 total receipts
$22 500 000 total payments
$1 500 000 net cash flow

\n

Award [1] for the correct answer and [1] for workings. Accept alternative methods provided they are correct methods.

\n
d.
\n
\n

Profit is typically calculated on an accrual basis (when revenue or expense actually accrues to the business) but does not reflect the actual movement of funds. Cash flow reflects the actual movement of funds – when a business receives payment and makes a payment. Thus, a timing difference can exist between the accrual of a revenue or an expense and the actual receipt of funds.

\n

Award [1] for partial understanding and explanation and [2] marks for a complete understanding and explanation. A candidate does not have actually to use the word accrual, but they must convey understanding of a timing difference between the profit and loss account and the cash flow.

\n

An alternative way that a candidate can earn [2] is by defining profit (revenue minus expenses) and then explaining that cash flow is the movement of funds such as external financing (an inflow) or debt service (an outflow) or some other specific examples of inflows and outflows.

\n
e.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
d.
\n
\n[N/A]\n
e.
\n
", "question_id": "18N.2.SL.TZ0.1", "topics": [ "2023-unit-3-finance-and-accounts" ], "subtopics": [ "3-7-cash-flow", "3-1-sources-of-finance", "3-4-final-accounts" ] }, { "Question": "
\n

Patras Furniture (PF)

\n

Patras Furniture (PF) manufactures chairs. PF uses batch production.

\n

\n

Currently, PF sells 200 chairs per month. Each chair sells at an average price of €100. Below are the forecasted fixed and variable costs for 2019.

\n

Table 1: Fixed costs

\n

\n

Table 2: Variable costs per chair

\n

\n
\n

Define the term batch production.

\n
[2]
\n
a.
\n
\n

Calculate the break-even level of output for PF for 2019 (show all your working).

\n
[2]
\n
b.i.
\n
\n

Construct a fully labelled break-even chart, to scale, for PF for 2019.

\n
[4]
\n
b.ii.
\n
\n

Calculate the forecasted profit if PF sells 2400 chairs in 2019 (show all your working).

\n
[2]
\n
b.iii.
\n
", "Markscheme": "
\n

Batch production involves making a group of identical items together, and each stage of operation is performed on the whole group before it moves on to the next stage.

\n

Candidates are not expected to word their definition exactly as above.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full, clear definition that conveys knowledge and understanding, such as stating that batch production involves a group of identical items made at the same time and then moving on to the next stage together.

\n
a.
\n
\n

Fixed costs: €24 000 + €6000 + €11 000 + €40 000 + €18 000 = €99 000

\n

Contribution: €100 – €50 – €5 = €45

\n

\n\n\n\neuro \n\n99\n\n000\n\n\n\neuro \n\n45\n\n\n = 2200 chairs must be sold to break-even.

\n

Award [1] for working or formula and [1] for the correct answer. Award up to a maximum of [2].

\n
b.i.
\n
\n

\n

Award marks as follows:

\n\n

Award [0] if a candidate produces a table, and award no more than [2] if the chart is not neat, not drawn with a straight-edge, or is not to scale. Ideally, the candidate will draw an arrow pointing to the break-even point and label the arrow. However, accept as an “appropriately labelled” break-even point a vertical line from the x-axis to the break-even point.

\n

 

\n
b.ii.
\n
\n

2400 × €100 = Sales revenue                 €240 000
Less: Variable costs (€50 + €5) × 2400 <€132 000>
Less: Fixed costs                                   <€99 000>
Forecasted profit                                        €9000

\n

Another possible response is:
(2400 − 2200) × 45 = 9000

\n

Reward other acceptable methods of calculating forecasted profit on sales of 2400 chairs.

\n

Award [1] for working or formula and [1] for the correct answer. Award up to a maximum of [2]. 

\n
b.iii.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
b.iii.
\n
", "question_id": "18N.2.SL.TZ0.2", "topics": [ "2023-unit-3-finance-and-accounts", "2023-unit-5-operations-management", "2024-unit-5-operations-management" ], "subtopics": [ "3-3-break-even-analysis", "5-2-production-methods", "5-5-break-even-analysis" ] }, { "Question": "
\n

With reference to an organization of your choice, examine the impact of ethics on organizational change.

\n
", "Markscheme": "
\n

Mark the candidate response using the Paper 2 markbands for May 2016 forward, section C.

\n

N.B. When the question asks for the application of one concept on another, it is still expected that Business Management content will be aligned with the concepts especially the second concept (the one being acted on).

\n

Please note that candidates can conclude that there was a minimal impact, however it has to be based on balanced arguments and evaluation.

\n

Additional guidance in relation to the assessment criteria
For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be met for that mark to be awarded.

\n

• The highest-level descriptors do not imply faultless performance and should be achievable by a candidate.
• A candidate who attains a high level of achievement for one criterion will not necessarily reach high levels of achievement for the other criteria and vice versa.

\n

If only one concept is addressed:
• Criteria A, B, C and E: award up to a maximum [3].
• Criterion D: full marks can be awarded.

\n

Where the question asks for impacts of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

Criterion B
For [1]: “…connection is inappropriate” – ignore superficial.
For [2]: “…connection is not developed” should be treated the same as superficial.

\n

Criterion C
1 + 1 arguments are expected per concepts.
• Questions 6 and 7 require consideration of the impact of one concept on a second concept – therefore accept 2 + 2 arguments for a balanced response.
• Justification is through logic or data.
• For [2] there is no balance as there are no counter arguments at all, or the arguments are all one-sided then this would be unjustified.
• For [3] there are some balanced arguments – some of which are justified.

\n

Criterion D
• Introductions need to be concise and related to the question.
• The candidate’s response does not to have explicit headings for each structural element.
• A body is the area in which the substance of arguments occurs. It is usually located between the introduction and the conclusion.
• Fit-for-purpose paragraph means that ideas are presented in a clear academic way. For example, one idea per paragraph.

\n

Criterion E
• One example of an “individual” could be an individual consumer or an individual manager. However, this cannot be considered with a “group” of consumers or a management team.
• For [4], a balanced response: look at the perspectives of both individual and group(s).
• The chosen individual, group needs to be applicable and relevant to the question with specific explanation.
• Candidates need to go beyond stating the stakeholder.

\n

Candidates need not explicitly say “stakeholder”.
If a candidate chooses an organization from another part of the exam (for example, an organization in the stimulus of section B), their response should be marked as follows:

\n

Criterion A – Award a maximum of [1], as the candidate might understand the essence of the two concepts but the content selected is irrelevant as the organisation is fictitious but the candidate may display some understanding of the concepts.

\n

Criterion B – Award [0], as there is no connection to a real organization.

\n

Criterion C – Award a maximum of [1]. The arguments cannot be relevant and justified as the organisation is fictitious.

\n

Criterion D – Mark as normal.

\n

Criterion E –Award [0]. The individual and/or group perspective(s) cannot be relevant if the organisation is fictitious.

\n

Specific comments

\n

Accept any relevant organizational change including a major change in product strategy. For example, diversifciation.

\n

Do not accept the simple adaptation of products to different cultures etc as organizational change.

\n

Accept a relevant example that may demonstrate that ethics had minimal or no impact therefore organizationl change has not occurred.

\n
", "Examiners report": "", "question_id": "18M.2.SL.TZ0.7", "topics": [], "subtopics": [] }, { "Question": "
\n

Speedy Delivery (SD)

\n

Speedy Delivery (SD) is a private limited company that delivers freshly cooked meals by bicycle. SD only delivers. Restaurants subcontract SD to deliver meals to customers who place orders online and expect quick and efficient delivery. SD has been operating profitably for two years. Currently, it has the highest market share in the city.

\n

SD is now facing two issues:
• It operates at 98 % capacity utilization. Recently, some restaurant owners complained to SD that meals arrived late and cold to customers.
• The market for home delivered, freshly cooked meals is growing quickly and some new delivery companies have just entered the market.

\n

The CEO wants to address the delivery quality issues and the threat of competitors, two of whom recently merged. He is considering an internal growth strategy involving investing in new electric scooters and employing more staff to deliver a greater number of meals more efficiently. SD must raise a large sum of finance. Major shareholders are in disagreement regarding the internal growth strategy.

\n

The financial manager has provided some financial information.

\n

Table 1: Current information

\n

\n

Table 2: Predicted return on the investment

\n

\n

[Source: © International Baccalaureate Organization 2018]

\n
\n

Define the term market share.

\n
[2]
\n
a.
\n
\n

Explain one advantage and one disadvantage for SD of working at almost full capacity utilization.

\n
[4]
\n
b.
\n
\n

Explain one advantage and one disadvantage for SD of using an internal growth strategy.

\n
[4]
\n
c.
\n
\n

Discuss two appropriate sources of finance for SD to purchase the scooters.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Market share can be defined as a percentage of an organization’s total sales revenue in relation to the total market sales revenue within a specific industry.

\n

Accept any other relevant definition.

\n

N.B. no application required. Do not credit examples.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full definition that conveys knowledge and understanding similar to the answer above. A candidate must demonstrate an understanding that the market share is measured as a percentage for [2].

\n

Accept the formula as an indication of percentage.

\n
a.
\n
\n

Referring to the 98% capacity utilization as mentioned in the stimulus should not be treated as application.
Some of the advantages of working at almost full capacity utilization:

\n

• Almost full capacity utilization indicates that there is sufficient demand for SD. All resources are nearly fully utilized, in this case the delivery people, so it is likely that their financial rewards are higher, especially if paid by meals delivered. Even if a fixed salary is paid, high demand at near full capacity utilization may provide opportunities for working overtime.
• Constant work could also increase the motivation of the delivery people due to job security.
• If a fixed salary is paid, SD does not pay its workers for idle time. Better financial management is evident as can be seen by the high 20% GPM.
• Due to satisfying the assumed high demand the profit is likely to increase. See figures presented.

\n

Disadvantages:
• SD flexibility might be reduced if a new organization approaches it to act as a subcontractor. SD will lose out on potential new clients in the currently growing market and growing competition for home delivered, freshly cooked meals.
• The cyclists/delivery people may be overworked and unmotivated. Accidents are more likely to occur when the cyclists are rushed to deliver.
• Quality compromised and SD might lose some contracts, especially as more competitors are entering the markets. There is evidence in the stimulus of some late deliveries, which reduced the quality of the meals delivered.
• The bicycles are more likely to break down, leading to increased costs and further delay of the arrival of the meals to customers. SD will lose many contracts, especially as a stronger competitor is entering the market. SD‘s highest market share/ power will be eroded.

\n

Accept any other relevant and applicable advantage/disadvantage.

\n

Mark as 2 + 2.

\n

Award [1] for identifying or describing the advantage/disadvantage for working at full capacity and a further [1] for a development with respect/ application to SD. Award a maximum of [2].

\n

[2] cannot be awarded per advantage/disadvantage if the response lacks either explanation and/or application.

\n

For example:
• for an identification or a description of an advantage/disadvantage with or without application [1]
• for explanation of an advantage/disadvantage with no application [1]
• for explanation of an advantage/disadvantage and application [2].

\n
b.
\n
\n

Internal growth strategy is proposed. It is expected that candidates describe the nature/meaning of this type of growth where the company grows from within using their own resources and capabilities to expand and grow in size/market share by investing in scooters and employing more staff to deliver the meals.

\n

Advantages:
• The management of SD will have full control of the process of growth in terms of speed, priorities and the amount of capital spent. As the stimulus outlines a large amount of finance is needed and the management could decide on the number of scooters etc. There will be no need for consultation and discussion with another organization be it through merger/takeover, joint venture or strategic alliance. Therefore, SD can react quickly to the current problem of late deliveries.
• It appears that SD is a successful company given the profit margins and perhaps operating within a successful organizational culture. SD will not lose its independence and/or culture. Nor will it experience any cultural clashes with the management and employees of a different organisation. Less change management is required/ less disruption to SD.
• Internal growth is likely to be cheaper than the external growth option of takeover. However, the stimulus outlines that a lot of capital has to be raised, so this option is theoretical rather than applicable. Nevertheless, the 6% return on the investment in scooters is relatively high and the investment is profitable.
• The proposed internal growth strategy will make the working life of the staff easier and more efficient. Motivation is likely to increase.

\n

Disadvantages:
• This method of growth is considerably slower compared to external growth. SD might not be able to compete with the newly merged competitors who are likely to be stronger. SD is likely to struggle against the new competitor and lose its current market leader position. SD will not be able to take immediate advantage of the growing market as the CEO plans.
• Some shareholders are against this option perhaps due to a large sum of finance being required. Shareholders tends to expect short term, quick results/dividends and are likely to block the proposal. The proposed option is against the current trend of consolidation. SD might not be able to compete with the newly created powerful competitor.

\n

Please note that while some text books may say that internal growth is cheaper, there is an indication in the stimulus that this particular option may pose a financial challenge to SD. Options such as a strategic alliance or franchising could be cheaper.

\n

Accept any other relevant/applicable advantage / disadvantage.

\n

Mark as 2 + 2.

\n

Award [1] for identifying or describing the advantage / disadvantage of internal growth and a further [1] for a development with respect to SD. Award a maximum of [2].

\n

[2] cannot be awarded per advantage / disadvantage if the response lacks either explanation and/or application.

\n

For example:
• for an identification or a description of an advantage / disadvantage with or without application [1]
• for explanation of an advantage / disadvantage with no application [1]
• for explanation of an advantage / disadvantage and application [2].

\n
c.
\n
\n

Some of the possible sources of finance:

\n

Issuing more shares – as a private limited company, SD can definitely issue more shares. Currently, SD is highly geared = 65 % so the option of shares might be an appropriate one, especially if the banks will not offer finance. Issuing shares will not require any payback of the loans and will not subject SD to vulnerability of interest rate fluctuations. GPM (20%)/NPM (9 %)are healthy in this industry, so dividends are likely to be paid. The payback is relatively short and the ARR is quite high / reasonable. If the current shareholders buy extra shares, ownership will not be diluted; if other friends and family buy the shares, the current shareholders’ control might be diluted and they may raise objections. However, the current shareholders still control who buys the shares. Control will be not lost.

\n

Going public (IPO) – an expensive and very time consuming source of finance that may not be judged as suitable for SD as a quick reaction to the competitors is needed. However, SD can raise a significant amount of finance needed to purchase the scooters which is much needed as stated in the stimulus. Ownership may be diluted with a risk of losing control.
However, a very low current ratio of 0.9 indicates liquidity problems which might deter investors.

\n

Long term bank loans – If agreed, the money can be given quickly / quicker than issuing shares, this is a very significant advantage for SD given the urgent need for action. However, the banks will be worried about SD being highly geared with its current obligation to pay interest as well as to pay back the loan. Moreover, given the low current ratio, it is likely that the bank’s financial manager will refuse the loan due to liquidity problems. Also, SD does not manage its short term liquidly- see debtors and creditors hence the bank may be worried of insolvency.

\n

Leasing the scooters – could provide a good solution for SD. The scooters can be leased quickly and maintained by the leased company. This fits the managers’ objectives of a quick response. SD will pay a relatively small amount every month, which mitigates the problem of raising a large sum pf money. However, while, if bought, the scooters will become SD fixed assets after 3.2 years (payback), if leased, they will never be SD’s. Still, one may judge this issue as less significant as the need for a quick reaction is vital

\n

Venture capitalists/business angel – As SD is highly geared, coupled with the likelihood that the banks refuse a loan, the use of the above might seem highly suitable especially if there is potential to make a quick /significant profit as seen given the GPM 20% and NPM 9 %. However, venture capitalists/business angels might be reluctant to join SD due to the merger between competitors and some discord with shareholders re: the methods of growth.
However, a very low current ratio of 0.9 indicates liquidity problems which might deter investors.

\n

Accept different arguments for the above option if fully justified.

\n

Using retained profit - SD is profitable. GPM is 20 % and NPM is 4%. While we do not know the industry norm, one may judge this option as highly suitable as SD will not be subject to fluctuating interest rates and repayments. It is also likely that being Ltd, the shareholders will agree to have less dividends to pursue the strategic option of internal finance.
However, some shareholders might object to this option. Despite the percentage given of the profit margin, it might not be sufficient to generate the large sum of finance required and SD might have to opt for external source of finance.

\n

Sell fixed assets – The main assets are bicycles. Selling these assets can generate some finance. However, it might be judged as a limited source /method to raise finance, as the bikes will not generate the cash needed, if any.
Another possibility is to sell some fixed assets like the office.

\n

Accept different arguments for the above option if fully justified.

\n

Please note:
• Long-term or medium-term sources of finance only should be considered.
• Do not accept some short-term sources of finance such as an overdraft, short term loan or creditors.
• Accept debtors or debt factoring if the candidate comments on their unsuitability given the liquidity problem.
• Accept ‘loan’
• If the candidate wrote ‘short term loan’ instead of just ‘loan’ but the arguments for /against are relevant /applicable give some credit.
• It is expected that the candidates suggest the suitability or otherwise of two different sources of finance. Within the above categories, candidates can suggest any source of finance, including some, which might not be highly appropriate, as long as they evaluate the appropriateness of their chosen sources. Candidates are expected to use the financial information provided as part of their evaluation. Not using any quantitative information reduces the quality of application and makes the response rather generic, therefore award up to 5 marks.
• Candidates should not divert into a solution to some cash-flow problem given the debtor and creditors ratios
• It is not expected that the candidate incorporate all of the above arguments.
• Accept any other relevant issue.
• Accept any other relevant discussion.
• A conclusion with judgment is expected.

\n

A balanced response is one that covers at least one issue/argument for and at least one argument against each option.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forwards with further guidance below.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "18M.2.HL.TZ0.3", "topics": [ "2024-unit-4-marketing", "2023-unit-5-operations-management", "2023-unit-1-business-organization-and-environment", "2024-unit-3-finance-and-accounts" ], "subtopics": [ "4-1-introduction-to-marketing", "5-5-production-planning", "1-6-growth-and-evolution", "3-2-sources-of-finance" ] }, { "Question": "
\n

With reference to an organization of your choice, examine the impact of innovation and culture on an organization.

\n
", "Markscheme": "
\n

Mark the candidate response using the Paper 2 markbands for May 2016 forward, section C.

\n

N.B. When the question asks for the application of one concept on another, it is still expected that Business Management content will be aligned with the concepts especially the second concept (the one being acted on).

\n

Please note that candidates can conclude that there was a minimal impact, however it has to be based on balanced arguments and evaluation.

\n

Additional guidance in relation to the assessment criteria
For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be met for that mark to be awarded.

\n

• The highest-level descriptors do not imply faultless performance and should be achievable by a candidate.
• A candidate who attains a high level of achievement for one criterion will not necessarily reach high levels of achievement for the other criteria and vice versa.

\n

If only one concept is addressed:
• Criteria A, B, C and E: award up to a maximum [3].
• Criterion D: full marks can be awarded.

\n

Where the question asks for impacts of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

Criterion B
For [1]: “…connection is inappropriate” – ignore superficial.
For [2]: “…connection is not developed” should be treated the same as superficial.

\n

Criterion C
1 + 1 arguments are expected per concepts.
• Questions 6 and 7 require consideration of the impact of one concept on a second concept – therefore accept 2 + 2 arguments for a balanced response.
• Justification is through logic or data.
• For [2] there is no balance as there are no counter arguments at all, or the arguments are all one-sided then this would be unjustified.
• For [3] there are some balanced arguments – some of which are justified.

\n

Criterion D
• Introductions need to be concise and related to the question.
• The candidate’s response does not to have explicit headings for each structural element.
• A body is the area in which the substance of arguments occurs. It is usually located between the introduction and the conclusion.
• Fit-for-purpose paragraph means that ideas are presented in a clear academic way. For example, one idea per paragraph.

\n

Criterion E
• One example of an “individual” could be an individual consumer or an individual manager. However, this cannot be considered with a “group” of consumers or a management team.
• For [4], a balanced response: look at the perspectives of both individual and group(s).
• The chosen individual, group needs to be applicable and relevant to the question with specific explanation.
• Candidates need to go beyond stating the stakeholder.

\n

Candidates need not explicitly say “stakeholder”.
If a candidate chooses an organization from another part of the exam (for example, an organization in the stimulus of section B), their response should be marked as follows:

\n

Criterion A – Award a maximum of [1], as the candidate might understand the essence of the two concepts but the content selected is irrelevant as the organisation is fictitious but the candidate may display some understanding of the concepts.

\n

Criterion B – Award [0], as there is no connection to a real organization.

\n

Criterion C – Award a maximum of [1]. The arguments cannot be relevant and justified as the organisation is fictitious.

\n

Criterion D – Mark as normal.

\n

Criterion E –Award [0]. The individual and/or group perspective(s) cannot be relevant if the organisation is fictitious.

\n

Specific comments

\n

Candidates can choose any aspect of the chosen organization. They should introduce the chosen aspects.
Candidates can choose organizational or national cultures or both.

\n
", "Examiners report": "", "question_id": "18M.2.SL.TZ0.8", "topics": [], "subtopics": [] }, { "Question": "
\n

Jacob Strutz (JS)

\n

Jacob Strutz (JS) is an American multinational company that produces jeans. Founded in 1860, for 100 years JS enjoyed steady growth in sales, mostly in the United States and then in Canada and Mexico. In the 1960s and 1970s, when teenagers worldwide began wearing jeans, JS’s sales increased significantly. JS’s premier product is Strutz’s No.5 jeans, one of the best-known brands in the world.

\n

In the late 1970s, JS operated 71 factories in the United States. In 1994, its sales peaked at $7.6 billion worldwide, but then began to decline. In 2002, JS made the decision to close its last remaining factories and outsource manufacturing to foreign manufacturers, whose quality was more difficult to control. By 2017, annual sales were only $4.5 billion. Even sales of Strutz’s No.5 jeans declined, and JS faced intense competition, including foreign competition.

\n

JS briefly experimented with fast fashion, an industry practice developed in the United States in response to cheap, foreign imports. In fast fashion, new design concepts are quickly manufactured once they have been tested at fashion shows. Unfortunately, fast fashion worked against JS’s brand identity. Surveys indicated that JS’s brand has value and inspires loyalty, though focus groups of young consumers did not perceive JS as cool.

\n

JS has been a leader in corporate social responsibility (CSR). Since the 1890s, it has pursued profits through values. More recently, JS introduced Strutz’s chemical-free jeans. Because many of JS’s suppliers operate in areas with few pollution regulations, to remain consistent with its image of CSR, JS is insisting that suppliers follow innovative but expensive chemical-free processes.

\n
\n

Define the term multinational company (MNC).

\n
[2]
\n
a.
\n
\n

Explain the importance to JS of brand value.

\n
[2]
\n
b.i.
\n
\n

Explain the importance to JS of brand loyalty.

\n
[2]
\n
b.ii.
\n
\n

Draw and label a product life cycle for Strutz’s No.5 jeans.

\n
[2]
\n
c.i.
\n
\n

Explain the position of Strutz’s No.5 jeans on the product life cycle.

\n
[2]
\n
c.ii.
\n
\n

Discuss the role and impact of globalization on the growth and evolution of JS.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

A multinational corporation is a company that operates in two or more countries. A multinational company needs to have a base in those countries, not just sell goods and services there.

\n

Award [1] for a partial understanding that conveys some understanding and [2] for a complete response that shows full understanding. Candidates do not have to word exactly as above. If candidates equate being a multinational corporation with being a global organization without any further qualification or explanation, maximum award: [1].

\n
a.
\n
\n

Brand value refers to the premium customers or potential customers are willing to pay for a product compared to the competition. For example, if jeans roughly comparable to Jacob Strutz’s products sell for $10 less, some dollar amount can be specifically attached to the value of the JS brand.

\n

For [2], candidates must define, explain, and apply the concept of brand value to JS. Award [1] for some partial response.

\n
b.i.
\n
\n

Brand loyalty refers to the loyalty that customers attach to a particular brand, whether for repeat purchases of the same product (jeans) or the purchase of new products traded under the brand name (jeans jackets, for example). In the case of JS, it has strong brand loyalty based upon on 100 years of successful marketing. Many customers are loyal to JS even though they could buy other jeans for less or buy jeans that have a certain trendiness now.

\n

For [2], candidates must define, explain, and apply the concept of brand loyalty to JS. Award [1] for some partial response.

\n
b.ii.
\n
\n

\n

Award [1] mark for some idea of the product life cycle. Award [2] if a candidate draws a product life cycle and correctly provides at least four stages. Maximum award: [2].

\n

N.B. If the candidate has not labelled the axes or has incorrectly labelled the axes, maximum award: [1]. Please be flexible if the candidate uses wording slightly different than in the markscheme: sales or revenue rather than sales revenue is fine. However, for the Y-axis, do not accept “market value” or “value of the product” or other wording that suggests some limited understanding but is otherwise inaccurate.

\n
c.i.
\n
\n

JS’s position is in the decline stage of the product life cycle. Despite strong brand loyalty, an ageing baby-boomer population is buying fewer jeans (thus, JS’s sales are down) while, presumably, young people are buying cheaper jeans made outside the US or more “fashionable” jeans made by designers. Regardless, JS’s sales are down considerably from their peak.

\n

For [2], candidates must explain and apply the concept of product life cycle to JS. Award [1] for some partial response.

\n

 

\n
c.ii.
\n
\n

PLEASE NOTE: This content is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

The role and impact of globalization on JS has been considerable and includes:

\n\n

Accept any other relevant point.

\n

In each of these ways, Strutz has been influenced by globalization. Some have been very positive for JS (increased sales for many years and lower costs), and some have taken a toll on JS (foreign competition and pressure for more expensive programmes of CSR).

\n

JS must continue to seek out opportunities and minimize threats from a changing world. Of importance for JS is either to find extension strategies that will makes its core products relevant again in the global market place or find new products to sell under its highly recognized and valued brand.

\n

For a balanced argument, a candidate must have two arguments showing the benefits of globalization and two arguments showing how globalization has posed some challenges. At least one of the arguments for and against can be purely theoretical, while at least one argument for and one argument against must be based upon application to the stimulus. If the candidate does not make judgements on conclusions, maximum award: [6].

\n

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
c.i.
\n
\n[N/A]\n
c.ii.
\n
\n[N/A]\n
d.
\n
", "question_id": "18N.2.SL.TZ0.3", "topics": [ "2024-unit-1-introduction-to-business-management", "2023-unit-4-marketing", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "1-6-multinational-companies-(mncs)", "4-5-the-four-ps-(product-price-promotion-place)", "1-6-growth-and-evolution" ] }, { "Question": "
\n

Taxi-M (TM)

\n

Taxi-M (TM) operates 2500 taxis in a developing country. All drivers are full-time employees and have a professional taxi license. Although not compulsory, TM regularly conducts safety inspections of the taxis. Though safe, most of TM’s taxis are old and TM charges high prices. Many customers complain.

\n

However, a multinational company, RE, with offices around the world, has started to offer a mobile application (app) called Best-Taxi (BT). Using their mobile phones, passengers can use BT to book and pay for a car journey. Any car owner can offer journeys through BT. For security reasons, the BT app registers passengers’ and drivers’ personal details.

\n

TM’s sales are falling and profits are down. A number of TM’s drivers are becoming demotivated. Facing lower incomes, poor management and rumours of redundancies, many loyal drivers have left to offer taxi services using their own cars and the BT app. Some of these drivers are earning considerably higher wages than before.

\n

The situation for TM appeared critical. However, local media have reported a higher rate of road accidents by BT drivers than licensed taxi drivers. Several of its drivers have assaulted and robbed customers. In response, TM’s management decided to downsize and differentiate itself from BT by positioning its service as a high-price, high-quality traditional taxi service. TM will:
• sell older cars and lease new luxury cars
• develop a unique selling point/proposition (USP) emphasizing comfort and safety.

\n

Customers can book taxis by telephone and by stopping them in the street. TM’s target market will be business people, higher income families and passengers concerned about safety.

\n

[Source: © International Baccalaureate Organization 2018]

\n
\n

Define the term redundancy.

\n
[2]
\n
a.
\n
\n

Explain one positive and one negative impact of the multinational company, RE, on the developing country.

\n
[4]
\n
b.
\n
\n

With reference to Maslow’s motivation theory, explain two reasons that some TM drivers left to drive for BT.

\n
[4]
\n
c.
\n
\n

Discuss the new strategy to differentiate TM from BT.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

When the business can no longer afford to employ a worker or the job does no longer exist or is considered necessary hence a person is unemployed. The business is eliminating the role.

\n

N.B. no application required. Do not credit examples.
Candidates are not expected to word their definition exactly as above.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full definition that conveys knowledge and understanding similar to the answer above. Redundancy occurs through no fault of the employee.

\n
a.
\n
\n

Positive impacts on the developing country:
• TM has new competition; consumers will have access to different taxi services, hence more choice at lower prices for the consumers.
• Tax revenue to the government of the developing country from profits made by RE taxi drivers.
• Working opportunities for drivers in the developing country will grow as any person with a car can download the BT app and begin his/her employment. Income will increase, standards of living will improve. Also, for drivers at TM there will be job creation and job security.
• In the future RE, with a possible increase in demand for the BT app may increase capital spending/infrastructure to manage operations. The developing country will benefit from an increase in economic activity.
• Technological transfer – the introduction of the BT app can be used in other industries to improve efficiency.

\n

Negative impacts on the developing country:
• BT’s competition is threatening TM’s market position and even forcing it out of business.
• RE as a multinational company, is probably a powerful company, which makes TM’s survival even more difficult. TM as a local business cannot compete and has started to experience a fall in sales and profit. TM might end up closing and this would lead to increased unemployment in the country which may result in the government intervening to ensure that the political fallout from such a move is minimized.
• RE takes advantage of a lack of compulsory regulation and BT drivers have a higher rate of road accidents as well as safety issues- assaults and robbery.
• Profits from RE could be repatriated to their home country. The financial benefits may be limited- this argument is not really applicable.
• Award [1] for theoretical possibility.
• Accept any other relevant positive/negative impact.

\n

Mark as 2 + 2.

\n

Award [1] for identifying or describing one positive/negative impact for TM and a further [1] for a development with respect to TM. Award a maximum of [2].

\n

[2] cannot be awarded per advantage/disadvantage if the response lacks either explanation and/or application.

\n

For example:
• for an identification or a description of a positive / negative impact with or without application [1]
• for explanation of a positive / negative impact with no application [1]
• for explanation of a positive / negative impact and application [2].

\n
b.
\n
\n

• Maslow’s physical needs refer to the basic physiological requirements of food, water and shelter. As TM drivers’ incomes are falling they may not be able to earn enough money to meet essential needs. Therefore, even the lowest level of needs is not fulfilled hence the drivers are demotivated. They will leave TM for BT as it seems that many drivers are making considerably more money.
• Maslow’s safety needs refer to the needs of security and protection. TM drivers may want to meet safety needs such as job security. TM is experiencing financial problems and there are rumors of redundancies. Uncertainty at TM could force many drivers to quit TM to a more stable position.
• Poor management may lead to a lack of love and belonging on the part of the workers. There is evidence implied by the stimulus of a lack of teamwork and cooperation, as TM’s drivers are effectively self-employed. Therefore, it could argued that TM’s drivers cannot reach the third level- Love and belonging.
• If the candidate does not use Maslow’s exact classification of any need Award [0]
• The inability to fulfil the higher level of needs are not relevant/ applicable in this case.
• Only credit relevant needs based on the stimulus
• Given that only 2 marks are available per need, a full explanation of the Maslow theory/ model is not expected.
Mark as 2 + 2.

\n

For each need:
• for an identification or a description of one relevant Maslow need with or without application [1]
• for explanation of one relevant Maslow need with no application [1] for explanation of one relevant of Maslow needs with and application [2]. Award a maximum of [4] in total.

\n
c.
\n
\n

• TM’s new strategy is to downsize and reposition the company as a high price and high quality traditional taxi service. Customers that are willing and able to pay for a more exclusive service will probably find the service attractive. This will put TM in a different target segment and will enable differentiation form BT.
• Current security and safety problems due to customers being assaulted by BT drivers and the higher rate of road accidents could help TM to develop a unique selling point emphasizing the fact that all TM drivers have professional licenses and cars have regular safety inspections.
• Leasing new luxury cars seems to be a good financial and operational alternative for TM as they won’t need to cash purchase the new vehicles. New luxury cars emphasize TM’s USP regarding comfort and differentiation from BT. Moreover, the taxi can be upgraded and regularly serviced for extra comfort to the newly targeted segment. Furthermore, customers are unlikely to be concerned whether the taxis are leased or not. This issue can be judged as of minimal / no importance. Leasing is cheaper in the short term and might enable TM to stay competitive in terms of quality/ price ratio.
• Technology can be a barrier for many people such as using mobile apps or even smart phones. Many customers, especially the elderly groups will find it simpler to telephone for a taxi instead of using a mobile app.

\n

On the other hand:
• Using a mobile app to book and pay for a taxi service can be difficult for some groups of consumers, the increasing usage of technology and mobile apps shows that BT is very practical for most groups of potential consumers.
• BT as a multinational company is a strong competitor for TM, probably benefitting from managerial and marketing economies of scale. They may also introduce a service offering an exclusive maintenance that will compete with TM´s new market positioning. TM cannot patent their new service. The idea/service is very easy to copy especially by a MNC.
• Leasing is usually an expensive option in the long term as payments will have to be made over the duration of the agreement. However, this point does not impact on differentiation unless TM increases its price and becomes uncompetitive. This is unlikely.
• Accidents could be reduced if BT makes professional driving license a compulsory requirement to become a driver. Getting a professional driving license is not an important barrier of entry for BT. TM’s USP is easy to imitate and could be quickly eroded.

\n

Overall, TM is in a very delicate situation. BT is a strong competitor and threatens TM’s market position. Although the new positioning strategy has several weaknesses it is a viable alternative to try in the short term before BT or other competitors move in. TM may be able to benefit significantly from first mover advantage. Otherwise, survival of the company is at stake.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forwards.

\n

• It is not expected that the candidate incorporate all of the above arguments.
• Accept any other relevant issue.
• Accept any other relevant discussion.
• A conclusion with judgment is expected.

\n

A balanced response is one that covers at least one issue for and at least one argument against each action or the candidates may answer holistically by providing at least two arguments for and two arguments against repositioning.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "18M.2.HL.TZ0.5", "topics": [ "2024-unit-2-human-resource-management", "2023-unit-1-business-organization-and-environment", "2023-unit-2-human-resource-management", "2024-unit-4-marketing" ], "subtopics": [ "2-7-industrial/employee-relations", "1-6-growth-and-evolution", "2-4-motivation", "4-2-marketing-planning" ] }, { "Question": "
\n

AFA was at a critical point. Sam and Finn had not fully resolved their disagreements. They seemed to be constantly arguing but Sam could also see that new issues were emerging. At their most recent meeting in early 2018, Finn provided the following financial information to illustrate the declining trend in gross profit margin.

\n

Table 1: Selected financial information for AFA

\n

\n

In addition, the recruitment of new staff was becoming a problem, as the wages that AFA offered were much lower than fair trade competitors. In a meeting between Sam and Finn, they argued over the best way to financially reward and motivate newly recruited workers, given the lower wages paid by AFA.

\n

Finn argued for a reward system based on fringe payments (perks), as this was being offered by AFA’s main competitors, the supermarkets. Sam countered that AFA should form a cooperative involving all physical stores. He argued that creating a worker cooperative could give all members a sense of community and fulfillment and motivate them so that all members of the cooperative would benefit. There would also be additional stakeholder benefits. Finn argued that a worker cooperative was too difficult to organize and operate and would not solve the problem of recruiting staff.

\n

In the meantime, AFA was continuing to attract a good deal of publicity. Sam had appeared on a national television show about young, innovative entrepreneurs. After the television show ended, one very large international retailer with a strong online presence contacted Sam about the possibility of a takeover. Sam initially refused, but as the details of the takeover became clear he started to seriously consider the opportunity. By selling the business Sam would have enough fresh capital to start new, innovative businesses and make some of his other visions and ideas into reality. In addition to the corporate social responsibility (CSR) AFA was generating, the takeover would give AFA access to other intangible assets. However, the international retailer had indicated that it could not guarantee keeping all existing and newly recruited employees and managers. Finn and Kim were both very worried that Sam would even contemplate the takeover, which they felt was an act of betrayal to all the stakeholders of AFA.

\n
\n

Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).

\n

Define the term intangible asset.

\n
[2]
\n
a.
\n
\n

Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).

\n

Calculate the gross profit margin of AFA for 2016 and 2017.

\n
[2]
\n
b.i.
\n
\n

Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).

\n

Explain one possible reason for the trend in gross profit margin for AFA between 2016 and 2017.

\n
[2]
\n
b.ii.
\n
\n

Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).

\n

Explain one benefit and one cost to AFA of using fringe payments (perks) to financially reward staff. 

\n
[4]
\n
c.
\n
\n

Refer to the As Fair As case study (SL/HL paper 1 Nov 2018) in the supplemental material.

\n

Discuss whether Sam should accept the offer of a takeover.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

An intangible asset is an asset that lacks physical substance and usually is very hard to evaluate, but it can add value to the business. It includes patents, copyrights, franchises, goodwill, trademarks and brand names with links to product positioning of a good or service that a business may offer.

\n

The definition does not need to be worded exactly as above.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full definition that conveys knowledge and understanding similar to the answer above.

\n

NOTE: Some candidates may write their definition in the context of AFA; in such cases, the main examples of intangible assets would be brand image (due to ethical behaviour and CSR leading to competitive advantage, customer loyalty, positive word-of-mouth) and goodwill.

\n
a.
\n
\n

GPM 2016 \n=\n\n\n142\n\n888\n\n\n2\n\n164\n\n486\n\n\n×\n\n\n100\n\n1\n\n=\n 6.6 %

\n

GPM 2017 \n=\n\n\n124\n\n211\n\n\n2\n\n400\n\n625\n\n\n×\n\n\n100\n\n1\n\n=\n 5.17 %

\n

Award [1] for each correct answer which includes the % (percentage) sign.

\n

NOTE: candidates are not asked to show their working. Candidates may round up the results of their calculations for example, 5.1% or 5.2% instead of 5.17%.
 

\n
b.i.
\n
\n

Given that sales revenues have increased, the likely cause of the decrease in gross profit margin is that direct costs have risen faster. There is evidence of diseconomies of scale being experienced by AFA and this calculation backs this up.

\n

Another possible reason is fluctuation/increase of foreign currency exchange rates (as AFA works with “wholesalers that import products from many parts of the globe”, line 46).

\n

Another possible reason is the increase of the cost of goods sold, which could be linked to the fact that price of fair trade goods may fluctuate/increase.

\n

Award [1] for a possible reason for the trend in gross profit margin, with an additional mark for application to AFA.

\n
b.ii.
\n
\n

Example of explanation of a benefit:

\n\n

Example of explanation of a cost:

\n\n

Award [1] for each benefit and cost identified, with an additional [1] per cost/benefit with direct application to AFA.

\n
c.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials. 

\n

There is considerable evidence from the stimulus that Sam and Finn's relationship is on the verge of breaking down. The mystery shopper incident has fuelled suspicion on both sides and a lack of trust and cooperation is evident. It would appear that Sam does not wish to involve himself in the day-to-day running of the business and instead focus on “big picture” thinking. This offer from the international retailer coming at this time would be very tempting. Entrepreneurs such as Sam sometimes do sell a business looking for new opportunities as they may have achieved their own personal goals in setting up a new sustainable business. The goodwill offered by the purchaser would easily allow Sam to put his entrepreneurial qualities to good use in new markets. There is considerable evidence from research that some serial entrepreneurs enjoy setting up new enterprises as an exciting challenge and when the final goal is achieved move on. Sam does seem to be restless and bored easily and the current tensions/conflicts may force his hand.

\n

However, whilst the positive publicity from the reality television show has lifted Sam, it could be easily taken away if the takeover occurs. “Temperton sells out” headlines would not help Sam or AFA and could impact on the brand value of the business. There is also the hypocrisy from Sam (given that he wanted to help internal and external stakeholders in the best way that he could) that the sale of AFA would create. Can he afford to tarnish his image?

\n

Finn and Kip provide the conscientious voice against the sale. AFA is doing well and its position in the market is established. There is, however, still much to do. Why quit now when the actual goal has not been fully achieved?

\n

There is conflict at AFA and this is to be expected. It would be a great shame for all the hard work carried out if Sam were to accept the offer. However, Sam and Finn appear to be drifting apart. Perhaps a change at the top is needed to bring fresh thinking to AFA at a time of expansion as long as Kim and Finn remain loyal to AFA.

\n

Mark according to the paper 1 markbands for May 2016 forward, section B.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "18N.1.SL.TZ0.4", "topics": [ "2024-unit-3-finance-and-accounts", "2023-unit-2-human-resource-management", "2024-unit-2-human-resource-management", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "3-5-profitability-and-liquidity-ratio-analysis", "2-4-motivation", "2-2-organizational-structure", "3-4-final-accounts" ] }, { "Question": "
\n

Sam and Finn are having difficulties resolving their disagreements. Finn was convinced that the problems at AFA should be resolved by a change in the organizational structure. Sam, however, was convinced that he should strengthen the organizational culture. Sam reluctantly accepted the need for greater delegation but insisted that there should be more training for all employees on the culture and ethics of AFA.

\n

As part of greater delegation, Kim was given responsibility for the relationship between AFA and its suppliers. Kim is concerned that she spends a lot of time chasing orders that do not arrive and dealing with the poor quality of orders. Some products have to be thrown away because they have passed their sell-by dates*. Others have to be returned to suppliers because the outlet managers do not accept the poor quality and therefore cannot be sold.

\n

AFA’s stock of fair trade woollen hats has now reached 500, with an annual sales average of around 1250 for the whole business. Kim wants to introduce lean production including total quality management (TQM) throughout AFA’s operations and has created a Gantt chart to show the stages in implementation.

\n

 

\n

Figure 1: Gantt chart for the implementation of lean production including TQM at AFA

\n

 

\n
\n

* sell-by dates: dates printed on the packaging of products that state the date after which the product can no longer be sold.

\n
\n

Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).

\n

State two elements of an organizational culture.

\n
[2]
\n
a.
\n
\n

Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).

\n

(i) Calculate the inventory/stock turnover for woollen hats (show all your working).

\n

(ii) Comment on your result in (b)(i).

\n
[4]
\n
b.
\n
\n

Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).

\n

Explain the usefulness of a Gantt chart to AFA in planning the implementation of a new process.

\n
[4]
\n
c.
\n
\n

Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).

\n

Discuss the value to AFA of lean production methods.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

References could be made to:

\n\n

Where these are shown above as either/or this can only be rewarded as one element eg if both leadership and management are stated this is only one element.

\n

References could be made to power culture, role culture, task culture and person culture.

\n

Elements should relate to internal factors and not external factors such as the culture of the country.

\n

Award [1] for each element to a maximum of [2]. This answer does not need to be in context.

\n
a.
\n
\n

(i) Stocks = 500, annual sales = 1250 so turnover = \n\n\n1250\n\n\n500\n\n\n = 2.5 times a year.

\n

Allow \n\n\n500\n\n\n1250\n\n\n × 365 = 146 days.

\n

Award [2] for a correct answer which must include “2.5 times” or “2.5 times per year” or 146 days.

\n

Award [1] for an attempt (eg calculating days sales in stocks as 146 days, or, making a mistake or no units).

\n

If the [2] mark answer does not appear in (i) but does appear in (ii) then (i) can be rewarded retrospectively – you will have to go back to mark entry for (i).

\n

Do not reward 500 + 1250 or \n\n\n500\n\n\n1250\n\n\n.

\n

 

\n

(ii) Seems very low – is the product seasonal? Is there poor management of stock control?

\n

Use OFR.

\n

Award [1] for a simple statement and [2] if the statement is in context.
Do not reward simply putting the answer into words.

\n
b.
\n
\n

Usefulness includes:

\n\n

Context could also be lean production.

\n

Usefulness could also be considered using shortcomings of Gantt.

\n

An explanation will usually include at least two uses/features of a Gantt chart.

\n

Award [4] for a good explanation using context effectively.

\n

Award [3] for either:

\n\n

Award [2] for an explanation, but no context.

\n

Award [1] for some understanding.

\n
c.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Contextual issues:

\n\n

Aspects of lean production:

\n\n

Might include: Kaizen, total quality management (TQM), cell production, flexible specialisms, simultaneous engineering, JIT and process innovation, such as greater use of IT.

\n

Most likely are JIT, total quality management (TQM), process innovation, Kaizen.

\n

However:

\n\n

Marks should be allocated according to the paper 1 mark bands for May 2016 forward, section B.

\n

Theoretical answer or context limited to naming the business max [4].

\n

One-sided discussion limited to [5].

\n

Both sides considered, good use of evidence, particularly from section B, but no effective conclusion award a maximum of [8].

\n

For [10] the answer needs to be clearly relevant to AFA with good use of context and a clear sense of the value to AFA argued convincingly.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "18N.1.HL.TZ0.4", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-3-finance-and-accounts", "2023-unit-5-operations-management", "2023-unit-2-human-resource-management" ], "subtopics": [ "1-7-organizational-planning-tools", "3-6-efficiency-ratio-analysis", "5-3-lean-production-and-quality-management", "2-5-organizational-(corporate)-culture" ] }, { "Question": "
\n

Sam and Finn are having difficulties resolving their disagreements. Finn was convinced that the problems at AFA should be resolved by a change in the organizational structure. Sam, however, was convinced that he should strengthen the organizational culture. Sam reluctantly accepted the need for greater delegation but insisted that there should be more training for all employees on the culture and ethics of AFA.

\n

As part of greater delegation, Kim was given responsibility for the relationship between AFA and its suppliers. Kim is concerned that she spends a lot of time chasing orders that do not arrive and dealing with the poor quality of orders. Some products have to be thrown away because they have passed their sell-by dates*. Others have to be returned to suppliers because the outlet managers do not accept the poor quality and therefore cannot be sold.

\n

AFA’s stock of fair trade woollen hats has now reached 500, with an annual sales average of around 1250 for the whole business. Kim wants to introduce lean production including total quality management (TQM) throughout AFA’s operations and has created a Gantt chart to show the stages in implementation.

\n

 

\n

Figure 1: Gantt chart for the implementation of lean production including TQM at AFA

\n

 

\n
\n

* sell-by dates: dates printed on the packaging of products that state the date after which the product can no longer be sold.

\n
\n

Sam is still impatient and keen to grow the business. He is becoming increasingly frustrated by problems with suppliers, particularly AB Clothing (ABC). Frequently, orders are late and wrong, and quality is becoming a major problem. Sam has heard rumours of disagreements amongst ABC’s board members and discontent from major shareholders. ABC’s share price has fallen 25 % in the last month. Productivity has fallen and strikes have been threatened. Recently, several press reports linked ABC to using child labour and suggested that the company did not always use organic materials for its products. Sam is wondering whether to take over ABC. He is sure that many of the problems at ABC could be resolved and that ABC would become, once again, a reliable supplier.

\n

Sam has put together some information. Figure 2 relates to AFA and shows a summary of issues and additional information. Tables 1 and 2 provide data on ABC.

\n

Figure 2: Fishbone diagram of the current situation at AFA

\n

\n

Table 1: Accounts for ABC for the years ending 2017 and 2018

\n

\n

Table 2: Selected marketing information for ABC

\n

\n

 

\n
\n

Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).

\n

Using the case study, resources and appropriate business tools, recommend whether AFA should take over ABC.

\n
", "Markscheme": "
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials. 

\n

Arguments for:

\n\n

Arguments against:

\n\n

The decision is likely to hang on the extent to which Sam/AFA can solve ABC’s problems.

\n

Accept any other relevant discussion.

\n

Marks should be awarded according to the paper 1 mark bands for May 2016 forward, section C.

\n

 

\n

Criterion A: possible theories, management tools and techniques include: Accounting techniques and ratios, interpreting data, mergers/takeovers, Fishbone, Boston Matrix, Ansoff, marketing issues, HRM/management issues, SWOT/Force Field/Decision trees (if used with a sense of purpose), the importance of assumptions.

\n

For [4]: Tools, techniques and theory understood and developed well with some relevance to the additional stimulus material.

\n

For [2]: some understanding of at least two tools, techniques or theories, but not developed.

\n

 

\n

Criterion B: the tools, techniques, theories and stimulus applied to the decision. Application will be judged by the use of the stimulus material.

\n

For [4]: relevant tools, techniques and theories are applied well to the case study context and additional stimulus material, the application is convincing and relevant.

\n

Remember, understanding has been rewarded in Criterion A.

\n

For [2]: some limited context/application but not developed. Use of tools limits candidate’s ability to make reasoned arguments.

\n

 

\n

Criterion C: Takeover discussed in balanced way, conclusions drawn and recommendation
made/supported.

\n

For [4]: There needs to be a clear recommendation supported by the data.

\n

For [2]: Some limited arguments but not justified. Or limited analysis (e.g. one-sided argument) but candidate arrives/draws a reasoned conclusion.

\n

 

\n

Criterion D: Structure: This criterion assesses the extent to which the student organizes his or her ideas with clarity, and presents a structured piece of writing comprised of:

\n\n

For [4]: all four elements present, clearly organized.

\n

For [2]: No logical structure but other elements present or logical structure with other elements missing.

\n

 

\n

Criterion E: Stakeholders:

\n\n

For [4] Individual(s) and group(s) are considered in a balanced way. ie needs 1 or more of both individuals and groups

\n

For [2]: one individual or group considered appropriately, or several individuals or groups considered superficially.

\n
", "Examiners report": "
\n[N/A]\n
", "question_id": "18N.1.HL.TZ0.5", "topics": [ "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "1-6-growth-and-evolution" ] }, { "Question": "
\n

Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).

\n

Describe two elements of a marketing plan (line 21) for AFA.

\n
[4]
\n
a.
\n
\n

Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).

\n

With reference to AFA, explain why applying appropriate principles and ethics of accounting practice is important.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

PLEASE NOTE: This content is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used. 

\n

The main elements of a marketing plan are:

\n\n

Context:

\n\n

The two elements can both come from the 4Ps provided they are clearly distinguished.

\n

Do not allow elements from a business plan, eg vision statement, unless they are clearly linked to marketing.

\n

Mark as 2 + 2.

\n

Award [1] for each correct element identified and [1] for a description of how that feature relates to AFA. Award a maximum of [2] per element.

\n
a.
\n
\n

PLEASE NOTE: Principles and ethics of accounting is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Accounting principles and ethics include:

\n\n

Context: in the context of AFA the business is run on ethical and fair trade concepts. Failing in any of the accounting principles and ethics could damage the reputation of the business and AFA could lose sales and customers. Investors will also need reassurance in relation to the ethics of the business. Other stakeholders, such as pressure groups concerned with fair trade, may need to be satisfied.

\n

Discussion of ethics in a wider sense is allowed but [6] can only be achieved if there is some reference to accounting principles.
If ethics are general, and no mention of accounting principles/ethics then maximum award is [3].
If accounting principles only with no reference to ethics/accounting ethics then maximum award is [3].

\n

Be aware that context is difficult, so the same context can be used for the various different principles/ethics.

\n

Accept any other relevant explanation.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.

\n

Award a maximum of [3] for a theoretical answer.

\n

Award a maximum of [5] if the explanation is mainly descriptive, but in context.

\n
b.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
", "question_id": "18N.1.SL.TZ0.1", "topics": [ "2023-unit-4-marketing", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "4-2-marketing-planning-(including-introduction-to-the-four-ps)", "3-4-final-accounts" ] }, { "Question": "
\n

Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).

\n

Describe two external stakeholders of AFA, other than customers.

\n
[4]
\n
a.
\n
\n

Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).

\n

With reference to AFA, explain the importance of branding.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

External stakeholders include:

\n\n

N.B.: Shareholders are NOT external.

\n

Mark as 2 + 2.

\n

Award [1] for each correct element identified and [1] for a description of how that feature relates to AFA. Award a maximum of [2] per element.

\n
a.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

The importance of branding to AFA can be classified in a number of areas:

\n\n

The importance can be developed through:

\n\n

Accept any other relevant explanation.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward, section A.

\n

Award a maximum of [3] for a theoretical answer, often a pre-prepared textbook answer

\n

Award a maximum of [5] if the explanation is mainly descriptive, but in context.

\n
b.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
", "question_id": "18N.1.SL.TZ0.2", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-4-marketing" ], "subtopics": [ "1-4-stakeholders", "4-5-the-four-ps-(product-price-promotion-place)" ] }, { "Question": "
\n

Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).

\n

With reference to AFA, outline one benefit and one cost to Sam of opening a new e-commerce website (lines 51–52).

\n
[4]
\n
a.
\n
\n

Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).

\n

Distinguish between the leadership styles of Sam and Finn.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

PLEASE NOTE: E- commerce is not included in the syllabus for 2024 exams onward.  Related parts of this multi-part question may be used.

\n

Main context: Sam’s vision to operate at a global level. Management issues. Need to reduce costs.

\n

Benefits include:

\n\n

Costs include:

\n\n

N.B. Costs do not include general disadvantages

\n

Mark as 2 (benefits) + 2 (costs)

\n

Award [1] for each correct cost or benefit identified and [1] for a description of how that cost or benefit relates to AFA. Award a maximum of [2] per cost or benefit. There can be no more than one of each (cost or benefit).

\n
a.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

N.B.: Culture is not on the SL guide.

\n

Sam:

\n\n

Finn:

\n\n

Candidate can be rewarded if they argue that the styles are both the same (usually autocratic) provided, they support their argument.

\n

Accept any other relevant explanation.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward, section A.

\n

Award a maximum of [3] for a theoretical answer.

\n

Award a maximum of [3] if only Sam or Finn.

\n

Award a maximum of [5] if the explanation is mainly descriptive, but in context. Eg if both are explained but not distinguished.

\n
b.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
", "question_id": "18N.1.SL.TZ0.3", "topics": [ "2023-unit-4-marketing", "2023-unit-2-human-resource-management" ], "subtopics": [ "4-8-e-commerce", "2-3-leadership-and-management" ] }, { "Question": "
\n

Ace Industries (AI)

\n

Ace Industries (AI) manufactures plastic containers, mostly for the soft and fruit juice industries. The operations management department uses flow production for its standard-sized products and batch production for its customized products.

\n

AI’s sales are growing rapidly. It currently has a 6 % share of the plastic container market. However, it has recently struggled to meet customized orders on time. Some customers have complained about product quality. Currently, AI is organized by region, which allows the company to have strong relationships with customers, who feel that AI knows them and cares about their interests. The human resource department is proposing restructuring the organization by function. Not everyone at AI agrees with this change. Many think that the problems of late delivery and poor quality could be solved through greater delegation.

\n

Lloyd Rinnegrat, Chief Financial Officer, has suggested that AI’s management think more deeply about their rapid growth. Except Lloyd, most people at AI believe that rapidly growing sales are good – that by increasing its market share AI will, in the long run, benefit by being a large organization. However, Lloyd argues that being a small organization has many merits, as shown by the changes in AI’s recent gross profit margins and net profit margins.

\n

Table 1: Selected financial data for AI

\n

\n

The marketing department has predicted that the soft and fruit juice industries are moving away from major mass-produced drinks and toward niche products, such as exotic fruit drinks and speciality beverages for very particular markets.

\n

[Source: © International Baccalaureate Organization 2019]

\n
\n

Outline two features of batch production.

\n
[2]
\n
a.
\n
\n

Draw a possible organizational chart for a manufacturing firm like AI if it is organized by function.

\n
[2]
\n
b.
\n
\n

Calculate the total size of the plastic container market in 2019 (show all your working).

\n
[2]
\n
c.i.
\n
\n

Calculate the difference in AI’s net profit before interest and tax between 2018 and 2019 (show all your working).

\n
[2]
\n
c.ii.
\n
\n

Explain how delegation might help AI improve its delivery times.

\n
[2]
\n
d.
\n
\n

With reference to AI, discuss Lloyd’s view that being a small organization has merits.

\n
[10]
\n
e.
\n
", "Markscheme": "
\n

Features of batch production include:

\n\n

Accept any other relevant feature.

\n

Award [1] for each feature identified up to [2].

\n
a.
\n
\n

\n

The organizational chart does not have to appear exactly as above. Award [1] if the candidate demonstrates some understanding of an organizational chart. Award [2] if the candidate draws an organizational chart that is organized by function and has at least three functional areas labelled (operations, marketing, accounting and finance, HR, etc).

\n
b.
\n
\n

$421 000 000 = 0.06 × (total market size)

\n

\n\n\n421\n \n000\n \n000\n\n0.06\n\n = $7 016 666 666.67

\n

Accept $7 016 666 667

\n

Award [2] for correct answer and workings. Award [1] for correct process but with a mathematical error.

\n
c.i.
\n
\n

PLEASE NOTE: Market size is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

0.08 × 376 000 000 = 30 080 000

\n

0.07 × 421 000 000 = 29 470 000 610 000

\n

The difference between AI’s profit in 2018 and 2019 was −$610 000.

\n

Award [2] for correct answer and working. Award [1] for correct process but with a mathematical error.

\n
c.ii.
\n
\n

PLEASE NOTE: Delegation is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

Delegation occurs when authority and responsibility are passed down the chain of command and subordinates are empowered to make decisions. When properly done, delegation leads to more effective decision making by subordinates, as they now feel the weight and bear the responsibility for their decisions. In the case of AI, if employees who deal with the customers’ orders and manage the operations line had greater authority, they could better align customized sales, which requires some reconfiguration of tooling for each batch, with capacity and availability.

\n

Award [1] for some understanding of delegation and award an additional [1] for an explanation of how delegation could improve delivery time.

\n
d.
\n
\n

Refer to Paper 2 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Advantages of being a small business include:

\n\n

Disadvantages of being a small business include:

\n\n

AI is transitioning into a large organization, but its growth affects the business. AI, for example, is not delivering orders on time, customers are complaining about product quality, and the company is not making the same margins it previously was. Unless AI can specifically pinpoint benefits from higher market share, which presumably explains the rapidly rising sales, the company may want to consider whether its sales growth is worth the problems.

\n

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n
e.
\n
", "Examiners report": "
\n

Many candidates had some understanding but many did not provide two features of batch production.

\n
a.
\n
\n

Many candidates earned full marks on this question and labelled plausible organizational charts.

\n
b.
\n
\n

Many candidates knew how to calculate the total size of the plastic container market.

\n
c.i.
\n
\n

Many candidates did well on this question.

\n
c.ii.
\n
\n

Responses on this question about delegation were surprisingly weak. Many candidates had no idea what delegation was or, if they had some understanding struggled to explain how delegation might improve delivery times.

\n
d.
\n
\n

While many candidates knew some merits and demerits of small organizations, answers tended to be theoretical with limited application to the stimulus.

\n
e.
\n
", "question_id": "19M.2.SL.TZ0.3", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-5-operations-management", "2023-unit-2-human-resource-management", "2023-unit-4-marketing", "2024-unit-3-finance-and-accounts" ], "subtopics": [ "1-6-growth-and-evolution", "5-2-production-methods", "2-2-organizational-structure", "4-1-the-role-of-marketing", "3-5-profitability-and-liquidity-ratio-analysis", "2-4-motivation" ] }, { "Question": "
\n

Willow Enterprises (WE)

\n

Willow Enterprises (WE) was founded in 1989 originally as a small manufacturer of carpeting for high-end commercial and institutional office space. In 1997 the management made several strategic decisions:

\n\n

Because of its appeal to environmentally conscious customers, WE became the regional market leader and, by 2008, was an important carpet manufacturer at a national level.

\n

At this time, Chief Executive Officer Simon Dee decided that WE would adopt a far-reaching programme of corporate social responsibility (CSR). Every year, WE committed more resources to various forms of corporate social responsibility (CSR), such as charitable contributions and fair payments to employees and suppliers. By 2018, WE had diverse revenue streams and a brand identity strongly associated with corporate social responsibility (CSR).

\n

For the last few years, WE’s gross and net profit margins have been falling slightly but steadily. Simon has attributed the declining profitability to diseconomies of scale and one-off (one-time) expenses associated with each takeover. The Chief Financial Officer, Ruth Croft, disagreed. She gave Simon a copy of a 1970 article by the economist Milton Friedman entitled “The Social Responsibility of Business is to increase its Profits”.

\n

[Source: © International Baccalaureate Organization 2019]

\n
\n

Define the term revenue streams.

\n
[2]
\n
a.
\n
\n

Explain one advantage and one disadvantage of WE changing its legal status to a public limited company.

\n
[4]
\n
b.
\n
\n

With reference to WE, distinguish between internal and external growth.

\n
[4]
\n
c.
\n
\n

Discuss whether WE should retain its programme of corporate social responsibility (CSR).

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Revenue streams refer to the different sources of sales revenue that a firm may have. Often, as firms grow, they attempt to diversify revenue streams as a way to find sales growth in saturated markets or as a way to offset risk (if sales revenue from one revenue stream declines, perhaps it can be offset by sales growth in another revenue stream).

\n

Award [1] for a partial answer that conveys some understanding and [2] for a complete response that shows full understanding. Candidates do not have to word exactly as above. Simple exemplification is insufficient for a second mark. There must be some definition or description.

\n
a.
\n
\n

Advantages of changing legal status to a public limited company include:

\n\n

Disadvantages of changing legal status to a public limited company include:

\n\n

Accept any other relevant advantage or disadvantage.

\n

Mark as 2 + 2.

\n

For [2], candidates must identify an advantage or disadvantage, explain it, and apply it to the stimulus.

\n
b.
\n
\n

Internal growth occurs when a business increases sales revenue through expansion of current operations, typically by building more capacity, hiring more sales people, or having more channels of distribution. WE’s growth, up until it decided on a programme of external growth, was always internal and in the carpet industry.

\n

External growth occurs when business grows through some activity related to another business external to the original one. When WE decided to purchase additional companies, it was acquiring revenue streams and operations from other firms, which allowed for rapid growth.

\n

Accept any other relevant advantage or disadvantage.

\n

Mark as 2 + 2.

\n

For [2], candidates must identify an advantage or disadvantage, explain it, and apply it to the stimulus.

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Much debate exists around the question of CSR. Some companies advocate it, arguing that CSR is a way to balance corporate power with corporate responsibility despite the fact that having a programme of CSR increases costs in the short term and that there is no certainty that it will enhance business performance in the long run (though a slight positive correlation appears to exist).

\n

Others argue that a company’s only responsibility, other than obeying the law, is increasing profits for shareholders. CSR makes a company less efficient. If all businesses in an economy are operating at less than optimal efficiency, the economy as a whole will suffer (just as each individual business will).

\n

In the case of WE, the question of CSR is complicated. On the one hand, the brand identity of WE was built first on ecological sustainability and, later, on a full programme of CSR (thus economic and social sustainability as well). To suddenly change focus and adopt a totally profit-oriented mentality, as Milton Friedman argues, could hurt WE’s brand identity in the marketplace.

\n

On the other hand, WE has experienced a steady erosion in margins (and, thus, profitability). Were the company to continue to allow this to occur, in the long run, WE would put itself at risk. Some disagreement internally exists, with the CEO believing the issue is the costs of expansion while the CFO has suggested that it is the costs of CSR.

\n

WE should undertake a full marketing audit to determine the impact of CSR on its brand identity, as well as a thorough financial and managerial costing analysis to determine the true source of declining profitability. Without that investigation, WE will have difficulty knowing whether it should continue with CSR.

\n

For a balanced argument, a candidate must have two arguments for and two arguments against CSR. At least one of the arguments for and against can be purely theoretical, while at least one argument for and one argument against must be based upon application to the stimulus. If the candidate does not make judgments on conclusions, maximum award: [6].

\n

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n
d.
\n
", "Examiners report": "
\n

Many candidates struggled with this question, in part because they did not have a clear idea of what revenue is.

\n
a.
\n
\n

Many candidates knew one advantage and one disadvantage changing legal status, but often they failed to apply their response to the stimulus.

\n
b.
\n
\n

Application to the stimulus was much stronger on this question than with 4 (b).

\n
c.
\n
\n

Candidates often knew many advantages of corporate social responsibility but often knew only one disadvantage, cost. Thus, responses tended not to be fully balanced.

\n
d.
\n
", "question_id": "19M.2.SL.TZ0.4", "topics": [ "2023-unit-3-finance-and-accounts", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "3-2-costs-and-revenues", "1-2-types-of-organizations", "1-6-growth-and-evolution", "1-3-organizational-objectives" ] }, { "Question": "
\n

Copper Health (CH)

\n

Copper Health (CH) was the market leader in the production of anti-venom* vaccines to treat poisonous snake bites. CH’s mission – influenced heavily by corporate social responsibility (CSR) – is to put customers first and profits second in the treatment of snake bites.

\n

Despite 100 000 deaths worldwide each year from snake bites and 400 000 serious injuries, CH recently announced that it will no longer produce anti-venom vaccines. Several large Mexican, Brazilian and Indian pharmaceutical companies have entered the market selling anti-venom vaccines at a much lower price than CH.

\n

A spokesperson for CH said: “We will remain a private limited company where corporate social responsibility (CSR) remains an important driving force for our mission. Our medical research is only financed from retained profit. When the lower-priced competition arrived, our sales and profits of anti-venom vaccines decreased significantly. Treating snakebites no longer makes financial sense. Instead, the technology used to produce anti-venom vaccines will be used to research and develop (R&D) other life-saving vaccines”.

\n

A non-governmental organization (NGO) has demanded action. “CH is the largest manufacturer of anti-venom vaccines in the world. Although CH’s competitors are increasing their production of anti-venom vaccines they will not be able to produce enough to satisfy demand for the next two years. There will be a major shortage. This will result in many life-threatening injuries and deaths.”

\n

The non-governmental organization (NGO) has urged CH to seek new sources of finance to continue the production of the anti-venom vaccine.

\n

[Source: © International Baccalaureate Organization 2019]

\n

 

\n

* anti-venom: a medication made from antibodies that is used to treat venomous bites and stings

\n
\n

Define the term retained profit.

\n
[2]
\n
a.
\n
\n

Explain one advantage and one disadvantage for CH of having a mission statement.

\n
[4]
\n
b.
\n
\n

Explain two possible external sources of finance CH could use to continue production of anti-venom vaccines.

\n
[4]
\n
c.
\n
\n

Discuss CH’s decision to stop producing anti-venom vaccines.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Retained profit is profit that is not given to shareholders in the form of dividends but is held back as part of shareholder equity to provide a source of funds for possible future activities.

\n

Accept any other relevant definition.

\n

N.B. no application required. Do not credit examples.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full definition that conveys knowledge and understanding similar to the answer above. A candidate must demonstrate an understanding that retained profit is part of shareholder equity and that it can be used as a source of funds for possible future business activities.

\n
a.
\n
\n

Advantages for CH of having a mission statement include:

\n\n

Disadvantages include:

\n\n

Accept any other relevant advantage/disadvantage.

\n

Mark as 2 + 2.

\n\n

Application must refer to the issues around CH having a mission statement.

\n
b.
\n
\n

The question is sufficiently broad to allow candidates to explain a range of possible sources of finance, but any candidate who looks at internal organic sources, such as increasing sales/profits, must be not given credit.

\n

Possible external sources include:

\n\n

Accept any other relevant possible source.

\n

Mark as 2 + 2.

\n\n

Application must refer to the possible sources of finance for production of anti-venom vaccines of anti-venom vaccines.

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Answers at the top level will look at the ethical arguments of retaining the production of anti-venom vaccines versus the final implications for doing so.

\n

CH’s mission statement alludes to “putting customers first and profits second”. The decision to stop producing the anti-venom vaccines will be viewed as hypocritical by stakeholders and will lead to a loss of its market leader status. There could be a consumer backlash/boycott, and this will hamper marketing attempts for any new life-saving vaccines. The drop in revenue could be considerable and as a result there may be no profits to finance research and development. The comments from the NGO are unhelpful and will bring increased scrutiny and further unwelcome publicity. Stopping production may damage the economic sustainability of CH to the point where they may cease to exist.

\n

However, the increased competition and wave of price reductions cannot be ignored. We must assume that this new competition has a product that competes with CH on price because, as the market leader, we would assume CH has a certain degree of brand loyalty. Clearly, consumers see the competition from Brazil, Mexico and India as a substitute, and unit sales of CH’s vaccine have fallen significantly. If CH does not stop production and cut its losses now, it may not have time or finance to develop new life-saving vaccines, through which it may be able to recreate its market leader status.

\n

The profit motive is the reward for entrepreneurial initiative and risk. CH is quite within its rights to stop production of a loss-making vaccine and switch to a market that may be underdeveloped, albeit one with considerably more risk. Ironically, if the decision to stop production is made quickly, CH may be the beneficiary of some panic buying, boosting short-term revenues before the anti-venom vaccine is withdrawn from the shelves.

\n

Given the ethical and moral issues in this case, CH may be wise to wait and carry out some further market research on the competition. It is indicated that for two years, the new competition will be unable to fill the gap left by CH if it decides to leave this market. CH is still the market leader. Possibly CH could emphasize its product quality over the competition and see if this acts as a spur.

\n

A conclusion with judgment is expected.

\n

A balanced response is one that covers at least two arguments for and at least two arguments against.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward with further guidance below.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n

Candidates cannot reach the top marks if there is no relevant reference/ application to the stimulus.

\n

\n
d.
\n
", "Examiners report": "
\n

Many candidates earned 1 mark but far fewer earned 2. Responses were not precise.

\n
a.
\n
\n

Many candidates knew an advantage and disadvantage of a mission statement. When candidates lost marks it was typically because of lack of application. Many candidates did apply to the guide.

\n
b.
\n
\n

For the most part, candidates could name two possible sources of finance, though explanations were sometimes weak.

\n
c.
\n
\n

Responses were not as strong as might have been hoped for. Often candidates merely summarized the stimulus, which resulted in fewer marks.

\n
d.
\n
", "question_id": "19M.2.SL.TZ0.5", "topics": [ "2024-unit-3-finance-and-accounts", "2023-unit-1-business-organization-and-environment", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "3-4-final-accounts", "1-3-organizational-objectives", "1-5-external-environment", "3-1-sources-of-finance" ] }, { "Question": "
\n

With reference to an organization of your choice, discuss the ways in which ethics can influence innovation in an organisation.

\n
", "Markscheme": "
\n

Refer to Paper 2 markbands for 2016 forward, section C available under the \"Your tests\" tab > supplemental materials.

\n

N.B. Although the question asks for the application of one concept on another, it is still expected that Business Management content will be aligned with the concepts especially the second concept (the one being acted on).

\n

Please note that candidates can conclude that there was a minimal impact, however it has to be based on balanced arguments and evaluation.

\n

Additional guidance in relation to the assessment criteria
For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be met for that mark to be awarded.

\n\n

If only one concept is addressed:

\n\n

Where the question asks for impacts of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

Criterion B
For [2]: “…connection is not developed” should be treated the same as superficial.

\n

Criterion C
1 + 1 arguments are expected per concepts.

\n\n

Criterion D

\n\n

Criterion E

\n\n

In section C, the question rubric explicitly states that “organizations featured in sections A and B and in the paper 1 case study may not be used as a basis” to candidate’s answers to questions 6, 7 and 8. When this happens please award marks as follows:

\n

Criterion A: award a maximum of [1]. The business management content cannot be relevant if the organization is fictitious.
Criterion B: 0 marks – there is no connection to a “real-world organization”
Criterion C: award a maximum of [1]. The arguments cannot be relevant if the organization is fictitious.
Criterion D: mark as normal.
Criterion E: award up to a maximum of [1]. The individual and/or group perspective(s) cannot be relevant if the organization is fictitious.

\n

Accept examples of CSR /environmental issues as being ethical. The question expects application of one concept on another. Candidates are expected to discuss ethics and its impact on innovation and not to discuss these two concepts separately. In other words, each example of ethical behaviour should be applied to a real innovation the company created /adopted and thereafter the impact on various stakeholders. (the impact is really of innovation)

\n
", "Examiners report": "", "question_id": "19M.2.SL.TZ0.6", "topics": [], "subtopics": [] }, { "Question": "
\n

With reference to an organization of your choice, examine the impact of culture on organizational strategy.

\n
", "Markscheme": "
\n

Refer to Paper 2 markbands for 2016 forward, section C available under the \"Your tests\" tab > supplemental materials.

\n

N.B. Although the question asks for the application of one concept on another, it is still expected that Business Management content will be aligned with the concepts especially the second concept (the one being acted on).

\n

Please note that candidates can conclude that there was a minimal impact, however it has to be based on balanced arguments and evaluation.

\n

Additional guidance in relation to the assessment criteria
For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be met for that mark to be awarded.

\n\n

If only one concept is addressed:

\n\n

Where the question asks for impacts of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

Criterion B
For [2]: “…connection is not developed” should be treated the same as superficial.

\n

Criterion C
1 + 1 arguments are expected per concepts.

\n\n

Criterion D

\n\n

Criterion E

\n\n

In section C, the question rubric explicitly states that “organizations featured in sections A and B and in the paper 1 case study may not be used as a basis” to candidate’s answers to questions 6, 7 and 8. When this happens please award marks as follows:

\n

Criterion A: award a maximum of [1]. The business management content cannot be relevant if the organization is fictitious.
Criterion B: 0 marks – there is no connection to a “real-world organization”
Criterion C: award a maximum of [1]. The arguments cannot be relevant if the organization is fictitious.
Criterion D: mark as normal.
Criterion E: award up to a maximum of [1]. The individual and/or group perspective(s) cannot be relevant if the organization is fictitious.

\n

Accept organizational culture or national culture.

\n

Accept any relevant organizational strategy.

\n

 

\n
", "Examiners report": "", "question_id": "19M.2.SL.TZ0.7", "topics": [], "subtopics": [] }, { "Question": "
\n

With reference to an organization of your choice, discuss the ways in which globalization can influence organizational change.

\n
", "Markscheme": "
\n

Refer to Paper 2 markbands for 2016 forward, section C available under the \"Your tests\" tab > supplemental materials.

\n

N.B. Although the question asks for the application of one concept on another, it is still expected that Business Management content will be aligned with the concepts especially the second concept (the one being acted on).

\n

Please note that candidates can conclude that there was a minimal impact, however it has to be based on balanced arguments and evaluation.

\n

Additional guidance in relation to the assessment criteria
For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be met for that mark to be awarded.

\n\n

If only one concept is addressed:

\n\n

Where the question asks for impacts of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

Criterion B
For [2]: “…connection is not developed” should be treated the same as superficial.

\n

Criterion C
1 + 1 arguments are expected per concepts.

\n\n

Criterion D

\n\n

Criterion E

\n\n

In section C, the question rubric explicitly states that “organizations featured in sections A and B and in the paper 1 case study may not be used as a basis” to candidate’s answers to questions 6, 7 and 8. When this happens please award marks as follows:

\n

Criterion A: award a maximum of [1]. The business management content cannot be relevant if the organization is fictitious.
Criterion B: 0 marks – there is no connection to a “real-world organization”
Criterion C: award a maximum of [1]. The arguments cannot be relevant if the organization is fictitious.
Criterion D: mark as normal.
Criterion E: award up to a maximum of [1]. The individual and/or group perspective(s) cannot be relevant if the organization is fictitious.

\n

Please note that the question is about organizational change / some major strategic change rather than a change in product/product adaptation strategy in marketing for example, McDonalds in India. To achieve the highest marks for Criterion E and Criterion B candidates are expected to examine the impact of organisational change due to globalisation on different stakeholders. Candidates may explain how globalization impacted on a particular individual (CEO) or a group in a position to create/initiate an organisational change. The question is not about the impact of globalisation directly on stakeholders.

\n
", "Examiners report": "", "question_id": "19M.2.SL.TZ0.8", "topics": [], "subtopics": [] }, { "Question": "
\n

Enjuice 

\n

Enjuice produces canned juices. The market for canned juices is very competitive. Each can is sold at $8. Enjuice’s profit margins are falling. The marketing manager has conducted primary market research and suggested increasing advertising to increase sales. In 2018 Enjuice sold 360 000 cans.

\n

Table 1: Selected financial information for 2018 (all figures in $000s)

\n

\n

[Source: © International Baccalaureate Organization 2019]

\n
\n

State two methods of primary market research.

\n
[2]
\n
a.
\n
\n

Using the information provided and in Table 1, calculating X and Y, construct a profit and loss account for Enjuice.

\n
[5]
\n
b.i.
\n
\n

Using the information provided and in Table 1, calculate the gross profit margin (no working required).

\n
[1]
\n
b.ii.
\n
\n

Explain one strategy that Enjuice could use to increase its gross profit margin.

\n
[2]
\n
c.
\n
", "Markscheme": "
\n\n

N.B. No application required. Do not credit examples. Sampling is not a method.

\n

Award [1] for each relevant method of primary market research identified. Award a maximum of [2].

\n
a.
\n
\n

X = (360 000 × $8) = $2 880 000

\n

Y = 160 000 × 10 % = $16 000

\n

Profit and loss account for Enjuice for 2018: (all figures in $000s)

\n

\n

Allow candidate own figure rule (OFR).

\n

Award [0] if the profit and loss account does not reach a standard described below.

\n

Award [1] if there is some limited understanding of a profit and loss account. There are more than three errors in presentation and calculations.

\n

Award [2] if there are three clear errors. which includes omission of working, formatting error, mathematical error, presentation. There is limited evidence of a general understanding of the format.

\n

Award [3–4] if the principal elements of the profit and loss account is constructed, but may not be entirely accurate. The calculations under each heading/component/part are largely correct.

\n

Allow up to two mistakes in calculations and/or presentation for [3].

\n

Allow for either one error in calculation or one error in presentation for [4].

\n

Allow candidate OFR.
For example, if one irrelevant figure that belongs to the profit and loss account is added, the rest will not match.

\n

Award [5] if the profit and loss account is accurately constructed in the expected IBO format. All the relevant headings of each component/parts are used and correctly classified. All relevant figures are presented. No extra irrelevant figures are included. The calculations under each part/component are correct and well-presented.

\n

Deduct [1] for one omission including the overall heading/title. Accept a partial title.

\n

N.B. If the candidate did not follow the IBO format award up to [2].

\n
b.i.
\n
\n

\n\n440\n2880\n\n × 100 = 15.27 %

\n

Accept 15.2 % or 15.3 %.
Award [1] for the correct answer (working not required). Candidates must show a percentage sign.
Do not accept 15 %, or the formulae.
Allow candidate OFR.

\n
b.ii.
\n
\n\n

N.B. Do not accept increase in price given the information in the stimulus.
Do not credit any suggestion to reduce expenses.

\n

Award [1] for a relevant generic explanation and [1] for application.

\n

[2] cannot be awarded if the response lacks either explanation and/or application.

\n

For an identification or a description of a strategy with or without application [1].

\n

For explanation of a strategy with no application [1].
For description of a strategy with application [1].

\n

For explanation of a strategy and application [2].

\n
c.
\n
", "Examiners report": "
\n

A straightforward question, which the majority of candidates answered successfully.

\n
a.
\n
\n

Teachers are reminded that profit and loss accounts must be accompanied by a title. Overall, this question was not approached well by many candidates. Many are still unable to distinguish between those items that go in the balance sheet and those in the profit and loss account. This resulted in candidates attempting to fit ‘all ‘ of the given data into a profit and loss account and consequently scored low marks. Had it not been for the fact that the question asked for the calculation of sales and tax, many would have scored zero marks.

\n

A few candidates showed a good understanding of the profit and loss account but then stopped at net profit after tax – losing 2 marks for missing dividends and retained profit.

\n
b.i.
\n
\n

A fairly straightforward calculation but still many candidates lost the mark for either incorrect rounding of the answer OR omitting the percentage sign.

\n
b.ii.
\n
\n

This question was poorly answered on several fronts. Firstly, many candidates simply said to increase the price. In a competitive environment this in not possible and this was clear from the stimulus. Secondly, candidates who understood the difference between gross and net expenditure mentioned the idea of increasing advertising to increase sales. Whilst this might indeed increase sales, without any change in the unit costs there would be no change in the profit margin. Finally, even if candidates understood the need for reducing Cost of goods sold, there was often no real application i.e. to finding cheaper suppliers of fruit and/or tins.

\n
c.
\n
", "question_id": "19M.2.HL.TZ0.2", "topics": [ "2023-unit-4-marketing", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "4-4-market-research", "3-4-final-accounts", "3-5-profitability-and-liquidity-ratio-analysis" ] }, { "Question": "
\n

MiniVS (MV)

\n

MiniVS (MV) imports light bulbs, which it sells business to business (B2B) to customers in the UK. In 2020, MV ran into cash-flow problems and had to use debt factoring. 

\n

MV has now solved its cash-flow problems. It operates a cost-plus (mark-up) pricing strategy and places a 100 % mark-up on the light bulbs that it purchases from suppliers.

\n

The forecasted opening cash balance for January 2021 is £20 000.

\n

Table 1: Forecasted data per month for MV for the first six months of 2021 (all figures in £)

\n

\n

The finance director is concerned that the online market for light bulbs in the UK is becoming increasingly price competitive. She believes that if suppliers raise prices in the second half of 2021, MV will have to abandon its cost-plus (mark-up) pricing strategy to be price competitive.

\n
\n

State two features of debt factoring.

\n
[2]
\n
a.
\n
\n

Using the information in Table 1, construct a fully labelled cash flow forecast for MV for the first six months of 2021.

\n
[6]
\n
b.
\n
\n

Explain the potential impact on MV’s gross profit margin if the prices charged by its suppliers increase in the second half of 2021.

\n
[2]
\n
c.
\n
", "Markscheme": "
\n

PLEASE NOTE: Debt Factoring is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

Debt factoring:

\n\n

Another feature is that the business selling its invoices does not receive the full value of the invoices as factor makes a charge (buys at a discount).

\n

If a candidate defines debt factoring accurately, award at least [1] for some understanding. Examiners should review the definition to determine if, in defining the term, candidates have included at least two features. If so, award [1] for each feature up to [2]. Maximum award: [2].

\n

Award [1] for each feature identified up to a maximum of [2].

\n
a.
\n
\n

Award [1] if the candidate has some idea of a six-month cash-flow forecast but otherwise has numerous errors. Award [2] if the cash flow has four or more errors or has a largely inaccurate format. Award [3] if it is largely formatted correctly and/or has three errors. Award [4] for a correctly formatted forecast with just two errors. Award [5] for a correctly formatted forecast with just one error.

\n

Award [6] for a correctly formatted and mathematically correct forecast.

\n

MiniVS Cash flow forecast 2021

\n

\n

Some possibility exists that candidates will misinterpret one portion of the stimulus and think that marketing, warehouse overheads, and office salaries total 36 000 for the three-month period Jan – Mar. and for the three-month period Apr – Jun. If a candidate interprets the stimulus in that fashion, accept as accurate provided that the candidate consistently applies the stimulus based upon that interpretation.

\n
b.
\n
\n

MV’s gross profit margin is forecast to be 50 % for the first half of 2021.

\n

Eg 75 000 – 37 50075 000 for months 1 to 3 OR 70 000-35 00070 000 for months 4 to 6.

\n

If supplier prices increase in the second half of 2021 and the finance director is correct that the online market for light bulbs in the UK will become increasingly price competitive, MV’s gross profit margin would fall. Under this scenario, MV would be unable to pass on to its customers the increase in prices that it, MV, is paying to suppliers. The margin would fall below 50 %.

\n

If the candidate says “the margin will decrease” but with no clear explanation and application to the stimulus, award [1].

\n

Award [1] for a basic explanation that conveys partial understanding.

\n

Award [2] for a full explanation that conveys knowledge and understanding similar to the above.

\n
c.
\n
", "Examiners report": "
\n

Many candidates were able to provide two features of debt factoring.

\n
a.
\n
\n

As noted above, many candidates failed to include cost of sales in cash outflows. Otherwise, candidates who chose question 1 often did quite well on the cash flow and earned 4 or 5 marks.

\n
b.
\n
\n

Most candidates attempting this question earned at least one mark and many received full marks.

\n
c.
\n
", "question_id": "20N.2.SL.TZ0.1", "topics": [ "2023-unit-3-finance-and-accounts" ], "subtopics": [ "3-5-profitability-and-liquidity-ratio-analysis", "3-1-sources-of-finance", "3-7-cash-flow" ] }, { "Question": "
\n

KPJ

\n

KPJ operates a cinema in a small town. It uses a price discrimination strategy for cinema tickets.

\n

Table 2: Selected financial information for KPJ for year ending
31 December 2019 at 31 Dec 2019 (all figures in $)

\n

\n
\n

Define the term price discrimination.

\n
[2]
\n
a.
\n
\n

Using Table 2, calculate X (no working required).

\n
[1]
\n
b.i.
\n
\n

Using Table 2, calculate the current ratio for 2019 (no working required).

\n
[1]
\n
b.ii.
\n
\n

Using Table 2, prepare a balance sheet for the year ending 31 December 2019.

\n
[4]
\n
c.
\n
\n

Explain the possible changes to KPJ’s balance sheet for 2019 if KPJ spent $30 000 on a new digital projector.

\n
[2]
\n
d.
\n
", "Markscheme": "
\n

PLEASE NOTE: Price Discrimination is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

Price discrimination is when a firm charges a different price to different groups of consumers for an identical good or service.

\n

Award [1] for a basic definition conveying the idea that it allows a business to sell the same goods/services at different prices. Award an additional [1] for stating the differing prices are for different groups of consumers that can be separated in some way.

\n

A candidate may achieve the second mark through the use of a good exemplar, eg by explaining that a cinema charges higher prices for adults than for children.

\n
a.
\n
\n

X = Gross profit

\n

Gross profit = Sales revenue − costs of goods sold

\n

=$175 000 - £122 000 = $53 000

\n

Award [1] for correct answer with or without working.

\n
b.i.
\n
\n

Current ratio=current assetscurrent liabilites

\n

=$8330$6800=1.23

\n
b.ii.
\n
\n

\n

Award [4] if the candidate constructs an accurate balance sheet (that balances) according to the IB prescribed format.

\n

Award [3] for a largely accurate balance sheet that balances, according to a generally accepted format, such as the vertical format above or the horizontal model typically used in the United States.

\n

Award [2] if the candidate constructs a largely recognizable balance sheet but it does not balance, or it has two major problems of classification.

\n

Award [1] if the candidate conveys some idea of what a balance sheet is.

\n

For full marks, the balance sheet must be dated. Failure to date the balance sheet is an error and, therefore, the maximum award that an undated balance sheet could receive is [3].

\n
c.
\n
\n

The purchase of a new digital projector will increase net fixed assets by $30 000.
Award [1] for recognizing that the net fixed assets will increase. Award [1] if the candidate then addresses the offset, which could be

\n\n

Accept any other reasonable suggestion for financing the projector. Do not accept a short-term loan or expansion of trade credit.

\n

The two potential marks for this question are independent of one another. In other words, a candidate may address the financing (the candidate suggests taking out a bank loan) and receive [1] even if s/he did not mention that net fixed assets will increase. Or, the candidate could state that net fixed assets will increase but not mention the offset, in which case the candidate would receive [1].

\n

Maximum award: [2].

\n
d.
\n
", "Examiners report": "
\n

Many candidates performed well on this question.

\n
a.
\n
\n

Many candidates choosing question 2 answered this question correctly.

\n
b.i.
\n
\n

Many candidates choosing question 2 answered this question correctly, though some lost marks because they do not know how to round correctly.

\n
b.ii.
\n
\n

Many candidates correctly created a balance sheet, though many struggled to do so correctly. Some candidates had virtually no idea what a balance sheet was.

\n
c.
\n
\n

Responses to this question were mixed. Some students suggested that the new digital projector would increase current assets. Some candidates did not indicate what the offsetting entry would be.

\n
d.
\n
", "question_id": "20N.2.SL.TZ0.2", "topics": [ "2023-unit-3-finance-and-accounts", "2023-unit-4-marketing", "2024-unit-3-finance-and-accounts" ], "subtopics": [ "3-5-profitability-and-liquidity-ratio-analysis", "4-5-the-four-ps-(product-price-promotion-place)", "3-4-final-accounts" ] }, { "Question": "
\n

Nigris & Speroni (NS)

\n

Nigris & Speroni (NS) is a national grocery store chain. In the tertiary sector, it benefits from economies of scale, including purchasing economies of scale. Its stores use sophisticated computerization to manage stock and monitor customers’ purchasing habits. NS is currently experimenting with cleverly placed products and short-term promotions to increase impulse purchases, which occur when a customer makes unplanned purchases. Something in the store – a smell, a vivid display, samples of products – triggers a customer’s desire for items.

\n

NS has above-average prices compared to the industry average, but at least one other chain is more expensive. The grocery store industry is competitive and grocery stores use many different pricing strategies. NS is considering adopting an online ordering and delivery service for customers, which would operate from its stores.

\n

Each of NS’ stores is given a number to identify it. Store number 507 is called NS 507.

\n

Table 3: Selected financial information for NS 507 for 2019

\n

\n

On 1 January 2020, an organic grocery store, U-Foods, opened near NS 507. U-Foods sells high-quality foods, including organically produced fruits and vegetables, organically raised meats and sustainably sourced seafood (not from fish farms). It charges higher prices than NS 507 and has higher margins. The few processed foods that it sells are organic and low in salt. Unlike NS 507, U-Foods does not sell cigarettes or high-sugar beverages and cereals. It is also not considering an online ordering and delivery service like NS is.

\n

In the first six months of 2020, however, NS 507 lost market share. Sales revenue was 12 % lower than in the first six months of 2019, even though the number of customers and transactions did not change.

\n
\n

State two types of business, other than grocery stores, that operate in the tertiary sector.

\n
[2]
\n
a.
\n
\n

Explain two elements of U-Foods’ marketing mix other than price.

\n
[4]
\n
b.
\n
\n

Calculate, for 2019, NS 507’s gross profit margin (no working required).

\n
[1]
\n
c.i.
\n
\n

Calculate, for 2019, NS 507’s net profit before interest and tax (no working required).

\n
[1]
\n
c.ii.
\n
\n

Explain one economy of scale, other than purchasing economies of scale, from which NS might benefit.

\n
[2]
\n
d.
\n
\n

Discuss two possible methods that NS 507 could use to regain lost market share.

\n
[10]
\n
e.
\n
", "Markscheme": "
\n

The tertiary sector is the service sector of an economy, including retail outlets.
Candidates may name any type of service sector business. Do not give credit for “online grocery stores” but award a mark for convenience store (or some other small shop where some grocery items might be sold).

\n

Award [1] for each type of business in the service sector identified up to [2].

\n
a.
\n
\n

The four Ps of the marketing mix that candidates may write about are place,
promotion, and product. In the stimulus, place and product can be identified:

\n\n

Award [1] for identification of one of the three Ps and an additional [1] for application to the stimulus and explanation.

\n

Mark as [2 + 2].

\n

N.B. If the candidate mentions promotion, award a maximum of [1], as nothing in the stimulus would allow for application. Thus, if a candidate explained promotion with some theoretical types and, then correctly explained and applied product, the total mark would be [3]: [1] for promotion and [2] for product.

\n
b.
\n
\n

$5 300 00020 000 000×100=26.5 % Gross profit margin is 26.5 %

\n

Award [1] for the correct answer.

\n
c.i.
\n
\n

Net profit before interest and tax = 3 % × 20 000 000 = $600 000

\n

Award [1] for the correct answer.

\n
c.ii.
\n
\n

Other economies of scale from which NS might benefit include:

\n\n

Accept any other relevant economy of scale.

\n

Award [1] for identification of an appropriate economy of scale and an additional [1] for appropriate application to and explanation of the stimulus. Maximum award: [2].

\n
d.
\n
\n

The stimulus provides some guidance to the students on ways to recover lost market share. The fact that sales revenue is down 12 % suggests that NS 507 has lost some sales to U-Foods. Given that the number of transactions has remained the same suggests that some customers continue to shop at NS but also go to U-Foods for certain items. One way that NS could attempt to recover those lost sales is to determine which specific items have seen their sales go down. It is likely that, for these items, shoppers are going to U-Foods. Once NS has identified which items customers are going to U-Foods for, NS can make modifications: improve the product, alter the price, or have better promotions. A disadvantage to this strategy is that it may not work or may be too expensive to work. For example, some customers are probably going to U-Foods for locally produced organic meats. However, probably few opportunities exist for economies of scale when U-Foods (or NS) purchase this type of meat. For U-Foods, passing on high costs to customers is probably not a problem. U-Foods is more expensive than NS and customers expect that. For NS customers, however, prices lower than U-Foods is the expectation. Were NS to start charging more, many customers may resist.

\n

Another strategy is to use more aggressive pricing. NS is a huge firm, and it could lower its prices to try to gain more customers. Predatory pricing is probably illegal, but NS 507 could, with the backing of the whole organization, be very aggressive in its pricing – just short of predatory – to win back customers or the specific purchases that are going to U-Foods. The problem with this strategy is that NS already has thin margins – typical of the grocery store industry – and lowering prices even further may be a problem.

\n

A third option is to start allowing customers to order online and have home delivery. This option would be expensive to set up and operate, and NS would lose impulse sales.

\n

Accept any other relevant way that NS 507 can recover lost market share.

\n

\n
e.
\n
", "Examiners report": "
\n

Many candidates could state two types of business, other than grocery stores, that operate in the tertiary sector.

\n
a.
\n
\n

The only real problem issue on this question was that candidates did not read the question carefully and applied the question to NS rather than U-Foods. When that occurred, the maximum mark was two rather than four marks.

\n
b.
\n
\n

Most candidates choosing question 4 answered 4(c)(i) correctly.

\n
c.i.
\n
\n

Most candidates choosing question 4 answered 4(c)(ii) correctly.

\n
c.ii.
\n
\n

Candidates in general knew what an economy of scale is, and many could effectively apply that knowledge to the stimulus.

\n
d.
\n
\n

In general, candidates could argue for two methods, with application to the stimulus, and most candidates seemed to understand the expectations of the command term.

\n
e.
\n
", "question_id": "20N.2.SL.TZ0.4", "topics": [ "2023-unit-1-business-organization-and-environment", "2024-unit-3-finance-and-accounts", "2024-unit-4-marketing", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "1-1-introduction-to-business-management", "3-4-final-accounts", "4-5-the-seven-ps-of-the-marketing-mix", "1-6-growth-and-evolution", "3-5-profitability-and-liquidity-ratio-analysis", "1-3-organizational-objectives" ] }, { "Question": "
\n

Pablo’s Peanuts (PP)

\n

Pablo recently emigrated from Argentina to Miami, Florida, which has a large Hispanic* population. However, he could not find caramelized peanuts – known as garrapiñada – at any of the Latin American markets in Miami. These tasty sweet snacks, sold by street vendors, are very popular in Latin American countries. Pablo began testing different recipes to make the snack himself. Once convinced he had the perfect product, he conducted primary market research in several Hispanic neighbourhoods. He was overwhelmed by the positive response.

\n

As a result, Pablo set up Pablo’s Peanuts (PP) as a private limited company. He then purchased a food truck (a large vehicle equipped to cook and sell food). From Tuesday to Sunday, he drove to different Latin American markets in the Miami area to cook and sell his product. PP soon became profitable, but meeting demand was difficult.

\n

Pablo wants PP to grow. To do this, he needs a second food truck and an employee. The second truck would require an investment of $100 000. Pablo’s break-even analysis shows that the expected increased output would more than double PP’s profits if the cost of fuel for the food trucks remains constant.

\n

Pablo is considering two options to finance the second truck:

\n\n

Table 4: Financial data related to both options

\n

\n
\n

* Hispanic: relating to Spain or to Spanish-speaking countries, especially those of Central and South America

\n
\n

State two characteristics of a business angel.

\n
[2]
\n
a.
\n
\n

Explain two reasons why Pablo conducted primary market research.

\n
[4]
\n
b.
\n
\n

Explain one advantage and one disadvantage of using a break-even analysis for PP.

\n
[4]
\n
c.
\n
\n

Recommend whether Pablo should choose Option 1 or Option 2.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Features of angel investors include:

\n\n

Accept any other relevant feature.

\n

Award [1] for a relevant feature with appropriate description up to a maximum of [2].

\n
a.
\n
\n

Reasons include:

\n\n

Award [1] for each relevant reason explained and [1] for appropriate application to PP to a maximum of [2].

\n
b.
\n
\n

Break-even analysis is a forecasting tool. Advantages of BE include:

\n\n

Accept any other relevant advantage.

\n

Disadvantages include:

\n\n

Accept any other relevant disadvantage.

\n

Award [1] for an advantage and [1] for appropriate application to PP to a maximum of [2].

\n

Award [1] for a disadvantage and [1] for appropriate application to PP to a maximum of [2].

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Option 1, the bank loan:
Advantages:

\n\n

Disadvantages:

\n\n

Option 2, finance from an angel investor:
Advantages:

\n\n

Disadvantages

\n\n

It is expected that candidates provide a conclusion with a substantiated judgment.
Candidates can provide any conclusion and judgment as long as it is substantiated. Accept any other substantiated judgment.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

A balanced response is one that provides at least one argument for and one argument against each option.

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n
d.
\n
", "Examiners report": "
\n

Many candidates could state two characteristics of a business angel.

\n
a.
\n
\n

Most students could provide at least one reason why Pablo should do market research but not as many could provide two reasons or the candidates basically restated the first reason.

\n
b.
\n
\n

Most candidates choosing question five knew what a break-even analysis is but candidates struggled to apply their knowledge to the stimulus.

\n
c.
\n
\n

Many candidates knew how to answer this question, a debt-versus-equity financing problem. For the most part, candidates understood the expectations of the command word.

\n
d.
\n
", "question_id": "20N.2.SL.TZ0.5", "topics": [ "2023-unit-4-marketing", "2023-unit-3-finance-and-accounts", "2024-unit-3-finance-and-accounts" ], "subtopics": [ "4-4-market-research", "3-3-break-even-analysis", "3-2-sources-of-finance", "3-1-sources-of-finance" ] }, { "Question": "
\n

Jill’s Jeans (JJ)

\n

Jill created Jill’s Jeans, which operates as a sole trader. JJ makes custom-design jeans. Jill designs all the jeans and sells them online and at local markets.

\n

Because of increasing demand in 2020, JJ has benefitted from economies of scale.

\n

Table 1: Budgeted and actual figures for the year ending 31 October 2020

\n

\n
\n

State two features of a sole trader.

\n
[2]
\n
a.
\n
\n

Using information in Table 1, for JJ, prepare a profit and loss account for the budgeted figures and the actual figures
(show all your working).

\n
[3]
\n
b.i.
\n
\n

Using information in Table 1, for JJ, prepare a variance analysis (show all your working).

\n
[3]
\n
b.ii.
\n
\n

Explain one possible economy of scale from which JJ has benefitted.

\n
[2]
\n
c.
\n
", "Markscheme": "
\n

Features include:

\n\n

Accept any other relevant feature. However, do not credit ‘unincorporated’ and ‘unlimited liability’ as two features. They are the same thing.

\n

Award [1] for each relevant characteristic stated to a maximum of [2].

\n

Application to the organization is not required

\n
a.
\n
\n

\n

If the profit and loss account is constructed following a generally accepted format and is correct in all respects, award [3].

\n

Award [2] if the candidate produces a correct net profit but does not follow a generally accepted format. Award [1] if the candidate shows some understanding of what a profit and loss account is, but the actual account constructed is not in a generally accepted format and has numerous errors.

\n

We need to be consistent with previous years where the format required is consistent with the guide – as 3 of the headings already given, then marks are for 2 headings and 4 calculations.

\n
b.i.
\n
\n

\n

For a perfect understanding of variances award [3]. There must be calculations and explicit reference to variances that are favourable or adverse.

\n

For variance analysis that has 1 calculation error and/or makes no reference to variances as favourable or adverse award [2].

\n

For a vague understanding of variances award or more than one calculation error and no reference to favourable/adverse [1].

\n
b.ii.
\n
\n\n

Accept any other relevant answer.

\n

Mark 1 + 1.

\n

Award [1] for a relevant economy of scale explained and [1] for appropriate application to JJ to a maximum of [2].

\n

N.B As there is limited stimulus information application must necessarily be in the form of reference to jeans, tailoring machinery or tailoring supplies. Do not reward generic references simply to ‘machinery or supplies’.

\n
c.
\n
", "Examiners report": "
\n

Generally, well answered as this type of question has been quite common over recent sessions.

\n
a.
\n
\n

Required two very simple profit and loss accounts to be produced. Many candidates achieved three marks but there were some common errors such as only producing a statement for budget or actual. Also, some candidates incorrectly labelling the final profit as retained profit rather than as net profit before tax and interest. Some candidates failed to show full workings.

\n
b.i.
\n
\n

Responses to this question were disappointing and overall showed a limited knowledge of Variance. Most candidates achieved 2 marks for correctly identifying the three variances for Cost of goods sold, Expenses and Sales. To those who had no grasp of variance analysis there were a significant number of incorrect answers.

\n
b.ii.
\n
\n

Many candidates failed to come up with a recognised economy of scale and to relate it to the business in question. Also, many candidates mistakenly classified the business as a retailer rather than a manufacturer.

\n
c.
\n
", "question_id": "20N.2.HL.TZ0.1", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "1-2-types-of-organizations", "3-4-final-accounts", "1-6-growth-and-evolution", "3-9-budgets" ] }, { "Question": "
\n

The Burnt Tomato (BTO)

\n

In 2003, Ben opened a street-food stall selling vegan food. The food stall was successful. Ben spent little on marketing, mainly advertising on the food stall itself and relocating it to places or events where many consumers would pass by.

\n

In 2008, Ben used the profits from the food stall to open a restaurant, The Burnt Tomato (BTO), which initially employed 16 people. In the following years, labour turnover was low. Employees received an annual bonus, which increased with each year of employment.

\n

In 2015, Ben created a website and began to use social-media marketing. Customers were encouraged to rate their BTO experience online. Their reviews consistently rated BTO’s experienced staff highly and showed that they thought the food was exceptional value. Ben replied to all reviews. Many BTO customers also joined a BTO social media group and communicated with each other and BTO regularly. For many customers, the total BTO experience of vegan food and social networking was like being in a club.

\n

Unfortunately, high labour costs, reasonable profits and the use of high-quality ingredients meant that BTO’s gross and net profit margins were below industry averages.

\n

Aware of the growing demand for vegan food, Ben borrowed money from a family member in 2018 and opened two more BTOs in different cities, hiring 32 new employees. However, in January 2019, a long-time customer of the original BTO ate at one of the new restaurants and wrote a negative review. The review went viral and sales at all three BTOs declined.

\n
\n

State two appropriate sources of finance Ben may have used when he first opened his vegan food stall.

\n
[2]
\n
a.
\n
\n

Explain one positive impact and one negative impact on BTO as a result of having low labour turnover.

\n
[4]
\n
b.
\n
\n

Explain one advantage and one disadvantage for BTO as a result of its use of social media.

\n
[4]
\n
c.
\n
\n

Discuss Ben’s decision to enlarge the scale of BTO from one restaurant to three restaurants.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Appropriate sources of finance include:

\n\n

Accept any other appropriate sources of finance.

\n

N.B. A bank loan without any other qualifying information is not appropriate, as few banks would make such a loan.

\n

Award [1] for each appropriate source of finance stated up to [2].

\n
a.
\n
\n

Positive impacts of low labour turnover include:

\n\n

Negative impacts of low labour turnover:

\n\n

Accept any other relevant positive negative impact.

\n

Mark as [2 + 2].

\n

Award [1] for identification of a positive impact and an additional [1] for explanation and application to the stimulus.

\n

Award [1] for identification of a negative impact and an additional [1] for explanation and application to the stimulus.

\n

Maximum award: [4].

\n
b.
\n
\n

Advantages of using social media include:

\n\n

Disadvantages of using social media include:

\n\n

Award [1] for identification of an advantage and an additional [1] for explanation and application to the stimulus.

\n

Award [1] for identification of a disadvantage and an additional [1] for explanation and application to the stimulus.

\n

Mark as [2 + 2].

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Advantages of expansion include:

\n\n

Accept any other relevant advantage.

\n

Disadvantages of expansion include:

\n\n

Accept any other relevant disadvantage.

\n

It is expected that candidates provide a conclusion with a substantiated judgment.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

If a candidate addresses only advantages of expansion, award a maximum of [4].

\n

If a candidate addresses either two advantages of expansion and only one disadvantage, or only one advantage of expansion and two disadvantages, award a maximum of [5].

\n

A balanced response is one that provides at least two advantages of expansion and two disadvantages of expansion. However, if the candidate does not provide substantiated judgments, maximum award of [6].

\n
d.
\n
", "Examiners report": "
\n

Many candidates could identify two appropriate sources of finance.

\n
a.
\n
\n

Many candidates knew what low labour turnover meant but a large number failed to apply that knowledge to the stimulus.

\n
b.
\n
\n

Most candidates earned at least partial marks on this question. One issue was failure to apply to the stimulus. Another issue was that candidates argued that one advantage of social media is that positive reviews spread easily and one disadvantage was that negative reviews spread quickly.

\n
c.
\n
\n

Often when candidates are asked a scale question, they struggled to apply their response to the stimulus. This lack of application was not a problem this session. Candidates rather effectively answered the question in the context of the stimulus.

\n
d.
\n
", "question_id": "20N.2.SL.TZ0.3", "topics": [ "2024-unit-3-finance-and-accounts", "2023-unit-2-human-resource-management", "2023-unit-4-marketing", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "3-2-sources-of-finance", "2-1-functions-and-evolution-of-human-resource-management", "4-5-the-four-ps-(product-price-promotion-place)", "1-6-growth-and-evolution" ] }, { "Question": "
\n

With reference to an organization of your choice, examine the impact of culture on organizational ethics.

\n
", "Markscheme": "
\n

Refer to Paper 2 markbands for 2016 forward, section C available under the \"Your tests\" tab > supplemental materials.

\n

N.B. Although the question asks for the application of one concept on another, it is still expected that Business Management content will be aligned with the concepts especially the second concept (the one being acted on).

\n

Please note that candidates can conclude that there was a minimal impact, however it has to be based on balanced arguments and evaluation.

\n

Additional guidance in relation to the assessment criteria
For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be met for that mark to be awarded.

\n\n

If only one concept is addressed:

\n\n

Where the question asks for impacts of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

Criterion B
For [2]: “…connection is not developed” should be treated the same as superficial.

\n

Criterion C
1+1 arguments are expected per concepts.

\n\n

Criterion D

\n\n

Criterion E

\n\n

Candidates need not explicitly say “stakeholder”.

\n
", "Examiners report": "", "question_id": "20N.2.SL.TZ0.6", "topics": [], "subtopics": [] }, { "Question": "
\n

Dan, a young entrepreneur, is planning to start his own small business making hand-made wooden garden benches – Beautiful Benches (BB).

\n

Table 2: Forecasted sales revenue for BB for the first four months
of operation, starting 1 January 2021 (all figures in $)

\n

\n

To be competitive, BB offers its customers credit. They pay 50 % when they buy a bench and 50 % one month later.

\n


Table 3: Selected forecasted financial information for BB for 2021
(all figures in $ and per month unless stated otherwise)

\n

\n

Dan was advised to pay close attention to BB’s working capital cycle.

\n
\n

Define the term working capital cycle.

\n
[2]
\n
a.
\n
\n

Prepare a monthly cash flow forecast for BB for the first four months of operation.

\n
[6]
\n
b.
\n
\n

Explain one strategy that BB could use to significantly improve its forecasted cash flow for January 2021.

\n
[2]
\n
c.
\n
", "Markscheme": "
\n

Working capital cycle is the period of time/interval between the actual cash paid for costs of production and the actual cash received from customers. It is the time period when net current assets is converted into cash. [2]

\n

N.B.: no application required. Do not credit examples.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding but omits reference to’ time period’ or ‘cash’.

\n

Award [2] for a full definition that conveys knowledge and understanding similar to the answer above.

\n
a.
\n
\n

\n

Please note: Candidates do not have to split “cash revenue” and “credit cash revenue” or cost of sales and costs of sales on credit.

\n

N.B. Allow candidate own figure rule (OFR): if a candidate makes an error in one row and carries it through the remainder of the forecast that is only one error. This provision includes both mathematical errors and conceptual errors (for example, if a candidate has the rent in the incorrect month then candidates should only lose [1] for that error.

\n

Award [1] if the candidate conveys some understanding of what a cash flow forecast is, but otherwise the forecast is largely inaccurate, incomplete, or illegible.

\n

Award [2–3] if a cash flow forecast is drawn, but either it is not in a generally accepted format or it is untidy, and/or the forecast contains three or more errors, which could include, in addition to number placement problems and mathematical errors, conceptual errors (using the word “profit” rather than “net cash flow”) or omissions, such as not having a line like “closing balance” or totals.

\n

Award [4–5] if the cash flow forecast is drawn essentially correctly and neatly in a generally accepted format, but there is one error for [5] or two errors for [4]. Award [6] if the cash flow forecast is drawn accurately and neatly in a generally accepted format and is error free. 

\n

If the candidate provided a heading of total inflow/outflow without using another heading above of inflow or outflow – do not penalize as an omission.

\n

If the candidate omitted both headings of outflow/inflow but does include ‘Total’ Cash Outflow/Inflow headings do not penalize.
Missing any of highlighted headings = one error

\n

Substituting the term “net profit in the cash flow forecast for “net cash flow” is inaccurate and [1] should be deducted.

\n

If the candidate has only one row for all cash outflows or inflows, subtract [1] from the total mark awarded.

\n

Full working is not expected.

\n
b.
\n
\n

It is expected that candidates identify the main figures/categories that contributed to the negative cash flow. Clearly the options are either to reduce the cash outflow or increase the cash inflow. Candidates should provide concrete examples as application. There is no need to reproduce a new cash flow. It is expected the relevant terminology is used. As generally total revenue is increasing, apart from February, it is not expected that candidates suggest to increase total revenue inflow using marketing etc.

\n

Increase inflows:
Candidates may suggest that BB should not give credit for the first months of operation. This will increase the inflow by a $1000.

\n

Dan can possibly ask the bank to give a loan in the first months of operation instead of the 4th months. $3000 will help BB to significantly reduce the initial negative cash flow.
Increasing the price of benches will increase inflows. However, this may reduce competitiveness.

\n

Reduce outflows:
Dan can reduce his own salary of 1500, especially in the first month or so. Own salaries and admin are the most excessive/large outflow that contributes to the negative cash inflow. A smaller self-reward can significantly reduce the outflow and therefore the net cash flow.

\n

Dan can also negotiate his rental payments. Instead of paying a large sum of 1200 in January, monthly instalments of $400 will significantly reduce the outflow in January Dan can also ask for at least one month’s credit from his landlord.
Do not accept an option of not buying the machinery/tools.
Accept lease the machinery for a considerably lower fee per months.
Generic comments like reduce donation, utilities etc will not make a significant impact. Hence not really applicable.

\n

Award [1] for a relevant generic strategy identified or described and [1] for any additional explanation in context to BB.

\n

[2] cannot be awarded for the strategy if the response lacks either explanation and/or application. Explanation needs to cover the effect the strategy is designed to produce. It is not enough just to say ‘reduce Dan’s salary’,

\n

For example: For an identification or a description of the strategy like reduce cash outflow/ increase cash inflow without explanation or application [1].

\n

For explanation of the strategy with no application [1].

\n

For explanation of the strategy and application [2].

\n

 

\n
c.
\n
", "Examiners report": "
\n

Many candidates exhibited poor knowledge and rarely mentioned the time taken in converting the cash spent on stocks back into the cash received from sales. There were many general definitions of working capital and no mention of the cycle element of the question.

\n
a.
\n
\n

Most candidates knew what a cash flow forecast involved but only a few gained full marks Common errors included regarding the loan as an outflow, the rent as $400 rather than $1200, a failure to correctly allocate cash and credit sales or cost of goods sold. In addition, there were marks deducted for missing sub totals or incorrect labelling.

\n
b.
\n
\n

Most candidates were able to make a suggestion, some of which were realistic but often failed to explain how this suggestion would impact on BB's cash flow in January 2021.

\n
c.
\n
", "question_id": "20N.2.HL.TZ0.2", "topics": [ "2023-unit-3-finance-and-accounts" ], "subtopics": [ "3-7-cash-flow" ] }, { "Question": "
\n

With reference to an organization of your choice, discuss the ways in which innovation can influence organizational change.

\n
", "Markscheme": "
\n

Refer to Paper 2 markbands for 2016 forward, section C available under the \"Your tests\" tab > supplemental materials.

\n

N.B. Although the question asks for the application of one concept on another, it is still expected that Business Management content will be aligned with the concepts especially the second concept (the one being acted on).

\n

Please note that candidates can conclude that there was a minimal impact, however it has to be based on balanced arguments and evaluation.

\n

Additional guidance in relation to the assessment criteria
For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be met for that mark to be awarded.

\n\n

If only one concept is addressed:

\n\n

Where the question asks for impacts of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

Criterion B
For [2]: “…connection is not developed” should be treated the same as superficial.

\n

Criterion C
1+1 arguments are expected per concepts.

\n\n

Criterion D

\n\n

Criterion E

\n\n

Candidates need not explicitly say “stakeholder”.

\n
", "Examiners report": "", "question_id": "20N.2.SL.TZ0.7", "topics": [], "subtopics": [] }, { "Question": "
\n

MusiCology

\n

MusiCology (MC) is a private limited company. Rob, the chief executive officer (CEO), founded it to encourage young people to play musical instruments, believing that too many young people either prefer to just listen to music or are abandoning traditional methods of making music in favour of generating it on computers. MC’s mission statement is: “MusiCology supports the playing of real music by real musicians on real instruments.” The business relies heavily on social media.

\n

MC offers downloadable online lessons and demonstrations prepared by professional musicians. Some of the lessons and demonstrations are free and some are paid for.

\n

Because MC has not been profitable, Rob asked Abbi, a technology specialist and successful provider of venture capital, for financial support. Abbi agreed, but insisted that MC organize a live music concert in six months that would be broadcast globally. She also thinks that MC’s mission statement needs updating.

\n

Abbi is confident that, with her social media connections and influence, the concert will be successful. She has contacted several artists, asking them to play, and their responses have been positive. The concert will also be pay-per-view*. Some artists have agreed to play for free, and several musical instrument manufacturers will sponsor the event. Abbi predicts significant profits.

\n

Rob likes the idea of the concert, but he doubts MC has the ability and resources to organize such an event. He is also concerned that some musicians will play computer-generated music, and fears a negative reaction on social media.

\n

Table 4: Selected financial information for MC for 31 October 2020

\n

\n
\n

* pay-per-view: a system that allows businesses to charge for premium content that otherwise might be shown for free

\n
\n

Describe one feature of a private limited company.

\n
[2]
\n
a.
\n
\n

Explain one advantage and one disadvantage for MC of having a mission statement.

\n
[4]
\n
b.
\n
\n

Explain one advantage and one disadvantage for MC of using venture capital to provide financial support.

\n
[4]
\n
c.
\n
\n

Discuss whether MC should organize the live concert.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

One feature of a private limited company is that

\n\n

Award [1] for a partial description and an additional mark for a full description similar but not exact to one of the above bullet points.

\n
a.
\n
\n

Theoretical answer – award [1] for each advantage and disadvantage:

\n\n

MC’s mission allows a clear differentiation for its business model away from rivals. Given that the number of young people eschewing musical instruments is rising, the mission could allow MC to create a USP. Clearly, musical instrument companies favour the mission and are willing to sponsor the potential concert adding a vital source of funds to allow it to proceed.

\n

However, the mission seems to preclude the use of technology to a degree by artists. It is accepted that even real musicians will use technology but if participants who play in the concert use only technology then MC runs the risk of being “hypocritical”. There is evidence of a clear backlash (negative reaction) on social media, which could undermine MC’s perception. Of course, it is accepted that organising the concert will require some use of the latest technology but the mission runs the risk of confusing its stakeholders.

\n

Award [1] for application to MC for both the advantage or disadvantage.
N.B. [2] cannot be awarded if the response lacks either explanation and / or application.

\n

Mark as [2+2]

\n
b.
\n
\n

PLEASE NOTE: Venture Capital is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

Theoretical advantage and disadvantage – award [1] for each.

\n

Advantages:
Venture capital provides the company with an opportunity to expand. This would not have been possible through other methods like bank loans. Bank loans require collateral and there is an obligation to repay the loan. However, in venture capital, the investors themselves are ready to take the risk as they believe in the company’s long-term success. Therefore, venture capital financing is beneficial for start-ups with high initial cost and limited operating history.

\n

Venture capitalists are often people with significant experience in their respective industries and this can be extremely helpful for those starting out in these industries. They can help with building strategies, technical assistance, resources, etc. in order to make a business successful.

\n

Venture capitalists have a huge network of connections in the business community. These connections could be advantageous for the start-ups to grow and become successful. They can help the start-up to enter into alliances with potential customers or business houses.

\n

Disadvantages:
Venture capitalist provides huge capital to the start-ups in return for a stake in the equity of the company. If the start-up succeeds, then it helps them earn tremendous amounts of profit. VC’s usually become a part of the Board. They actively participate in the company’s decision-making. VC’s will want to protect their investments. If there is a difference of opinion between the VC and the start-up founder, then things can get chaotic. Any major decision requires the consent of investors.

\n

A venture capitalist may decide to redeem the investment within 3 to 5 years. Their primary focus is to earn capital gains. Venture capital may not be suitable for an entrepreneur whose business plan will take a longer time to provide liquidity.

\n

Venture capital investors are taking high risks, hence take time in making decisions to invest. It can therefore be a lengthy process and not suitable when quick funding required.

\n

Application (award [1] for application to MC for both the advantage or disadvantage).

\n

Without the support of Abbi, MC would probably not be still able to carry out its mission. She is also able to provide some technological assistance on operations away from the playing of real instruments which will support MC in organising the concert. Rob clearly feels that MC does not have sufficient resources to do this on their own. The global concert may also attract other venture capitalists or other possible sources of finance from business angels for example.

\n

The disadvantage, however, is that Abbi being a venture capitalist may see the concert as the only solution to MC’s current financial predicament and if not successful may decide to seek other ventures. The financial situation at MC could deteriorate further. She thinks the mission needs updating and any social media backlash could hit MC hard. There is a considerable risk here given the nature of venture capital. Rob may have to look for new investors.

\n

Mark as [2+2].

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

There is a considerable tension between the need for financial sustainability outlined in the stimulus and the table and a violation of the mission statement if they decide to go ahead with the concert. There is no quick fix to MC’s problems.

\n

The financial figures provide some ammunition for evaluation both positively and negatively. Musicology’s solvency is at risk if they do nothing. But if they host the concert, they will use up valuable resources and the CEO doubts that the business will be able to cope. There is a forecast profit of 24million but what if budgets are exceeded or forecasts not met? Musicology is going beyond its normal operational ability and costs will be difficult to forecast. Even with pay per view it will be difficult to judge how many will actually pay.

\n

Musicology is being kept “alive by venture capital”. Will other potential investors tolerate a concert where musicians do not play real instruments? The mission statement is at risk and the gearing ratio is currently 75 %. They will not be able to borrow their way out of any financial difficulties.

\n

A great deal of trust is being placed in Abbi. Her confidence may be a positive thing, but can MC have faith in her social media connections? It can be very difficult to measure exactly how many people will be willing to pay. Cash flow forecasting at a time of variable cash inflows and outflows may be very hard to do.

\n

However, the global concert will spread the mission of MC. The reach could be considerable and new investors will probably come forward. The pay for view and sponsorship from the musical instrument manufacturers will offset revenue lost to illegal downloaded sites. If this concert goes well the future benefits to MC could be considerable. There may be future concerts and or other extension strategy possibilities. Angel investors may see the ethical approach MC is taking and bring forth newer investors reducing the dependence on venture capitalists.

\n

It would seem that if MC wish to remain economically sustainable the concert will have to proceed. It is a risky strategy but one which could have longer term benefits if the exposure of the business via the pay per view model to a global audience generates significant funds and publicity. Abbie seems confident and well connected and this is important for MC who do most of their promotion and brand building through the internet and social media.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n

Candidates will not be able to proceed to the highest mark bands without using the quantitative data in the table. [max award [6]]

\n

Balanced analysis will imply two arguments in favour with two against. Judgements should be substantiated to move beyond the 5–6 band.

\n
d.
\n
", "Examiners report": "
\n

Generally, well done and a question quite common over the last few sessions. Unfortunately, a significant number of candidates incorrectly stated that features of a private limited company included, only selling to a family member and not having to publish any financial data. Whilst it is true that many private limited companies are family owned, they are free to sell shares to anyone they please – they do not have to be family. Also, all private companies must produce financial statements and these are usually lodged with a central company registry. They are under no obligation to make available to the public although many central registries do allow public access.

\n
a.
\n
\n

Many candidates were able to identify one advantage and one disadvantage but were unable to utilise the stimulus material for application in their responses.

\n
b.
\n
\n

Most candidates recognised venture capital as a source of finance but there were many misunderstandings about the length of term with many candidates suggesting that interest will need to be paid and loan paid back in the medium term. There was almost too much discussion of Abi and the level of advice she was going to give and constraints it might place on Robs ability to run the business without always keeping an eye on the fact that the question was about venture capital itself and that it represents an equity stake. Yes, they will receive dividends if the company is profitable, but most have an exit route – usually an IPO – after a set period of time.

\n
c.
\n
\n

In many ways there was not much of a decision to be made with a current loss of $8m and a potential profit from the concert of $24m. Many candidates managed to avoid mentioning either of these two figures. Instead there was a good deal more use of the 0.8 current ratio and the 75 % gearing ratio, frequently with little relevance or validity to the argument. In many responses there was a great deal of direct repetition of the stimulus without clear analysis, synthesis or balance in leading to a conclusion.

\n
d.
\n
", "question_id": "20N.2.HL.TZ0.3", "topics": [ "2024-unit-1-introduction-to-business-management", "2023-unit-1-business-organization-and-environment", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "1-2-types-of-business-entities", "1-3-organizational-objectives", "3-1-sources-of-finance", "1-5-external-environment" ] }, { "Question": "
\n

ExotIce

\n

ExotIce (EI) is a private limited company producing and selling ice cream from a centrally located shop in a large capital city. Lena, the founder and chief executive officer (CEO), owns 80 % of the shares. Her two daughters, who travel the world to find new and exotic natural ingredients for new flavours, each own 10 % of the shares. The family value their freedom in the decision-making process and the collaborative and supportive nature of EI’s culture.

\n

EI’s unique selling point/proposition (USP) is based on:

\n\n

A strong brand name and brand loyalty has led to rapid growth in EI’s market share.
However, long queues (lines) are forming and the number of customer complaints is increasing. Lena is worried about the negative impact on EI.

\n

Lena is considering two strategic growth options:

\n\n
\n

Define the term unique selling point/proposition (USP).

\n
[2]
\n
a.
\n
\n

Explain the importance of people and processes in EI’s extended marketing mix.

\n
[4]
\n
b.
\n
\n

Explain one advantage and one disadvantage for EI of using a focus group.

\n
[4]
\n
c.
\n
\n

Recommend which of the two strategic growth options, Option 1 or Option 2, EI should implement.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

A unique selling point is any aspect of the organization, brand or product that enables differentiation in consumers’ minds from competitors.

\n

N.B. no application required. Do not credit examples.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full definition that conveys knowledge and understanding similar to the answer above. There should be some reference to differentiation from competition.

\n

Candidates may refer to either the product or brand aspect of the organisation only.

\n
a.
\n
\n

People and process are two out of the three extended marketing mix which that are highly relevant for an organisation that operates in the service sector like EI.

\n

The stimulus refers to people, in this case the employees, who are highly motived, skills, committed and interested. They serve the customers efficiently and interact well with the customers. The characteristics of the employees enhance the lack of some tangibility of the service on top of the actual ice cream of EI. People help to create USP.

\n

Candidates can refer to the daughter as people, who are successfully searching and finding exotics flavours to enhance customers’ satisfaction and create a USP. Do not penalize if candidates refer to employees or staff instead of ‘people’.

\n

Processes
The employees of EI do not only serve the ice cream but constantly interact with those who wish to create their own flavours. Creative freedom and professional employees’ support enable customers to try and create their own flavour. This adds significantly to the quality of their experience and is the basis for EI’s USP. The opportunities given for creativity and testing, enhances customers experience and as stated, create a USP/ clear basis for differentiation.

\n

Candidates can also refer to the process of serving customers efficiently. However, the long queues reported also suggest that process is not always efficient.

\n

Mark as 2 + 2.

\n

Award [1] for each relevant feature – P – explained and [1] for appropriate application to the organization/type of products to a maximum of [2].

\n

[2] cannot be awarded for the importance if the response lacks either explanation and / or application.

\n

For example:

\n\n
b.
\n
\n

Focus group, a primary research method, involve creating small discussion groups to gain insight into and information about opinion, attitudes and behaviour of the respondents.

\n

The possible advantages:
Lena’s daughter can engage in meaningful discussion with the participants and ask probing questions regarding their willingness/ motivation to open an EI’s franchise, their expectations, experience, reservations and so on. Lena should be more aware of the support that might be needed to ensure that the brand is not damage. A thorough research using a focus group can reduce the risk of failure.

\n

Asking local entrepreneurs may be a good starting point to get some initial responses about the level of interests, motivation, expectations, reservations and so on before a major strategic decision is made.

\n

However:
The use of local entrepreneurs is unlikely to provide the right sample as EI is interested in local as well as national franchising. Moreover, local entrepreneurs are more likely to presume their own business ideas rather than using EI’s. The sampling/targeted group can be seen as inappropriate and might give Lena inappropriate information.
One may doubt Lena’s daughter ability to conduct a focus group. She has no qualification and experience as she travels the world to find exotic flavours. Lack of knowledge and experience can result in inappropriate/ leading questions and hence inappropriate information for Lena to base her decision upon.

\n

Accept any other relevant/ applicable advantage/ disadvantage.
N.B Allow responses that may attempt to cite COVID as a disadvantage of focus groups since they rely heavily on the interaction between participants. Can ‘virtual’ focus groups e.g. Zoom, be as effective.

\n

Mark as 2 + 2.
Award [1] for each relevant advantage/disadvantage- explained and [1] for appropriate application to the organization to a maximum of [2].

\n

[2] cannot be awarded for the importance if the response lacks either explanation and / or application.

\n

For example:

\n\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

The two suggested options should enable EI to take advantage of its own strengths and reduce the main weakness of queues forming which can negatively impacted on EI’s main USP.

\n

More specifically:

\n

Option 1: Internal growth – Issuing shares to open eight shops locally and nationally

\n

By reducing her holding to 51 % Lena can potentially raise enough capital for EI to pursue the organic internal growth option.

\n

Pursuing an internal growth strategy, the nature and the pace of the growth can be fully controlled by Lena/the family especially in the short run. Lena will have full control of the process and the future operation of all of the shops as Lena/the family will still have the majority shares to retain the much-desired ownership, power, control and to make a major strategic decision. The collaborative culture of EI will be maintained. These issues are of high importance for the current owner.

\n

Still Lena will have to get some approval of other shareholders. One may judge this argument as less significant in the short run as the family will have the controlling interest in the business. In addition the only other shareholders are her daughters.

\n

Still, if EI is to grow further, more shares will have to be issued and Lena and the family control will be eroded as it only takes 2 % for the family to lose control. Still, as shares are only sold to friends and family, one may judge this issue as less significant.

\n

EI might also not raise all of the desired finance but this is unlikely as the targeted growth of 8 shops does not seem over ambitious.

\n

Having more shareholders might generate useful strategic input but it appears that Lena is not after shareholders inputs/ involvement – only finance.

\n

However, internal growth is a slower process than franchising and Lena is worried about the queues forming and its potential negative impact on the brand. N.B. do not credit candidates that wrongly assume shares can be sold publicly on a stock market – this is a Private Limited Company.

\n

Option 2: Franchising – External growth/Non-organic growth

\n

Some of the arguments in favour:

\n

The issue of ownership of the business is of no significance. No ownership will be lost.

\n

One may argue EI will be able to expand further with 50 outlets over 5 years. This growth is a much more significant growth and enables EI to build on its strong brand name and enable the brand to spread quickly throughout the country. The issue of the queues and its potential negative impact perhaps be solved quicker.
Moreover, a success might attract other franchises.

\n

EI will receive royalty regardless if the franchise is making a profit or not. However, this is not really an important argument as the motivation is not financial.

\n

However, this method of growth relies on the skills, motivation, the quality of management of the franchises.

\n

Despite some damage to EI’s USP if the franchisees do not follow the exact concept, Lena can terminate the agreement after few years. Still, some of potential damage to EI’s current strong brand/USP may be difficult to correct. It is however less likely as market research revealed that there are interested franchisees.

\n

Still EI’s USP cannot be protected and franchises can get experience and support from EI and start a similar business in the medium term. One may judge this argument as a very significant one as it is easy to open an ice cream shop, it is more difficult to come up and implement EI processes that can be copied.

\n

EI will have to spend money on training costs and to ensure that the same ingredients are sold to each of the franchises to ensure consistency and high standards. El is currently a ‘local’ brand. If franchising is to go ‘national’ then investment in the brand name will be needed.

\n

Control will be remained in the family but EI will have to ensure that each franchisee adheres fully to EI’s format. Poor service as well as poor quality ice cream will result in a major damage to the brand name.

\n

Accept any relevant/ applicable argument for and against each option.

\n

To sum up:
Candidates can recommend any option provided is well substantiated. For example:
Making more profit is not really a significant argument for EI. The issue power/ control and EI’s USP are of higher significance perhaps more than the speed.

\n

Arguments for and against that simply mirror each other, cannot be judged as balanced/ or as two arguments.

\n

Accept any other relevant argument for each option.

\n

It is expected that candidates provide a conclusion with a substantiated judgment.

\n

Accept any substantiated judgment.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

If a candidate evaluates / addresses only one option, award a maximum of [5].

\n

A balanced response is one that provides at least one argument for and one argument against each option. A balanced argument for Option 1 must consider both the financing as well as the growth aspect.

\n

Candidates may contrast one option with another for a balance as long as at least two arguments are given for each option.

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their response.

\n

\n
d.
\n
", "Examiners report": "
\n

Many candidates provided good responses, with most getting the word 'differentiate' into their answer, which was key. Some candidates simply repeated uniqueness as a requirement, which was effectively repeating the term in the question and on its own was not rewarded.

\n
a.
\n
\n

Some effective answers and the stimulus gave plenty of scope for application (which was used more effectively for people than process). There were common errors such as thinking that people = customers and process = the manufacturing process or the daughters trekking around the world in search of exotic flavours.

\n
b.
\n
\n

Most candidates identified one advantage and one disadvantage, although often the advantages provided were often common to other primary research methods. Application was less convincing with few candidates seeing the link between asking local entrepreneurs because the proposal was to use other entrepreneurs to take up franchises. Instead, many candidates suggested it was to give them better insight into flavours or some other aspect of the product.

\n
c.
\n
\n

Some candidates assumed that expansion was to be international rather than national. However, there was plenty in the stimulus to enable good candidates to do well, and some did. Most understood that the slow growth in option 1 would lead to a loss of control in terms of share ownership but also a maintenance on some control over the standards in the shop. Virtually all candidates assumed that whilst franchising, option 2, gave huge growth potential there would be a loss of quality as the franchisee would not maintain the same standards as Lena. This of course is far from the truth since tight franchising agreements often lead to better quality control than if you are trying to run eight outlets on your own. Often analysis was simplistic rather than thoughtful and evaluative with balanced arguments. Unfortunately, the issue of financing the two options was not discussed by many candidates, particularly in option 2 where very few candidates noted that the franchisees bear all the costs, leaving only training and marketing for Lena to cover.

\n
d.
\n
", "question_id": "20N.2.HL.TZ0.4", "topics": [ "2024-unit-4-marketing", "2023-unit-4-marketing", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "4-2-marketing-planning", "4-5-the-seven-ps-of-the-marketing-mix", "4-4-market-research", "1-3-organizational-objectives" ] }, { "Question": "
\n

With reference to an organization of your choice, examine the impact of globalization on marketing strategy.

\n
", "Markscheme": "
\n

Refer to Paper 2 markbands for 2016 forward, section C available under the \"Your tests\" tab > supplemental materials.

\n

N.B. Although the question asks for the application of one concept on another, it is still expected that Business Management content will be aligned with the concepts especially the second concept (the one being acted on).

\n

Please note that candidates can conclude that there was a minimal impact, however it has to be based on balanced arguments and evaluation.

\n

Additional guidance in relation to the assessment criteria
For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be met for that mark to be awarded.

\n\n

If only one concept is addressed:

\n\n

Where the question asks for impacts of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

Criterion B
For [2]: “…connection is not developed” should be treated the same as superficial.

\n

Criterion C
1+1 arguments are expected per concepts.

\n\n

Criterion D

\n\n

Criterion E

\n\n

Candidates need not explicitly say “stakeholder”.

\n
", "Examiners report": "", "question_id": "20N.2.SL.TZ0.8", "topics": [], "subtopics": [] }, { "Question": "
\n

Fort Industries (FI)

\n

Fort Industries (FI) manufactures aircraft. Jacques Fort founded the business in 1957 as a private limited company. He owned 100 % of the shares and managed the company strictly, making most of the decisions himself. FI grew through both internal and external growth. Later, it began to manufacture aircraft parts for other manufacturers.

\n

Jacques led his workforce by using Taylor’s motivation theory. He regularly set clear objectives and monitored his employees carefully. Employees had to meet international quality and safety standards. Although Jacques was controlling, employees had job security and believed that he had their best interests at heart.

\n

FI became a public limited company in 1988 and grew. Jacques found this transition difficult. He liked privacy and rarely spoke to the media. This had to change. Employees also began to ask for less supervision, wider spans of control and greater control over quality standards. Jacques retired in 2000 and his son, Henri, took over as CEO. Henri consults widely with his executive team and line managers on all decisions.

\n

Recently, FI has been struggling with liquidity. Henri implemented strict cost controls and analysed the following ratios (see Table 5).

\n

Table 5: Liquidity ratios for FI for 2019 and 2020 and industry averages for 2020

\n

\n

Often, FI has to delay payment to creditors. Employees are concerned that by saving money, safety standards at FI have been reduced.

\n

Henri is considering two options to solve the liquidity problem:

\n\n
\n

State two types of external growth.

\n
[2]
\n
a.
\n
\n

Explain one advantage and one disadvantage for FI of motivating its employees using Taylor’s motivation theory.

\n
[4]
\n
b.
\n
\n

Explain two reasons why Jacques may have found the transition difficult when FI became a public limited company.

\n
[4]
\n
c.
\n
\n

Recommend whether Henri should choose Option 1 or Option 2.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Types of external growth include:

\n\n

Award [1] for each type of external growth up to [2]. Maximum award: [2].

\n
a.
\n
\n

Taylor’s motivation theory will clearly have advantages for FI.

\n

Advantages:

\n\n

Disadvantages:

\n\n

Award [1] for a theoretical response with an additional mark for application to FI.

\n

Do not reward candidates who argue the advantages/disadvantages from the point of view of the worker and NOT the company.

\n

Mark as a [2+2].

\n
b.
\n
\n

When FI became a public company, Jacques’s situation changed. As a largely autocratic leader, he had not ever had to explain his decisions to anyone. He was in control. Now that he is the head of a public limited company with many shareholders, he had to explain his decisions to a board of directors that he had not personally selected.

\n

As head of a privately held company, Jacques could use company resources as he saw fit. If he made a poor decision and it hurt the finances of the company, he was only hurting himself. Now, as head of a publicly traded company, he has a fiduciary responsibility with the resources of the company. All resources should be used judiciously with the aim of improving the return to shareholders.

\n

As a public limited company, FI was subject to greater media scrutiny, which meant that any issue or problem was potentially subject to public viewing through the press. Jacques had always valued privacy. He largely controlled what information got to the press. Now as head of a publicly traded company, FI had to adopt an aggressive public relations strategy as a way to minimize informational risk and maximize shareholder value.

\n

Accept any other valid and relevant reason Jacques may have found the transition difficult.

\n

Mark as [2 +2].

\n

Award [1] for identification of a reason he may have found the transition difficult and an additional [1] for explanation and application.

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

The advantages of long-term debt are that FI gets money now and the repayment is over many years. Ownership is not affected by long-term debt, and, for a company as old and established as FI, financing from banks or other financial institutions would probably not be that hard to obtain.

\n

The disadvantages of long-term debt are that interests costs will rise, which increases outflows and liquidity will decrease. Additionally, the bank may put some restrictions on FI in the loan agreement which might limit future liquidity solutions in the future.

\n

The alternative method, issuing and selling additional shares of stock, has the advantage that it would raise equity, which has no interest payments. Thus, FI could raise money and invest it in current assets such that it could start taking trade and other discounts. Liquidity through increased cash inflow would improve.

\n

The main disadvantage is that the ownership of FI would be diluted. The Fort family would own a lesser percentage of the company than they currently do. Further, with greater equity, return on capital employed ratios would probably initially go down. Stakeholders will be concerned by this perceived fall in profitability.

\n

Any other strategies probably would not be appropriate or enough to fix the problems. Tinkering around with the composition of current assets is unlikely to make much of a difference. Presumably, FI turns its inventory as fast it can. Making debtors pay more quickly is not very likely to occur, as they will resist. This move could give FI’s competitors a competitive advantage if competitors do not alter payment terms.

\n

\n

“Balanced” means that the candidate has provided at least one argument for and one arguments against for each option.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n

Candidates may contrast one option with another for a balance as long as at least two arguments are given for each option.

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Award a maximum of [6] if the answer makes no reference to the quantitative data in the question.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their response.

\n
d.
\n
", "Examiners report": "
\n

Generally good responses with quite a few candidates outlining vertical and horizontal integration. Sometimes the simplicity of a question leads candidates to think they need to provide more than is required.

\n
a.
\n
\n

Most candidates had some idea of Taylor, usually referring to pay or piece rate and very occasionally to close supervision or quality and output control. Disadvantages usually ended by discussing poor motivation and many candidate responses saying that poor quality runs along with Tayloresque principles (not true unless substantiated). Application was often limited with few responses associating the paramount need for safety and quality in the aircraft industry. Also, the question was focused on FI and not the employees, which many candidates failed to grasp.

\n
b.
\n
\n

There was plenty of stimulus material to support strong application in this answer and many candidates made good use of it. A number of responses focussed on the fact that Jacques would be disappointed with a loss of income (presumably from salary and dividends), but this was not really allowable since his decision to go public ( having founded the business 31 years earlier) was probably a financial one as he eased into retirement.

\n
c.
\n
\n

Some good responses were given making use of the ratios (which were themselves of limited value) although few candidates referred to F1's ratios in comparison to the industry average. Most mentioned gearing levels (even though we were not told what it was) and many responses were excessively descriptive and theoretical on the Loan v Share Capital arguments. Few candidates recognised that Henri was a different type of leader compared to Jacques, and may be more inclined to accept a loss of control than his father.

\n
d.
\n
", "question_id": "20N.2.HL.TZ0.5", "topics": [ "2024-unit-1-introduction-to-business-management", "2023-unit-2-human-resource-management", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "1-5-growth-and-evolution", "2-4-motivation", "1-2-types-of-organizations", "1-3-organizational-objectives" ] }, { "Question": "
\n

Refer to the Multi Marketing (MM) case study (SL/HL paper 1 May 2021).

\n
\n

Outline two reasons why MM may relocate all of its operations to Bengaluru (lines 124–142).

\n
[4]
\n
a.
\n
\n

Explain how the proposed contract with Country X may conflict with MM ’s ethical objectives (lines 114–123).

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Reasons could include:

\n\n

The question is about relocation to Bengalaru specifically and not India, generally.

\n

Mark as 2 + 2.

\n

Accept any other relevant reason.

\n

Award [1] for each reason identified, up to [2], and award [1] additional mark for appropriate application.

\n
a.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

MM’s ethics include choice of customer. MM takes a firm line on:

\n\n

The proposed contract conflicts with MM ethics because Country X has been accused of:

\n\n

The proposed contract could negatively affect the reputation of MM. MM has worked hard to develop its profile and credibility as an ethical company, but this image could be damaged. This could have negative implications for future contracts, as some current clients may not want to be associated with MM any longer. This may be the case of some NGOs that specifically campaign for human rights or carbon footprint – and whose own CSR policies may stop them from working with an agency that does not consistently share the same values. Besides, country X has “arrested journalists for criticizing the government” (line 121) – with the contract, MM could give the impression that it condones such practices, and some journalists could create a negative campaign against MM, suggesting that its ethical claims are only a smoke screen meant to get them more contracts and more profit.

\n

Accept any other relevant explanation.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.

\n

Award a maximum of [3] for a theoretical answer.

\n

Award a maximum of [4] for an answer that describes MM ethics and the proposed contract with country X.

\n
b.
\n
", "Examiners report": "
\n

Most candidates showed some understanding of the reasons for business relocation, however not all of them could apply their reasons to the business (MM) and to the place (Bengaluru). The better answers chose two valid reasons and related them directly to Bengaluru, as opposed to India in general (so comments about Brexit, however topical, did not really help make a case for a relocation to Bengaluru).

\n
a.
\n
\n

Many candidates simply listed MM’s ethical stance and the failings of Country X, copying long extracts from the case study. Better candidates were able to relate the two lists with explanations as to why Country X was unsuitable despite the contract’s financial attractiveness, and what the impact for MM would be, especially in terms of brand image, reputation, customer loyalty and future customers. Unfortunately, many responses were descriptive.

\n
b.
\n
", "question_id": "21M.1.SL.TZ0.3", "topics": [ "2023-unit-5-operations-management", "2024-unit-1-introduction-to-business-management" ], "subtopics": [ "5-4-location", "1-3-business-objectives" ] }, { "Question": "
\n

Refer to the Multi Marketing (MM) case study (SL/HL paper 1 May 2021).

\n
\n

A friend of Aarvan owns a film studio, Satvi Films (SF), in Bengaluru. Aarvan has recommended that MM take over SF. SF has a reputation for making high-quality films that are very popular and it is accustomed to making full-length films for the Indian market. It has also made social marketing advertisements for Indian television. SF produces films to meet the precise demands of its customers, including producing them to customer specifications and tight deadlines. There are often pressures to get work done on time, especially as SF does not allow overtime working. Rachel is concerned that SF ’s managers are autocratic and that many of its employees lack the freedom to be creative. Although the pay scales at SF are lower than average for India, its managers do receive financial rewards, such as bonuses.

\n

To assess the possible takeover, Rachel is analysing financial information for SF (Table 1).

\n

Table 1: Selected financial information for SF for 2019 and 2020

\n

\n

Aarvan thinks that a takeover of SF will reduce MM ’s production costs and that owning SF would make it easier for MM to produce the advertisements that customers want. Aarvan knows that the owner wants to sell, so SF would be cheap and easy to buy.

\n

However, Javed thinks that SF does not have enough experience in making short, attention-grabbing advertisements: its main experience is in making full-length films for cinema release. He also thinks that it would be difficult to manage two very different businesses, each with different conditions of employment.

\n
\n

Define the term social marketing.

\n
[2]
\n
a.
\n
\n

Using Table 1 calculate the current ratio for SF for 2020 (show all your working).

\n
[2]
\n
b.i.
\n
\n

Using Table 1 suggest one reason why SF may have a liquidity problem.

\n
[2]
\n
b.ii.
\n
\n

Explain two factors that may influence the motivation of employees at SF.

\n
[4]
\n
c.
\n
\n

Recommend whether MM should take over SF.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

PLEASE NOTE: This content is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used. 

\n

Social marketing is the use of commercial marketing tools and techniques (such as market research; defining objectives and targets; creating and promoting brands; preparing strategies and plans; setting actions and budgets etc.) in order to influence individuals’ behaviour, to improve their well-being and/or that of society as a whole. Unlike commercial marketing, the aim is not to encourage purchase, but to raise awareness and lead to change.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full definition that conveys knowledge and understanding similar to the answer above (students are not expected to word their definition exactly as above).

\n
a.
\n
\n

Current ratio=current assets current liabilities                       = 4+10+1625=3025=1.2

\n

This can also be expressed as “1.2 : 1”.

\n

Award [2] for correct answer, showing the working.

\n

Award [1] for or a correct answer with units or a percentage sign, or an incomplete answer (such as 6/5) or if the candidate calculated the current ratio for 2019 (answer: 1.33).

\n

Do not reward formula only.

\n
b.i.
\n
\n

Liquidity is a measure of how quickly current assets (stock, debtors, cash) can be converted into cash (cash being already liquid anyway). A liquidity problem means that the company may struggle to pay off its short-term debt obligations.

\n

In the case of SF, possible reasons include:

\n\n

Accept any other reasonable reason.
Use OFR.
Credit candidates who calculated the acid test ratio.

\n

Award [1] for a basic answer that conveys some understanding of a reason why SF may have a liquidity problem. The answer may be short or descriptive, showing some partial knowledge of what current assets/liabilities/ratio are, and/or what liquidity means.

\n

Award [2] for an answer that conveys knowledge and understanding of a valid reason why SF may have a liquidity problem. The answer shows both theoretical understanding and application to SF.

\n
b.ii.
\n
\n

Factors could include:

\n\n

The answer must be explicitly about SF, not about MM, even if some aspects could be relevant for both.

\n

Accept any other relevant factor.

\n

Mark as a 2 + 2.

\n

Award [1] for an appropriate factor in context and for an explanation, which may include a theoretical reference (for example: to Pink or Herzberg). Award a maximum of [2] for each factor. Maximum award overall: [4].

\n
c.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Arguments for:

\n\n

Arguments against:

\n\n

Accept any other relevant discussion.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section B.

\n

For an answer with no effective use of context (theoretical answer) award a maximum of [3].

\n

For an answer that only looks at one side, award a maximum of [5].

\n

Both sides of argument considered but descriptively, award a maximum of [6].

\n

Both sides considered, good use of evidence, particularly from section B, but no effective conclusion/evaluation award a maximum of [8].

\n
d.
\n
", "Examiners report": "
\n

Few candidates were able to define ‘social marketing’ correctly: many thought it was about the use of social media, or about ensuring that the marketing messages reach a very high number of people. The answers were polarised: candidates who knew the meaning usually scored 2 marks; the ones who did not, scored zero marks. One mark was awarded when the answer was correct but not sufficiently developed, for example only writing that “social marketing is the use of commercial marketing to help make a change in society”: this is correct, but not enough – and candidates had enough time to develop their answers.

\n
a.
\n
\n

Although the formula to calculate the current ratio was given to candidates (current assets divided by current liabilities), a high number of candidates did not answer correctly; the main reason seems to be the fact that they did not know that current assets = stocks + cash + debtors. Others added units, such as $ or %, which showed a lack of understanding of what a ratio is. It was disappointing to realise that many DP candidates do not have that basic knowledge about finance.

\n
b.i.
\n
\n

The topic of liquidity was not well understood either, so again it was disappointing to realise that many DP candidates do not have that basic knowledge about finance. Examiners had a mark scheme inviting them to accept many possible reasons why SF may have a liquidity problem, however when basic knowledge of the notion of liquidity was absent, it was not possible to award any marks. More positively, there were also some excellent answers, for example some candidates calculated the acid ratio and commented on this, or compared 2019 or 2020, or questioned the importance of stocks for a film studio.

\n
b.ii.
\n
\n

Generally, this question was answered quite well, with the question asking candidates to explain two factors that may influence the motivation of SF employees. The stimulus material included many ideas that could be used as a starting point, for example the facts “that SF ’s managers are autocratic and that many of its employees lack the freedom to be creative”. Some candidates were able to interpret this in context (about the fact that SF is a film studio, so a business where creativity is essential) or to add some theoretical knowledge (typically using Maslow’s or Pink’s theories). Weaker answers were only descriptive, or only quoted extracts from the case study.

\n
c.
\n
\n

The final, evaluative question was quite well answered, for two main reasons: (1) most candidates understood the topic, about takeover/acquisition, (2) most answers were balanced and well structured, with both advantages and disadvantages. The best answers were long, detailed and well developed, presenting a range of quantitative and qualitative arguments and counterarguments, well applied to the scenario of MM and SF, using subject terminology. Weaker answers were either too short, or one-sided.

\n
d.
\n
", "question_id": "21M.1.SL.TZ0.4", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-4-marketing", "2023-unit-3-finance-and-accounts", "2024-unit-3-finance-and-accounts", "2024-unit-2-human-resource-management" ], "subtopics": [ "1-6-growth-and-evolution", "4-5-the-four-ps-(product-price-promotion-place)", "3-5-profitability-and-liquidity-ratio-analysis", "3-7-cash-flow", "2-4-motivation-and-demotivation" ] }, { "Question": "
\n

Refer to the Multi Marketing (MM) case study (SL/HL paper 1 May 2021).

\n
\n

Outline two benefits for MM of outsourcing human resource management (HRM) (lines 51–54).

\n
[4]
\n
a.
\n
\n

Explain how MM has differentiated itself.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Possible benefits include:

\n\n

Accept any other relevant benefits.

\n

Mark as a 2 + 2.

\n

Award [1] for each relevant benefit identified and an additional [1] for further outline in context. Award a maximum of [2] for each benefit.

\n
a.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

This question assesses candidates’ knowledge and understanding of differentiation, both in general (what it means, how it may be achieved) and in the specific case of MM.

\n

Companies differentiate themselves from their competitors in many ways, such as:

\n\n

The case study explicitly mentions about customer service, as MM “aims to respond to customers more quickly than others in the industry” (line 65). Other methods of differentiation are implied, for example MM has strong ethical objectives (e.g. only accepting customers with strong equal opportunities policies) and highly values cultural diversity (e.g. having multicultural content in the marketing strategies it creates). Their competitors may share those same ethical objectives and value cultural diversity too. The case study does not provide much information about MM competitors, yet this is not a problem to answer this question:

\n

Accept any other relevant explanation.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.

\n

Award a maximum of [3] for a theoretical answer about differentiation.

\n

Award a maximum of [4] for a descriptive answer.

\n
b.
\n
", "Examiners report": "
\n

Most candidates demonstrated some understanding of outsourcing and its benefits. Some candidates did not relate their understanding to human resource management. Good answers utilised the pre-release case study and context to the business (MM) in relation to cost-saving and to the founders’ areas of expertise (marketing and communication, as opposed to HR).

\n
a.
\n
\n

Many candidates only copied sentences from the case study, so they were not able to show whether they really understood the meaning of differentiation. Many responses consisted of simple lists of ideas, but others were well applied to MM, especially with reference to competitors and to customers, sometimes using subject terminology (such as USP) very well.

\n
b.
\n
", "question_id": "21M.1.SL.TZ0.1", "topics": [ "2024-unit-5-operations-management", "2024-unit-4-marketing" ], "subtopics": [ "5-4-location", "4-2-marketing-planning" ] }, { "Question": "
\n

Refer to the Multi Marketing (MM) case study (SL/HL paper 1 May 2021).

\n
\n

MM ’s growth has been helped by its unique selling point/proposition (USP) of rapid response to customer needs and by its high-quality customer service. New employees undergo detailed training to become skilled in:

\n\n

The business takes a multicultural approach to its customers, employees and other stakeholders. MM ’s approach to diversity is one of the features that stakeholders say they like about the business. The company also ensures that it accommodates many cultural differences.

\n

According to a business service that provides measures of social behaviour for every country, in British businesses:

\n\n

In comparison, Indian businesses:

\n\n

Maintaining high levels of customer service is expensive. MM has increasing costs (line 107). Rachel is concerned about MM ’s finances and is examining the latest accounts for the company for 2019 and 2020 (Table 1) to identify problems.

\n

Table 1: Selected financial information for MM for 2019 and 2020

\n

\n
\n

Define the term unique selling point/proposition (USP).

\n
[2]
\n
a.
\n
\n

Calculate the debtor days for MM at the end 2020 (show all your working).

\n
[2]
\n
b.i.
\n
\n

Explain one method MM could use to improve its liquidity.

\n
[2]
\n
b.ii.
\n
\n

Explain how the people element of the extended marketing mix has influenced MM ’s marketing strategy.

\n
[4]
\n
c.
\n
\n

Discuss how cultural differences within MM may influence employer–employee relationships.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

USP (unique selling point/proposition), the feature or features that make a product or service different (or is differentiated) from other similar products of competitors.
It is the product/service that has the USP, not the business.

\n

Candidates are not required to use the context of MM but should not be penalized if they do.

\n

Award [1] for some understanding.

\n

Award [2] for clear understanding. Candidates do not have to word exactly as above.

\n
a.
\n
\n

Debtor days ratio=debtorssales revenue×365   =16146 ×365

\n

= 40 days (or just 40)

\n

Award [2] for correct answer (allow rounding).

\n

Award [1] for an attempt or if correct answer has $m or million.

\n

As 2020 is a leap year you can allow 16/146 x 366 = 40.11 days. If candidates correctly use some or all data from 2019, they can be awarded one mark (e.g. 18/175 x 365 = 37.54 days).

\n

Do not reward formula only.

\n
b.i.
\n
\n\n

Methods that change the balance between current assets and current liabilities in the right direction should be rewarded. Methods suggested must improve liquidity for MM.

\n

Some methods, such as debt factoring and using cash to reduce overdraft, may improve cash flow but do not improve liquidity so should not be rewarded.

\n

Award [1] for identifying a method and [1] for explaining in context.

\n

Accept any other reasonable reason.

\n
b.ii.
\n
\n

Influences could include:

\n\n

Accept any other relevant reason.

\n

Candidates need to show the impact on the marketing strategy of MM. e.g. enhanced training may lead to better customer service which would aid marketing leading to the possibility of charging higher prices. e.g. improved after-sales service can lead to a stronger reputation leading to higher sales/increased market share etc. 
Candidates do not need to specifically define the people element of the extended marketing mix but should show understanding.

\n

Award [1] for some understanding of the people element of the extended marketing mix. [1] for a relevant influence and [2] for application/context. Maximum award overall: [4].

\n
c.
\n
\n

PLEASE NOTE: This content is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

The key factor is that there are offices in the UK and India and customers around the world.

\n

In the UK employers might:

\n\n

In India employers might:

\n\n

Candidates are expected to largely make use of the evidence in Section B but can take evidence from the wider case evidence.

\n

Candidates may focus some of their answer on possible cultural differences between the owners, however marks may be limited by the lack of context used.

\n

Candidate may make reference to the work of Charles Handy on different types of culture (power; task etc.). Whilst not required it is a valid line of discussion.

\n

Candidates need to show the impact on employer/employee relations at MM.

\n

Accept any other relevant discussion.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section B.

\n

For an answer with no effective use of context (theoretical answer) award maximum [3].

\n

For an answer that does not focus on the impact on employer/employee relations award a maximum [4].

\n

Award [4] if comparisons are presented as an undeveloped list.

\n

For an answer that is lacking balance e.g. only looks at one country; only looks at advantages etc. award a maximum [6].

\n

Both sides of discussion considered but descriptively max [6].

\n

Both countries considered, good use of evidence, particularly from section B, but with no/limited effective comparison/evaluation award a maximum of [8].

\n

For [10] marks a fully supported comparison/evaluation with good use of evidence, particularly from section B. 

\n
d.
\n
", "Examiners report": "
\n

Most candidates were able to give a definition of unique selling point/proposition. In several responses, the definition related to the business as a whole. This is not sufficiently precise. USP should apply to a product or service rather than a business.

\n
a.
\n
\n

Most candidates achieved two marks. Those candidates that failed to gain two marks either used a different measure of unit (rather than days) or made an error of calculation.

\n
b.i.
\n
\n

Improving liquidity was not a concept that was generally well understood. Too many responses made general comments such as ‘reduce liabilities’ or ‘reduce the overdraft’. Better answers gave a method such as ‘changing credit terms given to customers’ and then relating that to the figure calculated in part (i).

\n
b.ii.
\n
\n

Too many candidates interpreted ‘people’ in the extended marketing mix as the customers. Better responses tended to focus on the employees. While the use of customers could be an acceptable interpretation of the concept if the focus is on how the employee/customer relationship is developed in terms of customer services it is not a valid approach to answering this question if there is no link to employees. The second half of the answer needed to show the impact on the marketing strategy of MM. This was often a weakness of responses. The best answers focussed on issues such as training in respect of customer service and the impact this can have on the marketing strategy of MM.

\n
c.
\n
\n

This question generated a range of responses. The best candidates took the stimulus material on the cultural differences between business in the UK and in India, drew out the differences and then developed these ideas in how the employer/employee relationships might change in terms of organization structures, sometimes with reference to Handy or references to levels of hierarchy and spans of control, management and leadership with reference to differing styles. In weaker answers issues such as teamwork, individuality, competitiveness, building relations with customers were often discussed but without developing how these issues impact on employer/employee relations. Too many candidates failed to make enough use of the stimulus material provided in Section B. Answers that only make use of the pre-released case study often limit the marks that are available.

\n
d.
\n
", "question_id": "21M.1.HL.TZ0.4", "topics": [ "2024-unit-4-marketing", "2023-unit-3-finance-and-accounts", "2023-unit-4-marketing", "2023-unit-2-human-resource-management" ], "subtopics": [ "4-2-marketing-planning", "3-6-efficiency-ratio-analysis", "3-5-profitability-and-liquidity-ratio-analysis", "4-6-the-extended-marketing-mix-of-seven-ps", "2-6-industrial/employee-relations" ] }, { "Question": "
\n

JP

\n

JP produces electric guitars. It is a cooperative owned by a committed workforce who share in the management and success (or failure) of the company and its profits. Workers enjoy having control over the workplace and are productive. However, JP’s continued success is threatened by insufficient finance, which prevents them from spending more on traditional promotional methods.

\n

JP’s guitars are expensive relative to the competition but are known for their quality. Its customers are very brand loyal. The use of social media marketing by many famous musicians influences JP’s brand loyalty and awareness. Unfortunately for JP, one especially famous musician using a JP guitar on social media recently received negative publicity about his private life.

\n

JP follows strict quality procedures that include quality circles. JP’s management believe that teams of workers employed on the production line know the production process best and are in the best position to make any necessary improvements. Staff turnover at JP is very low.

\n

XYZ, a large company known for its kitchen appliances, is considering moving into the musical instrument market as part of a growth strategy – they want the high gross profit margins on guitars (compared to the low profit margins on kitchen appliances). XYZ wants to take over JP. XYZ has a strong balance sheet and large cash reserves and is an expert at marketing.

\n

The cooperative has refused to consider the takeover bid from XYZ. The cooperative has argued that the culture of XYZ is too different to JP’s. XYZ’s management are viewed as too controlling. However, increased price competition has led to falling sales, forcing JP to make redundancies. Some cooperative members argue that unless JP accepts XYZ’s bid, additional jobs will be lost.

\n

[Source: © International Baccalaureate Organization 2019]

\n
\n

Define the term cooperative.

\n
[2]
\n
a.
\n
\n

Explain one positive and one negative impact of social media marketing on JP’s promotional strategy.

\n
[4]
\n
b.
\n
\n

Explain two benefits to JP of using quality circles.

\n
[4]
\n
c.
\n
\n

Discuss whether JP should accept XYZ’s takeover bid.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

A cooperative is a type of ‘for profit social organization’ that is established owned and managed collectively by members, each of whom has a financial interest in the business and a say in how the business is run.
A cooperative operated by its members for their mutual benefit and can be organized by producers, consumers or employees

\n

Award [1] for a partial answer showing some partial knowledge of cooperatives such as that it is an organization which is owned and run by all its members.

\n

Award [2] if there is a further understanding that cooperatives exist for profit but with some social objectives that benefit its members.
Candidates do not have to identify the different types for full marks

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.
Award [2] for a full definition that conveys knowledge and understanding similar to the answer above.

\n
a.
\n
\n

One positive impact of social media (Facebook, Instagram) marketing on JP’s promotional strategy is cost effectiveness, the use of various types of social media is cheap and often free. This can positively impact on JP’s finance given the financial difficulties outlined in the stimulus.

\n

A second impact could be to strengthen the brand loyalty of the business, given that social media marketing is being used by famous musicians with a lot of followers which would be important given that JP’s guitars are more expensive than those of the competition.

\n

One negative impact is that celebrities endorsing JP’s guitars can be unpredictable and beyond JP’s control. Any poor behaviour or negative publicity can damage JP’s branding in the eyes of potential customers. Increased competition has meant that JP will need to ensure that its social media marketing presents the right image for the business. A negative impact on branding can lead to a fall in demand and further financial difficulties.

\n

Although cost effective, the use of social media marketing may make it difficult for JP to accurately measure the impact of its promotional strategy. Given that JP only uses social media it is very important for management to assess its effectiveness. Also, if social media marketing is not carried out professionally, it could contribute to a negative image such as a lack of response to customer complaints being viewed publicly.

\n

Accept any other relevant positive impact / negative impact.
The impact has to be applicable to social media marketing not any type of promotion.

\n

Mark as 2 + 2.

\n

For an identification or a description of one benefit / cost with or without application [1]:

\n\n

Application must refer to the impact of social media marketing on JP’s promotional strategy.

\n
b.
\n
\n

Candidates can refer to marketing, operation or Human Resource Management issues.
It is expected that the candidates demonstrate explicit understanding of the term/ practice of using quality circles.

\n

The benefits to JP of using quality circles revolve around the motivational/productivity/teamwork/cooperation/possible empowerment benefits gained from participation. The fact that JP is a cooperative also implies that quality circles will align with the culture of the organization (supportive, common goals).
Meeting together to find better methods of production/ practices creates high quality products/ guitars. JP established a Unique Selling Point based on quality which creates brand loyalty.
Empowered staff are more motivated and therefore staff turnover is also very low which reduces recruitment costs and training as well as increased efficiency when the higher levels of needs/ the motivators of employees are met. There is evidence in the case study that JP workers are productive and take pride in their work.

\n

Accept any other relevant benefit.

\n

Mark as 2 + 2.

\n\n

Application must refer to the benefits to JP of using quality circles.

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

There are a number of compelling reasons as to why JP should accept the takeover bid.
Financially, one may argue that JP needs the financial strengths of XYZ. JP’s financial future will be guaranteed. Price competition is eroding sales, indicating that financial sustainability is in doubt.

\n

The number of redundancies will probably be reduced and jobs will be saved. The cooperative may be kept intact. However, if the takeover does go ahead then a number of roles may be lost due to duplication.

\n

The stimulus indicates that XYZ has a strong balance sheet, large cash reserves and are also experts at marketing. JP is likely to benefit from XYZ’s expertise in the latter area given that its brand loyalty and awareness are dependent on social media marketing, which can be difficult to control and measure, as the stimulus indicates.This marketing expertise and finance will allow JP to promote its products through more traditional methods by enhancing/growing brand awareness and loyalty further. One may judge this argument as a significant one given the current problems that JP is facing.

\n

However, the motives for the takeover are narrow. They seem to be driven by financial considerations only. The takeover could change the culture at JP and the cooperative has already refused to consider the bid. Staff turnover is very low and the fear is that the takeover may force some staff to consider their position at JP. Staff turnover may rise, increasing recruitment and training costs, as it is assumed that quality circles would be kept. Expertise could be lost.

\n

As a large company, the combination of XYZ’s financial power and JP’s determination to remain as they are will cause conflict. XYZ is likely to be a profit maximizing organization with few social objectives. JP’s culture will have to change. JP will not remain as a for profit social enterprise.
XYZ has experience in kitchen appliances rather than producing musical instruments. Given the competition, XYZ might not be successful unless it finds ways of reducing costs as marketing might not be effective. Still, one may argue that marketing and financial expertise are transferable.
XYZ’s management tendency for strict control is highly likely to result in abandoning the practice of quality circles that requires empowerment and trust. The interest and motivation of JP’s employees is likely to be diminished considerably with further implications for quality and branding.
Perhaps JP should reject the offer and find some sources of finance to take the cooperative through this difficult time as it is likely that remaining as a cooperative is very important for the members while XYZ has just financial objectives – as stated in the stimulus.
The members of the cooperative will have to prioritize their objectives - being a social enterprise with some mutual benefits of changing into a for profit corporation.

\n

Ultimately, JP may have to revisit its financial forecasts and as a cooperative may have to take a more pragmatic view. If the warnings of additional jobs being lost come to fruition, the cooperative will have to accept the offer. The opportunities for growth in their market are considerable and may allow the business to regain market share. As the cooperative enjoys the successes of the business, the decision to accept the bid is warranted, although some concerns over culture loss and empowerment of the workforce must be taken into account if the transition is to be a smooth one.

\n

A conclusion with judgment is expected.
Accept any substantiated judgment.

\n

A balanced response is one that covers at least two arguments for and at least two arguments against.
It is expected that a substantiated judgment is provided

\n

Candidates cannot reach the top two mark bands if the issue of being a cooperative- for profit social enterprise is not covered.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward with further guidance below.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n

Candidates cannot reach the top marks if there is no relevant reference/application to the stimulus.

\n
d.
\n
", "Examiners report": "
\n

Most candidates produced an incomplete definition of cooperative. Only a small percentage showed understanding that a cooperative is a for profit social enterprise. Most covered joint ownership/management. Some produced a definition of partnership.

\n
a.
\n
\n

Conceptually/ theoretically most candidates understood the essence of social media. In many cases half of the marks were lost, either due to lack of specific application or due to lack of full explanation of the positive/ negative impact of social media marketing.

\n

Some candidates just copied sentences from the stimulus regarding bad publicity without full explanation of the impact.

\n
b.
\n
\n

Only a very small percentage of candidates showed a clear theoretical understanding of quality circles. Most candidates referred to quality control or quality assurance without demonstrating understanding of what quality circles actually do. On many occasions, only 1 mark was awarded due to some application/ references to the quality of the guitars. Many candidates showed good theoretical understanding, but their responses lacked application.

\n
c.
\n
\n

Some candidates produced relevant, balanced and substantiated responses. Many candidates attempted to provide balanced responses with conclusions, in most cases the analysis throughout and the resultant conclusions lacked substantiation. Despite commenting on the same issue many times, a significant number of candidates still just repeat the information from the stimulus without adding value, that is, without providing further explanation/ expansion and without weighting the significance/ importance of the arguments.

\n

Please note that just writing that overall ‘the argument for… outweigh the arguments against’, is not really an evidence of substantiation/ supported arguments.

\n

Most candidates did not refer to the fact that JP is a cooperative when they presented arguments for and arguments against accepting the takeover bid by XYZ.

\n
d.
\n
", "question_id": "19M.2.HL.TZ0.3", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-4-marketing", "2023-unit-5-operations-management" ], "subtopics": [ "1-2-types-of-organizations", "4-5-the-four-ps-(product-price-promotion-place)", "5-3-lean-production-and-quality-management", "1-6-growth-and-evolution" ] }, { "Question": "
\n

Hafs

\n

Hafs is a new cooperative. It plans to manufacture wastepaper bins for the household market.

\n

Hafs has forecast its sales in 2021 as 25000 units. Its forecasted break-even chart is shown in Figure 1.

\n

Figure 1: Forecasted break-even chart for Hafs for 2021

\n

\n
\n

State two features of a cooperative.

\n
[2]
\n
a.
\n
\n

Using Figure 1 explain what the y axis shows.

\n
[2]
\n
b.i.
\n
\n

Using Figure 1 calculate forecasted profit if sales are 25 000 units in 2021 (show all your working).

\n
[2]
\n
b.ii.
\n
\n

Using Figure 1 calculate the total contribution in 2021 if Hafs only sells 20 000 units (show all your working).

\n
[2]
\n
b.iii.
\n
\n

Explain whether an increase in total fixed costs has an impact on unit contribution.

\n
[2]
\n
c.
\n
", "Markscheme": "
\n

Co-operatives are businesses owned and run by and for their members. The members may be customers, employees or residents. All members have an equal say in what the business does and a share in the profits.

\n

Award [1] for each feature identified – no reference to Hafs is needed:

\n\n

N.B. If a candidate states that a cooperative is a social enterprise, accept that point as one feature for [1].

\n
a.
\n
\n

PLEASE NOTE: This content is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

Award [1] for a correct label or naming of revenue and costs and a second mark for a full explanation, such as “The y-axis represents both the forecasted cost and revenue figures for Hafs. As its sales or output or activity increases (x-axis), Hafs has higher revenue and higher total costs, which can be determined by their relationship to the y-axis and its scale. Wording does not have to be exactly as above. Maximum award: [2].

\n
b.i.
\n
\n

The level of profit if sales are 25 000 units in 2021 is
TR = $250 000 TC = $175 000 [1]
= $75 000 [1]

\n

Candidates that do not show any working and simply write 75 000 can only be awarded [1].

\n
b.ii.
\n
\n

Total contribution is the difference between total sales revenue and total variable costs.

\n

At an output of 20 000 units TR = $200 000
TVC = $100 000 (TC = $150 000; TFC = $50 000)
= $200 000 − $100 000
= $100 000

\n

To calculate TVC, take total costs and subtract fixed costs, as follows
$150 000 minus $50 000 = $100 000

\n

Candidates that do not show any working and simply write 100 000 can only be awarded [1].

\n
b.iii.
\n
\n

Award [1] for a statement such as “it will have no impact”.

\n

Award a further [1] for an explanation such as “unit contribution is the difference between the selling price and its variable cost, therefore an increase in fixed costs will have no impact on unit contribution”.

\n
c.
\n
", "Examiners report": "
\n

Many candidates could not state two features of a cooperative.

\n
a.
\n
\n

Most candidates earned at least one mark explaining the y axis.

\n
b.i.
\n
\n

Many candidates could correctly calculate the forecasted profit.

\n
b.ii.
\n
\n

In some instances, candidates provided the unit contribution instead of the total contribution.

\n
b.iii.
\n
\n

This question, explaining whether an increase in total fixed costs has an impact on unit contribution, was challenging for many candidates.

\n
c.
\n
", "question_id": "21M.2.SL.TZ0.1", "topics": [ "2023-unit-3-finance-and-accounts", "2024-unit-5-operations-management", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "3-3-break-even-analysis", "5-5-break-even-analysis", "1-2-types-of-organizations" ] }, { "Question": "
\n

The Pie Store (TPS)

\n

The Pie Store (TPS) bakes pies and sells them in its three retail stores. When developing its brand, TPS used the mathematical symbol pi (π). In 2020, each store made a profit.

\n

Table 1: Financial information for TPS’ three retail stores for 2020 (all figures in $)

\n

\n

At the end of 2020, the balance sheet for TPS (the three stores combined) showed $200 000 in assets and $120 000 in liabilities. $50 000 of the liabilities was long-term debt.

\n
\n

Describe one step in the development of a brand.

\n
[2]
\n
a.
\n
\n

Calculate which store made the highest net profit before interest and tax (no working required).

\n
[1]
\n
b.i.
\n
\n

Calculate which store had the highest profitability (show all your working).

\n
[2]
\n
b.ii.
\n
\n

Calculate TPS’ equity.

\n
[1]
\n
c.i.
\n
\n

Calculate TPS’ return on capital employed (ROCE) (show all your working).

\n
[2]
\n
c.ii.
\n
\n

Explain one effect that the $50 000 long-term debt may have on TPS’ profit and loss account.

\n
[2]
\n
d.
\n
", "Markscheme": "
\n

Common steps in developing a brand include:

\n\n

Accept any other relevant step. Candidates do not have to use identical wording to the above.

\n

Award [1] for identification of a step and [2] for an appropriate description of it.

\n
a.
\n
\n

\n

Store 2 made the highest profit.

\n

Award [1] for the correct answer. Working not required.

\n
b.i.
\n
\n

$24 000$180 000=13.33 %$27 000$223 000=12.11 %$18 000$170 000=10.59 %

\n

Store 1 had the highest profitability.

\n

Award [1] for correct working and [1] for correct answer. Own figure rule applies.

\n

On this question, to get marks for correct working, candidates must provide all three calculations and perform all three calculations correctly. Disregard minor errors of rounding provided that those errors are irrelevant to correct
determination of which store had the highest profitability.

\n

 

\n
b.ii.
\n
\n

 $200 000 [total assets] − $120 000 [total liabilities] = Equity

\n

   = $80 000

\n

Award [1] for the correct answer.

\n
c.i.
\n
\n

Step 1: add up the profits from the three stores.

\n

$24 000 + $27 000 + $18 000 = $69 000

\n

Step 2: Calculate ROCE.

\n

$69 000$50 000 (loan capital)+$80 000 [Equity] =53.08 %

\n

Award [1] for correct working and [1] for correct answer. Own figure rule applies.

\n
c.ii.
\n
\n

The $50 000 in long-term debt would have to be repaid with interest. That interest expense would have three effects:

\n\n

Award [1] for identification of an effect (or demonstration of some understanding). The candidate has to link interest expense (from the debt) to the profit and loss account and/or to changes in tax. Award an additional [1] for a complete, clear explanation. Candidates do not have to explain all three of the bulleted points above, only one.

\n
d.
\n
", "Examiners report": "
\n

Many candidates performed well on this question.

\n
a.
\n
\n

Many candidates choosing question 2 answered this question correctly.

\n
b.i.
\n
\n

Many candidates choosing question 2 answered this question correctly, though some candidates did not know how to calculate profitability.

\n
b.ii.
\n
\n

Surprisingly, more than a few candidates did not know how to calculate equity.

\n
c.i.
\n
\n

Though some could calculate return on capital employed (ROCE), many candidates had difficulty with this question.

\n
c.ii.
\n
\n

Many candidates were too vague in their response to this question and did not specify exactly the impact of long-term debt on the profit and loss account.

\n
d.
\n
", "question_id": "21M.2.SL.TZ0.2", "topics": [ "2023-unit-3-finance-and-accounts", "2023-unit-4-marketing" ], "subtopics": [ "3-3-break-even-analysis", "3-5-profitability-and-liquidity-ratio-analysis", "3-4-final-accounts", "4-5-the-four-ps-(product-price-promotion-place)" ] }, { "Question": "
\n

The Warriors

\n

The Warriors are a soccer* club who perform well but have not won any trophies. Recently, The Warriors have had above average turnover of managers, increasing time spent on recruitment. Player turnover has also been higher than that of other clubs.

\n

Dave Atkinson, owner and former player, is an autocratic leader who denies blame for the high manager and player turnover. He publicly criticizes players. However, fans adore Dave. He was a successful player, supports the fans and is committed to corporate social responsibility (CSR). He has:

\n\n

After a recent poor performance, Dave demanded that all players donate 50 % of their pay for that match to good causes. Two new players used social media to complain. In response, Dave threatened to cancel their contracts. The other players refused to turn up for training to show solidarity. Dave then locked the players out of the stadium.

\n

This controversy comes at a critical time for The Warriors. With a dynamic new manager, they have their first chance to win an important final and with it significant financial gain, which is needed to support corporate social responsibility (CSR) and upgrade spectator facilities. On social media, the fans have asked Dave not to enforce the lock-out.

\n

Dave wants to resolve the conflict and privately regrets the lock-out. He is angry with the team but wants to increase The Warriors’ corporate social responsibility (CSR). Without wishing to appear as a weak leader, he asked another popular former player for advice.

\n

[Source: © International Baccalaureate Organization 2019]

\n

 

\n

* soccer: football

\n
\n

Outline two features of autocratic leadership.

\n
[2]
\n
a.
\n
\n

Explain one cost and one benefit of a high labour turnover of managers for The Warriors.

\n
[4]
\n
b.
\n
\n

Explain one cost and one benefit to The Warriors of committing to corporate social responsibility (CSR).

\n
[4]
\n
c.
\n
\n

Discuss two methods to resolve conflict for The Warriors other than a lock-out.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n\n

Award [1] for each feature identified.

\n
a.
\n
\n

Costs of a high turnover of managers include increased recruitment costs and a management system that may be confusing for the subordinates to follow if managers keep changing. This may have further motivational issues, as the work force may be unsettled and impact on the players’ performance.
From the stimulus, there is evidence that The Warriors recruitment costs are higher than desirable given the time spent looking for new managers. More costs will result in less funds being available to support The Warriors corporate social responsibility practices and risk Dave’s achievement- see bullet points in stimulus.

\n

Player turnover has also been high, which may impact on teamwork on and off the pitch and reduces The Warriors chances for commercial success. There is also evidence in the stimulus that two new players who presumably have not gelled yet with the team, or The Warriors culture, are unhappy and complained on social media. This is bad publicity for The Warriors.

\n

The benefits are that poorly performing managers are not allowed to make things worse for the club. Underperforming managers can be moved on and fresh thinking and ideas can be introduced. Dave who is actually very popular with the fans, will probably enjoy even further support from the fans if he removes underperforming managers or players quickly. The Warriors have not yet won a trophy and the appointment of a dynamic new manager has put them on the verge of winning a final for the first time.

\n

Accept any other relevant benefit/cost.
While managers are technically employees, It is expected that the candidates apply the advantages/ disadvantages to the roles/ behaviour of the managers and/or possible impact on the players due to the changes in management.

\n

Mark as 2 + 2.

\n\n

Application must refer to the high turnover of managers for The Warriors.

\n
b.
\n
\n

The costs to The Warriors of committing to CSR involve the opportunity costs. Reduced ticket prices and healthy snacks, etc, divert funds when the funds could be used to purchase improved players, hire more experienced managers or improve spectator facilities. CSR improves the image of the team off the pitch in the eyes of the stakeholders, but perhaps greater consideration should be given to what is happening on it.

\n

The benefits of the commitment to CSR include brand development and loyalty through the eyes of its junior supporter group – an important group of longer-term stakeholders – that are willing to come and watch the games despite lack of success which ensures some financial sustainability of the club at a time when they are still waiting to win their first trophy.

\n

The benefits/costs should refer/ apply to The Warriors and not to different stakeholders.
The impact on different stakeholders may be used as long as the final costs/ benefits refer to The Warriors.

\n

Accept any other relevant cost and benefit.

\n

Mark as 2 + 2.

\n\n

Application must refer to The Warriors committing to CSR.

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

The question asks candidates to examine the stimulus and make reasoned judgements to suggest appropriate methods to resolve the conflict for The Warriors.
Candidates are expected to be familiar with:

\n\n

Given the stimulus, it could be argued that with an important final coming up and The Warriors being on the verge of winning their first trophy and given the lock-out, Dave is highly likely to push for non- strike agreement as any action such as strike action is likely to result in an irreversible negative impact and can easily be used by the players to send a message to Dave : they are serious about Dave’s actions but do not wish to jeopardize being in the final. The players have clearly had enough of Dave’s autocratic style and wish to see a change.
Dave and the fans are likely to be very worried as short term strike action is possible and could send a very serious message to stakeholders that the players’ dissatisfaction is real.

\n

However, the players are unlikely to agree without some form of compromise from Dave and the realization that a strike or not regularly training can reduce the chance of success. Also, loss of earnings, fear of management response etc might facilitiate some conflict resolution.

\n

Other methods could include conciliation and arbitration, where Dave will ask for an independent adjudicator to rule on the lock-out and other issues and bring both sides together. This, however, will take time and is a medium term solution and the final is approaching. Costs of organizing this could impact on The Warriors’ CSR.

\n

Dave’s habit of impulsive behaviour towards his managers and staff indicate that he would not be able to see the value in this solution. Given the stimulus, this may be difficult, especially if the arbitrator rules against Dave’s decision and the decision is binding. The players might support this method but need to ensure that they are able to represent their case or have a representative.

\n

Candidates can use conciliation and arbitration as two different methods provided that there is a clear explanation of the differences.

\n

Industrial democracy
Dave could seek to modify his management style and allow greater employee participation and publicly promise not to be so harsh on players. There is evidence that he is willing to consult with a former player to sort out the lock-out. But we must ask the question of, given Dave’s autocratic style, how likely this modification would be given Dave’s track record. Dave’s management style has to change to be more democratic which might be challenging for him but acceptable for the players.

\n

Dave is clearly a leader with a vision to do the right thing by his community. The conflict is affecting him, as he has admitted in private. He risks undoing some of the CSR that has put him in a favourable position with the supporters and in the absence of any trophy wins, he cannot afford to do this. It would seem that it would be in the best interests of the club and the fans to solve this conflict quickly. Dave will have to change his leadership style and allow greater employee participation. However, this could all change if The Warriors win this for the first time.

\n

Students may also evaluate the single union agreement

\n

A conclusion with judgment is expected.
The candidates should refer to methods of conflict resolution not actions/industrial relation that can be taken.
Please note that in the question, an example of industrial relation was given- a lock out hence some candidates may follow with other examples.
Candidates that refer only to industrial employee relations and not to methods of conflict resolution cannot reach the top mark bands - see below.

\n

A balanced response is one that covers at least one argument for and at least one argument against each option.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward with further guidance below.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].
For one relevant issue/ method that is balanced with sufficient depth award up to [5]
Accept methods/suggestions that are related to industrial democracy without naming the methods like- change leadership style, consultation/ discussion.

\n

If the candidates provided just examples of industrial relations and not conflict resolution, but the methods are well covered/ evaluated award up to [6]

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n

Candidates cannot reach the top marks if there is no relevant reference/application to The Warriors.

\n
d.
\n
", "Examiners report": "
\n

Some candidates produced a clear answer that outlined two different and relevant features of autocratic leadership. However, a significant number of candidates were awarded 1 mark only due to repetition of the same feature in reverse order- first reference to the leader as a sole decision maker and then reference to employees as stakeholders who are not involved in decision making.

\n

Candidates discussed the advantages and disadvantages of this type of leadership rather than outlining two features.

\n
a.
\n
\n

Most candidates demonstrated good theoretical understanding of the advantages and disadvantages of high labour turnover.

\n

However, many candidates did not relate their response to The Warriors and the stimulus.

\n
b.
\n
\n

Many candidates showed a clear understanding of the role and the theoretical costs and benefits of The Warriors committing to corporate social responsibility.

\n

Some candidates used examples, expanded the response and fully explained the resultant costs and benefits to The Warriors and were awarded full marks. However many candidates produced a relevant theoretical answer, but just used the organisation’s name or just gave some examples from the stimulus without providing a clear and full explanation of the resultant costs/ benefits to be awarded full marks. 

\n
c.
\n
\n

Unfortunately, this question was not well answered by many candidates.

\n

Candidate confusion between approaches to conflict resolution and industrial/ employee relations methods was evident.

\n

Even those candidates who attempted to provide some suggestions regarding conflict resolution, were not able to use appropriate subject terminology.

\n

Some credit was given to candidates whose responses implied industrial democracy/ involvement of union representative/ discussion between the parties.

\n

Areas for concern:

\n\n

Furthermore, as in other AO3, despite a good attempt by many candidates to provide some balance responses and reach a conclusion and final judgment of sort, the lack of substantiation was very apparent.

\n
d.
\n
", "question_id": "19M.2.HL.TZ0.4", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-2-human-resource-management" ], "subtopics": [ "1-3-organizational-objectives", "2-6-industrial/employee-relations", "2-3-leadership-and-management", "2-1-functions-and-evolution-of-human-resource-management" ] }, { "Question": "
\n

Refer to the Multi Marketing (MM) case study (SL/HL paper 1 May 2021).

\n
\n

With reference to MM, outline two sources of finance suitable for taking over the film studio in India (lines 144–147).

\n
[4]
\n
a.
\n
\n

Explain how a formal system of appraisal may have avoided the problems caused by Clare (lines 86–100).

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

The following four sources of finance are suitable: 

\n\n

Sale of assets is a suitable method but there is no context to suggest that this is an option for MM. Award one mark for sale of assets but not the second for context.

\n

Other sources are not suitable (e.g. retained profit, leasing, crowdfunding, overdrafts, trade credits, etc.) and must not be credited.

\n

Mark as a 2 + 2.

\n

Award [1] for each appropriate source and a further [1] for an outline of the source in context.

\n
a.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials. 

\n

Candidates are expected to show some understanding of one or more of the approaches to appraisal, including: 

\n\n

They apply both to Clare as an appraiser (Claire appraising her staff) and Clare as an appraisee (Clare being appraised by her own line manager). The problems caused by Clare should have been identified earlier on, before they escalated into such a conflict where employees have asked for Clare to be dismissed for harassment (line 99).

\n

Clare seemingly resented the fact that staff in her department went to her own line manager to complain about her behind her back, without telling her directly. A system of formative appraisal may have made her aware of the problems earlier on, if she had regularly and formally asked her staff about their work and their progress. Of course, they may have been reluctant to tell her the truth, which is why a 360-degree appraisal, with anonymous feedback from her staff about her own performance, could have made her aware of the extent of their dissatisfaction and their feelings of being bullied.
Similarly, a summative appraisal of Clare (by her own line manager) could have identified not only Clare’s positive results (“Customer satisfaction is very high, and some of the marketing strategies designed by Clare’s team have won awards”, line 90), but also areas of improvement, for example about how, as a leader, she reflects MM core values.
This said, it is not certain that formal systems of appraisal would have avoided all the problems: the way Clare reacted when she heard about her staff feelings (“she was rude to them, blocked their pay rises and threatened them with less interesting work” line 98) implies that her autocratic style is not aligned with MM cultural values. MM “considers it important that the organizations with which it works value freedom of expression” (line 60) – clearly Clare herself does not believe that this applies to her staff.

\n

Accept any other explanation.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.

\n

Award a maximum of [3] for a theoretical answer.

\n

Award a maximum of [4] for a descriptive answer.

\n
b.
\n
", "Examiners report": "
\n

Most candidates showed some understanding of sources of finance in general, however some failed to take the context of MM into account: some candidates, for example, answered about overdrafts and this is short-term and not suitable for such a high amount ($100 million).

\n
a.
\n
\n

The few candidates who chose Question 2 did so because their knowledge of appraisal systems was robust enough – and they indeed wrote good answers about appraisal systems such as 360-degree appraisal and self-appraisal. Some excellent answers also displayed very good critical thinking skills, for example about the fact that self-appraisal may not be fruitful in Clare’s case, as she lacks self-awareness about her leadership style, or 360-degree appraisal may only be successful if her staff feel that they can share their views anonymously.

\n
b.
\n
", "question_id": "21M.1.SL.TZ0.2", "topics": [ "2023-unit-3-finance-and-accounts", "2024-unit-2-human-resource-management" ], "subtopics": [ "3-1-sources-of-finance", "2-4-motivation-and-demotivation" ] }, { "Question": "
\n

Refer to the Accord case study (SL/HL paper 1 Nov 2019). 

\n
\n

Outline two advantages for Accord of using job/customized production.

\n
[4]
\n
a.
\n
\n

Explain how Accord can differentiate Enrich from the products of its competitors.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Advantages could include:

\n\n

Accept any other reasonable description.

\n

Award [1] for each advantage up to a total of [2].

\n

Award [1] for putting the advantage into context up to a total of [2].

\n
a.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Key aspects:

\n\n

Explanation/analysis should come from discussing these in relation to the situation that Accord is in.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.

\n

Award maximum [3] for a theoretical answer or for only analysing one feature.

\n

Award maximum [5] if the analysis of two features or more is mainly descriptive but in context.

\n
b.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
", "question_id": "19N.1.SL.TZ0.1", "topics": [ "2023-unit-5-operations-management", "2024-unit-4-marketing" ], "subtopics": [ "5-2-production-methods", "4-2-marketing-planning" ] }, { "Question": "
\n

Buzza

\n

Jo and Demi Straus established Buzza, a partnership, in 1999. Buzza manufactures women’s fashion accessories, such as handbags and scarves. Jo, a gifted designer, directs the design team. Demi, a business graduate, organized the business by function. She manages most of those functions.

\n

In 2012, they converted Buzza to a private limited company to help obtain finance for the business’s expansion. Jo and Demi retained 60 % ownership between them.

\n

Because of the brand’s reputation, Buzza can recruit creative graduates from design universities. Graduates receive 12-month contracts, which are renewed only if Buzza accepts their designs. Buzza tells graduates that, generally, only half of all contracts are renewed. The average age in the design team is 26. Labour turnover in the design team is much higher than in similar exclusive brands.

\n

Wealthy consumers interested in the latest fashions find Buzza a highly desirable and exclusive brand. Only approved retail outlets sell Buzza products. New collections are produced four times a year. At the end of each season, retailers return unsold products to Buzza. Last year, these unsold products were valued at $15 million. At present, Buzza sends returned products to an incinerator plant to be destroyed. A recent television documentary revealed that Buzza incinerates perfectly good products, which led to damaging social media comments.

\n

In response to the negative publicity, Jo and Demi are considering two options:

\n

Option 1: Sell surplus products at greatly reduced prices on its website.

\n

Option 2: Break down returned products to recover raw materials for re-use in future products. This process of breaking down returned products will be time consuming and costly.

\n
\n

State three of Buzza’s main business functions.

\n
[2]
\n
a.
\n
\n

Explain one advantage and one disadvantage to Buzza of operating as a partnership.

\n
[4]
\n
b.
\n
\n

Explain one advantage and one disadvantage of the high labour turnover of designers at Buzza.

\n
[4]
\n
c.
\n
\n

Discuss the two options that Jo and Demi are considering.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

PLEASE NOTE: This content is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

Possible answers include:

\n\n

Candidates must use the traditional business functions, such as those noted above (or others which are traditionally listed in textbooks). Do not accept terms inspired by the stimulus itself (R & D, for example).

\n

For [2], candidates must state 3 (or more) of the above.
For [1], candidates must state 2 of the above.
If a candidate states only one business function, award [0].

\n
a.
\n
\n

Advantages include:

\n\n

Disadvantages include:

\n\n

Each partner is liable for actions by other partners.

\n

Accept any other relevant advantage or disadvantage.

\n

Mark as 2 + 2.

\n

For [2], candidates must identify an advantage or a disadvantage, explain it, and apply it to the stimulus.

\n
b.
\n
\n

Advantages and disadvantages can apply to Buzza OR to the designers themselves.

\n

Advantages include:

\n\n

Disadvantages include:

\n\n

Accept any other relevant advantage or disadvantage.

\n

Mark as 2 + 2.

\n

For [2], candidates must identify ad advantage or a disadvantage, explain it, and apply it to the stimulus.

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Option 1: Sell surplus products at greatly reduced prices via its website.

\n\n

Option 2: Break down returned products to recover raw materials to re-use in future products. This process will be costly.

\n\n

No details are provided as to the actual costs of incineration or of breaking down products to re-use in future season products. Candidates in the 7+ mark range would be expected to refer to this and the need for more information before coming to a final decision.

\n

\n

 Marks should be allocated according to the paper 2 markbands for May 2016 forward. 

\n
d.
\n
", "Examiners report": "
\n

Many candidates could name three main business functions. When candidates drew from the stimulus, they gave incorrect answers.

\n
a.
\n
\n

Many candidates knew an advantage and a disadvantage of a partnership and generally applied the advantage to the stimulus. Fewer applied the disadvantage to the stimulus.

\n
b.
\n
\n

Most candidates earned at least partial marks on this question. Many could apply the advantage of labour turnover to the stimulus. Though most knew a disadvantage of labour turnover, many candidates did not apply it to the stimulus.

\n
c.
\n
\n

As noted above, many candidates knew the expectations of the ten-mark question and did a solid job. Candidates often made detailed use of the stimulus.

\n
d.
\n
", "question_id": "21M.2.SL.TZ0.3", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-2-human-resource-management", "2024-unit-4-marketing" ], "subtopics": [ "1-1-introduction-to-business-management", "2-1-functions-and-evolution-of-human-resource-management", "1-2-types-of-organizations", "4-5-the-seven-ps-of-the-marketing-mix" ] }, { "Question": "
\n

Refer to the Accord case study (SL/HL paper 1 Nov 2019). 

\n
\n

Describe two reasons why secondary market research may not be useful to Accord.

\n
[4]
\n
a.
\n
\n

Explain possible economies of scale that may apply to ABC but not to Accord.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Secondary market research – exploring data that has been already collected for a different purpose.

\n\n

Accept any other reasonable reason.

\n

Award [1] for each reason up to a total of [2].

\n

Award [1] for putting the reason into context up to a total of [2].

\n
a.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Economies of scale: Reduction in the average costs of a business as the scale of production increases. In this context, “scale” means productive capacity (ie, the physical size of the business) rather than the actual level of production.

\n

ABC is a large multinational so it can:

\n\n

Accept any other reasonable explanation/application of EOS.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.

\n

Award a maximum of [2] if the discussion is only about ABC or Accord but not both.

\n

Award maximum [3] for a theoretical answer.

\n

Award maximum [5] if the analysis is mainly descriptive but in context.

\n

N.B. Some textbooks refer to average costs going down when production goes up (because of fixed costs being spread out more). Technically this is incorrect, as this is about production efficiency rather than scale so should not be allowed.

\n
b.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
", "question_id": "19N.1.SL.TZ0.2", "topics": [ "2024-unit-4-marketing", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "4-4-market-research", "1-6-growth-and-evolution" ] }, { "Question": "
\n

Refer to the Accord case study (SL/HL paper 1 Nov 2019). 

\n
\n

Problems are continuing with Enrich drinks. Aran is becoming increasingly frustrated with the lack of growth of sales. He always wants to succeed and is driven by the need to get tasks completed. The Enrich part of his life is not a success. He blames the workforce. The workforce does not share his vision. Employees are mainly part-time workers and parents who value jobs that enable them to fit work around school hours. As Aran has become more autocratic in his leadership style, labour turnover has increased. Last month, from a workforce of twelve, one retired and two left for what they called “better jobs”.

\n

There are also increasing problems with the quality of Enrich drinks, as batches of Enrich are rejected by the quality control department. Elsie, the manager of the production department, blamed suppliers, saying that Aran had damaged business relations with them due to his impatience. Elsie also blamed Aran for poor stock management. She has proposed total quality management (TQM) as a solution to these problems.

\n

Detox

\n

Accord decided to start the production and marketing of Detox, the green tea drink that helps athletes to relax. Detox proved to be very successful. Encouraged by the success and boosted cash inflow, Kayla is considering producing a range of snack bars based on Enrich and Detox flavours and recipes. Accord would use the Enrich brand name for the snack bars. The market for healthy snack bars is very competitive and dominated by a few large companies who spend large amounts of money on advertising. The market is growing rapidly – some market researchers estimate by 34 % per annum. There are many examples of small businesses entering the market successfully on a small scale. Kayla estimates that the proposal would involve an investment of $100 000, with forecast net returns of $80 000 for four years. Aran thinks that the money could be better spent on marketing Enrich drinks.

\n
\n

Define the term labour turnover.

\n
[2]
\n
a.
\n
\n

For Kayla’s proposal calculate the payback period.

\n
[2]
\n
b.i.
\n
\n

For Kayla’s proposal calculate the net present value (NPV) using a discount rate of 6 %*.

\n

\n
[2]
\n
b.ii.
\n
\n

With reference to Accord, explain one advantage and one disadvantage of using total quality management (TQM).

\n
[4]
\n
c.
\n
\n

Discuss whether Aran and Kayla should change the organizational culture of Accord to overcome the problems with Enrich drinks.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Measure the rate at which employees are leaving a business, calculated as:

\n

 Employees leaving in a fixed periodAverage number employed in that period × 100

No need for formula if put into suitable words such as ideas of proportions, time periods, employees leaving, employee numbers.

\n

Award [2] for a complete definition.

\n

Award [1] for some understanding of labour turnover, eg it mentions “leaving” but not “employees” or time periods.

\n
a.
\n
\n

Payback measures the time taken to pay back the original investment.

\n

Original investment = $100k.

\n

Paid back at a net $80k per year.

\n

After 1 year paid back $80k so $20k more needed.

\n

$20k takes 1 4 year = 3 months.

\n

So payback = 1 year 3 months. Allow 1 ¼ years, 1.25 years, 15 months

\n

Award [2] if correct answer with units.

\n

Award [1] if correct answer but no units, or a reasonable attempt with errors.

\n
b.i.
\n
\n

\n

Allow rounding.

\n

Award [2] if correct answer.

\n

Award [1] if correct answer but no units, or a reasonable attempt with errors.

\n
b.ii.
\n
\n

Advantages:

\n\n

Disadvantages:

\n\n

Beware of answers that are only about general quality issues which should not be rewarded unless linked to TQM.

\n

Accept any other relevant advantage/disadvantage.

\n

Context comes from issues identified in the case and the nature of the business.

\n

Award [1] for each advantage/disadvantage of TQM up to a total of [2].

\n

Award [1] for putting each advantage/disadvantage into context up to a total of [2].

\n
c.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials. 

\n

Problems with Enrich related to culture:

\n\n

Potential culture issues:

\n\n

However, some problems seem down to Aran’s personality (person culture?): impatient, driven, wants to succeed, task-oriented. Is this culture, can it be changed?

\n

Other problems are due to marketing issues, which may not be due to culture.

\n

Can culture be changed?

\n\n

Culture seems to be power based, could change to role based or task based.

\n

If there are clear benefits from changing then it should be done, however, difficult to make a case?

\n

Accept reasonable alternative answers.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section B.

\n

Award a maximum of [4] for a purely theoretical answer or with no effective use of case (eg, only repeating case material without development).

\n

Award a maximum of [6] if culture change is considered but there is limited use of data, or if there is good analysis of data with limited consideration of culture change. (eg if main focus is on leadership with little link to culture).

\n

Award a maximum of [8] if culture changes are considered and there is good use of data but there are no significant judgements.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "19N.1.HL.TZ0.4", "topics": [ "2023-unit-2-human-resource-management", "2023-unit-3-finance-and-accounts", "2023-unit-5-operations-management" ], "subtopics": [ "2-1-functions-and-evolution-of-human-resource-management", "3-8-investment-appraisal", "2-5-organizational-(corporate)-culture", "5-3-lean-production-and-quality-management" ] }, { "Question": "
\n

ReVolve Ltd (RV)

\n

ReVolve Ltd (RV ) manufactures and sells high-quality, high-priced bicycles to high-income earners. Operating in a niche market, its advertising slogan and unique selling point/proposition (USP) is “hand made to order, in the USA, delivered within seven days”. Brand loyalty is strong, but brand recognition outside of its customer base is weak. 98 % of its sales are to customers living within 50 miles of the business.

\n

Prior to 2017, RV received an increasing number of customer complaints that phone lines were often engaged and calls not returned. As such, it adopted e-commerce. Its website now allows customers to:

\n\n

RV employs 20 highly paid, skilled employees using job production. To retain these workers, RV has raised their wages significantly since 2016.

\n

Increasing competition from imports of hand-made high-quality bikes has forced down prices in this niche market. RV has been making increasingly larger losses since 2017. In 2020, its sales fell by 15 %. Inflation is forecasted at between 2 % and 3 % for the next three years. As such, RV’s directors are considering two options to enable it to lower the prices of its bicycles.

\n

Option 1: Offshore production to China, where production costs are significantly lower. The bicycles would be manufactured using batch production. RV would focus only on the design and marketing of its bicycles.

\n

Option 2: Invest in new job production techniques that enable parts to be glued rather than welded, which only requires unskilled labour. Investment would cost $3 500 000 and the forecasted annual net cash flow is $600 000.

\n

\n

[Source: [Bicycle] Hall, E., (2006). My new bicycle [online]. Available at https://www.flickr.com/photos/mulegirl/99132433 (CC BY-SA 2.0) https://creativecommons.org/licenses/by-sa/2.0/ [Accessed 29 August 2019].]

\n
\n

Define the term niche market.

\n
[2]
\n
a.
\n
\n

Explain two benefits to RV of the decision to adopt e-commerce.

\n
[4]
\n
b.
\n
\n

Calculate the payback period if RV chooses Option 2 (show all your working).

\n
[2]
\n
c.i.
\n
\n

Explain one disadvantage to RV of using the payback period method of investment appraisal.

\n
[2]
\n
c.ii.
\n
\n

Recommend whether RV ’s directors should choose Option 1 or Option 2.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

A niche market is a small market segment. The products are usually specialised, aimed at satisfying specific market needs for a well-defined segment of the population.

\n

Candidates are not expected to word their responses exactly as above. If a candidate uses the word smaller rather than small, accept.

\n

Award [1] for some understanding.

\n

Award [2] for a clear definition.

\n
a.
\n
\n

PLEASE NOTE: This content is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

Benefits must be to RV not just to customers – a benefit to a customer can only be rewarded if the answers goes on to explain how this benefit also helps the business.
For example, stating that a website allows the customer to view the business products 24x7 (or to place orders from the comfort of their own home) is on its own not rewardable. The candidate would need to go on to state that this situation may lead to increased orders for RV bicycles for the response to be rewardable.

\n

Benefits may include:

\n\n

Accept any other relevant benefit.

\n

Award [1] for stating a benefit to RV from adopting e-commerce and an additional [1]for its explanation with reference to RV. Award a maximum of [2] per benefit.

\n

Mark as 2 + 2. Maximum award: [4].

\n
b.
\n
\n

The payback is:

\n

Payback formula = initial investmentnet cash flow per year 

\n

=$3 500 000$600 000

\n

= 5 years and 10 months OR 5.833 years

\n

OR

\n

$3.5$0.6

\n

= 5 years and 10 months OR 5.833 years

\n

Award [1] for correct formula (with or without figures)
OR
Award [1] for correct figures but incorrect final answer

\n

(e.g. $3.5 $0.6= 5.5 years).

\n

Award [2] for correct answer with working.

\n
c.i.
\n
\n

One disadvantage is that the payback method fails to take into account the time value of money and adjust the cash inflows accordingly. [1]
Though the forecasted net returns each year are $600 000, the inflation in the country is forecast to remain in the 2–3 % range for the next three years. Therefore, the real value of the annual $600 000 will be less in years 1 to 3, thus overstating the return on the investment.

\n

Also, the payback analysis fails to consider inflows of cash that occur beyond the payback period [1] – in this case we are not told the life of the investment so we cannot see how much the net returns will be for the life of the investment [1].

\n

Award [1] for a disadvantage of the payback method and [1] for its application to RV.

\n
c.ii.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials. 

\n

Option 1 advantages: 
RV will have lower production costs as production costs are lower in China. This option will help the business deal with the low-priced imports.

\n

It will allow RV to concentrate on design and marketing, which may enable it to improve its designs and marketing and, thus, increase sales.

\n

Option 1 disadvantages:
The Chinese factory uses batch production, which will affect RV’s ability to produce bicycles that fit their customer’s demands. Currently, RV can meet customer demands because the business uses job production.

\n

RV will no longer have control over production and quality standards may deteriorate.

\n

Transport issues from China will mean that RV will not be able to deliver bicycles to customers within 7 days of receipt of their orders. RV’s advertising slogan will need to change as the business will no longer hand make orders in the USA.

\n

Option 2 advantages: 
RV will have lower production costs because it will no longer need expensive, skilled labour. Lower costs will help the business deal with the low-priced imports.

\n

Production will remain in the USA and it can retain job production.

\n

RV will likely not have delivery time issues.

\n

Option 2 disadvantages:
Will need to make existing skilled employees redundant which will incur redundancy costs.

\n

Require an investment of $3.5m at a time when the business is making losses (since 2017) – this may require external finance which will, incur interest charges, raising unit costs.

\n

The payback period is also more than 5 years which is relatively long.

\n

Will their customer base trust the new production technique which uses glue rather than welding?

\n

Candidates may assume that using glue rather than welding means lower quality. Accept that assumption.

\n

Accept any other relevant evaluation.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n

The table below should be followed (along with the markbands on page 3). These mark awards in the table below should be viewed as maximums. That is, just because a candidate has one argument for Option 1 and one argument against does not mean that they will automatically get a 4. One strong argument for one side and merely a weak or nominal argument for the other side might result in a 3.

\n

\n
d.
\n
", "Examiners report": "
\n

Most candidates choosing question 4 earned at least one mark and often two marks for defining niche market.

\n
a.
\n
\n

Many candidates could explain two benefits of adopting e-commerce and many applied their response to the stimulus.

\n
b.
\n
\n

Most candidates choosing question 4 answered (c)(i) correctly.

\n
c.i.
\n
\n

Many candidates could not explain a disadvantage of using the payback period method of investment appraisal.

\n
c.ii.
\n
\n

Many candidates knew the expectations of the ten-mark question and did a solid job. Candidates often made detailed use of the stimulus.

\n
d.
\n
", "question_id": "21M.2.SL.TZ0.4", "topics": [ "2024-unit-4-marketing", "2023-unit-4-marketing", "2024-unit-5-operations-management", "2023-unit-3-finance-and-accounts", "2024-unit-3-finance-and-accounts" ], "subtopics": [ "4-2-marketing-planning", "4-8-e-commerce", "5-2-operations-methods", "3-8-investment-appraisal" ] }, { "Question": "
\n

Refer to the Accord case study (SL/HL paper 1 Nov 2019). 

\n
\n

With reference to Accord, outline two possible steps for Aran and Kayla in starting the business.

\n
[4]
\n
a.
\n
\n

Other than a business angel (line 108), explain methods of external finance that Accord could use to increase production capacity (line 108).

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

PLEASE NOTE: Steps to starting a business is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

It is a partnership, so needs to incorporate:

\n\n

Accept any other reasonable step.

\n

Award [1] for each step up to a total of [2].

\n

Award [1] for putting the step into context up to a total of [2].

\n
a.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n\n

Explanation should come from how relevant the sources are.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.

\n

Award a maximum of [2] if the source chosen is internal.

\n

Award maximum [3] for a theoretical answer.

\n

Award maximum [5] if the answer is mainly descriptive but in context.

\n
b.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
", "question_id": "19N.1.SL.TZ0.3", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "1-1-introduction-to-business-management", "3-1-sources-of-finance" ] }, { "Question": "
\n

Refer to the Accord case study (SL/HL paper 1 Nov 2019). 

\n
\n

Problems are continuing with Enrich drinks. Aran is becoming increasingly frustrated with the lack of growth of sales. He always wants to succeed and is driven by the need to get tasks completed. The Enrich part of his life is not a success. He blames the workforce. The workforce does not share his vision. Employees are mainly part-time workers and parents who value jobs that enable them to fit work around school hours. As Aran has become more autocratic in his leadership style, labour turnover has increased. Last month, from a workforce of twelve, one retired and two left for what they called “better jobs”.

\n

There are also increasing problems with the quality of Enrich drinks, as batches of Enrich are rejected by the quality control department. Elsie, the manager of the production department, blamed suppliers, saying that Aran had damaged business relations with them due to his impatience. Elsie also blamed Aran for poor stock management. She has proposed total quality management (TQM) as a solution to these problems.

\n

Detox

\n

Accord decided to start the production and marketing of Detox, the green tea drink that helps athletes to relax. Detox proved to be very successful. Encouraged by the success and boosted cash inflow, Kayla is considering producing a range of snack bars based on Enrich and Detox flavours and recipes. Accord would use the Enrich brand name for the snack bars. The market for healthy snack bars is very competitive and dominated by a few large companies who spend large amounts of money on advertising. The market is growing rapidly – some market researchers estimate by 34 % per annum. There are many examples of small businesses entering the market successfully on a small scale. Kayla estimates that the proposal would involve an investment of $100 000, with forecast net returns of $80 000 for four years. Aran thinks that the money could be better spent on marketing Enrich drinks.

\n
\n

Accord have not yet made a decision about producing a range of snack bars.

\n

Kayla is certain that there is a market for the snack bar products. The snack bars would complement Accord’s product portfolio. The investment required, according to Kayla’s estimate (see Section B), is acceptable and she is certain that it is the right time for the business to grow. Her information on the market (see Appendix 1) is very positive. In contrast, she believes that it is too difficult to grow in the beverage market because of competition, so she would prefer to switch from drinks to snack bars. She likes owning the business and has very clear objectives for the future.

\n

Aran is becoming increasingly frustrated. His idea of targeting a mass market for Enrich and Detox has been rejected by Kayla and other managers at Accord. His efforts to introduce total quality management (TQM) failed because employees resisted the change. He is interested in performance and not relaxation, so he does not like Detox as an idea for a product.

\n

Aran has been approached by Star Food (SF), a multinational company (MNC) that produces a range of food products including soft drinks. SF are interested in the Enrich brand name and Accord’s contracts with sports centres. SF have offered to buy Accord for $5 million. This is approximately five years of earnings for Accord. Kayla and Aran would keep the Detox part of the business. Aran would be happy to accept the offer, particularly given the risk that Accord may not survive (Table 1). Aran likes the certainty that the sale would bring. He would accept a small payment from Kayla to sell his share of the Detox business to her.

\n

Table 1: Survival rates of small businesses (based on a survey of local businesses)

\n

\n

\n
\n

Using the case study and the resources, recommend whether Accord should start making and selling snack bars or whether Kayla and Aran should sell Accord to SF. A force field analysis of the options could help you in your answer.

\n
", "Markscheme": "
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials. 

\n

Making and selling snack bars:
Forces for the change to snack bars:

\n\n

Forces restraining the change:

\n\n

Selling Accord to SF:
Forces for the selling SF:

\n\n

Forces restraining the change:

\n\n

Do not penalize candidates who do not consider the “do nothing” option.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section C

\n

Criterion A: Is about the choice of theories/tools made by the candidate to try and solve the problem. Possible theories, planning tools and techniques include: FFA, Investment appraisal, SWOT, Risk (candidates need not refer to Ansoff but it might be useful), takeovers, product portfolios, market data, ownership and control issues, eg partnership, market research the importance of assumptions.

\n

In this instance, as compared with previous sessions, the emphasis is likely to be on choosing relevant theories and ideas and not so much on business tools.

\n

No understanding of FFA max [3]. FFA could be presents as a table or a discussion of driving/restraining forces

\n

For [4]: FFA plus at least one other tool, technique or theory understood and developed well with some relevance to the additional stimulus material.

\n

For [2]: some understanding of at least two tools, techniques or theories, but not developed.

\n

Criterion B: Is about the use of the stimulus, tools, techniques, theories in solving the problem. Application will be judged by the use of the stimulus material, in particular the extra material, especially Table 1, Appendix 1.

\n

For [4]: relevant tools, techniques and theories are applied well to the case study (including OFR) context and additional stimulus material, the application is convincing and relevant.

\n

If only one option considered max [3].

\n

Limited use of Table 1 or Appendix 1 max [3].

\n

For [2]: some limited context/application but not developed. Use of tools limits candidate’s ability to make reasoned arguments.

\n

Criterion C: Is about the process of making a decision and the strength of the recommendation. Options discussed in balanced way, conclusions drawn as to whether they work. Remember, “do nothing” can be a recommendation.

\n

It is always worth reflecting on the piece of work as a whole (the entirety of the answer) when deciding on the mark for this criterion.

\n

There can be some flexibility about the chose option: Option A, Option B, both options, neither option.

\n

For [4]: There needs to be a comparison between the two options using Section C and other material and a recommendation (Option 1, option 2 or do nothing) made and supported.

\n

For [2]: Only one option considered or some limited arguments but not justified. No comparison, limited analysis, but candidate arrives/draws a reasoned conclusion.

\n

Criterion D: Structure. This criterion assesses the extent to which the student organizes his or her ideas with clarity, and presents a structured piece of writing comprised of:

\n\n

Beware of under-rewarding weak scripts that, nonetheless, have some or all of the elements. The candidate will lose marks in the other criteria so they should not be doubly penalized.

\n

For [4]: all four elements present, clearly organized and there is clarity in the student’s answer.

\n

For [2]: No logical structure, but other elements present or logical structure with other elements missing.

\n

Criterion E: Is about the extent to which stakeholders (both groups and individuals)
are considered.

\n\n

For [4]: two or more individuals and groups are considered in a balanced way.

\n

For [2]: one group or individual considered appropriately, or several individuals or groups considered superficially.

\n

[1] could be awarded if there is mention of stakeholders but with little development.

\n

[3] could be awarded if there is a range of stakeholders but little balance.

\n
", "Examiners report": "
\n[N/A]\n
", "question_id": "19N.1.HL.TZ0.5", "topics": [ "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "1-7-organizational-planning-tools" ] }, { "Question": "
\n

Small-Scale Hobbies (SSH)

\n

Scale Airplane Modeller is a magazine produced by Small-Scale Hobbies (SSH). The company sells the magazine through independent retail outlets in the US.

\n

The finance director produced a summary of 2018’s financial information. Last year’s break‑even chart showed that SSH had a margin of safety of 20 000 units.

\n

Table 1: Selected financial data for SSH for 2018:

\n

\n

This year, to reduce costs and to increase sales, the company will introduce new production methods, which will reduce:

\n\n
\n

Define the term margin of safety.

\n
[2]
\n
a.
\n
\n

Using the financial data in Table 1, calculate the break-even level of output (show all your working).

\n
[2]
\n
b.i.
\n
\n

Using the financial data in Table 1, calculate the percentage of total costs that were fixed costs for last year (show all your working).

\n
[2]
\n
b.ii.
\n
\n

Using the financial data in Table 1, calculate the level of profit for SSH at 2018’s level of production (show all your working).

\n
[2]
\n
b.iii.
\n
\n

Explain how the introduction of new production methods will affect the total cost line in SSH’s break-even chart.

\n
[2]
\n
c.
\n
", "Markscheme": "
\n

In break-even analysis, margin of safety is how much output or sales level can fall before a business reaches its break-even point.

\n

Award [1] for some understanding.

\n

Award [2] for a clear definition.

\n
a.
\n
\n

Formula = TFC Unit contribution

\n

= 100 000 4.5 - 2

\n

= 100 0002.5 = 40 000 units 

\n

[1] can be awarded for the formula on its own OR  100 0002.5

\n

An additional [1] is for the correct answer with working shown.

\n
b.i.
\n
\n

Output = 60 000 (break even = 40 000 and margin of safety = 20 000)
TC = TFC + TVC = 100 000 + (60 000 × 2)
TC = 220 000

\n

TFC percentage = 100 000 220 000 = 45.45 %

\n

N.B. OFR rule applies from (i).

\n

[1] can be awarded for TFC percentage = 100 000 220 000 even if the final answer is incorrect.

\n

If a candidate has the workings shown (100 000/200 000) and has the answer written out as 45.45, 45.4545, etc. award [2].

\n

If a candidate has the workings shown (100 000/200 000) and has the answer written out as 45.5, award [2] award [2].

\n

If a candidate has the workings shown (100 000/200 000) and has the answer written out as 45.4 or has a maths error, award [1].

\n
b.ii.
\n
\n

Output = 60 000
TR = 60 000 × $4.5 = $270 000
TC = $220 000
Profit = $50 000

\n

N.B. OFR rule applies from (i).

\n
b.iii.
\n
\n

The TC line will shift downwards (by $5000) [1].

\n

The slope or gradient of the TC line will become flatter (less steep) [1].

\n

A candidate may draw a sketch to show the impact on TC – this can be awarded [2] if it shows TC line shifting downwards and becoming flatter.

\n

If a candidate says that the total cost line is lower, or something to that affect, award [1].

\n

If a candidate correctly explains the impact on the break-even point, award [1].

\n
c.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
b.iii.
\n
\n[N/A]\n
c.
\n
", "question_id": "19N.2.SL.TZ0.1", "topics": [ "2023-unit-3-finance-and-accounts", "2024-unit-3-finance-and-accounts" ], "subtopics": [ "3-3-break-even-analysis", "3-3-costs-and-revenues", "3-4-final-accounts" ] }, { "Question": "
\n

Refer to the Accord case study (SL/HL paper 1 Nov 2019). 

\n
\n

Aran and Kayla decided to launch Detox using batch production. It has now been on the market for six months. Detox is showing strong growth, although sales for the first six months were less than a quarter of Kayla’s target of 160 000 bottles for the first year. The price of Detox is $2.50 per bottle. The cost of goods sold is $160 000 and the operating costs before interest and tax are $20 000 per year.

\n

Enrich sales have not grown much and Aran is very disappointed. Customers, mainly athletes, do not use the product frequently and it is difficult to find new customers. However, research into customer perceptions indicates a very strong brand, resulting largely from Accord’s corporate social responsibility (CSR) and strong customer loyalty.

\n

Aran does not like the way the business is organized by product and wants to change it so that it is organized by function instead.

\n

Following the success of Detox, Kayla wants to produce a range of snack bars based on Enrich flavours and recipes. Accord would use the Enrich brand name for the snack bars. The market for healthy snack bars is very competitive and dominated by a few large companies who spend large amounts of money on advertising. The market is growing rapidly – some market researchers estimate by 34 % per annum. There are many examples of small businesses entering the market successfully on a small scale. Kayla estimates the proposal would involve an investment of $100 000, with forecast net returns of $80 000 for four years. Aran thinks that the money could be better spent on marketing Enrich drinks.

\n
\n

Define the term batch production.

\n
[2]
\n
a.
\n
\n

Based on a target of 160 000 for the first year of production at Detox, calculate the gross profit generated by Detox.

\n
[2]
\n
b.i.
\n
\n

Based on a target of 160 000 for the first year of production at Detox, calculate the net profit margin of Detox.

\n
[2]
\n
b.ii.
\n
\n

With reference to Accord, explain one advantage and one disadvantage of an organizational structure based on product.

\n
[4]
\n
c.
\n
\n

Discuss Kayla’s plan to produce a range of snack bars.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Producing a defined number of identical products – each item in the batch passes through one stage of production before passing on to the next stage. An example, which is not necessary, is the commercial manufacture of biscuits.

\n

Award [2] for a complete definition.

\n

Award [1] for some understanding.

\n
a.
\n
\n

Gross profit = revenue − cost of goods sold
= $160 000 × $2.50 − $160 000 = $240 000

\n

Award [2] if correct answer and working shown.

\n

Award [1] if correct answer but no working, or a reasonable attempt with errors.

\n
b.i.
\n
\n

Net profit before tax, interest = Gross profit − operating costs before tax and interest
= $240 000 − $20 000 = $220 000

\n

so

\n

NPM =  Net Profit before tax and interestsales revenue × 100 %

\n

  220 400  × 100 = 55 %

\n

Award [2] if correct answer and working shown.

\n

Award [1] if correct answer but no working, or a reasonable attempt with errors.

\n
b.ii.
\n
\n

Advantages:

\n\n

Disadvantages:

\n\n

Any other reasonable explanation

\n

Award [1] for each advantage/disadvantage up to a total of [2].

\n

Award [1] for putting each advantage/disadvantage into context up to a total of [2].

\n
c.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Arguments for:

\n\n

Arguments against:

\n\n

Recommendation not needed, but rewardable if supported by analysis.

\n

Accept reasonable alternative answers.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section B.

\n

Award a maximum of [4] for a purely theoretical answer, or with no effective use of case (eg, only repeating case material without development).

\n

Award a maximum of [6] if culture change is considered but there is limited use of data, or if there is good analysis of data with limited consideration of culture change.

\n

Award a maximum of [8] if culture changes are considered and there is good use of data but there are no significant judgements.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "19N.1.SL.TZ0.4", "topics": [ "2023-unit-5-operations-management", "2023-unit-3-finance-and-accounts", "2023-unit-2-human-resource-management", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "5-2-production-methods", "3-4-final-accounts", "3-5-profitability-and-liquidity-ratio-analysis", "2-2-organizational-structure", "1-3-organizational-objectives" ] }, { "Question": "
\n

Daytona Go-Carts

\n

In 2020, Ron James aims to open Daytona Go-Carts, a race track where individuals as young as twelve can rent go-carts and participate in races. Through primary market research, Ron has discovered that many teenagers would enjoy participating in go-cart races.

\n

Ron has two options for locations for the go-cart race track:

\n

Option 1: The cost of the site would be $1.2 million 
Option 2: The cost of the site would be $1.8 million.

\n

\n

    

\n

 

\n

 

\n

 

\n

 

\n

 

\n

 

\n

 

\n

Forecasted profits for Option 1 are: 

\n

\n

Forecasted profits for Option 2 are $300 000 in the first year, with profits growing by 20 % per year for the next four years.

\n
\n

State two methods of primary market research.

\n
[2]
\n
a.
\n
\n

Calculate, for Option 1 the average rate of return (ARR) (show all your working).

\n
[2]
\n
b.i.
\n
\n

Calculate, for Option 1 the payback period (show all your working).

\n
[2]
\n
b.ii.
\n
\n

Calculate, for Option 2, the average rate of return (ARR) (show all your working).

\n
[2]
\n
c.
\n
\n

Explain one reason why Option 1 may be a less risky investment than Option 2.

\n
[2]
\n
d.
\n
", "Markscheme": "
\n

Types of primary market research include:

\n\n

Award [1] for each type of market research method identified, up to a maximum of [2]. If a candidate names two types of the same method (for example, postal survey and online survey), award a maximum of [1].

\n

Do not accept “Data collected from a business” (or something similar), as this wording is insufficiently precise. Many types of data collected from a business would be secondary.

\n
a.
\n
\n

ARR:

\n

Profit from investment – Cost of investmentNumber of years =$1 400 000 - $1 200 000 5= $200 0005

\n

= $40 000 average profit per year

\n

Average per annum profitCost of investment = $40 000$1 200 000 = 3.3%

\n

Award [1] for working or formula and [1] for the correct answer. Award up to a maximum of [2].

\n

If a candidate has the workings shown (40 000/1 200 000) and has the answer written out as 3.33, 3.3333, etc, award [2].

\n

If a candidate has the workings shown (40 000/1 200 000) and has the answer written out as 3.3, award [2].

\n

If a candidate has the workings shown (40 000/1 200 000) and has the answer written out as 3.4, or has a maths error, award [1].

\n
b.i.
\n
\n

Payback period:

\n

Profit after the first four years is $1 000 000, which means that $100 remains going into the fifth year, which has anticipated profits of $300.

\n

$100$300 = 13 = four months.

\n

The payback period is 4 years and 4 months.

\n

Award [1] for working or formula and [1] for the correct answer. Award up to a maximum of [2].

\n
b.ii.
\n
\n

ARR:

\n

\n

Profit from investment – Cost of investmentNumber of years = $2 232 480 - $1 800 0005 = $432 4805

\n

= $86 496 average profit per year

\n

Average per annum profitCost of investment = $86 496$1 800 000 = 4.81 %

\n

If a candidate has the workings shown (86 496/ 1 800 000) and has the answer written out as 4.8053, 4.80533, etc., award [2].

\n

If a candidate has the workings shown (86 496/ 1 800 000) and has the answer written out as 4.81 or 4.8, award [2].

\n

If a candidate has the workings shown (86 496/ 1 800 000) and has any other answer than those above or has a maths error, award [1].

\n
c.
\n
\n

Reasons that Option 1 may be the less risky of the two investments include:

\n\n

Accept any other relevant response.

\n

Award [1] for identification of a reason why Option 1 may be safer and award [2] for an explanation of why Option 1 may be safer. Application is largely built into the question.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "19N.2.SL.TZ0.2", "topics": [ "2023-unit-4-marketing", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "4-4-market-research", "3-8-investment-appraisal" ] }, { "Question": "
\n

Top Star (TS)

\n

Top Star (TS) manufactures sports footwear. Its products are sold through retail outlets and online. Sales of TS’ footwear in retail outlets are falling. However, because e-commerce is growing rapidly, online sales are increasing. In 2018, TS’ total domestic sales were $5 000 000 and total domestic market sales for the same time period were $50 000 000.

\n

TS must consider several challenges:

\n\n

The directors think that TS should follow an external growth strategy. Two options are being considered:

\n\n

The finance manager believes that merging with All Champion could hurt TS’ reputation. TS’ factories may have to close, which the local population may resent.

\n
\n

Describe one feature of a multinational company (MNC).

\n
[2]
\n
a.
\n
\n

Calculate TS’ market share in 2018 (show all your working).

\n
[2]
\n
b.
\n
\n

Explain two disadvantages and one advantage to TS of selling its products online.

\n
[6]
\n
c.
\n
\n

With reference to TS, evaluate the two merger options.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n\n

Award [1] for each feature stated and award an additional [1] for a description up to a maximum of [2].

\n

For a statement like “A multinational company operates in two or more countries” but with no further description, award [1].

\n
a.
\n
\n

Market share % = (firm’s sales /total market sales) × 100

\n

5 000 00050 000 000  × 100 = 10 %

\n

Award [1] for the correct answer and [1] for correct working.

\n

If no workings are shown, but the final answer is correct, award a maximum of [1].

\n
b.
\n
\n

PLEASE NOTE: E-commerce is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

Like other businesses in the industry, TS may find selling online increasingly problematic due to the associated costs. Customer complaints about TS’ website and ordering problems are already increasing. Costs of dealing with customer complaints, technical issues and delivery problems may increase and reduce profit.

\n

TS’ brand image may be eroded due to its inefficient way of dealing with online sales. Its unfriendly website and increasing customer complaints are probably eroding its brand image and market share. If TS wants to increase international presence and expand its market, it should improve its current online sales system.

\n

On the other hand, TS’ sales and profits can increase by taking advantage of e-commerce’s rapid growth. It can also take advantage of a potential market opportunity left by the competing businesses in the industry that are experiencing problems with online sales.

\n

TS’ international presence is weak; selling online can help to create brand awareness in international markets and reach a worldwide audience with relatively low costs.

\n

Accept any other relevant explanation.

\n

Mark as 2 + 2 + 2.

\n

Award [1] for each correct advantage/disadvantage identified and [1] for a relevant explanation with application to TS. Award up to a maximum of [2] per advantage/disadvantage explained.

\n

[2] cannot be awarded per advantage/disadvantage if the response lacks either explanation and/or application.

\n

For example: For an identification/description of an advantage/disadvantage with or without application [1]. For explanation of an advantage/disadvantage with no application [1].

\n

For explanation of an advantage/disadvantage and application [2].

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Merging with All Champion:

\n

Top Star is a manufacturer. Prior to either Option 1 or Option 2, TS had no brick-and-mortar retail outlets. The merger with the footwear manufacturer All Champion (AC) will produce gains in economies of scale, and will give TS the possibility of growing.

\n

As a multinational company, AC has access to more and cheaper resources such as finance. Additional finance will allow for research and development of new products. TS will be able to develop the new line of running shoes and expand its product portfolio.

\n

Merging with AC will also allow for rationalization of resources, such as concentrating output on one site and concentrating managerial and technical capacities. For instance, TS will have access to larger IT and marketing departments to improve its website and deal with online sales more efficiently.

\n

A merger with AC eliminates a strong competitor in the market. The two companies might have different strengths and experiences and they, therefore, could fit well together. The new merged company will probably be stronger and could therefore increase its competitive power in the market. AC´s market share (only 10 %) will increase.

\n

On the other hand, a merger with AC may have a number of drawbacks. In a merger process, the smaller company, such as TS, could be cannibalized by the larger one. TS’ culture may be dissolved within AC’s way of doing things. There are also high chances that some of AC’s factories will be closed, causing discontent within the local community. The finance manager is right to be suspicious about this merger. TS’ reputation may be hurt due to the possibilities of closing factories and sales may fall.

\n

Merging with a footwear retailer:
If TS merges with a footwear retailer with a strong presence in domestic and international markets, it will secure an outlet for its products. TS will be able to increase its domestic market share of 10 % and additionally access the
international markets, using the experience, knowledge and expertise of the footwear retailer. TS will keep the manufacturing process and then factories will not close. In addition, the risks of cannibalization of this option are low.

\n

However, this merger may not exclude a strong competitor such as AC. Production economies of scale will not be gained, as the footwear retailer has no experience in the footwear manufacturing process.

\n

Overall, merging with AC will give Top Star the competitive edge needed to grow and develop its product portfolio. On the other hand, merging with a footwear retailer also has some evident advantages, but it seems that merging with AC looks like a stronger choice.

\n

It is expected that candidates provide a conclusion with a substantiated judgment.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

If a candidate evaluates / addresses only one merger option, award a maximum of [5].

\n

A balanced response is one that provides at least one argument for and one argument against each merger option.

\n

Candidates may contrast one option with another for a balance as long as at least two arguments are given for each option.

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in the answer.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "19N.2.SL.TZ0.3", "topics": [ "2024-unit-1-introduction-to-business-management", "2024-unit-4-marketing", "2023-unit-4-marketing", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "1-6-multinational-companies-(mncs)", "4-1-introduction-to-marketing", "4-8-e-commerce", "1-6-growth-and-evolution" ] }, { "Question": "
\n

Imperial Falls (IF)

\n

Imperial Falls (IF) is a luxury hotel in a city centre. The hotel is an old palace, elegantly furnished and overlooking the harbour. Of the highest quality, for decades IF has been the preferred hotel for business travellers to the city. Relying on reputation and word of mouth, IF does little promotion. Its facilities include a swimming pool and a high-quality restaurant. Table 1 shows information about the principal hotels located in this city centre in 2018.

\n

Table 1: Selected information about the principal hotels in the city centre in 2018

\n

\n

In 2019, bookings at IF have begun to decline because of a new hotel, Guest Rooms (GR), which is part of a global chain. Many businesses have employees who travel to major cities, where most business meetings occur. Hotels in city centres are usually luxurious and expensive. GR is different. It offers clean, small rooms with Wi-Fi, a small desk and a double bed. Room prices at GR are significantly lower than most city-centre hotels. The new GR is located near the airport, 6 kilometres (3.72 miles) from the city centre.

\n

GR uses a fee-based membership model and member companies require employees to stay at a GR hotel when on business. Employees may also stay there when on personal travel. Guests use self-service check-in machines (similar to those used at airport check-ins), which issue electronic keys. GR electronically bills the company directly. Service is minimal. GR relies heavily on social media marketing. It also uses above-the-line promotion.

\n
\n

State two types of above-the-line promotion.

\n
[2]
\n
a.
\n
\n

Using Table 1, construct a product position map/perception map for all four hotels prior to the opening of GR.

\n
[4]
\n
b.
\n
\n

Explain two ways in which GR is able to offer rooms at a lower price than IF.

\n
[4]
\n
c.
\n
\n

Discuss possible changes to IF’s marketing mix to reduce the loss of customers to GR.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Appropriate types of above-the-line promotion include:

\n\n

Accept any other relevant answer, including “advertising on the Internet” or “the Internet.”

\n

Award [1] for each appropriate type of above the line promotion up to [2].

\n
a.
\n
\n

\n

Award [1] for the overall layout of the map with both axes labelled correctly (price: high or low; service: high or low).

\n

N.B. It does not matter which one is horizontal/vertical.

\n

The correct positioning is as shown above. Adjust appropriately if a candidate makes the price the vertical axis and quality the horizontal axis.

\n

Award [2] for a correctly labelled position map with two of the companies properly placed.

\n

Award [3] for a correctly labelled position map with three of the companies properly placed.

\n

Award [4] for a correctly labelled position map with all four companies properly placed.

\n

The position map has been scaled from $155–$245 for the horizontal axis and 3 stars to 5 stars for the vertical axis. If candidates scale the perception map differently (1 to 5 stars, for example), mark accordingly and per the explanation for [1], [2], [3] and [4] above.

\n

The candidates were asked to position the four hotels prior to the opening of the GR. The four hotels represent the full range of the market (at the time, before GR opened) and, therefore, the positioning should be as shown above. However, candidates may consider a 3-star hotel to be “middle quality” rather than low quality because three is the mid-point between 1 star and 5 star. Thus, some candidates may position the four hotels more toward quadrant one than they should.

\n

Nevertheless, examiners should have some forbearance: as long as the relative position of the hotels is accurate, award marks appropriately. For example, the position map below would earn [4].

\n

\n

N.B. If the relative position is correct but the candidate has compressed the positions of the four hotels into one quadrant (which would typically be quadrant 1), award a maximum of [3].

\n
b.
\n
\n

Three ways in which GR is able to have lower costs than traditional hotels include:

\n\n

Accept any other relevant example.

\n

If a candidate refers to the airport versus city-centre location and assumes that the airport location is less expensive, award [1].

\n

Mark as [2 + 2].

\n

Award [1] for identification of a way to lower costs and an additional [1] for an explanation thereof.

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Main differences in the marketing mix of the two hotels are:

\n

\n

The question of place is tricky. At one level of argument, place is different than location. However, in the case of a hotel, place and location are virtually indistinguishable, as hotels are ontologically a venue where customers rent rooms for the night. Thus, in the case of hotels, place devolves to location.

\n

Possible changes to the IF’s marketing mix include:

\n\n

Remember that at standard level, the candidates are not expected to know the extended marketing mix but rather just the four Ps: price, place, promotion, product. Candidates should not be penalized if they address the extended
marketing mix.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward with further guidance below.

\n

N.B. The marks listed in the far right column are maximum awards. Candidates could technically have a response that addresses two Ps in a balanced way yet still lacks the depth, precision, or application for [4] (for example).

\n

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "19N.2.SL.TZ0.4", "topics": [ "2023-unit-4-marketing", "2024-unit-4-marketing" ], "subtopics": [ "4-5-the-four-ps-(product-price-promotion-place)", "4-2-marketing-planning", "4-2-marketing-planning-(including-introduction-to-the-four-ps)" ] }, { "Question": "
\n

FrioAire Appliances (FA)

\n

FrioAire Appliances (FA) manufactures medium-priced and medium-quality refrigerators. It is a multinational public limited company. Its factory is located in a less economically developed country that has high unemployment, a tradition of autocratic leadership and labour costs lower than FA’s home country. The factory is profitable, and FA pays consistently good dividends. Market growth for medium-priced and medium-quality refrigerators is limited.

\n

As part of a strategic objective to increase productivity and to enter a fast-growing market for high-priced and high-quality refrigerators, FA is considering building a new factory in and relocating production to Germany. This would require closing the factory in the less economically developed country. The new factory will:

\n\n

Germany has a highly skilled, qualified and productive workforce. The new factory would allow FA to reposition its products. However, FA would need to raise significant finance to build and equip the new factory.

\n

FA’s leadership style at the factory in the less economically developed country is autocratic. Members of FA’s board wonder whether this style would be suitable for the new factory in Germany, where workers have more bargaining power because of their high skill level and the labour-friendly cultural traditions. In Germany, FA would have to follow more regulations regarding the environment, health and safety, and employee rights.

\n

FA workers in the less economically developed country are very loyal to FA, which has continued operation through a civil war at significant cost to itself (for security). If FA were to close in the less economically developed country, the workers would not find such good jobs.

\n
\n

Describe one disadvantage of operating as a public limited company.

\n
[2]
\n
a.
\n
\n

Explain one benefit and one cost to FA of using an autocratic leadership style.

\n
[4]
\n
b.
\n
\n

Explain one positive and one negative impact of FA on the developing country.

\n
[4]
\n
c.
\n
\n

Evaluate the option of building a factory in, and relocating, to Germany.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Disadvantages of operating as a public limited company include:

\n\n

Unless candidates otherwise have elements in their response deserving marks, do not award any marks for statements such as “dilution of control” or “the owner will not have full control.” Answers such as these two show a significant misunderstanding.

\n

Award [1] for an identification of a disadvantage and another [1] for sufficient description thereof.

\n
a.
\n
\n

In the stimulus it is indicated that FA has an autocratic leadership style. This style appears to dovetail with the culture of the less economically developed country. Also, the factory is profitable and has been efficient through lower costs. It is possible that the leadership style fosters loyalty in this country because of the cultural fit.

\n

The costs to FA include that autocratic leadership may stifle creativity and innovation, which could be available in a more democratic system. Productivity in Germany could be higher than in a less economically developed country. The fact that FA’s leadership is thinking of relocating to Germany indicates that they see problems in moving to a new higher-price segment.

\n

Mark as 2 + 2.

\n

Award [1] for each relevant benefit / cost explained and [1] with application to FA. Award up to a maximum of [2] per benefit/cost explained.

\n

[2] cannot be awarded per benefit / cost if the response lacks either explanation and / or application.

\n

For example: For an identification/description of a benefit / cost with or without application [1]. For explanation of a benefit / cost with no application [1].

\n
b.
\n
\n

Positive impacts of FA on the developing country include:

\n\n

Theoretically possible other positive impacts include:

\n\n

Negative impacts of FA on the less economically developed country include:

\n\n

Theoretically possible other negative impacts include:

\n\n

Mark as [2 + 2]. For [2], candidates must identify a positive and a negative impact, explain it, and apply to the less economically developed country.

\n

Award [2] for a positive impact with application to the less economically developed country.

\n

Award [2] for a negative impact with application to the less economically developed country.

\n

If there is no application to the less economically developed country at all then the maximum mark per impact is [1].

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

The option of building a factory in and relocating to Germany is a major strategic decision. In certain respects, FA would be an entirely different company: new products, new processes, new types of workers and new leadership styles, as well as a wholly new cultural context. Going into highly sophisticated high-tech manufacturing with robots has the potential to position FA for a future of highly automated manufacturing. Without making these changes, FA runs some risk of remaining stuck in much lower value-added processes, which in the long run are less profitable. The risks are very high. The potential rewards are high as well.

\n

Perhaps a strategy for FA would be not to sell the older factory but to continue to operate it and rely on those profits to support the new factory as it gets started. Whether FA’s balance sheet is strong enough to operate both factories is an open question, as is the question of whether its management has sufficient depth to operate two major plants.

\n

Balance in this context means having two arguments for opening the plant in Germany and two arguments against, which could be partially couched in a discussion of leaving the old plant open.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "19N.2.SL.TZ0.5", "topics": [ "2024-unit-1-introduction-to-business-management", "2024-unit-2-human-resource-management", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "1-2-types-of-business-entities", "2-3-leadership-and-management", "1-6-multinational-companies-(mncs)", "1-3-organizational-objectives" ] }, { "Question": "
\n

Sassy

\n

Sassy, a partnership between fashion designers, produces clothes for teenagers. Capacity utilization is very high.

\n

The partners are considering some strategic changes. After conducting research, they presented three options and outlined the costs and expected revenue. They also predicted that the economy would either improve or stay the same. The probability of the economy staying the same is 0.3.

\n

The options, costs and expected revenue are given below:

\n

Table 1: Information relating to the three strategic options for change

\n

\n
\n

Describe one disadvantage for an organization of operating at high capacity utilization.

\n
[2]
\n
a.
\n
\n

Construct a fully labelled decision tree and identify the best option for Sassy (show all your working).

\n
[6]
\n
b.
\n
\n

Explain one limitation for Sassy of using a decision tree as a planning tool.

\n
[2]
\n
c.
\n
", "Markscheme": "
\n

Some of the disadvantages for an organisation of operating at high capacity:

\n\n

Accept any other relevant disadvantage.

\n

Award [1] for a relevant disadvantage with appropriate description up to a maximum of [2].

\n

For [2] marks responses must link the disadvantage to an outcome as in the examples above.

\n

It is not expected that candidates explain the benefits to any stakeholder.

\n

Application to the organization is not required.

\n

Do not credit an example.

\n
a.
\n
\n

\n

Calculations:

\n

EMV 1 = (300 000 × 0.7 + 250 000 × 0.3) − 2 00,000 = $85 000
EMV 2 = $150 000
EMV 3a = (220 000 × 0.7 + 170 000 × 0.3) − 150 000 = $55 000
EMV 3b = (550 000 × 0.7 + 450 000 × 0.3) − (170 000 + 150 000) = $200 000

\n

Best option 3(b) should be followed.

\n

[0]
The decision tree does not reach a standard described below.

\n

[1–2]
The decision tree is not accurately constructed, and / or the calculations of each option are not presented or accurate. However, there is some evidence of a general understanding of the model.

\n

[3–4]
The principal elements of the decision tree are constructed, but may not be entirely accurate. The calculations of each option are largely correct. Allow up to three mistakes in calculations and / or presentation for [3].

\n

Allow for either two errors in calculation or two error in presentation [4].

\n

For an accurately constructed decision tree with incorrect calculations, award up to a maximum of [3].

\n

For an accurately constructed decision tree with EMV calculations, but no working [4].

\n

[5-6]
The decision tree is accurately constructed. The calculations of each option are correct and well presented. A key is provided. Workings are shown. As well as the rejected options [6]. Full marks can be awarded even if the headings of expected return/forecast revenue and probabilities are not explicitly written.

\n

Deduct [1] if a key is not provided.

\n

Deduct [1] if the best option is not identified either on the diagram OR following the EMV calculations.

\n

N.B. for only correct calculations of all options without a decision tree award a maximum of [2].

\n

Essentially treat the lack of key or rejected options as presentation errors as errors. Hence three presentation/calculation errors = [3].

\n

Apply candidate own figure rule (OFR) throughout this response.

\n
b.
\n
\n

While a general limitation of the decision tree model is the nature of the predicted outcome, here the use of the model is even more limited as it has been done by the partners who are designers. Due to lack of experience/qualification, they ignored the possibility that the economy might deteriorate. The predicted financial returns for each option might be inaccurate, especially in the volatile, everchanging fashion industry. Hence, possible bias and different numerical outcomes.

\n

N.B. Do not accept “worsening economy” if there is no other reference to the stimulus since this is often cited as a generic limitation.

\n

Accept any other relevant limitation.

\n

Candidates do not have to cover all of the applicable issue above. One is sufficient.

\n

Award [1] for a relevant generic limitation identified or described and [1] for any additional explanation in context.

\n

[2] cannot be awarded for the limitation if the response lacks either explanation and / or application.

\n

For example:
For an identification or a description of the limitation with or without application [1].
For explanation of the limitation with no application [1].
For explanation of the limitation and application [2].

\n
c.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
", "question_id": "19N.2.HL.TZ0.1", "topics": [ "2023-unit-5-operations-management", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "5-5-production-planning", "1-7-organizational-planning-tools" ] }, { "Question": "
\n

With reference to an organization of your choice, examine the impact of globalization on business ethics.

\n
", "Markscheme": "
\n

Refer to Paper 2 markbands for 2016 forward, section C available under the \"Your tests\" tab > supplemental materials.

\n

N.B. Although the question asks for the application of one concept on another, it is still expected that Business Management content will be aligned with the concepts especially the second concept (the one being acted on).

\n

Please note that candidates can conclude that there was a minimal impact, however it has to be based on balanced arguments and evaluation.

\n

Additional guidance in relation to the assessment criteria
For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be met for that mark to be awarded.

\n\n

If only one concept is addressed:

\n\n

Where the question asks for impacts of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

Criterion B
For [2]: “…connection is not developed” should be treated the same as superficial.

\n

Criterion C
1 + 1 arguments are expected per concepts.

\n\n

Criterion D

\n\n

Criterion E

\n\n

Candidates need not explicitly say “stakeholder”.

\n
", "Examiners report": "", "question_id": "19N.2.SL.TZ0.6", "topics": [], "subtopics": [] }, { "Question": "
\n

KapTan

\n

KapTan (KT ), which manufactures rechargeable batteries for cordless consumer products like vacuum cleaners, began five years ago as a business with a product orientation. It sells business to business (B2B). Multinational companies dominate the rechargeable battery industry, and KT suffered from cash-flow problems in its first year of trading. Its profits are small and, in the last two years, have fallen.

\n

KT has now developed an innovative battery that is small and lightweight. This battery is an emergency power source allowing electric cars to reach a charging station. However, the battery can only be used ten times before it runs out. KT has insufficient finance to create a battery that can be recharged an unlimited number of times.

\n

Through market research, KT has discovered that:

\n\n

KT has the capacity to produce 90 000 of these new batteries each year. The average cost is $200 per unit. KT has insufficient funds to invest in additional capacity.

\n

KT is considering two options:

\n

Option 1: Market and sell directly to existing car owners through business to consumer (B2C) at a retail price of $400. KT will need to borrow significant capital to finance this option.

\n

Option 2: Accept an offer of a five-year strategic alliance with a manufacturer of electric cars. KT would provide its product exclusively at $250 per unit. Sales are guaranteed.

\n

Table 2: KT’s forecasted and guaranteed worldwide unit sales (in 000s) for the two options

\n

\n
\n

Define the term product orientation.

\n
[2]
\n
a.
\n
\n

With reference to Option 1, for KT, explain the relationship between the product life cycle, investment, profit and cash flow.

\n
[4]
\n
b.
\n
\n

With reference to KT, explain two problems that a new business may face.

\n
[4]
\n
c.
\n
\n

Recommend whether KT should choose Option 1 or Option 2.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

A company following a production orientation chooses to ignore their customers’ needs and to focus only on efficiently building a quality product. They do not undertake market research identifying customer reactions to their proposed product before commencing production. This type of company believes that if they can make the best product their customers will come.

\n

Candidates are not expected to word their responses exactly as above.

\n

If the candidate says something to the effect of “The company focuses on the product,” award [1]. A second mark can be awarded if the candidate then offers a contradistinction such as “ignores the market,” “does not do market research,” “does not appeal to the market,” etc.

\n

Award [1] for identification of one characteristic of a product-orientated business.

\n

Award [2] for a full, clear description.

\n
a.
\n
\n

Initial research and development costs plus the costs involved in launching a product usually means a product will be a loss maker in its early years. Cash flows may be negative. As sales grow and the product moves into the growth phase, profits are likely to be positive but the company will require additional working capital Not until the product reaches the maturity phases of the life cycle are cash flows and profits likely to be positive. In the decline phase, cash flows and profits are likely to remain positive. The cash flows especially should be solid with the contraction of necessary working capital. For KT, the investment in R&D for the new battery will have had a negative effect on cash flow and profits. Once the product is launched, Option 1 forecasts see quite large sales and therefore large cash inflows. However, we do not know about the marketing costs, which will increase cash outflows. Sometime in year 2, further investment would be needed if sales targets in years 3 and 4 are to be fulfilled as projected sales exceed capacity. This investment would increase fixed costs and reduce profits.

\n

If a candidate shows some understanding the relationship between the product life cycle, investment, profit and cash flow, but with no application to the stimulus, award [1].

\n

If the candidate shows clear understanding of the relationship between the product life cycle, investment, profit and cash flow, but with no application to the stimulus, award [2].

\n

If the candidate shows some understanding of the relationship between the product life cycle, investment, profit and cash flow and has some application to the stimulus, award [2].

\n

If the candidate shows clear understanding of the relationship between the product life cycle, investment, profit and cash flow and has some application to the stimulus, award [3].

\n

If the candidate shows clear understanding of the relationship between the product life cycle, investment, profit and cash flow and has detailed application to the stimulus, award [4].

\n

If a candidate writes or draws some sort of table (such as exist in several of the textbooks IB students use) listing the stages of the product life cycle and showing the relationship between stages of the life cycle and their relationship to investment, cash flow and profit, accept and award [2] marks if well executed with no application to the stimulus and award [1] if poorly executed with no application to the stimulus.

\n

If the candidate applies to the stimulus, either by making inserts into the table or with commentary before or after it, award an additional [1 to 2] according to the depth and quality of the application.

\n
b.
\n
\n

Problems any new business may face include:

\n\n

Accept any other relevant problems that a new business may face.

\n

Mark as 2 + 2.

\n

For [2], candidates must identify a problem, explain it, and apply it to the stimulus.

\n

N.B. If the candidate addresses an issue at the end of the time period specified in the stimulus and notes a problem that KT may face then, do not accept (as the business will no longer be new).

\n
c.
\n
\n

PLEASE NOTE: B2C option 1 is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials. 

\n

Option 1: Selling car batteries directly to car owners. They currently sell B2B rather than B2C.

\n

Advantages:

\n\n

Disadvantages:

\n\n

Option 2: Form a five-year strategic alliance with a manufacturer of electric cars.

\n

Advantages:

\n\n

Disadvantages:

\n\n

Balance in the context of this question means having at least one advantage and one disadvantage for each option (and, thus, addressing both options).

\n

Accept any other relevant evaluation.

\n

These mark awards in the table below should be viewed as maximums.

\n

\n

 Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n
d.
\n
", "Examiners report": "
\n

More than a few candidates did not know what product orientation is.

\n
a.
\n
\n

Responses to this question were for the most part weak and characterized by vagueness and lack of application to the stimulus.

\n
b.
\n
\n

Most candidates could explain two problems that a new business might face and, in general, were effective in applying their response to the stimulus.

\n
c.
\n
\n

Many candidates knew the expectations of the ten-mark question and did a solid job. Candidates often made detailed use of the stimulus.

\n
d.
\n
", "question_id": "21M.2.SL.TZ0.5", "topics": [ "2024-unit-4-marketing", "2023-unit-4-marketing", "2024-unit-1-introduction-to-business-management", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "4-1-introduction-to-marketing", "4-5-the-four-ps-(product-price-promotion-place)", "1-1-what-is-a-business", "1-3-organizational-objectives" ] }, { "Question": "
\n

With reference to an organization of your choice, examine the impact of innovation on distribution strategy.

\n
", "Markscheme": "
\n

Refer to Paper 2 markbands for 2016 forward, section C available under the \"Your tests\" tab > supplemental materials.

\n

N.B. Although the question asks for the application of one concept on another, it is still expected that Business Management content will be aligned with the concepts especially the second concept (the one being acted on).

\n

Please note that candidates can conclude that there was a minimal impact, however it has to be based on balanced arguments and evaluation.

\n

Additional guidance in relation to the assessment criteria
For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be met for that mark to be awarded.

\n\n

If only one concept is addressed:

\n\n

Where the question asks for impacts of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

Criterion B
For [2]: “…connection is not developed” should be treated the same as superficial.

\n

Criterion C
1 + 1 arguments are expected per concepts.

\n\n

Criterion D

\n\n

Criterion E

\n\n

Candidates need not explicitly say “stakeholder”.

\n
", "Examiners report": "", "question_id": "19N.2.SL.TZ0.7", "topics": [], "subtopics": [] }, { "Question": "
\n

With reference to an organization of your choice, discuss the ways in which culture can promote or inhibit change.

\n
", "Markscheme": "
\n

Refer to Paper 2 markbands for 2016 forward, section C available under the \"Your tests\" tab > supplemental materials.

\n

N.B. Although the question asks for the application of one concept on another, it is still expected that Business Management content will be aligned with the concepts especially the second concept (the one being acted on).

\n

Please note that candidates can conclude that there was a minimal impact, however it has to be based on balanced arguments and evaluation.

\n

Additional guidance in relation to the assessment criteria
For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be met for that mark to be awarded.

\n\n

If only one concept is addressed:

\n\n

Where the question asks for impacts of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

Criterion B
For [2]: “…connection is not developed” should be treated the same as superficial.

\n

Criterion C
1 + 1 arguments are expected per concepts.

\n\n

Criterion D

\n\n

Criterion E

\n\n

Candidates need not explicitly say “stakeholder”.

\n
", "Examiners report": "", "question_id": "19N.2.SL.TZ0.8", "topics": [], "subtopics": [] }, { "Question": "
\n

\n

Mutombo Window Fans (MWF)

\n

Mutombo Window Fans (MWF) manufactures and sells window fans to wholesalers across eastern Africa. Although the business began small, it experienced rapid internal growth through aggressive, commission-based sales.

\n

Currently, MWF sells 300 window fans per month. Each fan sells at an average price of $100.

\n

 

\n

Table 1: Forecasted fixed costs for 2020 (all figures in $)

\n

\n

Table 2: Variable costs per fan for 2020 (all figures in $)

\n

\n
\n

Define the term internal growth.

\n
[2]
\n
a.
\n
\n

Calculate, for MWF, the break-even level of output for 2020.

\n
[2]
\n
b.i.
\n
\n

Construct a fully labelled, to scale, break-even chart for MWF for 2020.

\n
[4]
\n
b.ii.
\n
\n

Calculate the profit if MWF sells 3600 window fans in 2020.

\n
[2]
\n
b.iii.
\n
", "Markscheme": "
\n

Internal growth occurs when a business expands existing operations rather than growing by merging or acquiring other businesses. Typically, internal growth occurs when a business expands its capacity and sells to a wider market.

\n

Candidates do not have to have wording exactly as above.

\n

Award [1] for some understanding of internal growth (such as “expands existing operations”) and [1] for additional wording that gives precision (“rather than growing by merging or acquiring other businesses” or “internal growth occurs when a business expands its capacity and sells to a wider market”).

\n

N.B. the question is about internal growth and not about growth generically. Do not award beyond [1] mark if the response does not make this distinction.

\n
a.
\n
\n

Total fixed costs: $130 000
Contribution: $100 − $60 = 40

\n

Break-even point: 130 00040 = 3250 units

\n

Award [2] for correct answer and workings. Award [1] for correct process but with a mathematical error.

\n
b.i.
\n
\n

\n

Award marks as follows:
[1] for both appropriately labelled axes – y-axis must include both costs and revenue. The x-axis can be any suggestion of quantity: units, fans. Responses should be penalised if using $ sign in x-axis. If x or y axes show no units or scale is inaccurate then it follows that TR and TC must also be inaccurate

\n

[1] for accurately drawn and labelled total cost line.

\n

[1] for accurately drawn and labelled total revenue line.

\n

[1] for indication of break-even point. OFR applies from part b(i). The breakeven value does not need to be stated but the diagram must be consistent with the value in b(i) Do not award lines simply drawn from the BEP to the x and y axes without further annotation.

\n

Award a maximum of [2] if the chart is not neat, not drawn with a straight edge, or is not to scale.

\n

If a candidate produces a table rather than a chart, award [0].

\n

N.B. The Fixed Cost (FC), Variable Cost (VC) and Margin of Safety do NOT need to be shown as in diagram.

\n
b.ii.
\n
\n

Total revenue − Total cost = Profit

\n

(3600 × 100) − (130 000 + 3600 × 60) = 360 000 − (130 000 + 216 000)

\n

       = 360 000 − 346 000 = $14 000 Net profit

\n

Alternatively, profit can be calculated using the total contribution – fixed costs.

\n

Total contribution = 3600 × 40 = 144 000

\n

Profit is (3600 × $40) − $ 130 000 = $14 000

\n

Or

\n

Profit = Contribution per unit X Margin of safety
= ($100 − $60) × (3600 −3250)
= $14 000

\n

Award [2] for correct answer and workings. Working does not need to be as extensive as shown above. Award [1] for correct process but with a mathematical error.

\n
b.iii.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
b.iii.
\n
", "question_id": "19N.2.HL.TZ0.2", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "1-6-growth-and-evolution", "3-3-break-even-analysis", "3-4-final-accounts" ] }, { "Question": "
\n

Sharon’s Super Lunches (SSL)

\n

Sharon’s Super Lunches (SSL) is a cooperative that provides healthy school lunches. The lunches are delivered daily to students, who order them online. SSL aims for a minimum order size of 50 lunches to deliver to a school.

\n

Table 2: Sales and other financial information for SSL for one week

\n

\n

SSL is considering a new promotional strategy for healthy school lunches: they will donate a free school lunch to a student in a lower-income area for each lunch purchased in a higher-income area.

\n
\n

Describe one feature of a cooperative.

\n
[2]
\n
a.
\n
\n

Using total contribution, calculate the forecasted total profit for SSL before the introduction of the new promotional strategy (show all your working).

\n
[2]
\n
b.
\n
\n

Construct a fully labelled break-even chart for SSL for before the new promotional strategy is introduced (show all your working).

\n
[4]
\n
c.
\n
\n

Explain one advantage to SSL from implementing the new promotional strategy.

\n
[2]
\n
d.
\n
", "Markscheme": "
\n

One feature of a cooperative:

\n\n

Award [1] for a partial description of a cooperative.

\n

Award [2] for a fuller description which may include an element of profit (surplus) or loss sharing.

\n
a.
\n
\n

Unit contribution is $10.20 − $6.40 = $3.80

\n

Total contribution = 3200 × $3.80 = $12 160

\n

Total profit = $12 160 − $7980 = $4180

\n

Award [1] for a correct calculation for both total contribution and one mark for total profit similar to the working shown above.

\n

If the candidate correctly calculates total profit but does not make any reference to contribution, then award [1] only.

\n

If candidate incorrectly calculates contribution but applies correctly to Total Profit then OFR and 1 mark.

\n

Do not penalize lack of $ sign.

\n
b.
\n
\n

\n

Award [1] for correct labelling of both x and y axis − total costs and revenue (y) and output or units produced (x).

\n

Award [1] for accurate total cost curve.

\n

Award [1] for accurate total revenue curve.

\n

Award [1] for identifying the break-even point = Do Not reward calculations of BE quantity when not accompanied by chart.

\n

Candidates are NOT required to produce Fixed Costs FC or show the B/E Revenue line.

\n

Accuracy of TC and TR is based on the ability to approximate the B/E quantity based on the scale chosen for the x and y axes (this allows for the cases where graph paper has not been used).

\n

If B/E not accurate but identified DO NOT penalize if either TR and/or TC already penalized. Hence OFR applied.

\n
c.
\n
\n

The new promotional strategy will allow SSL to generate considerable goodwill, publicity and social responsibility. This will boost output from the current level of 3200 to the maximum of 4000. SSL may be able to reduce costs through greater bulk buying of ingredients and this could lead to an increase in profits.

\n

As SSL has a minimum order size of 50, the promotional offer is likely to encourage more schools to order.

\n

Award [1] for an advantage and an additional [1] for clear application to SSL.

\n
d.
\n
", "Examiners report": "
\n

Candidates demonstrated a poor understanding of cooperatives. Many candidates commented that it was a form of cooperation between two businesses. Others provided definitions rather than features. Many responses described features that could equally apply to other types of business entities, such as partnerships.

\n
a.
\n
\n

This was a two-part question as the first three words “Using total contribution” meant that this amount needed to be calculated first. In many cases candidates didn’t calculate total contribution but went on to give the correct forecasted total profit.

\n
b.
\n
\n

The quality of the charts constructed continues to be disappointing. Some of the continuing mistakes are:

\n\n
c.
\n
\n

Overall, candidates poorly understood this question and few demonstrated understanding of the the financial aspects of the data provided.

\n
d.
\n
", "question_id": "21M.2.HL.TZ0.2", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-4-marketing", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "1-2-types-of-organizations", "4-5-the-four-ps-(product-price-promotion-place)", "3-3-break-even-analysis" ] }, { "Question": "
\n

Cool Meals (CM)

\n

Cool Meals (CM) produces frozen organic ready-made meals that are sold to food retailers throughout the country.

\n

CM buys large quantities of organic ingredients from local farmers for its just-in-case (JIC) stock control management. It uses a cost-plus (mark-up) pricing strategy.

\n

CM is known for its:

\n\n

Recently, an economic downturn and increased competition, especially from non-organic frozen meal suppliers, has decreased demand for frozen organic meals.

\n

The finance manager of CM, Kayleigh, provided the following financial information.

\n

Table 1: Selected financial information for CM

\n

\n

Kayleigh is worried about the cash flow of CM and suggested the company changes the stock control method from just-in-case (JIC) to just-in-time (JIT). She is also looking at other strategies to improve CM’s financial position.

\n
\n

Define the term corporate social responsibility (CSR).

\n
[2]
\n
a.
\n
\n

Explain one advantage and one disadvantage for CM of using a cost-plus (mark-up) pricing strategy.

\n
[4]
\n
b.
\n
\n

Explain one advantage and one disadvantage for CM of changing its stock control method from just-in-case (JIC) to just-in-time (JIT).

\n
[4]
\n
c.
\n
\n

Using the financial information in Table 1, evaluate two strategies that CM could use to improve its financial position other than changing to a just-in-time (JIT) stock control method.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

CSR is the decision/attempt by a business to take responsibility for their action/activities by considering the interests of and the impact on a wide range of stakeholders in society. The business accepts the moral and legal obligations to society, not just to investors, that result from its operation.

\n

Candidates are not expected to word their definition exactly as above.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding similar to the above answer. The first mark would typically come from awareness that there is some morale guidance.

\n

Award [2] for a full, clear definition that conveys knowledge and understanding similar to the answer above. Individual stakeholders do not need to be named to gain full marks.

\n

Do not credit an example.

\n
a.
\n
\n

One advantage for CM of using a cost-plus pricing strategy is the fact that it will be CM that covers all the costs and ensures a certain percentage of profit to be made. It is evident given the figures above that CM makes a profit. CM’s ability to make a profit ensures long-term survival. CM’s meals are perceived as good value for money, hence the strategy is effective.

\n

Given the increase in competition, CM can be flexible and reduce the margin set above the costs. Flexibility in pricing is an important factor when there is an economic downturn, as well as increased competition.

\n

A possible disadvantage is that CM’s costs are likely to be higher than competitors who supply non-organic meals. Together with the customers’ unwillingness to pay a premium price during an economic downturn, CM might see a further fall in demand as seen in the fall in total revenue in 2018.

\n

Accept any other relevant advantage / disadvantage.

\n

Award [1] for each role identified and an additional [1] for development with application to CM. Award a maximum of [2] per advantage/disadvantage. [2] cannot be awarded per role if the response lacks either explanation and / or application.

\n

For example:
For an identification or a description of an advantage/ disadvantage with or without application [1].
For explanation of relevant advantage/ disadvantage with no application [1].
For explanation of a relevant advantage/ disadvantage and application [2].

\n
b.
\n
\n

A possible advantage for CM of changing the stock method from JIC to JIT:
As CM buys agriculture produce/ stock, these products need to be well stored and possibly refrigerated. Moving to JIT will significantly reduce costs of storage and spoilage. The gross profit margin, which has fallen by 2 %, is likely to increase rather than decrease. The very high current ratio of 2.4 will fall, as CM will not stock financially unproductive assets.

\n

A possible disadvantage for CM of changing production /stock method methods from JIC to JIT:
Given the nature of the industry, the farmers are likely to prefer CM buying large quantities seasonally. Ordering lower quantities when needed might create problems/costs for the farmers, who might not prioritize CM any longer. CM will also lose its reputation for CSR based on long-term commitment to farmers to buy large quantities.

\n

Moreover, given the unpredictable nature of farming, not having buffer stock could result in CM being out of stock with the consequences of losing clients/reputation and therefore revenue and profit. CM is likely to lose its reputation for flexibility with the retailers in terms of quantity and delivery if not enough agriculture produce is available.

\n

Accept any other relevant/applicable advantage / disadvantage.

\n

Award [1] for each advantage / disadvantage identified and an additional [1] for development with application to CM. Award a maximum of [2] per advantage / disadvantage.

\n

[2] cannot be awarded per role if the response lacks either explanation and / or application.

\n

For example:
For an identification or a description of an advantage/ disadvantage with or without application [1].
For explanation of a relevant advantage/ disadvantage with no application [1].
For explanation of a relevant advantage/ disadvantage and application [2].

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

It is expected that candidates make constant reference to/use of the figures and other relevant information in the stimulus combined with theoretical understanding of the advantages and disadvantages of the possible strategies.

\n

Some of the possible strategies:

\n

Reduce cash outflow. CM is facing cash flow crisis as seen by its deteriorating acid test ratio of 0.6. Without stock, which contributed to a high current assets ratio, CM cannot meet its long-term liabilities. It is evident that there is a big difference between debtors and creditors days. CM paid the farmers within five days in 2018, which is very quick and got significantly quicker – twice as fast – but received money from the retailers after 70 days in 2018, a significant increase from 50 days. CM is too generous to retailers with the credit term. Despite the fact that the relationship with retailers and the suppliers is CM’s competitive advantage, it is financially dangerous given the decreasing and very low acid test.

\n

Seek alternative suppliers with cheaper agriculture produce might be seen as an extreme solution, as CM’s relationship with the farmers and the quality of the organic ingredients are key to its competitive advantage. It might take a long time to find different suppliers. Perhaps agreeing a longer credit term would be a better solution. Currently, CM pays after five days. One can assume that the farmers are likely to prefer a request for a longer pay period than a more drastic one.

\n

Cut expenses. Gross profit margin is considerably higher than net profit margin for a manufacturing company and is getting worse over time. CM should look at some unnecessary expenses like marketing or administration. However, cutting salaries or staff might impact on the employees’ motivation and cutting marketing might create some difficulties in competing with the new competitors. However, going out of business due to lack of cash can be judged as a more significant threat.
Do not accept better stock control due to JIT.

\n

Tighter credit control. Cash payments only for the retailer will clearly reduce/eliminate debtor days. The acid test ratio is worrying and CM must take immediate actions to solve this short-term liquidity problem. However, the relationship with the retailers might deteriorate and they might start buying non-organic frozen food from the emerging competitors. It appears that CM’s bargaining power with the retailer is weak and this option is unlikely to be successful. One, however, may argue that increasing the creditor days is unlikely to be met with much objection from its suppliers given the very low starting figures and long-established trust. CM might also be able to ask its debtors – the retailers – to pay sooner, even after two months, a demand which is likely to be seen as reasonable.

\n

Changing pricing policy. CM can possibly reduce the price of its products. While CM may be more competitive and this strategy may work well given the economic downturn and the increased competition, CM may suffer losses or a reduction in profit. However, customers may perceive the frozen organic meals as even better value for money and increase demand. Moreover, perhaps CM can withstand a reduction in profit in the short term and we can see that CM is profitable. The liquidity issue ought to be sorted. CM should prioritize its cash flow problem first, then deal with a low acid test to generate cash to survive.

\n

Enhance marketing to generate more sales in cash. CM might be able to reduce its increasing level of stock and reduce stock turnover in days, which has clearly deteriorated considerably from 20 to 40 days. However, any type of promotion may incur more expenses, especially in cash. The data indicates that the net profit margin is considerably lower than the gross profit margin, which indicates that CM does not control its expenses well.

\n

Improved product portfolio. Perhaps CM should also consider non-organic meals or other types of products to enhance its portfolio and create more revenue streams. However, cannibalism can be created – CM may also have to compete more directly with the increasing number of providers of non-organic frozen meals. Market research has to be done so perhaps this option is not the most appropriate one in the short term.

\n

Seeking alternative short term sources of finance. Accept relevant applicable suggestions like the use of overdraft and short-term loans, to deal with CM’s short-term liquidity crisis. However, these options are more of first aid rather than solution to some ongoing problems and are likely to be more theoretical given the lack of information in the stimulus.

\n

It is not expected that the candidates cover all of the above.

\n

Accept any other relevant arguments for and against any relevant suggested strategy.

\n

Accept any other relevant examination.

\n

A conclusion with judgment is expected.

\n

A balanced response covers at least one argument for and one argument against each of two different strategies.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward with further guidance below.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n

It is expected that the candidate goes beyond just providing some relevant arguments for or against any suggested strategy and finish off with some conclusions and judgment.

\n

Award a maximum of [4] marks if the answer, regardless of balance and judgment makes no reference to either the figures or headings in Table 1.

\n

Candidates, in order to reach to the top markband, should show clear evidence of substantiation/well supported.

\n

For the top markband, candidates must make use of the financial information given in their discussion.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "19N.2.HL.TZ0.3", "topics": [ "2024-unit-3-finance-and-accounts", "2023-unit-1-business-organization-and-environment", "2023-unit-4-marketing", "2023-unit-5-operations-management" ], "subtopics": [ "3-5-profitability-and-liquidity-ratio-analysis", "1-3-organizational-objectives", "4-5-the-four-ps-(product-price-promotion-place)", "5-5-production-planning" ] }, { "Question": "
\n

Refer to the Megamin Mining case study (SL/HL paper 1 Nov 2021).

\n
\n

Describe two differences for MM between marketing its minerals (a product) and marketing its hotels (a service).

\n
[4]
\n
a.
\n
\n

Explain strategies MM could use to improve cash flow in its palladium mine in South Africa (Table 1).

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

PLEASE NOTE: This content is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

Marketing minerals

\n\n

Marketing hotels

\n\n

Accept any other reasonable difference.
Award [1] for each difference up to a total of [2].
Award [1] for putting the difference into context up to a total of [2].

\n
a.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n\n

Explanation should come from how relevant the strategies are.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.

\n

Award maximum 2 marks for only explaining one strategy.
Award maximum 3 marks for a theoretical answer or an answer that describes two (or more) strategies without explaining them.
Award maximum 5 marks if the answer is mainly descriptive but in context.

\n
b.
\n
", "Examiners report": "
\n

This was generally well answered with candidates usually including very good contextual discussion. Some made excellent reference to the seven Ps (although this is not part of the SL syllabus and was not expected) of the extended marketing mix to illustrate the differences between product and service marketing. The discussion of the service (The hotel) and the product (The minerals) was often well distinguished.

\n
a.
\n
\n

The discussion of cash flow was often descriptively done with some reluctance to make use of the data in Table 1. Use of the data in Table 1 would have enhanced the chances of gaining clear context marks. Better answers did provide some data and mention of changing credit terms, rescheduling capital expenditure etc. Overall, the answers seemed a little better than similar finance-based questions set on previous papers. It remains important to ensure questions are read carefully. In this case the question required strategies MM could use to improve cash flow.

\n
b.
\n
", "question_id": "21N.1.SL.TZ0.3", "topics": [ "2023-unit-3-finance-and-accounts", "2023-unit-4-marketing" ], "subtopics": [ "3-7-cash-flow", "4-1-the-role-of-marketing" ] }, { "Question": "
\n

Refer to the Ducal Aspirateurs case study (DA) (SL/HL paper 1 Nov 2020). 

\n
\n

With reference to DA, outline two suitable methods of sampling (lines 112–113).

\n
[4]
\n
a.
\n
\n

Explain the factors that DA would need to consider before deciding to outsource some of its production (line 110).

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

DA used sampling for recognition of brand name. It would have used sampling to set up focus groups and surveys. It also used focus groups in five different European countries for click and fix.

\n

Context can be achieved by making reference to:

\n\n

Methods could include:

\n\n

Award [1] for each suitable method identified and [1] for a description of how that method relates to DA. Award a maximum of [2] per method. Unsuitable methods cannot get context mark.

\n
a.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Factors include:

\n\n

Accept any other relevant explanation.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.

\n

Award a maximum of [3] for a theoretical answer, often a pre-prepared textbook answer or if there is only one factor.

\n

Award a maximum of [5] if the explanation is mainly descriptive, but in context.

\n
b.
\n
", "Examiners report": "
\n

Many candidates were able to identify two different sampling methods however not many candidates were able to outline these methods in the context of the business. The best answers made observations about the nature of the sample population: it is small because of the niche market; it is widespread as the focus is several European countries; DA probably have financial constraints that might affect the choice of method.

\n
a.
\n
\n

Most candidates know and understand the concept of outsourcing. Better answers focused on: the impact that outsourcing might have on the workforce who, in the past, have been looked after by DA; quality which may be more difficult to maintain but which is crucially important for DA's products; possibly enhanced production methods at the outsourced company who may specialize in mass production, of which DA has no experience. Many weaker answers simply produced text-book answers i.e. without effective use of context.

\n
b.
\n
", "question_id": "20N.1.SL.TZ0.1", "topics": [ "2023-unit-4-marketing", "2023-unit-5-operations-management" ], "subtopics": [ "4-4-market-research", "5-4-location" ] }, { "Question": "
\n

Soft Skin Cosmetics (SSC)

\n

Soft Skin Cosmetics (SSC) is a private limited company that produces a small range of face creams and soaps. Its products are designed and produced in the United States, and are made from safe, natural ingredients.

\n

SSC has a product-orientated marketing approach. Tiffany Presley, one of the company’s co-founders, believes that SSC’s consumers value health above fashion. “The skincare market is full of toxic products, but ours are healthy even if they don’t smell or look as nice,” she says. Chelsea Presley, SSC’s other co-founder, wants to develop the first sunscreen free of synthetic chemicals. However, product innovation is costly and risky. If the new sunscreen is a failure, several years of research and development costs will be wasted, which SSC cannot afford. SSC currently lacks the scale to innovate.

\n

SSC does not pay for advertising. It relies on social media and word-of-mouth promotion. Its brand awareness is very high among young women, and customer reviews are very positive about SSC’s quality and effectiveness. The company only sells online, not in retail outlets. To reach unsatisfied demand domestically and internationally, SSC would have to broaden its current distribution channels.

\n

SSC practises corporate social responsibility (CSR). It does not test its products on animals, and supports several charities protecting endangered species. Pressure groups publicly recognize SSC’s commitment to animal welfare.

\n

Currently, multinational companies dominate the global skincare market. Small emerging companies rarely survive. Chelsea wants to convert SSC to a public limited company, but Tiffany disagrees: she argues that shareholder pressure toward profit maximization could jeopardize consumer and animal safety.

\n
\n

State two features of product innovation.

\n
[2]
\n
a.
\n
\n

Explain one advantage and one disadvantage for SSC of having a product-orientated marketing approach.

\n
[4]
\n
b.
\n
\n

Explain one advantage and one disadvantage to SSC of practising corporate social responsibility (CSR).

\n
[4]
\n
c.
\n
\n

Discuss Chelsea’s idea to convert SSC into a public limited company.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Product innovation features could include:

\n\n

Accept any other relevant feature of product innovation. Candidates are not expected to word their responses exactly as above. Award [1] for each relevant feature of product innovation identified. Award a maximum of [2]. N.B. do not credit features which are in fact repetitions.

\n
a.
\n
\n

As a product-orientated business, SSC can:

\n\n

However:

\n\n

Accept any other relevant and applicable advantage/disadvantage.

\n

Mark as 2 + 2.

\n

Award [1] for identifying or describing the advantage/disadvantage of having a product-orientation and a further [1] for a development with respect/application to SSC.
Award a maximum of [2]. 
[2] cannot be awarded per advantage/disadvantage if the response lacks either explanation and/or application.

\n

For example:

\n\n
b.
\n
\n

By practising corporate social responsibility, SSC will be able to:

\n\n

However:

\n\n

Accept any other relevant and applicable advantage/disadvantage.

\n

Mark as 2 + 2.

\n

Award [1] for identifying or describing an advantage/disadvantage of corporate social responsibility and a further [1] for a development with respect/ application to SSC.
Award a maximum of [2].
[2] cannot be awarded per advantage/disadvantage if the response lacks either explanation and/or application.

\n

For example:

\n\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

If SSC converts to a public limited company they will be able to finance product innovation, research and development. SSC is already facing difficulties to fund internally the development of a sunscreen free of synthetic chemicals. If the company goes public, they will be able to sell shares in the stock market to raise the required capital to develop and produce it.

\n

With share capital, SSC will also be able diversify their production and offer a wider range of creams, soaps and other innovative cosmetics. Through the expansion of their product portfolio, it is likely that SSC’s customer base and sales will increase.

\n

SSC is probably missing sales opportunities by selling online only. As a Plc, they will have the financial means to develop alternative distribution channels, to reach unsatisfied national and international demand. Sales turnover may increase and SSC will ultimately grow.

\n

Share capital will also open up advertising possibilities. SSC will be able to finance costly above the line advertising instead of relying on social media and word of mouth.

\n

However, converting to a public limited company could be is a risky move. The cosmetic market is dominated by multinational companies. If more than 50 % of shares are bought by another company Tiffany and Chelsea will lose their control over SSC.

\n

New shareholders may have a different perspective in several aspects such as SSC corporate social responsibility or SSC product orientation. Clashing perspectives may arise. Tiffany is already worried about losing control. New shareholders may replace SSC’s ethical objectives and focus on profit maximization. Tiffany’s commitment to the animal cause may be lost. Pressure groups may react as well as stop their support to the company.

\n

It is likely that as a bigger company SSC may also change into market orientation. SSC may decide to produce what the market wants instead of focusing on high quality healthy products. Healthy products may be replaced by nice smelling and looking ones. Current customers may perceive this change and stop buying SSC.

\n

Overall, it seems that SSC needs to grow externally. The cosmetic market is highly competitive and it is dominated by multinational companies. SSC has no chances of expansion with its current level of finance, thus converting to a Plc has clear advantages to SSC. However, Tiffany and Chelsea will have to make several concessions. It is unlikely that more capital will come without new perspectives, new ways of doing things and a new ethos.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n

A balanced response is one that covers at least two arguments for and two arguments against the option.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n
d.
\n
", "Examiners report": "
\n

It was important here for candidates to pay attention to the command term, state. It was not necessary to explain at length about product innovation.

\n
a.
\n
\n

Many candidates could see the disadvantage of producing something that the consumer did not want and wasting vast sums in research and development and production. Finding an advantage was more difficult for candidates with many just describing what product orientation was with little attempt to link to the question.

\n
b.
\n
\n

Generally, this question was well answered but a significant number of candidates didn’t provide application to SSC.

\n
c.
\n
\n

Many candidates wasted a lot of time by repeating the question or simply lifting sections of text from the stimulus. Many candidates further wasted time explaining how becoming a public limited company would give SSC limited liability when they already have it. Also, many candidates forgot the concept of a Board of Directors – namely that it is not required to consult every shareholder with every decision made.

\n

Few candidates mentioned the ability to develop new distribution channels.

\n
d.
\n
", "question_id": "21M.2.HL.TZ0.3", "topics": [ "2023-unit-5-operations-management", "2024-unit-4-marketing", "2023-unit-1-business-organization-and-environment", "2024-unit-1-introduction-to-business-management" ], "subtopics": [ "5-6-research-and-development", "4-1-introduction-to-marketing", "1-3-organizational-objectives", "1-2-types-of-business-entities" ] }, { "Question": "
\n

Refer to the Megamin Mining case study (SL/HL paper 1 Nov 2021).

\n
\n

MM is reviewing its hotel and mining operations.

\n

To understand customer opinions about its hotels, MM will distribute questionnaires at two of its hotels and use a convenience sampling method. MM is also considering introducing flexitime for hotel employees.

\n

For its gold mining operations, MM wants to increase its market share worldwide to 1 % by 2030. In 2020, MM produced 17 tonnes of the global production of 3200 tonnes.

\n

In another development, MM wants to enter the rapidly growing lithium market. MM has rejected the idea of buying an existing lithium producer and is considering two options: opening its own lithium mine in Australia or entering a joint venture with a lithium mining company.

\n

Option 1: Open a lithium mine in Australia

\n

MM has identified a site in Australia, and the Australian government, which is keen to develop its country’s lithium mining industry, will approve a mining license for it. Development of the mine would take three years and cost $100 million. Table 2 shows the forecasted net returns for the first six years.

\n

Table 2: Forecasted net returns for the lithium mine (in millions of $)

\n

\n

MM will sell the lithium to battery manufacturers in China, a market familiar to the Australian mining industry. Transport costs would be high. Environmental pressure groups oppose the mine because of the water and air pollution they think it would create.

\n

Option 2: A joint venture with CanLith (CL)

\n

CL, a lithium mining company, is seeking expansion with a new mine and needs finance. A joint venture with MM would bring MM’s expertise and corporate values to the expansion. MM and CL would have equal ownership of the new mine and jointly manage it. CL would appoint a board of directors. However, CL has attracted bad publicity because of its poor environmental record, and local people oppose the new mine. Information on the joint venture is shown in Table 3.

\n

Table 3: Information on setting up the joint venture

\n

\n
\n

Define the term flexitime.

\n
[2]
\n
a.
\n
\n

Calculate for MM: its market share worldwide in gold in 2020 (show all your working).

\n
[2]
\n
b.i.
\n
\n

Calculate for MM: the average rate of return (ARR) for the lithium mine (show all your working).

\n
[2]
\n
b.ii.
\n
\n

Explain one advantage and one disadvantage for MM of using convenience sampling for its market research.

\n
[4]
\n
c.
\n
\n

Using the case study and additional information from Section B, recommend whether MM should choose Option 1 or Option 2.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

A system of working a set number of hours with the starting and finishing times chosen within agreed limits by the employee and employer.

\n

Candidates are not expected to word their responses exactly as above.

\n

Award [2] for a clear, complete definition.
Award [1] for a partial definition that shows some understanding.

\n
a.
\n
\n

MM’s sales: 17 tonnes
Total market 3200 tonnes

\n

Market share =173200×100 = 0.53 % (allow rounding)

\n

Award [2] if correct answer and working shown.
Award [1] if correct answer but no working, or no %.

\n
b.i.
\n
\n

Average rate of return (ARR) =(total returns - capital cost) ÷ years of usecapital cost ×100                                             

\n

                                              =(190m - 100m) ÷ 5100m × 100 = 18 %

\n

Total return = $ (−70 − 20 − 10 + 30 + 60 + 100)m = $90m = $18m per year
Investment = $100m

\n

ARR =18100m × 100 % = 18 % per year

\n

(alternative method: $190m return from $100m investment = net $90m =

\n

90m100m × 100 % = 90 % over 5 years = 18 % average per year)

\n

Award [2] if correct answer and working shown.
Award [1] if correct answer but no working, or no %.

\n
b.ii.
\n
\n

Advantage

\n\n

Disadvantage

\n\n

Award [1] for each advantage/disadvantage up to a total of [2].
Award [1] for putting each advantage/disadvantage into context up to a total of [2].

\n
c.
\n
\n

NOTE FOR EXAMS 2024 ONWARD: Option 1 is not a good fit for the new syllabus as it is effectively internal growth and this is not assessed at AO3. Related parts of this multi-part question may be used.

\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Arguments for Option 1

\n\n

Arguments for Option 2

\n\n

Recommendation needed. But rewardable only if supported by analysis.
Accept reasonable alternative answers.
Marks should be allocated according to the paper 1 markbands for May 2016 forward section B.
Award a maximum of [4] for a purely theoretical answer or with no effective use of case (e.g. only repeating case material without development.)
Award a maximum of [5] if only one option is considered.
Award a maximum of [8] if both options are considered and there is good use of data but there are no significant judgements.

\n
d.
\n
", "Examiners report": "
\n

Most candidates had some basic understanding of the term flexitime but too often, the answers remained very short, if not tautological (‘flexitime means flexible time’). Some candidates provided scenarios to show their understanding, for example about ‘core hours’ of 10am to 3pm and employees having some flexibility to choose when exactly to start and end their workday, as long as they work between the core hours. Candidates have time to develop their answers and should not try to write minimalist answers that are as short as possible.

\n
a.
\n
\n

The calculations of market share and ARR did not pose particular problems to candidates. A small number of candidates did not show their workings and/or forgot the % sign.

\n
b.i.
\n
\n

The calculations of market share and ARR did not pose particular problems to candidates. A small number of candidates did not show their workings and/or forgot the % sign.

\n
b.ii.
\n
\n

The topic of convenience sampling proved quite difficult; it seemed that many candidates had not encountered it during their studies and tried to guess its meaning, with basic comments such ‘an advantage of convenience sampling is that it is convenient’. A small number of answers were excellent, referring to the context of hotels and the fact that respondents are all likely to be guests who may therefore not give helpful answer about non-sampled parts of the population.

\n
c.
\n
\n

The answers to the last question were usually well structured and thorough (typically: advantages of Option 1, disadvantages of Option 1, advantages of Option 2, disadvantages of Option 2). Such a structure may seem formulaic, but it enables students to show their knowledge (AO1), to apply it to a context (AO2) and to provide a recommendation after weighing up the alternatives (AO3).

\n
d.
\n
", "question_id": "21N.1.SL.TZ0.4", "topics": [ "2024-unit-2-human-resource-management", "2024-unit-4-marketing", "2023-unit-3-finance-and-accounts", "2023-unit-4-marketing" ], "subtopics": [ "2-1-introduction-to-human-resource-management", "4-1-introduction-to-marketing", "3-8-investment-appraisal", "4-8-e-commerce", "4-6-international-marketing" ] }, { "Question": "
\n

Refer to the Megamin Mining case study (SL/HL paper 1 Nov 2021).

\n
\n

MM uses just-in-time (JIT) production in its Oil Production Division.

\n

The long-term demand for oil is usually predictable, and production is reliable unless major problems occur. In 2020, however, there was an unexpected decrease in demand for oil. Uncertainties in the world economy and responses to climate change now make predictions more difficult.

\n

MM has prepared a sales forecast for its oil production for 2022 and 2023 (Table 2).

\n

Table 2: Sales forecast for oil production for 2022 and 2023 (millions of barrels)

\n

\n

§ calculated using a four-quarter moving average based on six years of historic data
† calculated by comparing actual sales with a four-quarter moving average

\n

 

\n

In 2020, MM had some major problems:

\n\n

In response to these problems, MM had to rely on its contingency planning and its crisis management procedures.

\n

JG Mining (JG) wants to buy MM’s tar sands mining operation for $50 million, but the board of directors are divided. MM recently invested $15 million in their tar sands operation in addition to the original $30 million set-up cost in 1986. Production is at designed capacity, and, although the long-term average rate of return (ARR) for the tar sands operation is below those of most of MM’s other investments, it provides a reliable source of income. However, MM has difficulty selling sulphur, a by-product of tar sands production.

\n

Employees at the tar sands operation are against selling the operation to JG. However, the income from the sale would help MM finance other investments, such as lithium mining, and the sale could help improve MM’s corporate image. MM’s Finance Director, Ethan, estimates that the net present value (NPV) of the tar sands operation is $46 million.

\n
\n

Define the term just-in-time (JIT) production.

\n
[2]
\n
a.
\n
\n

With reference to Table 2, explain one benefit and one limitation for MM of using sales forecasting.

\n
[4]
\n
b.
\n
\n

With reference to MM, explain the difference between crisis management and contingency planning.

\n
[4]
\n
c.
\n
\n

Using information from the case study and additional information above, discuss whether MM should sell its tar sands mining operation to JG.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Candidates can answer in terms of JIT production where the focus is on processes that reduce the time within production systems (work-in-progress) and response times with suppliers/customers. The mention of lean production (of which JIT is a part) is useful.

\n

Candidates can also answer in respect of managing stocks (raw materials, work-in-progress, finished products) so that these are available exactly when needed and not before. Award a max of [1] if the answer is only related to JIT stock control.

\n

Candidates can use ‘inventories’ rather than ‘stocks’.

\n

Award [2] for a complete definition.
Award [1] for some understanding of JIT e.g., it mentions ‘lean production’ or ‘stocks’ but not the idea of reducing to a minimum.
Award a max of [1] if the answer is only related to JIT stock control.

\n
a.
\n
\n

Benefits

\n\n

Limitations

\n\n

Award [1] for one benefit or one limitation, up to a total of [2].
Award [1] for putting each benefit/limitation into context, i.e., reference MM/ Table 2 up to a total of [2].
i.e Award [3] for answers that put a benefit and/or limitation into context but does not make use of Table 2 in relation to sales forecasting for MM.
Only award [4] for answers that make explicit use of Table 2 in relation to sales forecasting for MM.

\n
b.
\n
\n

Contingency planning; Planning how to respond to unlikely events that are a threat to a business

\n\n

Crisis management: The process by which a business deals with a major event that has happened and poses a threat to the business

\n\n

Accept any other relevant difference.
Context comes from issues identified in the case and the nature of the business.

\n

Award [4] for a clear distinction between the two with effective use of the context.
Award [3] if both crisis management and contingency planning are understood in context, but there is no clear distinction made.
Award [2] if there is clear understanding of contingency planning and crisis management but no context is shown.
Award [1] for limited understanding.

\n
c.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Arguments for the sale:

\n\n

Arguments against the sale:

\n\n

Judgement/evaluation

\n\n

Final judgement should relate to points raised.

\n

Candidates can use information from Section A and Section B.
Candidates who attempt to make use of Section B information may not write with the same level of depth but should be rewarded positively.

\n

Accept reasonable alternative answers.
Marks should be allocated according to the paper 1 markbands for May 2016 forward section B.
Award a maximum of [4] for a purely theoretical answer or with no effective use of the case (e.g., only repeating case material without development).
Award a maximum of [5] for a one-sided answer.
Award a maximum of [6] if options are considered but there is limited use of data or if there is good analysis of data with limited consideration of issues.
Award a maximum of [8] if options are considered and there is good use of data but there are no significant judgements.

\n
d.
\n
", "Examiners report": "
\n

Most candidates demonstrated general understanding of the term just-in-time (JIT) production. However, too many responses focused just on issues of stock control. Better responses often included information on lean production. As with previous Q4a, there was no need to relate the answer to the case material.

\n
a.
\n
\n

The notion of sales forecasting was often only understood in general terms. The specific subject use (as illustrated in Table 2) was not understood, and marks varied considerably. Better answers tended to make non-descriptive use of the numbers in Table 2. Many responses tended to make descriptive comments about sales forecasting.

\n
b.
\n
\n

Both terms were generally well understood. The use of context was good, and most responses achieved good marks. A good strategy was to explain the terms in time order i.e. contingency (before the event) and crisis management (after the event).

\n
c.
\n
\n

This question generated a range of answers. The question required a judgement with a requirement to use information from the case and other material. Unfortunately, many candidates chose to only make use of the pre-seen case study material. Better answers referred to the full range of information and data provided. Many responses listed the arguments in favour of MM making the sale followed by a list of the arguments against. Much of the information in the arguments was just lifted from the pre-seen case study. Development of the information with strong analysis and application would have helped many candidates. Not all candidates gave a judgement or suggested a solution for MM.

\n
d.
\n
", "question_id": "21N.1.HL.TZ0.4", "topics": [ "2023-unit-5-operations-management", "2023-unit-4-marketing", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "5-3-lean-production-and-quality-management", "4-3-sales-forecasting", "5-7-crisis-management-and-contingency-planning", "1-3-organizational-objectives" ] }, { "Question": "
\n

Refer to the Ducal Aspirateurs case study (DA) (SL/HL paper 1 Nov 2020). 

\n
\n

DA’s board must make two major decisions.

\n

Decision 1: DA needs to reduce employment costs. A new system of pay and benefits is under consideration. This includes:

\n\n

Decision 2: The three options from DA directors (lines 105–143) must be considered.

\n

Immediately prior to the board meeting, Mia withdrew her proposal (Option C).

\n

There is now additional information available on the remaining options.

\n

Option A: Louise’s proposal – market development

\n

Louise plans to target the mass market and proposes using the brand name DuLow for the redesigned products. She is planning for DA to outsource production to Star Electrics (SE). SE uses mass production together with some customization of products. SE keeps costs low by importing cheap raw materials and paying low wages.

\n

Ben, the human resource management director, is concerned about the impact this change would have on DA’s employees.

\n

Option B: Salah’s proposal – product development

\n

Salah’s plan requires new production lines, one for each product. Salah proposes using cellular manufacturing. The investment cost is estimated to be €500 million. Salah estimates the following net cash inflows (excluding the initial investment cost).

\n

Table 1: Forecast financial information for Option B (figures in € millions)

\n

\n

Louise thinks the option is expensive. Dodi, the finance director, thinks that the investment is too large and he believes that some shareholders are also concerned about the size of future dividends. Salah believes that shareholders will be pleased about the revenues that this investment will generate. Mia is worried that the products would be expensive to produce and that demand might fall in five to seven years.

\n
\n

Define the term retained profit.

\n
[2]
\n
a.
\n
\n

Using Table 1, calculate for Option B the average rate of return (ARR) (show all your working).

\n
[3]
\n
b.i.
\n
\n

Using Table 1, calculate for Option B the payback period (no working required).

\n
[1]
\n
b.ii.
\n
\n

Explain one advantage and one disadvantage for DA of replacing the current pay system and benefits with the proposed employment package (Decision 1).

\n
[4]
\n
c.
\n
\n

Using the Ducal Aspirateurs case study and additional information, recommend whether DA should choose Option A or Option B (Decision 2).

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Profit made by the business, calculated after all deductions, including dividends. It is reinvested into the business as an internal source of finance.

\n

Award [1] for a partial definition and [2] for a full, clear definition. This answer does not need to be in context and can be worded differently to the above.

\n
a.
\n
\n

Average rate of return (ARR)=total returns-capital costyears of usecaptital cost×100

\n

ARR=50+150+200+300+400-5005500×100=24 %

\n

Award [3] for a correct answer which must include %.
Award [2] if there are no, or incorrect, units.
Award [1] if the working is not shown.

\n
b.i.
\n
\n

After 3 years $400m paid back so needs 4 more months
So payback = 3 years 4 months

\n

Accept alternative formats such as “40 months” or “3 and 1/3 years” or “month 4 of year 4”

\n

Award [1] for correct answer

\n
b.ii.
\n
\n

Advantages include:

\n\n

Accept any other valid advantage.

\n

Disadvantages include:

\n\n

Accept any other valid disadvantage.

\n

Award [1] for each relevant advantage identified and [1] for a description of how that advantage relates to DA. Award [1] for each relevant disadvantage identified and [1] for a description of how that disadvantage relates to DA.

\n
c.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Option A

\n

Advantages include:

\n\n

Disadvantages include:

\n\n

Option B

\n

Advantages include:

\n\n

Disadvantages include:

\n\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section B.

\n

Theoretical answer or context limited to naming the business or lack of development max [4].

\n

Discussion of only one option marks limited to [5].

\n

Discussion but no clear balance [6].

\n

Options considered, good use of evidence, particularly from section B, but no effective conclusion award a maximum of [8].

\n

For [10] the answer needs to be clearly relevant to DA with good use of context and a clear and supported recommendation.

\n
d.
\n
", "Examiners report": "
\n

Most candidates wrote at least a partial definition of retained profit, however many answers were very short and sometimes tautological ('retained profit is the profit retained by the business'). For such definition questions, candidates should be trained to develop their ideas, and not write as concisely as possible.

\n
a.
\n
\n

The two calculations (ARR and payback period) were often correctly done, though sometimes candidates forgot the units.

\n
b.i.
\n
\n

The two calculations (ARR and payback period) were often correctly done, though sometimes candidates forgot the units.

\n
b.ii.
\n
\n

The replacement of current pay system and benefits with a different employment package was understood, but many candidates tended just to copy the information given in the case study itself, without adding much in their answer.

\n
c.
\n
\n

The discussion of Option A and Option B was usually balanced, though some candidates started with their recommendation ('DA should choose Option X because...'), which should have appeared at the end of the conclusion, after weighing the advantages and disadvantages of both Options.

\n
d.
\n
", "question_id": "20N.1.SL.TZ0.4", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-3-finance-and-accounts", "2023-unit-2-human-resource-management" ], "subtopics": [ "1-3-organizational-objectives", "3-4-final-accounts", "3-8-investment-appraisal", "2-4-motivation" ] }, { "Question": "
\n

Refer to the Ducal Aspirateurs case study (DA) (SL/HL paper 1 Nov 2020). 

\n
\n

Outline two STEEPLE factors that have influenced DA’s business strategy.

\n
[4]
\n
a.
\n
\n

Explain how knowledge of the product life cycle may have influenced DA’s product range.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

PLEASE NOTE: This content is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

The STEEPLE factors are:

\n

Most relevant:

\n\n

Although STEEPLE strictly refers to external factors reward can be given where external factors have influenced decisions within DA such as its focus on employee welfares (ethics) and its use of technology in design/manufacture.

\n

Mark as 2 + 2.

\n

Award [1] for each relevant factor identified and [1] for a description of how that factor relates to DA. Award a maximum of [2] per factor.

\n
a.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

References include:

\n\n

Throughout the business’s life, new products have been introduced when others are in maturity/saturation, and existing products are given revitalized lives through extension strategies. Candidates may draw a product life cycle. This is not necessary but may help the explanation.

\n

Accept any other relevant explanation.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.

\n

Award a maximum of [3] for a theoretical answer or for an answer that does not identify any stages of the product life cycle.

\n

Award a maximum of [5] if the explanation is mainly descriptive, but in context.

\n
b.
\n
", "Examiners report": "
\n

Most candidates understand the ideas behind STEEPLE analysis and were able to identify two relevant STEEPLE factors. Good candidates were able to tie these factors to the wealth of relevant information in the case which included evidence of recessions and growth, political events, the social and ethical issues that define DA and technological change such as battery technology.

\n
a.
\n
\n

Understanding of the product life cycle is not strong and seldom stretched beyond the theoretical. Many candidates missed opportunities to link the concept with the products identified in the case, some of which faced decline, others which were being launched and introduced. Context was a challenge for many even though suitable evidence was available.

\n
b.
\n
", "question_id": "20N.1.SL.TZ0.2", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-4-marketing" ], "subtopics": [ "1-5-external-environment", "4-5-the-four-ps-(product-price-promotion-place)" ] }, { "Question": "
\n

Refer to the Ducal Aspirateurs case study (DA) (SL/HL paper 1 Nov 2020). 

\n
\n

There are several important items to be discussed at DA’s board meeting, three of which are outlined below.

\n

Item 1: Budgets. DA produces its budgets based on the functional areas of the business. For example, the Marketing, Production, Innovation and Corporate Social Responsibility (CSR) Departments are all separate cost centres. Pierre is proposing that budgets should be more detailed so that, for example, each of DA’s products has its own cost centre and each separate innovation project is also a cost centre.

\n

Item 2: Recommendations from the management consultants. The management consultants propose bringing DA more up to date with employment practices by replacing the many benefits that employees get with a low basic pay and a profit-related bonus, and charging market rents for the housing in Ville d’Ablet. There will also be penalties on employees for failing to meet targets. The CSR department are opposed to this idea because they believe it will change the culture of the business, which has built up over many years.

\n

Item 3: The manufacture of rechargeable batteries used in cordless products. DA currently makes its own rechargeable batteries. In 2019, it made 10 000 batteries. The variable cost is €15 per battery and the fixed costs are €30 000. XL, a public limited company, is a major manufacturer of batteries. DA has contacted XL to manufacture the rechargeable batteries, which they will buy from XL at €17 each.

\n
\n

Define the term public limited company.

\n
[2]
\n
a.
\n
\n

Explain one advantage and one disadvantage for DA of changing from function-based cost centres to the cost centres proposed by Pierre.

\n
[4]
\n
b.
\n
\n

Calculate the difference between the cost for DA to make the rechargeable batteries and the cost to buy them from XL.

\n
[3]
\n
c.i.
\n
\n

Suggest one other factor that DA should consider before deciding whether to make the rechargeable batteries or buy them from XL.

\n
[1]
\n
c.ii.
\n
\n

Discuss the likely impact on DA’s organizational culture of the changes recommended by the management consultants.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

A limited company (incorporated), often a large business, with the legal right to sell shares to the general public (publicly traded). Its share price is quoted on the national stock exchange. It has limited liability (not necessary in answer but helpful)

\n

References to ‘owned by the government’ or ‘local authorities can be rewarded as state involvement in plcs is common in some countries

\n

Award [1] for a partial definition and [2] for a full, clear definition. This answer does not need to be in context and the definition does not have to use the words above. A full, clear definition needs more than just a reference to limited liability.

\n
a.
\n
\n

A cost centre is a section of a business to which both costs and revenues can be allocated.

\n

Currently cost centres are based on functional areas such as Marketing, HRM. Proposal is to base them on product (washing machines, vacuum cleaners, toasters etc,) and, where appropriate, project (eg click and fix).

\n

Advantages of change include:

\n\n

Disadvantages of change include:

\n\n

Please note context may be a challenge. Candidates need to mention functional areas, products, projects that appear in the case.

\n

References to budgets need to be linked to cost centres.

\n

Award [1] for each relevant advantage identified and [1] for a description of how that advantage relates to AFA. Award [1] for each relevant disadvantage identified and [1] for a description of how that disadvantage relates to DA.

\n

Where a candidate ONLY refers to existing cost centres max award [1], for understanding cost centres.
Where a candidate does not refer to new cost centres but does mention impacts of changing: max award [2].

\n
b.
\n
\n

Cost to make = 10 000 × €15 + €30 000 = €180 000
Cost to buy = 10 000 × €17 = €170 000
Difference/Saving = €10 000 in favour of buying

\n

Reward alternative methods of getting to the same answer e.g. by starting with unit costs and cost differences. Although working is preferable the question does not require it.
The answer € 10 000 also achieves [3]

\n

Award [3] for a correct answer which must include €.

\n

Award [2] for a correct answer with wrong units or reasonable attempt with units. E.g. not making a final subtraction.

\n

Award [1] for an attempt.

\n

If the answer does not appear in (i) but does appear in (ii) then (i) can be rewarded retrospectively – you will have to go back to mark entry for (i).

\n
c.i.
\n
\n

Factors could include:

\n\n

Award [1] for any relevant factor – does not have to be in context. Do not reward relative costs.

\n
c.ii.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials. 

\n

Changes include:

\n\n

Culture currently based on:

\n\n

Focus is changed to managing costs. The switch is from ‘soft’ to ‘hard’ HRM, part of the culture.
The current ‘soft’ approach is more consistent with a family business than ‘hard’ HRM.

\n

‘Balance’ could be achieved by comparing old and new methods; positive and negative impacts on stakeholders and/or DA.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section B.

\n

Theoretical answer or context limited to naming the business or simplistic development max [4].

\n

Discussion of only either the existing situation or the new situation or only focuses on motivation, or on impacts other than on culture [5].

\n

Discussion of culture with no clear balance [6].

\n

Cultural change considered, good use of evidence, particularly from section B, but no effective conclusion award a maximum of [8].

\n

For [10] the answer needs to be clearly relevant to DA, with good use of context, a clear sense of how culture will change and a clear conclusion. 

\n
d.
\n
", "Examiners report": "
\n

Most candidates mentioned the key features of public limited companies — limited liability, openly traded by the general public on the stock exchange. In some countries public limited companies have some significant ownership of shares by the state and such answers were allowed even though in many countries this is not appropriate.

\n
a.
\n
\n

There is a general lack of knowledge of cost centres. The concept is central to the management of many businesses, so this is a significant gap in many candidates' knowledge. Of those candidates who did know what cost centres are, few were able to develop the idea in relation to the proposed change in the structure of the business. Good answers referred to the fact that there would be far more cost centres under a 'product' approach but that it would be easier to manage product performance including target setting. Candidates could mention the various products and the actual functions in this business. Some candidates confused cost centres with budgets.

\n
b.
\n
\n

Many candidates got the correct answer of €10,000. Some candidates quoted dollars, or no units. Others forgot to take the difference between the two total costs. Some candidates forgot to include the fixed costs.

\n
c.i.
\n
\n

Almost all candidates were able to identify a factor, but a few candidates did not recognize the significance of the word 'other' in the question.

\n
c.ii.
\n
\n

Organizational culture does not seem to be an area of strength for most candidates. The pre-release material provided a range of cultural issues at DA and it is surprising that candidates seem to not to have appreciated the importance of the existing culture at DA to its effective functioning. The proposals provided a major change to the culture, shifting the business from one based on 'soft HRM' to 'hard HRM'. The changes proposed would totally change the business. Many weaker answers focused on the impact of the proposed changes on motivation while other answers focused on whether the change was a good idea or not.

\n

Good answers contrasted the likelihood that DA may become leaner and more efficient with the greater likelihood that the extensive good will and loyalty of the workforce might be destroyed. Good answers also involved ethical considerations and likely loss of customer loyalty and brand loyalty.

\n
d.
\n
", "question_id": "20N.1.HL.TZ0.4", "topics": [ "2024-unit-1-introduction-to-business-management", "2023-unit-2-human-resource-management", "2023-unit-5-operations-management" ], "subtopics": [ "1-2-types-of-business-entities", "2-2-organizational-structure", "5-5-production-planning", "2-5-organizational-(corporate)-culture" ] }, { "Question": "
\n

Refer to the Megamin Mining case study (SL/HL paper 1 Nov 2021).

\n
\n

With reference to MM, describe two features of a merger (lines 20–22).

\n
[4]
\n
a.
\n
\n

Explain the strategies used by MM to achieve sustainability.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Answers could include:

\n\n

Accept any other reasonable description.
Award [1] for each feature up to a total of [2].
Award [1] for putting the feature into context up to a total of [2].

\n
a.
\n
\n

PLEASE NOTE FOR 2024 exams onward: The concept of sustainability will be assessed in the internal assessment for HL/SL only. Related parts of this multi-part question may be used for external assessment practice.

\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Sustainability has three dimensions: environmental (ecological) sustainability, social sustainability and economic sustainability.

\n

Environmental sustainability

\n

Most of MM’s strategies are concerned with environmental sustainability and include:

\n\n

Social sustainability

\n\n

Economic sustainability

\n\n

Accept any other reasonable point about MM’s sustainability strategies.
Explanation/analysis should come from discussing these in relation to the situation that MM is in.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.
Award maximum 2 marks for only explaining one strategy.
Award maximum 3 marks for a theoretical answer or an answer that describes two (or more) strategies without explaining them.
Award maximum 5 marks if the explanation of two strategies or more is mainly descriptive but in context.

\n
b.
\n
", "Examiners report": "
\n

Most candidates were able to demonstrate some understanding of mergers. The question required candidates to describe two features of mergers. Most candidates considered the consequences of mergers having taken place rather than a feature of them. Whilst there could be some overlap on some points it was often difficult for candidates to gain the second mark for context.

\n
a.
\n
\n

Candidates were generally able to show good understanding of sustainability and relate the concept to Megamin Mining (MM). Strategies were often well discussed. Some good responses were able to split sustainability into three dimensions—environmental; social and economic, but many candidates only copied in their answers elements from the case study, without much added value.

\n
b.
\n
", "question_id": "21N.1.SL.TZ0.1", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-5-operations-management" ], "subtopics": [ "1-6-growth-and-evolution", "5-1-the-role-of-operations-management" ] }, { "Question": "
\n

High Plains PLC (HP)

\n

High Plains PLC (HP) owns 600 budget hotels. It operates in a rapidly growing market and has a 60 % market share of the budget hotel market.

\n

Recent secondary market research on the hotel industry revealed:

\n\n

HP’s directors aim to increase occupancy rates in HP’s hotels from the current 65 % to 80 % by the end of 2024. Each of HP’s hotels has 400 rooms. People on business trips account for only 15 % of the hotels’ bookings.

\n

HP is considering two options.

\n

Option 1: Price discounts on 100 of the rooms in each of HP’s hotels

\n

The discounts would undercut prices charged by its major competitor, Kampfort Inns (KI), by 10 %. HP would also offer a price match guarantee, which means that it would match any lower price charged by KI for any room.

\n

Option 2: Upgrade 100 of the standard rooms in each of HP’s hotels

\n

Upgraded rooms, called HP+, would have improved IT facilities, new décor, a coffee machine and a better shower. HP+ rooms would be $20 per night more expensive than standard rooms. Estimated upgrade costs are $1500 per room, and the upgrades would take two years to complete. The HP+ rooms are targeted both at the business traveller market segment and at customers willing to pay slightly more for an enhanced hotel experience.

\n
\n

Define the term market segment.

\n
[2]
\n
a.
\n
\n

Construct a Boston Consulting Group (BCG) matrix for HP, identifying the correct segments for HP’s standard rooms and its HP+ upgraded rooms if Option 2 is chosen.

\n
[4]
\n
b.
\n
\n

Explain one advantage and one disadvantage for HP of using secondary market research.

\n
[4]
\n
c.
\n
\n

Discuss whether HP should choose Option 1 or Option 2.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

A market segment is a sub-group or portion of a whole market who share similar characteristics.

\n

For 2 marks candidates need to demonstrate that: 

\n\n

Award [1] for a definition that shows some understanding of a market segment.

\n

N.B. If a candidate writes a response similar to the following, award [1]: A market segment is a group of people who share one or more common characteristics.

\n
a.
\n
\n

\n

Award [1] for a diagram that has either the correct axis labels OR the 4 correct segments labelled [1].

\n

Award [2] for a diagram that is fully, correctly labelled [2].

\n

Award [1] for either stating that HP rooms are a STAR or by placing this in the STAR segment the diagram drawn.

\n

Award [1] for either stating that HP + rooms are a ? or a Problem Child or by placing this in the ? / Problem child segment in the diagram drawn.

\n
b.
\n
\n

Application Advantage

\n\n

Application Disadvantage

\n\n

Award [1] for identifying an advantage to HP from its use of secondary market research.

\n

Award [1] for identifying a disadvantage to HP from its use of secondary market research.

\n

In order to access the 3rd and 4th marks both answers must make use of the stimulus / be contextualised.

\n

Mark as [2+2].

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

There is no “correct answer”.
Option 1

\n

Pros
This is very simple to implement and can be done very quickly. There will be additional costs as this price change will need to be heavily advertised to create customer awareness. Above and below the line advertising can be used.
Advertisements on TV, in the press and on social media will need to be used but HP can also use its database of customers to send then direct mail. As most budget hotel customers are price sensitive then this is likely to increase demand It is likely that they will be able to raise occupancy rates above the 65 % rate and this can be achieved quickly.

\n

Cons
How successful this option depends on how its main rival reacts. Kampfort may react by matching the price cuts that HP makes – if this happens then occupancy rates may only rise minimally – the price cuts may grow the market slightly. It could also lead to a price war – Kampfort Inns may even cut its prices below those of HP in which case HP occupancy rates may fall. However, it may have some impact on its profitability – occupancy rates must rise by more than 10 % if sales revenue is not to fall.

\n

Option 2

\n

Pros
The upgraded rooms are more likely to appeal to business guests and they account for 15 % of its target market. Secondary market research data shows that 20 % of budget hotel customers are not price sensitive and therefore the upgraded rooms may appeal to this market segment.

\n

The upgraded rooms bring in more revenue per room per night as they are $20 per night more expensive than standard rooms – if they hit the target of 80 % occupancy then revenue per night would increase (80 × $20 × 600) = $960 000 per night.
The change differentiates HP from a major rival. This may allow HP to raise its status as it now offers a better “product” at all of its hotels compared to the offer of its rival.

\n

Cons
This will have higher initial costs. Each upgraded room costs $1500, that is $150 000 per hotel. It has 600 hotels so the total cost would be $90 million. This is likely to be far greater than the promotion costs of option A.
There will also be lost revenue at each hotel whilst the 100 rooms are upgraded. This will impact both profits and occupancy rates. Occupancy rates will fall initially and as it will take 2 years for all the upgrades to be undertaken.

\n

There is also the danger of brand cannibalisation – HP may find that occupancy rates stay the same, with more customers staying in the HP+ rooms rather than standard rooms – they would not achieve their target of 80 % occupancy rates BUT sales revenue would increase.

\n

\n

It is expected that candidates provide a conclusion with a substantiated judgment.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n

If a candidate evaluates / addresses only one option, award a maximum of [5].

\n

A balanced response is one that provides at least one argument for and one argument against each option.

\n

Candidates may contrast one option with another for a balance as long as at least two arguments are given for each option.

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in the answer.

\n
d.
\n
", "Examiners report": "
\n

Many candidates were successful (2 marks) on this question. Sometimes, however, candidates defined target market.

\n
a.
\n
\n

Many candidates earned full marks on this question.

\n
b.
\n
\n

As noted above, many candidates did not effectively apply their response to the stimulus.

\n
c.
\n
\n

Responses to 1(d) were generally quite effective. Many students have been properly trained about how to answer this type of question, which is to write about both options and have at least one advantage and one disadvantage for each option.

\n
d.
\n
", "question_id": "21N.2.SL.TZ0.3", "topics": [ "2023-unit-4-marketing", "2024-unit-4-marketing" ], "subtopics": [ "4-5-the-four-ps-(product-price-promotion-place)", "4-4-market-research", "4-5-the-seven-ps-of-the-marketing-mix", "4-2-marketing-planning" ] }, { "Question": "
\n

Refer to the Ducal Aspirateurs case study (DA) (SL/HL paper 1 Nov 2020). 

\n
\n

Outline one benefit of Viv’s leadership style and one benefit of Salah’s leadership style (lines 82–84).

\n
[4]
\n
a.
\n
\n

Explain suitable sources of finance for Option B.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Leadership styles identified:

\n

Viv: Autocratic when re-establishing business. Benefit is that it got things done and she had very clear determination. Later more democratic when she consulted engineers. Benefit is that manager may have been in a better position. Overall situational which may be appropriate for an evolving business.

\n

Salah: Largely laissez-faire although some elements of democratic. Candidates will have to identify this for themselves. Creative employees work best when left alone – suitable for the innovation division.

\n

There is no need for answers to identify the leadership style – the question is about benefits.

\n

Award [1] for relevant benefit identified and [1] for a description of how that benefit relates to DA. Award a maximum of [2] per benefit.

\n
a.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Key factors:

\n\n

Remember the concept of positive marking – full marks can be achieved with more than one suitable method even if some unsuitable methods are identified.

\n

Accept any other relevant explanation.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.

\n

Award a maximum of [3] for a theoretical answer (unsuitable methods) or if there is only one source.

\n

Award a maximum of [5] if the explanation is mainly descriptive, but in context. E.g. if most of the context is mentioned but not developed.

\n
b.
\n
", "Examiners report": "
\n

Most candidates were able to identify Viv's and Salah's leadership styles. Many candidates were able to provide the standard textbook benefits of these leadership style but fewer candidates were able to put these benefits into context. The best answers identified times in DA's history when Viv's predominantly autocratic style was needed to get through tough times, and how Salah's largely laissez faire style is likely to be conducive to creating ideas for the innovation division.

\n
a.
\n
\n

Many candidates were able to name possible sources of finance, such as bank loan or sale of assets, however those sources were not always suitable (for example overdrafts). The best answers commented on the suggestions, for example about the fact that involving business angels could lead to a loss of control (for the family), or the fact that selling shares would not be possible (unless there is a change of legal status).

\n
b.
\n
", "question_id": "20N.1.SL.TZ0.3", "topics": [ "2023-unit-2-human-resource-management", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "2-3-leadership-and-management", "3-1-sources-of-finance" ] }, { "Question": "
\n

Jill’s Gloves (JG)

\n

Jill’s Gloves (JG) is a sole trader owned by Jill McAloon. The business makes and sells ski gloves. JG sells each pair of gloves for $20.

\n

Jill has forecasted sales in 2022 to be 20 000 units. She has also projected the fixed costs (Table 1) and variable costs (Table 2) for that year.

\n

Table 1: Projected fixed costs for 2022

\n

\n

 

\n

 Table 2: Projected variable costs per pair of gloves for 2022

\n

\n

Jill expects a 10 % increase in her fixed costs and a 5 % increase in her variable costs in 2023.

\n
\n

State two features of a sole trader.

\n
[2]
\n
a.
\n
\n

Construct a fully labelled break-even chart, to scale, for JG for 2022.

\n
[4]
\n
b.
\n
\n

Calculate JG’s level of profit if sales are 20 000 units in 2022 (show all your working).

\n
[2]
\n
c.
\n
\n

Explain how the changes that Jill expects in fixed and variable costs in 2023 would affect the total costs line of the break-even chart from your answer to (b).

\n
[2]
\n
d.
\n
", "Markscheme": "
\n

Award [1] for each feature identified – no reference to Jill’s gloves is needed:

\n\n

Do not award marks for advantages and disadvantages of operating as a sole trader (for example, a sole trader cannot sell shares to other people or to the public) or for the idea that the sole trader performs all of the business functions on their own, as often sole traders employ other people.

\n

Accept any other relevant feature of a sole trader.

\n

Award [1] for each feature of a sole trader stated up to a maximum of [2].

\n
a.
\n
\n

\n

Award [1] mark for correctly labelling both axes.

\n

Award [1] for a correct and correctly labelled total sales revenue line. If the candidates writes “revenue” instead of “total revenue”, accept.

\n

Award [1] for a correct and correctly labelled total costs line.

\n

Award [1] for correctly identifying the break-even point.

\n

N.B. If the chart is not drawn to scale is not neat, not drawn with a straight-edge, maximum award: [2].

\n

A candidate producing a chart that is not to scale may still receive marks for a correct and correctly labelled total revenue line and a correct and correctly labelled total cost line provided that:

\n\n

The maximum award for a break-even chart would still be [2] because the chart is not to scale.

\n
b.
\n
\n

The level of profit if sales are 20 000 units in 2022 is
TR = 20 000 × $20 = $400 000
TC = $75 000 [fixed costs] + ($15 × 20 000)
      = $75 000 + $300 000 = $375 000
TR − TC = $25 000

\n

Award [1] for correct workings/steps but an incorrect answer from something such as a mathematical error.

\n

If candidates do not show any working and but correctly write $25 000, award [1].

\n
c.
\n
\n

A candidate must refer to the total cost line in their response to receive marks.

\n

The increase in fixed costs would cause the TFC line to shift vertically upwards, award [1]. If a candidate writes something to the effect that the total cost line will now intersect the y-axis at $82 500, accept.

\n

The increase in variable costs would cause the TC line to become steeper (gradient would increase) award [1].

\n

Award a maximum of [1] if no other rewardable points are stated but candidate states that this will increase her break-even point or says something to the effect of “the total cost line goes up.”

\n
d.
\n
", "Examiners report": "
\n

Many candidates were successful (2 marks) on this question.

\n
a.
\n
\n

Many candidates earned full marks on this question. Though, as often occurs, some candidates did not draw their chart to scale or did not know how to label properly the y axis.

\n
b.
\n
\n

Many candidates answered the question effectively.

\n
c.
\n
\n

Responses to this question were clear and many candidates received 2 marks.

\n
d.
\n
", "question_id": "21N.2.SL.TZ0.1", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "1-2-types-of-organizations", "3-3-break-even-analysis" ] }, { "Question": "
\n

\n

[Author: Clker-Free-Vector-Images (pixabay.com).]

\n

Trestle Z PLC (TZ) 

\n

Trestle Z PLC (TZ), a specialist coffee roaster, operates in the secondary sector. Its instant coffees are sold worldwide in a very competitive market. Consumers in this market have strong brand loyalty.

\n

Although demand for instant coffee has not grown in many richer countries, it is growing in emerging markets and Eastern Europe. TZ has no control over the price of its raw material (coffee beans), as prices are determined by world markets.

\n

The directors of TZ want to increase the company’s gross profit margin and net profit margin and grow the business. Table 5 gives selected financial information for the company for 2019 and 2020.

\n

Table 5: Selected financial information for TZ

\n

\n

TZ’s directors are considering two options.

\n

Option 1: Take over a specialist coffee business

\n

TZ is considering taking over Green Glass (GG) for $600 million. GG owns 1000 cafés in the USA that sell speciality products at high prices. It also has an e-commerce subscription service that sells its coffee beans to consumers. In 2020, GG’s net profits were $120 million. GG has a well-organized distribution channel and strong brand awareness in the USA. TZ would operate the cafés using the GG branding.

\n

Option 2: Launch its own chain of cafés

\n

These cafés would compete against established chains of cafés serving the mass market. Initially, the launch would be in three EU countries but would then, if successful, be launched across the world. TZ would produce a range of freshly ground coffees for sale in the cafés. 

\n
\n

Define the term secondary sector.

\n
[2]
\n
a.
\n
\n

Explain two factors that might prevent TZ from increasing its gross profit margin.

\n
[4]
\n
b.
\n
\n

Explain, using the Ansoff Matrix, TZ’s proposed takeover of GG.

\n
[4]
\n
c.
\n
\n

Recommend whether TZ’s directors should choose Option 1 or Option 2.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

This sector includes both construction and manufacturing. It uses resources from the primary sector to manufacture finished goods or process raw materials to be used for other secondary sector business. The secondary sector supports both the primary and tertiary sector.

\n

Award [1] for some understanding.

\n

Award [2] for a clear definition.

\n

Providing examples of secondary sector business alone is insufficient to receive marks. However, exemplification can strengthen a definition and be a basis for a second mark (if the definition was not fully complete).

\n
a.
\n
\n

TZ will find it very difficult to reduce its cost of sales as raw material prices are dependent on the world price of coffee beans and TZ has no control over these prices (it is a price taker).

\n

TZ will find it very difficult to raise prices as TZ operates in a “very competitive market”.

\n

To increase its gross profit margin TZ would need to either

\n\n

Mark as [2+2].

\n

Award [1] for stating a reason why TZ might not be able to increase its gross profit margin and an additional [1] for its explanation with reference to TZ. Award a maximum of [2].

\n
b.
\n
\n

Candidates can be awarded up to 2 marks for demonstrating a knowledge of the Ansoff Matrix and a further 2 marks for applying it the stimulus.

\n

Candidates do NOT need to draw the Ansoff Matrix, but marks can be awarded if they do and place the takeover of GG in an appropriate sector. However, such an answer without any commentary is restricted to a maximum of 2 marks.

\n

There is no single correct answer.

\n

Candidates can be rewarded application marks if they suggest the takeover is either:

\n\n

Award [1] if the answer demonstrates a weak grasp of the Ansoff Matrix.

\n

Award [2] if the answer demonstrates a sound grasp of the Ansoff Matrix.

\n

Award [3] if the answer demonstrates a sound grasp of the Ansoff Matrix and the candidate explains why it might be considered to be either PD, MD or MP using the stimulus.

\n

Award [4] if the answer demonstrates a sound grasp of the Ansoff Matrix and the candidate explains why it might be considered to be more than just one classification i.e. either PD or MD or PD or MP, MD or MP using the stimulus.

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Option 1 Advantages

\n\n

Option 1 Disadvantages

\n\n

Option 2 Advantages

\n\n

Option 2 Disadvantages

\n\n

In order to reach the top bands of the markscheme candidates must have a balanced view, made a judgement AND also used the data in Table 3 effectively.

\n

Accept any other relevant evaluation.

\n

The table below should be followed (along with the paper 2 markbands).

\n

These mark awards in the table below should be viewed as maximums. That is, just because a candidate has one argument for option 1 and one argument against does not mean that they will automatically get a 4. One strong argument for one side and merely a weak or nominal argument for the other side might result in a 3.

\n

\n

 Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n
d.
\n
", "Examiners report": "
\n

Many candidates earned two marks on this question.

\n
a.
\n
\n

On the whole, responses to this question were good explanations and good application to the stimulus. Some students, perhaps not reading the question carefully, wrote about grow profit rather than gross profit margin, which was not answering the question.

\n
b.
\n
\n

Many students knew the Ansoff Matrix and effectively applied it to the stimulus.

\n
c.
\n
\n

Responses to 4(d) were generally quite effective. Many students have been properly trained about how to answer this type of question, which is to write about both options and have at least one advantage and one disadvantage for each option.

\n
d.
\n
", "question_id": "21N.2.SL.TZ0.4", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-3-finance-and-accounts", "2024-unit-4-marketing" ], "subtopics": [ "1-1-introduction-to-business-management", "3-5-profitability-and-liquidity-ratio-analysis", "1-3-organizational-objectives", "4-6-international-marketing" ] }, { "Question": "
\n

Refer to the Megamin Mining case study (SL/HL paper 1 Nov 2021).

\n
\n

Describe one advantage and one disadvantage for MM of decentralization (lines 44–45).

\n
[4]
\n
a.
\n
\n

Explain how MM could reduce stakeholder conflict in relation to its gold mine in Egypt (lines 103–107).

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Decentralization: Some decision making is delegated to lower level managers – in this case to subsidiary businesses.

\n

Advantages

\n\n

Disadvantages

\n\n

Accept any other reasonable advantage/disadvantage.
Award [1] for each advantage and one mark for each disadvantage up to a total of [2].
Award [1] for putting each advantage and [1] for putting each disadvantage into context up to a total of [2].

\n
a.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Stakeholder issues can include:

\n\n

Some possible solutions could be:

\n\n

The use of stakeholders might be implied especially when referring to 'conflict with the business'. In this case the 'business' might mean managers, shareholders or owners if the candidate makes this clear without using any of those terms.

\n

Accept any other reasonable explanation/application of stakeholder conflict.
Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.
Award maximum 2 marks for only explaining one strategy.
Award maximum 3 marks for a theoretical answer or an answer that describes two (or more) strategies without explaining them.
Award maximum 5 marks if the explanation is mainly descriptive but in context.

\n
b.
\n
", "Examiners report": "
\n

The responses to this question often moved away from decentralization and instead focused on delegation. Candidates could justifiably mention delegation as an aspect of decentralization, but they could not score highly without making sure that the focus remained on decentralization. Better responses applied specific aspects of decentralization from the pre -seen case study and showed why it was good and bad for MM.

\n
a.
\n
\n

There were very few answers that clearly laid out which stakeholders were involved and what the actual conflict was between them. Several candidates simply wrote largely pre-prepared answers about the workforce demanding more pay. Better candidates were able to identify two distinct stakeholder groups of MM and then analyse the conflict between them.

\n
b.
\n
", "question_id": "21N.1.SL.TZ0.2", "topics": [ "2024-unit-2-human-resource-management", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "2-2-organizational-structure", "1-4-stakeholders" ] }, { "Question": "
\n

Refer to the Ducal Aspirateurs case study (DA) (SL/HL paper 1 Nov 2020). 

\n
\n

There are several important items to be discussed at DA’s board meeting, three of which are outlined below.

\n

Item 1: Budgets. DA produces its budgets based on the functional areas of the business. For example, the Marketing, Production, Innovation and Corporate Social Responsibility (CSR) Departments are all separate cost centres. Pierre is proposing that budgets should be more detailed so that, for example, each of DA’s products has its own cost centre and each separate innovation project is also a cost centre.

\n

Item 2: Recommendations from the management consultants. The management consultants propose bringing DA more up to date with employment practices by replacing the many benefits that employees get with a low basic pay and a profit-related bonus, and charging market rents for the housing in Ville d’Ablet. There will also be penalties on employees for failing to meet targets. The CSR department are opposed to this idea because they believe it will change the culture of the business, which has built up over many years.

\n

Item 3: The manufacture of rechargeable batteries used in cordless products. DA currently makes its own rechargeable batteries. In 2019, it made 10 000 batteries. The variable cost is €15 per battery and the fixed costs are €30 000. XL, a public limited company, is a major manufacturer of batteries. DA has contacted XL to manufacture the rechargeable batteries, which they will buy from XL at €17 each.

\n
\n

The final item in the board meeting (Item 4) is to discuss and decide which of the directors’ proposals, Option A, B or C, to implement.

\n

Mia withdrew her proposal (Option C), and there is now additional information available on the remaining two proposals.

\n

Additional information on Option A: Market development 

\n

Louise plans to target the mass market and proposes using the brand name DuLow for the redesigned products. She is planning for DA to outsource production to Star Electrics (SE). SE uses mass production together with some customization of products. SE keeps costs low by importing cheap raw materials and paying low wages.

\n

Ben, the human resource management director, is concerned about the impact this change would have on DA’s employees and about the impact of DuLow on DA’s other brands. He has collected relevant information on household electrical appliances (see Figure 1).

\n

Figure 1: Data on household electrical appliances, France

\n

\n

Louise has estimated that the investment necessary to launch the DuLow product range will have a payback of about two years and an average rate of return (ARR) of about 30 %. This assumes high market penetration.

\n

Additional information on Option B: Product development

\n

Salah’s plan requires new production lines, one for each product. Salah thinks that cellular manufacturing, together with a flow production assembly line, would be a good way to manufacture the interchangeable modules. The investment cost is estimated to be €100 million if production lines are converted gradually and €20 million more if all conversions are done at the same time. Salah estimates the following net cash inflows (excluding the initial investment cost) (Table 1).

\n

Table 1: Forecast financial information for Option B (figures in € millions)

\n

\n

Louise does not think DA can afford the project because profits are low. Dodi, the finance director, thinks that the investment is too large and he believes that some shareholders are also concerned about the size of future dividends. Salah believes that shareholders will be pleased about the revenues that this investment will generate. Mia is worried that the products would be expensive to market and it would be difficult to make a profit. She also
thinks that demand for these new products will be difficult to predict.

\n

Additional information for both options

\n

Figure 2: Decision tree

\n

\n
\n

Using the case study and additional information from Sections B and C, recommend whether DA should choose Option A or Option B. You may find it useful to complete and use the decision tree and to analyse Table 1.

\n
", "Markscheme": "
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials. 

\n

Option A Louise’s plan

\n

Arguments for:

\n\n

Arguments against

\n\n

Option B Salah’s plan

\n

Arguments for:

\n\n

Arguments against:

\n\n

Decision tree favours Option B, all products converted with EV €38m compared with €35m for Option A. ‘All products converted’ (€138m) is preferred to ‘gradual conversion of products’ (€126m). NB Some candidates might average the EVs for Option 2 and get the answer €32m. This is incorrect but allow OFR.

\n

Option B seems to have higher chance of success and higher returns but at a higher cost.

\n

Accept any other relevant discussion.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section C.

\n

Criterion A: possible theories, management tools and techniques include: Investment appraisal, decision trees, interpreting data, Ansoff, importance of assumptions, also, possibly but less likely, marketing issues, HRM/management/motivation issues, SWOT/Force Field (Each of these needs to be used with a sense of purpose especially Ansoff, SWOT, FFA).

\n

For [4]: Tools, techniques and theory understood and developed well with some relevance to the additional stimulus material.

\n

For [2]: some understanding of at least two relevant tools, techniques or theories, but not developed.

\n

Beware that if, for example the Decision tree is not used then that is recognized in the Criterion A mark and should not be reflected in Criteria B and C marks.

\n

Criterion B: The stimulus and the tools, techniques, ideas, theories applied to the decision. Application will also be judged by the use of the stimulus material.

\n

Remember, understanding has been rewarded in Criterion A. So B is about USE.

\n

For [4]: relevant tools, techniques and theories are applied well to the case study context and additional stimulus material, the application is convincing and relevant.

\n

For [2]: some limited context/application but not developed. Use of tools limits candidate’s ability to make reasoned arguments.

\n

Criterion C: Options discussed in balanced way, conclusions drawn and recommendation made/supported.

\n

For [4]: There needs to be a clear recommendation supported by a balanced comparison of the options using the relevant evidence and data for both options.

\n

For [2]: Some limited arguments but not justified. Or limited analysis (e.g. one-sided argument) but candidate arrives/draws a reasoned conclusion.

\n

Criterion D: Structure: This criterion assesses the extent to which the student organizes his or her ideas with clarity, and presents a structured piece of writing comprised of:

\n\n

For [4]: all four elements present, clearly organized.

\n

For [2]: No logical structure but other elements present or logical structure with other elements missing.

\n

Beware of under-rewarding weaker work which may have all/most of the elements but very few paragraphs and little to say within them.

\n

Criterion E: Stakeholders:

\n\n

Please be aware that a simple mention of groups, for example using the phrase ‘shareholders will be pleased…’ which is a phrase from the case is insufficient to be consideration of a group.

\n

For [4] Individual(s) and group(s) are considered in a balanced way. ie needs 1 or more of both individuals and groups developed

\n

For [2]: one individual or one group considered appropriately, or several individuals and/or groups considered superficially.

\n
", "Examiners report": "
\n

Candidates had a range of information sources to use in their answers and many candidates found these sources accessible. While many candidates were able to carry out relevant analysis of the issues and draw a conclusion/recommendation a significant number of candidates missed opportunities for marks through a lack of clear understanding of the marking criteria. For example, a wide range of scripts had no introduction and/or structured paragraphs and many candidates did not recognise the criteria that awards marks for developing consequences of decisions on groups/individuals.

\n

Candidates are expected to use business tools in their answers. In this instance there were clear opportunities to use the given information relating to the decision tree and to interpret and use investment appraisal information.

\n

Many candidates are good at identifying the key pieces of information however such information is often quoted with little development. To gain higher marks on criterion C candidates need to develop discussion along the lines of: 'this means that....' or 'because.... A....then....B....' or' on the one hand...on the other....'. This will help the candidate to think further than just the basic evidence. This should be part of the process of working towards a recommendation.

\n
", "question_id": "20N.1.HL.TZ0.5", "topics": [ "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "1-5-external-environment" ] }, { "Question": "
\n

Office Supplies (OS)

\n

Office Supplies (OS) is a family-owned private limited company that, for 40 years, has operated three retail office supply stores in a small city. OS offers a wide range of office products (such as computer paper and stationery) and office machinery (such as computers and printers). When each store opened, OS purchased the buildings using long-term loan capital. OS’s objective is to have enough profit to finance the company’s working capital and pay annual dividends.

\n

OS has no clear marketing strategy. Traditionally, OS competed with several other office supply stores operating in the same city. The market was not competitive, however, and most customers went to the nearest office supply store. OS’s prices were comparable to those of other retail office supply stores, and the company did little promotion.

\n

Nationally, the retail office supply store industry is declining. Many retail office supply stores have had to close, and new competitors have entered the market, many of which benefit from some or all of the following:

\n\n

Like other physical retail stores, OS has seen its sales decline. Gross and net profit margins have fallen. Last year, to ensure enough funds for capital expenditure and revenue expenditure, OS’s board of directors chose not to pay dividends. OS also anticipates the need for additional finance next year. OS’s board is considering changes to the company’s marketing mix in response to new competitors.

\n
\n

State two marketing objectives that a company might have.

\n
[2]
\n
a.
\n
\n

With reference to OS, explain one advantage and one disadvantage of operating as a private limited company.

\n
[4]
\n
b.
\n
\n

With reference to OS, explain the difference between capital expenditure and revenue expenditure.

\n
[4]
\n
c.
\n
\n

Discuss possible changes to any two elements of OS’s marketing mix.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Marketing objectives include:

\n\n

Accept any other valid marketing objective.

\n


Award [1] for each objective identified up to a maximum award of [2].

\n
a.
\n
\n

Advantages of operating as a private limited company include:

\n\n

For OS, one advantage to operating as a private limited company is that OS could make changes in dividend policy without affecting perceptions of the company in the marketplace. When OS realized that it needed to preserve cash, it suspended dividend payments for one year and said it possibly would for a second year. When a publicly traded company lowers or eliminates dividend payments to preserve cash, the share price typically falls, sometimes significantly, which can make capital sufficiency issues even worse.

\n

Disadvantages of operating as a privately limited company often include:

\n\n

OS is currently facing a difficult moment, as its industry is changing, a situation that has led to a decline in sales and a contraction of margins. As a private limited company, OS may not have the expertise to face this situation. Currently, the company has no real marketing strategy and may not have the marketing expertise to make appropriate adjustments.

\n

Additionally, many potential adjustments OS may make will require capital, which, as a private limited company, OS has lesser access to than if it were public.

\n

Mark as [2 + 2].

\n

Award [1] for identification of an advantage and an additional [1] for an explanation thereof with application to the stimulus.

\n

Award [1] for identification of a disadvantage and an additional [1] for an explanation thereof with application to the stimulus.

\n

Maximum award: [4].

\n
b.
\n
\n

Capital expenditure refers to any expenditure for assets with a life of more than one year. The stimulus refers to three instances of capital expenditure in the company’s history: each time OS purchased a building location.

\n

Revenue expenditure refers to those expenses that will be accounted for fully in the year in which the expense occurs. In the case of OS, revenue expenditures mention in the case are expenditures for inventory.

\n

Mark as [2 + 2].

\n

Award [1] for an explanation of capital expenditure and an additional [1] for an explanation with application to the stimulus.

\n

Award [1] for an explanation of revenue expenditure and an additional [1] for an explanation with application to the stimulus.

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Ways that OS could modify its marketing mix to match and compete with the new competitors.

\n\n

For each of the four Ps, OS could make modifications. Modifying each has advantages and disadvantages. For example, contracting its product range could give the organization more focus and require lesser investment in stock. On the other hand, assuming that OS process its products properly, each inventory item makes some contribution to fixed costs. Further, any termination of a product line means that customers for that product, however few, will have to go to a competitor for that product.

\n

OS could modify its prices, particularly try being more aggressive with its pricing. Whereas that may attract more customers (advantage), margins will be thinner.

\n

An ecommerce shift with a door-to-door aspect will change OS’s supply chain considerably. Time and resources will need to be devoted to this task

\n

There is a sense that OS is a traditional business and new aggressive forms of pricing and promotion will be required. Will they know how to do the latter? Do they need to introduce a social media campaign backed up with a membership or loyalty programme?

\n

Candidates are expected to provide a conclusion with a substantiated judgment.

\n

Grade according to the paper 2 markbands for May 2016 forward.

\n

For one relevant modification to the marketing mix that is one-sided, award a maximum of [3].

\n

For two relevant modifications, but the discussion of both is one-sided, award a maximum of [4].

\n

For two relevant modifications, one treated in a balanced way and another in an unbalanced way, award a maximum of [5].

\n

For two relevant modifications, both treated in balanced ways, but no real conclusion, award a maximum of [6]. Conclusions must be more than nominal (for example, when a candidate opens a final paragraph with “In conclusion . . . “ but then has no real conclusion), award a maximum of [6].

\n
d.
\n
", "Examiners report": "
\n

Many students could state two marketing objectives that a company might have.

\n
a.
\n
\n

Candidates struggled a bit with application but otherwise had sound theoretical knowledge for this question.

\n
b.
\n
\n

Many candidates did not know the what capital and revenue expenditure mean and, when they did, application to the stimulus was often not very effective application.

\n
c.
\n
\n

This question proved surprisingly challenging. Many candidates had “place” one of their elements of the marketing mix, but then wrote about location. The other somewhat common problem was that many students did not provide balance in their response.

\n
d.
\n
", "question_id": "21N.2.SL.TZ0.5", "topics": [ "2024-unit-1-introduction-to-business-management", "2023-unit-3-finance-and-accounts", "2024-unit-4-marketing" ], "subtopics": [ "1-3-business-objectives", "1-2-types-of-business-entities", "3-1-sources-of-finance", "4-5-the-seven-ps-of-the-marketing-mix" ] }, { "Question": "
\n

PB Ltd

\n

Phoebe Bowen, a young entrepreneur, started her own clothing company, PB Ltd, on 1 January 2019. On the same day, PB Ltd purchased fixed assets for $20 000. The estimated useful life of the assets is six years.

\n

At the end of 2020, Phoebe’s newly appointed accountant said that Phoebe had omitted the depreciation of the firm’s fixed assets from the accounts. Table 1 shows selected financial information from the final accounts of PB Ltd for the years ending 31 December 2019 and 31 December 2020.

\n

Table 1: Selected financial information from the final accounts of PB Ltd for years ending 31 December 2019 and 31 December 2020 (all figures in $000s)

\n

\n
\n

Describe one disadvantage of using the reducing/declining balance method of depreciation.

\n
[2]
\n
a.
\n
\n

Using the reducing/declining balance method of depreciation, calculate PB Ltd’s annual depreciation of fixed assets for 2019 and 2020. Use 5 % as the depreciation rate (show all your working).

\n
[3]
\n
b.i.
\n
\n

Using the selected financial information in Table 1 and your answer from (b)(i), prepare a balance sheet for PB Ltd for 31 December 2020.

\n
[5]
\n
b.ii.
\n
", "Markscheme": "
\n

The main disadvantage of the reducing balance method is the choice of an accurate/realistic percentage with which to depreciate the assets.

\n

Secondly, the value of the asset with reducing balance is never fully written off by the business.

\n

Award [1] for stating an appropriate disadvantage and [1] for an appropriate description (application not required), up to a maximum of [2].

\n
a.
\n
\n

Depreciation allowance in $

\n

\n

[3] Marks for correct figures of the depreciation allowance/yearly depreciation for each year – max 2 marks.Working is shown or clear. It is not necessary to show net fixed assets.

\n

Subtract [1] for any omission or for a mistake in the method or the actual calculation or if the working (for one or both years) is not presented.

\n
b.i.
\n
\n

B/S for PB Ltd for the end of 2020. (All figures are in $)

\n

\n

Accurate presentation refers to the correct heading, sub-heading and to the inclusion of all and only the relevant figures.

\n

Allow OFR.

\n

The presentation of the B/S can be done in one column.

\n

Award [0] if the B/S does not reach a standard described below.

\n

Award [1] if the B/S is not accurately constructed, and/or the calculations within and between the various components are not presented or largely incorrect. However, there is limited evidence of a general understanding
of the format. More than four mistakes/omissions are evident.

\n

Deduct 1 mark for each irrelevant addition of figures/irrelevant heading/omission which can includes the overall heading.

\n

Award [5] if the B/S is accurately constructed in the expected IBO format. All the relevant headings of each component/parts are used and correctly classified.

\n

Do not penalise for internal order of classification. All and only the relevant figures are presented. No extra irrelevant figures that belong to the P/L are included. The calculations under each part/component of the B/S are
correct and well presented.

\n

To get full marks the candidate has to present the format in full as presented in the IB programme. For example, the presentation, calculation of working capital, the subtraction of LTL to arrive at Net Assets.

\n

For full marks candidates must use the depreciation to arrive at net fixed asset. Ignoring the net fixed assets/depreciation should be rated as 1 mistake as the account will not balance for another deduction.

\n

N.B. If the candidate does not follow the IBO format award up to [2] marks.

\n

Deduct 1 mark for each irrelevant addition of figures/irrelevant heading/omission.

\n

N.B. The values in table 1 assume that Phoebe has included the depreciation in the P/L which leads to the calculation of given retained profit. If a student does not make this assumption but tries to recalculate retained profit do NOT penalize but apply OFR to the extent possible. The BS will not balance (minus 1 mark) Mark all other calculations and headings as normal.

\n

If candidates start the B/S with Fixed assets of 19000 (because they have already deducted the depreciation for 2019) and then proceed to deduct just 2020 depreciation then allow this.

\n

Accept Capital Employed as an alternative definition of Total Assets minus Current Liabilities heading.

\n
b.ii.
\n
", "Examiners report": "
\n

Many responses seemed to focus on advantages and therefore did not answer the question. Gaining the second mark here was also difficult and required some knowledge of the negative consequences of choosing this method over the straight-line method e.g., tax – higher depreciation in earlier years leads to lower net profits.

\n
a.
\n
\n

Relatively straight forward calculation with most candidates who attempted it, gaining full marks.

\n
b.i.
\n
\n

Despite the question specifically asking candidates to use the information in (b)(i) many candidates failed to do so. Some candidates made the error of only subtracting one years’ worth of depreciation. Unfortunately, although compiling balance sheets is a common exam question in Section A, it is mainly without taking account of depreciation and some students were confused by this. There was perhaps a little confusion in the figures supplied, in that depreciation had already been factored into to the Profit and loss account. Where candidates tried to do the profit and loss calculation they obviously would not get the balance sheet to balance. The mark scheme was adjusted to give these candidates credit for their attempt.

\n
b.ii.
\n
", "question_id": "21N.2.HL.TZ0.1", "topics": [ "2023-unit-3-finance-and-accounts" ], "subtopics": [ "3-4-final-accounts" ] }, { "Question": "
\n

Sock Paradise (SP)

\n

After conducting primary market research, Pam opened Sock Paradise (SP), which sells colourful socks. SP operates a retail stall in a large department store and sells online through its own website.

\n

Table 2 shows selected financial data for SP for 2020.

\n

Table 2: Selected financial data for SP for 2020

\n

\n

At the end of 2020, the department store told Pam that it would increase rent by $14 000 per year starting on 1 January 2021. Pam forecast total sales for 2021 as 18 000 pairs of socks; other costs and prices were forecast to remain unchanged.

\n
\n

State two methods of primary market research.

\n
[2]
\n
a.
\n
\n

Using the selected financial data in Table 2, calculate for SP for 2020: 

\n

the break-even level of output (show all your working).

\n
[2]
\n
b.i.
\n
\n

Using the selected financial data in Table 2, calculate for SP for 2020: 

\n

the margin of safety (show all your working).

\n
[2]
\n
b.ii.
\n
\n

Using the selected financial data in Table 2, calculate for SP for 2020: 

\n

the net profit (show all your working).

\n
[2]
\n
b.iii.
\n
\n

Explain how the impact of the increase in rent and the forecast increase in sales in 2021 could affect SP’s profitability.

\n
[2]
\n
c.
\n
", "Markscheme": "
\n

Methods of primary market research include:

\n\n

Accept any other correct form of market research. Award [1] for each method identified up to a maximum of [2].

\n
a.
\n
\n

$9.00 minus $4.00 = $5.00 = contribution

\n

 = 12 000 units

\n

12 000 units is the break-even level of output. Do NOT penalize if missing word, units.

\n

Award [1] for correct method and [1] for correct answer, for a maximum award of [2].

\n

If a candidate uses a correct alternate method, accept. If a candidate only lists the answer but shows no workings, award [1].

\n

If candidate calculates contribution but gives wrong break-even level of output award [1].

\n
b.i.
\n
\n

Labelling of figures is not required.

\n

15 000 [total sales in units] − 12 000 [break-even level of output] = 3 000 units or pairs of socks.
3 000 units or pairs of socks is the margin of safety.

\n

Award [1] for correct method and [1] for correct answer, for a maximum award of [2]. Apply OFR if candidate uses incorrect answer from b(i). 

\n

N.B. deduct one mark in b(i) and b(ii) for use of inappropriate units e.g. $

\n
b.ii.
\n
\n

Actual profit (year 2020)
$9.00 × 15 000 = $135 000 in sales revenue
$50 000 + $10 000 = $60 000 in fixed costs (FC)
$4.00 × 15 000 = $60 000 in variable costs (VC)
Net profit = $135 000 − $60 000 − $60 000 = $15 000

\n

Alternative methods
Net profit = total contribution minus FC (15 000 × $5) − $60 000 = $15 000.
or
Net profit = MoS X contribution per unit = (18 000 − 15 000) × ($9 − $4) = 3 000 × $5 = $15 000

\n

Award [1] for correct method and [1] for correct answer, for a maximum award of [2].
N.B. A break-even chart is not required to be drawn and will gain no marks if presented without the above calculations.

\n
b.iii.
\n
\n

SP’s profitability will probably increase. The increase in rent will add $14 000 to fixed costs. However, if the forecast sales are accurate and prices and costs do not change, then Pam can expect an additional 3000 x $5 in sales revenue ($15 000). 
N.B. The actual increase in profit is not required.

\n

Award [1] if the candidates has shown some understanding that profitability is likely to increase. Award an additional mark if in their explanation, they demonstrate some application by using figures from the case study.

\n

N.B. Award [1] if the candidate explains increasing profitability without referring to both rent and sales forecast increases.

\n

N.B. If candidates interpret “profitability” to mean ratios then do not penalize. The explanation would be that profitability decreases from 11.1 % to 9.88 %. For full marks some reference to the figures is necessary.

\n
c.
\n
", "Examiners report": "
\n

Nearly all candidates gained full marks. However, many candidates wasted time in lengthy explanations which were unnecessary given the command term is state.

\n
a.
\n
\n

Some candidates needlessly lost a mark by putting a dollar sign in front of the result.

\n
b.i.
\n
\n

Most candidates achieved full marks for this question.

\n
b.ii.
\n
\n

The final part of this question was fairly well completed by candidates.

\n
b.iii.
\n
\n

This question proved difficult for some candidates as they often missed out what the specific effect on the final profitability was or simply did not utilize the numerical data provided in the stimulus.

\n
c.
\n
", "question_id": "21N.2.HL.TZ0.2", "topics": [ "2023-unit-4-marketing", "2023-unit-3-finance-and-accounts", "2024-unit-5-operations-management" ], "subtopics": [ "4-4-market-research", "3-3-break-even-analysis", "5-5-break-even-analysis" ] }, { "Question": "
\n

Healthy Nation (HN)

\n

Healthy Nation (HN) is a pharmaceutical organization that used to operate in the public sector, selling its medicines (drugs) to hospitals at very low prices.

\n

With increasing government funding over several years, HN increased the number of employees in its Research and Development Department, which was staffed by scientists, and in the Manufacturing Department. However, both departments were inflexible and inefficient. Resources were significantly under-utilized, and innovation limited.

\n

HN’s structure used to be hierarchical, with a very long chain of command and channels of communication. Senior management made the decisions and set the production levels. Consequently, the scientists in the Research and Development Department never developed decision-making skills, and development of new medicines was slow. In 2021, after many years of losses, the government sold HN to a profit-maximizing global pharmaceutical manufacturer, Global Pharma (GP).

\n

To improve productivity, efficiency and flexibility, the management of GP reorganized HN as a shamrock organization by:

\n\n

In addition, two major changes were announced:

\n\n

These changes have proved to be very unpopular, and the scientists in particular are resisting the changes and the short time frame in which they will be implemented.

\n
\n

Define the term public sector.

\n
[2]
\n
a.
\n
\n

Explain one benefit and one limitation for GP resulting from the implementation of the shamrock organization structure for HN.

\n
[4]
\n
b.
\n
\n

Explain one advantage and one disadvantage for GP resulting from the introduction of cognitive training for HN’s scientists.

\n
[4]
\n
c.
\n
\n

Discuss two human resource strategies that GP could use to reduce the scientists’ resistance to the changes.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

A public sector is a sector where organisations are owned and controlled by the government on behalf of its citizens to provide essential and affordable goods or services for its citizens that otherwise might not have been produced/provided. The government controls many aspects of the product or service such as the price.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding similar to the above answer. The first mark would typically come from awareness that there is government ownership. 
N.B. Do not accept references to run, managed, operated, controlled unless accompanied by some reference to ownership.

\n

Award [2] for a full, clear definition that conveys knowledge and understanding similar to the answer above.

\n

Do not credit an example.

\n
a.
\n
\n

Candidates can explain the shamrock structure and may refer to the three types of functions within the structure.

\n

Benefits:

\n

If GP management restructure HN using the shamrock organization structure, the new structure will accommodate some of their specified plans/enable GP management to achieve its objectives increasing efficiency, flexibility and productivity.

\n

The scientists are the core employees with full benefits, job security, training and a clear career path. The manufacturing department is to be outsourced.

\n

Periphery employees- extra employees to be employed when needed and possibly also include support staff are the flexible internal part of the organisation.

\n

The scientists will become the core employees within the R&D department as the core function. The management values the R&D department and regard it as core activity as they have many manufacturing facilities around the world. Keeping the scientists as core employees, providing them with appraisal and training to improve performance etc., will enable GP to cut costs by reducing the number of employees, improving productivity (which will also cut costs).

\n

At the same time, GP is planning to outsource the production parts. This will clearly reduce costs significantly.

\n

One assumes that some peripheral workers will still be employed to support the scientists. Those employees, possibly including highly qualified scientists might come to support the core workers when needed. Costs can be reduced due to the temporary nature of the contract and payments will be made when needed.

\n

Accept any other relevant benefit explained.

\n

Limitations:

\n

The impact on the core employees/ scientists may be negative. Getting support staff on a short-term basis and when needed can put extra pressure on the core employees especially if they are expected to innovate and the core employees are subject to appraisal for rewards.

\n

Peripheral/non-core employees, some of whom may be highly qualified could suffer from a lack of job security. The impact on their motivation/ the quality of support to the scientists in the R&D department could be negatively affected.

\n

Possible cultural clashes between HN employees and employees from the outsourced manufacturer. There could be miscommunication issues, quality issues affecting the production of medicines resulting in a negative impact on HN
and GP’s image too.

\n

N.B. Do not credit answers which merely describe “Shamrock” without mention of benefits and limitations.

\n

Accept any other relevant limitation explained.

\n

Accept any other relevant benefit / limitation.

\n

Award [1] for each benefit / limitation identified and an additional [1] for development with application to GP. Award a maximum of [2] per benefit / limitation.

\n

[2] cannot be awarded per role if the response lacks either explanation and / or application.

\n

For example:
For an identification or an explanation of and benefit / limitation with or without application [1].

\n

For explanation of relevant benefit / limitation with no application [1].

\n

For explanation of a relevant benefit / limitation and application [2].

\n
b.
\n
\n

PLEASE NOTE: This content is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

Cognitive training for the scientists will enable the development of mental skills/to develop, enhance the brain ability to learn and think for the scientists to improve on their current performance. Senior management made all of the decisions and set targets, scientists never developed decision-making skills, which slowed down the development of new medicines. GP management clearly want to enable the scientists in the R&D department to improve on current deficiencies and become more competitive by speeding up the development of new medicine and feel confident to make their own decisions.

\n

However, developing cognitive skills can be very expensive when undertaken by an external provider. GP wants to cut costs. The cognitive training will take time to deliver the benefits and cost savings which GP is hoping to experience.

\n

Accept any other relevant advantage / disadvantage.

\n

Award [1] for each advantage / disadvantage identified and an additional [1] for development with application to GP. Award a maximum of [2] per advantage / disadvantage. [2] cannot be awarded per advantage / disadvantage if
the response lacks either explanation and / or application.

\n

For example:
For an identification or a description of an advantage / disadvantage with or without application [1].

\n

For explanation of relevant advantage / disadvantage with no application [1].

\n

For explanation of a relevant advantage / disadvantage and application [2].

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

In terms of application and evaluation, while the reasons for fear and resistance to change are clear given the stimuli, it is expected that candidates show awareness/ understanding that the current employees of HN especially the scientists have been unproductive. They were protected by the government for a while and were largely inefficient. Now a profit maximising organisation is in control and there will be inevitable changes and tension. So while the resistance can somewhat be understood, evaluation should be centered around the points above- power and necessity of change. The fact that a government owned organisation is to be sold to a profit maximising organisation is the key issue for candidates to incorporate in their evaluation.

\n

The question refers to the scientists. Hence a full discussion of the management of the employees in the manufacturing department is not relevant.

\n

Candidates should show awareness that GP wants to keep the scientists and has got no interest in making the scientists redundant. They are to become core employees. Hence GP’s bargaining power is strong but not without limit so some discussion and compromise might have to be reached.

\n

Possible HR strategies:

\n\n

The candidates do not have to use the exact terminology above and can evaluate any general HR strategies.

\n

One may argue that GP’s management can implement the proposed changes radically and quickly given their profit maximising objective and the losses/long term contract etc. The scientists and the remaining employees will have to accept the changes but can still express fear. GP has the bargaining power to use more extreme methods such as threats to facilitate its changes.

\n

Negotiation and agreement - GP’s management is to discuss the proposed change- communicate clearly, explain the reason, invite discussion and possibly some negotiation, ask for feedback, emphasize the positive outcome in the longer term but not hide the negative immediate outcome of massive redundancies. To reduce fear and resistance, the scientists should be made aware that they are unlikely to lose their jobs. Perhaps GP should be willing to amend some of the changes but again, GP has the bargaining power. Training is already offered for the core employees to enhance performance and to reduce fear of the unknown and any lack of competencies.

\n

GP’s management may appoint a change champion among the scientists. This strategy could possibly be seen as manipulation.

\n

N.B. Do not reward generic suggestions (max 3 marks) that do not link to the stimulus material.

\n

Marks to be awarded by use of the generic mark bands and the following is to be noted.

\n

Candidates are expected to provide a conclusion with a substantiated judgment.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward.

\n

For one relevant modification to the human resource strategy that is one-sided, award a maximum of [3].

\n

For two relevant modifications, but the discussion of both is one-sided, award a maximum of [4].

\n

For two relevant modifications, one treated in a balanced way and another in an unbalanced way, award a maximum of [5].

\n

For two relevant modifications, both treated in balanced ways, but no real conclusion, award a maximum of [6]. Conclusions must be more than nominal (for example, when a candidate opens a final paragraph with “In conclusion . . . “ but then has no real conclusion, award a maximum of [6].

\n

\n
d.
\n
", "Examiners report": "
\n

Candidates needed to say more than just the government is involved in the running. Candidates required to include ownership in their response.

\n
a.
\n
\n

Many candidates did not understand what Shamrock was and simply repeated much of the stimulus.

\n
b.
\n
\n

Only a few candidates were able to adequately incorporate application by reference to the pre-sale environment.

\n
c.
\n
\n

Many candidates did not include any counter arguments to their suggestions. In addition, few candidates focussed on the issue of resistance to change and instead simply described motivation and leadership theories.

\n
d.
\n
", "question_id": "21N.2.HL.TZ0.3", "topics": [ "2023-unit-1-business-organization-and-environment", "2024-unit-2-human-resource-management", "2023-unit-2-human-resource-management" ], "subtopics": [ "1-2-types-of-organizations", "2-1-introduction-to-human-resource-management", "2-2-organizational-structure", "2-1-functions-and-evolution-of-human-resource-management" ] }, { "Question": "
\n

Smith’s Foods Ltd (SF)

\n

Charles Smith and seven friends started a private limited company, Smith’s Foods Ltd (SF), to produce ready-made healthy meals for people with diabetes*. Using a cost-plus (mark‑up) pricing strategy, SF’s mission is to make inexpensive, widely available meals that help diabetics manage their carbohydrate intake accurately.

\n

Despite reliance on inexpensive social media marketing, SF grew rapidly. Due to this rapid growth, however, the quality of its products deteriorated, and a number of its meals were found to contain different quantities of carbohydrate than those stated on the packaging. Negative comments appeared on SF’s Instagram page. Charles responded quickly to reassure customers and offered refunds. SF’s response led to the company receiving an industry award for ethical behaviour.

\n

Charles introduced flow production to reduce the cost of SF’s meals, which changed SF’s scale of operations and increased its gearing ratio. However, Charles had little business experience of using flow production and problems emerged.

\n

External stakeholders began to look into SF’s operations. One supermarket chain, Good Foods (GF), contacted Charles and offered to take over SF, keeping Charles on the board of directors. This takeover would allow SF’s meals to be produced at a lower cost and reach a wider target market. GF would also finance research and development into new meals with more carefully controlled carbohydrate levels.

\n

However, SF would close. Negative publicity would be considerable. The remaining shareholders have threatened to launch a new business, creating their own brand of meals for people with diabetes in direct competition with GF.

\n
\n

* diabetes: a medical condition that causes a person’s blood sugar level to become too high. People with diabetes need to be mindful of the amount of carbohydrates (which includes sugar) they include in their diet.

\n
\n

Define the term cost-plus (mark-up) pricing strategy.

\n
[2]
\n
a.
\n
\n

Explain two benefits for SF of using social media marketing.

\n
[4]
\n
b.
\n
\n

Explain one benefit and one cost to SF of using a flow production method.

\n
[4]
\n
c.
\n
\n

Discuss whether Charles should accept GF’s offer of a takeover.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Cost-plus pricing is a pricing method where the total cost of producing is calculated which includes variable costs (direct costs) and a fixed cost component (or part of the overhead). Then a profit margin per unit is added to obtain the selling price.

\n

Award 1 mark for a partial definition where the candidate has mentioned costs and a small profit margin being added to achieve the selling price

\n

Award 2 marks for a full clearer definition which includes reference to both variable and fixed costs being calculated with a profit margin being added to achieve the selling price.

\n
a.
\n
\n

Social media marketing allows accurate targeting through social media. Below the line could allow targeting to families who have a strong interest in purchasing diabetic meals though Facebook or Reddit groups.

\n

Cheap and quick to set up and very wide reach. Evidence that SF has grown fast indicating that below the line promotion has exceeded expectations.

\n

The speed of response of social media may be instant. Charles' quick response on social media managed to reduce the impact of the negative publicity after the quality issue.

\n

Below the line promotion allows SF to create customer loyalty programmes which can be managed online and have continued direct links to current and potential customers looking for diabetic meals.

\n

Award [1] for a benefit of social media marketing with an additional [1] for application to SF.

\n

Mark as [2+2].

\n
b.
\n
\n

The benefits of a flow production method to SF could include:

\n\n

The costs allude to an increase in complexity of the business and the stimulus indicates that some problems are emerging. Hence some costs could include:

\n\n

Award [1] for a benefit of flow production with an additional [1] for application to SF.

\n

Mark as [2+2].

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

SF is clearly a successful business although struggling to maintain control. The offer of a takeover comes at a critical time.

\n

There are a number of arguments against the takeover:

\n\n

However, there are a number of arguments for takeover:

\n\n

The decision is difficult. The other shareholders do not want this move and can ill afford the additional negative publicity. A conflict carried out on social media could become damaging to the brand which relies on positive social media word of mouth. The offer is tempting but SF is in fair financial shape despite the higher gearing ratio. Charles has limited experience and perhaps needs more time. It might be sensible for Charles to wait and discuss further with the other shareholders since a majority agreement is required to sell.

\n

Marks to be awarded using the paper 2 mark bands for May 2016 forward and the following is to be noted.

\n

Candidates are expected to provide a conclusion with a substantiated judgment.

\n

For one relevant argument for acceptance of the takeover that is one-sided, award a maximum of [3].

\n

For two relevant arguments, but the discussion of both is one-sided, award a maximum of [4].

\n

For two relevant arguments, one treated in a balanced way and another in an unbalanced way, award a maximum of [5].

\n

For two relevant arguments, both treated in balanced ways, but no real conclusion, award a maximum of [6]. Conclusions must be more than nominal (for example, when a candidate opens a final paragraph with “In conclusion . . . “ but then has no real conclusion, award a maximum of [6].

\n

\n
d.
\n
", "Examiners report": "
\n

Cost-plus (mark-up) pricing – the key to full marks was understanding that costs involve both fixed and variable costs. In fact, this is one of the major drawbacks of this method, insomuch as companies often understate the apportioned fixed costs attributable to each unit of production.

\n
a.
\n
\n

Social media marketing has clearly a cost advantage and most candidates recognised this. Some candidates found it difficult to apply to SF i.e., the link to past rapid growth. In addition, many candidates missed the point about responding directly to their target market especially when trying to respond to the various complaints, outlined in the stimulus.

\n
b.
\n
\n

Many candidates incorrectly included increased gearing as an advantage. Other responses did not recognize that flow production is simply another form of mass production and attempted to contrast the two. Some candidates confused flow production with cell production. Another common error was that many candidates felt there was a decline in quality control. The opposite is in fact the case due to the standardization of products.

\n
c.
\n
\n

This question was well answered by most candidates. However, many candidates mistook the actual nature of a takeover where the acquired company usually remains intact and often keeping most of the existing management and support structures and even its name. This is particularly so where the acquired company has strong brand recognition.

\n
d.
\n
", "question_id": "21N.2.HL.TZ0.4", "topics": [ "2023-unit-4-marketing", "2023-unit-5-operations-management", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "4-5-the-four-ps-(product-price-promotion-place)", "5-2-production-methods", "1-6-growth-and-evolution" ] }, { "Question": "
\n

Refer to the Peacewick University case study (SL/HL paper 1 May 2022).

\n
\n

Describe two long-term benefits for PU of its marketing strategies (lines 60–64).

\n
[4]
\n
a.
\n
\n

Explain the possible impacts on PU of the ethical issues it faces (lines 101–117).

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Background given in the case study: PU’s marketing strategies are “aggressive” (line 60) and PU, unlike its competitors, keeps investing a lot in its marketing (“Adriana saw marketing expenditure as a worthwhile investment”, (lines 62-63)), especially in terms of promotion (communicating actively on PU’s “achievements both in research and teaching” (line 63) and on its “competitive fees” (line 64)).

\n

Long-term benefits include:

\n

The main anticipated long-term benefit (i.e. the strategic aim that justifies these marketing strategies) is to get more students (as they are the ‘customers’ of PU), both local students (as “many local students have decided to postpone their studies for a year”, (lines 52-53)) and international students (as they “pay higher fees to the university than the fees that the university receives from local student” (lines 54-55)). For PU, more students mean more revenue (more income), which improves the cash-flow situation (very important, as PU has “cash-flow problems”, as repeated several times, lines 57, 69 and 85).

\n

Other long-term benefits of PU’s marketing strategies include:

\n\n

N.B. The question is not about the marketing mix (4Ps, or even 7Ps). If the answer is just an outline of PU’s marketing mix (describing PU’s Product (high quality courses), Price (competitive fees) etc.); award up to [2], as it shows some understanding of marketing, but not of the topic of strategy, nor of the notion of long-term benefits. Likewise, answers about ATL and BTL forms of promotion and answers that use the Ansoff matrix (e.g. product development: PU offering new courses) may also be partially credited, as they display knowledge of marketing.

\n

Accept any other relevant long-term benefit.

\n

If a candidate provides context that provides a benefit, but the benefit is not explicitly stated, the “second” mark can be awarded i.e. [0] + [1].

\n

Mark as a [2] + [2].

\n

Award [1] for each appropriate benefit identified and [1] for some description and application. Award a maximum of [2] for each benefit. Maximum [4] for two benefits.

\n
a.
\n
\n

Refer to Paper 1 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Ethical issues and impacts include:

\n\n

Accept any other relevant impact.

\n

Marks should be allocated according to the paper 1 markbands for 2016 forward section A.

\n

Award a maximum of [3] for a theoretical answer or for limiting answer to only one impact.

\n

Award a maximum of [5] if the answer is mainly descriptive but in context.

\n

Award a maximum of [6].

\n
b.
\n
", "Examiners report": "
\n

Most candidates were able to describe at least one benefit of PU's aggressive marketing strategies; the second benefit was sometimes redundant, only repeating the first one, but with different words. Weaker answers were sometimes too theoretical, about brand loyalty or the marketing mix, without application to the context.

\n
a.
\n
\n

Many candidates were able to explain some of the impacts of the ethical issues that PU faces. Stronger answers used subject terminology well, for example about stakeholders, brand reputation and revenue streams. As in previous sessions however, weaker answers just lifted sentences from the case study, without much added value.

\n
b.
\n
", "question_id": "22M.1.SL.TZ0.1", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-4-marketing" ], "subtopics": [ "1-3-organizational-objectives", "4-6-the-extended-marketing-mix-of-seven-ps" ] }, { "Question": "
\n

Refer to the Peacewick University case study (SL/HL paper 1 May 2022).

\n
\n

Outline two steps that Adriana should take if she decides to dismiss the head of the Faculty of History, Jim (lines 89–100).

\n
[4]
\n
a.
\n
\n

Explain strategies, in addition to redundancies, that PU could use to solve its cash-flow problems (lines 56–59).

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Two steps include:

\n\n

Accept any other relevant step, as long as they apply to what Adriana would need to do if she decides to dismiss Jim. Non-procedural steps can also be rewarded such as the department review.

\n

Mark as a [2] + [2].

\n

Award [1] for each appropriate step and [1] for application of each step. Maximum award, for two steps: [4].

\n
a.
\n
\n

Refer to Paper 1 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Strategies include:

\n\n

Accept any other relevant strategy, or methods mentioned as part of an overall strategy.

\n

Marks should be allocated according to the Paper 1 markbands for 2016 forward section A.

\n

Award a maximum of [3] for a theoretical answer or for limiting answer to only one strategy.

\n

Award a maximum of [5] if the answer is mainly descriptive but in context.

\n

Award a maximum of [6].

\n
b.
\n
", "Examiners report": "", "question_id": "22M.1.SL.TZ0.2", "topics": [ "2023-unit-3-finance-and-accounts" ], "subtopics": [ "3-7-cash-flow" ] }, { "Question": "
\n

Refer to the Peacewick University case study (SL/HL paper 1 May 2022).

\n
\n

In January 2021, a respected guide to universities rated PU top in two categories:

\n\n

Before the accident at the nearby chemical plant in September 2021, PU’s student accommodation and teaching facilities were highly rated. However, the university was rated poorly for digital innovation and support services, with support staff not always understanding the needs of students.

\n

In surveys, students generally rated PU highly for the quality of its courses and facilities. The campus was also voted one of the best in the country, but this changed after the accident.

\n

After the accident, PU continued to experience unexpected changes to its culture:

\n\n

The government grants received by PU for the purchase of IT equipment did not address all equipment shortages. Due to an increase in online teaching, PU purchased 500 laptops for students, at a cost of $500 each. Each laptop has a useful life of three years. After three years, each laptop will be sold to local schools for $50.

\n
\n

Define the term contingency planning.

\n
[2]
\n
a.
\n
\n

Explain two elements of PU’s organizational culture after the accident at the nearby chemical plant.

\n
[4]
\n
b.
\n
\n

Using the straight line method, calculate the annual depreciation for each laptop (show all your working).

\n
[2]
\n
c.i.
\n
\n

Comment on the usefulness to PU of the results of your calculation in part (i).

\n
[2]
\n
c.ii.
\n
\n

Using information from the case study and additional information above, discuss the importance to PU of the extended marketing mix in the provision of services at the university.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Contingency planning is preparing for an outcome other than that expected in usual circumstances. It often used to manage risks for exceptional circumstances that could have a catastrophic outcome.

\n

Beware of circular definitions, which cannot be rewarded.

\n

There needs to be some suggestion of forward thinking (prior to things/events that might happen).

\n

Some may focus on contingency planning as a way of ‘preventing’ things/events happening. This should only be awarded [1].

\n

Candidates do not have to word exactly as above. Award [1] for a partial definition which contains some of the elements, award [2] for a clear definition that shows understanding. No application is required. Maximum award: [2].

\n
a.
\n
\n

Organizational culture refers to the underlying beliefs, assumptions, values and ways of interacting that contribute towards the working environment of a business.

\n

E.g. teamwork; community; trust; innovation; caring; trustworthy management.

\n

Two elements of PU’s organizational culture include:

\n\n

Other possible issue arises from the case study: change of focus to online teaching – less social contact; a culture that did nothing about intolerant behaviour.

\n

Some may wish to make use of actual types of culture (role; task etc.). This is fine but the context is critical.

\n

Some of the mission statement may not have been achieved in particular, inclusivity with some online teaching making courses less available to some, excellence with some courses compromised.

\n

Mark as [2] + [2].

\n

Award [1] for each appropriate element identified and an additional [1] for explanation applied to the stimulus. Maximum award: [4].

\n
b.
\n
\n

Cost of laptop $500

\n

Residual value $50

\n

Fall in value $450 over 3 years = $150 per year per laptop (or annual depreciation per laptop)

\n

OR
$500-$503=$4503=$150 per year per laptop

\n

OR
Candidates can present the annual depreciation as a percentage: 30 % (150 / 500).

\n

Accept answers where candidates calculate the total depreciation $150 x 500 = $75000 and present this as their final answer as long as the $150 in included as part of the working.

\n

Possible answers and marks:
$150 with working [2]
30 % with working [2]
30 % without working [1]
150 (no units) with working [1]
$75000 without mention of $150 [1] (an attempt)
$75000 with working and mention of $150 [2]

\n

Award [2] for correct answer, with workings and correct units.
Award [1] for a reasonable attempt or absence of workings and/or correct units.

\n
c.i.
\n
\n

Depreciation is a component of profit/loss and balance sheet. Ensures PU’s profits factor in replacement laptop costs. PU will need to replace laptops after 3 years.

\n

Straight line is useful when there is not a great variation in the actual value of the asset over time (such as the laptops in this case).

\n

Straight line is generally better for lower valued items.

\n

Award [1] for a general comment about the numbers rather than the usefulness.
Award [2] for a brief explanation that shows some understanding of the usefulness to PU.

\n
c.ii.
\n
\n

Refer to Paper 1 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

People

\n

The university is entirely dependent on people:

\n\n

Probably the most important people are the lecturers and students without whom the university would not exist.

\n

Processes

This has changed drastically since the accident. From face-to-face teaching using dedicated resources such as buildings to online teaching and the use of temporary, non-specific resources elsewhere. The process has been highly rated in surveys.

\n

The process also involves other services such as recruiting new students, and providing training for lecturers in online teaching. Support services are not as good as they could be.
The online teaching is a major change in how they operate.

\n

Physical evidence

\n

The campus was always beautiful and part of what attracted students to PU. It is now severely damaged. It will be important to restore the campus. Buildings facilitated PU’s teaching and research work. These will need to be restored. Issues such as sustainability could also be included, facilities such as solar panels, energy efficient classrooms could be built.

\n

It could be argued that restoring the infrastructure of PU (the buildings and campus), in other words physical evidence, is the most important in the short term, but that, overall, people are critical, without these the processes will not be effectively delivered.

\n

Accept reasonable alternative answers.

\n

Marks should be allocated according to the Paper 1 markbands for 2016 forward section B.

\n

Award a maximum of [4] for a purely theoretical answer or there is no effective use of case (e.g. only repeating case material without development).

\n

Award a maximum of [4] for an answer that only explores the 4Ps of the marketing mix (price; promotion; place and product).

\n

Award a maximum of [5] if only one element of the extended marketing mix is considered.

\n

Award a maximum of [6] if only two elements of the extended marketing mix are considered.

\n

Award a maximum of [6] if the extended marketing mix is considered but there is limited use of data or if there is good analysis of data with limited consideration of issues.

\n

Award a maximum of [8] if all three elements of the extended marketing mix are considered and there is good use of data but there are no significant judgements.

\n
d.
\n
", "Examiners report": "
\n

Candidates had some understanding of contingency planning but often confused the concept with crisis management. There was a need to identify that 'contingency' happens before the event with 'crisis' happening after the event. Most candidates scored at least one mark for some aspect of planning that takes place.

\n
a.
\n
\n

Organizational culture was not well understood by all leading to a variety of responses to this question. Better answers focused on how culture changes after a major event with strong references to PU's situation. Weaker answers wrote generally about culture with only limited consideration of PU.

\n
b.
\n
\n

There was a pleasing number of candidates who were able to correctly calculate the annual depreciation using the straight line method. Candidates must be reminded of the need to show the units, in this case the dollar ($) sign.

\n
c.i.
\n
\n

This was generally less well answered though there was a mix from those who fully understood why calculating deprecation using the straight-line method would be useful to PU, to those who wrote generally about depreciation with no mention of PU.

\n
c.ii.
\n
\n

This question generated a range of answers. As the question with the highest number of marks, it was important for candidates to have a good knowledge and understanding of the topic being covered. Sadly, this was not the case for all candidates with a larger number than we hoped writing generally about the 4 P's of the marketing mix with little or no reference to people, process or physical evidence. Better answers wrote at length about each of the extra P's in relation to PU. Weaker answers made no reference at all to the extra P's. 

\n
d.
\n
", "question_id": "22M.1.HL.TZ0.4", "topics": [ "2023-unit-3-finance-and-accounts", "2023-unit-4-marketing", "2023-unit-5-operations-management", "2023-unit-2-human-resource-management" ], "subtopics": [ "3-4-final-accounts", "4-6-the-extended-marketing-mix-of-seven-ps", "5-7-crisis-management-and-contingency-planning", "2-5-organizational-(corporate)-culture" ] }, { "Question": "
\n

AXL

\n

AXL has two factories, in which it manufactures aluminium cans for the soft drinks industry.
AXL has a maximum production capacity of 80 million cans per year.

\n

Table 1: AXL’s forecasted sales revenue and costs for 2023

\n

\n

AXL plans to close its two factories and move production to a new, larger factory to obtain economies of scale.

\n

In the first six months of 2022, increased competition led to a fall in AXL’s sales. For the final two months of 2022, AXL plans to increase the trade credit period it offers to customers from 30 to 60 days.

\n
\n

Define the term economies of scale.

\n
[2]
\n
a.
\n
\n

Using Table 1, calculate the contribution per unit (show all your working).

\n
[2]
\n
b.i.
\n
\n

Using Table 1, calculate the break-even level of output (no working required).

\n
[1]
\n
b.ii.
\n
\n

If AXL produces 75 million cans in 2023, using Table 1, calculate the margin of safety (no working required).

\n
[1]
\n
c.i.
\n
\n

If AXL produces 75 million cans in 2023, using Table 1, calculate the profit (show all your working).

\n
[2]
\n
c.ii.
\n
\n

Explain the potential impact on AXL if it implements its planned increase in trade credit period.

\n
[2]
\n
d.
\n
", "Markscheme": "
\n

Economies of scale are the reductions in unit/average costs that result from an increase in output / increase in scale.

\n

Candidates are not expected to word their definition exactly as above.

\n

Do not reward examples of economies of scale e.g. purchasing economies.

\n

To be awarded [2] candidates must include references to both reductions in costs and the scale of output.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full definition that conveys knowledge and understanding similar to the answer above.

\n

N.B. no application required. Do not credit examples.

\n
a.
\n
\n

Unit contribution = selling price − variable costs.

\n

Selling price = $0.15

\n

Variable costs = $0.05

\n

Answer = $0.10

\n

Award [2] for a correct answer with working.

\n

Award [1] for correct answer without working.

\n

Award [1] for correct method with an error in the calculation.

\n
b.i.
\n
\n

Correct answer = 50m

\n

Award [1] for correct answer without working.

\n

Candidates that omit the million or m sign award [0].

\n
b.ii.
\n
\n

MOS = current output − break even

\n

= 75m − 50m = 25m

\n

Award [1] for correct answer without working.

\n

Candidates that omit the million or m sign award [0].

\n

If candidates have a dollar sign ($) by the figure, award [0] (for example, the candidate writes $25m).

\n

Allow candidate own figure rule (OFR). A mark can be awarded if an error made in b(ii) is carried through to (c)(i).

\n
c.i.
\n
\n

Output = 75 million cans

\n

TFC = $5m

\n

TVC = $3.75m (75m x 0.05)

\n

TC = $8.75m

\n

TR = $11.25m

\n

Profit = $2.5m

\n

Award [1] for the correct working and [1] for the correct answer.

\n

Award [1] for the correct answer without working.

\n

Answers that omit the m or millions cannot be awarded full marks – a correct answer without the m or millions can be awarded [1] if the method / working is correct.

\n
c.ii.
\n
\n

Trade credit is an agreement between businesses that allows the buyer of goods or services to pay the seller at a later date.

\n

Candidates need to show an understanding of trade credit for [1] and make use of the stimulus for [2].

\n

For example, this change may reverse the decline in sales that occurred in the first half of 2022, as now customers have longer to pay, which makes the business more competitive in an increasingly competitive market.

\n

However, a comment such as “It may lead to an increase in sales but a reduction in cash inflows as AXL’s existing customers can now delay payment for an additional 30 days” has only nominal application, as the comment applies to almost all non-retail companies. In this instance, award [1].

\n

Award [1] for only a partial/unclear explanation of the impact on AXL.

\n

Award [2] for a clear explanation of the impact on AXL that makes use of the stimulus provided.

\n
d.
\n
", "Examiners report": "
\n

Most candidates had at least some understanding of economies of scale.

\n
a.
\n
\n

Many candidates could calculate contribution per unit.

\n
b.i.
\n
\n

Many candidates could correctly determine the break-even level of output.

\n
b.ii.
\n
\n

Many candidates could correctly determine the margin of safety.

\n
c.i.
\n
\n

Many candidates could calculate the profit.

\n
c.ii.
\n
\n

Most candidates had some understanding of the implications of increasing the trade credit period, but few correctly applied that knowledge to the stimulus.

\n
d.
\n
", "question_id": "22M.2.SL.TZ0.1", "topics": [ "2024-unit-5-operations-management", "2024-unit-3-finance-and-accounts", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "5-5-break-even-analysis", "3-2-sources-of-finance", "1-6-growth-and-evolution" ] }, { "Question": "
\n

Ritev Enterprises (RE)

\n

Ritev Enterprises (RE) is a public limited company that owns a chain of 20 gas (petrol) stations. Next year, RE plans to modernize its gas stations by installing self-service pumps.

\n

Table 2 provides selected financial data for RE from:

\n\n

Table 2: Selected financial data for RE

\n

\n

The finance director is concerned about the trend in consumer preference for electric cars and the potential impact of increased numbers of electric cars on RE.

\n
\n

State two appropriate external sources of finance that RE could use to modernize its gas stations.

\n
[2]
\n
a.
\n
\n

Construct a fully labelled balance sheet for RE as of 31 December 2021.

\n
[5]
\n
b.i.
\n
\n

Calculate RE’s gross profit margin (no working required).

\n
[1]
\n
b.ii.
\n
", "Markscheme": "
\n

Award [1] for each appropriate source of finance up to a maximum of [2].

\n

Appropriate external sources include:

\n\n

Do not award inappropriate sources such as:

\n\n
a.
\n
\n

\n

N.B. if the candidate does not follow the IB prescribed format award a maximum of [3].

\n

N.B. candidates should not be penalized for: omitting the row “Long-term liabilities (debt)”, or for writing “retained profit” omitting the word “accumulated”.

\n

Award [1] if the candidate conveys some idea of what a balance sheet is.

\n

Award [2] if the candidate constructs a largely recognizable balance sheet, but it does not balance, or it has two major problems of classification.

\n

Award [3] for a largely accurate balance sheet that correctly balances. (There could be one misclassification.)

\n

Award [4] if the candidate constructs an accurate balance sheet (that balances) according to the IB prescribed format.

\n

Award [5] if the candidate constructs an accurate balance sheet (that balances) according to the IB prescribed format and the balance sheet is dated.

\n
b.i.
\n
\n

$100 000m – 80 000m = $20 000m

\n

$20 000m$100 000m = 20 %

\n

Correct answer = 20 % or .2

\n

If a candidate does not express the gross profit margin (GPM) as a percentage or as a decimal, the answer is incorrect.

\n

Award [1] for the correct answer (no working required).

\n
b.ii.
\n
", "Examiners report": "
\n

Most candidates could name at least one appropriate external source of finance.

\n
a.
\n
\n

As is usually the case with construction of a balance sheet, candidates tended to do very well (4-5 marks) or poorly (0-1 mark).

\n
b.i.
\n
\n

Most, but certainly not all, correctly calculated the gross profit margin.

\n
b.ii.
\n
", "question_id": "22M.2.SL.TZ0.2", "topics": [ "2023-unit-3-finance-and-accounts", "2024-unit-3-finance-and-accounts" ], "subtopics": [ "3-5-profitability-and-liquidity-ratio-analysis", "3-2-sources-of-finance", "3-4-final-accounts" ] }, { "Question": "
\n

Refer to the Peacewick University case study (SL/HL paper 1 May 2022).

\n
\n

Outline two STEEPLE factors that influence PU’s decisions.

\n
[4]
\n
a.
\n
\n

Explain ways in which PU could achieve greater sustainability in the 2022/23 academic year (lines 118–131).

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

STEEPLE framework: Social, Technological, Economic, Ethical, Political, Legal, Ecological (‘Environmental’)

\n

STEEPLE factors include:

\n\n

If the STEEPLE factor is not explicitly stated, the “second” mark can be awarded i.e. [0] + [1] if it is clear from the context what factor is being referred to.

\n

Answers must present two separate STEEPLE factors.
E.g. two economic factors would only be awarded a maximum of [2].

\n

Accept any other relevant factor.

\n

Mark as a [2] + [2].

\n

Award [1] for an appropriate factor and [1] for application. Maximum award for two factors: [4].

\n

Note: To be awarded the second mark, each factor must be explicitly linked to the STEEPLE framework. Some flexibility is allowed in the categorization, for example the economic recession could be outlined from a social perspective, or the governments grants could be seen as the result of a legal decision. The same factor, however, cannot be counted twice.

\n
a.
\n
\n

Refer to Paper 1 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Ways to achieve greater sustainability include:

\n\n

Candidates may refer to different forms of sustainability including the triple bottom line; this should be awarded.

\n

Marks should be allocated according to the Paper 1 markbands for 2016 forward section A.

\n

Award a maximum of [3] for a theoretical answer, or for limiting the answer to only one way, or for only copying extracts from the case study.

\n

Award a maximum of [6].

\n
b.
\n
", "Examiners report": "
\n

Some answers were very good; the topics of economic recession and the accident at the nearby chemical plant were the most popular ones. Some candidates however forgot that STEEPLE factors are external, not internal: they wrote about internal issues (for example IT equipment or cash-flow problems), not about the external environment.

\n
a.
\n
\n

Some candidates answered very well, showing their knowledge of the different dimensions of sustainability (economic sustainability, social sustainability and environmental sustainability). Other answers were limited to some ideas lifted from the case study, typically about solar panels, or possible recycling.

\n
b.
\n
", "question_id": "22M.1.SL.TZ0.3", "topics": [ "2024-business-management-toolkit" ], "subtopics": [ "steeple-analysis" ] }, { "Question": "
\n

Hums Athletics (HA)

\n

Hums Athletics (HA) manufactures running shorts, sweat shirts, and sports bras. Operating only in the secondary sector, HA has a head office and three manufacturing facilities, one for each product. These are located in its home country in Europe. Labour costs are high. The quality of labour is excellent.

\n

HA produces goods under its own HA brand, which it sells to wholesalers. HA also manufactures for other sportswear companies. HA puts the other sportswear companies’ logos on the running shorts, sweat shirts, and sports bras. Sales to other sportswear companies are an important revenue stream for HA.

\n

HA has many levels of hierarchy. Managers at each level have a narrow span of control, and the company is organized by product. HA’s management believe that these features of organizational structure ensure product quality, which they view as essential for brand loyalty.

\n

The sportswear manufacturing industry is becoming more competitive. Some foreign manufacturers have begun using penetration pricing to gain market share. For three years, none of HA’s revenue streams have increased, despite increasing unit sales. HA’s gross and net profit margins have declined. However, its sales have increased for the last three years. HA has had to raise additional external finance to increase production.

\n

In response to the increasing competition, HA is considering two options:

\n\n

Market research has shown that consumers increasingly expect to buy online.

\n
\n

State two ways in which market share can be measured.

\n
[2]
\n
a.
\n
\n

Draw an organization chart for HA.

\n
[4]
\n
b.
\n
\n

Explain the impact of price changes by foreign competition on HA’s break-even point.

\n
[2]
\n
c.i.
\n
\n

Explain why HA had to raise additional external finance to increase production.

\n
[2]
\n
c.ii.
\n
\n

Recommend whether HA should choose Option 1 or Option 2. 

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

The term market share refers to the percentage of a sales that one company has within a particular market, such as athletic gear.

\n

Ways that market share can be measured include:

\n\n

N.B. candidates are not being asked how to calculate market share, and, thus, they are not expected to provide a definition. For [2], they have to convey the idea that two ways exists to measure it.

\n

Award [1] for each correct way of measuring market share up to [2]. Maximum award: [2].

\n
a.
\n
\n

\n

The chart does not have to be drawn exactly as above.

\n

Award [1] for drawing an organizational chart and additional [1] for each of:

\n\n

Maximum award: [4].

\n

N.B. to convey the idea of organized by product, candidates may use the actual products (running shorts, sweat shirts, and sports bras) or generic products (product A, product B, product C) as long as they have exactly three products.

\n
b.
\n
\n

HA is selling more units of product, but sales revenue has not been rising as foreign competitors, using penetration pricing, have driven prices down. Thus, the average sales price per unit is falling. Further, the gross profit margin has been declining, which means that HA has not been able to reduce per unit cost as much as sales price per unit. With a declining contribution per unit, HA has seen its break-even point move to the right on the X-axis.

\n

Award [1] for stating that the break-even point moves to the right, and an additional [1] for an explanation with application to the stimulus.

\n
c.i.
\n
\n

Candidates may answer this question in one of three ways:

\n
    \n
  1. One way puts emphasis on the word external in the question. If a candidate chose this emphasis, they need to say something like “Because foreign competitors have used penetration pricing to gain market share, HA has had to lower its prices, which is why gross and net profit margins have declined. As a result, HA has not been able to generate sufficient internal finance to support increased production and has had to turn to external finance.”

    Both of the other ways candidates can answer this question emphasize the increase in production:

    \n
    2. \n
  2. Candidates may believe that HA needs more working capital to support increased trading activity. HA has had increased unit sales volume, which means that it has been manufacturing and selling more product, even if at lower margins. For most companies, increased trading means increased inventory and accounts receivable. The asset accounts must be financed. Increased accounts payable will fund some of that increased trading activity, but probably not all of it. With margins declining, HA probably cannot fund this need internally and, thus, has had to turn to external sources of finance.

    \n
    3. \n
  3. Candidates may believe that HA needs property, plant, and equipment to support increased production. However, because of contracting margins, in the past few years, HA probably has generated insufficient funds internally to finance long-term assets. Thus, they have obtained finance externally.
    4. \n
\n

Award [1] for some understanding of one of the three issues above and an additional [1] for application to the stimulus. Up to a maximum of [2].

\n

N.B. In all three cases, the key is for candidates to link contracting margins or lower prices (which is why HA’s margins are lower) to external finance (rather than internal) or to increased production (increased working capital requirements or more property, plant, and equipment).

\n
c.ii.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Reasons for outsourcing include:

\n\n

Reasons against outsourcing include:

\n\n

Accept any other relevant reason for or against outsourcing.

\n

Reasons for setting up online business-to-consumer (B2C) retail stores include:

\n\n

Reasons against setting up online retail stores include:

\n\n

Accept any other relevant reason for or against setting up online retail stores.

\n

Award marks as follows:

\n

\n

N.B. A balanced argument is one that has a reason for and a reason against the options.

\n

Marks should be allocated according to the Paper 2 markbands for 2016 forward.

\n
d.
\n
", "Examiners report": "
\n

Many candidates knew at least one way to measure market share (value).

\n
a.
\n
\n

Many candidates earned 2 or 3 marks and some earned 4.

\n
b.
\n
\n

Many candidates appeared to understand, or at least have some understanding, of the issues in both of these questions but, in their responses, they did not clearly explain reasons.

\n
c.i.
\n
\n

Many candidates appeared to understand, or at least have some understanding, of the issues in both of these questions but, in their responses, they did not clearly explain reasons.

\n
c.ii.
\n
\n

As noted above, many candidates knew the expectations of the ten-mark question and did a solid job. Candidates often made detailed use of the stimulus.

\n
d.
\n
", "question_id": "22M.2.SL.TZ0.3", "topics": [ "2023-unit-4-marketing", "2023-unit-2-human-resource-management", "2023-unit-3-finance-and-accounts", "2023-unit-5-operations-management", "2024-unit-3-finance-and-accounts" ], "subtopics": [ "4-1-the-role-of-marketing", "2-2-organizational-structure", "3-1-sources-of-finance", "5-4-location", "3-3-costs-and-revenues" ] }, { "Question": "
\n

Refer to the Peacewick University case study (SL/HL paper 1 May 2022).

\n
\n

The trustees of PU have made proposals to introduce new working patterns for lecturers:

\n\n

PU is considering a joint venture with Country B’s government. Country B is performing well economically and is planning to expand its university sector. The trustees of PU believe that the university has a sufficiently strong reputation that the government of Country B will be
interested in PU opening a campus there.

\n

Country B’s government would provide the facilities and recruit local lecturers and other staff to work at the university. PU would be responsible for all the other costs that it incurs setting up the campus.

\n

PU would:

\n\n

In addition, PU would undertake all market research needed for planning and monitoring new courses, including primary research into the market for university courses.

\n

PU would receive an annual payment from the government of Country B and a fee for each student that successfully completes a degree course.

\n
\n

Define the term performance-related pay (PRP).

\n
[2]
\n
a.
\n
\n

Explain one impact on PU and one impact on PU’s lecturers of the new working patterns.

\n
[4]
\n
b.
\n
\n

Explain two methods of primary market research that PU could use to monitor the progress of each course.

\n
[4]
\n
c.
\n
\n

Recommend whether PU should open a campus in Country B. 

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Performance-related pay (PRP) is a system of financial reward where the amount received by a worker is linked to how well they have reached targets and met criteria.

\n

PRP can be a motivator, but it is also difficult to implement, for example to measure and quantify performance.

\n

Award [1] for a partial definition which may be circular or tautological.
Award [2] for a clear definition that shows knowledge and understanding beyond stating that pay is related to performance.

\n

Maximum award: [2].

\n
a.
\n
\n

Impact on PU:

\n\n

Impact on PU’s lecturers:

\n\n

The new working patterns are about home working and reduced vacations. Training may be considered as it is explicitly linked to the new working patterns, e.g. about the fact that lecturers need specific training to adapt to the new working patterns.

\n

N.B. PRP is a type of financial reward, not a working pattern (candidates’ knowledge of PRP has already been assessed through question Q4a).

\n

N.B. candidates may also explain the impacts as “long-term impact” versus “short-term impact”, or “positive impact” versus “negative impact”, or “financial impact” versus “HR impact” – all these approaches are valid, as long as they are about the new working patterns.

\n

Mark as a [2] + [2].

\n

Award [1] for an appropriate impact on PU’s lecturers and an additional [1] for application. Award [1] for an appropriate impact on PU and an additional [1] for application. Maximum award overall: [4].

\n
b.
\n
\n

Methods include:

\n\n

These methods can help collect data from students and/or teachers.

\n

Accept any other relevant method.

\n

Mark as a [2] + [2].

\n

Award [1] for an appropriate method identified and an additional [1] for explanation and application to the stimulus. Maximum award overall: [4].

\n
c.
\n
\n

Refer to Paper 1 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Arguments for:

\n\n

Arguments against:

\n\n

Accept any other relevant argument for or against.

\n

Marks should be allocated according to the Paper 1 markbands for 2016 forward section B.

\n

For a one-sided answer, award up to a maximum of [5].

\n

Both sides considered, good use of evidence, particularly from Section B, but no effective conclusion/evaluation award a maximum of [8].

\n

For full marks a fully supported conclusion/evaluation with good use of evidence, particularly from Section B.

\n
d.
\n
", "Examiners report": "
\n

Some definitions were very good, but some were so short and tautological (\"performance-related pay means that workers are paid according to their performance\") that candidates could not achieve 2 marks. Candidates have plenty of time to develop their answers and show their knowledge and understanding of the terms they are asked to define.

\n
a.
\n
\n

Many explanations were very good, but some candidates did not understand the topic of \"working patterns\" (and for example they wrote about performance-related pay, possibly because they just defined that term).

\n
b.
\n
\n

Again, many explanations were good, usually about surveys/questionnaires and interviews, though many candidates did not sufficiently develop their answers in the context of PU. When preparing Paper 1, candidates should be encouraged to develop their answers, rather than opting for a 'minimalist' approach.

\n
c.
\n
\n

Most candidates were able to structure balanced answers, with arguments for and against the opening of a new campus in country B. The best answers went beyond the case study, for example applying the Ansoff matrix (market development), commenting on international issues (different culture, possible different language), or evaluating the advantages and disadvantages of a joint venture with a foreign government. Examiners noted that, as always, some candidates unfortunately wrote one-sided answers starting with their chosen conclusion and then justifying it: \"PU should do it for all the following reasons....\" The final Q4(d) question, always worth 10 marks, requires synthesis and evaluation. Candidates are expected to make judgments based on arguments and counterarguments.

\n
d.
\n
", "question_id": "22M.1.SL.TZ0.4", "topics": [ "2023-unit-2-human-resource-management", "2023-unit-4-marketing", "2024-unit-1-introduction-to-business-management" ], "subtopics": [ "2-4-motivation", "2-1-functions-and-evolution-of-human-resource-management", "4-4-market-research", "1-5-growth-and-evolution" ] }, { "Question": "
\n

Red Squirrel Apple Juice (RS)

\n

\n

Red Squirrel Apple Juice (RS) is a cooperative of apple farmers. RS was named after the red squirrel, whose population is declining because of growing numbers of grey squirrels. Originally from North America, grey squirrels are aggressive and take over red squirrels’ habitats. RS’s founders thought that the red squirrel would be a good symbol to reverse the declining popularity of traditional apple juice due to consumer preference for high-sugar American-style beverages. With the symbol, RS aimed to appeal to environmentally aware and health-conscious consumers.

\n

Originally, RS only sold apple juice in bulk to beverage companies. These companies bottle the juice and sell it under their own labels. RS requires these companies to place RS’s logo of a red squirrel on their labels. Although RS only sells to a small number of beverage companies, its logo is on juice bottles in stores across the country.

\n

Awareness of the RS brand grew. The cooperative’s managers recently opened another channel of distribution: direct sales of bottled juice to consumers at the cooperative’s processing plant. RS charges lower prices than stores. The new channel of distribution required capital expenditure for bottling equipment and additional revenue expenditure. RS experienced increased labour and promotion costs, which some farmers complained about.

\n

In recent decades, RS’s home country has experienced rising anti-immigrant sentiment. Some politically motivated organizations have begun to use images of red squirrels to symbolize this sentiment, so some beverage companies no longer want to use RS’s logo on their labels.

\n

Some of RS’s stakeholders are concerned.

\n
\n

State two features of a cooperative. 

\n
[2]
\n
a.
\n
\n

With reference to RS, explain the importance of branding.

\n
[4]
\n
b.
\n
\n

With reference to RS, explain the difference between capital expenditure and revenue expenditure.

\n
[4]
\n
c.
\n
", "Markscheme": "
\n

The main features of a cooperative include:

\n\n

Accept any other relevant feature.

\n

Award [1] for each relevant feature identified up to [2].

\n
a.
\n
\n

Branding is a way for a company to distinguish itself from other organizations. Ideally, it succinctly delivers a message about your product, as RS hoped with the symbol of the red squirrel would symbolize environmental friendliness by reminding consumers of the dangers of invasive species and would symbolize health consciousness, as RS was promoting traditional juice, which has less sugar (and preservatives) than American-style beverages. In this way, RS hoped to build credibility with consumers – any beverage with the RS symbol would be healthy and would remind consumers of the environment. With these features, RS hoped to build goodwill.

\n

Brands, and their symbols, run the risk of taking on a life of their own. Sometimes a famous brand, like McDonald’s, enjoys decades of positive psychological associations but then, as culture and consumer trends change, the brand starts to generate negative associations. Such was partially the case with RS. Originally, the image of the red squirrel was at worst innocuous and at best heart-warming. As anti-immigrant groups co-opted the red squirrel for its own purposes, however, the cooperative faced risks of being associated with anti-immigrant sentiment. Some consumers may now be turned off by the brand as to them a red squirrel may symbolize a political position that they disagree with.

\n

Award [1] if the candidate demonstrates some understanding of branding. Award up to [2] if the candidate demonstrates a clear understanding of the importance of branding but makes no meaningful reference to the stimulus.

\n

Award up to [3] if the candidate demonstrates a clear understanding of the importance of branding and makes meaningful reference to the stimulus, but the explanation is one-sided. Award up to [4] if the candidate demonstrates a clear understanding of the importance of branding, makes meaningful reference to the stimulus, and points out both a benefit of branding and some risks inherent with it.

\n

Maximum award: [4]

\n

N.B. For application, just mentioning red squirrel is not enough. Candidates must link the response to the stimulus (for example, \"appeal to environmentally aware and health-conscious consumers\").

\n
b.
\n
\n

Capital expenditure is the purchase of assets whose life exceeds one year. Revenue expenditure is made up of expenses related to the trading cycle: purchasing raw material, processing, inventory, making payroll, etc. With respect to RS, capital expenditure refers to the bottling equipment needed to produce bottled apple juice to sell directly to consumers. RS experienced an increase in revenue expenditures when it started selling bottled apple juice, as it had increased labour costs (presumably to operate the bottling equipment) and increased costs for promotion.

\n

Award [1] for a theoretical understanding of capital expenditure and an additional [1] for reference to the bottling equipment.

\n

Award [1] for a theoretical understanding of revenue expenditure and an additional [1] for reference to increases in labour expenses or increased costs in promotion.

\n

Mark as [2] + [2]. Maximum award: [4].

\n
c.
\n
", "Examiners report": "
\n

Most candidates earned at least 1 mark but far fewer earned 2 marks.

\n
a.
\n
\n

Many candidates earned 2 or 3 marks on this question.

\n
b.
\n
\n

If candidates knew the difference between capital and revenue expenditure, they usually got 3 or 4 marks (often they struggled with application of revenue expenditure to the stimulus). Many candidates, however, did not know the difference.

\n
c.
\n
", "question_id": "22M.2.SL.TZ0.4", "topics": [ "2023-unit-4-marketing", "2024-unit-3-finance-and-accounts", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "4-5-the-four-ps-(product-price-promotion-place)", "3-1-introduction-to-finance", "1-2-types-of-organizations" ] }, { "Question": "
\n

Some teachers have complained that Mrs K is too strict and treats them like students. These teachers want more freedom in choosing what to do in their lessons. However, other teachers like the certainty and clear instructions they receive at the weekly staff meetings and appreciate that Mrs K takes a close interest in everything they do. Mrs K makes all the day-to-day decisions at the school, and sometimes would like more guidance from Jacob, but she is pleased that he makes all the strategic decisions.

\n

Jacob has delegated the day-to-day running of the school to Mrs K. Whenever he meets the staff at the school he likes to listen and he wants to learn about what challenges them in their work. The teachers and management want to help Jacob achieve his vision for the school. He is very effective at negotiating with external organizations and promoting the school, and is the main force for innovation and change.

\n

Jacob has undertaken further market research into what families living in Dodoma want from a school. He used a convenience sampling method that involved talking to friends and relatives.

\n

Jacob is concerned with cash flow. Although the school year starts in January, fees are not collected until April, the time when local people traditionally have higher incomes. At the moment all purchases are made in cash. Table 1 shows the latest cash-flow forecast for the next six months.

\n

\n
\n

Define the term economies of scale (line 36).

\n
[2]
\n
a.
\n
\n

Explain one advantage and one disadvantage for Jacob of using convenience sampling.

\n
[4]
\n
b.
\n
\n

Calculate the value of X and the value of Y in Table 1.

\n
[2]
\n
c.i.
\n
\n

With reference to Table 1, explain one way in which MSS could improve cash flow.

\n
[2]
\n
c.ii.
\n
\n

Discuss the differences in leadership style between Jacob and Mrs K.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

The reduction in average costs that result from an increase in the scale of production.

\n

Candidates are not expected to word their definition exactly as above.

\n

Award [2] for a complete definition.

\n

Award [1] for some understanding of economies of scale, eg no reference to average costs.

\n
a.
\n
\n

Context:

\n\n

Advantages: Cheap method, and he’s concerned with cash flow, easy – can he spare teachers’ time spent on this?

\n

Disadvantages: Biased, might ask wrong people, difficult to focus, sample may not represent people in Dodoma.

\n

Award [1] for an advantage and award a second mark if the advantage is put into context.

\n

Award [1] for a disadvantage and award a second mark if the disadvantage is put into context.

\n
b.
\n
\n

X = 21 + 5 − 5 − 4 = 17
   = 17 − 11 = 6

\n

Y = 11 − 5 − 3 − 5 = −2

\n

Award [1] for each correct answer.

\n

Accept 6000 and −2000

\n

Accept the presence or absence of unit

\n

Note: negative results may also be presented in brackets, so accept (2) and (2000) in the sense −2 and −2000

\n
c.i.
\n
\n

Two possibilities:

\n\n

Do not credit “seek more donations” or “more promotion/marketing”.

\n

Award [1] for a method to improve cash flow and [1] for applying this method to MSS.

\n
c.ii.
\n
\n

Jacob: Seems to delegate. Good at listening and learning, and gains loyalty from his staff. Fulfils role as a negotiator and is the main force for change. These fit in well with management roles with interpersonal, informational and decisional features. Shows traits of democratic and Theory Y.

\n

Mrs K: Seems to be autocratic, with a Theory X approach. Focuses on day-today decisions rather than strategy, so is more of a manager than a leader. Limited in terms of management roles.

\n

The question asks for a discussion of the difference between the two leadership styles. It is not enough to only describe, explain or evaluate Jacob’s leadership style then Mrs K’s leadership style one after the other.

\n

Accept reasonable alternative answers.

\n

Marks should be allocated according to the Paper 1 markbands for May 2016 forward, section B.

\n

Award a maximum of [4] for a purely theoretical answer or with no effective use of case material.

\n

Award a maximum of [6] if both people are considered but there is limited discussion of the differences between the two styles.

\n

For full marks both people should be considered, data used effectively, and a clear discussion drawn based on theories.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.i.
\n
\n[N/A]\n
c.ii.
\n
\n[N/A]\n
d.
\n
", "question_id": "17N.1.SL.TZ0.4", "topics": [ "2023-unit-3-finance-and-accounts", "2023-unit-2-human-resource-management", "2023-unit-1-business-organization-and-environment", "2023-unit-4-marketing" ], "subtopics": [ "3-7-cash-flow", "2-3-leadership-and-management", "1-6-growth-and-evolution", "4-4-market-research" ] }, { "Question": "
\n

Frez PLC (FR)

\n

Frez PLC (FR) has 6000 employees in its 100 supermarkets and 250 in its head office. FR operates a 360-degree feedback appraisal system for head office employees. FR’s directors believe that this system has improved retention and morale of head office employees. This year, to reduce head office costs, FR offered head office employees the option of teleworking, which 60 % accepted. They will work at the head office only one day per month.

\n

Each FR supermarket has 10 departments. Departmental managers have concerns about their workload caused by their large span of control. Labour turnover at FR supermarkets is increasing each year because departmental managers are leaving. In January, FR increased its supermarket opening hours and hired an additional 1000 part-time employees. FR is considering extending its 360-degree feedback appraisal system to all supermarket employees.

\n

Recently, demand from supermarket shoppers for a home delivery service increased, although industry experts disagree on whether this demand will continue. FR’s main competitors already provide delivery services.

\n

FR has decided to launch a home delivery service. It will require 500 vans, which would be replaced every five years. FR is considering two options:

\n\n

FR already borrowed $50 million in 2019 to finance the modernization of its supermarkets.

\n
\n

State two features of a public limited company.

\n
[2]
\n
a.
\n
\n

Explain two disadvantages for FR if it extends its 360-degree feedback appraisal system to its supermarket employees.

\n
[4]
\n
c.
\n
\n

Recommend whether FR should choose Option 1 or Option 2.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

The main features of a public limited company, some of which may apply to a private limited company, include:

\n\n

Accept any other relevant feature.

\n

Award [1] for each relevant feature stated up to [2]. Maximum award: [2].

\n
a.
\n
\n

Disadvantages with potential for application include:

\n\n

Disadvantage where opportunity for application is limited include:
Employees may select “raters” that are “fans”. This can lead to skewed results and department managers may disagree with an employee’s choice of raters, which may further increase staff turnover of departmental managers.

\n

Accept any other relevant disadvantage.

Award [1] for identifying or describing the disadvantage for FR and a further [1] for a development with respect to FR. Award a maximum of [2].

\n

[2] cannot be awarded per disadvantage if the response lacks either explanation or application.

\n

For example: For an identification or a description of a disadvantage without application, award [1]. For an explanation of a disadvantage with no application, award [1].

\n

For explanation of a disadvantage and application, award [2].

\n

Mark as [2] + [2]. Maximum award: [4]

\n

N.B. The disadvantage has to be specific to a 360-degree feedback appraisal system, not to appraisal in general.

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

There is no “correct answer”. Answers could include:

\n

Option 1

\n

Pros
This option is less expensive in the long term. The business will need to raise $17m (500 x $34 000). Currently interest rates are very low and therefore the interest charges will only raise the business costs by a relatively small amount. E.g. 3 % per annum ($510 000 in year 1).

\n

At the end of the five-year period the business intends to replace the vans – as it owns them it can sell them to raise some finance towards their replacement.

\n

As FR already has a $50m bank loan it might be assumed they have a good relationship with their bank and further borrowing would not be a problem.

\n

Cons

\n

The business will need to negotiate an additional loan from its bank and may need to provide the bank with additional financial documents and possibly collateral. Should the business fail to repay the loan then the collateral would be seized by the bank.

\n

It is not a cost-free option even when interest rates are low, as a $17m loan would incur interest charges of 3 % per annum ($510 000 in year 1). If using simple interest this totals to $19.55m over five years.

\n

If the trend to buying online is not maintained and shoppers gradually return to shopping face-to-face, then FR may have a large number of vans that it no longer needs but is paying for over five years. Whilst these could be re-sold there would be a significant loss made as second-hand prices will be a lot lower than the $34 000 purchase price.

\n

FR would be liable for the maintenance and repair of vans.

\n

Option 2

\n

Pros
Leasing is more flexible. The business will need to lease the vans for at least 24 months. At that point if it finds that consumer trends have changed then it can either not renew the leases on 500 vans or lease a much smaller number, say 200. This will save the business money in the long run e.g. leasing just 200 vans will cost only $2.6m per year.

\n

If after 24 months demand is not seen to be there then the business could end the lease and purchase vans, saving money in the long run.

\n

One of the tax advantages to leasing a van could include claiming up to 100 % sales tax back on the monthly payments. Also, leasing payments are expenses and, thus, lower pre-tax profits and income tax expense.

\n

In addition, lessors are usually liable for maintenance and servicing of the vans on a regular basis.

\n

N.B. Terms and conditions of fleet leasing vary. In some instances, lessors are not responsible for maintenance or service. In other cases, fleet lessors are responsible for service and maintenance, though they often contract out the management of the service and maintenance to a third company for a monthly fee.

\n

Given the limited experience of our candidates, which could well inform their knowledge about vehicle leases, candidates can argue that FR will not be responsible for maintenance and servicing (a pro of leasing) or that FR might still be responsible for maintenance and servicing (a con of leasing).

\n

Cons

\n

This may have higher long-term costs. A lease of 500 vans will cost the business $6.5m annually (500 × $13 000). Over five years this would be $32.5m which is almost twice the cost of the option A. This is a significant difference in terms of costs.

\n

At the end of each lease period the business does not own the vans and has to negotiate a new leasing agreement.

\n

The business will pay penalties at the end of the lease agreement if the leased vans are damaged in any way.

\n

\n

It is expected that candidates provide a conclusion with a substantiated judgment.

\n

Marks should be allocated according to the Paper 2 markbands for 2016 forward.  

\n

If a candidate evaluates / addresses only one option, award a maximum of [5].

\n

A balanced response is one that provides at least one argument for and one argument against each option.

\n

Candidates may contrast one option with another for a balance as long as at least two arguments are given for each option.

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in the answer.

\n
d.
\n
", "Examiners report": "
\n

Most candidates knew at least one feature of a public limited company. Many knew two.

\n
a.
\n
\n

Many candidates struggled with the question. Even when they knew what a 360-degree feedback appraisal is, they were weak at applying their response to the question.

\n
c.
\n
\n

Many candidates knew the expectations of the 10 mark question and did a solid-enough job. Candidates often made use of the stimulus. Candidates understanding of leasing tended to be weak, and candidates were often vague or imprecise about which op.

\n
d.
\n
", "question_id": "22M.2.SL.TZ0.5", "topics": [ "2024-unit-2-human-resource-management", "2024-unit-1-introduction-to-business-management" ], "subtopics": [ "2-4-motivation-and-demotivation", "1-2-types-of-business-entities", "1-3-business-objectives" ] }, { "Question": "
\n

MSS is in Central Tanzania. This area of the country is subject to severe droughts every few years, and in other years there can be very heavy rain, causing floods and significant damage to roads. Malaria has been a concern, but a government health scheme is reducing cases of this disease in children of school-going age. Jacob is considering having a school contingency plan for such natural disasters.

\n

Jacob is concerned that the financial position of the school is not as good as it could be. He has prepared a variance analysis for the most recent six months.

\n

\n

Jacob recognizes the need for change, but his experience tells him that change needs careful management and that if something works well it is best left alone. He is planning to create an internet connection for the school to help teachers and students to access more educational resources. However, this is likely to be expensive and a technical challenge due to the school’s remote location and underdeveloped infrastructure. He also has plans to improve classroom facilities, but the school does not, at the moment, have sufficient finance.

\n

Mrs K is discussing with Jacob ways in which the school could become more efficient and improve examination results. She wants to increase teacher contact time with students. This would mean a better use of resources and should help students to learn more. She also wants teachers to observe each other’s lessons with the aim of making suggestions for improvements of teaching and learning methods. There could be additional duties for teachers, such as supervising students’ spare time and study time. Supervision is particularly important at weekends, when some teachers currently go home to their families.

\n
\n

Define the term contingency plan.

\n
[2]
\n
a.
\n
\n

Explain the usefulness to MSS of the variance analysis in Table 1.

\n
[4]
\n
b.
\n
\n

Explain two restraining forces relating to change at MSS.

\n
[4]
\n
c.
\n
\n

Discuss human resource strategies that could reduce the impact on employees of the changes suggested by Mrs K.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

A contingency plan is a systematic way of preparing for the unexpected. Can accept “planning”. This would be sufficient for [2].

\n

The aim is to reduce the possible impact of unexpected and unwanted events. If the definition relies on natural disasters, emergencies, crisis etc rather than “unexpected” only award [1] unless it is clear these are examples and that there is a “plan.”

\n

Award [1] for some understanding.

\n

Award [2] for a clear definition which must include a sense of preparing for the unexpected/unwanted/crisis or similar words.

\n
a.
\n
\n

The variances suggest seeking answers to questions, helping future budgeting and identifying problems.

\n

The calculations show lower than expected fees. This helps plan for teachers and other resources.

\n

Higher than expected salaries. This helps questions such as “Have we recruited too many teachers”? and “Could we afford a pay increase?”.

\n

Higher cash purchases suggests looking at the value to MSS of cash purchases made. The overall profit figure has changed a great deal so considerable need for concern.

\n

Candidates are likely to explain the general meaning of variances and then illustrate their use by reference to the data in Table 1. However, do not reward a simple interpretation of the table without reference to use as this doesn’t answer the question.

\n

A description only/definition only does not gain marks however a very clear description of variance analysis together with a very good example of use from Table 1 could achieve [4]. Otherwise:

\n

Award [1] for each usefulness identified and [1] for its relevance to MSS, usually with reference to numbers.

\n
b.
\n
\n

Restraining forces include:

\n\n

Accept other reasonable alternative answers.

\n

Award [1] for identifying each restraining force and [1] for linking that force to MSS.

\n
c.
\n
\n

Proposed changes suggested by Mrs K:

\n\n

Possible strategies include:

\n\n

This question is more about management of change than human resources and high mark answers should reflect that.

\n

Accept reasonable alternative answers.

\n

Marks should be allocated according to the Paper 1 markbands for May 2016 forward.

\n

Award a maximum of [4] for a purely theoretical answer with no effective use of additional case material or reference to management of change.

\n

Award a maximum of [4] if the candidate only analyses/evaluates Mrs K’s changes.

\n

Award a maximum of [5] if only one strategy is considered in context.

\n

Award a maximum of [5] if there is no reference to the changes suggested by Mrs K.

\n

Award a maximum of [6] if more than one strategy is considered but there is limited use of data.

\n

Award a maximum of [8] if strategies/impacts are considered, there is good use of data, but lack judgement(s).

\n

For full marks more than one strategy should be considered, data used effectively, a clear development of the impact on employees given and judgements are made.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "17N.1.HL.TZ0.4", "topics": [ "2023-unit-5-operations-management", "2023-unit-3-finance-and-accounts", "2023-unit-1-business-organization-and-environment", "2023-unit-2-human-resource-management" ], "subtopics": [ "5-7-crisis-management-and-contingency-planning", "3-9-budgets", "1-7-organizational-planning-tools", "2-6-industrial/employee-relations" ] }, { "Question": "
\n

Wong Corporation (WC)

\n

Wong Corporation (WC) manufactures clothes dryers. WC pays tax at a rate of 20 %. WC has a hierarchical organization structure. Table 3 shows selected forecasted financial information for the company for 2022, and Table 4 shows its annual cash flow forecast for 2022.

\n

Table 3: Selected forecasted financial information for WC for 2022 (all figures in $000s)

\n

\n

Table 4: Annual cash flow forecast for WC for 2022
(all figures in $000s)

\n

\n
\n

State two features of a hierarchical organizational structure.

\n
[2]
\n
a.
\n
\n

Calculating X and Y in Table 3, prepare a profit and loss account for WC for 2022 (show all your working).

\n
[4]
\n
b.
\n
\n

Using Table 4, calculate WC’s net cash flow for 2022 (show all your working).

\n
[2]
\n
c.
\n
\n

Explain the difference between WC’s profit and its cash flow.

\n
[2]
\n
d.
\n
", "Markscheme": "
\n

Features of a hierarchical organization include:

\n\n

If a candidate raises the issue of decision-making, award [1] if they say that decision-making typically takes time.

\n

However, if the candidate appropriately contextualizes their response, they can earn [1] for saying decision-making can be faster. For example, if a candidate wrote something to the effect of “In hierarchical organizations where delegation occurs, decision-making can be fast.”

\n

Accept any other relevant feature.

\n

Award [1] for each feature identified up to a maximum of [2].

\n
a.
\n
\n

Gross profit (X) = $16 000 000
Tax (Y) = $800 000

\n

If, in their workings, the candidate has dropped the 000s, accept X = $16 000 and Y = $800.

\n

WC Profit and loss account for the year 2022
Figures in $000

\n

\n

Award [1] for correctly calculating gross profit (X), [1] for correctly calculating (Y), [1] for the correct layout of a profit and loss account, and [1] for a correct heading. Maximum award: [4].

\n

N.B. In the heading candidates must say the name of the company (WC), the year, and profit and loss account (they may say income statement). If the candidates does not say “in 000s”, accept.

\n
b.
\n
\n

\n

If, in their workings, the candidate has dropped the 000s, accept Z = $2 600.

\n

An alternate method for calculating net cash flow is to use the following formula:

\n

Closing balance = net cashflow + opening balance
$10 000 000 = NCF + $7 400 000
$10 000 000 − $7 400 000 = $2 600 000.

\n

Award [1] for correct method and [1] for correct answer. Maximum award: [2].

\n
c.
\n
\n

A candidate can earn [1] by defining profit (revenue minus expenses) and then explain that cash flow is the movement of funds such as external financing (an inflow) or debt service (an outflow) or some other specific examples of inflows or outflows.

\n

For a second mark [2], candidates must apply their response to the stimulus. Application must be more than nominal (just naming WC but otherwise providing a generic answer). Based up the stimulus, two opportunities exist for genuine application:

\n\n

An alternate way a candidate can earn [2] is by explaining that profit is typically calculated on an accrual basis (when revenue or expense actually accrues to the business) but does not reflect the actual movement of funds. On an accrual basis, WC had a net profit of $3 200 000. Cash flow reflects the actual movement of funds – when a business receives payment or makes a payment. In 2022, WC had receipts in excess of payments in the net amount of $2 600 000. This difference between profit and cashflow reflects a timing difference between the accrual of a revenue or an expense and the actual receipt or payment of funds.

\n

Award [1] for partial understanding and explanation and [2] for a complete understanding and explanation. A candidate does not have to use the word accrual, but they must convey some understanding of a timing difference between the profit and loss account and the cash flow. If the candidate does not apply their response to the stimulus, the maximum award is [1].

\n
d.
\n
", "Examiners report": "
\n

Many candidates earned 1 mark on this question, and some earned 2 marks. Often candidates were too vague in their responses.

\n
a.
\n
\n

Many candidates earned 4 marks on this question. Some lost a mark for not having a heading to their Profit and Loss account.

\n
b.
\n
\n

Most candidates accurately calculated the net cash flow.

\n
c.
\n
\n

Many candidates new the difference between profit and cashflow but many, unfortunately, failed to apply their response to the stimulus.

\n
d.
\n
", "question_id": "21N.2.SL.TZ0.2", "topics": [ "2023-unit-2-human-resource-management", "2023-unit-3-finance-and-accounts", "2024-unit-3-finance-and-accounts" ], "subtopics": [ "2-2-organizational-structure", "3-4-final-accounts", "3-7-cash-flow" ] }, { "Question": "
\n

Roscas

\n

Roscas produces and sells sugar donuts. Monthly fixed costs are $15 000, monthly sales revenue is $70 000, and total variable costs per month are $25 000. To increase its productivity rate, Roscas wants to buy a new high-efficiency machine that produces chocolate-filled donuts. The finance manager has forecasted the following information.

\n

Table 1: Forecasted information for the production of chocolate-filled donuts

\n

\n

Table 2: Forecasted cash flow for the new machine

\n

\n
\n

Define the term productivity rate.

\n
[2]
\n
a.
\n
\n

Using the information provided above and in Table 1, calculate the total contribution per month for the production of 20 000 chocolate-filled donuts (show all your working).

\n
[2]
\n
b.i.
\n
\n

Using the information provided above and in Table 1, calculate the monthly profit if Roscas sells sugar donuts and chocolate-filled donuts (show all your working).

\n
[2]
\n
b.ii.
\n
\n

Using the information provided above and in Table 2, calculate the payback period for the new machine (show all your working).

\n
[2]
\n
c.i.
\n
\n

Using the information provided above and in Table 2, calculate the average rate of return (ARR) for the new machine (show all your working).

\n
[2]
\n
c.ii.
\n
", "Markscheme": "
\n

Productivity rate is a measure of the efficiency of production and can be defined as the rate of output to input of production. It is also a measure of the added value of the business.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full definition that conveys knowledge and understanding similar to the above and refers to inputs and outputs or similar words such as resources and production.

\n

N.B. No application required. Do not credit examples.

\n
a.
\n
\n

Total contribution = contribution per unit x number of units = 3 × 20 000 = $60 000

\n

OR

\n

Total contribution = total revenue – total variable costs = 100 000 − (2 × 20 000) = $60 000

\n

Award [1] for correct working and [1] for the correct answer.

\n

Award up to a maximum of [2].

\n

Working should include some reference to the contribution calculation.

\n

Award a maximum of [1] if $ sign is omitted.

\n
b.i.
\n
\n

Profit = sales revenue – total costs

\n

Monthly profit = (100 000 + 70 000) − (15 000 + 1000) − (25 000 + 40 000) = $89 000

\n

Award [1] for correct working and [1] for the correct answer. Award up to a maximum of [2].

\n

Award a maximum of [1] if $ sign is omitted, however do NOT penalize more than once if repeated in any question part i.e. part (b)(i) and (b)(ii).

\n

Award [1] if profit for only one of sugar or chocolate is provided.

\n

Award [1] to incorrect answers where there is a single numerical error in what is otherwise correct working.

\n
b.ii.
\n
\n

\n

2000-1920700×12 = 3 years and 1.37 months or 42 days

\n

Award [1] for correct working and [1] for the correct answer.
Award up to a maximum of [2].
Accept any other method of calculation.
Accept answer discrepancies due to decimal rounding.

\n
c.i.
\n
\n

ARR = ((total returns − capital cost/years of usage)/capital cost)) × 100

\n

Total returns = $3 330 000

\n

Net return per annum =3 330 000-2 000 0005= $266 000

\n

ARR =266 0002 000 000×100 = 13.3 %

\n

Award [1] for correct working and [1] for the correct answer.
Award up to a maximum of [2].

\n

Award a maximum of [1] if % sign is omitted.
Do not penalize if workings are left in 000’s.

\n
c.ii.
\n
", "Examiners report": "
\n

Whilst seemingly a straightforward question, many candidates confused productivity rate with production rate. The former looks at the relationship between inputs and outputs, the latter simply with speed. It is quite possible to have a high rate of production, but a low rate of productivity. This question was made easier by the fact that the formula was given in the formula sheet.

\n
a.
\n
\n

Again a simple question but many candidates seemed to think they need to add in or subtract fixed costs which was incorrect. Others simply worked out the individual unit contribution and not the total.

\n
b.i.
\n
\n

Generally, this question was well answered, and candidates were given credit for only providing the profit for one donut option. However, many candidates lost a mark for not including the dollar sign.

\n
b.ii.
\n
\n

There were a number of different methods applied by candidates. All of these were credited if sufficient workings were shown, however many candidates did not provide sufficient evidence of how they got their final answer.

\n
c.i.
\n
\n

Average rate of return (ARR) has been set in a number of recent past papers and it was pleasing to see that application was much improved. However, candidates had assistance from the formula sheet.

\n
c.ii.
\n
", "question_id": "22M.2.HL.TZ0.1", "topics": [ "2023-unit-5-operations-management", "2023-unit-3-finance-and-accounts", "2024-unit-5-operations-management" ], "subtopics": [ "5-5-production-planning", "3-8-investment-appraisal", "3-3-break-even-analysis", "5-5-break-even-analysis" ] }, { "Question": "
\n

Les Légumes Contentes (LLC)

\n

Les Légumes Contentes (LLC) is a cooperative of farmers that sells organic produce. LLC’s starting capital is $5000. It needs a bank loan to buy refrigerators for its store. The bank has requested a cash-flow forecast. The forecasted figures are shown in Table 3.

\n

Table 3: Forecasted figures for LLC for the first four
months of operations, beginning 1 January

\n

\n
\n

State two features of a cooperative.

\n
[2]
\n
a.
\n
\n

Using Table 3 and the information provided above, prepare a monthly cash-flow forecast for LLC for the first four months of operations.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Two features include:

\n\n

Accept any other relevant feature.
An explanation is not required.

\n

Award [1] for each correct feature stated. Award a maximum of [2].
Application is not expected.

\n

N.B. Whilst the command term is “features” it is also true that some features may also be advantages.

\n
a.
\n
\n

\n

N.B. Allow candidate own figure rule (OFR): if a candidate makes an error in one row and carries it through the remainder of the forecast, that is only one error. This provision includes both mathematical errors and conceptual errors (for example, if a candidate includes the credit sales for January in this month, it is one error) and candidates should only lose [1] for that error.

\n

Award [1] if the candidate has some idea of what a cash-flow forecast is and looks like.

\n

Award [2] for a cash-flow forecast that has some problems in layout and wording and which has more than three errors/mistakes (apply OFR), which could include in addition to number placement problems and mathematical errors, or conceptual errors, or omissions, such as not having a line like “closing balance”.

\n

Award [3] for a largely correct cash-flow forecast that has some minor problems with layout, wording and calculations, which has three mistakes (apply OFR).

\n

Award [4] for a largely correct cash-flow forecast that has some minor problems with layout and wording and which has up to two mistakes (apply OFR) or the candidate does not produce a mathematically correct cash flow.

\n

Award [5] for a mathematically correct cash-flow forecast that has up to one calculation error, or some omission of the wording above.

\n

Award [6] for a fully correct cash-flow forecast with a generally accepted format and lines for total inflows/receipts, total outflows/payments (or some other acceptable wording), a line for net cash flow/inflow, etc., and lines for opening and closing balance.

\n

Substituting the term “net profit” in the cash-flow forecast for “net cash-flow” is inaccurate and [1] should be deducted.
Cash sales and credit sales need not be separated.

\n
b.
\n
", "Examiners report": "
\n

This question was generally poorly answered with few candidates understanding the difference between \"members\" and \"shareholders\". Other common mistakes were \"non-profit\" or \"cooperation\" between several different businesses. Many responses could have applied to any business structure.

\n
a.
\n
\n

It was pleasing to see that overall the understanding of cash flow has improved from previous sessions. The presentation format was better. However, a significant number of candidates did not understand the difference between sales and cash flow including the former in their forecast giving rise to big errors on the \"total cash inflow\" at the start. Also, many candidates incorrectly calculated cost of goods sold (COGS) based on cash sales rather than total sales.

\n
b.
\n
", "question_id": "22M.2.HL.TZ0.2", "topics": [ "2023-unit-3-finance-and-accounts", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "3-7-cash-flow", "1-2-types-of-organizations" ] }, { "Question": "
\n

Carol’s Designs (CD)

\n

Carol Rodríguez is passionate about design. She runs Carol’s Designs (CD) with two assistants, making and selling party dresses directly to consumers through her website. Customers provide their style preferences and measurements. Then, Carol emails a computer-designed drawing for the customer’s approval. CD uses job/customized production.

\n

An emerging talent in dress design, Carol decided to use e-commerce because she could not afford the fixed costs of an expensive physical location and traditional promotional techniques. Through her website, she promotes and sells her designs to a large audience and collects valuable information and opinions from her customers. The business-to-consumer (B2C) approach, essential for her business growth, requires regular website updates.

\n

E-commerce sales have steadily increased worldwide, and Carol’s dress orders have increased too. However, CD regularly misses delivery deadlines and is often short of cash. Carol’s bank suggested that she find a partner. She approached Juan Pérez, an engineer and business angel, about becoming a 50 % partner in CD. Juan thinks Carol needs to delegate design and focus on the operation of the business.

\n

CD uses social media marketing. Alexia Bros, a famous actress, ordered a dress for this season’s cinema festival, and Carol uploaded pictures of Alexia wearing her newly designed dress. Recently, however, some negative comments, including customer complaints about delays in delivery times, have appeared on social media. Carol did not have time to reply to these complaints. She is planning to hire a social media marketing manager.

\n
\n

Define the term fixed cost.

\n
[2]
\n
a.
\n
\n

Explain one advantage and one disadvantage for CD of using a job/customized production method.

\n
[4]
\n
b.
\n
\n

Explain one advantage and one disadvantage for CD of forming a partnership.

\n
[4]
\n
c.
\n
", "Markscheme": "
\n

Fixed cost is defined as those costs that do not vary through output or quantity produced.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding. e.g. fixed costs do not change.

\n

Award [2] for a full definition that conveys knowledge and understanding similar to the answer above. e.g links directly to output.
Output can also be sales for retail businesses.

\n

N.B. No application required. Do not credit examples.

\n
a.
\n
\n

Job/customized production refers to the production of a single or exclusive item specially designed for each customer.

\n

Advantages:

\n\n

Disadvantages:

\n\n

Accept any other relevant advantage / disadvantage.

\n

N.B. The response must reflect the advantaqe / disadvantage to CD and not customers.

\n

Mark as [2] + [2].

\n

Award [1] for each correct advantage / disadvantage identified or described and [1] for a relevant explanation with application to CD. Award up to a maximum of [2].

\n

[2] cannot be awarded per advantage / disadvantage if the response lacks either explanation and/or application.

\n

For example: For an identification or description of an advantage / disadvantage with or without application, award [1]. For explanation of an advantage / disadvantage with no application, award [1].

\n

For explanation of an advantage / disadvantage and application, award [2].

\n
b.
\n
\n

Advantages:

\n\n

Disadvantages:

\n\n

Accept any other relevant advantage / disadvantage.

\n

Award [1] for each correct advantage / disadvantage identified or described and [1] for a relevant explanation with application to Carol. Award up to a maximum of [2].

\n

[2] cannot be awarded per advantage / disadvantage if the response lacks either explanation and/or application.

\n

For example: For an identification or description of a disadvantage with or without application, award [1]. For explanation of a disadvantage with no application, award [1]. For explanation of a disadvantage and application, award [2]. 

\n
c.
\n
", "Examiners report": "
\n

A small minority still confused fixed costs with fixed assets. Whilst many candidates gave examples of fixed costs, no credit was given for these, as is the case with any examples in definition questions. There continued to be the perennial problem of confusion between price and cost — see later under teaching guidance.

\n
a.
\n
\n

A few candidates got quite inventive by saying job/customized production was personalized and hence motivating for employees; and then stated a few lines later that it could be boring i.e., contradictory responses. Many also tried to use e-commerce to argue both for and against job production. Whilst there may be some relevance to CD it has no direct relevance to the production method.

\n
b.
\n
\n

There were many misconceptions regarding partnerships including:

\n\n

Many also used profit sharing as a negative but in reality, few people would enter into a partnership unless the long-term benefits would realize greater overall profits than currently being realized. Finally, the term \"business angel\" is a generic one and not to be confused with application. The fact that Juan is an engineer however would classify as application.

\n
c.
\n
", "question_id": "22M.2.HL.TZ0.3", "topics": [ "2023-unit-3-finance-and-accounts", "2024-unit-5-operations-management", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "3-2-costs-and-revenues", "5-2-operations-methods", "1-2-types-of-organizations" ] }, { "Question": "
\n

Jacob wants to introduce the IT centre and internet access as soon as possible. He has found a donor who is willing to pay for the installation of an internet connection and for half of the monthly subscription. Jacob also has an estimate of the cost to convert the classroom and he thinks that MSS can afford it. However, the staff at the school do not think the IT centre is a good idea as it is risky due to possible construction problems. They think that there are better ways to spend the money and everyone is worried that they will be expected to help out with the construction work. The teachers do not want to lose a classroom.

\n

The staff want Jacob to consider the purchase of an old minibus. At the beginning of the term some students have difficulty travelling to the school. Expensive taxis also have to be used to bring supplies from the town to the school and to take anyone who is sick into town for medical treatment. As well as saving costs and offering greater convenience, the minibus could carry excess food grown by the students to town for sale. Teachers would have to take turns driving the minibus and sometimes undertake repairs on it. However, the minibus would be helpful to the teachers and Mrs K whenever they needed to visit the town.

\n

Jacob has undertaken research into the two possible options of the IT centre and the minibus. He knows that only one option is possible at the moment. He has drawn up a decision tree to compare the two options depending on various outcomes.

\n

\n

He has also carried out an investment appraisal based on the most likely outcome, with the following results:

\n

Option 1: convert classroom to IT centre

\n\n

Net present value (NPV) at 10 % discount = $1153.

\n

Option 2: the minibus

\n\n

Net present value (NPV) at 10 % discount = $567.

\n
\n

Using the information above and in Figure 1, recommend either Option 1 or Option 2 for MSS. You will find it useful to calculate the payback period for the two options.

\n
", "Markscheme": "
\n

Discussion could include:

\n

Option 1: IT centre

\n\n

Option 2: minibus

\n\n

Other issues

\n\n

Only some of these issues need to be discussed for a full response
Accept any other relevant discussion.

\n

Criterion A is concerned with what techniques and ideas are chosen to solve the problem.

\n

Criterion B is concerned with how effectively these techniques and the data are applied to the problem.

\n

Criterion C is concerned with how well arguments are balanced and recommendations that are made.

\n

Criterion A: Knowledge areas include: risk, decision trees and predicted outcomes, investment appraisal, use and limitations of data, strategic decision making. No understanding of decision trees and/or predicted outcomes and/or investment appraisal, marks limited to [3].

\n

Criterion B: Application will be judged by the use of the stimulus material, in particular the extra material. If only one option considered, award a maximum of [2]. If both options considered but no use of additional material, award a maximum of [3]. If no payback based on the original data or payback not used limit to [3].

\n

Criterion C: Reasoned argument. For full marks there needs to be a comparison between the two options and a supported recommendation. If analysis of only one, award a maximum of [3]. If no comparison but analysis of both options award a maximum of [2]. For simplistic analysis max [1].

\n

Criterion D: Structure – see criterion.

\n

Criterion E: Likely issues include: Groups: impact on communities, teachers and/or other employees, students/potential students, parents, townspeople, contractors, trustees, management, other stakeholders. Individuals: Jacob and Mrs K.

\n

0 = no relevant mention of any groups, individuals
1 = only group(s), or only individual(s) or both treated superficially
2 = group(s) and individuals(s) considered but either groups or individuals superficial
3 = groups and individuals considered more than superficially but not balanced
4 = groups and individuals given balanced consideration

\n

Note: a recommendation that a decision cannot be made due to lack of information (eg market research) can be regarded as a decision provided the arguments are supported.

\n

Do not penalise candidates who make little or no reference to the original pre-release material.

\n
", "Examiners report": "
\n[N/A]\n
", "question_id": "17N.1.HL.TZ0.5", "topics": [ "2023-unit-3-finance-and-accounts" ], "subtopics": [ "3-8-investment-appraisal" ] }, { "Question": "
\n

Bandit & Max

\n

Bandit & Max (BM) is a partnership between Dr. Jones and Dr. Morris that produces specialist food for dogs with health problems. BM’s unique selling point/proposition (USP) is food for dogs with diabetes and digestive or kidney problems. BM’s mission statement is, “To help strengthen the bond between people and their dogs.”

\n

BM uses a cost-plus (mark-up) pricing strategy; however, the costs of raw materials are rising. BM has an excellent brand image and sells its products only through veterinarians and large pet shops that provide advice to customers. Veterinarians recommend BM’s dog food because of its high quality and nutritional value. However, potential customers in some areas lack access to BM’s food. BM’s sales are not growing.

\n

Dr. Morris wants to diversify into specialist cat food, as more people are buying or adopting cats. BM has experience in developing new products. In the past, BM outsourced its research and development. Now, Dr. Morris wants BM to build its own research facilities, but building costs are high. BM’s warehouse will need refurbishing to stock more food. BM could become a private limited company to raise the necessary finance.

\n

Dr. Jones disagrees. He believes BM should not diversify. BM’s current distribution costs are high. He has suggested introducing a new distribution channel for the dog food that includes a large supermarket chain, a wholesaler, and many small pet shops.

\n
\n

Describe one feature of a mission statement.

\n
[2]
\n
a.
\n
\n

Explain two advantages of BM’s unique selling point/proposition (USP).

\n
[4]
\n
b.
\n
\n

Explain one advantage and one disadvantage for BM of using a cost-plus (mark-up) pricing strategy.

\n
[4]
\n
c.
\n
\n

Discuss whether BM should diversify into specialist cat food or introduce a new distribution channel for dog food.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Features include:

\n\n

Accept any other relevant feature.

\n

N.B. No application required. Do not credit examples.

\n

Award [1] for a basic description of one feature that conveys partial knowledge and understanding.

\n

Award [2] for a full description of one feature that conveys knowledge and understanding similar to the answer above.

\n
a.
\n
\n

A unique selling point/proposition (USP) is a feature that differentiates a product or an organization from its rival products and competitors. BM’s USP is based on the production of specialist food for unhealthy dogs.

\n

Advantages include:

\n\n

Accept any other relevant advantage.

\n

Mark as [2] + [2].

\n

Award [1] for each correct advantage identified or described and [1] for a relevant explanation with application to BM. Award up to a maximum of [2].

\n

[2] cannot be awarded per advantage if the response lacks either explanation and/or application. For example: For an identification or description of an advantage with or without application, award [1]. For explanation of an advantage with no application, award [1].

\n

For explanation of an advantage and application, award [2].

\n
b.
\n
\n

A cost-plus pricing is a strategy by which the selling price is calculated by adding a profit margin to the full cost of product.

\n

Advantages to BM include:

\n\n

Disadvantages to BM include:

\n\n

Accept any other relevant advantage / disadvantage.

\n

Mark as [2] + [2].

\n

Award [1] for each correct advantage / disadvantage identified and [1] for a relevant explanation with application to BM. Award up to a maximum of [2].

\n

[2] cannot be awarded per advantage / disadvantage if the response lacks either explanation and/or application. For example: For an identification or description of an advantage disadvantage / with or without application, award [1]. For explanation of an advantage /disadvantage with no application, award [1]. For explanation of an advantage / disadvantage and application, award [2].

\n
c.
\n
\n

Refer to Paper 2 markbands for 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

If BM diversifies into specialist food for cats, it will open up to a larger and growing new market. The demand for cats is increasing, BM could also take advantage of its brand image as customers already know BM’s high quality. BM’s excellent brand image is an asset that can be capitalized in the development of new specialist food for cats. Vets who already recommend BM’s dog food would presumably recommend BM’s specialist cat food.

\n

In addition, BM has experience in developing new products. Even if the costs of building its own research facilities are high, BM could get the necessary finance by becoming a private limited company.

\n

However, introducing a new product into an existing market (Product Development) is a risky move. However, BM has the know-how of producing and selling specialist dog food. If BM becomes a private limited company to get the necessary finance, ownership will be diluted. Dr. Jones and Dr. Morris could lose some control of their business as decisions will have to be shared. BM’s current focus on quality could be compromised if the new partners prioritize profit maximization. What is more, the finance raised through the private limited company may not be enough to fund BM’s research facilities and the warehouse that will need refurbishing to stock more products.

\n

N.B. With reference to Ansoff, cat owners might be considered a different market to dog owners hence Market Development.

\n

As an alternative BM could introduce a new channel of distribution for the specialist dog food. A two intermediary distribution channel is one that includes a wholesaler that buys the goods from the producer and sells to the retailers.

\n

So far, BM dog food was only distributed through veterinarians and large pet shops and BM food was not available for customers in certain areas. A two intermediary distribution channel that includes a larger supermarket chain, a wholesaler and many small pet shops, will enable BM to reach a larger customer base. Now, potential customers in different areas will be able to buy BM. BM will still pay for transport costs to the delivery to veterinarians and large pet shops, but they will not have to add transport costs to distribute to other small retailers around the country as the wholesaler will pay for transport costs.

\n

In addition, the wholesaler and the supermarket chain could store the food and help BM to reduce stocks. This could be very convenient for BM as it would not need to refurbish the warehouse.

\n

However, a major disadvantage is that BM‘s selling price will be more expensive to final customers as a wholesaler is introduced. BM’s price is probably already high and a higher markup could lead to a very high price to final customers. Alternatively, BM could accept reduced profit margins and keep the price stable.

\n

Another disadvantage is that in supermarkets and small pet shops, BM food will probably be sold without sales advice and recommendation from veterinarians and large pet shops owners. BM food will be sold among cheaper brands of lower quality, without specialist features. Competition could be strong as customers may not be well informed. BM could lose potential sales.

\n

BM could lose control over the marketing mix. In addition, the supermarket chain could use promotions or change other elements of the marketing mix that BM would not be able to control.

\n

Candidates could apply the Ansoff matrix model. For instance:

\n

If BM diversifies into specialist cat food, it will be marketing a new product in a new market. This alternative entails several risks as BM will be moving into a market in which it has no experience at all. Diversifying into specialist cat food can also be seen as an expensive option as new food will have to be researched and developed. New premises will also be needed. However, if BM is successful, it will be growing in sales and spreading its product portfolio. Synergies and common know-how could help to reduce costs to produce a successful new product for cats.

\n

N.B. Reward candidates that understand the distinction between related and unrelated diversification, with the former representing considerably less risk.

\n

If BM chooses to open a new distribution channel for the food for dogs, it will be adopting a market development strategy and will be selling into unreached areas. New customers will be able to access BM’s food and sales will probably increase. Costs and risks seem to be lower for this option, however, if BM increases its price due to more intermediaries, sales could remain stagnant.

\n

Even if diversifying appears to be risky and costly, BM should consider the right balance between risk and reward when choosing what to do. A new distribution channel could be safer in the short run; however, diversifying can be highly rewarding and strategically speaking a better option for BM’s future.

\n

Accept product development strategy as it could also be seen as a new product (cat food) in the existing broader market of pet food.

\n

Accept any other relevant and applicable argument for and against each option.

\n

To sum up: candidates can provide a judgment, a conclusion or recommend any option provided it is well substantiated.

\n

Marks should be allocated according to the Paper 2 markbands for 2016 forward with further guidance below.

\n

For one relevant argument that is one-sided, award up to [3]. For more than one relevant argument that is one-sided, award up to a maximum of [4].

\n

If a candidate evaluates/addresses only one option, award a maximum of [5].

\n

A balanced response is one that provides one argument for and one against for each option.

\n

Candidates may contrast one option with another for a balance, as long as at least two arguments are given for each option.

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n
d.
\n
", "Examiners report": "
\n

There was a lot of variation in responses to this question with some candidates confusing mission with vision statement as well the \"time\" element. A mission statement is not a short-term objective but a goal that is being continuously achieved in the present. Nevertheless, a fair degree of leeway was given in marking as in the real-world mission statements vary considerably and with many companies having a combined version of both mission and vision.

\n
a.
\n
\n

The problem here was that many candidates were apt to mention lots of benefits for the dogs or consumers, but failed to be clear about the benefit to the company. Many also seemed to think that the dog food was some kind of medicinal product which was clearly not the case.

\n
b.
\n
\n

The responses to this question were quite disappointing and clearly indicated that many did not understand this pricing mechanism. Many confused it with premium pricing which led to a general misconception all round that it led to high pricing that many could not afford. Yes, it covers their costs, but even competitors have to cover costs — apart from maybe temporary promotions. Quite a few candidates stated that customers might be angry at the company for using this pricing method, but realistically few people have any idea of the pricing method used when buying a product except maybe psychological pricing. One fact largely ignored by most candidates was the lack of competition. In a competitive environment it is difficult to raise the price hence the profit margin will be reduced if costs of production rise. However, in a non-competitive market, prices can rise with costs and hence the profit margin is maintained.

\n
c.
\n
\n

Generally, this question was well answered as it had two defined options on which to comment. It was good to see that many candidates recognized and applied Ansoff Matrix correctly. However, few candidates recognized the distinction between related and unrelated diversification which have significantly different risk parameters. In addition, few candidates seemed to fully understand the role of a wholesaler and both the risks and costs that it assumes.

\n
d.
\n
", "question_id": "22M.2.HL.TZ0.4", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-4-marketing" ], "subtopics": [ "1-3-organizational-objectives", "4-2-marketing-planning-(including-introduction-to-the-four-ps)", "4-5-the-four-ps-(product-price-promotion-place)" ] }, { "Question": "
\n

Dana’s Handbags (DH)

\n

Dana’s Handbags (DH ) is a small manufacturer of women’s handbags. DH sells directly to large retail chains in Europe. The company is privately owned and has fifteen shareholders.

\n

Table 1: Selected financial data for DH for 2016 and 2017 (figures in $000s)

\n

\n

Beginning in 2017, DH adopted a programme of corporate social responsibility (CSR) by:

\n\n

This programme was expensive.

\n

DH’s management thought that a programme of corporate social responsibility (CSR) would strengthen DH’s brand. During the first year of the corporate social responsibility (CSR) programme, employee morale improved and DH received favourable media attention.

\n

However, at the annual general meeting in January 2018, financial results from 2017 revealed that sales growth had not improved. Several influential shareholders complained about the high cost of the corporate social responsibility (CSR) programme. Other shareholders suggested that DH should develop consumer awareness that it is a socially responsible company.

\n
\n

Identify two features of a private limited company.

\n
[2]
\n
a.
\n
\n

Calculate the net profit margins for DH for 2016 and 2017.

\n
[2]
\n
b.i.
\n
\n

Calculate net current assets (working capital) for DH for 2016 and 2017.

\n
[2]
\n
b.ii.
\n
\n

Explain one method of above-the-line promotion and one method of below-the-line promotion that DH could use to raise consumer awareness that it is a socially responsible company.

\n
[4]
\n
c.
\n
\n

Discuss DH’s decision to develop a policy of corporate social responsibility (CSR).

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Features of a private limited company include:

\n\n

Accept any other relevant feature. Award [1] for each feature identified up to [2].

\n
a.
\n
\n

     2016                                    2017
\n\n\n1370\n\n\n28\n\n000\n\n\n = 4.89 %              \n\n\n1300\n\n\n29\n\n000\n\n\n = 4.48 %
             =====                             =====

\n

Award [1] for each correct answer. Showing working is not required.

\n

Accept 4.9 % (2016) and 4.5 % (2017), but do not accept 5 % (2016) or 4 % or 5 % (2017).

\n
b.i.
\n
\n

                      In 000s of dollars:
            2016                                    2017
5000 − 3000 = $2000      5200 − 3500 = $1700
                        =====                             =====

\n

Award [1] for each correct answer. Showing working is not required.

\n
b.ii.
\n
\n

Methods of above-the-line promotion that DH could use include:

\n\n

Methods of below-the-line promotion that DH could use include:

\n\n

Do not accept word of mouth as a form of below-the-line promotion.

\n

Accept any other appropriate form of above-the-line or below-the-line promotion.

\n

Mark as a 2 + 2.

\n

Award [1] for an appropriate above-the-line method identified and an additional [1] for development of the explanation illustrating the appropriateness of the method with respect to DH.

\n

Award [1] for an appropriate below-the-line method identified and an additional [1] for development of the explanation illustrating the appropriateness of the method with respect to DH. Maximum award: [4].

\n

If the answer has methods but no application (or just mentions the name of the business) then award a maximum of [2] overall.

\n
c.
\n
\n

Refer to Paper 2 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental resources. 

\n

DH’s decision to develop a policy of corporate social responsibility (CSR) fits well with trends in business today, whereby many companies are doing so. Indeed, sometimes today stakeholder groups exert powerful pressure on companies to practice CSR. The pressure to follow triple-bottom line reporting is also influencing companies to act in a more socially responsible way (despite some criticism of CSR by certain economists).

\n

DH has adopted several approaches that are popular today: giving profits, lending employees, and being more environmentally friendly. All these methods have garnered DH favourable media attention, though less clear is if DH’s brand identity has benefited. Sales growth has not improved. The gross profit margin decreased from 50 % to 48.28 %, and the net profit margin declined from 4.89 % to 4.48 %. The costs of donating profits, lending employees and presumably higher-priced biodegradable materials took a toll on profits. The situation also negatively affected the balance sheet, which saw a deteriorated working capital position, falling from $2 000 000 to $1 700 000.

\n

One of the commonly cited reasons for practicing CSR is that it is a form of enlightened self-interest: doing good for others will in the long run lead to greater profits. In the case of DH, perhaps that was its intention. Employee morale improved, which can lead to greater productivity and loyalty (labour turnover would probably decline). CSR would enhance DH’s reputation, socially responsible consumers would find an additional reason to purchase DH products, and, over time, the company would make more profits than it otherwise would
have.

\n

Some shareholders, however, are not satisfied with the results so far. At the annual general meeting, they complained about unimproved sales growth and lower margins, which they directly linked to the CSR programme. Several shareholders suggested that DH develop consumer awareness that it is a socially responsible company. The favourable media attention in the first year was insufficient to make an impact on the revenue side. Were DH to take this approach, reshape its brand identity and raise consumer awareness, it would have to invest in a promotional and public relations campaign, which might be costly. Profits and margins might go down before they go up, and possibly even more shareholders will be dissatisfied.

\n

Accept any other relevant evaluation.

\n

Marks should be allocated according to the Paper 2 markbands for May 2016 forward.

\n

For a limited discussion of the financial situation (income statement only or balance sheet statement only), award up to [3]. For limited discussion of financial situation and one relevant non-quantitative consideration, award up to a maximum of [4].

\n

If a candidate evaluates / addresses only the financial situation or only non-financial considerations, award a maximum of [5].

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgement/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgement/conclusions that are not based on analysis/explanation already given in their answer.

\n

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "18N.2.SL.TZ0.4", "topics": [ "2023-unit-1-business-organization-and-environment", "2024-unit-3-finance-and-accounts", "2023-unit-3-finance-and-accounts", "2023-unit-4-marketing" ], "subtopics": [ "1-2-types-of-organizations", "3-5-profitability-and-liquidity-ratio-analysis", "3-4-final-accounts", "4-5-the-four-ps-(product-price-promotion-place)", "1-3-organizational-objectives" ] }, { "Question": "
\n

Benno

\n

\n

Benno is a soft drinks manufacturer. Its mission statement is “to produce healthy drinks without damaging the environment”.

\n

Competition in the healthy soft drinks market is fierce. Benno uses a competitive pricing strategy. However, sales of Benno’s drinks have fallen significantly over the last five years, particularly in the 12–18 age group. The business has no accumulated retained profits. 

\n

Benno is committed to innovation and corporate social responsibility (CSR). Its research and development division has recently invented a new biodegradable drink pack ring that starts to break down within two hours of contact with sea water. It dissolves fully in 48 hours. Currently, 98 % of pack rings are made of plastic and when dumped in the sea are responsible for the death of many sea creatures.

\n

A focus group of loyal customers used regularly by Benno’s marketing department is wholeheartedly in favour of the new drink rings. However, the marketing director has read recent studies that suggest:

\n\n

To manufacture the new drink rings, machinery costing $5 million would be needed. Drink ring production unit costs would rise from 10 cents to 15 cents and prices of a six-pack of Benno soft drinks would have to increase by 5 %. Benno’s net profit margin on a six-pack is 10 %.

\n

Benno’s director of corporate social responsibility favours the change to the new drink rings but is opposed by both the finance director and marketing directors.

\n

[Source: Image provided with permission from E6PR™]

\n
\n

Define the term innovation.

\n
[2]
\n
a.
\n
\n

Explain two roles of Benno’s mission statement.

\n
[4]
\n
b.
\n
\n

Explain one advantage and one disadvantage for Benno of using a focus group of loyal customers.

\n
[4]
\n
c.
\n
\n

Recommend whether Benno should replace its plastic drink rings with the new biodegradable drink rings.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Innovation is about putting a new idea or approach into action. It can be described as the process of translating an idea/invention into a service/good that creates value. Innovation can be achieved by improving existing goods, processes or services

\n

Candidates are not expected to word the definition exactly as above. Award [1] if the candidate recognizes that innovation is the creation or invention of something original. Award [2] marks if the candidate also recognizes that the new invention or process has value [2].

\n

N.B.: no application required. Do not credit examples on their own.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full definition.

\n
a.
\n
\n

The roles of a mission statement include:

\n\n

For Benno, the mission statement has provided a way for the business to differentiate itself from its competitors, especially at a time when competition in the healthy soft drinks market is intense.

\n

The mission statement is also a way to attract new investors who may have empathy with the direction of Benno. This is an important role given the need for Benno to be committed to innovation and CSR.

\n

Award [1] for a basic answer that shows an understanding of a role of a mission statement.

\n

Award [2] for an answer that shows an understanding of two roles of a mission statement.

\n

Award [3] for an answer that shows a good understanding of two roles of a mission statement and one of these is suitably applied to Benno.

\n

Award [4] for an answer that shows a good understanding of two roles of a mission statement and both of these is suitably applied to Benno.

\n

Do not reward marks for describing/defining a mission statement.

\n
b.
\n
\n

Advantages of a focus group of loyal customers:

\n\n

Disadvantages of a focus group of loyal customers:

\n\n

Possible application:
For Benno, an advantage of using a regular focus group is that they will be aware of the company’s products and mission. This will reduce the amount of statistical noise and save time in the discussions when looking at new product ideas, such the biodegradable rings.

\n

However, having a regular group for Benno increases bias and reduces objectivity of the data researched. It might be a useful exercise for Benno to ask customers who are not overly familiar with their products to achieve a more balanced qualitative view.

\n

Accept any other relevant advantage / disadvantage.

\n

Accept any other relevant explanation.

\n

Mark as 2 + 2.

\n

Award [1] for a basic answer that shows an understanding of an advantage of using a focus group.

\n

Award [2] for an answer that shows an understanding of an advantage and disadvantage of using a focus group.

\n

Award [3] for an answer that shows an understanding of an advantage and disadvantage of using a focus group of loyal customers and one of these is suitable applied to Benno.

\n

Award [4] for an answer that shows an understanding of an advantage and disadvantage of using a focus group of loyal customers and both of these is suitable applied to Benno.

\n

Mark as 2 + 2.

\n
c.
\n
\n

Refer to Paper 2 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

For:

\n\n

Against:

\n\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward with further guidance below. 

\n

A balanced response is one that provides at least two arguments for and two arguments against the option.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4]. Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgement/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgement/conclusions that are not based on analysis/explanation already given in their answer.

\n

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "18N.2.SL.TZ0.5", "topics": [ "2023-unit-5-operations-management", "2023-unit-1-business-organization-and-environment", "2023-unit-4-marketing" ], "subtopics": [ "5-6-research-and-development", "1-3-organizational-objectives", "4-4-market-research" ] }, { "Question": "
\n

With reference to an organization of your choice, examine the impact of innovation on promotional strategy.

\n
", "Markscheme": "
\n

Marks should be allocated using the paper 2 markbands for May 2016 forward, section C available under the \"Your tests\" tab > supplemental materials. With further guidance below.

\n

N.B.: examiners should include a breakdown of each mark awarded per criterion and a brief note explaining the mark awarded at the end of each candidate’s response.

\n

The main aim of paper 2 (SL or HL) section C is to assess candidates’ understanding of the six major concepts (change, culture, ethics, globalization, innovation, strategy) within a business context. Candidates are to demonstrate their understanding through an organization of their choice. The expectation of the use of an organization is to allow assessment of the depth of candidates’ understanding through their ability to apply the
concepts and their knowledge.

\n

Assessment of candidates’ knowledge of the organization itself is not an aim of the assessment. If a candidate makes minor factual errors and these minor errors have no genuine bearing on whether the candidate understands the concepts, examiners should not penalize. For example, a minor error of historical fact (the year when a company was founded, or the year in which a change was implemented) which has no genuine bearing on candidates’ understanding of the concepts does not warrant penalty.

\n

It is expected that the candidate explains the chosen theoretical direction / content of their response.

\n

Additional guidance in relation to the assessment criteria
For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be met for that mark to be awarded.

\n\n

If only one concept is addressed:

\n\n

Where the question asks for impacts of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

In section C, the question rubric explicitly states that “organizations featured in sections A and B and in the paper 1 case study may not be used as a basis” to candidate’s answers to questions 6, 7 and 8. When this happens please award marks as follows:

\n

Criterion A
Award a maximum of [1]. The business management content cannot be relevant if the organization is fictitious.

\n

Criterion B
0 marks – there is no connection to a real-world organization.

\n

Criterion C
Award a maximum of [1]. The arguments cannot be relevant if the organization is fictitious.

\n

Criterion D
Mark as normal.

\n

Criterion E
Award up to a maximum of [1]. The individual and/or group perspective(s) cannot be relevant if the organization is fictitious.

\n

Criterion B
For [2]: “…connection is not developed” should be treated the same as superficial.

\n

Criterion C

\n\n

Criterion D

\n\n

Criterion E

\n\n
", "Examiners report": "
\n[N/A]\n
", "question_id": "18N.2.SL.TZ0.6", "topics": [ "2023-unit-4-marketing" ], "subtopics": [ "4-5-the-four-ps-(product-price-promotion-place)" ] }, { "Question": "
\n

With reference to an organization of your choice, examine the impact of globalization on change in operations management.

\n
", "Markscheme": "
\n

Marks should be allocated using the paper 2 markbands for May 2016 forward, section C available under the \"Your tests\" tab > supplemental materials. With further guidance below.

\n

N.B.: examiners should include a breakdown of each mark awarded per criterion and a brief note explaining the mark awarded at the end of each candidate’s response.

\n

The main aim of paper 2 (SL or HL) section C is to assess candidates’ understanding of the six major concepts (change, culture, ethics, globalization, innovation, strategy) within a business context. Candidates are to demonstrate their understanding through an organization of their choice. The expectation of the use of an organization is to allow assessment of the depth of candidates’ understanding through their ability to apply the
concepts and their knowledge.

\n

Assessment of candidates’ knowledge of the organization itself is not an aim of the assessment. If a candidate makes minor factual errors and these minor errors have no genuine bearing on whether the candidate understands the concepts, examiners should not penalize. For example, a minor error of historical fact (the year when a company was founded, or the year in which a change was implemented) which has no genuine bearing on candidates’ understanding of the concepts does not warrant penalty.

\n

It is expected that the candidate explains the chosen theoretical direction / content of their response.

\n

Additional guidance in relation to the assessment criteria
For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be met for that mark to be awarded.

\n\n

If only one concept is addressed:

\n\n

Where the question asks for impacts of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

In section C, the question rubric explicitly states that “organizations featured in sections A and B and in the paper 1 case study may not be used as a basis” to candidate’s answers to questions 6, 7 and 8. When this happens please award marks as follows:

\n

Criterion A
Award a maximum of [1]. The business management content cannot be relevant if the organization is fictitious.

\n

Criterion B
0 marks – there is no connection to a real-world organization.

\n

Criterion C
Award a maximum of [1]. The arguments cannot be relevant if the organization is fictitious.

\n

Criterion D
Mark as normal.

\n

Criterion E
Award up to a maximum of [1]. The individual and/or group perspective(s) cannot be relevant if the organization is fictitious.

\n

Criterion B
For [2]: “…connection is not developed” should be treated the same as superficial.

\n

Criterion C

\n\n

Criterion D

\n\n

Criterion E

\n\n
", "Examiners report": "
\n[N/A]\n
", "question_id": "18N.2.SL.TZ0.7", "topics": [ "2023-unit-5-operations-management" ], "subtopics": [ "5-1-the-role-of-operations-management" ] }, { "Question": "
\n

With reference to an organization of your choice, examine the impact of ethics and culture on human resource management.

\n
", "Markscheme": "
\n

Marks should be allocated using the paper 2 markbands for May 2016 forward, section C available under the \"Your tests\" tab > supplemental materials. With further guidance below.

\n

N.B.: examiners should include a breakdown of each mark awarded per criterion and a brief note explaining the mark awarded at the end of each candidate’s response.

\n

The main aim of paper 2 (SL or HL) section C is to assess candidates’ understanding of the six major concepts (change, culture, ethics, globalization, innovation, strategy) within a business context. Candidates are to demonstrate their understanding through an organization of their choice. The expectation of the use of an organization is to allow assessment of the depth of candidates’ understanding through their ability to apply the
concepts and their knowledge.

\n

Assessment of candidates’ knowledge of the organization itself is not an aim of the assessment. If a candidate makes minor factual errors and these minor errors have no genuine bearing on whether the candidate understands the concepts, examiners should not penalize. For example, a minor error of historical fact (the year when a company was founded, or the year in which a change was implemented) which has no genuine bearing on candidates’ understanding of the concepts does not warrant penalty.

\n

It is expected that the candidate explains the chosen theoretical direction / content of their response.

\n

Additional guidance in relation to the assessment criteria
For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be met for that mark to be awarded.

\n\n

If only one concept is addressed:

\n\n

Where the question asks for impacts of two concepts on content, examiners must allow for unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be more significant than the other.

\n

In section C, the question rubric explicitly states that “organizations featured in sections A and B and in the paper 1 case study may not be used as a basis” to candidate’s answers to questions 6, 7 and 8. When this happens please award marks as follows:

\n

Criterion A
Award a maximum of [1]. The business management content cannot be relevant if the organization is fictitious.

\n

Criterion B
0 marks – there is no connection to a real-world organization.

\n

Criterion C
Award a maximum of [1]. The arguments cannot be relevant if the organization is fictitious.

\n

Criterion D
Mark as normal.

\n

Criterion E
Award up to a maximum of [1]. The individual and/or group perspective(s) cannot be relevant if the organization is fictitious.

\n

Criterion B
For [2]: “…connection is not developed” should be treated the same as superficial.

\n

Criterion C

\n\n

Criterion D

\n\n

Criterion E

\n\n
", "Examiners report": "
\n[N/A]\n
", "question_id": "18N.2.SL.TZ0.8", "topics": [ "2023-unit-2-human-resource-management" ], "subtopics": [ "2-3-leadership-and-management" ] }, { "Question": "
\n

Designer Dolls (DD)

\n

Designer Dolls (DD) is a start-up business that will create hand-crafted unique dolls using a job/customized production method. As part of their business plan DD undertook a breakeven analysis.

\n

Table 1: Forecasted figures for DD for the first year of operation

\n

\n
\n

Describe one limitation of a break-even analysis.

\n
[2]
\n
a.
\n
\n

Calculate the number of dolls that DD needs to sell to achieve a profit of $4000 (show all your working).

\n
[2]
\n
b.i.
\n
\n

Calculate the capacity utilization rate at the break-even quantity for DD for the first year of operation (show all your working).

\n
[2]
\n
b.ii.
\n
\n

Calculate the profit or loss in the first year if DD sells 400 dolls (show all your working).

\n
[2]
\n
b.iii.
\n
\n

Assuming that the quantity of dolls to be sold in the second year is 550 and costs remain unchanged, calculate the price per doll that DD would need to charge to make a $6500 profit.

\n
[2]
\n
c.
\n
", "Markscheme": "
\n

Some of the limitations may include:

\n\n

Accept any relevant description. There is no need for further explanation of the exact impact on the break-even point.

\n

Application is not expected.

\n

Award [1] for each relevant identification / list of one limitation of the model.

\n

Award [1] for a description up to a maximum of [2].

\n
a.
\n
\n

Fixed costs + target profit = 10 000 + 4000 = 14 000 = 700 dolls

\n

Contribution per unit = 50 − 30 = 20 [shows that it’s part of given formula]

\n

OR

\n

Profit = total revenue – total cost

\n

4000 = 50X – (10 000 + 30X)

\n

20X = 14 000

\n

The number of dolls needing to be sold to reach a profit of $4000 = 700

\n

Award [1] for working and [1] for the correct answer.

\n

Award a maximum of [2].

\n

For a correct response that demonstrates understanding and application of the formula, even if no specific headings are presented, award full marks.

\n

Working must be shown for full marks. Accept a graphical calculation of BE if drawn and stated accurately ie sufficient to extract correct data (do not penalize labeling errors).

\n
b.i.
\n
\n

Break-even quantity = \n\n\n\nFixed costs\n\n\n\n\nContribution per unit\n\n\n\n

\n

                                = \n\n\n10\n\n000\n\n\n\n(\n\n\n$ \n\n50\n−\n\n$ \n\n30\n\n)\n\n\n20\n\n\n

\n

                                = 500 dolls

\n

Capacity utilization rate = \n\n\n500\n\n\ndolls\n\n\n\n900\n\n\ndolls\n\n\n\n = 0.55 × 100 = 55.55 %

\n

Accept 55.5% or 55.56%

\n

An alternative method would be:

\n

Total revenue = total costs, where:

\n\n

Capacity utilization= \n\n\n500\n\n\n900\n\n\n × 100 = 55.55 %

Accept 55.5% or 55.6%

\n

Do not credit for using the formula as it is given. Do not fully credit if the figure is not expressed in %.

\n

Award [1] for correct working, which includes the calculations of the breakeven point and [1] for the correct answer in %. Award up to a maximum of [2].

\n

If only the correct breakeven is present, then award [1] only if working is shown.

\n

For a correct response that demonstrates understanding and application of the formula, even is no specific heading are presented, award full marks.

\n
b.ii.
\n
\n

Margin of safety times contribution per unit
400 − 500 = (100) × 20 = [$2000]

\n

Do not credit for the calculation of the break-even point but allow OFR even if correct. It is application of the MOS-BE formula which gets the mark for workings.

\n

Accept any other relevant method:

\n

Total revenue − total costs

\n

Price × quantity − (total fixed costs = total variable costs)

\n

400 × $50 − [$10 000 = (400 × $30)]

\n

$20 000 − [$10 000 + $12 000]

\n

$20 000 − $22 000

\n

$(2000) = a loss

\n

Award [1] for correct working and [1] for the correct answer. Award up to a maximum of [2].

\n

For a correct response that demonstrates understanding and application of the formula, even if no specific headings are presented, award full marks.

\n
b.iii.
\n
\n

Target profit = total revenue − total costs

\n

$6500 = $550X − [10 000 + ($30 × 550)]

\n

$6500 = $550X − [10 000 + 16 500]

\n

$6500 = $550X − $26 500

\n

$6500 + $26 500 = 550X

\n

$33 000 = 550X

\n

X = $60

\n

Price that DD has to charge is $60.

\n

Accept any other method provided that working is shown.

\n

Award [1] for working and [1] for the correct answer.

\n

Award a maximum of [2].

\n
c.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
b.iii.
\n
\n[N/A]\n
c.
\n
", "question_id": "18N.2.HL.TZ0.1", "topics": [ "2023-unit-3-finance-and-accounts", "2023-unit-5-operations-management" ], "subtopics": [ "3-3-break-even-analysis", "5-5-production-planning" ] }, { "Question": "
\n

Describe two advantages to MSS of being a charity (line 14).

\n
[4]
\n
a.
\n
\n

Explain how the school could overcome high labour turnover.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Advantages to MSS include:

\n\n

Accept any other reasonable description.

\n

Award [1] for each advantage, up to a total of [2].

\n

Award [1] for putting the advantage into context, up to a total of [2].

\n
a.
\n
\n

Key aspects leading to high labour turnover are:

\n\n

Solutions likely to come from these including higher wages, more levels of hierarchy, access to new technology, staff involvement.

\n

Explanation/analysis will come from discussing these and any other relevant issue. Candidates do not need to discuss these in relation to motivation theories, such as Maslow, Herzberg, Taylor, Adams or Pink but these could be rewarded.

\n

Accept any other reasonable explanation.

\n

Award a maximum of [3] for a theoretical answer or for only analysing one method/idea.

\n

Award a maximum of [5] if the analysis of two or more methods/ideas is mainly descriptive but in context.

\n

Only award [6] if the answer takes into account constraints on methods/ideas eg limited finance, being a charity etc.

\n
b.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
", "question_id": "17N.1.SL.TZ0.1", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-2-human-resource-management" ], "subtopics": [ "1-2-types-of-organizations", "2-1-functions-and-evolution-of-human-resource-management" ] }, { "Question": "
\n

Describe two features of the school’s marketing mix (line 54).

\n
[4]
\n
a.
\n
\n

Explain, with reference to MSS, the purpose of the mission and vision statements (line 37).

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Context: The marketing mix can apply to: the IT centre, the product of an education for girls, boarding, a better school environment than most schools, and a humanitarian award.

\n

Features include:

\n\n

Remember: Place is about distribution, not location and is unlikely to apply to MSS.

\n

Accept any other reasonable description. (eg at HL can accept the 7Ps)

\n

For each feature: Award [1] for identifying the feature and [1] for relevant application to MSS.

\n
a.
\n
\n

A mission statement is a statement of the purpose of an organization, in this instance providing an education for girls. It should refer to the key market (parents of girls), the contribution it makes to that market and what makes the service unique, so that the client chooses the school. The school’s ethics may play a part in this.

\n

A vision statement is a statement of an organization’s overall objectives designed to aid decision making. In this instance it will refer to future plans for growth and facilities.

\n

Mission statements and vision statements fulfill different purposes. A mission statement describes an organization’s purpose and answers the questions “What business are we in?” and “What is our business for?”. A vision statement
provides strategic direction and describes what the owner or founder wants the company to achieve in the future.

\n

Accept any other reasonable explanation.

\n

Award a maximum of [3] for a theoretical answer.

\n

Award a maximum of [4] if either only one of mission statement or vision statement are addressed in context.

\n

Award a maximum of [5] if the analysis is mainly descriptive but in context.

\n

If there is confusion between mission statement and vision statement but there is some understanding shown of the concepts award a maximum of [4] if in context and [2] if no context. If the statements are not explained but purposes developed also award max [4].

\n
b.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
", "question_id": "17N.1.SL.TZ0.2", "topics": [ "2023-unit-4-marketing", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "4-2-marketing-planning-(including-introduction-to-the-four-ps)", "1-3-organizational-objectives" ] }, { "Question": "
\n

Papel

\n

Papel manufactures and sells paper bags. It pays cash for 80 % of its raw materials but, to remain competitive, it must sell on credit to all customers. Many debtors are not paying on time and creditors (suppliers) are increasing. The board of directors is concerned about Papel’s liquidity position.

\n

The finance manager has provided information from Papel’s accounts.

\n

Table 1: Selected information from Papel’s accounts at 31 October 2018

\n

\n
\n

Define the term debtors.

\n
[2]
\n
a.
\n
\n

Using information from Table 1 construct a fully labelled balance sheet for Papel for the end of October 2018.

\n
[5]
\n
b.i.
\n
\n

Using information from Table 1 calculate the current ratio for Papel for the end of October 2018.

\n
[1]
\n
b.ii.
\n
\n

Explain one possible strategy, other than elimination of credit sales, for Papel to improve its liquidity position.

\n
[2]
\n
c.
\n
", "Markscheme": "
\n

A debtor is a customer or a firm that has purchased a good or service from a business and has not yet paid. A debtor may be allowed up to one month or more to settle.

\n

N.B.: no application required. Do not credit examples.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full definition that conveys knowledge and understanding similar to the answer above. – reference to repayment period is not necessary for full marks.

\n
a.
\n
\n

Papel balance sheet as at 31 October 2018

\n

\n

N.B.: if the candidate does not follow the IB prescribed format, award a maximum of [3].

\n

N.B.: candidates should not be penalized for writing “retained profit” omitting the word accumulated.

\n

Allow OFR.

\n

[0]
The B/S does not reach a standard described below.

\n

[1–2]
The B/S is not accurately constructed, and/or the calculations within and between the various components are not presented or largely incorrect. However, there is limited evidence of a general understanding of the format

\n

[3–4]
The principal elements of the B/S are constructed, but may not be entirely accurate. The calculations under each heading/component/part are largely correct.
Allow up to two mistakes in calculations and/or presentation for [3].
Allow for either one error in calculation or one error in presentation [4].
For an accurately constructed B/S with incorrect calculations, award up to a maximum of [3].
Allow OFR.
For example, if one irrelevant figure that belongs to the P/L account is added, obviously the rest will not match.

\n

[5]
The B/S is accurately constructed in the expected IBO format. All the relevant headings of each component/ parts are used and correctly classified. Do not penalise for internal order of classification. All and only the relevant figures are presented. No extra irrelevant figures that belong to the P/L are included. The calculations under each part/ component of the B/S are correct and well presented [5].

\n

Deduct [1] for one omission including the overall heading provided the B/S is accurately balanced.

\n

N.B.: If the candidate did not follow the IBO format award up to [2] marks

\n
b.i.
\n
\n

Current ratio = \n\n(\n\n\n\n\ncurrent assets\n\n\n\n\ncurrent liabilities\n\n\n\n\n)\n\n\n\n\n\n20\n\n\n20\n\n\n = 1

\n

Award [1] for the correct answer. Award no marks merely for writing the formulae. Award [1] mark with OFR but working must be shown.

\n
b.ii.
\n
\n

Liquidity is the ability to pay short-term debts. Papel’s liquidity position is delicate. Working capital is zero and Papel´s acid test is 0.75, which means that Papel has less than $1 of liquid assets with which to repay every $1 of its short-term debts.

\n

Papel could improve its liquidity position by keeping a tight credit control with debtors. Many are not paying on time, which means that Papel does not keep a check of customers’ accounts.

\n

Papel could use a debt factoring service to recoup some of the debt as a way to boost its liquidity.

\n

Papel should monitor debtors and chase them to pay on time and to respect the credit periods established and agreed.

\n

Creditors are increasing even though 80 % of accounts are settled in cash. To improve the liquidity position, Papel could try to negotiate improved credit terms with its suppliers.

\n

Reward candidates who highlight ‘surplus’ or ‘unused’ assets to sell but not a generic response of ‘sell assets’. Award maximum [1] as no application is possible.

\n

Accept any other relevant strategy.

\n

Award [1] for a relevant generic strategy identified or described and [1] for any additional explanation in context to DD.

\n

[2] cannot be awarded for the strategy if the response lacks either explanation and/or application. 

\n

For example: For an identification or a description of the strategy either debtors or creditors with or without application [1].

\n

For explanation of the strategy with no application [1].

\n

For explanation of the strategy and application [2].

\n
c.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.i.
\n
\n[N/A]\n
b.ii.
\n
\n[N/A]\n
c.
\n
", "question_id": "18N.2.HL.TZ0.2", "topics": [ "2023-unit-3-finance-and-accounts" ], "subtopics": [ "3-4-final-accounts", "3-5-profitability-and-liquidity-ratio-analysis" ] }, { "Question": "
\n

Describe one capital expenditure and one revenue expenditure for MSS (lines 16–17).

\n
[4]
\n
a.
\n
\n

Explain a suitable promotional mix that MSS might use to attract new students.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Capital expenditure could include: buildings, computers, books, equipment. Revenue expenditure could include: wages, materials, electricity, marketing, etc.

\n

Pens, paper and other consumables are revenue expenditure even if bought in bulk.

\n

Accept any other reasonable expenditures.

\n

For each capital expenditure: Award [1] for identifying the expenditure and [1] for relevant application to MSS.

\n

For each revenue expenditure: Award [1] for identifying the expenditure and [1] for relevant application to MSS.

\n
a.
\n
\n

Relevant context:

\n\n

Above the line methods:

\n\n

Below the line:

\n\n

Remember: This question is about a “mix” of promotional activities and therefore needs more than one promotional activity.

\n

Accept any other reasonable explanation.

\n

Analysis should come from explaining how the methods can achieve the objective.

\n

Award a maximum of [3] for a theoretical answer.

\n

Award a maximum of [4] if the explanation is limited to only one promotional activity in context.

\n

Award a maximum of [5] if the answer is purely descriptive but in context.

\n

A judgement/recommendation is not needed for [6].

\n
b.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
", "question_id": "17N.1.SL.TZ0.3", "topics": [ "2023-unit-3-finance-and-accounts", "2023-unit-4-marketing" ], "subtopics": [ "3-1-sources-of-finance", "4-5-the-four-ps-(product-price-promotion-place)" ] }, { "Question": "
\n

KA

\n

KA is a public limited company that designs, manufactures and sells air conditioners. KA’s unionized employees are motivated and efficient despite not being involved in any decision making. However, they are resistant to change.

\n

The market and competition for air conditioners are growing rapidly. KA operates at full capacity but stock turnover has slowed.

\n

Primary market research revealed that:

\n\n

To exploit opportunities and overcome weaknesses and threats, KA’s management has decided to redesign its products so that they are energy efficient. KA is considering two options:

\n\n

Employees have heard rumours of both options and fear for their jobs. Strike action is being considered.

\n
\n

Define the term public limited company.

\n
[2]
\n
a.
\n
\n

With reference to QS, explain two features of cradle to cradle manufacturing.

\n
[4]
\n
b.
\n
\n

Explain two possible human resource strategies that KA management could use to reduce employees’ resistance to change.

\n
[4]
\n
c.
\n
\n

Evaluate the two options that KA is considering.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

A public limited company is an incorporated organization listed on a Stock exchange with a legal right to sell shares to the general public.

\n

Candidates are not expected to word their definition exactly as above. Eg may omit mention of Stock Exchange if another feature of incorporation is present.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full, clear definition that conveys knowledge and understanding similar to the answer above.

\n
a.
\n
\n

Cradle to cradle is a sustainable form of manufacturing. QS seeks to create manufacturing principles that attempt to use production techniques that are efficient but also sustainable and waste free. Two features of using cradle to cradle with reference to QS are as follows:

\n

As its name suggests, QS will design and produce its air conditioners in such a way that most, if not all, of the materials used are recyclable. These materials (like glass, metal, plastic) that form parts of the air conditioners will be recyclable and used again for the production of future models. This will minimise waste.

\n

Cradle to cradle manufacturing with also allow QS to reuse some of the ready components of the old air conditions in the new models instead of disposing of those parts. QS might have to offer some financial incentives for the customers to return their old/outdated air conditioners.

\n

The air conditioners will also be built with biodegradable materials if QS cannot recycle the materials: for example, the carton for packaging of the air conditioners. This aspect will allow QS to reduce the environmental impact of its air conditioners.

\n

Accept any other relevant examples and explanation.

\n

Application here is very difficult – all of the stimulus info is about KA and gives no real links to QS – hence I believe to avoid generic responses, candidates should at least make reference to ‘air-conditioners” ie if responses just refer to QS and this could be replaced with any other company – then this is generic and only [1].

\n

Mark as 2 + 2.

\n

Award [1] for each relevant feature explained and [1] for appropriate application to the organization/type of products to a maximum of [2].

\n

[2] cannot be awarded for the difference if the response lacks either explanation and / or application.

\n

For example:

\n\n
b.
\n
\n

Two possible change management strategies as part of overall HR strategies that can be used by KA management to reduce the impact of employees’ resistance to change.

\n

The employees are currently not involved in any decision making, so it can be assumed that there is not much communication between employees and management; as such, open and clear communication with the employees can be seen as one possible change strategy. The management should be honest and fully explain the reasons for the change. The management should emphasize the positive outcome of outsourcing as a way to overcome some of the weaknesses of KA, like an opportunity to improve customers’ perceptions. The possibility of new opportunities for employees in the marketing department should be emphasized as a new and motivating challenge. The management should not lie about some of the negative outcomes, like job losses of those who are not going to be employed in the marketing department.

\n

Before a final decision is taken, KA management should change the non-participative way/culture/lack of involvement in decision making and encourage bottom-up participation and consult with the employees and listen to their suggestions and opinion. Some of the more motivated employees might come up with some alternative strategies and/or express their preferences.

\n

Management should acknowledge the fear of the unknown and the possibility of resistance to change due to fear of inability to cope with new challenges. A promise of training should be provided for those who are going to be employed in the marketing department if option 2 is chosen or for all employees if option 1 is chosen.

\n

Another strategy is to appoint a change champion among the employees to encourage those employees who are reluctant to change to see the benefits of both option 1 and 2. Perhaps inviting the Trade Union to put forward solutions to minimizing the negative effects or in fact making the union the change champion.

\n

Do NOT accept – “raising salaries/wages” unless tied to Option 1. Clearly this strategy is not feasible for those laid off in Option 2.

\n

Accept any other relevant change HR strategy.

\n

Award [1] for a relevant generic HR (change management) strategy identified or described and [1] for any additional explanation in context.

\n

[2] cannot be awarded for the chosen (change management) HR strategy if the response lacks either explanation and / or application.

\n

For example:

\n\n

Do not credit non-HR strategies. Analysis of strategies is not required.

\n
c.
\n
\n

Refer to Paper 2 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Given the fact that KA redesigned their product, both options will have the same starting point of being more energy efficient.

\n

Some of the possible arguments for option 1:

\n\n

Some of the possible arguments for option 2:

\n\n

Overall, both options can potentially enable KA to become a more environmentally and ecologically sustainable organization. The second option will enable KA to achieve this in the short term, however the possibility of strike action is real and this will require some significant conflict resolution strategies by KA’s management. Some of the good will enjoyed by KA will be undermined by this move.

\n

Accept any other relevant argument for each option.

\n

Accept any other substantiated judgment.

\n

It is expected that candidates provide a conclusion with a substantiated judgment.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forwards.

\n

For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].

\n

If a candidate evaluates / addresses only one option, award a maximum of [5].

\n

A balanced response is one that provides at least one argument for and one argument against each option.

\n

Candidates may contrast one option with another for a balance as long as at least two arguments are given for each option.

\n

Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "18N.2.HL.TZ0.3", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-5-operations-management", "2024-unit-2-human-resource-management", "2023-unit-3-finance-and-accounts" ], "subtopics": [ "1-2-types-of-organizations", "5-3-lean-production-and-quality-management", "2-1-introduction-to-human-resource-management", "3-8-investment-appraisal" ] }, { "Question": "
\n

La Bonita (LB)

\n

La Bonita (LB) is a beach hotel owned by Felix and Rose Sanchez. Its current target market is families seeking beach holidays. LB offers high-quality service. Customers do not pay in advance and pay in full on departure. LB is located near a capital city.

\n

As there are no hotel training schools locally, Felix provides on the job training to all new recruits. A recent survey by LB to assess brand loyalty found that existing customers remain loyal because:

\n\n

However, many customers have commented that the hotel needs to upgrade its facilities.

\n

In winter, LB has a very low capacity utilization and monthly cash flows are negative. LB gets through these months using bank overdrafts while continuing to pay its suppliers in cash to get generous discounts. Felix is concerned that the cash-flow situation is unsustainable and could get worse because the hotel facilities need upgrading. He proposes that LB raises additional finance and finds ways of reducing cash outflows in the winter (proposal 1).

\n

Rose believes that the cash-flow problem is mainly due to low capacity utilization in the winter months. She wants to diversify and attract a new segment for the winter: business customers. However, this would involve significant expenditure, including upgrading and adding new facilities to the hotel (proposal 2).

\n
\n

Define the term brand loyalty.

\n
[2]
\n
a.
\n
\n

Explain two advantages for LB of using on the job training.

\n
[4]
\n
b.
\n
\n

Explain the importance to LB of two elements of the extended marketing mix.

\n
[4]
\n
c.
\n
\n

Discuss whether LB should implement proposal 1 or proposal 2.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Consumers’ faithfulness to a particular brand, which will allow a business to see repeat purchasing by consumers and/or over the longer term, much more acceptability in raising the price of its products/services.

\n

Accept any other relevant definition.

\n

N.B.: no application required. Do not credit examples.

\n

Award [1] for a basic definition that conveys partial knowledge and understanding.

\n

Award [2] for a full definition that conveys knowledge and understanding similar to the answer above.

\n
a.
\n
\n\n

Accept any other relevant advantage

\n

Do not credit an explanation of general training
Mark as 2 + 2.

\n

Award [1] for each correct advantage identified or described and [1] for a relevant explanation with application to LB. Award up to a maximum of [2].

\n

[2] cannot be awarded per advantage if the response lacks either explanation and/or application.

\n

For example: For an identification or description of an advantage with or without application [1]. For explanation of an advantage with no application [1]. For explanation of an advantage and application [2].

\n
b.
\n
\n

Physical evidence is referred to as the environment in which the goods or services are delivered. It is a crucial element for hotels like LB, as hotel customers make their choices based on the appearance and state of hotel facilities to a great extent. Guests’ judgements will be based on LB’s physical evidence, including its location at the beach, to decide whether or not to book a room. There is, however, evidence from the stimulus that LB’s facilities need upgrading.

\n

People makes reference to the way employees relate to and communicate with customers. This is another crucial element for a hotel. LB’s employees are polite and helpful and particularly good with children. This has proved to be very important for LB’s brand loyalty and customers’ perceptions of it, and also provides a service that is perceived as very good value for money.

\n

Process could be related to the way LB provides a unique way of making payment for guests. LB provides a mechanism that allows customers the opportunity to pay on departure and avoid paying in advance.

\n

Accept any other relevant explanation.

\n

Mark as 2 + 2.

\n

Award [1] for each correct element of the extended marketing mix identified and described and [1] for a relevant explanation of the importance with application to LB. Award up to a maximum of [2].

\n

[2] cannot be awarded per element of the extended marketing mix that has been identified if the response lacks either explanation and/or application.

\n

For example: For an identification or a description of an element of the extended marketing mix with or without application [1].

\n

For an explanation of an element of the extended marketing mix with no application [1].

\n

For an explanation of an element of the extended marketing mix and application [2].

\n
c.
\n
\n

Refer to Paper 2 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Proposal 1

\n\n

Proposal 2

\n\n

It can be concluded that Rose’s alternative seems to be more risky and expensive than Felix’s. What if business customers are not attracted? LB will be indebted with facilities that would remain obsolete for its current market segment. Felix’s proposal, on the other hand, seems more plausible and conservative. Some of the alternatives, such as delaying payments, could work without much risk involved. However, LB should also find a way to increase inflows by tackling its capacity utilization problem. Diversifying into another market segment (such as elderly tourism?) that may not involve a great investment could help to increase inflows in winter.

\n

Marks should be allocated according to the paper 2 markbands for May 2016 forward with further guidance below.

\n

A balanced response is one that covers at least one argument for and one against each proposal.

\n

For one relevant argument that is one-sided, award up to [3]. For more than one relevant argument that is one-sided, award up to a maximum of [4].

\n

If a candidate evaluates/addresses only one proposal, award a maximum of [5]. Award a maximum of [6] if the answer is of a standard that shows balanced analysis and understanding throughout the response with reference to the stimulus material but there is no judgment/conclusion.

\n

Candidates cannot reach the [7–8] markband if they give judgment/conclusions that are not based on analysis/explanation already given in their answer.

\n
d.
\n
", "Examiners report": "
\n[N/A]\n
a.
\n
\n[N/A]\n
b.
\n
\n[N/A]\n
c.
\n
\n[N/A]\n
d.
\n
", "question_id": "18N.2.HL.TZ0.4", "topics": [ "2023-unit-4-marketing", "2023-unit-2-human-resource-management", "2023-unit-1-business-organization-and-environment" ], "subtopics": [ "4-5-the-four-ps-(product-price-promotion-place)", "2-1-functions-and-evolution-of-human-resource-management", "4-6-the-extended-marketing-mix-of-seven-ps", "1-3-organizational-objectives" ] }, { "Question": "
\n

Refer to the Radeki de Dovnic Manufacturing (RDM) case study (SL/HL paper 1 May 2019).

\n
\n

With reference to RDM, describe how changes in operations management altered its relationship with two other business functions.

\n
[4]
\n
a.
\n
\n

Explain how RDM’s transformation of its manufacturing process from traditional mass production to highly automated production affected the interests of internal stakeholders.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

PLEASE NOTE: This content is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

The shift in operations management from a traditional industrial manufacturing process to an automated process altered its relationship with the following business functions:

\n\n

Candidates should name the functions, but they can be implicit.

\n

N.B. R&D is not a business function.

\n

Accept any other relevant changes.

\n

Mark as a 2 + 2.

\n

Award [1] for an appropriate business function identified and an additional [1] for some description of changes in context. Award a maximum of [2] for each function described.

\n
a.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n\n

Accept any other relevant internal stakeholders.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.

\n

Award a maximum of [3] for a theoretical answer, or for only considering one internal stakeholder.

\n

Award a maximum of [5] if the answer is mainly descriptive but in context.

\n

Award a maximum of [6].

\n
b.
\n
", "Examiners report": "
\n

Candidates were asked to describe how changes in operations management altered RDM’s relationship with two other business functions. Of those that did answer almost all candidates chose Human Resources, outlining the reduction in the workforce and the change to a more skilled workforce. Many candidates chose Finance and Accounting, describing the need for finance. Some candidates did not understand the term ‘business function’.

\n
a.
\n
\n

Candidates were asked to explain how the change from traditional mass production to highly automated production affected the interests of internal stakeholders. Nearly all candidates identified correctly internal stakeholders, usually employees and managers although some identified directors and/or owners. Most candidates identified more than one stakeholder. Weaker answers tended not to develop the context or kept their explanations to the simplistic without developing their ideas. The best answers developed the impact of the changes on both the stakeholders and the business and used the context well.

\n

Some candidates just copied extracts from the case study in their answer; identifying the relevant case study material is important, but it should only be a starting point: the text written by candidates should go beyond what is stated in the case study and it should add value, showing the candidates’ knowledge and understanding in their own words; solely quoting the case study is not enough to be awarded marks in the higher mark questions.

\n
b.
\n
", "question_id": "19M.1.SL.TZ0.1", "topics": [ "2023-unit-1-business-organization-and-environment", "2024-unit-1-introduction-to-business-management" ], "subtopics": [ "1-1-introduction-to-business-management", "1-4-stakeholders" ] }, { "Question": "
\n

Refer to the Radeki de Dovnic Manufacturing (RDM) case study (SL/HL paper 1 May 2019).

\n
\n

With reference to RDM, outline one advantage and one disadvantage of Jan’s leadership style (lines 88–89).

\n
[4]
\n
a.
\n
\n

Explain how innovation at RDM may have influenced their marketing practices.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

Jan’s leadership style is democratic with hints of laissez faire. A simple assertion that it is democratic or is laissez faire is insufficient for context.

\n

Advantages:

\n\n

Disadvantages:

\n\n

Accept any other relevant advantage or disadvantage.

\n

Mark as a 2 + 2.

\n

Award [1] for an appropriate advantage and [1] for a disadvantage identified and an additional [1] for application to the points identified. Maximum award: [4].

\n

N.B. The case study states the leadership style is democratic, but there are hints of laissez faire. Mention of either “democratic” or “laissez faire” on their own is not enough for an application mark, there needs to be use of the actual context to gain application marks.

\n
a.
\n
\n

PLEASE NOTE: This content is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Innovation: introduce something or some process that is new.

\n

Prior to changing to healthcare products, RDM’s marketing practices would have been based on:

\n

For SL and HL:

\n\n

Additional for HL:

\n\n

There was little evidence of a marketing strategy so these items are not coordinated.

\n

Post innovation marketing practices based on:

\n

For SL and HL:

\n\n

Additional for HL:

\n\n

Other issues include change in target market, change in nature of market (growing), creating USP. After innovation, these practices will need to be included in a coordinated marketing mix.

\n

Accept any other relevant explanation.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.

\n

Award a maximum of [3] for a theoretical answer or for limiting answer to only considering one market practice.

\n

Award a maximum of [5] if the answer is mainly descriptive but in context.

\n

Award a maximum of [6].

\n
b.
\n
", "Examiners report": "
\n

candidates were asked to outline one advantage and one disadvantage of Jan’s leadership style. Most candidates showed very good knowledge of the advantages and disadvantages of democratic leadership style and gave a typical textbook answer. Fewer candidates were able to relate their answer to the relevant case material – for example: most employees love the environment; it is consistent with teamwork and creativity; that some employees have complained that there is insufficient guidance; and that the business sometimes lacks focus. However, candidates who state this context also need to relate it to leadership style rather than simply ‘lifting’ it from the case.

\n
a.
\n
\n

Candidates were asked to explain how innovation at RDM may have influenced marketing practices. Many candidates picked up in the case material that RDM ‘did not have a marketing strategy’ and promptly presented a pre-prepared answer based on what would be a good marketing strategy. They did not answer the question that was set and could only be rewarded for their knowledge of marketing. Good answers focused on what was relevant about the 7Ps (or 4Ps at Standard Level) at RDM prior to and after innovation. Fairly common in many answers was a comparison between the standardized product to begin with which became customized products after innovation. Other ideas included the likelihood that prior to innovation products were sold through retailers whereas post innovation there was direct contact with customers. Another relevant thought that a few candidates mentioned was that prior to innovation the products were at the end of their life cycle which would have been reflected in any marketing whereas post innovation there were products at various stage of the cycle. Candidates were also able to develop some ideas relating to price, people and processes. Just because there was no strategy does not mean there was no marketing.

\n
b.
\n
", "question_id": "19M.1.SL.TZ0.2", "topics": [ "2023-unit-2-human-resource-management", "2023-unit-4-marketing" ], "subtopics": [ "2-3-leadership-and-management", "4-1-the-role-of-marketing" ] }, { "Question": "
\n

Refer to the Radeki de Dovnic Manufacturing (RDM) case study (SL/HL paper 1 May 2019).

\n
\n

Describe two changes in the external environment that have affected RDM.

\n
[4]
\n
a.
\n
\n

Explain how the methods used to motivate employees could have changed when RDM transformed from traditional mass production to highly automated production.

\n
[6]
\n
b.
\n
", "Markscheme": "
\n

PLEASE NOTE: This content is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.

\n

A number of changes in the external environment are referred to in the stimulus.

\n

Social:

\n\n

Technological:

\n\n

Economic:

\n\n

Ecological:

\n\n

Political:

\n\n

Legal:

\n\n

Ethical:

\n\n

N.B. No need for candidates to actually mention STEEPLE features by name.
There may be some other external factors that are relevant eg competition, changes in demand which can also be included.

\n

Mark as 2 + 2.

\n

Accept any other relevant change in the external environment.

\n

Award [1] for each change in external environment identified, up to [2], and award [1] additional per external factor identified for appropriate description and application to the stimulus.

\n

Maximum award: [4].

\n
a.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Historically:

\n\n

After change (to highly automated):

\n\n

In the case of RDM:

\n\n

Accept any other relevant explanation.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.

\n

Award a maximum of [3] for a theoretical answer or for limiting answer to only the traditional situation or to only the highly automated situation.

\n

Award a maximum of [5] if the answer is mainly descriptive but in context.

\n

Award a maximum of [6].

\n

 

\n
b.
\n
", "Examiners report": "
\n

Candidates were asked to describe two changes to the external environment that affected RDM. Most candidates were able to answer these in context but many answers were limited in describing the effects. Changes often included: the ageing population suggesting to RDM that they enter the market for health products; the political changes (communism and the velvet revolution affecting the ownership and management of RDM); technological changes allowing innovation at RDM; the Czech economy and role in Europe; and changes to the Czech IT infrastructure, affecting how RDM operated and developed. The best answers identified the changes and described how they affected RDM.

\n
a.
\n
\n

It is clear that candidates understand issues to do with motivation and how these may relate to leadership styles. Some candidates gave very general answers or limited their answers to the situation currently prevailing at RDM. The best answers explored how motivation may have been achieved when the workforce was fairly large, unskilled and doing repetitive jobs to the current situation which has a smaller workforce, skilled labour and responsible jobs.

\n

In Paper 1, for all these questions, theoretical answers are not enough: candidates are expected to provide a balance of “theory” and “practice” – such is the nature of Business Management, an applied subject.

\n
b.
\n
", "question_id": "19M.1.SL.TZ0.3", "topics": [ "2023-unit-1-business-organization-and-environment", "2024-unit-2-human-resource-management" ], "subtopics": [ "1-5-external-environment", "2-4-motivation-and-demotivation" ] }, { "Question": "
\n

Refer to the Radeki de Dovnic Manufacturing case study (SL/HL paper 1 May 2019).

\n
\n

If RDM builds a new production facility in Europe, an immediate consequence will be an increase in capacity. At current levels of output this would lead to a reduction in capacity utilization. The current output of RDM’s factory is 20 000 units a year, with a productive capacity of 21 000 units a year before the new facility is built. If the new production facility is built, the greater capacity for the whole business will, at current levels of output, result in the capacity utilization falling to 50 % until production at the new facility starts.

\n

Xi, the marketing manager, suggests that this increased capacity provides the opportunity for market development to be achieved by entering the United States (US) market.

\n

The US market has similarities with Europe, with an aging population and low birth rate. Demand for customized healthcare devices is high. However, the healthcare system in the US is very different, with a much greater role for private sector healthcare compared to Europe, where much of the healthcare is state funded. In the US, 18 % of gross domestic product (GDP) is spent on healthcare compared with an average of 11 % in Europe. Advertising spend in the US is very high for the typical healthcare equipment business, which uses TV and the internet to reach individuals, whereas in Europe healthcare equipment businesses typically negotiate with government organizations. Average incomes in the US are higher than in Europe. Competition in the US is very high, although some major healthcare equipment businesses dominate the market. Industrial/ employee relations in the US are generally more decentralized than in Europe, with a lower level of unionization.

\n

To assess the best way to enter the US market, some senior managers may have to move to the US and Xi may need to recruit some new staff in the US with specialized knowledge of US laws and regulations, as well as some additional marketing employees. Xi is aware that industrial/ employee relations are different in the US. Existing staff will have to get used to new ways of working and are concerned about having to work with new staff in the US.

\n

[Source: © International Baccalaureate Organization 2019]

\n
\n

Describe one industrial/employee relations method used by employers.

\n
[2]
\n
a.
\n
\n

Using the resource, calculate the current capacity utilization rate at RDM’s factory.

\n
[1]
\n
b.i.
\n
\n

Calculate the increase in capacity at RDM if the company builds a new production facility (show all your working).

\n
[3]
\n
b.ii.
\n
\n

Explain two possible reasons for RDM employees’ resistance to change if RDM enters the US market.

\n
[4]
\n
c.
\n
\n

Using information from the case study and the resource, discuss the opportunities and threats for RDM of entering the US market.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Types of industrial/employee method used by employers in industrial/employee relations include:

\n\n

Do not allow methods used by employees e.g. creating a union as this is done by employees not employers, strike action. Nor methods used by employers that do not involve direct engagement of workers such as delegation, leadership style, team building etc.

\n

Award [1] for identification of a method and [1] for a description. Candidates do not have to word exactly as above. No application is required but might be helpful. Maximum award: [2].

\n

 

\n
a.
\n
\n

Capacity utilization rate is \n\n\n20\n \n000\n\n\n21\n \n000\n\n\n × 100 = 95 % (95.2% but allow rounding)

\n

Award [1] for correct answer.

\n
b.i.
\n
\n

Capacity utilization is now 50 % so 50 % = \n\n\n20\n000\n\nnew capacity\n\n × 100

\n

so new capacity = 20 000 × \n\n100\n50\n\n =40 000 units

\n

Increase in capacity is 19 000 units

\n

Award [3] for correct answer with working. ‘Units’ not necessary. Working wrong only award [2].

\n

Award [2] for correct answer without workings or wrong working or good attempt (e.g 40,000, or 40,000 units)

\n

Award [1] for an attempt with workings. 95.2 % - 50 % =45.2 % (allowing for rounding) can be awarded [1]

\n

Do not reward formula only.

\n

 

\n
b.ii.
\n
\n

Reasons for resistance to change could include:

\n\n

Accept any other relevant reason.

\n

Mark as a 2 + 2.

\n

Award [1] for an appropriate reason [1] for application/context. Award a maximum of [2] for each reason. Maximum award overall: [4].

\n
c.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Opportunities:

\n\n

Threats:

\n\n

OPPORTUNITIES AND THREATS SHOULD BE EXTERNAL TO RDM

\n

If candidate considers all four elements of SWOT only reward for that part of the answer relevant to opportunities and threats.

\n

Accept any other relevant opportunity or threat.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section B.

\n

For an answer with no effective use of context (Theoretical answer) award maximum [3].

\n

For an answer that only looks at strengths and weaknesses (internal factors) award a maximum [3]

\n

Award [4] if opportunities and threats are presented as an undeveloped list.

\n

For an answer that only looks at opportunities or only looks at threats, award up to a maximum of [5]. At top end context has to be good.
Both opportunities and threats considered but descriptively max {6}

\n

Both opportunities and threats considered, good use of evidence, particularly from section B, but no effective conclusion/evaluation award a maximum of [8].

\n

For [10] marks a fully supported conclusion/evaluation with good use of evidence, particularly from Section B.

\n
d.
\n
", "Examiners report": "
\n

Few candidates were able to give a clear description of industrial/employee relations methods used by employers. Some who gave trade unions (a valid method) did so from the perspective of the employees rather than employers. Good answers referred to any of the recognized methods including collective bargaining, arbitration, negotiations with unions and more extreme methods such as lock-outs.

\n
a.
\n
\n

Almost every candidate got the correct answer – rounding was allowed. 

\n
b.i.
\n
\n

Some candidates got the correct answer of 19,000. Some candidates got the new capacity of 40,000 but did not subtract the 21,000 to get the increase. Candidates who got the answer wrong were rewarded, where appropriate, if the working showed that they were using a reasonable approach.

\n
b.ii.
\n
\n

Most candidates understood the concept of resistance to change and many candidates related this to the issues involved in entering the US market. Weaker candidates often identified contextual issues (such as employees having to move, different employment conditions in the US, language issues etc.) without linking these into the concept of resistance to change.

\n
c.
\n
\n

There were many answers that included factors that are internal to RDM. SWOT analysis has internal factors included in strengths and weaknesses so are not appropriate to opportunities and threats. Better answers discussed the external factors relating to RDM in terms of those that present opportunities and those that create threats. Very few answers took the final step of attempting to balance the opportunities and threats and even fewer answers justified which of the two outweighed the other.

\n
d.
\n
", "question_id": "19M.1.HL.TZ0.4", "topics": [ "2023-unit-2-human-resource-management", "2023-unit-5-operations-management", "2024-unit-2-human-resource-management", "2023-unit-4-marketing" ], "subtopics": [ "2-6-industrial/employee-relations", "5-5-production-planning", "2-1-introduction-to-human-resource-management", "4-7-international-marketing" ] }, { "Question": "
\n

Refer to the Radeki de Dovnic Manufacturing case study (SL/HL paper 1 May 2019).

\n
\n

If RDM builds a new production facility in Europe, an immediate consequence will be an increase in capacity. At current levels of output this would lead to a reduction in capacity utilization. The current output of RDM’s factory is 20 000 units a year, with a productive capacity of 21 000 units a year before the new facility is built. If the new production facility is built, the greater capacity for the whole business will, at current levels of output, result in the capacity utilization falling to 50 % until production at the new facility starts.

\n

Xi, the marketing manager, suggests that this increased capacity provides the opportunity for market development to be achieved by entering the United States (US) market.

\n

The US market has similarities with Europe, with an aging population and low birth rate. Demand for customized healthcare devices is high. However, the healthcare system in the US is very different, with a much greater role for private sector healthcare compared to Europe, where much of the healthcare is state funded. In the US, 18 % of gross domestic product (GDP) is spent on healthcare compared with an average of 11 % in Europe. Advertising spend in the US is very high for the typical healthcare equipment business, which uses TV and the internet to reach individuals, whereas in Europe healthcare equipment businesses typically negotiate with government organizations. Average incomes in the US are higher than in Europe. Competition in the US is very high, although some major healthcare equipment businesses dominate the market. Industrial/ employee relations in the US are generally more decentralized than in Europe, with a lower level of unionization.

\n

To assess the best way to enter the US market, some senior managers may have to move to the US and Xi may need to recruit some new staff in the US with specialized knowledge of US laws and regulations, as well as some additional marketing employees. Xi is aware that industrial/ employee relations are different in the US. Existing staff will have to get used to new ways of working and are concerned about having to work with new staff in the US.

\n

[Source: © International Baccalaureate Organization 2019]

\n
\n

Jan is considering two options for the long-term development of the business: market development and diversification.

\n

Option 1: Market development

\n

Although Jan, with his strong associations with the US, likes the idea of developing the US market, he has concerns about it. Over the last four years, the exchange rate has fluctuated between €1 = $1.40 and €1 = $1.03. There is some evidence that the US wants to discourage imports and prefers foreign businesses to invest directly in the US. Jan thinks there are other markets in and closer to Europe that could be developed more easily without significant changes to the distribution channels or the culture of the business. He has suggested the United Kingdom (UK) market as an alternative, which has a health service similar to those in other European countries. In most other respects the UK market is similar to other European markets. The main worry is that the UK market would be difficult to enter, as established suppliers are likely to be preferred by the health service and there may be financial constraints on the health service.

\n

Option 2: Diversification

\n

Jan is also considering a proposal by Heinrik Langer, a business analyst. Heinrik’s idea is for diversification. He thinks that RDM should develop a service role. RDM’s directors and workforce have all of the skills and experience needed to help other businesses convert from traditional production methods to automated robotic production processes. This service (known as a consultancy) would require recruitment of more engineers and computer specialists as well as highly skilled and experienced consultants. Heinrik’s proposal is based on:

\n\n

[Source: © International Baccalaureate Organization 2019]

\n

 

\n

Table 1: Population birth rates

\n

\n

[Source: © International Baccalaureate Organization 2019]

\n

 

\n

Table 2: Market research on robotics

\n

\n

[Source: © International Baccalaureate Organization 2019]

\n

 

\n

Nikita, RDM’s director of corporate strategy, has asked both Jan and Xi to provide data on each option to help her construct a decision tree to present at the next board meeting. The decision tree below summarizes the issues involved in the decision.

\n

 

\n

Decision tree based on Jan’s and Xi’s estimates

\n

\n

[Source: © International Baccalaureate Organization 2019]

\n
\n

Using the case study and the resources, recommend whether RDM should choose Option 1 or Option 2.

\n
", "Markscheme": "
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

Option 1: Market development

\n

Arguments for:

\n\n

The following points are in the resource so are not necessary for an answer but can be rewarded:

\n\n

Arguments against:

\n\n

The following points are in the resource so are not necessary for an answer but can be rewarded:

\n\n

Option 2: Diversification

\n

Arguments for:

\n\n

Arguments against:

\n\n

Allow discussion of any reasonable related issue. Discussion of Brexit in the UK may help a candidate reach a conclusion but is not to be rewarded as the issue is external to the case.

\n

Marks should be allocated according to the paper 1 markbands for May 2016 forward section C.

\n

Criterion A: Knowledge and understanding of tools, techniques and theories

\n

Decision tree and data from case, the 7Ps, diversification, interpretation of data, stakeholder differences, pace of change, Ansoff, Risk. Force Field and SWOT, but both often misunderstood in which case not rewarded. Be careful, mention of market development/diversification does not necessarily show knowledge of Ansoff – the candidate could be quoting from the case.

\n

For [4] Good understanding of a range appropriate tools/techniques/theories

\n

For [2] Satisfactory understanding of a limited number of tools/techniques/theories

\n

Criterion B: Application judged by use of stimulus, in particular the extra material.

\n

Remember, understanding has been rewarded in Criterion A. So B is about USE

\n

For [4]: relevant tools, techniques and theories are applied well to the case study context and additional stimulus material, the application is convincing and relevant.

\n

For [2]: some limited context/application but not developed. Use of tools limits candidate’s ability to make reasoned arguments.

\n

Criterion C Reasoned arguments
Options discussed in balanced way, conclusions drawn and recommendation made/supported.

\n

For [4]: There needs to be a clear recommendation supported by the data and analysis.

\n

For [2]: Some limited arguments but not justified. Or limited analysis (e.g. one-sided argument) but candidate arrives/draws a reasoned conclusion.

\n

Criterion D: Structure: This criterion assesses the extent to which the student organizes his or her ideas with clarity, and presents a structured piece of writing comprised of:

\n\n

For [4]: all four elements present, clearly organized.

\n

For [2]: No logical structure but other elements present or logical structure with other elements.

\n

Criterion E: Individuals: Heinrik, Jan, Xi; Groups: Directors; shareholders; employees; customers; competitors. Likely issues include what the individuals want, the impact on employees, whether employees/managers have right skills, etc.
For [4 Individual(s) and group(s) are named and considered in a balanced way. I.e needs 1 or more of both individuals and groups developed

\n

For [2]: one individual or one group considered appropriately, or several individuals and/or groups considered superficially.

\n

For [1] one individual and/or one group considered superficially

\n
", "Examiners report": "
\n

There was a wide range of answers for this question. The best answers showed a strong grasp of applying appropriate tools. Relevant tools could include, but not necessarily: decision trees, Ansoff, sometimes the Boston Matrix, SWOT and occasionally force field analysis along with relevant ideas such as motivation, marketing, risk, management of change, sources of finance. The choice of tools and ideas was more important than trying to include as many tools/ideas as possible – the choice being based on the need to be able to justify a recommendation. The best answers made good use of the tools/ideas and strong use of the information provided in the additional material. Few candidates scored well on Criterion E. For Criterion E it is important for candidates to build their answer around the various stakeholders in the business. Many candidates wasted marks on Criterion D by not structuring their answer well including such simple ideas as an introductory paragraph and a concluding paragraph i.e. a separate paragraph including a recommendation or a conclusion.

\n
", "question_id": "19M.1.HL.TZ0.5", "topics": [ "2024-unit-1-introduction-to-business-management" ], "subtopics": [ "1-3-business-objectives" ] }, { "Question": "
\n

Refer to the Radeki de Dovnic Manufacturing (RDM) case study (SL/HL paper 1 May 2019).

\n
\n

While identifying a location for the new factory, Zylstra Industries (ZI), a large manufacturing company located not far from Location A, presented RDM with another possibility: a strategic alliance. Thus, RDM have two options to consider.

\n

Option 1: Purchase land and build a new automated factory. The potential location is summarized in Table 1.

\n

Table 1: Information on Location A

\n

\n

Location A is in an economically depressed area of northwestern Europe, where land values nevertheless remain high. Location A has an old industrial tradition with a long tradition of poor industrial/employee relations.

\n

Option 2: A ten-year strategic alliance with ZI. ZI has proposed that RDM uses some of its vacant
manufacturing space in exchange for assistance in transforming ZI’s manufacturing process into a
highly automated one using robots. Twenty RDM engineers and computer scientists would:

\n\n

ZI would pay all capital expenditures and RDM would employ the twenty engineers and computer scientists. Average salary and other financial rewards of one highly skilled employee would be $150 000 per year. In exchange, RDM would get free usage of factory floor space. RDM would buy its own equipment at a cost of $6 000 000. 

\n

RDM estimates that leasing space similar to what ZI is offering would cost $3 000 000 a year.

\n

[Source: © International Baccalaureate Organization 2019]

\n

 

\n
\n

State two reasons for selecting a specific location for production.

\n
[2]
\n
a.
\n
\n

Using the information in Table 1, calculate for Location A the payback period (show all your working).

\n
[2]
\n
b.i.
\n
\n

Using the information in Table 1, calculate for Location A the average rate of return (ARR) (show all your working).

\n
[2]
\n
b.ii.
\n
\n

Explain two types of financial rewards, other than salary, that RDM might offer its engineers and computer scientists.

\n
[4]
\n
c.
\n
\n

Recommend whether RDM should choose Option 1 or Option 2.

\n
[10]
\n
d.
\n
", "Markscheme": "
\n

Reasons for selecting a specific location of production include:

\n\n

Accept any other valid reason.

\n

Award [1] for each reason identified up to [2]. Maximum award: [2].

\n
a.
\n
\n

$16.0M per year profits. Cost: $64.0M.

\n

\n\n64\n16\n\n = 4 years

\n

or

\n

Capital outlay $64 000 000
Expected yearly profit $16 000 000

\n

\n

Answer: exactly 4 years

\n

Award [1] for the correct workings and [1] for the correct answer with the unit “years”.

\n
b.i.
\n
\n

ARR = [(80 000 000 − 64 000 000) ÷ 5 ÷ 64 000 000] × 100 = 5 %

\n

Award [2] for correct answer with working and with the percentage sign.

\n

Award [1] if the percentage sign is missing,

\n

Do not credit the formula alone.

\n
b.ii.
\n
\n

Types of financial reward other than salary that RDM might offer its engineers and computer scientists include:

\n\n

Accept any other relevant financial reward.

\n

Mark as a 2 + 2.

\n

Award [1] for an appropriate financial reward identified and an additional [1] for explanation and application. Award a maximum of [2] for each financial reward identified, explained, and applied to the stimulus. Maximum award overall: [4].

\n
c.
\n
\n

Refer to Paper 1 markbands for May 2016 forward, available under the \"Your tests\" tab > supplemental materials.

\n

With Option 1, advantages for RDM include:

\n\n

Disadvantages of Option 1 include:

\n\n

Accept any other relevant advantage or disadvantage of Option 1.

\n

With Option 2, advantages for RDM include:

\n\n

Disadvantages of Option 2 include:

\n\n

Accept any other relevant evaluation.
Marks should be allocated according to the paper 1 markbands for May 2016 forward section B.

\n
d.
\n
", "Examiners report": "
\n

Candidates were asked to state two reasons for selecting a specific location for production. Most candidates answered correctly, with a wider responses such as the cost of land, the cost and/or availability of raw materials, local workforce, infrastructure, transport, proximity to markets, proximity to suppliers etc. The question was accessible and did not present any particular difficulty.

\n
a.
\n
\n

For (4)(bi) and (4)(bii), candidates had to do some calculations, which is always challenging for some, even though the formula of the ARR was provided. A small number of candidates did not achieve full marks because they did not show their workings (although the instructions explicitly stated “show all your working”) or did not include the unit: “years” for (4)(bi), “%” for (4)(bii).

\n
b.i.
\n
\n

For (4)(bi) and (4)(bii), candidates had to do some calculations, which is always challenging for some, even though the formula of the ARR was provided. A small number of candidates did not achieve full marks because they did not show their workings (although the instructions explicitly stated “show all your working”) or did not include the unit: “years” for (4)(bi), “%” for (4)(bii).

\n
b.ii.
\n
\n

Candidates were asked to explain two types of financial rewards that RDM could use. As for (2)(a) and (3)(b), many candidates wrote generic answers, typically defining bonus or fringe benefits in general, without application to the case study. As a consequence, the marks awarded to (4)(c) were overall disappointing; many candidates clearly had some theoretical knowledge of financial rewards, but did not link this to the case.

\n
c.
\n
\n

Candidates had to recommend one of two strategic options. Both had advantages and disadvantages; candidates who achieved the highest marks considered the advantages and disadvantages of both options, whereas candidates who discussed only one option produced one-sided, limited answers. One fairly common approach did not work well: some candidates started their response with their recommendation: “RDM should choose Option A because….” and the whole response was just a justification, without considering other arguments, other perspectives.

\n
d.
\n
", "question_id": "19M.1.SL.TZ0.4", "topics": [ "2023-unit-5-operations-management", "2023-unit-3-finance-and-accounts", "2023-unit-2-human-resource-management" ], "subtopics": [ "5-4-location", "3-8-investment-appraisal", "2-4-motivation" ] }, { "Question": "
\n

Las Migas

\n

Carolina plans to set up a bakery, Las Migas, in a small town. Competition from established bakeries is strong. Carolina has asked for a bank loan because her personal savings are insufficient. The bank manager requested the following information:

\n\n

Carolina has no experience with financial forecasts but she estimated the figures for Las Migas for the first four months of operations. These figures are shown in Table 1.

\n

Table 1: Estimated figures for Las Migas for the first four months of operations

\n

\n

[Source: © International Baccalaureate Organization 2019]

\n
\n

State two elements, other than a cash flow forecast, of a business plan.

\n
[2]
\n
a.
\n
\n

Prepare a cash flow forecast for Las Migas for the first four months of operations.

\n
[6]
\n
b.
\n
\n

Explain one problem that Las Migas may experience as a new business.

\n
[2]
\n
c.
\n
", "Markscheme": "
\n\n

Accept any other relevant, meaningful element (eg product portfolio).

\n

N.B. If a candidate states mission and vision statements, award [1]. If a candidate states either vision or mission statement, award [1]. If a candidate states forecasted profit and loss account or forecasted balance sheet, award [1]. If a candidate states both forecasted profit and loss account and forecasted balance sheet, award [1].

\n

Do not award a mark for information such as table of contents, name and address of business, index, etc. Also, do not accept executive personnel introduction, as in this case that would be totally irrelevant.

\n

Award [1] for stating an appropriate element of a business plan (application not required), up to a maximum of [2].

\n
a.
\n
\n

All figures in $

\n

\n

Accept slightly different headings / format.

\n

N.B. Allow candidate own figure rule (OFR): if a candidate makes an error in one row and carries it through the remainder of the forecast that is only one error. This provision includes both mathematical errors and conceptual errors (for example, if a candidate has the interest in the incorrect month then candidates should only lose [1] for that error.

\n

If a candidate misclassifies an item, like salary, as an inflow, consider that one error. Award [1] if the candidate conveys some understanding of what a cash flow forecast is, but otherwise the forecast is largely inaccurate, incomplete, or illegible.

\n

If the candidate produces a cash flow as below:

\n

\n

Award a maximum of [5] if otherwise fully correct. Deduct any further marks according to the guidance above for mathematical and conceptual errors.

\n

Award [2–3] if a cash flow forecast is drawn, but either it is not in a generally accepted format or it is untidy, and/or the forecast contains three or more errors, which could include, in addition to number placement problems and mathematical errors, conceptual errors (using the word “profit” rather than “net cash flow”) or omissions, such as not having a line like “closing balance” or totals.

\n

Award [4–5] if the cash flow forecast is drawn essentially correctly and neatly in a generally accepted format, but there is one error for [5] or two errors for [4].

\n

Award [6] if the cash flow forecast is drawn accurately and neatly in a generally accepted format, and is error free. If the candidate provides a heading of total inflow/outflow without using another heading above of inflow or outflow – do not penalise as an omission.

\n

If the candidate omitted both headings of outflow/inflow = one error substituting the term “net profit in the cash flow forecast for “net cash flow” is inaccurate and [1] should be deducted. If the candidate has only one row for all cash outflows, deduct [1] from the total mark awarded.

\n

Full working is not expected.

\n
b.
\n
\n\n

N.B. Accept cash flow problems/a need for finance, referring to the cash flow forecast constructed.

\n

Do not accept “legal issues”, as it is a reasonable assumption that Carolina is operating within the law.

\n

Award [1] for a relevant generic problem identified or described and [1] for any additional explanation in context.

\n

[2] cannot be awarded for the problem if the response lacks either explanation and / or application.

\n

For example: for identification or a description of the problem with or without application [1].

\n

For explanation of the problem with no application [1].

\n

For explanation of the problem and application [2].

\n
c.
\n
", "Examiners report": "
\n

Many candidates were successful (2 marks) on this question.

\n
a.
\n
\n

Marks range from 0 to 6. Many candidates could do the cash flow accurately but some had no idea of what one was. Marks were lost for various reason including errors in classification, labelling, and mathematical problems.

\n
b.
\n
\n

Most candidates performed well on this question about problems facing Las Migas as a new business.

\n
c.
\n
", "question_id": "19M.2.SL.TZ0.1", "topics": [ "2023-unit-1-business-organization-and-environment", "2023-unit-3-finance-and-accounts", "2024-unit-1-introduction-to-business-management" ], "subtopics": [ "1-1-introduction-to-business-management", "3-7-cash-flow", "1-1-what-is-a-business" ] }, { "Question": "
\n

DuffJD

\n

DuffJD provides a laundry service for towels and sheets to three hotel chains in a major city, Hoyluk. It provides each hotel chain with trade credit.

\n

Competition in this market is increasing, as two rivals are planning to offer laundry services to hotel chains in Hoyluk.

\n

 

\n

Table 1: Selected financial data for DuffJD for 2018

\n

\n

[Source: © International Baccalaureate Organization 2019]

\n
\n

Define the term trade credit.

\n
[2]
\n
a.
\n
\n

Using the financial data for DuffJD for 2018, calculate the contribution per unit per item laundered (no working required).

\n
[1]
\n
b.i.
\n
\n

Using the financial data for DuffJD for 2018, calculate the margin of safety (no working required).

\n
[1]
\n
b.ii.
\n
\n

Draw a fully labelled break-even chart for DuffJD for 2018 using the data provided.

\n
[4]
\n
c.
\n
\n

Explain how an increase in competition may affect DuffJD’s margin of safety.

\n
[2]
\n
d.
\n
", "Markscheme": "
\n

Trade credit is an important source of short-term finance available to businesses. It allows a business to buy goods and/or services on account without making immediate cash or cheque payments.

\n

Candidates are not expected to word their definition exactly as above.

\n

Award [1] for a basic definition conveying the idea that it allows a business to buy goods/services without making immediate cash or cheque payments Award an additional [1] for stating that it is a short-term source of finance [2].

\n
a.
\n
\n

sales price per unit − variable costs per unit = contribution
       $2.00             −            $0.50             = $1.50

\n

contribution = $1.50

\n

Award [1] for the correct response. No working required.

\n
b.i.
\n
\n

number of units sold − break-even number of units = margin of safety

\n

       200 000            − \n\n(\n\n\n\n\n$\n\n75\n \n000\n\n\n\n$\n\n1.50\n\n\n\n)\n\n 50 000                   = 150 000

margin of safety = 150 000 units

\n

Award [1] for the correct response. No working required.

\n

 

\n
b.ii.
\n
\n

Candidates do not need to create the table below – these are the figures for the break-even chart.

\n

\n

\n

Award marks as follows:
[1] for a correctly labelled and accurately drawn total revenue (TR) line – can be TR or revenue (but not “Sales” on its own).
[1] for a correctly labelled and accurately drawn total cost (TC) line.
[1] for identifying the break-even point. Ideally, the candidate will draw an arrow pointing to the break-even point and label the arrow. However, accept as an accurately labelled break-even point a vertical line from the x-axis to the break-even point, provided that the line is labelled “break-even point”.
[1] for correctly labelling BOTH axes – x-axis must have both costs and revenue; y-axis must have some indication of quantity, eg, units/quantity/items laundered.

\n

A break-even chart that is not drawn to scale can be awarded a maximum of [2].

\n

The break-even chart below should be awarded [2]. The candidate has correct TR, TC, both axes, and BEP. However, the chart is not to scale. Therefore, the award is capped at [2] because the x-axis is not to scale.

\n

\n

Be mindful of positive marking. If a candidate mislabeled one axis and the TC line (called it VC), the response would still receive [2] because the candidate had gotten correct the TR line and the BEP.

\n

Also, be mindful that the own figure rule (OFR) applies. If a candidate incorrectly calculates the break-even quantity when determining the margin of safety (question (b)(ii)) and then uses that incorrect break-even quantity when drawing their break-even chart, accept the break-even quantity in the chart. The candidate will have already lost marks for the incorrect calculation in (b)(ii). Do not double penalize.

\n
c.
\n
\n

An increase in competition may have two effects on DuffJD – they may lose a contract with one or more of its current three clients and thus will sell less laundry services. A loss of sales will reduce DuffJD’s margin of safety. The increase in competition may also force down prices. A decrease in price will increase the break-even level of output and thus reduce the margin of safety.

\n

Award [1] for a candidate displaying a sound understanding of the term margin of safety.

\n

Award a further [1] if the candidate identifies that the margin of safety is likely to fall for either of the two reasons indicated above.

\n
d.
\n
", "Examiners report": "
\n

A surprising number of candidates did not have an accurate understanding of trade credit. Really succinct and precise responses were rare.

\n
a.
\n
\n

Many candidates could accurately calculate the contribution per unit.

\n
b.i.
\n
\n

Most candidates, as well, correctly calculated the margin of safety.

\n
b.ii.
\n
\n

Most candidates had at least some idea of what a break-even chart is. Many scored four marks. When they did not, marks were typically lost for the chart not being to scale or an inaccurate label on the y-axis.

\n
c.
\n
\n

Candidates who understood break-even (questions b(i), b(ii), and (c) typically outlined that an increase in competition would decrease DuffJD’s margin of safety.

\n
d.
\n
", "question_id": "19M.2.SL.TZ0.2", "topics": [ "2023-unit-3-finance-and-accounts" ], "subtopics": [ "3-1-sources-of-finance", "3-3-break-even-analysis" ] } ]