Topic Tests for Unit 4a: Making Business Decisions

Transcription

1 1 Topic Tests for Unit 4a: Making Business Decisions For the 2014 examination, based around the Greggs pre-release material Contents For Edexcel s Business Studies A2 level, 6BS04 By Ned Browne, Carly Evans and Gerald Wood These Topic Tests are designed to give teachers assessment tools, which they may use at the end of teaching successive sections of Unit 4a. There are four tests outlined below: Topic test title Specification Page reference Section 1: Corporate objectives and strategy 4.3.1a 3 Section 2: Making strategic decisions 4.3.2a 15 Section 3: Assessing competitiveness 4.3.3a 27 Sections 4: Company growth 4.3.4a 39 Each Topic Test has four key features: 1. They are laid out in the general format of the Unit 4a examination, and so help students to become familiar with the approach which they will face when they sit the Unit. Each Topic Test uses the 2014 pre-release material on Greggs. 2. They cover the core concepts in the relevant section of the syllabus. 3. Accompanying each test is a mark scheme, based around Edexcel s own mark schemes. These both assist the teacher in marking students work, and helps students understand what they need to do to improve their mark. 4. Also accompanying each test is a set of suggested answers. These are rather longer than most students would have time to produce in an examination setting, and also contain more analysis and detail than students would be expected to know. They will therefore be useful as a source of further study. Licence The printed material is sold with a licence to photocopy for the benefit of staff and students within the purchasing institution, but not further afield. Disclaimer While the authors are all experienced teachers of Edexcel s A level specifications, the endorsement of Edexcel has neither been sought nor given for this work.

2 Sample page 2 Write your name here Surname Other name Unit 4a Topic Tests based on Greggs pre-release, Section 1 Centre Number Candidate Number Unit 4a: Making Business Decisions Section 1: Corporate objectives and strategy Date: Time: 1 hour 30 minutes Paper Reference 6BS04/01 You need the pre-issued Evidence A to H for this examination paper Total Marks Instructions Use black ink Fill in the boxes at the top of this page with your name, centre number and candidate number Answer all questions in both Section A and Section B You may use a calculator Information Total marks for this paper is 80 Quality of written communication will be taken into account in Questions 7a and 7b in Section B. This is indicated with an asterisk*. You should take particular care on this question over spelling, punctuation, grammar and clarity of expression Advice Read each question carefully Keep an eye on the time Try to answer every question Check your answers if you have time at the end

3 Sample page 3 SECTION A Evidence A to H was pre-issued before the date of the examination. Using the evidence and your own knowledge, answer all six questions (total 30 marks). Additional Evidence I Time allowed (35 minutes). Since the 1980s, obesity in Britain has soared. An obese person is defined as one having a BMI (Body Mass Index) of over 30. While just 15% of UK adults were obese in , 25% of adults are now obese. One particularly worrying feature has been the increase in children falling into the obese category. With 15% of children aged 2 to 15 now obese, Britain now has the highest rate of childhood obesity in Western Europe. An interesting feature of obesity is its link to income. While it was once the case that higher-income families were more likely to suffer from obesity because they could afford to eat more, this correlation has now switched round so that the poor are more likely to be obese. The most likely explanation for this is that virtually everyone can afford to eat as much as they want, but higher-income families are more likely to follow medical advice and eat healthy, balanced diets. This poses a challenge to Greggs, whose bakery business has grown on the back of selling high-calorie, high-salt sausage rolls and other savoury takeaway foods to Britain s lower-income groups. Their expansion from a small family business to one with over 1600 outlets with sales of 700 million every year has done wonders for its shareholders. But the question remains: has their success been bought at the expense of the very people Greggs was set up to serve; its customers? Sources: adapted from June 2013 news reports and Public Health England s website

4 Sample page 4 1. What is meant by resource intensive (Evidence F, paragraph 2)? (2) 2. What is meant by profit share (Evidence G, paragraph 2)? (2) 3. Explain how Greggs could utilise Porter s strategic matrix when making business decisions. (4) 4. Briefly comment on why the objectives of Greggs various stakeholders may differ from each other (Evidence I). (6) 5. [Greggs ] bakery business has grown on the back of selling high-calorie, high-salt sausage rolls and other savoury takeaway foods to Britain s lowerincome groups (Evidence I, final paragraph). Analyse the conflict between ethical behaviour and profit-based objectives Greggs faces. (8)

5 Sample page 5 Unit 4a, Section 1 Corporate objectives and strategy: mark scheme Note: Any acceptable answer which shows the range of skills required may score full marks Q. 1 What is meant by resource intensive (Evidence F, paragraph 2)? Mark 1 mark for identification of one or more resources e.g. labour or management time or capital or buildings Second mark for explanation of intensive i.e. use a lot of the resource in question Total: 2 Q. 2 What is meant by profit share (Evidence G, paragraph 2)? Mark 1 mark for basic idea of profit i.e. financial surplus or what the company is left with after costs have been subtracted from turnover Second mark for explaining share e.g. employees are given a proportion / percentage of the profit the company makes Total: 2 Q. 3 Explain how Greggs could utilise Porter s strategic matrix when making business decisions. For knowledge of Porter s way of classifying companies into those aiming at mass and niche markets, and those aiming at product differentiation or cost leadership Application up to 2 To Greggs, explaining how Porter could enable Greggs to identify its strengths and work out who its real competitors are ideally spotting that Greggs is a cost leader, though credit any view that is supported with evidence Marks Total: 4 Q. 4 Briefly comment on why the objectives of Greggs various stakeholders may differ from each other (Evidence I). 1 mark for definition of stakeholder; second mark for any expansion e.g. identifying a couple of stakeholder groups Application up to 2 Identification of two stakeholder group objectives for both marks Analysis up to 2 Must explain why for these marks; e.g. shareholders buy shares primarily as an investment, so financial motives dominate whereas employees may be more interested in job security for the sake of their families If only one reason, cap at 3 marks Marks Total: 6

6 Sample page 6 Unit 4a, Section 1 Corporate objectives and strategy: suggested answers 1. What is meant by resource intensive (Evidence F, paragraph 2)? (2) Answer: A recruitment process that is resource intensive is one that uses significant amounts of inputs (or resources ) such as labour and capital. The implication is that the process could be more efficient if it were better organized, and so be less intensive in its use of inputs. 2. What is meant by profit share (Evidence G, paragraph 2)? (2) Answer: A company s profit is the surplus that it makes, once all costs have been deducted from its turnover. A profit share is some proportion of the profit, a proportion that in this case is distributed to the employees of Greggs. 3. Explain how Greggs could utilise Porter s strategic matrix when making business decisions. (4) Answer: Porter s strategic matrix is a way of classifying firms according to whether they are cost leaders or product differentiators, and whether they are aimed at niche or mass markets. The purpose of the matrix is to help companies better understand themselves by seeing what their market positioning is, and therefore who their competitors are. Greggs is very clearly a cost leader, and Porter would suggest that they must be careful not to sacrifice this core area of expertise as indeed they have not, with their new coffee shop format costing up to 30% less than Starbucks and Costa. Equally, their defined area of expertise suggests they should be careful not to stray outside their existing niche markets. 4. Briefly comment on why the objectives of Greggs various stakeholders may differ from each other (Evidence I). (6) Answer: The stakeholders of a business are any group of people with an interest in the company. Typically these groups include customers, employees, suppliers, the wider community and of course the shareholders, the actual owners of the business. Evidence I mentions that shareholders will be pleased with ever-increasing profits and it is indeed the case that most shareholders view their interest in a company exclusively from the point of view of financial return. By contrast, customers will be more concerned with the value they receive. In general terms, customers want the lowest possible prices which may conflict with the shareholders desire for high profits. This is, of course, reflected among most stakeholder groups. All want the company to do well but on their own terms. So employees want a thriving company paying high wages while Greggs would prefer to pay low wages; and suppliers equally would prefer a high price for their inputs while Greggs would rather pay them low prices.