A-LEVEL Business Studies

Transcription

1 A-LEVEL Business Studies BUSS3 Strategies f Success Mark scheme 2130 June 2016 Version 1.0: Final Mark Scheme

2 Mark schemes are prepared by the Lead Assessment Writer and considered, together with the relevant questions, by a panel of subject teachers. This mark scheme includes any amendments made at the standardisation events which all associates participate in and is the scheme which was used by them in this examination. The standardisation process ensures that the mark scheme covers the students responses to questions and that every associate understands and applies it in the same crect way. As preparation f standardisation each associate analyses a number of students scripts. Alternative answers not already covered by the mark scheme are discussed and legislated f. If, after the standardisation process, associates encounter unusual answers which have not been raised they are required to refer these to the Lead Assessment Writer. It must be stressed that a mark scheme is a wking document, in many cases further developed and expanded on the basis of students reactions to a particular paper. Assumptions about future mark schemes on the basis of one year s document should be avoided; whilst the guiding principles of assessment remain constant, details will change, depending on the content of a particular examination paper. Further copies of this mark scheme are available from aqa.g.uk.

3 Assessment Objectives The Assessment Objectives represent those qualities which can be demonstrated in students wk and which can be measured f the purposes of assessment. AO1 Demonstrate knowledge and understanding of the specified content AO2 Apply knowledge and understanding to problems and issues arising from both familiar and unfamiliar situations AO3 Analyse problems, issues and situations AO4 Evaluate, distinguish between and assess appropriateness of fact and opinion, and judge infmation from a variety of sources Quality of Written Communication Students give accurate definitions of relevant terms. Students can also gain credit f identifying a point relevant to the question. Students should apply their knowledge to the business context in which the question is set, through recognition of some specific business aspect, the management of the business the problems issues faced by the business. Students will not be rewarded f simply dropping the company name product categy into their answer. Students use relevant business they and select infmation from a range of sources, using appropriate methods, to analyse business problems and situations. F example, students may be asked to build up an argument that shows understanding of cause and effect. Students evaluate evidence to reach reasoned judgements. This can be shown within an answer, through the weighting of an argument it can also be shown within a conclusion, perhaps by weighing up the strength of the candidate s own arguments f and against a proposition. Students will not gain credit by the simple use of drilled phrases such as On the other hand Business operates in an everchanging environment. The quality of written communication is assessed in all assessment units where students are required to produce extended written material. Students will be assessed accding to their ability to: ensure that text is legible, and that spelling, grammar and punctuation are accurate, so that meaning is clear. select and use a fm and style of writing appropriate to purpose and complex subject matter ganise infmation clearly and coherently, using specialist vocabulary when appropriate. The assessment of the quality of written communication is included in Assessment Objective 4. 3 of 16

4 The process of marking When marking a response, it is imptant to follow the flow of the arguments. This means that you should read a paragraph as a whole to see how an argument develops. In some cases, you may need to read me than one paragraph to follow through an argument to its conclusion. When reading, you need to identify the relevant skill, (eg application, analysis and evaluation) and then decide on the level. At the end of the response, you should reflect on the response as a whole - take a view of how the answer wks in its entirety and, if necessary, be prepared to revisit particular paragraphs to consider the level. At the bottom of the script you should write down the skills and levels, eg Reasonable Analysis and Reasonable Application. This determines the level you award - in this case Level 3. You then need to decide on where within the level the mark should fall. Add up your marks f the Application and Analysis and f the Evaluation to give the total. The total should be recded in the right hand margin. Make sure you check your addition at this stage and when totaling up the marks f the paper as a whole. Annotation When rewarding knowledge, you annotate K. This is common, f example, at the start of an answer when there are often definitions. Once other skills have gone beyond Limited it is not necessary to keep annotating K through the script. F the other skills: Limited Application: use Ap Reasonable Application: use RAp Good Application: use GAp Limited Analysis: An Reasonable Analysis: RAn Good Analysis: GAn Limited Evaluation: E1 Reasonable Evaluation: E2 Good Evaluation: E3 Note: if you want to flag where a skill is within a level you can use +/-, eg if it is at the top of Reasonable Analysis you can highlight this as RAn+; if it is only just Reasonable Evaluation you might show this as E2. This is not essential but some markers find this a useful way of showing if they feel it is as the top bottom of level of a skill. It is very imptant that you annotate the skills you see fully. This shows that all the script has been read and that you have taken relevant arguments into account. You should also tick initial blank pages please read all plans and annotate, eg K. Remember that once a student has reached a level they cannot go lower. F example, if a student achieves Good Analysis in one argument they stay at this level even if the rest of the response only demonstrates Limited Analysis. 4 of 16

5 GUIDANCE FOR MARKING When marking a response it is imptant to take an overview of the answer at the end. You should read the response as a whole to see how the arguments develop and how the effective the skills are within the overall response. Having read the whole response you must make a decision on the overall quality of the different skills demonstrated - is the quality of the application good? What about the analysis of the question? What about the quality of the evaluation of the question? Markers should mark from the top down is it good? If not, is it reasonable? If not, it is limited? Start with the top level and wk downwards rather than the other way around. In making a decision about whether a particular response is good reasonable, use the following guidelines. APPLICATION Application occurs when a response is in context. F example, it relates to the given scenario the particular issues and problems facing the business industry. Good application means the response is well applied to the context. It should be annotated as GAp. This can be demonstrated in different ways; f example, the response may: Be firmly embedded in the context. The arguments made within a response may, overall, relate well to the given context recognising key aspects of the situation. This insight into the context may occur in one instance be a combination of insights that show a good awareness of the specific issues facing the business. Combining infmation effectively. Candidates may appreciate the meaning and significance of one aspect of the case in the context of another aspect of the business situation. This combination of facts can show a good insight into the context. Manipulating data effectively. Candidates may use some numerical data in one part of the case and relate this to another relevant and significant figure elsewhere; by combining these effectively candidates can show a good grasp of the context. Reasonable application makes some reference to the context in suppt of the argument(s) but: is not necessarily well developed does not show much appreciation of the significance of aspects of the context. It should be annotated as RAp. Limited application. A mainly descriptive reference to the context. 5 of 16

6 ANALYSIS Analysis occurs when students build arguments that show an understanding of cause and effect and may make use of relevant they. Good analysis should be annotated as GAn. It occurs when: the answer as a whole has analysed key issues in the question well is focused on the precise question and provides a logical, coherent, multi-stage argument examining the causes and effects of an event as appropriate and linking the different aspects of the question effectively it makes use of relevant they to develop the argument, selecting relevant infmation and use appropriate methods effectively to build up the links between the stages. Reasonable analysis should be annotated as RAn. It occurs when there are relevant arguments explained but: these are less developed there are less clear chains of argument (f example, stages in the argument may be missing unclear assumed) these are generic rather than addressing the issues in the question directly focuses on one aspect of the question. Limited analysis: This is assertion of little relevance to the question EVALUATION This occurs when a judgement is made. Judgements may occur throughout a response. Good judgement directly answers the specific question set. It: provides a clear and well suppted overall response to the question set is built on analysis and evidence and is in the context of the given question. Reasonable judgement may: be making judgements on relevant arguments but not the question as a whole address some aspects of the question but not directly answers the specific question set may have some suppt but is not built on effective analysis. It may be rather generic, may be incomplete not fully consistent given the arguments made. Limited evaluation is an assertion a judgement with limited suppt. The decision on the Quality of Written Communication may be used to adjust a mark within the level selected on the basis of the student s evaluation. F example, a student may have been awarded the lower mark in E2 f evaluation but the response may be particularly well structured with highly effective use of technical terms. In this case, the mark may be adjusted upward to the maximum f E2. A well written answer without any evaluation can receive one mark f quality of language, as long as it contains evidence of knowledge. 6 of 16

7 1 Total f this question: 10 marks Table 5 shows the perfmance objectives that were set by Kings package holiday business in 2015 relative to the industry average. Analyse why Kings set perfmance objectives at these levels. Level Descript Marks Default mark L5 Good application AND Good analysis L4 Good application AND Reasonable analysis Good analysis AND Reasonable application L3 Reasonable application AND Reasonable analysis Good application 6 Good analysis L2 Reasonable application Reasonable analysis L1 Limited response primarily based on knowledge Perfmance objectives are the specific targets that the company wishes to achieve Points f application: The company is targeting high income families and positions itself as a premium provider. It aims to have me rooms full per hotel than competits (70% compared to 60%) perhaps due its loyalty and reputation. It aims generate a higher income per holidaymaker per week than the industry average ( 1450 compared to 1000) presumably due to its premium nature. It needs highly trained staff that offer higher than industry average levels of service such as quicker checking in times (10 minutes compared to 20) and me flight attendants (5 per flight compared to 3) Points f analysis: To do this it needs flights to be well staffed and to invest in training to ensure staff have expertise. They want to make the customer experience better than rivals by not losing bags and making checking in times. These are imptant to holidaymakers. All of this means the unit cost is relatively high. 7 of 16

8 2 Total f this question: 18 marks The Marketing Direct considers that Kings marketing activities befe Thea Jennings arrived in 2015 were very successful? To what extent do you agree? Justify your view. [18 marks] Level Descript Marks Default L5 Good application AND Good analysis L4 L3 Good application AND Reasonable analysis Good analysis AND Reasonable application Reasonable application AND Reasonable analysis Good application mark Good analysis Reasonable application L Reasonable analysis L1 Limited response primarily based on knowledge Marketing activities include both the overall strategic approach plus specific decisions regarding product, price, promotion and distribution Points f application could include: Current marketing strategy is of differentiation Decline in package holiday business is due to me customers preferring to independently book holidays online and ganise flights and accommodation separately. Rise in budget airlines offering me competitive prices Increased growth in year olds booking 'sht haul' city breaks as well as summer holidays.kings do not offer holidays to this market segment Kings market share has increased. Sales have fallen but less than the industry sales have fallen and this means its share of sales have increased. The profit margin has increased (i.e. me profit per sale ) when the industry average has become negative (i.e losses being made). The total profit being earned has actually increased ; the company has been able to push prices up as it has made demand even me inelastic 8 of 16

9 Marketing budget as a % of revenue has decreased from 37.5m in 2013 to 31.5m in 2014 to 29.24m in 2015 Points f analysis: Increased market share and rising profits indicate that the marketing activities were successful within the package holiday market PED has fallen indicating that customers are less price sensitive due to the good reputation of Kings All of this has been achieved with a fall in the marketing budget; this means the actual amount spent on marketing has fell and yet me profits are being made. This suggests success. Due to the trend f customers preferring to ganise their holidays independently, the package holiday market is declining. Consequently a strategy of differentiation will fail as the entire market is getting smaller. The increased popularity of budget airlines offering lower prices has attracted customers away from buying package holidays The growth in year olds booking city breaks is a market that King Airways does not cater f Kings has failed to respond to these market changes, by not providing a product that meets the expectations of the younger market as well as not targeting the fastest growing sect of the market. F Evaluation, you should award marks using the grid below. Note: Evaluation also assesses candidates quality of written communication. Level Descript Marks E3 E2 E1 Good judgement. Answer has a logical structure throughout with effective use of technical terms. Reasonable judgement shown. Evidence of a logical structure and some use of technical terms. Limited judgement shown. Limited evidence of a logical structure and limited use of technical terms. Points f evaluation: External facts have had a maj effect upon the marketing success especially as younger customers have switched to booking holidays and accommodation separately as well as a greater preference f 'sht haul' destinations. Kings marketing activities have failed to respond to these external facts The fundamental flaw with the activities seems to be that the business continues to operate in a market that is declining by 20%. So yes a success in the sht term but not looking ahead long term of 16

10 Markers note: If candidate considers that Thea arrived in 2015 and consequently ignes 2015 data, the answer should still be credited. 10 of 16

11 3 Total f this question: 18 marks The Finance Direct, Tom, considers that the initial investment required f Thea s proposal would be 300 million. He believes that the best way f Kings to raise this money is to do so entirely by browing. Do you agree with Tom s view? You should use appropriate calculations to suppt your answer. [18 marks] Level Descript Marks Default mark L5 Good application AND Good analysis L4 Good application AND Reasonable analysis Good analysis AND Reasonable application L3 Reasonable application AND Reasonable analysis Good application Good analysis L2 Reasonable application Reasonable analysis L1 Limited response primarily based on knowledge Relevant calculations could include: Gearing (befe) = 700/1700 x 100 = 41.2% Gearing (after) = 1000/2000 x 100 = 50% Current ratio = 180/580 = 0.3:1 ROCE = 8% of 680= /1700 x 100 = 3.1% Markers note: Do not credit investment appraisal calculations unless they are used as part of an argument linked to raising finance Crect calculation of ratio award L1. Crect interpretation of ratio calculation award Rap. Crect calculation of new Gearing award Rap Own figure rule applies f crect analysis of an increct calculation 11 of 16

12 Possible other points f application: King Airways owns several types of planes Non current assets are wth 2100m Dividends as a % of profits has risen from 45% to 55% Share price has fallen from 200p to 175p Points f analysis: Current gearing is low (41.2%), but browing the 300m would raise gearing to 1000/2000 x 100 = 50% exposing King Holidays to greater risk Rising dividends will please current shareholders but falling share price may deter them from buying me shares Cutting dividend payments would enable the business to reinvest me profits to help finance the proposal Current ratio is too low, indicating potential cash flow problems. This may deter potential invests Sale of the planes could provide a cash injection but they are over 15 years old Sale of other non current assets, e.g offices Markers note: if a candidate fails to include any calculations in their response, the maximum mark that can be awarded is L3 plus E2 F Evaluation, you should award marks using the grid below. Note: Evaluation also assesses candidates quality of written communication. Level Descript Marks E3 E2 E1 Good judgement Answer has a logical structure throughout with effective use of technical terms. Reasonable judgement shown. Evidence of a logical structure and some use of technical terms. Limited judgement shown. Limited evidence of a logical structure and limited use of technical terms. Browing the 300m is possible but would raise gearing to 50%. However invests may be prepared to lend a smaller amount as the business has 2100m in non current assets which could be used as security. The rise in dividends as a % of profits may persuade existing shareholders to buy me shares through a rights issue, especially if they believe that Thea s proposal could be successful of 16

13 Sale of the aircraft could provide a solution to the company s cash flow problems, as well as provide additional funds f the proposal. However the age of the planes may limit the amount of funds raised King Airways would be best advised to raise the 300m required from a combination of loan and share capital, as well as the sale of non-current assets that are no longer required. 13 of 16

14 4 Total f this question: 34 marks Using the infmation available to you, complete the following tasks: analyse the key arguments f and against Thea s proposal make a justified recommendation on whether you think that the Directs of King Holidays plc should accept Thea s proposal. [34 marks] Level Descript Marks Default mark L5 Good application AND Good analysis Good application AND Reasonable analysis L4 L3 L2 L1 Good analysis AND Reasonable application Reasonable application AND Reasonable analysis Good application AND Limited analysis Good analysis AND Limited application Reasonable application AND Limited analysis Reasonable analysis AND Limited application Limited response primarily based on knowledge Application Possible arguments f could include: Payback is 3 years and 0.9 months (3 years 28 days) and ARR is 15.16% - both of which meet the Finance Directs expectations Thea Jennings has held seni positions at Easyjet and Whizzair The sht haul market is the maj growth segment of the travel market in terms of passenger numbers and revenue. Its value is expected to rise by 23% between 2016 and Even though the marketing strategy has been successful in the package holiday business profits have not grown very much so unlikely to meet Xenton s targets. The existing package holiday market is expected to decline further so no long term prospects. Cost savings from closure of the package holiday division, reduction in number of aircraft, withdrawal of flights to the USA and the Caribbean and flying from regional airpts 14 of 16

15 Replacement of entire fleet of aircraft by 2020, saving several millions of pounds Kings rates highly f customer service Loyal wkfce with a lower labour turnover (5%) than the industry average (10%) Possible points f analysis could include: Kings can exploit its reputation f good quality and customer service in der to successfully enter a growing market Cost savings should result in operational efficiencies enabling the business to charge me competitive prices Kings generates me revenue per passenger than its rivals, if it can reduce its costs this should lead to greater profit margins Wkfce appears to be motivated, which could be a reason f the high customer service ratings Average rate of return of 15% should impress potential invests Application Possible arguments against could include: Competition from bigger established rivals such as RyanAir and EasyJet Currently do not cater f the year old market segment 500 redundancies plus remaining staff placed on inferi contracts 70% of the wkfce belong to a trade union Possible negative reaction from current older customers to closure of the package holiday division The Marketing Direct is opposed Marketing budget seems limited- won t it need me investment? Possible points f analysis could include: Lack of awareness of King Airways amongst the year old market combined with competition from powerful rivals are substantial problems to overcome Male issues from redundancies and inferi contracts may have a negative effect upon customer service 15 of 16

16 Note: Evaluation also assesses candidates quality of written communication. Level Descript Marks E3 E2 E1 Good judgement. Ideas are communicated in a coherent structure, with some appropriate use of technical terms. There are occasional errs in accepted conventions of written communication. Reasonable judgement shown. Ideas are communicated using a logical structure, with some appropriate use of technical terms. There are occasional errs in accepted conventions of written communication. Limited judgement shown. Ideas are communicated with some structure evident and with occasional use of technical terms. There are some errs in accepted conventions of written communication Default mark Points f evaluation could include: Financially the proposal wks and there seems little alternative option Pressure from Xenton to achieve significant profit growth Sht term issues regarding the problems linked to the closure of the package holiday division and attracting the year old market, compared to the long term benefits resulting from offering a good quality product at a competitive price in a growing market. The effect of the redundancies and inferi contracts in terms of lowering male, could result in a wsening of customer service which is one of Kings strengths A recognition that Thea s proposal could be considered to be too ambitious and that the Marketing Directs option of offering package holidays to existing older customers could be safer Thea Jennings has several years of experience the company should trust her judgement 16 of 16