More MCQ's

Paper 1 MCQ Blast: Test 11: Calculations & Numerical Concepts


 

How to answer 18 Markers - Jun 11 Paper 3 Old Spec

This task ask the students to be the examiner, marking 18 mark questions and judging which level answers have achieved and justifying why.

Recently I have found that I am simply telling students how they should write answers which isn't always having the desired outcome. Therefore I decided to show them effective structures that they should use.

This week we answered an 18 mark question from June 2011 on the impact of a marketing budget on marketing objectives. Firstly, students answered the question using differentiated frameworks. Secondly, students were given to exemplar answers that the had to highlight using a different colour for Point, Evidence, Explain and the Conclusion. Thirdly, students used the level descriptors from the mark scheme to mark both answers - this was easy as the answers were already highlighted which clearly showed strengths and weaknesses in the answer. Lastly, students then used this technique to mark each others answers and give honest and constructive PEER reviews (a Positive, an Even Better If, an Example and a Reason).

At the end of the lesson I asked students to review their learning, feedback showed that students were able to clearly understand how their questions would be marked and that more emphasis should be placed on using the case and analyzing the points they make rather than trying to write as much knowledge as possible (a common mistake!).

Why not have a go? All the necessary resources and an example are below.

The question

Amina believes that a significant marketing budget would be necessary for her marketing plan to achieve its objectives. To what extent do you agree with this view? (18 marks) 

The answers

Answer 1

Task 1: Use different colours to highlight the POINT, the EVIDENCE, the EXPLANATION and the DISCOM conclusion.

Task 2: Use the level descriptors to give this question a mark out of 18.

A marketing budget could be necessary because the 15-24 year old market is a new focus for Sound and Vision plc. For Amina this is because only 30% of her current customers are 15-24 years old, with 40% being 25-34 and another 30% being made up of 35+. This could affect Amina’s objective of creating awareness of her new strategy as she will need to advertise to the 15-24 year olds and make them aware of the changes in the company that will interest them. For Amina this could mean that she would require a large marketing budget as she will need to invest heavily in advertising to ensure this message is communicated with her target market. Coupling her new target market with strong competitors, such as online retailers and supermarkets, could result in Amina requiring a large marketing budget to be able to get noticed in such an overcrowded market. Furthermore, these are large and strong competitors which would require more investment as these competitors already have an established reputation and large marketing budgets themselves, thus requiring more advertising and a larger budget for Amina to ensure she can create awareness.

However, a marketing budget may not be necessary as there are other factors their success. For Amina, this could mean focussing on other factors such as operational issues. Amina is planning to set up a new warehouse and distribution centre, this could result in inventory and distribution problems which could impact her objective of regaining market share from the supermarkets and online retailers. As these are established businesses it would be expected that they have slick operations that have well established relationships with their retailers. Furthermore, at the minute the industry average for deliveries from suppliers is 5 days, whereas Sound and Vision plc average is 7 days. This could negatively affect their operations and their customer service, struggling to replenish stock and compete with their competition.

Overall, I agree to a medium extent that Amina will require a large marketing budget. However, it depends on how well Amina spends her marketing budget as if she invests in effective marketing campaigns then she is more likely to be successful. Furthermore, the budget is only one element of the marketing plan, as is the advertising, as Amina may need to invest further money in market research to ensure she streamlines the business to the wants of her new target market. In the short term she may need to invest heavily, however in the long term if she can become well established she may only need to maintain her sales as ultimately the product is key and if it meets the needs of the target market they will continue to return to her business.Ultimately, I agree to a medium extent as there are other factors that will affect the success of her business.

Answer 2

Task 1: Use different colours to highlight the POINT, the EVIDENCE, the EXPLANATION and the DISCOM conclusion.

Task 2: Use the level descriptors to give this question a mark out of 18.

A marketing budget can be important as it allows a business to spend more on marketing. For example, a business may be able to spend more on advertising. Advertising is important so that customers know about your product, that way your business will be more likely to make a profit. Also, a marketing budget can be important as it means you can invest in market research. This is important because a business can then find out what customers want and make products that a suitable for them so they will make more profit. Also, it means that a business can find out about their competition and plan their products so they are different and stand out in the market.

A marketing budget might not be important because there are other factors in businesses that are also important including finance, human resources and operations. For example, operations are important because this is how the business actually runs, such as who suppliers are, the logistics of delivering products, how products and produced and so on. This is important because this will make sure that the business has good quality products that customers will want to buy, meaning customers are more likely to buy the products and that means the business will make more profit.

Overall, I think that a marketing budget is important because it means the business can advertise to their customers and conduct market research to make sure they attract the right customers and make profit. I think marketing more important than operations because as long as customers know about the product and are convinced to buy it then it will sell. 

Example of Highlighted Answer

MCQ's on HRM & Operations Management

MCQ's on Business Strategy

This is a revision lesson covering a range of Business Strategy topics from section 3.7-3.10 of the AQA specification.

The video has pauses built in to enable it to be used in a revision lesson. Pause the video when the answer options are displayed and then press play to reveal the answer and explanation.

Paper 1: Planning, writing and concluding a 25 mark Essay

MCQ's - Finance

MCQ's - Theme 1

More MCQ's & short context questions

Click here to access some short answer questions on all topics.

Network Analysis - Critical Path explained

Various Multiple Choice Revision Quizzes

Click here to access MCQ's on all areas of business Studies. Really useful for revision.

Lego & Over Supply

It has been an interesting week for Lego. For the first time i 13 years, they have seen a fall in sales for their bricks. Click here to read BBC article.

Useful when discussing
budget variances, supply methods etc

Business Theorists - Hofstede's Model of national Cultures

Here is a quick revision video of Hofstede's Model of National Cultures. I kniow we have been through in class, but the video is just another way to embed your knowledge.

There's no need for AQA A Level Business students to be an expert in this model. However, make sure you know the six categories of national culture and how they might like to areas such as risk-taking, decision-making, human resource management etc.

Stakeholders & Stakeholder mapping

The concept of stakeholders is covered in this short revision video.

After a quick reminder about what a stakeholder is (and how this is different from a "shareholder") we explore how stakeholder interests differ and how they can come into conflict. This leads nicely onto the concept of stakeholder mapping - which is a suggested approach for how businesses should deal with different levels of stakeholder power and interest.

More MCQ's

5 Reasons why Toys R Us failed

Click here to access a good article on why Toys R Us failed. Excellent when discussing business strategy.

Business Theorists - Kotter & Schlesinger

Human resource management - Soft Vs Hard approach

Business Theorists - Updated Presentation

Starbucks - Ansoff Matrix

An excellent short interview with the CEO of Starbucks discussing their growth strategy, both at home in a saturated market and abroad in an emerging market.

 

Latest MCQ Tests

Critical Path Analysis Explained

Critical Path Analysis from tutor2u

Price Elasticity of Demand

Practice MCQ's - Unit 1

In this MCQ revision video there are 15 questions based on the Year 1 content of the AQA A Level Business specification.

Porters 5 Forces - Facebook Vs Unilever

Facebook v Unilever: Porter's Five Forces & CSR in Action

Another useful real life example of a business theorist in action. Who has the bargaining power in this case?

Two excellent articles on strategy

Can Nestle Succeed With a Market Development Strategy in the Indian Pet Food Market?

links to Ansoffs matrix - what do you think the benefits might be for Nestle and what might be the hurdles they must overcome in order to succeed.

Homebase - A Botched Takeover Highlights the Risks of External Growth Strategies

External growth - Ansoffs matrix again.

Change management - Kotter & Schlesinger -

How can senior management overcome the inevitable resistance to change when change is required? This study note outlines the six approaches suggested by Kotter & Schlesinger.

Education & Communication

The starting point for successful change is to communicate effectively the reasons why change is needed!

Honest communication about the issues and the proposed action helps people see the logic of change

Effective education helps address misconceptions about the change, including misinformation or inaccuracies

Education and communication are unlikely to achieve very short-term effects. They need to be delivered consistently and over a long-period for maximum impact

Participation & Involvement

Involvement in a change programme can be an effective way of bringing “on-board” people who would otherwise resist

Participation often leads to commitment, not just compliance

A common issue in any change programme is just how much involvement should be permitted. Delays and obstacles need to be avoided

Facilitation & Support

Kotter & Schlesinger identified what they called “adjustment problems” during change programmes

Most people (though not all) will need support to help them cope with change

Key elements of facilitation and support might include additional training, counselling and mentoring as well as simply listening to the concerns of people affected

If fear and anxiety is at the heart of resistance to change, then facilitation and support become particularly important

Co-option & Manipulation

Co-option involves bringing specific individuals into roles that are part of change management (perhaps managers who are likely to be otherwise resistant to change)

Manipulation involves the selective use of information to encourage people to behave in a particular way

Whilst the use of manipulation might be seen as unethical, it might be the only option if other methods of overcoming resistance to change prove ineffective

Negotiation & Bargaining

The idea here is to give people who resist an incentive to change – or leave

The negotiation and bargaining might involve offering better financial rewards for those who accept the requirements of the change programme

Alternatively, enhanced rewards for leaving might also be offered

This approach is commonly used when a business needs to restructure the organisation (e.g. by delayering)

Explicit & Implicit Coercion

This approach is very much the “last resort” if other methods of overcoming resistance to change fail

Explicit coercion involves people been told exactly what the implications of resisting change will be

Implicit coercion involves suggesting the likely negative consequences for the business of failing to change, without making explicit threats

The big issue with using coercion is that it almost inevitably damages trust between people in a business and can lead to damaged morale (in the short-term)

Managing Change

Change Management from tutor2u

Business Culture - Hofstede Culture

Social psychologist Geert Hofstede has conducted extensive research into the different categories of culture that help distinguish the ways business is conducted between different nations.

Hofstede carried out research amongst over 100,000 employees working around the world for IBM.

He attempted to categorise cultures of different nationalities working at IBM

Hofstede has extended the categories to six based on his latest research

Individualism v Collectivism

Some societies value the performance of individuals

For others, it is more important to value the performance of the team

Has important implications for financial rewards at work (e.g. individual bonuses v profit-sharing for bigger groups)

Power Distance

This considers the extent to which inequality is tolerated and whether there is a strong sense of position and status

A high PD score would indicate a national culture that accepts and encourages bureaucracy and a high respect for authority and rank

A lower PD score would suggest a national culture that encourages flatter organisational structures & a greater emphasis on personal responsibility and autonomy

Long-term orientation

This category is concerned with the different emphases national cultures have on the time horizons for business planning, objectives & performance

Some countries place greater emphasis on short-term performance (so-called short-termism), with financial and other rewards biased towards a period of just a few months or years.

Other countries take a much longer-term perspective, which is likely to encourage more long-term thinking.

The key implication of this category is the impact on investment decisions and risk-taking

Masculinity v Femininity

This somewhat unfortunately-named category considers the differences in decision-making style

Hofstede linked what he called a “masculine” approach to a hard-edged, fact-based and aggressive style decision-making

By contrast, ”feminine” decision-making involved a much greater degree of consultation and intuitive analysis

Uncertainty Avoidance

This category essentially considers the different attitudes to risk-taking between countries

Hofstede looked at the level of anxiety people feel when in uncertain or unknown situations

Low levels of uncertainty avoidance indicate a willingness to accept more risk, work outside the rules and embrace change. This might indicate a more entrepreneurial national culture

Higher levels of uncertainty avoidance would suggest more support for rules, data, clarity of roles and responsibilities etc. These cultures might be less entrepreneurial as a consequence

Indulgence v Restraint

Indulgence stands for a society that allows relatively free gratification of basic and natural human drives related to enjoying life and having fun

Restraint stands for a society that suppresses gratification of needs and regulates it by means of strict social norms

Business Culture

Business Strategy and Culture from tutor2u

Charles Handy, a leading authority on organisational culture, defined four different kinds of culture:

Power culture

Role culture

Task culture

Person culture

Let's summarise what each of those kinds of organisational culture mean.

Power Culture

In an organisation with a power culture, power is held by just a few individuals whose influence spreads throughout the organisation.

There are few rules and regulations in a power culture. What those with power decide is what happens. Employees are generally judged by what they achieve rather than how they do things or how they act. A consequence of this can be quick decision-making, even if those decisions aren't in the best long-term interests of the organisation.

A power culture is usually a strong culture, though it can swiftly turn toxic. The collapse of Enron, Lehman Brothers and RBS is often attributed to a strong power culture.

Role Culture

Organisations with a role culture are based on rules. They are highly controlled, with everyone in the organisation knowing what their roles and responsibilities are. Power in a role culture is determined by a person's position (role) in the organisational structure.

Role cultures are built on detailed organisational structures which are typically tall (not flat) with a long chain of command. A consequence is that decision-making in role cultures can often be painfully-slow and the organisation is less likely to take risks. In short, organisations with role cultures tend to be very bureaucratic.

Task Culture

Task culture forms when teams in an organisation are formed to address specific problems or progress projects. The task is the important thing, so power within the team will often shift depending on the mix of the team members and the status of the problem or project.

Whether the task culture proves effective will largely be determined by the team dynamic. With the right mix of skills, personalities and leadership, working in teams can be incredibly productive and creative.

Person Culture

In organisations with person cultures, individuals very much see themselves as unique and superior to the organisation. The organisation simply exists in order for people to work. An organisation with a person culture is really just a collection of individuals who happen to be working for the same organisation.

Bowman's Strategic Clock

Bowman’s Strategic Clock is a model that explores the options for strategic positioning – i.e. how a product should be positioned to give it the most competitive position in the market.

The purpose of the clock is to illustrate that a business will have a variety of options of how to position a product based on two dimensions – price and perceived value.

The Strategic Clock looks like this:

Let’s look briefly at each position on the clock

Low Price and Low Value Added (Position 1)

Not a very competitive position for a business. The product is not differentiated and the customer perceives very little value, despite a low price. This is a bargain basement strategy. The only way to remain competitive is to be as “cheap as chips” and hope that no-one else is able to undercut you.

Low Price (Position 2)

Businesses positioning themselves here look to be the low-cost leaders in a market. A strategy of cost minimisation is required for this to be successful, often associated with economies of scale. Profit margins on each product are low, but the high volume of output can still generate high overall profits. Competition amongst businesses with a low price position is usually intense – often involving price wars.

Hybrid (Position 3)

As the name implies, a hybrid position involves some element of low price (relative to the competition), but also some product differentiation. The aim is to persuade consumers that there is good added value through the combination of a reasonable price and acceptable product differentiation. This can be a very effective positioning strategy, particularly if the added value involved is offered consistently.

Differentiation (Position 4)

The aim of a differentiation strategy is to offer customers the highest level of perceived added value. Branding plays a key role in this strategy, as does product quality. A high quality product with strong brand awareness and loyalty is perhaps best-placed to achieve the relatively prices and added-value that a differentiation strategy requires.

Focused Differentiation (Position 5)

This strategy aims to position a product at the highest price levels, where customers buy the product because of the high perceived value. This the positioning strategy adopted by luxury brands, who aim to achieve premium prices by highly targeted segmentation, promotion and distribution. Done successfully, this strategy can lead to very high profit margins, but only the very best products and brands can sustain the strategy in the long-term.

Risky High Margins (Position 6)

This is a high risk positioning strategy that you might argue is doomed to failure – eventually. With this strategy, the business sets high prices without offering anything extra in terms of perceived value. If customers continue to buy at these high prices, the profits can be high. But, eventually customers will find a better-positioned product that offers more perceived value for the same or lower price. Other than in the short-term, this is an uncompetitive strategy. Being able to sell for a price premium without justification is tough in any normal competitive market.

Monopoly Pricing (Position 7)

Where there is a monopoly in a market, there is only one business offering the product. The monopolist doesn’t need to be too concerned about what value the customer perceives in the product – the only choice they have is to buy or not. There are no alternatives. In theory the monopolist can set whatever price they wish. Fortunately, in most countries, monopolies are tightly regulated to prevent them from setting prices as they wish.

Loss of Market Share (Position 8)

This position is a recipe for disaster in any competitive market. Setting a middle-range or standard price for a product with low perceived value is unlikely to win over many consumers who will have much better options (e.g. higher value for the same price from other competitors).

Overview

Looking at the Strategy Clock in overview, you should be able to see that three of the positions (6, 7 and 8) are uncompetitive. These are the ones where price is greater than perceived value. Provided that the market is operating competitively, there will always be competitors that offer a higher perceived value for the same price, or the same perceived value for a lower price.

Boston Matrix & Samsung

A great post on South Korean multinational giant Samsung for Business Students.

Samsung is a highly diversified multinational that is the most significant firm in the South Korean economy. It has achieved a strong record of improved profitability, quarter after quarter, as demand for its product portfolio has grown, particularly mobile devices.

However, in January 2014 it announced that it expected to suffer a fall in profits:

Samsung's pre-earnings guidance showed it expected to make an operating profit of 8.3 trillion won ($7.8bn; £4.8bn) for the last quarter of 2013, down 18% from the previous three months.

What were the implications for Samsung following their announcement?

We can use the Boston Matrix as a model of strategic choice to outline some of the issues and options for Samsung.

For Samsung, mobile devices became the most significant generator of profits, contributing around two-thirds of overall company profits in recent quarters. For some time, Samsung's portfolio of smartphones and tablets had been the rising stars of the Samsung product portfolio as demand soared in both developed and emerging economies.

However, competition in the market for mobile devices became much more intense (even though Apple and Samsung still dominated industry profits) with the emergence of new competitors at the "low end").

Two great examples of these are Huawei and Xiaomi which have feature on our business studies blog.

Should Samsung start treating its mobile products most as "cash cows" rather than "rising stars" and refocus their significant investment in R&D into other product areas?

Watch this video of two analysts from the team at FT Lex, considering the reasons for the slowdown in Samsung profit growth.

It's a fascinating discussion and it touches on two very important business concepts - corporate culture and shareholder value (in particular the returns that Samsung shareholders receive via their very low dividend yield).

Ansoffs matrix

Check out this incredibly interesting (!!!) video explaining how to relate Ansoffs matrix to the business world. More material on Ansoff below:

Strategy - Ansoffs Matrix from tutor2u

...and [perhaps the best one...