Cambridge A Level Business (for first examination in 2016) 9609 — 2024 May/June Paper 4 · Variant 2

1 Evaluate the extent to which CA’s operations strategy between 2019 and 2024 led to the failure of the city Z branch. [20]

Mark scheme: 1 Evaluate the extent to which CA’s operations strategy between 2019 and 2024 led to the failure of the city Z branch. AO1 Knowledge and understanding Knowledge (max 1 mark) can be awarded for any relevant business knowledge about operations, including:  The transformation process  Efficiency, effectiveness, productivity and sustainability  Capital intensive and labour intensive operations  Job, batch, flow and mass customisation  Managing inventory, including JIT  Capacity utilisation  Outsourcing  Location  Economies and diseconomies of scale  Quality management, including benchmarking  The influence of human, marketing and finance resource availability on operations decisions  The changing role of Information Technology (IT) and Artificial Intelligence (AI)  The need for flexibility with regard to volume, delivery time and specification  Process innovation: changing current processes or adopting new ways of producing products or delivering services  Location  Internal and external economies and diseconomies of scale  Quality management  Benchmarking  Improving flexibility and innovation  Enterprise resource planning (ERP)  Lean production  Operations planning, including critical path analysis. Award for any explanation of relevant business knowledge, up to a max of 2 marks. Operations strategy involves lean production, which is about reducing waste . One way to implement lean production is using just in time, which involves only ordering inventory when it is needed . 1 K for identification and 1 DEV for a point of explanation AI can improve the efficiency of a business because it uses a computer instead of a person . A computer can work seven days a week for 24 hours a day . Unlike a person who is legally allowed to take comfort breaks and breaks for meals . 1 K for identification and 2 DEVs for two points of explanation 20 Question Answer Marks 1 AO2 Application Application (max 2 marks) can be awarded for applying operations/operations strategy to CA between 2019 and 2024 CA’s operations decisions, including:  CA is Nala’s first job after university, only experience before being made Operations Manager was as a cleaner for CA.  Planning opening of the new city Z branch, including: – The use of critical path analysis – 13 weeks to plan and open the branch (assuming no delays) – Float available on activities C, D, F, G and H – Critical path = A, B, E and J – No built-in time to respond to research results  Lean production methods introduced by Nala in 2021, including: – Kaizen (continuous improvement) introduced throughout city Z branch – All cleaners are placed in a quality circle, including one manager and eight cleaners in each team – A target to ethically recycle 90% of customers waste – Just in time re-ordering of cleaning materials  CA’s new AI system introduced in 2022, including: – Majority of customer services operatives made redundant – Chatbot system to interact with customers – Book appointments, answer customer queries and take complaints – Poor customer/media reaction  Comparison between the operations of the city Z branch and the city A branch of CA in 2023, including: – City Z branch has lower revenue than city A – City Z branch has sightly improved revenue between 2021 and 2023 (2% increase) – City A branch has 10% improved revenue between 2021 and 2023 – City Z branch has improved revenue, same number of cleaners whereas city A branch has increased cleaners – City Z branch has a loss of $0.1m in 2023, compared to an increased profit for city A branch. – City Z branch has increased direct costs, despite introduction of lean production methods – Rate of inventory turnover has increased in city Z branch (suggesting improvement) but may not have added to cost savings. Question Answer Marks 1 AO3 Analysis Analysis is likely to be based on how operations may have affected CA’s decision making ( and and ) between 2019 and 2024, including:  Nala’s inexperience – poor decision making – too much responsibility – may have been integral to the failure of city Z branch – particularly important since city A branch has increased profitability.  Did the city Z branch open too quickly? – Is 13 weeks long enough to plan such a large investment? – poor implementation of decisions.  Critical path analysis is a useful theoretical tool, but does it have enough practical value when Nala and the business are new to the city? – increased costs – reduced profit.  Built-in float may suggest inefficiency – Was the rent paid for too long before opening? – increased costs – reduced profitability.  Employee recruitment in city Z had float – increased costs – reduced profit.  However, CPA may have led to a more efficient opening – reduced costs – increased profit.  No float between advertising and bookings – efficient.  CPA allowed Nala to focus on what areas are most important – increased efficiency.  Kaizen may have allowed more creative ideas to come from every area of the business – lower costs – however also detracts from the primary task of the cleaners (and other employees) – increased costs.  Likewise, quality circles may detract from cleaning – may theoretically (academically) increase value of workforce but could lead to wasted time not focused on primary tasks like cleaning – increased costs. Also there may be problems of bringing mainly part-time employees together for meeting – may incur additional costs for wages. Also, attendance and contributions might depend on whether workers are paid for attending or not – employees may feel resentful and become demotivated – deceased productivity.  Ethical recycling of customer waste may provide a USP to CA in city Z – however only if customers value this in the market.  Just in time ordering may decrease costs of holding inventory – however it may lead to wasted time without necessary supplies.  Chatbot system may lead to reduced indirect costs (less customer service employees needed) – however seems to have irritated customers and may lead to losing established customers going to other firms. Link between figures in Appendix 4 and operations decisions. Question Answer Marks 1 AO4 Evaluation Evaluation ( and and ) including: Evaluation will largely depend on the points raised in the analysis.  A judgement over the extent to which operational decisions between 2019 and 2024 led to the failure of CA’s city Z branch.  Discussion over the contribution of the separate and combined decisions on the eventual failure of the city Z branch,  The extent to which the decisions alone led to the failure of the city Z branch.  Other likely influences on the failure of the city Z branch, such as the state of the economy in city Z, human resource management of the cleaners and indirect staff, Nala’s personality, unrealistic expectations of the board of directors of CA, marketing of CA, especially for the city Z branch, the financing given to help the city Z branch become successful etc.  The extent to which the failure of the city Z branch could be attributed to the operational decisions alone.  The extent to which CA itself was deemed successful (city A branch). Accept all valid responses. Question Answer Marks 1 Exemplars for awarding evaluation: No credit L1 including: (limited supporting evidence) L2 including: (developed supporting evidence) L3 including: (developed supporting evidence with context) The operations strategy did lead to the failure of the city Z branch. The operations strategy did lead to the failure of the city Z branch because it was poorly implemented. The operations strategy did lead to the failure of the city Z branch because it was poorly implemented. This meant that the money spent on the lean production methods was wasted and it could have been spent on something else. The operations strategy did lead to the failure of the city Z branch because it was poorly implemented by Nala who was inexperienced. This meant that the money spent on the lean production methods was wasted and it could have been spent on something else. The reason the city Z branch failed was due to the marketing. The reason the city Z branch failed was due to the marketing not the operations. The reason the city Z branch failed was due to the marketing not the operations. This is because they did not do enough market research to back up their strategic decisions. The reason the city Z branch failed was due to the marketing not the operations. This is because they did not do enough market research to back up their strategic decisions, such as research whether customers want 90% of their waste recycled.

2 Advise Nala on the most important elements to be included in a corporate plan for the future of the city Z branch. [20]

Mark scheme: 2 Advise Nala on the most important elements to be included in a corporate plan for the future of the city Z branch. AO1 Knowledge and understanding Knowledge (max 1 mark) can be awarded for any relevant business knowledge about a corporate plan / corporate planning, including, including:  Knowledge of the contents of a corporate plan, including: – mission/vision – objectives – strategic planning – external influences on a business: social, legal, economic, environmental, ethical, political, technological – functional data: marketing, operations management, human resources management, financial management – contingency planning, risk management  Knowledge of the process of corporate planning, including: – a corporate plan is similar to a strategic plan – used for businesses with multiple business units or subsidiaries/parts – defines business direction – and business strategy to get there – usually refers to the broader business as a whole, not individual parts/functions – steps involved in corporate planning, such as assess your current strategy/position, identify objectives, develop your strategic plan and determine performance metrics, implement and share plan, revise and amend. Award for any explanation of relevant business knowledge, up to a max of 2 marks. A corporate plan shows the objectives and strategy of a business . It may also outline the external influences facing the business, such as economic influences . 1 K for identification and 1 DEV for a point of explanation Corporate planning involves defining the direction a business is heading and the strategy involved in meeting its objective . It is a broad plan for the entire business, not just any one function, such as marketing . 1 K for identification and 2 DEVs for two points of explanation 20 Question Answer Marks 2 AO2 Application Application (max 2 marks) can be awarded for applying knowledge of a corporate plan or corporate planning, to CA and/or the city Z branch, including:  Nala has experience as a cleaner, Operations Manager with CA and planning and management of a branch of CA.  Nala has contacts that she built up (employees, customers, local information) in her role with CA.  Data from the timeline.  Data from the appendices.  A corporate plan is required by the bank to finance her new start-up. AO3 Analysis Analysis is likely to be based on the elements of a corporate plan or corporate planning ( and and ) for CA and/or the city Z branch. Arguments of what should (or should not) be included in Nala’s corporate plan for a new cleaning business, including:  Mission/vision – to give the business direction – important for a new business and to convince the bank to provide finance for the new business – however this might not be useful as the separate business has not been set up yet.  Objectives – likely to be Nala’s own objectives, unless she is planning to bring in shareholders – a new business is likely to focus on survival and/or providing Nala with enough income to survive.  Strategic planning – likely to be one of the most important elements of Nala’s corporate plan as this will give the bank an idea of how she plans to achieve her objectives and repay any finance loaned – Nala may have more experience of her strategy than many start-up businesses as she has managed the city Z branch for the past four years (she has expertise).  External influences on a business – may be less important to inform the bank/Nala as these will be common to all businesses in city Z and/or market. However, Nala may need to provide evidence to the bank (and other stakeholders) that she has recognised these influences.  Functional data: – Marketing – to prove that Nala understands the cleaning market in city Z and to show that she has a plan to reach her target market in sufficient numbers to meet her objectives. – Operations management – Nala’s area of expertise (as a previous Operations Manager of CA) and important to show that she is able to deliver a service sector product. – Human resources management – as a business offering a service in city Z, the management of people will be important to allowing Nala to meet her objectives and implement the business strategy. – Financial management – important as Nala’s main purpose in preparing a corporate plan is to raise finance to fund her business. Question Answer Marks 2 AO4 Evaluation Evaluation ( and and ) including: Evaluation will largely depend on the points raised in the analysis.  A judgement over what Nala should include in a corporate plan for her new cleaning business.  What the judgement may depend upon; further data about the market in city Z for cleaning services, external influences, such as the economy, legal issues, fashions/trends, demographic changes, ethical influences, environmental influences, political influences, technological influences, the prior history of Nala with CA and other stakeholders whom she may need to interact with in her new business.  Weighing up of the relevant pieces of data needed for Nala’s corporate plan and its use in financing the new business.  Weighing up of the relevant arguments for the use of other data instead of (or in tandem with) the corporate plan. Accept all valid responses. Question Answer Marks 2 Exemplars for awarding evaluation No credit L1 including: (limited supporting evidence) L2 including: (developed supporting evidence) L3 (developed supporting evidence with context) The most important element to be included in a corporate plan for the future of the city Z branch is the objective. The most important element to be included in a corporate plan for the future of the city Z branch is the objective to survive the first few months. The most important element to be included in a corporate plan for the future of the city Z branch is the objective to survive the first few months. Without this, Nala is unlikely to be able to make the branch successful. The most important element to be included in a corporate plan for the future of the city Z branch is the objective to survive the first few months. Without this, Nala is unlikely to be able to make the branch successful because she is too inexperienced. It is important to include all of the sections such as marketing, production, HRM and finance. It is most important to include all of the sections such as marketing, production, HRM and finance. It is most important to include sections on marketing, production, HRM and finance, because they all influence one another and the business as a whole. It is most important to include sections on marketing, production, HRM and finance, because they all influence one another and the business as a whole so it is the best way to get finance from the bank.

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