Cambridge A Level Business (for first examination in 2016) 9609 — 2025 May/June Paper 4 · Variant 1

1 Evaluate the impact of Chelsea’s HR strategy on RR’s performance between 2021 and 2024. [20]

Mark scheme: Question Answer Marks 1 Evaluate the impact of Chelsea’s HR strategy on RR’s performance between 2021 and 2024. 20 Responses may include: AO1 Knowledge and understanding Knowledge (max 3 marks) can be awarded for any relevant business knowledge about HR Strategy: • Definition of HR Strategy (achieving business objectives is also accepted) • Example – HR strategy is a plan to improve efficiency through the management of employees • Definition of HRM • Approaches to human resource management • The difference between ‘hard’ and ‘soft’ HRM • Flexible working contracts: temporary contracts or flexible contracts including zero hours contracts, part-time, full-time, annualised hours, flexi-time, home working, shift working, job sharing, compressed working hours, the gig economy • The measurement, causes and consequences of poor employee performance • Strategies for improving employee performance • Definition of labour turnover • Management by Objectives (MBO) – implementation and usefulness • The changing role of Information Technology (IT) and Artificial Intelligence (AI) in HRM • Motivational theories • Human resource management • Training and development • Motivation • Management • Organisational structure • Communication • Leadership No other AO2, AO3 OR AO4 marks can be awarded without AO1. 1 AO2 Application Indicated by as 1 mark (max 2 s), Application must support an assessment objective to be in context. Application can be awarded for use of RR’s context, including any elements of RR’s human resource strategy between 2021 and 2024: • RR was a highly profitable restaurant • Established in 1980 (over 40 years ago) by sole trader, Riki • Reputation for tasty food, reasonable prices and outstanding customer service • Chelsea took over business as a sole trader on 1st January 2021 • Chelsea graduated with a business management degree • Aimed to increase profitability by at least 30% by the end of 2025 • Human resource strategy to increase efficiency • Human resource strategy aims to reduce labour cost, the highest cost of the business • Five employees made redundant (two chefs and three customer service employees) • Increased labour turnover • Reduced customer satisfaction • Annual sales revenue is 50% lower than 2021 • Loss of $52 500 in 2023. First loss for RR. • Chelsea converts business to a partnership in 2024 with Mario. Equal ownership. • Mario is a successful chef with lots of ideas to improve performance • Customer satisfaction reducing. In 2024 customer satisfaction recovered. 1 AO3 Analysis Analysis of the impact of the HR strategy on a business ( and and ) including: Limited analysis – candidate shows one link in the chain of analysis (max 3). Developed analysis of individual strategic element – candidate shows two or more links in the chain of analysis. Developed analysis of overall strategy – candidate shows a counter answer to the chain of analysis (2-sided answer). • Staff discount reduced which could cause dissatisfaction, but it may vary across the employees depending upon how much they purchased food from the restaurant – some may not be impacted. • Opportunity to earn individual bonuses which could motivate employees, especially if financially motivated. • Multiskilling leading to greater job variety. Some employees may like the variety and opportunity to learn new tasks/skills. However, others may worry about the increased breadth of job role and being able to cope. • Some training offered. The training may motivate employees. However, is the ‘some training’ sufficient? • Hard HRM – disciplinary action. • End of established staff team – link to Maslow and social needs. Could link to team building opportunities. • Move from permanent hours to zero hour contract. Lack of stability for employees. Only seven days’ notice of weekly hours. • Hours to match demand and employee availability. Link to customer demand will increase efficiency and therefore the profitability objective. However, employee availability may support employees to achieve a better work-life balance. • Labour turnover increasing; however, it peaked in 2023. Maybe the employees who were unhappy have left and the new employees may have chosen to work for RR because of the flexibility, or it may be a blip before further increases. Still relatively high level of labour turnover in 2024. • Staff redundancies reduced job security. Employees left may be uncertain about the stability of their job role and worry that they will be made redundant in the future. Employee needs affected by redundancies (link to Maslow) – break down of personal work relationships/friendships, job security, position in hierarchy. • How were the changes communicated to employees by Chelsea? 1 AO4 Evaluation L1 limited supporting evidence – answering the question with a brief explanation. L2 developed supporting evidence – reason is developed further. L3 developed supporting evidence with context – Levels 1 and 2 are answered in context. Evaluation will largely depend on the points raised in the analysis. • A judgement on the impact of the human resource strategy between 2021 and 2024. • Discussion on how the impact of the human resource strategy can be evaluated and what that judgement could depend upon; link to Chelsea’s profitability objective from 2021, the extent to which Chelsea was sufficiently experienced to manage the change, other measures of success for a sole trader (profitability, profit, sole trader’s objectives, other stakeholder objectives, measures of size). • The extent to which the performance of RR between 2021 and 2024 was based on the human resource strategy or other actions taken by Chelsea/management of the change generally. Also impact of other functional areas, e.g. operational decisions, marketing decisions and/or financial decisions. • Other external influences on RR between 2021 and 2024 other than the human resource strategy (e.g. the state of the economy; economic growth), social factors (e.g. increasing remote working due to the pandemic, effect of the pandemic on the hospitality industry), technological factors (e.g. increased use of technological communication in 2020/2021 due to the pandemic). Accept all valid responses.

2 Advise Mario on the most appropriate approach he should use to develop a new business strategy to improve the performance of RR against its competitors. [20]

Mark scheme: 2 Advise Mario on the most appropriate approach he should use to develop a new business strategy to improve the 20 performance of RR against its competitors. Responses may include: AO1 Knowledge and understanding Knowledge (max 3 marks) can be awarded for any relevant business knowledge on approaches to develop business strategy, including: • Blue ocean strategy – the aim to combine product differentiation with low-cost to develop new markets and demand. It is about finding uncontested markets to gain a competitive advantage. Comparison with red ocean strategy awardable. • Scenario planning – managers consider the main risks and uncertainties and adopt different strategies for different scenarios. Flexible approach. • Uncertainties that affect their business. • SWOT analysis: strengths, weaknesses, opportunities, threats. SWOT is very easy to construct so can be subjective. • PEST analysis – focuses on the macro environment including political, economic, social, and technological. • Porter’s five forces – threats of substitutes, supplier power, threat of entry, buyer power, competitive rivalry. • Core competence framework – core competencies lead to the development of core products. Core products are not necessarily sold to final consumers. Instead, they are used to produce many end-user products. • Ansoff matrix – Market penetration, market development, diversification, product development. Different options open to a marketing manager when considering new opportunities for sales growth. It includes thinking of the market in which the business is going to operate and the product(s) it plans to sell. Business decides whether to remain in the existing market or to enter new ones along with whether to sell existing products or develop new ones. • Force field analysis – weighs up the potential advantages and disadvantages of a decision before a choice is made. It gives managers an insight that will allow them to strengthen the forces supporting a decision and reduce the forces that oppose it. • Decision trees – considers all of the options open to a manager, the different possible outcomes resulting from these options, the chances of these outcomes occurring, and the economic returns from these outcomes. Other knowledge marks may be awarded for: • The meaning and purpose of a business strategy; plan of action to achieve the vision and objectives of a business and upon which decisions are made. For identifying an approach and follows for the definition of the approach up to two DEV to gain the full 3 marks. No further AO1, AO2, AO3 or AO4 without at least one K from the approaches above. 2 AO2 Application Application (max 2 marks) can be awarded for applying knowledge of approaches, to RR: • RR was a highly profitable restaurant • Established in 1980 (over 40 years ago) by sole trader, Riki • Reputation for tasty food, reasonable prices and outstanding customer service • Riki retired in 2020 • Chelsea took over business as a sole trader on 1st January 2021 • Chelsea graduated with a business management degree • Aimed to increase profitability by at least 30% by the end of 2025 • Human resource strategy to increase efficiency • Human resource strategy aims to reduce labour cost, the highest cost of the business • Five employees made redundant (two chefs and three customer service employees) • Increased labour turnover • Reduced customer satisfaction • Annual sales revenue is 50% lower than 2021 • Loss of $52 500 in 2023. First loss for RR. • Chelsea converts business to a partnership in 2024 with Mario. Equal ownership. • Mario is a successful chef with lots of ideas to improve performance • Chelsea responsible for the operations and human resource functions. Mario leads the marketing and finance function. 2 AO3 Analysis Analysis of the appropriateness of the different approaches to develop business strategy ( and and ) including: • PEST analysis will be appropriate to understand the external environment of each potential market. This could be especially useful to RR as it’s a competitive market. Competitive market – 57 restaurants within a five-mile radius. Do they offer the same type of food and target the same customers as RR? Economic downturn. Under Riki RR developed a positive reputation for reasonable prices. Impact of this reputation in current economic climate. • Blue ocean strategy may allow RR to break into vegan food – opportunity to develop new menu options aimed at vegans which other successful local restaurants are introducing. However, does RR wish to differentiate from this trend if other local restaurants are developing in this way? • Scenario planning could allow RR to explore different possibilities in the markets he wants to develop, or menu options RR would like to add. • SWOT analysis to understand the internal strengths and weaknesses of the business. Use the strengths to overcome future threats and the opportunities to overcome present weaknesses. • Porter’s five forces may help RR to develop an understanding of the forces in each potential market. It will require an investment in market research to understand the competitive nature of each market. 67% of market dominated by international fast-food companies – these competitors have large budgets and support from head office. They also benefit from economies of scale. However, does RR have any USP due to smaller size? Does RR offer the same type of food and target the same customers as these competitors? • Core competencies might work for the initial strategy of finding new markets and will help them with possibly tapping into the market aimed at vegans? • Ansoff matrix may be the most useful to analyse the risk of any new strategy. Does this really help RR to develop a strategy? Revenue reduced between 2021 and 2023 but started to increase in 2024. Is the increase in 2024 a random abnormality or the start of a recovery? • Force field analysis could help RR to understand the constraining and driving forces in developing a new strategy. This may help him to identify actions that need to be taken to reduce constraining forces. • Decision trees are unlikely to be helpful in developing a new strategy, but they could be used to help decide between alternative strategies. RR may find it difficult to obtain the data on probabilities and economic outcomes to construct a decision tree. 2 AO4 Evaluation L1 limited supporting evidence – answering the question with a brief explanation. L2 developed supporting evidence – reason is developed further. L3 developed supporting evidence with context – Levels 1 and 2 are answered in context. Evaluation will largely depend on the points raised in the analysis of the approaches needed to develop the new strategy. • Judgement as to the most appropriate approach to develop a new business strategy. • Discussion as to the impact of other external factors and competitor actions on the appropriateness. • What the judgement(s) may depend upon; the reactions of competitors, the dynamism of the external environment, the likely development of smart speaker technology beyond 2025, the reactions of customers to the failed launch of the QA2 etc. • Many of the approaches rely heavily on the accuracy of forecast data. • Advice to RR should make clear which approach is likely to be most appropriate and useful in this context. The question is clearly asking for ONE approach. • A discussion about whether Mario has sufficient experience/knowledge to develop the new business strategy. Accept all valid responses.

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