Business strategy — Paper 4 · A Level Business (for first examination in 2016) 9609

2 Advise Ruhi on whether Porter’s five forces analysis is the most useful approach when developing S2U’s new business strategy. [20]

20 marks

Mark scheme: 2 Advise Ruhi on whether Porter’s five forces analysis is the most useful approach when developing S2U’s new 20 business strategy. AO1 Knowledge AO2 Application AO3 Analysis AO4 Evaluation Level and understanding 2 marks 8 marks 7 marks 3 marks Description Description Description Description 3 7–8 marks 6–7 marks Developed analysis of Effective evaluation the overall strategy that A developed judgement/conclusion identifies connections is made in the business context between causes, impacts that draws together developed and/or consequences. evaluative comments which balance some key arguments in the business context. 2 2–3 marks 2 marks 4–6 marks 3–5 marks Developed Developed Developed analysis of Developed evaluation knowledge of application of individual strategic • A developed relevant key term(s) relevant point(s) element(s) that identifies judgement/conclusion is and/or factor(s) is to the business connections between made. used to answer the context. causes, impacts and/or • Developed evaluative question. consequences. comments which balance some key arguments. 1 1 mark 1 mark 1–3 marks 1–2 marks Limited knowledge Limited Limited analysis that Limited evaluation of relevant key application of identifies connections • A judgement/conclusion is term(s) and/or relevant point(s) between causes, impacts made with limited supporting factor(s) is used to to the business and/or consequences. comment/evidence. answer the question. context. • An attempt is made to balance the arguments. 2 AO1 Knowledge AO2 Application AO3 Analysis AO4 Evaluation Level and understanding 2 marks 8 marks 7 marks 3 marks Description Description Description Description 0 0 marks 0 marks 0 marks 0 marks No creditable No creditable No creditable response. No creditable response. response. response. Responses may include: AO1 Knowledge and understanding Knowledge can be awarded for any relevant business knowledge. • The meaning and purpose of business strategy; plan of action to achieve the vision and objectives of a business and upon which decisions are made. • The meaning and purpose of strategic management (the entire process of identifying, choosing and implementing the planning of business activity): analysis (identifying options and understanding the business, market and external environment), choice (between strategic options) and implementation (the decision making of implementing a strategic decision). • Understanding of Porter’s five forces (do not reward repetition of Appendix 4, but understanding of the forces/model is rewardable). • Other approaches to develop business strategy, including; blue ocean strategy, scenario planning, SWOT analysis, PEST analysis, core competence framework, Ansoff matrix, force field analysis, decision trees, 2 AO2 Application • Data about from Appendix 4; – Threat of new entrants; few barriers to entry, price is more important than brand loyalty to most customers. – Bargaining power of buyers; well-informed customers, highly price sensitive. – Intensity of competitive rivalry; S2U is market leader in country Z, growing market size, many international competitors – Bargaining power of suppliers; software suppliers have monopoly power, hardware is a very competitive market – Threat of substitutes; many substitutes, little differentiation between services • S2U’s sales are declining. • Kareem (previous CEO) left to pursue a TV career. Previous success of S2U may have been largely based on Kareem’s success. • Ruhi has just become CEO (in 2022) after Kareem left S2U. • Ruhi has asked an external management consultant business to analyse the market. • New business strategy needed to enable growth. AO3 Analysis Analysis for the usefulness of Porter’s five forces (analysis of the content of the appendix and ); • Analysis of the external environment of the threat of new entrants: – Few barriers to entry so S2U with a large market share may be able to use their monopoly power to keep out competitors. – S2U may benefit from economies of scale which also reduce the threat of new competitors. – S2U uses dynamic pricing, and having a large market share may be able to reduce price to keep out competition. • Analysis of the bargaining power of buyers: – Transparent market, especially with IT systems being well-documented on internet. S2U may need to focus on what makes their service better than what is available. – Economies of scale may allow S2U to lower prices better than many competitors. • Analysis of intensity of competitive rivalry: – Market leader in country Z may give S2U a competitive advantage and economies of scale. – Market is growing – may allow S2U to achieve their increase in sales. – Outside of country Z market is more competitive – may lead to continued reduction in profit margin (as prices drop to gain international market share). 2 • Analysis of bargaining power of suppliers: – Software suppliers have the power to set prices which may make it difficult for S2U to control their prices as their costs will be determined by the suppliers. However, as the market leader, S2U may be able to afford to make a loss in the short run where a smaller competitor may not. – The hardware market is the opposite and gives S2U more control over costs and therefore prices. • Analysis of threat of substitutes: – Many substitutes and little differentiation make it difficult for S2U to build up brand differentiation which is important in this market (market research). Analysis for the usefulness of Porter’s five forces (as a whole and ); • Enables S2U to evaluate the competitive rivalry in the market and to gauge the competitiveness of the industry. May lead to S2U developing a new marketing strategy to increase sales revenue. • Helpful for S2U to plan for the future (marketing, operations, HRM etc.) and develop new approaches to stay in the market or to develop new market possibilities. • Gives S2U insight into how they should communicate with their suppliers – the importance of keeping their suppliers happy – in this scenario the suppliers have a great deal of power (monopoly) and S2U needs to understand this so they do not lose this relationship. • Gives S2U insight into how they should communicate with their customers – the importance of keeping customers happy – price sensitive and well informed. S2U may have market power, but no power to increase prices. Arguments against the usefulness of Porter’s five forces: • No analysis of the internal elements that may be important in the strategic analysis of S2U or implementation of a new strategy. SWOT and core competency analysis would provide this insight that is needed before any strategy can be developed. • Porter’s five forces is unlikely to help when S2U is making a strategic choice between future strategies – approaches such as investment appraisal and decision trees may be required to make a strategic choice. • This approach was completed by an external management consultancy business – with no investment in S2U, to what extent can this information be relied upon to base future decisions? • The five-force analysis was completed in 2022 – is it still relevant in 2023? • The five-force analysis is looking at how the market has operated in the past, with no guarantee of how it may operate in the future. The technology market, in particular, is dynamic and fast changing, so the analysis may be out-of-date before it can be used. • The five-force analysis is only looking at the IT support market, it does not take into account other external influences, such as the economy of country Z (and other countries), political changes and other technology markets, such as might be analysed in a PEST analysis. 2 AO4 Evaluation ( and and ); • A judgement about the usefulness of Porter’s five forces when developing a new business strategy for S2U. • Judgement may depend upon; the validity of the data, the external environment in country Z and abroad, whether S2U is staying in the same market, or whether it will diversify, the use of other approaches in tandem with Porter’s five forces. • Weighing up of the relevant arguments for the use of Porter’s five forces in making decisions about developing a new strategy for S2U. • Weighing up of the relevant arguments for the use of other approaches instead of (or in tandem with) Porter’s five forces. Accept all valid responses.

This question in 9609/42 Feb/March 2023

1 Evaluate whether LH made the correct strategic decision to take over PS. [20]

20 marks

Mark scheme: 1 Evaluate whether LH made the correct strategic decision to take over PS. Level AO1 Knowledge and understanding 3 marks AO2 Application 2 marks AO3 Analysis 8 marks AO4 Evaluation 7 marks Description Description Description Description 3 7–8 marks Developed analysis of the overall strategy that identifies connections between causes, impacts and/or consequences. 6–7 marks Effective evaluation A developed judgement/conclusion is made in the business context that draws together developed evaluative comments which balance some key arguments in the business context. 2 2–3 marks Developed knowledge of relevant key term(s) and/or factor(s) is used to answer the question. 2 marks Developed application of relevant point(s) to the business context. 4–6 marks Developed analysis of individual strategic element(s) that identifies connections between causes, impacts and/or consequences. 3–5 marks Developed evaluation  A developed judgement/conclusion is made.  Developed evaluative comments which balance some key arguments. 1 1 mark Limited knowledge of relevant key term(s) and/or factor(s) is used to answer the question. 1 mark Limited application of relevant point(s) to the business context. 1–3 marks Limited analysis that identifies connections between causes, impacts and/or consequences. 1–2 marks Limited evaluation  A judgement/conclusion is made with limited supporting comment/evidence.  An attempt is made to balance the arguments. 0 0 marks No creditable response. 0 marks No creditable response. 0 marks No creditable response. 0 marks No creditable response. 20 Question Answer Marks 1 Indicative content Responses may include: AO1 Knowledge and understanding Knowledge of business concepts (max 3 s), including:  Strategy – a plan of action to achieve a long-term aim  Developing business strategies – SWOT analysis  Business growth – external growth – takeover and mergers  Ratios – liquidity, profitability and financial efficiency  Quality management – meeting customer expectations and quality control  Any understanding of other terms, ratios or concepts in the case or appendices. AO2 Application Indicated by as 1 mark (max 2 s):  Purchase of international luxury gift supplier  Brand name of PS used to retain international brand awareness  Elements from SWOT analysis  Elements from financial data  Use of online review extracts  Any use of the case that is in context of the answer. AO3 Analysis 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).  OPM increasing by about 10% 2016 to 2017 which signifies Loretta’s short term profit maximisation plan was working and therefore may have produced sufficient profits for investment opportunities.  Gearing reduced by 33% which allowed for borrowing for investment in the international growth markets which would satisfy Loretta’s 5 year rapid expansion target to be met.  Acid test ratio of 0.7 (low for a stock intensive operation) signified that stock management systems were effective which would neutralise PS’s inefficient inventory control and improve the low DPS if it was a result of poor operating margins. Question Answer Marks 1  Increasing dividends may have left less available for expansion.  Trade receivables increased by over 7x, showing that corporate buyers want longer/better payment terms which decreases cashflow/increases financial risk.  The business was bought for international brand awareness in 2018 however by 2021 the name was dropped which indicates that the investment into the brand may have failed.  PS wide range of national suppliers would have negated LH weakness of a limited number of regional suppliers therefore increasing choice, however an acid test ratio drop of 0.5 between 2017 and 2019 implies that too much stock was held which could have affected the cashflow and may have been a reason for lack of investment into cyber security.  The rapid development of international corporate clients in 2019–20 increased gearing by 8x over 2 years and increased further by 5% indicating that cashflow was poor and debts were high, which may have negatively impacted the dividend per share and caused shareholder unrest which may be a reason Loretta had to present figures and may have contributed to her replacement in 2023. AO4 Evaluation Limited evaluation - unsupported judgement and/or a weak attempt at evaluative comment Developed evaluation – supported judgement and/or reasonable evaluative comment Developed evaluation in context – supported judgement in context and/or reasonable evaluative comment in context. Evaluation will largely depend on the points raised in the analysis of the data of LH.  The efficiencies of LH didn’t lead to synergies with PH who lacked economies of scale and meant that the original objective of profit maximisation was ignored, however this may have been expected with the rapid expansion that was planned.  To what extent did the high gearing and reducing profit margins and falling DPS in 2019–20 lead to the cyber-attack? Was there a lack of investment into online security?  The takeover of PS has had a significant negative impact on the financial position of LH, which may be an issue for a rapidly expanding, relatively new company.  Overall judgement required about the balance between the accounting and qualitative elements of LH’s strategic decision making. Accept all valid responses. Question Answer Marks 1 Exemplar and annotations The decision was an example of external growth, a way of growing a business by a merger of takeover to improve efficiency , Loretta’s identification of PS as an international luxury gift supplier , LH would benefit from existing customers , increasing profitability , this is evident in the financial data by LH as revenue increased from 30 million in 2017 to 56 million in 2019 and 61 million in 2020 after the takeover . It can be argued that PS’ luxurious brand image negatively affected LH as their standards may have been difficult to control. Strategic analysis is the analysis of the current business situation and researching the best method of business strategy to achieve long term objectives . The business strategic implementation would be the process by which the business’ chosen strategy is introduced in the setting of their long-term objectives . LH’s gearing ratio has increased, meaning that LH may not be as profitable as they could ,due to the immense amount of borrowing to finance takeover and extra expenses . But in the long term it seems that if LH can keep up their profitability, they would be able to pay back their loans . To conclude, LH’s short-term objective of profit maximisation appears to not be met due to the external growth of LH’s takeover of PS . LH may not have been able to keep up with the demand which could hurt their reputation . The consumers of LH would have been negatively affected by the takeover as they would be expecting luxurious high- quality food and gift baskets. LH would have taken a loss if the product did not meet customer expectations . LH should consider the external environment when completing the take-over . For example, if the government implement economic policies, LH could face higher interest rates and it would be difficult to lower their gearing ratio which is increasing . AO1 – 3/3 AO2 – 2/2 AO3 – 8/8 AO4 – 7/7 Total 20 marks Judgement is a yes or no. Comment is anything weighing up the other side of the argument.

This question in 9609/41 May/June 2023

2 Advise Carmen on whether the use of a core competence framework is sufficient to develop a successful new business strategy for RHR. [20]

20 marks

Mark scheme: 2 Advise Carmen on whether the use of a core competence framework is sufficient to develop a successful new business strategy for RHR. Level AO1 Knowledge and understanding 3 marks AO2 Application 2 marks AO3 Analysis 8 marks AO4 Evaluation 7 marks Description Description Description Description 3 7–8 marks Developed analysis of the overall strategy that identifies connections between causes, impacts and/or consequences. 6–7 marks Effective evaluation A developed judgement/conclusion is made in the business context that draws together developed evaluative comments which balance some key arguments in the business context. 2 2–3 marks Developed knowledge of relevant key term(s) and/or factor(s) is used to answer the question. 2 marks Developed application of relevant point(s) to the business context. 4–6 marks Developed analysis of individual strategic element(s) that identifies connections between causes, impacts and/or consequences. 3–5 marks Developed evaluation  A developed judgement/conclusion is made.  Developed evaluative comments which balance some key arguments. 1 1 mark Limited knowledge of relevant key term(s) and/or factor(s) is used to answer the question. 1 mark Limited application of relevant point(s) to the business context. 1–3 marks Limited analysis that identifies connections between causes, impacts and/or consequences. 1–2 marks Limited evaluation  A judgement/conclusion is made with limited supporting comment/evidence.  An attempt is made to balance the arguments. 0 0 marks No creditable response. 0 marks No creditable response. 0 marks No creditable response. 0 marks No creditable response. 20 Question Answer Marks 2 Indicative content Responses may include: AO1 Knowledge and understanding Knowledge can be awarded for any relevant business strategy knowledge.  The purpose of business strategy.  The meaning and purpose of strategic management.  What a core competence framework is  Alternative approaches to develop business strategy, including: – blue ocean strategy – scenario planning – SWOT analysis – PEST analysis – Porter’s five forces – Ansoff matrix – force field analysis – Decision trees AO2 Application  Lack of growth in the current market  Growth in city/business hotels  The three competences identified  Human resources – strong leadership and communication  Marketing – customer loyalty  Operations – delivering exceptional customer service  Any element of the timeline  Any element of the appendices AO3 Analysis Analysis for core competence framework ideally and then up to two alternatives but award for analysis of ANY models up to three ( and for a one-sided argument and for a two-sided argument or contrast):  RHR operate all-inclusive holiday hotels – how much of this can be transferred to the running of a city hotel? Question Answer Marks 2  Core competencies around running the hotel and delivering a good customer experience may be transferable but how will their marketing need to change for the new strategy?  There seems to be just 3 areas for the framework – is this sufficient to ensure the success of the city hotels? What other information is needed?  Is the development of the new strategy at the expense of the Asian expansion? – which would be more aligned with the core competencies than city hotels. How does Juan feel about the change of direction after his work on the Asian market and potential for growth (appendix 3)? Candidates may offer up alternative approaches:  May want to use the Blue Ocean Strategy to help with move to city hotels as they redefine what the company delivers across a number of new locations.  Scenario planning could help map what may happen in city locations and how they differ/are similar to what they know from running resort hotels.  SWOT analysis may help identify strengths that can be transferred to city hotels whilst highlighting the problems they may face in a different model to how they currently operate.  PEST analysis could help if they are operating in countries where there is no RHR for example in the UK or Northern Europe and they need an understanding of how those countries work.  Five forces would help understand the rivalry they face in a very crowded city hotel market.  Ansoff’s matrix may be useful in weighing up whether they should focus on market or product development moving forward – or if there are other possibilities for growth.  Force field analysis could help Carmen to understand the constraining and driving forces in developing the new strategy. This may help her to identify actions that need to be taken to reduce constraining forces.  Decision trees could be used to help make a quantitative led decision between Asia or urban hotels expansion. AO4 Evaluation ( and and ): Evaluation will largely depend on the points raised in the analysis of the approaches needed to develop the new strategy other than the core competency framework.  Candidates should state that the Core Competency Framework is/isn’t sufficient for L1 Eval.  RHR clearly have a set of core competencies that will help them set up hotels but is this enough for the new city hotels format? Should Carmen be using a combination of the strategic approaches?  How quickly does Carmen expect this to happen? Is there time to test the waters with the city hotel strategy? Question Answer Marks 2  Has Carmen over-simplified what they do? Without using other models she may take too much of a risk while the Asian growth would be easier to implement given their current business model.  Many of the approaches rely heavily on the accuracy of forecast data – Does Carmen have the data?  Core Competence Framework is enough as it gives managers the direction they need as they implement the strategies related to it throughout the new hotels. This is an established business that should be able to deliver a hotel experience wherever they set up.  Advice to Carmen should make clear whether the core competence framework is sufficient or whether it should be supported by other models, and if so, which? Accept all valid responses.

This question in 9609/43 May/June 2023

2 Advise Jane on whether blue ocean strategy is the most useful approach as she attempts to diversify the business. [20]

20 marks

Mark scheme: 2 Advise Jane on whether blue ocean strategy is the most useful approach as she attempts to diversify the 20 business. Level AO1 Knowledge and AO2 Application AO3 Analysis AO4 Evaluation understanding 2 marks 8 marks 7 marks 3 marks 3 7–8 marks 6–7 marks Developed analysis of Effective evaluation the overall strategy A developed that identifies judgement/conclusion is made in connections between the business context that draws causes, impacts and/or together developed evaluative consequences. comments which balance some key arguments in the business context. 2 2–3 marks 2 marks 4–6 marks 3–5 marks Developed knowledge Developed application Developed analysis of Developed evaluation of relevant key term(s) of relevant point(s) to individual strategic • A developed and/or factor(s) is used the business context. element(s) that judgement/conclusion is to answer the question. identifies connections made. between causes, • Developed evaluative impacts and/or comments which balance consequences. some key arguments. 1 1 mark 1 mark 1–3 marks 1–2 marks Limited knowledge of Limited application of Limited analysis that Limited evaluation relevant key term(s) relevant point(s) to the identifies connections • A judgement/conclusion is and/or factor(s) is used business context. between causes, made with limited supporting to answer the question. impacts and/or comment/evidence. consequences. • An attempt is made to balance the arguments. 0 0 marks 0 marks 0 marks 0 marks No creditable response. No creditable response. No creditable response. No creditable response. 2 Indicative content AO1 Knowledge and understanding Knowledge (max 3 marks) can be awarded for any relevant business knowledge on Blue Ocean strategy, including: • Blue Ocean Strategy – the aim to combine product differentiation with low-cost to develop new markets and demand. It is about finding new markets with zero or limited competition to gain a competitive advantage. A firm using blue ocean strategy will not be confined by existing market structures or industry boundaries and will be able to think ‘outside of the box’ to find new ideas and products. • Create uncontested markets to enter. • Make the competition irrelevant. • Create and exploit new demand. • High value customers, but at a low-cost. • Product differentiation and low cost. No further AO1, AO2, AO3 or AO4 without at least one K from blue ocean strategy. Knowledge can also be awarded for any relevant business knowledge on diversification, including: • Process/product innovation – changing current processes or developing new products or adopting new ways of producing products or delivering services. • Ansoff’s matrix – new product strategy. • Boston matrix and product life cycle. • Unique selling point (USP). Knowledge can also be awarded for any business knowledge of other approaches to developing business strategy, including: • scenario planning – identify possible future situations/scenarios. • SWOT analysis – all four elements. • PEST analysis – all four elements. • Porter’s five forces – two forces. • core competence framework – about the firm’s capabilities/abilities/what it does best. • Ansoff matrix – all four quadrants. • force field analysis – driving (for) forces and restraining (against) forces. • decision trees – probabilities and (net) outcomes – assessing alternatives. 2 AO2 Application Application (max 2 marks) can be awarded for applying knowledge of approaches to developing business strategy, to FL, including: • FL has a well-known brand name; however this may not help in a diversified market. • Intrapreneurial management team – likely to have the skills to successfully implement a blue ocean strategy. • Low-cost factory in a developing country, may have a lack of flexibility in changing production processes and output. • Highly geared – especially after takeover of GY, which may limit diversification. • Subscription sales have reached maturity stage – hence need for a new strategy. • Opportunity to sell manufactured products through other retailers, may suggest a different strategy other than diversification. • Opportunity to offer new subscription products – could still be diversified, subscription is only a distribution channel. • Increasingly competitive market (0 to 5 competitors up to 2020), including established retailers. • Increasing profit margin in this established market (–2% to 3%). • Bad publicity about GY factory, which may affect future strategies. AO3 Analysis Analysis of the impact of usefulness of approaches to develop business strategy ( and and ) including: Usefulness of Blue Ocean strategy may include: • Blue ocean strategy can help FL to gain an uncontested market space to increase revenue – increased profit margin however it may not have the necessary finance and FL may need to borrow . • May allow FL to overcome the threat of established retailers entering the market – allow FL to gain new customers and a USP in a new market. • FL’s current subscription service is in the maturity stage, so business is unlikely to grow unless they can either extend the product life cycle or develop a new product – blue ocean strategy may allow FL to see opportunities that exist beyond their current portfolio. • FL has a very limited, single product offering, blue ocean strategy may allow FL to diversify and enter a new market, reducing risk and allowing a more secure future for the business. • However, FL has a well-known brand-name in the online clothing market and finding new approaches in a new market may eliminate this strength from the business. • FL is highly geared and may not be able to finance the likely high cost of developing a new product or service in a new market. • FL might be better to focus on their current market instead of developing a totally new market with high risk. • FL may need to focus on their core competencies instead of diversifying into new markets. 2 Analysis of the usefulness of other approaches may include: • Scenario planning could allow Jane to analyse markets and consider uncertainties in each market. It could be especially useful in finding a diversified market for FL to enter. However, Jane may not know enough about new markets to plan a scenario. • SWOT analysis to understand the internal strengths and weaknesses of FL. Use the strengths to overcome future threats and the opportunities to overcome present weaknesses. Jane may have an excellent understanding of FL, so she may be able to develop the strengths and overcome the weaknesses. However, with the market and product being new (diversification) she may not have enough data to understand the threats and opportunities. • PEST analysis will be useful to understand the external environment of a new potential market. FL currently operates in an international (global) market, so may already have a good understanding of these external influences. However, these influences may not be as applicable to a new market/product. • Porter’s five forces may help Jane to develop an understanding of the forces in a new market. It will require an investment in market research to understand the competitive nature of each market. Jane can use the five forces to find market(s) where FL can have a competitive advantage and may have a low intensity of rivalry. • Jane is likely to understand the core competencies of FL. However, how useful will core competencies be for a diversified strategy? Many of FL’s core competencies are likely to be transferable (such as administration, marketing, etc.), however they are in a dynamic and specific environment and depending on what market(s) they diversify into. • Ansoff matrix may help Jane to categorise different strategies and ignore ones which do not fit into the diversification quadrant. Ansoff suggests that diversification is the riskiest strategy, and it may help Jane to understand the elements needed for a successful strategy. However, the board has already asked for a diversification strategy, so may not be as useful as some other approaches. • Force field analysis could help Jane to understand the constraining and driving forces that FL could face in a diversification strategy. This may help Jane to identify actions that need to be taken to reduce constraining forces. However, Jane may not have enough data and experience to do a force field analysis, especially in a new market – could require market research. • Decision trees are unlikely to be helpful in developing a diversification strategy, but they could be used to help decide between alternative strategies. Jane may find it difficult to obtain the data on probabilities and economic outcomes to construct a decision tree. 2 AO4 Evaluation Evaluation ( and and ) including: • Blue ocean strategy may give FL a competitive advantage, but it depends on whether Jane/the management team can come up with another good idea for a new market. • Blue ocean strategy is likely to be useful in technological businesses and in coming up with new products and processes because it allows FL to come up with an original idea which may give FL a new market to dominate. • Jane is likely to need other approaches to develop a new strategy to launch a new product in the next six months, such as focussing on the core competencies of FL, an updated internal audit, a new external audit (PEST), five forces, etc. • The time scale given to Jane (six months) may mean that an open approach to developing a new strategy (such as blue ocean) may not be appropriate. If FL need a ‘quick fix’ then it may be more appropriate to focus on what FL has already done well, instead of a totally new approach. • A judgement over which approaches (or combination of approaches) are most likely to be useful for Jane when attempting to build a strategy of diversification. • Weighing up of different approaches within the context of FL developing a diversification strategy. • The need for further data/techniques (such as market research) to enable the use of these techniques. May also include evaluation of the usefulness of approaches depending on the markets targeted. • Elements that the use of approaches may depend upon, such as; the market, external influences, timescale needed to diversify, whether FL can continue in their current market or not, etc. Accept all valid responses. 2 Exemplars and annotations for AO3 (assuming relevant AO1 has been awarded): No credit L1 (limited L2 (developed L3 (developed analysis of strategy) (no analysis on FL) analysis) analysis) Blue ocean strategy Blue ocean strategy Blue ocean strategy will Blue ocean strategy will allow FL to focus on will allow FL to focus will allow FL to focus allow FL to focus on markets which have greatest potential to sell on markets which on markets which markets which have innovative products to the public, thereby have greatest have greatest greatest potential to sell increasing the profits of FL. However, FL potential. potential to sell innovative products to the has already achieved significant growth by innovative products to public, thereby increasing focussing on its core products and a new the public. the profits of FL. blue ocean strategy may mean that they lose their competitive edge in this market. Assuming that the Assuming that the Assuming that the online Assuming that the online fashion market is online fashion online fashion market fashion market is now a now a red ocean market, blue ocean will market is now a red is now a red ocean red ocean market, blue help FL find a market with untapped ocean market, blue market, blue ocean ocean will help FL find a customers to increase its revenue and future ocean will help FL. will help FL find a market with untapped profits. market with untapped customers to increase its But if this market is not red ocean, then FL customers to increase revenue and future profits. might be better to stick to what it knows and its revenue. increase its market share further to gain higher profit. SWOT could be SWOT could be used SWOT could be used to SWOT could be used to focus FL on used to focus FL on to focus FL on focus FL on overcoming overcoming its threats by using its overcoming its overcoming its threats its threats by using its weaknesses, for example by increasing threats by using its by using its weaknesses, for example production in the low-cost factories, which strengths. weaknesses, for by increasing production may enable FL to compete against the example by increasing in the low-cost factories, established retailers. However, the SWOT production in the low- which may enable FL to lacks the detail needed to diversify into a cost factories. compete against the new market, and therefore may provide established retailers. weak information for decision making. 2 Exemplars and annotations for AO4 (assuming relevant AO1 has been awarded): No credit L1 L2 (developed supporting L3 (developed supporting (no supporting (limited supporting evidence) evidence with context) evidence) evidence) Blue ocean Blue ocean strategy is Blue ocean strategy is the most Blue ocean strategy is the most useful strategy is the most the most useful useful approach as Jane attempts approach as Jane attempts to useful approach as approach as Jane to diversify the business because diversify the business because it Jane attempts to attempts to diversify it allows FL to find an uncontested allows FL to find an uncontested diversify the the business because market. This could allow FL to market. This could allow FL to business. it allows FL to find an dominate this new market and dominate this new market and lead to uncontested market. lead to greater success. greater success than the 4% it has of the online fashion market. The usefulness of The usefulness of The usefulness of blue ocean The usefulness of blue ocean blue ocean blue ocean depends depends on the skills of the depends on just how experienced the depends on many on the skills of the people using it. new Director of Strategy, recruited by factors. people using it. The risk involved in diversification Jane actually is. may mean that by focussing on a The risk involved in diversification blue ocean market, FL may lose may mean that by focussing on a blue its competitiveness in the online ocean market, FL may lose its fashion market. competitiveness in the online fashion market. FL should use a FL should use a core FL should use a core competency FL should use a core competency core competency competency framework so that FL does not framework so that FL does not lose framework. framework so that FL lose sight of what has made it sight of what has made it successful does not lose sight of successful up until now. There is up until now. There is no reason why what has made it no reason why FL cannot use FL cannot use what the business successful up until what the business does well now does well now, such as its well-known now. to help enter a diversified market. brand name in the online fashion market, to help enter a diversified market.

This question in 9609/42 Oct/Nov 2023

2 Advise Carlos on which approaches RT should use to develop a business strategy to achieve ‘profit through diversification’. [20]

20 marks

Mark scheme: 2 Advise Carlos on which approaches RT should use to develop a business strategy to achieve ‘profit through 20 diversification’. Level AO1 Knowledge and AO2 Application AO3 Analysis AO4 Evaluation understanding 2 marks 8 marks 7 marks 3 marks 3 7–8 marks 6–7 marks Developed analysis Effective evaluation of the overall A developed judgement/conclusion strategy that identifies is made in the business context that connections between draws together developed evaluative causes, impacts comments which balance some key and/or consequences. arguments in the business context. 2 2–3 marks 2 marks 4–6 marks 3–5 marks Developed Developed Developed analysis Developed evaluation knowledge of relevant application of of individual • A developed key term(s) and/or relevant point(s) to the strategic element(s) judgement/conclusion is made. factor(s) is used to business context. that identifies • Developed evaluative comments answer the question. connections between which balance some key causes, impacts arguments. and/or consequences. 1 1 mark 1 mark 1–3 marks 1–2 marks Limited knowledge of Limited application Limited analysis that Limited evaluation relevant key term(s) of relevant point(s) to identifies connections • A judgement/conclusion is made and/or factor(s) is the business context. between causes, with limited supporting used to answer the impacts and/or comment/evidence. question. consequences. An attempt is made to balance the arguments. 0 0 marks 0 marks 0 marks 0 marks No creditable No creditable No creditable No creditable response. response. response. response. 2 Indicative content AO1 Knowledge and understanding Knowledge (max 2 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. • 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. No further AO1, AO2, AO3 or AO4 without at least one K from the approaches above. AO2 Application Application (max 2 marks) can be awarded for applying knowledge of approaches, to RT: • Carlos’ aims for the next 5 years. • Growing global economy. • PEST analysis he wants to produce. • 2021 purchase of new factory sees increase in capacity by 66%. • Also increase in capital intensive production with more technically advanced cotton processing machinery purchased. • The increasing exports of Brazil increasing international competitiveness. 2 • Brazil is one of the largest producers of cotton. • The increased publicity from the Brazil fabric industry magazine article. • Any element of the case study. • Any element of the appendices. AO3 Analysis Candidates are likely to focus on two or three approaches. Analysis of the impact of usefulness of approaches to develop business strategy ( and and ) including: • The usefulness of approaches to develop a strategy that brings ‘Profit though diversity’ for RT. • PEST analysis will be useful to understand the external environment of each potential market. This could be especially useful if RT is to become a global player in either or both the fabric market and the soya been market as they will now have to consider the needs and restrictions of other countries. • Blue ocean strategy may allow RT to break into the international market but even if you take this premise, that market is going to be competitive globally once RT is in there. Blue Ocean strategy may be useful if RT want to redefine how they operate in Brazil when finding new markets which may be possible given they are now one of the top 5 producers in the country. • Scenario planning could allow Carlos to explore different possibilities in the markets he wants to develop but two of those – export fabric and soya bean production – are markets they currently do not operate in. How will they get data to help construct different scenarios within those markets? • 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. However, he may not have the data to understand the opportunities and threats in those markets where RT is new. • Porter’s five forces may help Carlos 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. But given they supply their own cotton how useful is the power of suppliers? Also the fact that they are one of top 5 producers implies they hold a lot of power so would this be a useful model for RT to invest time and money in if it confirms what they know? • Core competencies might work for the initial strategy of finding new markets and it will help them with exporting their fabric but they have little experience in farming and even less in soya production and how many of the core competencies of the business would help that strategy? • Ansoff matrix may be the most useful to analyse the risk of any new strategy. Does this really help Carlos to develop a strategy? 2 • Force field analysis could help Carlos 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. However, Carlos may not have enough data and experience to do a force field analysis. • Decision trees are unlikely to be helpful in developing a new strategy, but they could be used to help decide between alternative strategies. Carlos may find it difficult to obtain the data on probabilities and economic outcomes to construct a decision tree. No credit (no L1 (limited L2 (developed L3 (developed analysis of analysis on RT) analysis) analysis) strategy) The strengths, The strengths, The strengths, weaknesses, The strengths, weaknesses, weaknesses, weaknesses, opportunities, and threats can opportunities, and threats can opportunities and opportunities, and threats help RT find a diversified help RT find a diversified threats can help RT can help RT find a approach. The increased approach. The increased publicity find a diversified diversified approach. The publicity from the Brazil fabric from the Brazil fabric industry approach. The increased publicity from industry magazine article will magazine article will have an increased publicity the Brazil fabric industry have an increased brand increased brand recognition. This from the Brazil fabric magazine article will have recognition. This will increase will increase sales and establish industry magazine an increased brand sales and establish itself with itself with new products. However, article. recognition. new products. a high increase in labour turnover may suggest employees do not buy into the aim of profit through diversification resulting in failure to diversify. 2 No credit (no L1 (limited L2 (developed L3 (developed analysis of analysis on RT) analysis) analysis) strategy) SWOT analysis can SWOT analysis can help SWOT analysis can help RT SWOT analysis can help RT find help RT find their RT find their strength to find their strength to achieve their strength to achieve their strength to achieve achieve their goal. With their goal. With many goal. With many factories of their goal. many factories of factories of production RT production RT can gain production RT can gain can gain economies of scale economies of scale which will economies of scale which which will reduce unit costs reduce unit costs allowing them to will reduce unit costs. allowing them to save money save money for research to for research to design new design new products for the fabric products for the fabric market. However, potential threat market. from existing competitors may reduce profits and thus diversification of RT. Looking at PEST Looking at PEST Looking at PEST economic Looking at PEST economic economic factors economic factors shows factors shows the increasing factors shows the increasing shows the the increasing export of export of Brazil suggests export of Brazil suggests increasing export of Brazil suggests increasing increasing international increasing international Brazil suggests international competitiveness. RT will be competitiveness. RT will be able increasing competitiveness. RT will able to diversify and risks can to diversify and risks can be international be able to diversify and be shared. This will allow RT shared. This will allow RT to have competitiveness. risks can be shared. to have an absolute an absolute advantage over advantage over producers. producers. However, this also means there can be intense competition among domestic and international markets reducing sales and profits. 2 AO4 Evaluation Evaluation ( and and ) including: Evaluation will largely depend on the points raised in the analysis of the approaches needed to develop the new strategy. • The unpredictability of the dynamic external environment – is RT more exposed if they start operating in global markets for fabric and soya? • PEST analysis is not going to help internally with a strategy, it will just evaluate the external environment which needs addressing if they enter new markets but will not resolve any financial or operational issues the business has with a new strategy. • To what extent should Carlos try to plan for a new strategy with the resources that he has? New strategy will likely include finding funds – is he overstretched after 8 years of growth? Ratios would imply they are only now starting to recover after the last expansion. • Many of the approaches rely heavily on the accuracy of forecast data – and 2 of those markets are unknowns. • Advice to Carlos should make clear which approaches are likely to be most relevant and useful in this context. Accept all valid responses. Exemplars and annotations for AO4 (assuming relevant AO1 has been awarded): 2 No credit (no L1 (limited L2 (developed supporting L3 (developed supporting supporting supporting evidence) evidence) evidence with context) evidence) Overall SWOT Overall SWOT analysis Overall SWOT analysis seems to Overall SWOT analysis seems to analysis seems to seems to be the best be the best approach to develop be the best approach to develop be the best approach to develop the the business strategy to achieve the business strategy to achieve approach to business strategy to profit through diversification. This profit through diversification. develop the achieve profit through is because SWOT will cover all However, the effectiveness of business strategy diversification. This is areas that PEST will. However, SWOT needs to be considered as to achieve profit because SWOT will the effectiveness of SWOT needs it is all qualitative values. This through cover all areas that to be considered as it is all means that Carlos will make diversification. PEST will. qualitative values. This means choices to diversify with that Carlos will make choices to quantitative factors. Especially that diversify with quantitative factors. RT’s financials such as ROCE has dropped from 26% to 9%. Overall I think RT Overall I think RT should Overall I think RT should use Overall I think RT should use should use use several approaches several approaches to achieve several approaches to achieve several to achieve profit through profit through diversification. RT profit through diversification. RT approaches to diversification. RT should should use SWOT and PEST to should use SWOT and PEST to achieve profit use SWOT and PEST to look at the external and internal look at the external and internal through look at the external and environment and have a full environment and have a full diversification internal environment and picture of the business. This will picture of the business. This will have a full picture of the allow RT to look at their strengths allow RT to look at their strengths business and find new ways to diversify and find new ways to diversify which will increase sales and which will increase sales and profits. profits. RT’s strength of control over their supply chain by taking over the farms allows no disruption of supply which means they may become more productive and make new products allowing exports to other countries to be successful and profitable.

This question in 9609/43 Oct/Nov 2023

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

20 marks

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.

This question in 9609/42 May/June 2024

1 Evaluate the extent to which corporate planning could have prevented the ‘Fly-away’ promotion crisis. [20]

20 marks

Mark scheme: Question Answer Marks 1 Evaluate the extent to which corporate planning could have prevented the ‘Fly-away’ promotion crisis. 20 Indicative content Responses may include: AO1 Knowledge and understanding Knowledge (max 1 mark) can be awarded for any relevant business knowledge about planning: • the process of setting goals for a business and developing a strategy to achieve them, including: • Defining goals/objectives • Creating a plan • Identifying/allocating resources • Monitoring progress • Functional (Marketing, Operations HR, Finance) decision making Award for any explanation of corporate planning and implementation, up to a max of 2 marks, including: • Objectives for the entire organisation • Long term objectives and strategy/plans • Business priorities • Role of corporate culture • Role of transformational leadership • Role of contingency planning • Role of crisis management • Role of strategic (planning) approaches (blue ocean strategy, scenario planning, SWOT analysis, PEST analysis, Porter’s five forces, core competency framework, Ansoff matrix, force field analysis, decisions trees) AO2 Application Application (max 2 marks) can be awarded for • Cost to be shared equally between AB and DF. • Demand is much greater than expectations. • DF refuses the majority of ‘Fly-away’ applications. • Negative comments from angry customers trend on social media. • The ‘Fly-away’ promotion crisis is highlighted on consumer TV programmes. • Use of data in appendix 1 (not repetition of basic data) 1 AO3 Analysis Analysis is likely to be based upon DF’s planning ( and and ) Analysis of the corporate planning; Advantages • Improve communication – better planning could have helped marketing communicate better with other functions to anticipate the problems • Adapt to change – would have allowed DF to anticipate and adapt to changes as the strategy unfolded • Improved decision making – would have allowed the management to consider more options and make better decisions as to how the promotion should run or if it should have run at all • Focus on resources – planning would have helped ensure enough resources – financial or otherwise – were in place to help the promotion be successful • Drive growth – planning would have helped identify all possible growth avenues for DL and maybe look at alternatives to the promotion Disadvantages • Overplanning – plans may have been too detailed in some areas and lacking in others that decisions may have become too complex • Complacency – planning may lead management to become complacent and not consider all the options as they were focused on this particular promotion instead of other ways to achieve growth. • Limited flexibility- planning may have been too tight that it limits the flexibility for DF to respond when things did start to go wrong, the plans need an element of adaptability to ensure DF can respond in a timely manner • Limited creativity – planning may have limited the creativity to help solve this crises quickly and ‘nip it in the bud’ before social media got hold of it. AO4 Evaluation Evaluation ( and and ) including: Evaluation will largely depend on the points raised in the analysis. • A judgement over the extent to which DF’s corporate planning could have prevented the ‘Fly-away’ promotion crisis • Discussion over what elements of corporate planning could have been used and what that judgement could depend upon; • External environment will have influenced the demand for and reputation of the promotion 1 • Competition – DF’s response was to a competitive environment and their actions forced DF to come up with something more creative, and risky, to win customers/market share • Shareholder expectations – these were low given the recent ratio performance and pressure to perform better/increase sales/increase market share may have led to risky promotions being put together • Customer reactions – this was always going to be a good deal so did DF underestimate customers or have flawed market research which led to the crises? Accept all valid responses.

This question in 9609/41 Oct/Nov 2024

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]

20 marks

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.

This question in 9609/41 May/June 2025

1 Evaluate the usefulness to QA of the approaches used to develop its business strategy between 2021 and 2024. [20]

20 marks

Mark scheme: Question Answer Marks 1 Evaluate the usefulness to QA of the approaches used to develop its business strategy between 2021 and 2024. 20 AO1 Knowledge and understanding Knowledge (max 1 mark) can be awarded for any relevant business knowledge about an approach to develop business strategy, including: • SWOT analysis – strengths, weaknesses, opportunities and threats. Allows a business to identify the influences within the business and those which it may be able to take advantage of / be wary of in the future. • Ansoff matrix – cross references existing and new markets against existing and new product to help decide whether a business should use market development, market penetration, product development or diversification. • Product life cycle – model to plan the movement of a product through the stages of sales; launch, growth, maturity, saturation, decline. • Decision tree – allows a quantitative understanding of the risks and expected values from a decision. These are calculated using probabilities and expected outcomes from making decisions. Allow knowledge of any approach, including: • Blue ocean strategy / red ocean strategy • Scenario planning • PEST analysis • Porter’s five forces • Core competence framework • Force field analysis • Boston matrix (BCG) • Investment appraisal (payback, ARR, IRR and NPV). 1 Award for any explanation of an approach that could be used to develop business strategy, up to a max of 2 marks. Identified an approach, so only SWOT K. 1 K for identification and 1 DEV SWOT , can be used to identify the internal and external force . for a point of explanation. 1 K for identification and 2 DEVs SWOT , can be used to identify the internal and external force to for two points of explanation. overcome its weaknesses with its opportunities . Note: – Candidates can gain full marks for AO1 from one term that is explained ( + + ) or from two terms partially explained ( + and + ). 1 AO2 Application Application (max 2 marks) can be awarded for applying knowledge, analysis or evaluation of an approach to develop business strategy, to QA between 2021 and 2024. • Technology business located in country A • Sells AI smart speakers • 2016 first device (QA1) had high demand • Management buyout (for $20m) in 2012 • 2021 QA becomes a private limited company • Use of Appendix 1 – SWOT analysis • Eight senior managers become directors with equal share split • 2022 – Ansoff matrix used – product development (new product, existing market) • 2022 – QA2 in development – next generation speaker with improved functionality • 2023 – sales of QA1 enter decline stage of product life cycle • 2023 – QA makes a loss for the first time • Use of Appendix 2 – Decision tree • 2023 – decision made to launch the QA2 early • 2024 – launch of QA2 (early) • 2024 – sales higher than expected • 2024 – excess demand, QA unable to increase supply • 2024 – QA launch a website to show inventory availability at retail outlets • 2024 – complaints from customers about QA2 • 2024 – QA makes a public apology about the QA2. 1 AO3 Analysis Analysis is likely to be based on the impact of the approaches used to develop a business strategy for QA between 2021 and 2024 ( and and ) , including: • SWOT analysis – allows a business to use its strengths to overcome its threats and use its opportunities to overcome its weaknesses. Provides an overview of QA and provides the directors with data to enable effective formulation of a business strategy. However, only provides a picture of where the business is right now. Data about the threats and opportunities is only as good as the research it is based upon. In particular, this is a new technology market and QA is a relatively small player in the market – the actions of competitors are unlikely to be covered by a SWOT analysis. • Ansoff matrix – useful tool for helping decision makers in a business see the risk involved in different business strategies. A choice of product development (new product to existing market) allows the business to see a medium level risk. However, this is a simplistic tool and unlikely to be much use in such a dynamic and technologically changing market. With product development being crucial in the technology market, will the Ansoff matrix provide enough data to enable to directors to decide upon a new strategy? • Product life cycle – useful to plot the likely movement of products through stages of sales, which allows QA to predict what might be likely to happen to sales of QA1 as time progresses. Particularly useful when combined with other analytical tools such as the Boston matrix to analyse the product portfolio of QA. However, it is not certain that every product will follow the same pattern of sales, especially in the technology market where there is not an established pattern of sales. There are also large competitors (Google, Apple) who dominate this market, and their actions are likely to have massive effects on the lifecycle of the product. • Decision tree – Allows a quantitative understanding of the outcomes and risks of a decision. Allows the directors to make an objective decision based on the data without subjective issues getting in the way. However, the data can only be as good as the research upon which it is based. Especially in this market where outcomes are unlikely to be known and probabilities may rely on subjective issues which cannot be known in advance. 1 AO4 Evaluation Evaluation ( and and ) including: Evaluation will largely depend on the points raised in the analysis. • A judgement over the usefulness of each approach that QA used to develop strategy between 2021 and 2024. • A judgement over the most useful approach that QA used to develop strategy between 2021 and 2024. • A judgement over the other approaches QA could have used to develop strategy between 2021 and 2024. • What the judgement(s) may depend upon; the actions of competitors, the external environment (social, legal, economic, political, technological), the objectives of stakeholders etc. • Weighing up of the relative usefulness of each approach used in the development of strategy between 2021 and 2024. Accept all valid responses. No credit L1 including: L2 including: (developed L3 including: (developed supporting (limited supporting evidence) evidence with context) supporting evidence) SWOT SWOT analysis is SWOT analysis is the most useful SWOT analysis is the most useful approach analysis is the the most useful approach because it shows because it shows internal data, like QA most useful approach because internal and external factors, unlike having a 6% market share and external approach. it shows internal other approaches, like PEST, factors, unlike other approaches, like PEST, and external which only shows external factors. which only shows external factors. factors. The The usefulness of The usefulness of the approaches The usefulness of the approaches depends usefulness of the approaches depends on the accuracy of the on the accuracy of the data because if QA the depends on the data because if QA makes makes decisions based on inaccurate data, approaches accuracy of the decisions based on inaccurate they might make the wrong decision, leading depends on data. data, they might make the wrong to failure. This might be particularly bad many factors. decision, leading to failure. since the decision tree only has a $0.6m difference, which if it is wrong, could have meant QA launched the QA2 at the wrong time.

This question in 9609/42 May/June 2025

2 Advise FM’s directors whether blue ocean strategy is the best approach to develop a future business strategy. [20]

20 marks

Mark scheme: 2 Advise FM’s directors whether blue ocean strategy is the best approach to develop a future business strategy. 20 Indicative content Responses may include: AO1 Knowledge and understanding Candidates must show knowledge and understanding, they cannot just mention a key term. • The purpose of business strategy. • The meaning and purpose of strategic management. • What Blue Ocean Strategy is – approach focused on creating markets where competition is absent • Alternative approaches to develop business strategy, including: – scenario planning – SWOT analysis – PEST analysis – porter’s five forces – core competence framework – ansoff matrix – force field analysis – decision trees. – red ocean strategy To be awarded it MUST be for an explanation of Blue Ocean Strategy 2 marks Blue Ocean Strategy focuses on creating markets where Identification of what Blue Ocean Strategy is, so only K. competition is absent Blue Ocean Strategy focuses on creating markets where 1 K for identification and 1 DEV for a point of explanation. competition is absent, , to achieve this a business needs to differentiate their product while keeping low cost Blue Ocean Strategy focuses on creating markets where 1 K for identification and 2 DEVs for two points of competition is absent, , to achieve this a business explanation needs to differentiate their product while keeping low costs , this allows a business to create demand rather than compete for it from competitors 2 Note – candidates can gain full marks for AO1 from only using the term Blue Ocean Strategy and that is explained ( + + ). Use of any other strategy remains No other AO2, AO3 OR AO4 marks can be awarded without AO1. AO2 Application Application (max 2 marks) can be awarded for applying knowledge, analysis or evaluation of FM marketing strategy including: Candidates MUST apply this to FM business and the external environment – a lot of this will come from the appendices • Low price, fast fashion • Lack of expensive marketing to keep loyal customers • 150 stores in country X, 25 abroad, 175 stores in total based on low price clothing model • Pursuing international expansion • Any element of the case study • Any element of the appendices Note this list is not exhaustive, any business or external environment context used from the appendices can be rewarded if used correctly AO3 Analysis Candidates need to identify an approach and provide developed analysis to get to L2, this then needs to be counterbalanced to get to L3. If a candidate does this twice, they will gain 8 marks. . ( and and ) Analysis should primarily focus on Blue Ocean Strategy but then go on to suggest other strategies FM could use to develop the new strategy of expansion. • Blue Ocean Strategy (BOS) worked well for FM – they were market leader in cheap, fast fashion and built-up good market share. This has helped them to expand to 150 stores over 46 years • BOS has helped them stay focused on what makes them different on the high street from other fashion retailers and allowed them to grow the business in this sector. • May help FM discover an unknown/untapped marketplace. • FM can increase their growth potential by identifying new opportunities. • BOS can create new demand and customers, increasing market share and size. 2 • It promotes innovation. • Identifying the right blue ocean strategy can be challenging and costly for FM. • FM’s marketing costs are likely to significantly increase to attract a new market. • No guarantee that the BOS will work/ be effective. • Time and patience may be needed to be successful in the market. Is this compatible with the fashion market? • High risk strategy for FM. However some candidates could dismiss BOS but would need to discuss two other valid approaches to gain 8 marks. • The next move is into high income countries so mirroring the model that worked in the first 25–30 years of building the business would make sense, FM will have a reputation that those countries may know about and if it is not cheap fast fashion could they lose out in those markets and have to pull out? • FM could use scenario planning to consider how expansion may end up but not very useful for developing the whole strategy. • A SWOT analysis could help FM identify what opportunities/threats are globally and how they could handle these to ensure success of the expansion. • A PEST analysis would support an analysis of the external environment but may not help develop the strategy to tackle this as the PEST factors are out of their control. • Porter’s five forces would help them understand the external environment, but FM is a large business and holds a lot of the power. This provides little help in developing a new strategy. • The core competence framework would be like BOS in that it identifies what FM does well and then allows them to replicate this in their new stores. Given the model is staying the same this would be easy to apply once the core competencies have been identified. • Ansoff matrix could help them consider other possibilities to help the business grow • Force field analysis could help FM identify the driving and restraining forces to help them come out of CEO’s management and back to the low-price model that made them a success. • Decision trees could help make the decision, but FM would need to have lots of information gathered on alternatives to make sure that this model really helps decide on what to do next – plus this would be a very quantitative way of doing this – what about qualitative factors? 2 AO4 Evaluation Candidates MUST answer the question – a judgement on the whether Blue Ocean Strategy is the right approach. The development and support of this judgement will help them to move through L2 and L3. Evaluation ( and and ) including: To award L3 the answer must be in context and draw upon the previous analysis. Candidate will have to make a judgement on Blue Ocean Strategy in the first instance, not just suggest alternatives without evaluating the BOS concept. • Candidates may state that Blue Ocean Strategy is/isn’t sufficient • The use of BOS (or any other approach) may depend upon; FM’s objectives, the objectives of FM’s stakeholders, the external environment (especially economic and social), the competitors in the market, the success of the international expansion etc. • FM know the BOS was working so possibly re-focusing after sustainability programmes allows them to get back the customers and possible drop prices after the recent 25% increases. • BOS is no longer useful to them as they have moved too far away from this model with recent sustainability programmes and price rises/new factories. They are now more mainstream and have moved into red ocean territory and now need to adapt to this way of competing. • Advice to FM should make clear whether BOS is sufficient or whether it should be supported by other models, and if so which? • BOS is Ok but needs other strategies to support it with external factors. Accept all valid responses. 2 No Credit L1 including: (limited L2 including: (developed L3 (developed supporting supporting evidence) supporting evidence) evidence with context) Blue Blue Ocean strategy is not the Blue Ocean strategy is not the Blue Ocean strategy is not the Ocean best approach because recently best approach because recently best approach because recently strategy is they have moved away from this they have moved away from this they have moved away from this not the type of approach. type of approach. They have type of approach. They have best become more mainstream and become more mainstream with approach have moved to more Red Ocean their recent sustainability Strategy so need alternative ways programmes and average 25% to compete. price rises and have moved to more Red Ocean Strategy so need alternative ways to compete. Blue Blue Ocean strategy is the best Blue Ocean strategy is the best Blue Ocean strategy is the best Ocean approach because it allows FM to approach because it allows FM to approach because it allows FM to strategy is meet its objectives meet its objectives that the meet its objectives that the the best shareholders want and mirroring shareholders want and mirroring approach its current model has worked its current model has worked before. FM know the BOS was before. FM know the BOS was working so it will allow them to get working so it will allow them to back the customers and possible refocus after the sustainability drop prices programme get back the customers and possible drop prices after the recent 25% increase.

This question in 9609/41 Oct/Nov 2025

2 Advise Sarah on whether PEST analysis is the most useful approach for SH in developing a new business strategy. [20]

20 marks

Mark scheme: 2 Advise Sarah on whether PEST analysis is the most useful approach for SH in developing a new business 20 strategy. Level AO1 Knowledge AO2 Application AO3 Analysis AO4 Evaluation and 2 marks 8 marks 7 marks understanding 3 marks Description Description Description Description 3 7–8 marks 6–7 marks Developed analysis of Effective evaluation the overall strategy that A developed judgement/conclusion identifies connections is made in the business context between causes, impacts that draws together developed and/or consequences. evaluative comments which balance some key arguments in the business context. 2 2–3 marks 2 marks 4–6 marks 3–5 marks Developed Developed Developed analysis of Developed evaluation knowledge of application of individual strategic • A developed relevant key relevant point(s) element(s) that identifies judgement/conclusion is term(s) and/or to the business connections between made. factor(s) is used context. causes, impacts and/or • Developed evaluative to answer the consequences. comments which balance question. some key arguments. 2 Level AO1 Knowledge AO2 Application AO3 Analysis AO4 Evaluation and 2 marks 8 marks 7 marks understanding 3 marks Description Description Description Description 1 1 mark 1 mark 1–3 marks 1–2 marks Limited Limited Limited analysis that Limited evaluation knowledge of application of identifies connections • A judgement/conclusion is relevant key relevant point(s) between causes, impacts made with limited supporting term(s) and/or to the business and/or consequences. comment/evidence. factor(s) is used context. • An attempt is made to balance to answer the the arguments. question. 0 0 marks 0 marks 0 marks 0 marks No creditable No creditable No creditable response. No creditable response. response. response. 2 Advise Sarah on whether PEST analysis is the most useful approach for SH in developing a new business strategy. Responses may include: AO1 Knowledge and understanding Knowledge (max 1 mark) can be awarded for knowledge about approaches, can be awarded for understanding of the approaches up to two marks including: • Blue ocean strategy aims 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. • 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 - It 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 - consider 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. • PEST analysis – It focuses on the macro environment (Note: Mentioning of PEST or political, economic, social and technological is not Knowledge as they are in the question and case respectively). 2 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. • The meaning and purpose of strategic management (the entire process of identifying, choosing and implementing the planning of business activity): analysis (identifying options and understanding the business, market and external environment), choice (between strategic options) and implementation (the decision making of implementing a strategic decision). • (do not reward repetition of Appendix 4, but understanding of the model is rewardable). For identifying an approach and follows for the definition of the approach up to two DEV to gain the full 3 marks. Award for any explanation of a policy that affects a business’ strategy, up to a max of 2 marks. Some basic knowledge about a Blue ocean strategy . policy, so only K. 1 K for identification and 1 DEV Blue ocean strategy , aims to combine product differentiation with low-cost to for a point of explanation develop new markets and demand. . 1 K for identification and 2 DEVs Blue ocean strategy , aims to combine product differentiation with low-cost to for two points of explanation develop new markets and demand. . It is about finding uncontested markets to gain a competitive advantage. . Note – Candidates can gain full marks for AO1 from one term that is explained ( + + ) or from two terms partially explained ( + and + ). The mentioning of PEST or Political, Economic, Social and Technological cannot be awarded for knowledge as it is stated in the case study but any understanding of it can. No other AO2, AO3 OR AO4 marks can be awarded without AO1. AO2 Application Application (max 2 marks) can be awarded for applying knowledge, analysis or evaluation of approaches and their usefulness on developing a new business strategy for SH. 2 Candidates MUST apply this to SH’s business model – a lot of this will come from the appendices • Data about from Appendix 4; • Political – government actions to encourage more investment into country D from multinational companies • Economic – recovery from economic recession, rising inflation and high cost of producing goods • Social – increased online shopping, importance of technological advances when choosing a gaming headset, price sensitivity of consumers, increased immigration by young people • Technological – increasing use of artificial intelligence in market research and potential for new product techniques • SH’s revenue declining. New competitor became market leader. • Market share reduced • Asked an external management consultant business to create a PEST analysis. • New business strategy needed to enable SH to return to profitability. AO3 Analysis ( and and ) , including: Analysis for the usefulness of PEST analysis: • Analysis of the political forces: • government actions to encourage more investment into country D from multinational companies which may lead to new competitors entering the gaming headset market in country D • Analysis of the economic forces: • recovery from economic recession – the marketing strategy was created during an economic boom but the elements of the strategy may need to change for a recession. SH continued with the same strategy that was effective during prosperous economic times • high inflation and high cost of production – squeezed disposable incomes may affect consumer buying habits/choices and the ability of SH to make a profit. Limited scope for further price rises to increase profit margins. • Analysis of the social forces: • increased online shopping – the impact of this on SH’s decision to sell headsets through retail stores • importance of technological advances when choosing a gaming headset – consumers value the technological advances of SH’s products but is price becoming more important due to the current economic climate • price sensitivity of consumers • increased immigration by young people. 70% of gaming headsets are purchased by consumers under 30 years old. • Analysis of the technological forces: • increased use of artificial intelligence in market research – does SH use this technology in its market research? • potential for new production techniques – could they reduce the cost of producing the headsets to offset the high cost of production? However, would capital investment be recovered by the production cost savings? 2 Analysis for the usefulness of PEST analysis; • Enables the consultant to consider the impact of external factors on the potential success of the business strategy and the different strategic choices • Internal policies/strategies may need to change to achieve success in light of the external factors Arguments against the usefulness of PEST analysis: • The model is relatively simplistic • The results are a snapshot in time – the forces will change. Are the factors identified in 2025 relevant for 2027? • The strategy for the future will be based on estimates/predictions • This approach was completed by an external management consultancy business with no investment in SH – to what extent can this information be relied upon to base future decisions? • Does not consider new external influences in the future Candidates may choose to contrast other approaches with PEST. Candidates need to identify an approach and provide developed analysis to get to L2, this then needs to be counterbalanced to get to L3. If a candidate does this twice, they will gain 8 marks. 2 AO4 Evaluation Evaluation ( and and ) including: 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 – Level 1 and 2 is answered in context. • A judgement about the usefulness of PEST analysis when developing a new business strategy for SH. • Judgement may depend upon; the validity of the data, the external environment in country D, whether SH is staying in the same market, or whether it will diversify, the use of other approaches in tandem with PEST analysis. • Weighing up of the relevant arguments for the use of PEST analysis in making decisions about developing a new business strategy for SH. • Weighing up of the relevant arguments for the use of other approaches instead of (or in tandem with) PEST analysis. Accept all valid responses. 2 Exemplars and annotations for AO4 (assuming relevant AO1 has been awarded): No credit (no L1 (limited L2 (developed supporting L3 (developed supporting supporting evidence) evidence) supporting evidence with evidence) context) Overall SWOT analysis Overall SWOT analysis seems to Overall SWOT analysis seems Overall SWOT seems to be the better be the better approach to develop to be the best approach to analysis seems to approach to develop the business strategy. This is develop the business strategy be the better the business strategy because SWOT will cover all to achieve profit through approach to This is because SWOT areas that PEST will. However, diversification. However, the develop the will cover all areas that the effectiveness of SWOT needs effectiveness of SWOT needs business strategy PEST will not. to be considered as it is all to be considered as it is all qualitative values. This means qualitative values. This means that SH will make choices to that SH will make choices to diversify with quantitative factors. diversify with quantitative factors. Especially that SH’s financials such as Total annual revenue has dropped from 46 m in 2021 to 26 m in 2024 and ROCE from 8 to (4). 2 No credit (no L1 (limited L2 (developed supporting L3 (developed supporting supporting evidence) evidence) supporting evidence with evidence) context) Overall I think SH Overall I think SH Overall I think SH should use Overall I think SH should use should use several should use several several approaches to achieve a several approaches to achieve approaches to approaches to achieve new business strategy. SH a new business strategy. SH achieve a new a new business should use SWOT and PEST to should use SWOT and PEST to business strategy strategy. SH should look at the external and internal look at the external and internal use SWOT and PEST environment and have a full environment and have a full to look at the external picture of the business This will picture of the business This will and internal allow SH to look at their strengths allow SH to look at their environment and have and find new ways to recover strengths and find new ways to a full picture of the which will increase sales and recover which will increase business profits. sales and profits. SH’s strength of innovation allows it to be different and demand premium prices which means when recession recovers and with their extensive advertising and use of celebrity to promote their products sales and profits will start increasing again.

This question in 9609/43 Oct/Nov 2025