Business Management HL
Growth and evolution (Unit 1, HL) — Unit 1 HL
- 1.
A regional airline is considering whether to expand into long-haul international routes. Its strengths include a strong safety record and a loyal domestic customer base; its weaknesses include an ageing fleet unsuited to long-haul flights. (a) Explain how this SWOT information could support a decision against immediate long-haul expansion. (b) Suggest one internal action the airline could take before expanding to address the identified weakness.
[4 marks] · no calculator - 2.
Marking analysis: A learner attempts the following task: “A regional airline is considering whether to expand into long-haul international routes. Its strengths include a strong safety record and a loyal domestic customer base; its weaknesses include an ageing fleet unsuited to long-haul flights. (a) Explain how this SWOT information could support a decision against immediate long-haul expansion. (b) Suggest one internal action the airline could take before expanding to address the identified weakness.” Their response addresses only this point: “Explains that the ageing fleet weakness directly undermines the operational requirements of long-haul flying, such as range, comfort and reliability.” Evaluate the response against the complete 4-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[4 marks] · no calculator - 3.
A furniture retailer is evaluating two growth options: (Option A) selling its existing furniture range through a new online store to its existing domestic market, or (Option B) selling a new range of outdoor furniture to a new overseas market. (a) Using the Ansoff Matrix, identify the growth strategy represented by Option A. (b) Identify the growth strategy represented by Option B. (c) State which option is generally considered lower risk. (d) Explain why.
[5 marks] · no calculator - 4.
Marking analysis: A learner attempts the following task: “A furniture retailer is evaluating two growth options: (Option A) selling its existing furniture range through a new online store to its existing domestic market, or (Option B) selling a new range of outdoor furniture to a new overseas market. (a) Using the Ansoff Matrix, identify the growth strategy represented by Option A. (b) Identify the growth strategy represented by Option B. (c) State which option is generally considered lower risk. (d) Explain why.” Their response addresses only this point: “Identifies Option A as market penetration/market development, since it uses an existing product in an existing market through a new channel.” Evaluate the response against the complete 5-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[5 marks] · no calculator - 5.
A company is deciding how to grow: (Option A) reinvesting its own retained profit to gradually open new stores itself, or (Option B) acquiring an existing chain of stores from a competitor. (a) Identify Option A as organic (internal) growth or external growth. (b) Identify Option B as organic (internal) growth or external growth. (c) Suggest one situation in which a company would prefer Option B over Option A.
[3 marks] · no calculator - 6.
Marking analysis: A learner attempts the following task: “A company is deciding how to grow: (Option A) reinvesting its own retained profit to gradually open new stores itself, or (Option B) acquiring an existing chain of stores from a competitor. (a) Identify Option A as organic (internal) growth or external growth. (b) Identify Option B as organic (internal) growth or external growth. (c) Suggest one situation in which a company would prefer Option B over Option A.” Their response addresses only this point: “Identifies Option A as organic (internal) growth.” Evaluate the response against the complete 3-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[3 marks] · no calculator - 7.
Two companies of similar size in the same industry combine to form a single new company, with both sets of shareholders agreeing to the combination. (a) Identify this method of external growth. (b) Distinguish this from a takeover (acquisition), in which one company purchases a controlling stake in another.
[3 marks] · no calculator - 8.
Marking analysis: A learner attempts the following task: “Two companies of similar size in the same industry combine to form a single new company, with both sets of shareholders agreeing to the combination. (a) Identify this method of external growth. (b) Distinguish this from a takeover (acquisition), in which one company purchases a controlling stake in another.” Their response addresses only this point: “Identifies this as a merger.” Evaluate the response against the complete 3-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[3 marks] · no calculator - 9.
A domestic airline wants to start offering international flights but lacks the local knowledge, landing rights, and airport relationships needed in a specific foreign country. It partners with a foreign airline: the two remain fully independent companies, but they agree to jointly create and jointly own a brand-new, separate airline company to operate these specific international routes together. (a) Identify this method of external growth. (b) Distinguish it from a strategic alliance, in which the two companies would cooperate without creating a new, separate jointly owned company.
[3 marks] · no calculator - 10.
Marking analysis: A learner attempts the following task: “A domestic airline wants to start offering international flights but lacks the local knowledge, landing rights, and airport relationships needed in a specific foreign country. It partners with a foreign airline: the two remain fully independent companies, but they agree to jointly create and jointly own a brand-new, separate airline company to operate these specific international routes together. (a) Identify this method of external growth. (b) Distinguish it from a strategic alliance, in which the two companies would cooperate without creating a new, separate jointly owned company.” Their response addresses only this point: “Identifies this as a joint venture.” Evaluate the response against the complete 3-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[3 marks] · no calculator - 11.
A successful restaurant chain wants to expand rapidly into many new cities without funding all the new restaurants itself. It allows independent local business owners to open and operate new restaurants using its brand name, recipes, and business systems, in exchange for an upfront fee and ongoing royalty payments. (a) Identify this method of growth. (b) Explain one benefit of this method for the restaurant chain (the franchisor). (c) Explain one benefit of this method for the local business owner (the franchisee).
[3 marks] · no calculator - 12.
Marking analysis: A learner attempts the following task: “A successful restaurant chain wants to expand rapidly into many new cities without funding all the new restaurants itself. It allows independent local business owners to open and operate new restaurants using its brand name, recipes, and business systems, in exchange for an upfront fee and ongoing royalty payments. (a) Identify this method of growth. (b) Explain one benefit of this method for the restaurant chain (the franchisor). (c) Explain one benefit of this method for the local business owner (the franchisee).” Their response addresses only this point: “Identifies this as franchising.” Evaluate the response against the complete 3-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[3 marks] · no calculator - 13.
As a manufacturing company has grown much larger, its head office has become slower at communicating decisions to individual factories, and different departments increasingly duplicate each other's work without realising it. (a) Identify the concept illustrated by these problems. (b) Explain how growing significantly larger can specifically cause the communication problem described.
[3 marks] · no calculator - 14.
Marking analysis: A learner attempts the following task: “As a manufacturing company has grown much larger, its head office has become slower at communicating decisions to individual factories, and different departments increasingly duplicate each other's work without realising it. (a) Identify the concept illustrated by these problems. (b) Explain how growing significantly larger can specifically cause the communication problem described.” Their response addresses only this point: “Identifies diseconomies of scale.” Evaluate the response against the complete 3-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[3 marks] · no calculator - 15.
A large supermarket chain is able to negotiate significantly lower prices per unit from suppliers than a small independent grocery store can, simply because it buys in much greater bulk. (a) Identify the type of economy of scale illustrated here. (b) Identify and briefly describe one other distinct type of economy of scale that a large business could benefit from.
[2 marks] · no calculator - 16.
Marking analysis: A learner attempts the following task: “A large supermarket chain is able to negotiate significantly lower prices per unit from suppliers than a small independent grocery store can, simply because it buys in much greater bulk. (a) Identify the type of economy of scale illustrated here. (b) Identify and briefly describe one other distinct type of economy of scale that a large business could benefit from.” Their response addresses only this point: “Identifies purchasing (bulk-buying) economies of scale.” Evaluate the response against the complete 2-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[2 marks] · no calculator - 17.
Two businesses fail within the same year: Business A fails because its founder made poor cash-flow management decisions and failed to control costs; Business B fails because a sudden, severe economic recession collapses demand across its entire industry. (a) Identify Business A's cause of failure as internal or external. (b) Identify Business B's cause of failure as internal or external. (c) Explain why distinguishing between internal and external causes of failure matters for evaluating the quality of a company's management.
[4 marks] · no calculator - 18.
Marking analysis: A learner attempts the following task: “Two businesses fail within the same year: Business A fails because its founder made poor cash-flow management decisions and failed to control costs; Business B fails because a sudden, severe economic recession collapses demand across its entire industry. (a) Identify Business A's cause of failure as internal or external. (b) Identify Business B's cause of failure as internal or external. (c) Explain why distinguishing between internal and external causes of failure matters for evaluating the quality of a company's management.” Their response addresses only this point: “Identifies Business A's cause of failure as internal.” Evaluate the response against the complete 4-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[4 marks] · no calculator - 19.
A company proudly reports that its total sales revenue grew by 40% over the past year. (a) Identify two other measures, besides sales revenue, that could be used to assess whether a business has genuinely grown. (b) Explain why relying on sales revenue growth alone can give a misleading picture of a business's overall growth or success.
[4 marks] · no calculator - 20.
Marking analysis: A learner attempts the following task: “A company proudly reports that its total sales revenue grew by 40% over the past year. (a) Identify two other measures, besides sales revenue, that could be used to assess whether a business has genuinely grown. (b) Explain why relying on sales revenue growth alone can give a misleading picture of a business's overall growth or success.” Their response addresses only this point: “Identifies a valid alternative measure, such as market share, number of employees, number of outlets/branches, or total assets.” Evaluate the response against the complete 4-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[4 marks] · no calculator - 21.
A multinational company (MNC) based in a wealthy country opens a large factory in a developing country, hiring thousands of local workers and introducing new production technology, while also repatriating (sending home) most of its profits rather than reinvesting them locally. (a) Explain one benefit of this MNC's investment for the host (developing) country. (b) Explain one cost or drawback of this MNC's investment for the host country.
[4 marks] · no calculator - 22.
Marking analysis: A learner attempts the following task: “A multinational company (MNC) based in a wealthy country opens a large factory in a developing country, hiring thousands of local workers and introducing new production technology, while also repatriating (sending home) most of its profits rather than reinvesting them locally. (a) Explain one benefit of this MNC's investment for the host (developing) country. (b) Explain one cost or drawback of this MNC's investment for the host country.” Their response addresses only this point: “States a valid benefit, such as job creation, the transfer of new technology and skills to the local workforce, or increased tax revenue and export earnings for the host country.” Evaluate the response against the complete 4-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[4 marks] · no calculator - 23.
A company based in a culture that values individual achievement and direct communication is expanding into a country whose culture, according to Hofstede's cultural dimensions, scores much higher on collectivism and places strong value on group harmony. (a) Identify the specific Hofstede dimension being described. (b) Explain one way the company's management style or HR practices might need to adapt when managing employees in this new cultural context.
[3 marks] · no calculator - 24.
Marking analysis: A learner attempts the following task: “A company based in a culture that values individual achievement and direct communication is expanding into a country whose culture, according to Hofstede's cultural dimensions, scores much higher on collectivism and places strong value on group harmony. (a) Identify the specific Hofstede dimension being described. (b) Explain one way the company's management style or HR practices might need to adapt when managing employees in this new cultural context.” Their response addresses only this point: “Identifies the individualism versus collectivism dimension.” Evaluate the response against the complete 3-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[3 marks] · no calculator - 25.
A factory experiences a sudden, unexpected chemical spill that forces an immediate evacuation and a halt to production, requiring the management team to respond within hours. (a) Identify whether this situation calls primarily for crisis management or contingency planning. (b) Explain the key difference between crisis management and contingency planning.
[3 marks] · no calculator - 26.
Marking analysis: A learner attempts the following task: “A factory experiences a sudden, unexpected chemical spill that forces an immediate evacuation and a halt to production, requiring the management team to respond within hours. (a) Identify whether this situation calls primarily for crisis management or contingency planning. (b) Explain the key difference between crisis management and contingency planning.” Their response addresses only this point: “Identifies this as requiring crisis management.” Evaluate the response against the complete 3-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[3 marks] · no calculator - 27.
A growing manufacturing company is under pressure from customers and investors to reduce its environmental impact. It considers 'greening' its operations, for example by switching to renewable energy and more sustainable packaging. (a) Explain one way 'greening' the business could benefit the company in the long run. (b) Explain one reason the company's management might hesitate to invest in greening in the short run.
[4 marks] · no calculator - 28.
Marking analysis: A learner attempts the following task: “A growing manufacturing company is under pressure from customers and investors to reduce its environmental impact. It considers 'greening' its operations, for example by switching to renewable energy and more sustainable packaging. (a) Explain one way 'greening' the business could benefit the company in the long run. (b) Explain one reason the company's management might hesitate to invest in greening in the short run.” Their response addresses only this point: “States a valid long-run benefit, such as an improved brand reputation attracting environmentally conscious customers and investors, or long-run cost savings from greater energy efficiency.” Evaluate the response against the complete 4-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[4 marks] · no calculator - 29.
A traditional retailer that has only ever sold through physical stores launches an online e-commerce store to reach customers nationwide. (a) Explain one way this digital business model allows the company to grow beyond the geographic limits of its physical stores. (b) Explain one new challenge the company is likely to face as a result of operating online that it did not face with physical stores alone.
[2 marks] · no calculator - 30.
Marking analysis: A learner attempts the following task: “A traditional retailer that has only ever sold through physical stores launches an online e-commerce store to reach customers nationwide. (a) Explain one way this digital business model allows the company to grow beyond the geographic limits of its physical stores. (b) Explain one new challenge the company is likely to face as a result of operating online that it did not face with physical stores alone.” Their response addresses only this point: “Explains that an online store allows the company to reach customers anywhere with internet access, no longer limited to people who can physically travel to a store location, enabling growth into new geographic markets without the cost of opening new physical branches.” Evaluate the response against the complete 2-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[2 marks] · no calculator