IB · BM HL

Business Management HL

Strategic analysis (HL): BCG matrix, STEEPLE and contingency planning — Unit 1 HL

Name: ____________________Date: October 2, 2026

1.
A company's product has a market share of 20%, while its largest competitor in that market has a market share of 40%. (a) Calculate the product's relative market share. (b) The market itself is growing at 15% per year, which is considered high growth. Using the BCG matrix, classify this product, and justify your classification.
[5 marks]
Marking points
- Uses the formula: relative market share = company's market share / largest competitor's market share.
- Substitutes to obtain 20/40 = 0.5.
- States that a relative market share of 0.5 is low (below 1), meaning the company is not the market leader.
- Classifies the product as a 'question mark' (or 'problem child'), since it combines high market growth with low relative market share.
- Justifies this by noting that a question mark requires significant investment to try to gain market share in a growing market, with an uncertain outcome (it may become a 'star' or may fail and be divested).
Examiner tip: The BCG matrix always has two axes: market growth rate (high/low) and relative market share (high/low) — a product's quadrant (star, cash cow, question mark, or dog) is determined entirely by where it falls on these two dimensions.
2.
Marking analysis: A learner attempts the following task: “A company's product has a market share of 20%, while its largest competitor in that market has a market share of 40%. (a) Calculate the product's relative market share. (b) The market itself is growing at 15% per year, which is considered high growth. Using the BCG matrix, classify this product, and justify your classification.” Their response addresses only this point: “Uses the formula: relative market share = company's market share / largest competitor's market share.” Evaluate the response against the complete 5-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[5 marks]
Marking points
- Recognises credit for the stated point: Uses the formula: relative market share = company's market share / largest competitor's market share.
- Identifies the missing requirement: Substitutes to obtain 20/40 = 0.5.
- Identifies the missing requirement: States that a relative market share of 0.5 is low (below 1), meaning the company is not the market leader.
- Identifies the missing requirement: Classifies the product as a 'question mark' (or 'problem child'), since it combines high market growth with low relative market share.
- Identifies the missing requirement: Justifies this by noting that a question mark requires significant investment to try to gain market share in a growing market, with an uncertain outcome (it may become a 'star' or may fail and be divested).
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
3.
Explain why a 'cash cow' in the BCG matrix (high relative market share, low market growth) typically requires relatively little further investment, and state what a company usually does with the surplus cash it generates.
[2 marks] · no calculator
Marking points
- Explains that a cash cow already has a dominant (high) market share in a market that is no longer growing quickly, so there is limited opportunity or need for further aggressive investment to grow its share.
- States that companies typically use the surplus cash generated by cash cows to fund investment in question marks or stars elsewhere in their product portfolio, which have greater growth potential but need more investment.
Examiner tip: The BCG matrix's core strategic insight is portfolio balance: use the 'milk' from cash cows to fund promising question marks, rather than treating each product in isolation.
4.
Marking analysis: A learner attempts the following task: “Explain why a 'cash cow' in the BCG matrix (high relative market share, low market growth) typically requires relatively little further investment, and state what a company usually does with the surplus cash it generates.” Their response addresses only this point: “Explains that a cash cow already has a dominant (high) market share in a market that is no longer growing quickly, so there is limited opportunity or need for further aggressive investment to grow its share.” 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
Marking points
- Recognises credit for the stated point: Explains that a cash cow already has a dominant (high) market share in a market that is no longer growing quickly, so there is limited opportunity or need for further aggressive investment to grow its share.
- Identifies the missing requirement: States that companies typically use the surplus cash generated by cash cows to fund investment in question marks or stars elsewhere in their product portfolio, which have greater growth potential but need more investment.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
5.
The STEEPLE framework extends the PEST framework by adding Ethical and Legal (and Environmental) factors. Explain how an ethical factor, such as growing consumer concern about animal testing, could affect a cosmetics company's strategy.
[3 marks] · no calculator
Marking points
- States that ethical factors reflect changing social attitudes about what is considered morally acceptable business practice, which companies must respond to in order to maintain their reputation and customer base.
- Explains that growing consumer concern about animal testing could pressure the company to switch to alternative, cruelty-free testing methods, even if this is initially more costly or slower.
- Explains that failing to respond to this ethical shift risks losing customers to competitors who market themselves as cruelty-free, or facing reputational damage from activist campaigns or negative publicity.
Examiner tip: Ethical factors in STEEPLE are distinct from legal factors: an ethical shift (changing social expectations) often happens well before it becomes an actual legal requirement, so companies that respond early can gain a competitive/reputational advantage.
6.
Marking analysis: A learner attempts the following task: “The STEEPLE framework extends the PEST framework by adding Ethical and Legal (and Environmental) factors. Explain how an ethical factor, such as growing consumer concern about animal testing, could affect a cosmetics company's strategy.” Their response addresses only this point: “States that ethical factors reflect changing social attitudes about what is considered morally acceptable business practice, which companies must respond to in order to maintain their reputation and customer base.” 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
Marking points
- Recognises credit for the stated point: States that ethical factors reflect changing social attitudes about what is considered morally acceptable business practice, which companies must respond to in order to maintain their reputation and customer base.
- Identifies the missing requirement: Explains that growing consumer concern about animal testing could pressure the company to switch to alternative, cruelty-free testing methods, even if this is initially more costly or slower.
- Identifies the missing requirement: Explains that failing to respond to this ethical shift risks losing customers to competitors who market themselves as cruelty-free, or facing reputational damage from activist campaigns or negative publicity.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
7.
Distinguish between crisis management and contingency planning, and explain why a company should ideally engage in contingency planning before a crisis occurs rather than relying only on crisis management afterward.
[3 marks] · no calculator
Marking points
- Defines contingency planning as preparing in advance for potential future crises, by developing plans for how the company would respond to specific identified risks before they occur.
- Defines crisis management as the actions a company takes in actual response to a crisis that has already occurred, often under significant time pressure.
- Explains that contingency planning allows a company to respond more quickly, calmly, and effectively when a crisis does occur, since decisions and procedures have already been thought through in advance rather than improvised under pressure.
Examiner tip: Contingency planning is proactive (before the event) while crisis management is reactive (after the event) — strong contingency planning is what makes effective crisis management possible in the first place.
8.
Marking analysis: A learner attempts the following task: “Distinguish between crisis management and contingency planning, and explain why a company should ideally engage in contingency planning before a crisis occurs rather than relying only on crisis management afterward.” Their response addresses only this point: “Defines contingency planning as preparing in advance for potential future crises, by developing plans for how the company would respond to specific identified risks before they occur.” 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
Marking points
- Recognises credit for the stated point: Defines contingency planning as preparing in advance for potential future crises, by developing plans for how the company would respond to specific identified risks before they occur.
- Identifies the missing requirement: Defines crisis management as the actions a company takes in actual response to a crisis that has already occurred, often under significant time pressure.
- Identifies the missing requirement: Explains that contingency planning allows a company to respond more quickly, calmly, and effectively when a crisis does occur, since decisions and procedures have already been thought through in advance rather than improvised under pressure.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
9.
Using Hofstede's cultural dimensions, explain how a company expanding from a country with a highly individualist culture into a country with a highly collectivist culture might need to adapt its approach to employee incentives and teamwork.
[3 marks] · no calculator
Marking points
- States that individualist cultures tend to value personal achievement and individual responsibility, while collectivist cultures tend to value group harmony, loyalty, and collective achievement over individual recognition.
- Explains that individual performance-based incentives (such as 'employee of the month' awards or individual bonuses) that motivate well in an individualist culture may feel uncomfortable or even counterproductive in a collectivist culture, where singling out one employee could create social discomfort.
- Suggests that the company should instead consider adapting incentives toward team-based rewards and emphasizing group harmony and collective success in a more collectivist cultural context.
Examiner tip: Hofstede's individualism-collectivism dimension is one of the most frequently tested in HL strategy questions — always connect the cultural dimension to a specific, practical HR or management implication rather than describing the theory in the abstract.
10.
Marking analysis: A learner attempts the following task: “Using Hofstede's cultural dimensions, explain how a company expanding from a country with a highly individualist culture into a country with a highly collectivist culture might need to adapt its approach to employee incentives and teamwork.” Their response addresses only this point: “States that individualist cultures tend to value personal achievement and individual responsibility, while collectivist cultures tend to value group harmony, loyalty, and collective achievement over individual recognition.” 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
Marking points
- Recognises credit for the stated point: States that individualist cultures tend to value personal achievement and individual responsibility, while collectivist cultures tend to value group harmony, loyalty, and collective achievement over individual recognition.
- Identifies the missing requirement: Explains that individual performance-based incentives (such as 'employee of the month' awards or individual bonuses) that motivate well in an individualist culture may feel uncomfortable or even counterproductive in a collectivist culture, where singling out one employee could create social discomfort.
- Identifies the missing requirement: Suggests that the company should instead consider adapting incentives toward team-based rewards and emphasizing group harmony and collective success in a more collectivist cultural context.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
11.
Explain Porter's concept of a 'cost leadership' generic strategy, and state one risk a company following this strategy faces.
[2 marks] · no calculator
Marking points
- Explains that a cost leadership strategy involves a company aiming to become the lowest-cost producer in its industry, typically through economies of scale, efficient operations, and tight cost control, allowing it to compete on price.
- States a valid risk, such as a competitor finding an even lower-cost method of production, or the company being drawn into a price war that erodes profit margins for all firms in the industry.
Examiner tip: Porter's generic strategies (cost leadership, differentiation, and focus) describe fundamentally different ways to compete — a company that tries to pursue both cost leadership and differentiation at once risks becoming 'stuck in the middle', excelling at neither.
12.
Marking analysis: A learner attempts the following task: “Explain Porter's concept of a 'cost leadership' generic strategy, and state one risk a company following this strategy faces.” Their response addresses only this point: “Explains that a cost leadership strategy involves a company aiming to become the lowest-cost producer in its industry, typically through economies of scale, efficient operations, and tight cost control, allowing it to compete on price.” 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
Marking points
- Recognises credit for the stated point: Explains that a cost leadership strategy involves a company aiming to become the lowest-cost producer in its industry, typically through economies of scale, efficient operations, and tight cost control, allowing it to compete on price.
- Identifies the missing requirement: States a valid risk, such as a competitor finding an even lower-cost method of production, or the company being drawn into a price war that erodes profit margins for all firms in the industry.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
13.
Explain Porter's 'differentiation' generic strategy and one risk a firm following it faces.
[2 marks] · no calculator
Marking points
- Explains that differentiation means offering a product perceived as unique (quality, design, brand), allowing a premium price.
- States a risk, such as competitors imitating the features, or customers becoming unwilling to pay the premium.
Examiner tip: Differentiation only works while customers value the difference enough to pay for it.
14.
Marking analysis: A learner attempts the following task: “Explain Porter's 'differentiation' generic strategy and one risk a firm following it faces.” Their response addresses only this point: “Explains that differentiation means offering a product perceived as unique (quality, design, brand), allowing a premium price.” 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
Marking points
- Recognises credit for the stated point: Explains that differentiation means offering a product perceived as unique (quality, design, brand), allowing a premium price.
- Identifies the missing requirement: States a risk, such as competitors imitating the features, or customers becoming unwilling to pay the premium.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
15.
Explain what is meant by a 'focus' generic strategy and give one example of a business that might use it.
[2 marks] · no calculator
Marking points
- Explains that a focus strategy targets a narrow market segment, competing on either low cost or differentiation within it.
- Gives a valid example, such as a boutique producing handmade shoes for customers with wide feet.
Examiner tip: Focus differs from the other two strategies by choosing a narrow target market rather than the whole industry.
16.
Marking analysis: A learner attempts the following task: “Explain what is meant by a 'focus' generic strategy and give one example of a business that might use it.” Their response addresses only this point: “Explains that a focus strategy targets a narrow market segment, competing on either low cost or differentiation within it.” 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
Marking points
- Recognises credit for the stated point: Explains that a focus strategy targets a narrow market segment, competing on either low cost or differentiation within it.
- Identifies the missing requirement: Gives a valid example, such as a boutique producing handmade shoes for customers with wide feet.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
17.
Distinguish between a power culture and a role culture, using Handy's classification.
[2 marks] · no calculator
Marking points
- States that a power culture concentrates control in a few central individuals, with decisions based on personal authority and few formal rules.
- States that a role culture relies on clearly defined job roles, rules and procedures, giving stability but slower, bureaucratic change.
Examiner tip: Contrast where authority comes from: a person (power culture) versus the position and procedures (role culture).
18.
Marking analysis: A learner attempts the following task: “Distinguish between a power culture and a role culture, using Handy's classification.” Their response addresses only this point: “States that a power culture concentrates control in a few central individuals, with decisions based on personal authority and few formal rules.” 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
Marking points
- Recognises credit for the stated point: States that a power culture concentrates control in a few central individuals, with decisions based on personal authority and few formal rules.
- Identifies the missing requirement: States that a role culture relies on clearly defined job roles, rules and procedures, giving stability but slower, bureaucratic change.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
19.
Using Lewin's force field analysis, explain how a manager can increase the chance that a change will succeed.
[2 marks] · no calculator
Marking points
- Explains that driving forces push for the change and restraining forces resist it, and the change happens when drivers outweigh restrainers.
- Explains that a manager can strengthen drivers or, often more effectively, reduce restraining forces such as fear and lack of skills through communication and training.
Examiner tip: Reducing restraining forces is often better than pushing harder, which can increase resistance.
20.
Marking analysis: A learner attempts the following task: “Using Lewin's force field analysis, explain how a manager can increase the chance that a change will succeed.” Their response addresses only this point: “Explains that driving forces push for the change and restraining forces resist it, and the change happens when drivers outweigh restrainers.” 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
Marking points
- Recognises credit for the stated point: Explains that driving forces push for the change and restraining forces resist it, and the change happens when drivers outweigh restrainers.
- Identifies the missing requirement: Explains that a manager can strengthen drivers or, often more effectively, reduce restraining forces such as fear and lack of skills through communication and training.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
21.
Explain two reasons why employees might resist organizational change.
[2 marks] · no calculator
Marking points
- Explains a reason such as fear of job loss, changed duties or reduced status.
- Explains a second reason such as lack of information or involvement, comfort with existing routines, or distrust of management's motives.
Examiner tip: Resistance usually comes from uncertainty; involving staff early tends to reduce it.
22.
Marking analysis: A learner attempts the following task: “Explain two reasons why employees might resist organizational change.” Their response addresses only this point: “Explains a reason such as fear of job loss, changed duties or reduced status.” 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
Marking points
- Recognises credit for the stated point: Explains a reason such as fear of job loss, changed duties or reduced status.
- Identifies the missing requirement: Explains a second reason such as lack of information or involvement, comfort with existing routines, or distrust of management's motives.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
23.
Using Mendelow's power-interest grid, explain how a firm should manage a stakeholder with high power but low interest.
[2 marks] · no calculator
Marking points
- Explains that such stakeholders should be 'kept satisfied': they can block or support the firm but are not actively engaged.
- Explains that the firm should keep them informed of key issues without overloading them, avoiding raising their interest into opposition.
Examiner tip: High power means they cannot be ignored; low interest means they should not be over-consulted.
24.
Marking analysis: A learner attempts the following task: “Using Mendelow's power-interest grid, explain how a firm should manage a stakeholder with high power but low interest.” Their response addresses only this point: “Explains that such stakeholders should be 'kept satisfied': they can block or support the firm but are not actively engaged.” 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
Marking points
- Recognises credit for the stated point: Explains that such stakeholders should be 'kept satisfied': they can block or support the firm but are not actively engaged.
- Identifies the missing requirement: Explains that the firm should keep them informed of key issues without overloading them, avoiding raising their interest into opposition.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
25.
Distinguish between strategic and tactical decisions, giving one example of each for an airline.
[2 marks] · no calculator
Marking points
- States that strategic decisions are long-term, high-impact choices about the direction and scale of the business, e.g. entering long-haul routes or merging with a rival.
- States that tactical decisions are shorter-term choices on how to implement strategy, e.g. adjusting seasonal fares or flight schedules.
Examiner tip: Tactics serve strategy: they are easier to reverse and have narrower consequences.
26.
Marking analysis: A learner attempts the following task: “Distinguish between strategic and tactical decisions, giving one example of each for an airline.” Their response addresses only this point: “States that strategic decisions are long-term, high-impact choices about the direction and scale of the business, e.g. entering long-haul routes or merging with a rival.” 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
Marking points
- Recognises credit for the stated point: States that strategic decisions are long-term, high-impact choices about the direction and scale of the business, e.g. entering long-haul routes or merging with a rival.
- Identifies the missing requirement: States that tactical decisions are shorter-term choices on how to implement strategy, e.g. adjusting seasonal fares or flight schedules.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
27.
A product is classified as a 'dog' in the BCG matrix. Explain two strategic options available to the firm.
[2 marks] · no calculator
Marking points
- Explains divestment: selling or discontinuing the product to free resources for more promising products.
- Explains harvesting: minimizing investment and promotion to extract remaining cash flow before withdrawing, or repositioning into a niche if it has loyal buyers.
Examiner tip: A dog has low share in a low-growth market, so the question is whether to exit or extract value, not to invest heavily.
28.
Marking analysis: A learner attempts the following task: “A product is classified as a 'dog' in the BCG matrix. Explain two strategic options available to the firm.” Their response addresses only this point: “Explains divestment: selling or discontinuing the product to free resources for more promising products.” 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
Marking points
- Recognises credit for the stated point: Explains divestment: selling or discontinuing the product to free resources for more promising products.
- Identifies the missing requirement: Explains harvesting: minimizing investment and promotion to extract remaining cash flow before withdrawing, or repositioning into a niche if it has loyal buyers.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
29.
Evaluate whether a merger between two firms is likely to succeed, considering synergy and corporate culture.
[4 marks] · no calculator
Marking points
- Explains potential synergies, such as combined economies of scale, shared distribution and a larger market share.
- Explains the risk of culture clash, e.g. a role culture merging with a power culture, causing conflict and staff departures.
- Notes other risks such as integration costs, duplicated roles and loss of focus.
- Reaches a justified judgement, e.g. success depends on cultural compatibility and a clear integration plan.
Examiner tip: Many mergers fail on people and culture rather than on the financial logic.
30.
Marking analysis: A learner attempts the following task: “Evaluate whether a merger between two firms is likely to succeed, considering synergy and corporate culture.” Their response addresses only this point: “Explains potential synergies, such as combined economies of scale, shared distribution and a larger market share.” 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
Marking points
- Recognises credit for the stated point: Explains potential synergies, such as combined economies of scale, shared distribution and a larger market share.
- Identifies the missing requirement: Explains the risk of culture clash, e.g. a role culture merging with a power culture, causing conflict and staff departures.
- Identifies the missing requirement: Notes other risks such as integration costs, duplicated roles and loss of focus.
- Identifies the missing requirement: Reaches a justified judgement, e.g. success depends on cultural compatibility and a clear integration plan.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.