M02-3-BUSMT-SP1-ENG-TZ0-XX

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Keycap Digit One

Paper 1

Question 1 - MaximumMarks - 17

This question involves evaluating different aspects of business strategy and operations for a company named Open Views. The questions will explore the rationale behind the company's growth strategy, the competitive advantages of small and medium-sized firms, and the effectiveness of the current marketing approach.

Question 1 - A

This question asks why Joseph Obeng believes that organic growth is the best strategy for Open Views, rather than going public or merging with other companies.

Question 1 - A - Answer

Joseph Obeng believes that organic growth is the best strategy for Open Views because it allows for natural growth funded by increased sales revenue, which can then be reinvested in the business in the form of additional assets. He values retaining control over his business and is proud of the personalized and bespoke service that Open Views offers. This level of service would be difficult for a larger company to replicate, as neither McGregor nor Blue Seas have been able to offer a similar service. Joseph has a hands-on leadership style and wants to make all major decisions himself. If the business grows too large, he would lose this control. Rapid growth could also lead to a loss of financial control if the business overtrades. He has rejected the idea of going public because there is a risk that he will lose control of the business if shares are bought by others, potentially leading to a takeover. Similarly, a merger would reduce his control and decision-making opportunities.

Question 1 - A - Answer - EC

The candidate’s response effectively identifies the key reasons why Joseph Obeng prefers organic growth. The explanation covers the importance of retaining control, the personalized service offered by Open Views, and the risks associated with going public or merging. The response is well-structured and demonstrates a clear understanding of the issues of personal and financial control. The candidate has provided a comprehensive answer that aligns with the marking scheme, reflecting a high level of business acumen.

Question 1 - B

This question requires an analysis of whether small and medium-sized firms, such as Open Views, have commercial and competitive advantages over multinationals like McGregor's and Blue Sea.

Question 1 - B - Answer

Small and medium-sized firms like Open Views can have several commercial and competitive advantages over multinationals: Personal Service: Customers may be willing to pay a higher price for a personalized service, which small firms can offer more effectively than larger companies. Flexibility: Small firms can react more quickly to changing market conditions due to less bureaucracy and quicker decision-making processes. Innovation, Dynamism, and Creativity: Small firms are often more entrepreneurial and willing to be creative, leading to innovative products and services. Employment Legislation: Small firms are often exempt from certain employment laws that apply to larger companies, potentially reducing costs. Niche Services and Products: Small firms can cater to specialized demand and may become monopoly suppliers within a niche market, which large firms might not find profitable. Government Support: Many governments offer financial assistance and grants to small firms, which can provide a competitive edge. Diseconomies of Scale: Large firms may suffer from inefficiencies as they grow, which small firms can avoid. However, there are also disadvantages: Less Economies of Scale: Small firms may have higher unit costs due to lower production volumes. Restricted Division of Labour: Small firms may lack specialist advice and expertise. Finance Issues: Small firms often face difficulties in raising finance and may have to pay higher interest rates on loans. Marketing and Market Research: Small firms may be less effective in marketing and market research, making them vulnerable if their niche market contracts. Capital for Expansion: Small firms may find it harder to obtain capital for future expansion. Recruitment Challenges: Small firms may struggle to attract skilled personnel.

Question 1 - B - Answer - EC

The candidate’s response provides a balanced analysis of the advantages and disadvantages of small and medium-sized firms compared to multinationals. The discussion is well-supported with relevant examples and expands on the ideas presented. The response demonstrates a clear understanding of the commercial and competitive landscape, and the candidate has effectively illustrated both sides of the argument. This comprehensive analysis aligns with the marking scheme and reflects a high level of critical thinking and business insight.

Question 1 - C

This question asks you to examine Open Views' present marketing approach and consider whether it needs reviewing and refining.

Question 1 - C - Answer

Open Views' present marketing approach includes minimal marketing efforts, relying primarily on word of mouth, personal recommendations, brochures, and direct mail. Advertising is limited. While these methods have been cost-effective and well-focused, there are concerns about their sufficiency. If customer satisfaction levels fall, leading to fewer rebookings and recommendations, the current approach may not be sustainable. As the firm grows, it may require wider coverage and different promotional strategies, especially if new projects like the commercial center or cottages are developed. Additionally, lower occupancy rates during off-peak months suggest the need for a new marketing approach. Undifferentiated marketing is not suitable for a small/medium-sized firm like Open Views. Suggestions for TV advertising should be rejected in favor of more targeted and cost-effective methods. Imaginative PR exercises, increased direct mailing, and focused advertising in specialist publications could be more beneficial.

Question 1 - C - Answer - EC

The candidate’s response provides a clear examination of Open Views' existing marketing approach and offers a thoughtful review of potential options. The analysis reflects an appreciation of the current cost-effectiveness while suggesting intelligent refinements. The response is well-structured, with a logical progression of ideas and a focus on practical and targeted marketing strategies. This aligns with the marking scheme and demonstrates a high level of understanding of marketing principles and their application to a small/medium-sized firm.

Question 2 - MaximumMarks - 14

This question involves understanding different management styles and their effectiveness in a business context. Specifically, it focuses on the leadership approach and management style of Joseph Obeng, and the incentives that could be used to improve productivity and motivation among staff.

Question 2 - A

This question asks you to explain what is meant by an autocratic manager.

Question 2 - A - Answer

An autocratic manager is one who exercises authoritarian control over their employees. This type of manager does not consult with their employees but instead issues directives that must be followed. Communication tends to be one-way, flowing from the manager down to the employees, and feedback is neither invited nor encouraged. Often, orders are reinforced with threats of punishment if tasks are not completed or are not completed successfully.

Question 2 - A - Answer - EC

The candidate has provided a clear and accurate definition of an autocratic manager. The explanation includes key characteristics such as the lack of consultation, one-way communication, and the use of threats to enforce compliance. This response demonstrates a solid understanding of the concept and would be awarded full marks for its completeness and clarity.

Question 2 - B

This question asks you to discuss the effectiveness of Joseph Obeng's leadership approach and management style.

Question 2 - B - Answer

Joseph Obeng's management style is a unique blend of different approaches. Major decisions are centralized, and when Joseph is present, his style is hands-on and paternalistic. However, when he is absent, the management style shifts to a more laissez-faire approach. The staff, being relatively experienced, can cope in most situations, but financial and performance indicators suggest that the lack of consistency and support is affecting staff efficiency and motivation.While the staff appreciates Joseph's personal approach, they are becoming frustrated by his whirlwind visits, lack of consistency, and frequent changes of mind. As the business has grown, it has become evident that Joseph needs to delegate some decision-making responsibilities, as managing all major decisions is proving to be too overwhelming.

Question 2 - B - Answer - EC

The candidate has accurately described Joseph Obeng's leadership approach and management style, highlighting both the hands-on and laissez-faire elements. The discussion includes specific examples from the case, such as the staff's frustration with Joseph's inconsistency and the impact on efficiency and motivation. This response demonstrates a thorough understanding of the effects of different management styles on a business and would be awarded full marks for its detailed and insightful analysis.

Question 2 - C - i

This question asks you to select four monetary and two non-monetary incentives that Joseph Obeng and Peter Storm could use to improve the productivity and/or motivation of their staff.

Question 2 - C - i - Answer

Possible monetary incentives include:<ul><li>Overtime</li><li>Performance-related pay / piece rates</li><li>Bonuses</li><li>Profit sharing</li></ul>Possible non-monetary incentives include:<ul><li>Club membership</li><li>Employee of the month awards</li></ul>

Question 2 - C - i - Answer - EC

The candidate has selected relevant and appropriate incentives, both monetary and non-monetary, that could be used to improve productivity and motivation among staff. The selection is well-balanced and demonstrates an understanding of different types of incentives. This response would be awarded full marks for its relevance and appropriateness.

IB BUSINESS MANAGEMENT SL, Paper 1, May, 2002, TZ0, Solved Past Paper