Check In test
Objectives and strategy
Questions
1
A mission statement:
(a)
contains specific and measurable targets which a business needs to achieve.
(b)
distinguishes between long term, medium term and short term goals.
(c)
is a qualitative statement to stakeholders about what a business exists to do.
(d)
states that the accounts of a business give a true and fair view of its performance.
2
A travel agency which has always sold European holidays to the general public has begun to
sell its European holidays to schools and colleges.
[1]
Into which of the four quadrants of Ansoff’s Matrix does this growth strategy fall?
(a)
Diversification
(b)
Market development
(c)
Market penetration
(d)
Product development
3
The Delphi technique assumes that a forecast is more accurate when:
(a)
compiled by a structured group of experts.
(b)
cyclical variation is ignored.
(c)
numerical data is used.
(d)
the intuition of senior personnel is relied on.
4
A business uses the plan-do-review cycle when implementing strategic decisions.
[1]
[1]
Which of the following activities is not part of the planning phase?
(a)
Agreeing budgets
(b)
Monitoring progress
(c)
Obtaining resources
(d)
Setting objectives
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[1]
1
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5
Which of the following performance measures are the local residents of a chemical
manufacturing company most likely to be interested in?
(a)
Capital budget variance
(b)
Environmental impact
(c)
Market share
(d)
Share dividends
6
Which of the following terms best describes the expected peak in ice-cream sales during the
summer months?
(a)
A boom phase in the business cycle
(b)
Cyclical variation
(c)
Seasonal variation
(d)
The growth phase of the product lifecycle
7
According to Porter’s Generic Strategies model which of the following strategies is likely to
give a business a competitive advantage?
(a)
Differentiation
(b)
Diversification
(c)
Marginal cost pricing
(d)
Mass marketing
8
A supermarket chain tries to improve its corporate social responsibility profile by operating a
scheme which pays for sports and leisure equipment for schools and community youth clubs.
[1]
[1]
[1]
Which of the following is not an expected consequence of running this scheme?
(a)
Improved profits
(b)
Improved public relations
(c)
Increased costs
(d)
Increased labour turnover
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[1]
2
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9
using an example, what is meant by the term ‘opportunity cost’.
Explain,
[2]
10
State one advantage and one disadvantage to a business of contingency planning.
[2]
11
Identify one force from Porter’s Five Forces model.
business make strategic choices.
[4]
12
Explain how this force can help a
Complete the decision tree below by entering the appropriate value into each of the nodes
and boxes labelled a - d.
[4]
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Mark scheme
Question
1 1
Answer
(c)
Marks
1
AO
1
Rationale
2
2
(b)
1
1
(a) Diversification requires there to be a new product as well as a new market.
(b) Correct answer: Same product to a different market.
(c) Market penetration involves selling more of the same product to the same market.
(d) Product development involves changing the product rather than the market.
3
3
(a)
1
1
(a) Correct answer The Delphi technique seeks to reach an agreed forecast by using
questionnaires to progressively narrow down the opinion of a structured group of experts.
(b): Time series analysis requires cyclical variation to be calculated, but this is not part of the
Delphi technique.
(c) The Delphi technique is a qualitative forecasting method. Numerical data is used in
quantitative methods.
(d) Intuition is sometimes the most reliable forecaster; however it is not part of the Delphi
technique.
4
4
(b)
1
1
(a) Agreeing budgets is part of the planning phase.
(b) Correct answer: Monitoring progress is part of the review phase, rather than the planning
phase.
(c) Obtaining resources is part of the planning phase.
(d) Setting objectives is part of the planning phase.
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(a) Specific and measurable targets are SMART objectives and would not be found in a mission
statement.
(b) A mission statement does not incorporate time scales.
(c) Correct answer: A document informing stakeholders of the purpose and function of a
business.
(d) Candidate confuses a mission statement with a statement from auditors.
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Question
5 5
Answer
(b)
Marks
1
AO
1
Rationale
6
6
(c)
1
1
(a) Candidate confuses a seasonal peak in the market with the peak of the business cycle.
(b) Cyclical variations are the variations that appear as a result of peaks and troughs in the
business cycle. They cover much greater periods of time than cyclical variations. Even in times of
boom or bust, ice-cream sales will peak in the summer months.
(c) Correct answer: The peak in ice-cream sales in the middle of the year is an example of
season a variation.
(d) Candidate confuses a seasonable peak in the market with the increasing sales experience
during the growth phase of the product lifecycle.
7
7
(a)
1
1
(a) Correct answer: Peter’s Generic Strategies includes three models for success: Cost
leadership, differentiation and niche (focus).
(b) Candidate confuses ‘diversification’ (Ansoff’s Matrix) with ‘differentiation’.
(c) Marginal cost pricing uses the additional cost of producing one more item to price a product. It
is not one of Peter’s Generic Strategies.
(d) Peter’s Generic Strategy recommends focusing on niche markets; mass marketing is the
antithesis of this
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8
(d)
1
1
(a) Marketing benefits of running such a scheme may well lead to increased profits in the long run.
(b) The general public tend to look favourably on businesses with a good CSR profile.
(c) Running the scheme and providing the equipment will have a financial cost for the
supermarket chain.
(d) Correct answer: It is extremely unlikely for an employee to want to leave a firm because of
additional CSR activities. Running a CSR scheme is likely to have a positive or no effect on labour
turnover. Labour turnover should not be confused with sales turnover.
Version 2
(a) A departmental manager or director is likely to be interested in budget variance.
(b) Correct answer: Local residents live in the area so are concerned with traffic congestion, air
pollution, water pollution, noise, litter etc.
(c) This is a performance measure which of more interest to directors and shareholders.
(d) Share dividends are likely to be of greatest interest to shareholders and prospective investors.
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Question
9
Answer
One mark for explanation.
Marks Guidance
2
Indicative content:
One mark for example.
(AO1 1)

(AO2 1)

the loss of the next best alternative which was
foregone when a decision was made
the benefits lost from not taking the next best
alternative
Exemplar response:
The benefits lost by choosing one option rather than
another (1). For example, a business is considering
spending its reserves on adding a new production line or
buying out its main supplier. If the business chooses to
add the new production line it loses all of the benefits of
buying out the new supplier. Benefits such as minimising
raw material costs and control of supplies (1).
10
One mark for the correct identification of an advantage.
(AO1 2)
One mark for the correct identification of a
disadvantage.
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2
6
Indicative content:

advantages:
o damage limitation
o recover faster
o minimise risk of catastrophic loss
o lower strategic risk
o business more likely to survive
o prepared for eventualities
o worse case scenario can be prepared for
o avoids the need for firefighting.
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Question
Answer
Marks Guidance

11
4
One mark for a correct identification, plus up to three
further marks for explanation.
(AO1 4)
disadvantages:
o time
o money
o opportunity cost
o wasted if negative event does not happen.
No context required.
Indicative content:





threat of new entrants
threat of substitute products
bargaining power of suppliers
bargaining power of customers
existing competitive rivalry.
Exemplar response:
According to Porter, if a business is considering a change
in strategic direction it needs consider the threat of
substitute products in the market (1). This is because the
greater the number of substitutes the more competition the
business is likely to experience (1). If the business chooses
to go along such a path it needs to bolster its competitive
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Question
Version 2
Answer
Marks Guidance
advantage with a strong brand (1) and aggressive
marketing (1).
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Question
12
Answer
One mark for each correct identification up to a
maximum of four identifications.
Marks Guidance
4
OFR applies to ‘d’ based on errors in calculation of a, b and
c.
(AO2 4)
Award full marks for d: £4.9 million (irrespective of
nodes a,b,c or workings).
Otherwise award:
1 mark for a: £14.1 million
1 mark for b: £4.8 million
1 mark for c: £6.9 million
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