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Date November 2018 Marks available 20 Reference code 18N.1.HL.TZ0.5
Level Higher level Paper Paper 1 Time zone Time zone 0
Command term Recommend Question number 5 Adapted from N/A

Question

Sam and Finn are having difficulties resolving their disagreements. Finn was convinced that the problems at AFA should be resolved by a change in the organizational structure. Sam, however, was convinced that he should strengthen the organizational culture. Sam reluctantly accepted the need for greater delegation but insisted that there should be more training for all employees on the culture and ethics of AFA.

As part of greater delegation, Kim was given responsibility for the relationship between AFA and its suppliers. Kim is concerned that she spends a lot of time chasing orders that do not arrive and dealing with the poor quality of orders. Some products have to be thrown away because they have passed their sell-by dates*. Others have to be returned to suppliers because the outlet managers do not accept the poor quality and therefore cannot be sold.

AFA’s stock of fair trade woollen hats has now reached 500, with an annual sales average of around 1250 for the whole business. Kim wants to introduce lean production including total quality management (TQM) throughout AFA’s operations and has created a Gantt chart to show the stages in implementation.

 

Figure 1: Gantt chart for the implementation of lean production including TQM at AFA

 


* sell-by dates: dates printed on the packaging of products that state the date after which the product can no longer be sold.

Sam is still impatient and keen to grow the business. He is becoming increasingly frustrated by problems with suppliers, particularly AB Clothing (ABC). Frequently, orders are late and wrong, and quality is becoming a major problem. Sam has heard rumours of disagreements amongst ABC’s board members and discontent from major shareholders. ABC’s share price has fallen 25 % in the last month. Productivity has fallen and strikes have been threatened. Recently, several press reports linked ABC to using child labour and suggested that the company did not always use organic materials for its products. Sam is wondering whether to take over ABC. He is sure that many of the problems at ABC could be resolved and that ABC would become, once again, a reliable supplier.

Sam has put together some information. Figure 2 relates to AFA and shows a summary of issues and additional information. Tables 1 and 2 provide data on ABC.

Figure 2: Fishbone diagram of the current situation at AFA

Table 1: Accounts for ABC for the years ending 2017 and 2018

Table 2: Selected marketing information for ABC

 

Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).

Using the case study, resources and appropriate business tools, recommend whether AFA should take over ABC.

Markscheme

Refer to Paper 1 markbands for May 2016 forward, available under the "Your tests" tab > supplemental materials. 

Arguments for:

Arguments against:

The decision is likely to hang on the extent to which Sam/AFA can solve ABC’s problems.

Accept any other relevant discussion.

Marks should be awarded according to the paper 1 mark bands for May 2016 forward, section C.

 

Criterion A: possible theories, management tools and techniques include: Accounting techniques and ratios, interpreting data, mergers/takeovers, Fishbone, Boston Matrix, Ansoff, marketing issues, HRM/management issues, SWOT/Force Field/Decision trees (if used with a sense of purpose), the importance of assumptions.

For [4]: Tools, techniques and theory understood and developed well with some relevance to the additional stimulus material.

For [2]: some understanding of at least two tools, techniques or theories, but not developed.

 

Criterion B: the tools, techniques, theories and stimulus applied to the decision. Application will be judged by the use of the stimulus material.

For [4]: relevant tools, techniques and theories are applied well to the case study context and additional stimulus material, the application is convincing and relevant.

Remember, understanding has been rewarded in Criterion A.

For [2]: some limited context/application but not developed. Use of tools limits candidate’s ability to make reasoned arguments.

 

Criterion C: Takeover discussed in balanced way, conclusions drawn and recommendation
made/supported.

For [4]: There needs to be a clear recommendation supported by the data.

For [2]: Some limited arguments but not justified. Or limited analysis (e.g. one-sided argument) but candidate arrives/draws a reasoned conclusion.

 

Criterion D: Structure: This criterion assesses the extent to which the student organizes his or her ideas with clarity, and presents a structured piece of writing comprised of:

For [4]: all four elements present, clearly organized.

For [2]: No logical structure but other elements present or logical structure with other elements missing.

 

Criterion E: Stakeholders:

For [4] Individual(s) and group(s) are considered in a balanced way. ie needs 1 or more of both individuals and groups

For [2]: one individual or group considered appropriately, or several individuals or groups considered superficially.

Examiners report

[N/A]

Syllabus sections

Last exams 2023 » Unit 1: Business organization and environment » 1.6 Growth and evolution » Economies and diseconomies of scale
Last exams 2023 » Unit 1: Business organization and environment » 1.7 Organizational planning tools (HL only) » The value to an organization of these planning tools
Last exams 2023 » Unit 1: Business organization and environment » 1.6 Growth and evolution » The merits of small versus large organizations
Last exams 2023 » Unit 1: Business organization and environment » 1.7 Organizational planning tools (HL only) » The following planning tools in a given situation: fishbone diagram, decision tree, force field analysis, Gantt chart
Last exams 2023 » Unit 1: Business organization and environment » 1.6 Growth and evolution » The difference between internal and external growth
Last exams 2023 » Unit 1: Business organization and environment » 1.6 Growth and evolution » The following external growth methods: mergers and acquisitions (M&As) and takeovers, joint ventures, strategic alliances, franchising
Last exams 2023 » Unit 1: Business organization and environment » 1.6 Growth and evolution » The role and impact of globalization on the growth and evolution of businesses
Last exams 2023 » Unit 1: Business organization and environment » 1.6 Growth and evolution » Reasons for the growth of multinational companies (MNCs)
First exams 2024 » Unit 1: Introduction to business management » 1.5 Growth and evolution » 1.5.5 External growth methods
Last exams 2023 » Unit 1: Business organization and environment » 1.6 Growth and evolution » The impact of MNCs on the host countries
First exams 2024 » Unit 1: Introduction to business management » 1.5 Growth and evolution
Last exams 2023 » Unit 1: Business organization and environment » 1.6 Growth and evolution
Last exams 2023 » Unit 1: Business organization and environment » 1.7 Organizational planning tools (HL only)
Last exams 2023 » Unit 1: Business organization and environment
First exams 2024 » Unit 1: Introduction to business management
Last exams 2023
First exams 2024

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