| Date | November 2019 | Marks available | 10 | Reference code | 19N.1.HL.TZ0.4 |
| Level | Higher level | Paper | Paper 1 | Time zone | Time zone 0 |
| Command term | Discuss | Question number | 4 | Adapted from | N/A |
Question
Refer to the Accord case study (SL/HL paper 1 Nov 2019).
Problems are continuing with Enrich drinks. Aran is becoming increasingly frustrated with the lack of growth of sales. He always wants to succeed and is driven by the need to get tasks completed. The Enrich part of his life is not a success. He blames the workforce. The workforce does not share his vision. Employees are mainly part-time workers and parents who value jobs that enable them to fit work around school hours. As Aran has become more autocratic in his leadership style, labour turnover has increased. Last month, from a workforce of twelve, one retired and two left for what they called “better jobs”.
There are also increasing problems with the quality of Enrich drinks, as batches of Enrich are rejected by the quality control department. Elsie, the manager of the production department, blamed suppliers, saying that Aran had damaged business relations with them due to his impatience. Elsie also blamed Aran for poor stock management. She has proposed total quality management (TQM) as a solution to these problems.
Detox
Accord decided to start the production and marketing of Detox, the green tea drink that helps athletes to relax. Detox proved to be very successful. Encouraged by the success and boosted cash inflow, Kayla is considering producing a range of snack bars based on Enrich and Detox flavours and recipes. Accord would use the Enrich brand name for the snack bars. The market for healthy snack bars is very competitive and dominated by a few large companies who spend large amounts of money on advertising. The market is growing rapidly – some market researchers estimate by 34 % per annum. There are many examples of small businesses entering the market successfully on a small scale. Kayla estimates that the proposal would involve an investment of $100 000, with forecast net returns of $80 000 for four years. Aran thinks that the money could be better spent on marketing Enrich drinks.
Define the term labour turnover.
For Kayla’s proposal calculate the payback period.
For Kayla’s proposal calculate the net present value (NPV) using a discount rate of 6 %*.
With reference to Accord, explain one advantage and one disadvantage of using total quality management (TQM).
Discuss whether Aran and Kayla should change the organizational culture of Accord to overcome the problems with Enrich drinks.
Markscheme
Measure the rate at which employees are leaving a business, calculated as:
No need for formula if put into suitable words such as ideas of proportions, time periods, employees leaving, employee numbers.
Award [2] for a complete definition.
Award [1] for some understanding of labour turnover, eg it mentions “leaving” but not “employees” or time periods.
Payback measures the time taken to pay back the original investment.
Original investment = $100k.
Paid back at a net $80k per year.
After 1 year paid back $80k so $20k more needed.
$20k takes year = 3 months.
So payback = 1 year 3 months. Allow 1 ¼ years, 1.25 years, 15 months
Award [2] if correct answer with units.
Award [1] if correct answer but no units, or a reasonable attempt with errors.
Allow rounding.
Award [2] if correct answer.
Award [1] if correct answer but no units, or a reasonable attempt with errors.
Advantages:
- There are quality issues that could be addressed – batches are being rejected.
- There are supply chain issues as confirmed by Elsie that could be reduced with TQM.
- It could increase efficiency and therefore profits, which are essential to a small business.
- Could influence Aran’s impatience with supply chain.
Disadvantages:
- Accord is a small business and may not have resources.
- It employs part-time staff who may not take on TQM ideas.
- TQM is designed for larger, more complex operations.
Beware of answers that are only about general quality issues which should not be rewarded unless linked to TQM.
Accept any other relevant advantage/disadvantage.
Context comes from issues identified in the case and the nature of the business.
Award [1] for each advantage/disadvantage of TQM up to a total of [2].
Award [1] for putting each advantage/disadvantage into context up to a total of [2].
Refer to Paper 1 markbands for May 2016 forward, available under the "Your tests" tab > supplemental materials.
Problems with Enrich related to culture:
- Sales not strong
- Aran getting frustrated
- Workforce do not share vision
- Mainly part-time interests outside of work
- Aran’s autocratic style has increased labour turnover
- Quality problems (may overlap with (c))
- Problems with suppliers (may overlap with (c))
- Some disagreement as to who is to be blamed.
Potential culture issues:
- Autocratic leadership
- Lack of sharing of vision
- Signs of disagreements and different styles.
However, some problems seem down to Aran’s personality (person culture?): impatient, driven, wants to succeed, task-oriented. Is this culture, can it be changed?
Other problems are due to marketing issues, which may not be due to culture.
Can culture be changed?
- TQM can change culture. Is it really suitable? It would certainly examine all the processes and business relationships.
- Clearer vision and training staff may help.
- Maybe task culture is not helping. Could this become more one of roles or some other culture?
- Is Aran’s style part of the culture? Maybe a different leadership style.
- Might it be better to employ full-time workers? Is this realistic?
Culture seems to be power based, could change to role based or task based.
If there are clear benefits from changing then it should be done, however, difficult to make a case?
Accept reasonable alternative answers.
Marks should be allocated according to the paper 1 markbands for May 2016 forward section B.
Award a maximum of [4] for a purely theoretical answer or with no effective use of case (eg, only repeating case material without development).
Award a maximum of [6] if culture change is considered but there is limited use of data, or if there is good analysis of data with limited consideration of culture change. (eg if main focus is on leadership with little link to culture).
Award a maximum of [8] if culture changes are considered and there is good use of data but there are no significant judgements.
