With reference to MM, outline two sources of finance suitable for taking over the film studio in India (lines 144–147).

Explain how a formal system of appraisal may have avoided the problems caused by Clare (lines 86–100).

The following four sources of finance are suitable: 

• loan capital (i.e. long term bank loan, mortgage)
• share capital (either through new shareholders, or by changing MM legal status to public limited company i.e. going public) venture capitalists / business angels
• grant / subsidies from the Indian government (to support FDI); this answer is unlikely but acceptable.

Sale of assets is a suitable method but there is no context to suggest that this is an option for MM. Award one mark for sale of assets but not the second for context.

Other sources are not suitable (e.g. retained profit, leasing, crowdfunding, overdrafts, trade credits, etc.) and must not be credited.

Mark as a 2 + 2.

Award [1] for each appropriate source and a further [1] for an outline of the source in context.

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

Candidates are expected to show some understanding of one or more of the approaches to appraisal, including: 

• Formative
• Summative
• 360-degree
• Self-appraisal

They apply both to Clare as an appraiser (Claire appraising her staff) and Clare as an appraisee (Clare being appraised by her own line manager). The problems caused by Clare should have been identified earlier on, before they escalated into such a conflict where employees have asked for Clare to be dismissed for harassment (line 99).

Clare seemingly resented the fact that staff in her department went to her own line manager to complain about her behind her back, without telling her directly. A system of formative appraisal may have made her aware of the problems earlier on, if she had regularly and formally asked her staff about their work and their progress. Of course, they may have been reluctant to tell her the truth, which is why a 360-degree appraisal, with anonymous feedback from her staff about her own performance, could have made her aware of the extent of their dissatisfaction and their feelings of being bullied.
Similarly, a summative appraisal of Clare (by her own line manager) could have identified not only Clare’s positive results (“Customer satisfaction is very high, and some of the marketing strategies designed by Clare’s team have won awards”, line 90), but also areas of improvement, for example about how, as a leader, she reflects MM core values.
This said, it is not certain that formal systems of appraisal would have avoided all the problems: the way Clare reacted when she heard about her staff feelings (“she was rude to them, blocked their pay rises and threatened them with less interesting work” line 98) implies that her autocratic style is not aligned with MM cultural values. MM “considers it important that the organizations with which it works value freedom of expression” (line 60) – clearly Clare herself does not believe that this applies to her staff.

Accept any other explanation.

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.

Award a maximum of [3] for a theoretical answer.

Award a maximum of [4] for a descriptive answer.

Most candidates showed some understanding of sources of finance in general, however some failed to take the context of MM into account: some candidates, for example, answered about overdrafts and this is short-term and not suitable for such a high amount ($100 million).

The few candidates who chose Question 2 did so because their knowledge of appraisal systems was robust enough – and they indeed wrote good answers about appraisal systems such as 360-degree appraisal and self-appraisal. Some excellent answers also displayed very good critical thinking skills, for example about the fact that self-appraisal may not be fruitful in Clare’s case, as she lacks self-awareness about her leadership style, or 360-degree appraisal may only be successful if her staff feel that they can share their views anonymously.