Applied Business Question 2019

Applied Business Question 2019

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About the ABQ


1 The Higher Level Leaving Certificate Business Paper consists of three sections.
2 Section 2 which is the Applied Business Question (ABQ) is a compulsory question.
3 The ABQ consists of a single practical Case Study Business Question – 80 marks are available, representing 20% of the total marks.
4 The text and questions of the ABQ are based on three specified units of the syllabus, out of a total of seven units, which alternate (change) on an annual basis. In 2019 the ABQ will be based on Units 1, 2 and 3 of the syllabus, similar to the 2009 and 2014 examinations, as the ABQ operates on a five year cycle.

Methodology


  • This section requires you to Name, Explain and Link for each point. A high level of synthesis (i.e. combining different elements into the one answer) must be established and should therefore be done when you are fresh. Evaluation may be also required.
  • In answering the questions on the ABQ candidates must explain and make use of relevant knowledge / theory (and understanding) gained in the subject while studying the course in addition to the relevant links from the ABQ.
  • Linking of points made in your answer with the text by relevant quotes / phrases / statements from the ABQ is essential. It is recommended that you present the link / quote in a different colour ink. A DIFFERENT / SEPARATE link is required for each point of theory made within each part of the ABQ. A link will not be awarded marks without having the relevant theory attached.
  • Read the ABQ provided in full before reading the questions, then go back and highlight the relevant points / links in the text.
  • Present your answers to each part of the question in point form and be sure to link or quote from the text of the ABQ in your answer, even if you are not specifically requested to do so.
  • The methodology that must be used can be seen by looking at the structure of the sample answers shown below.

Sample Q & A


Sample 1 – ABQ suitable for Leaving Cert 2019

Frontline Furniture Ltd.

abq_2019_1Michael Buckley, when receiving the Exporter of the Year Award from Enterprise Ireland, made the point that he is now managing a large manufacturing company dealing with issues such as maintaining the quality of the furniture and coordinating the work of various departments. Whereas his father Peter had shown enterprise when he established the company in 1990. He bought a piece of land on the main Dublin to Cork road and with two craftsmen began manufacturing furniture. Early customers included Arnotts and Brown Thomas. Peter had been able to price competitively by buying fabrics straight from mills in Belgium, Italy, Turkey and America.

Michael took over the management of the company in 2014 when sales were at €7 million. Michael is a good listener and adopts a hands-on approach. He can be seen daily walking around the factory, talking to staff and getting feedback. Michael has great contacts in business through his role as being President of the Dublin Chamber of Commerce and spends a lot of time networking, asking other members what they are doing to cope with various issues such as shortage of suitable staff. Frontline Furniture has increased staff numbers from 40 to 60 in the last two years. Michael motivates staff by paying them well, having as many employees as possible organised into teams and involved in making decisions.

Part of the factory was converted into a showroom. They set up a website and in September 2016 Frontline Furniture opened to the public for the first time. “Five retailers who previously had sold our furniture did not like us selling the same goods cheaper than they were and stopped dealing with us.” However the move proved successful and sales are up 20% since. The opening of the factory shop did not affect their relationship with retailers in other European markets which accounts for 40% of revenue.

1A Analyse the relationship between Frontline Furniture and the furniture retailers.

(30 marks)

Sample Answer 1A – Analyse the relationship between Frontline Furniture and the furniture retailers

Competitive relationship – Both go after the same thing but only one gets it. Each tries to win over the other (win/lose). The various retailers compete with each other for market share. Michael is prepared to take further risks to develop the business and to use the profits for expansion. Competition could take the form of a price war, advertising or boycott of goods. Conflict can be resolved by non-legislative or legislative means.

Link: They set up a website and in September 2016 Frontline Furniture opened to the public for the first time. “Five retailers who previously had sold our furniture did not like us selling the same goods cheaper than they were and stopped dealing with us.”

Co-operative relationship – Working together towards a common goal/acting in a mutually beneficial manner (win/win). The relationship is co-operative when the manufacturer gives open, transparent and honest information to the retailer e.g. quality of goods, delivery dates and payment dates.

Link: The opening of the factory shop did not affect their relationship with retailers in other European markets which accounts for 40% of revenue.

1B Evaluate how Michael can use his management skills to ensure the continued success of Frontline Furniture Ltd. (Evaluate each of the three skills separately).

(30 marks)

Sample Answer 1B – Evaluate how Michael can use his management skills to ensure the continued success of Frontline Furniture Ltd.

Communication is concerned with the processes of transferring ideas,  information and messages from a sender to a receiver with the main purpose being the understanding by the receiver of the sender’s message.

Downward Communications: Instructions go from a superior to a subordinate.

Upward Communications: allow suggestions to be reported to the superior by the subordinate. New and changed work practices should be made in consultation with staff – consultation implying good two-way communication exists. The advanced ICT allows communication to be efficient, speedy, and accurate.

Link: Michael is a good listener and adopts a hands-on approach. He can be seen daily walking around the factory, talking to staff and getting feedback

Evaluation:  In my opinion Michael communicates regularly with staff, and actively encourages staff to put forward suggestions for improvements. He values his staff and recognizes the contribution that they have made to the business. He encourages feedback from staff and customers. This allows any confusion or misunderstandings to be resolved quickly.

Motivation involves putting factors in place that cause people to behave in certain ways. Motivation may be defined as the factors that cause people to act or behave in certain ways. People’s behaviour can be influenced (controlled) by motivating them to meet their unsatisfied needs: (1) A need (2) A goal (3) Action (4) Feedback. Employee motivation is the key to achieving results. Theories of motivation include Maslow’s Theory of Motivation and Mc Gregor’s Theory X and Theory Y.
Link: Frontline Furniture has increased staff numbers from 40 to 60 in the last two years. Michael motivates staff by paying them well, having as many employees as possible organised into teams and involved in making decisions.

Evaluation:  In my opinion there appears to be a very positive work atmosphere in FF Ltd. The employees have accepted the changes to working conditions. Michael is very good at motivating the staff.

Leadership involves directing and assisting people in order to ensure work is done effectively so that objectives can be met. Leadership allows an individual to positively influence how others behave so that they contribute voluntarily to achieving group goals. This encourages people to contribute to the decision-making process. People’s feelings and emotions are considered important by the leader. Shared solutions to problems are sought, motivation and cooperation levels are very high, and there is excellent job satisfaction. Good leadership encourages an enterprise culture within business. Leadership Styles include Autocratic (Authoritarian), Laissez Faire and Democratic.
Link: Michael has great contacts in business through him being President of the Dublin Chamber of Commerce and spent a lot of time networking, asking other members what they are doing to cope with various issues such as shortage of suitable staff.

Evaluation:  In my opinion Michael is a democratic leader, adopting a democratic and facilitative approach to managing. This seems to be working well as sales are up 20%.

1C Explain the differences between the activities of enterprise and management using appropriate examples from the text.

(25 marks)

Sample Answer 1C – Differences between the activities of enterprise and management.

Entrepreneurs require certain skill such as being decisive and creative.

Decisive: Entrepreneurs have the ability to make quick and clear decisions so as not to miss opportunities. The issue of timing is crucial e.g. decisiveness when dealing with suppliers and contractors. They take full personal responsibility for the actions and decisions they make.

Link: He (Peter) bought a piece of land on the main Dublin to Cork road and with two craftsmen began manufacturing furniture.

Creative: Entrepreneurs are good at coming up with new ideas or new ways of doing things/‘thinking outside the box’. They expand their minds to what is beyond the ordinary through research and the collection of data/ability to see things in new ways. They are prepared not only to be different but tend to have a vision of the future.

Link: Peter had been able to price competitively by buying fabrics straight from mills in Belgium, Italy, Turkey and America.

Management includes organising and controlling.

Organising involves getting things done through some form of organised structure so that a business, with its activities coordinated, has the best chance of reaching its objectives. Possible structures are line/functional organisation, and matrix structure.

Link: (Michael) co-ordinating the work of various departments.

Controlling involves measuring the deviations from planned performance and taking action to correct them. Elements in a business requiring control include: Quality control, Stock (Inventory) control, Credit control, Budgetary control.

Link: (Michael) managing a large manufacturing company dealing with such issues as maintaining the quality of the furniture.

Sample 2 – ABQ and answer from Leaving Certificate Exam 2014 (Units 1,2 and 3)


Atlantic Surf
abq_2019_2Shay Doherty, a native of Summerstown, is the owner of Atlantic Surf, a surfing school located on the seafront at Summerstown Beach in County Donegal. In 2008 Shay was enjoying life in Australia and perfecting his big wave surfing skills when he read an article in the ‘National Geographic’ describing the quality of the giant waves surfers were experiencing along the west coast of Ireland. Inspired by the article and having always wanted to have his own business he decided to return home from Australia in 2008 to set up Atlantic Surf. Having tried and failed in business in the past Shay realised that he needed to carry out some market research and get assistance with this venture. Shay contacted the Irish Surfing Association (ISA) and received valuable advice on health and safety legislation, on how to network and on the importance of having a web presence. He prepared a business plan and received a business start-up grant of €10,000 from Donegal County Enterprise Board. He used the grant together with €30,000 he had saved while working in Australia to establish Atlantic Surf, an ISA approved surfing school.

From the outset Shay understood that location would be a key factor driving business success. While researching property sites he spotted a suitable retail premises located on the seafront at Summerstown. The property was advertised as being available for immediate use for an annual rent of €10,000. Given the economic climate at the time and the collapse in property prices in Summerstown, Shay believed that a better deal could be agreed. He telephoned the landlord and suggested a more realistic price of €7,500. This price was rejected and both parties entered into negotiations with the objective of concluding a legal contract. In April 2009, just before celebrating his twenty-eighth birthday, Shay was delighted when the landlord said yes to an annual rent of €8,000. Shay secured the premises and paid €8,000 to the landlord. The necessary documentation for the rental was signed in the solicitor’s Summerstown Office in time for the busy summer surfing season.

Shay decided to open a ‘one stop surf shop’ in the rented premises and appointed Karen, a champion surfer, as its manager. The shop sells high quality stock including wetsuits, surfboards, kite surfing equipment and Atlantic Surf branded beach clothing. In addition, it rents out wetsuits and surfboards. From the beginning, Karen adopted a cash sales only policy with customers and negotiated a 30 day credit period with suppliers. While very pleased with the high stock turnover of the Atlantic Surf branded beach clothing, she had some concerns because the annual stocktake revealed a high level of kite surfing equipment still unsold.  To assist with cash flow, Karen decided to use the website to highlight offers such as six  surfing lessons for the price of five if payment is made in advance. Karen believes quality development is key to business success and she is hoping to apply for Quality Standard Certification in the near future.

(2A) Illustrate what it means to be an entrepreneur with reference to Atlantic Surf.

                                                                                (20 marks)

Sample Answer (2A) – What it means to be an entrepreneur with reference to Atlantic Surf.

Being an entrepreneur in Atlantic surf involves:

Innovative/Creative – Entrepreneurs are good at coming up with new ideas. They are constantly looking for new ideas and ways of improving what they do. Entrepreneurs show imagination, initiative, resourcefulness and readiness to undertake new projects. They think outside the box to develop new products or new versions of existing products.

Link: He read an article in “National Geographic” describing the quality of the giant waves surfers were experiencing.

Risk Taker – Being an entrepreneur involves taking both personal and financial risk in pursuit of a business idea. Successful entrepreneurs are not afraid of taking risks. They are realistic risk takers.

Link: He used the grant together with €30,000 he had saved while working in Australia to establish Atlantic Surf.

Initiative/Exploiting opportunity – Shay showed initiative by bringing his surfing experience/skill to Ireland and taking advantage of Ireland’s growing reputation for quality waves. Shay saw an opportunity presenting itself in the growing interest in surfing along the west coast of Ireland.

Link: Inspired by the article and having always wanted to have his own business he decided to return home from Australia in 2008 to set up Atlantic Surf.

Resilient /Confident – Entrepreneurs are not put off by failure. Entrepreneurs have a strong sense of self-belief and conviction about their own business ideas. Shay showed confidence and belief in Atlantic Surf. He sees failure as an opportunity to learn. Having ambition and having a strong desire for success or achievement is central to being an entrepreneur.

Link: Having tried and failed in business in the past

(2B) ‘For a contract to be legally enforceable certain essential elements must exist.’ Discuss this statement with reference to the rented premises at Atlantic Surf.

(30 marks)      

Sample Answer (2B)

Offer: A promise by the person making the offer to be bound by the offer provided the terms of the offer are accepted. The offer can be made orally, in writing, or by conduct and is a clear indication of the offeror’s willingness to enter into an agreement under specified terms.
Link:  He telephoned the landlord and suggested a more realistic price of €7,500.
Acceptance: It must be identical to the offer without any changes or conditions and communicated to the offeree in the time specified.
Link: Shay was delighted when the landlord said yes to an annual rent of €8,000.
Legality of form: Certain contracts, to be considered legal, must be drawn up in a particular manner. Some contracts must be in writing if they are to be legally valid. These include: insurance policies; Hire Purchase agreements; the sale of property or land; share transactions; consumer credit and bank loans.
Link: The necessary documentation for the rental was signed in the solicitor’s office.
Consideration: Each party in a contract must give something of value to the other party. Something of value must be exchanged. So long as consideration exists, a court of law will not question its adequacy, provided it is of some value. Consideration is usually some monetary payment but it could also be something valuable exchanged as part of the contract.
Link: Shay secured the premises and paid €8,000 to the landlord.
Capacity to contract: All natural persons (human beings) and legal/corporate persons, such as companies, have the legal right to enter freely into a contract. The following generally do not have the capacity to contract: Infants (those under 18 years of age) except in certain cases e.g. necessities; persons under the influence of drink or drugs; Insane persons; Bankrupt persons; Diplomats; Companies operating outside their powers/ Ultra Vires.
Link: In April 2009, just before celebrating his twenty-eighth birthday…
Intention to Contract: Both parties to the contract must be aware that they are entering into a legally binding agreement that could see them in court if they fail to keep their side of the agreement. With domestic and social arrangements there is no intention to create a legally binding contract.

Link:  both parties entered into negotiations with the objective of concluding a legal contract.

Legality of Purpose: Contracts must be compliant with the laws of the land. Contracts may not be for an illegal activity such as smuggling or defrauding the state of taxes.

Link: While researching property sites he spotted a suitable retail premises.

(2C) Evaluate the effectiveness of the systems of management control in operation at Atlantic Surf.

(20 marks)

Sample Answer (2C)

Stock Control: Stock Control is concerned with keeping optimum stock levels so that Atlantic Surf doesn’t have too much stock or too little stock. Stock control can achieve efficiencies by eliminating the costs associated with carrying too much or too little stock i.e. high storage and administration costs resulting from too much stock and  production stoppages due to a lack of raw materials and components for production, and lost sales orders because of a lack of finished goods for sale.
Link: While very pleased with the high stock turnover of the Atlantic Surf branded beach clothing.

Evaluation: In my opinion Karen is doing a good job at stock control. She became aware as a result of the annual stock take that there is a high level of kite surfing equipment still unsold and can now take action to remedy this problem.

Quality Control: Quality control is concerned with checking/inspecting work done to ensure it meets the required quality standards of the business. It could involve physical inspections, quality circles. Effective quality control leads to efficiencies in business because consistently high quality products are being sold, resulting in repeat purchasing, consumer loyalty and the ability to charge higher prices.
Link: “The shop sells high quality stock including wetsuits, surfboards, kite surfing equipment and Atlantic Surf branded beach clothing. ”

Evaluation: In my opinion Karen believes quality development is key to business success and she is hoping to apply for Quality Standard Certification in the near future, such as ISO 9000. This symbol is recognised worldwide and would be of major benefit to Atlantic Surf in marketing its products internationally.

Credit Control: Credit Control means controlling the amount of credit given to customers and the payment period given to customers. Good credit control ensures that payments are made in full and on time. It involves checking credit worthiness of customers, setting credit limits, credit periods and deciding on penalties for late payments. It seeks to minimise bad debts.
Link: To assist with cash flow, Karen decided to use the website to highlight offers such as ‘6 surfing lessons for the price of 5’ if payment is made in advance.

Evaluation: In my opinion Karen is doing a very good job in relation to financial control. She uses cash sales only with customers but has negotiated a 30 day credit period with suppliers.

Student Activity – Sample ABQ suitable for Leaving Cert 2019. (Units 1, 2 and 3)   


Rivertown Social Services and Rivertown Office Supplies Ltd.

abq2019_3In 2000, both Rivertown Social Services and Rivertown Office Supplies Ltd. were both founded. Rivertown Social Services (RSS), a voluntary organisation, began by providing meals on wheels to people in Rivertown. It was staffed by ten volunteers who used their own cars to transport the meals. RSS now (2018) has ten vans, three mini buses, over ten employees and eighty volunteers. Its services include providing meals on wheels, a free laundry service, a crèche as well as activities for the elderly. It relies heavily on fund raising and Health Service Executive (HSE) grants for its existence.

The work is coordinated by a part-time Chief Executive who has been successful in recruiting volunteers and employees to date. However at the 2018 Annual General Meeting the feeling was that the organisation is now at a stage when a professional business manager should be recruited, who would help RSS expansion. Such a person would give RSS the necessary expertise and confidence in all areas of management, for example, planning and organising.

Mary Walsh established Rivertown Office Supplies Ltd. to offer a range of office equipment and stationery. Sales have grown rapidly in recent years; turnover/sales now stand at €4 million an increase of 15% on the previous year. Staff members have contacted their Trade Union to express their desire for a substantial pay increase. A demand for a pay increase of 20% has been submitted to Rivertown Office Supplies Ltd.

Modern office equipment is very complex. Mary only sends younger workers on training courses when new equipment comes on the market. Two workers, who are with the company since 2000, have told Mary that this is discrimination.

(A) Explain how people in voluntary organisations such as Rivertown Social Services are enterprising.

(20 marks)

(B) Advise the Chairperson of Rivertown Social Services by way of a business letter of three characteristics to be looked for when interviewing candidates for the management position.

(25 marks)

(C) (i) Define Discrimination

(ii) Draft a report to Mary Walsh evaluating her position in the two industrial relations problems and outline methods that could be used to solve each one.

(35 marks)

Template for Solution

(A) Explain how people in voluntary organisations such as Rivertown Social Services are enterprising. 

People in RSS need to be risk takers. They are taking a personal/reputation risk. Successful entrepreneurs are not afraid of …………

Link: Rivertown Social Services (RSS), a voluntary organisation, began by providing meals on wheels to people in Rivertown.  

Innovative/creative. Entrepreneurs/People in RSS are good at coming up with new ideas and ……………..

Link: Its services include providing meals on wheels, a free………..

People in RSS are decisive. This means choosing between alternative courses of action. They analyse information and ………………

Link: ………….

Leadership/Human Relations. Leadership involves directing and assisting people in order to ensure work is done effectively so that objectives can be met……………….

Link: RSS now (2018) has ten …………….

(B) Advise the Chairperson of Rivertown Social Services by way of a business letter of three characteristics to be looked for when interviewing candidates for the management position.

abq_2019_letter

(C ) (i) Define Discrimination

Discrimination is described as the treatment of a person in a less favourable way than another person is, …………

(C) (ii) Draft a report to Mary Walsh evaluating her position in the two industrial relations problems and outline methods that could be used to solve each one. 

Title: Report to Mary Walsh on how to resolve industrial relational conflicts.

Prepared by:

Terms of Reference: Evaluating Mary Walsh’s position in the two conflict situations and outline methods that could be used to solve each one.

Findings:

Conflict 1: Trade Union demand for a 20% pay increase.

The two methods of handling Pay Demand are Negotiation (internal) and Conciliation e.g. Workplace Relation Commission (WRC) (external).

Negotiation: A process of bargaining to try to reach a mutually acceptable solution to the conflict. Mary could meet with the Shop Steward/workers to discuss……………

Conciliation: The parties to the dispute can meet with a neutral third party to help them sort their differences. The Workplace Relations Commission offers a conciliation…………………

Evaluation: in my opinion Mary’s position is reasonably good. Sales have grown rapidly ………………

Link: Staff members have contacted their Trade Union………………

Conflict 2: Complaint of discrimination in relation to training.

Under the Employment Equality Act 1998-2015 it is unlawful to discriminate under the nine grounds of Gender, …………….

Complaints of discrimination/breaches of equality legislation may be reported to and investigated by the Workplace Relations Commission (WRC). The two methods of handling equality or discrimination disputes are mediation and adjudication.

Mediation: This is a voluntary and confidential process which facilitates both parties……………..

Adjudication: The Adjudication Officer will conduct an enquiry and issue a legally binding decision. Remedies will include ……………..

Evaluation: in my opinion Mary’s position is not good. She is discriminating on the grounds of age.

Link: Mary only sends younger workers on training courses ………………….

Date:      ____________________

Signed: _____________________