Applied Business Question 2016

Applied Business Question

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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. The 2016  ABQ will be based on Units 3, 4 and 5 of the syllabus, similar to the 2006 and 2011 examination 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. 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 2016

Premier Office Supplies Ltd.
 

office_suppliesIn 2005 Mary Walsh established Premier Office Supplies Ltd. to offer a range of office equipment and stationery. Premier Office Supplies Ltd. recruited sales people and qualified technicians to serve the client base and expand the product range of the firm. It regularly hosts product presentations and demonstrations on its premises for representative sections of its customers. Prices are set by taking into account competitor prices and various economies of scale. Services such as website design and maintenance, training and consultancy, have been added.

This led to Mary reorganising the firm to have as many of the employees as possible organised into teams and involved in making the decisions. She liked people with initiative to work for her, especially those who would stick with jobs, spot challenges early and find solutions quickly. She allowed her staff to deal with customers directly, paid them well but expected planned targets to be met. Over the past ten years the office equipment business has changed a lot, especially in the areas of quality, customer service and in stock and financial management. Her reliance on trust in the staff has been successful in that only one employee has been dismissed for theft.

Premier Office Supplies Ltd. has seen sales grow by over 20% in recent months, resulting in major difficulties and stress for staff. Mary knows that to ensure the business success continues, changes will have to be made. Over her ten years’ experience in business she has seen a lot of changes introduced especially in the areas of information and communications technology (ICT), work practices and customer service. Change always caused difficulties but Mary feels the best approach is to communicate with staff to tackle the challenges. The people in Premier Office Supplies Ltd. are some of the most talented and committed in the industry.

1(A) Discuss the elements of the Marketing Mix as they apply to Premier Office Supplies Ltd.
(30 marks)

Sample Answer (1A)

1 Product: The physical good or service provided. The product is made up of the detailed characteristics of the good/service on offer e.g. its distinctive features, form, shape and colour. This includes any relevant information on the item such as its quality, after-sales service, guarantees, brand name, image and unique selling point (USP).
Link: Services such as website design and maintenance, training and consultancy, have been added.”
2 Price: is what one pays for a product. Price represents the value of the product to the buyer. The price of a product on the market will be determined by the product’s unique properties, the cost of manufacture, competition and target market. If the particular product is aimed at the luxury end of the market then the price set may be high.
Link: “Prices are set taking into account competitor prices and various economies of scale.”
3 Promotion: is concerned with letting existing and possible future customers know about the products on offer in order to increase sales. The business needs to stay close to consumers. The essential promotional techniques are advertising, sales promotion, public relations and personal selling.
Link: It regularly hosts product presentations and demonstrations on its premises for representative sections of its customers…
3 Place: A firm must use the most suitable and cost-effective way of distributing their products. Distribution channels include selling directly to customers, retail, online and use of agents – independent persons who will act on behalf of the firm who will generally receiving a commission on sales.
Link: Mary allowed her staff to deal with customers directly”.
1(B) Analyse the management activities used by Mary in the running of her business. Refer to the above text in your answer.
(20 marks)

Sample Answer (1B)

Planning involves selecting organisational goals or objectives and seeking out ways to achieve them. An effective plan will help reduce risk and uncertainty and give an organisation purpose and direction. These may include:

Mission Statement
Strategic Plans
Tactical Plans

Link:She allowed her staff to deal with customers directly, paid them well but expected planned targets to be met.”
Organising involves getting things done in a  structured way so that a business has the best chance of reaching its objectives. Possible structures are line / functional organisation and matrix structure.
Link: This led to Mary reorganising the firm having as many of the employees as possible organised into teams and involved in making the decisions.”
Controlling involves monitoring and 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 and budgetary control.

Link: “Over the past ten years the office equipment business had changed a lot, especially in the areas of quality, customer service and in stock and financial management.”
1(C) Evaluate the strategies that Mary could use to successfully manage the change process in the business. Explain your answer fully.
(30 marks)

Sample Answer (1C)

Senior Management’s commitment to the change process. If this commitment is not present then the staff concerned will become aware of the half-hearted effort and the change will not progress.
Link: Mary knows that to ensure business survival changes will have to be made.”
Consultation / Communication with trade unions and employee representatives regarding the proposed changes/involve all in the decision making process. Effective communication between all parties throughout the change process is essential. This will reduce uncertainty and tensions. This requires honesty on both sides. A constant two way communication approach will help to reduce insecurity, ignorance and dispel fear.
Link: Change always caused difficulties but Mary feels the best approach is to communicate with staff to tackle the challenges.”
Change in management style from ‘controller’ to ‘facilitator’. Group-based working, so that the team depends on each other and are responsible for a series of jobs, may give the opportunity for employee empowerment / training / job rotation / job enlargement.
Link: She liked people with initiative to work for her, especially those who would stick with jobs, spot challenges early and find solutions quickly.”
Rewards: Remuneration packages for staff. Productivity agreements, possible part ownership of the business, pension schemes and general improvement in the working conditions may all be part of the change process.
Link: “She allowed her staff to deal with customers directly, paid them well but expected planned targets to be met.”
Evaluation
Mary will be good at managing change. Over the past ten years she has seen a lot of changes especially in the areas of quality, customer service and in stock and financial management. Mary has a very positive attitude to communicating with the staff. Mary feels the best approach is to communicate with staff to tackle the challenges.

Sample 2 – ABQ suitable for Leaving Cert 2016


Clothes-4-Us Ltd
Cloths-4-UsClothes-4-Us Ltd established its first retail store in Galway city in 1990. Its mission statement focuses on providing
‘fashionable fast moving clothing’ as well as ‘value for money’ for young fashion-conscious consumers. Its founder, Aoife Coyle, was determined from a very young age to become an entrepreneur and she chose the fashion industry because of her love of clothes. Under her guidance the business has expanded and now employs 600 staff in twenty retail stores located in prime sites throughout Ireland. The business continues to grow steadily. Strong performance in the Irish market and many years of profitability has encouraged Aoife to expand her successful business model into the UK clothing market. Monthly meetings are held to manage the growth and expansion of the business. Strategies have been put in place in the event of possible disruptions in the supply of essential stocks from global suppliers. Recently it was decided to undertake an advertising campaign on UK television to coincide with the opening of the company’s first store in London’s Oxford street.Oliver Quinn, the Human Resource manager, has played a central role in the steady growth of Clothes-4-Us Ltd. He continues to effectively manage employee numbers. For the planned opening of the store in London, Oliver advertised job opportunities on the company’s website and included an on-line application form. With increasing competition in the market coupled with recessionary times, Aoife and Oliver recognise the necessity to invest in staff training. A comprehensive induction programme is provided throughout the company and personnel from the Human Resource department meet employees annually to review their progress. Employees at Clothes-4-Us Ltd are well rewarded and there are opportunities for promotion for those who achieve their sales targets.

Aoife is concerned that the business may lose market share because of increased competition from rival ‘copycat’ fashion multiples. She has begun visiting the company’s stores unannounced to monitor sales, employee behaviour and customer trends. In addition, the marketing department is carrying out regular consumer surveys. Fashion magazines with their coverage of the latest designer ‘catwalk’ fashion trends from Milan, Paris and London are closely monitored. The company’s daily sales records and data from the Central Statistics Office (CSO) on market size and consumer expenditure patterns are continually analysed. Aoife believes that a renewed emphasis on its unique selling point (USP) of fashionable budget clothing, targeted at the young fashion-conscious consumer, will position Clothes-4-Us Ltd as the market leader. With this in mind the business has updated its slogan to “Affordable Fashion” which it will use for its advertising campaign in the UK market.

(2A) (i) Define the management activity of ‘planning’.
(ii) Illustrate how different types of planning benefit Clothes-4-Us Ltd.
(20 Marks)

Sample Answer (2A)

(i) Planning is the setting down of specific goals and objectives and the putting in place of strategies that allow you to achieve the stated goals and objectives of the business.
(ii) Benefits of different types of planning for Clothes-4-Us Ltd include:
Mission Statement: This is a visionary statement outlining who the business is, what the business does and where the business is going. It gives an insight to the stakeholders into what makes a business ‘tick’.
Link: Clothes-4-Us’s “Mission Statement focuses on providing ‘fashionable fast moving clothing’ as well as ‘value for money’ for young fashion-conscious consumers.”
Strategic Planning: This is long-term planning covering a period up to five years or more. It is usually drawn up by top management and it outlines how the long-term goals of the firm are to be achieved.
Link: Aoife Coyle plans ‘to expand her successful business model into the UK clothing market’.
Tactical Planning/Operational: This is short-term planning which breaks the strategic plan into shorter more manageable periods. They deal with the ‘now’ part of the plan. It is usually drawn up by middle level managers.
Link: ‘Recently it was decided to undertake an advertising campaign on UK television to coincide with the opening of the company’s first store in London’s Oxford Street.’
Contingency Planning: This is back-up planning to cope with emergencies / unforeseen events and unexpected circumstances.
Link:Strategies have been put in place in the event of possible disruptions in the supply of essential stocks from global suppliers’.
(2B) Evaluate the effectiveness of the Human Resource department at Clothes-4-Us Ltd.
(30 marks)

Sample Answer (2B)

1 Manpower Planning: This involves having the right people with the right skills in the right place at the right time throughout the business. It involves doing a human resource audit and estimating future human resource needs.
Link: ‘He continues to effectively manage employee numbers’.
2 Recruitment/Selection: Recruitment and selection is concerned with finding or attracting potential candidates with the appropriate skills and then picking the most suitable candidates for employment. The Human Resource manager must draw up a job description and person specification and then advertise the position. Selection is usually by means of an interview process.
Link: ‘Oliver advertised job opportunities on the company’s website and included an on-line application form.’
3 Training / Development: Training is concerned with improving the employees’ ability to perform their job in an effective manner. The company invests in training leading to better knowledge and skills among employees. Induction training helps new employees fit into the workplace. Other types of training include internal / external training. Development prepares the employees for new responsibilities and greater challenges in the workplace. Helps employees self-actualise.
Link: A comprehensive induction programme is provided throughout the company’.
4 Performance Appraisal: This is the process of evaluating the performances, progress, contribution and effectiveness of an employee. It ensures high performance standards in the business, leading to organisational success. A meeting is held with the employees to review their progress and set targets for the future. Regular reviews are vital to the performance appraisal process.
Link: ‘Personnel from the Human Resource department meet employees annually to review their progress.’
5 Rewarding: Rewarding employees is concerned with paying employees (monetary / non-monetary) well for work well done, leading to a motivated workforce. It may include wages, salaries, bonuses, benefit-in-kind, share options, pension plans, promotion etc.
Link: ‘‘Employees at Clothes-4-Us Ltd are well rewarded and there are many opportunities for promotion for those who achieve their sales targets.’
Evaluation: Clothes-4-Us Ltd has very good Human Relations. Oliver Quinn plays a central role in the business and he is effective in managing employees. Clothes-4-Us Ltd has invested in training programs which will improve Human Relations. Clothes-4-Us Ltd rewards employees very well this will ensure highly motivated workers and few industrial relations problems.
(2C) (i) Explain the term ‘Market Research’.

(ii) Analyse how Desk and Field Research can contribute to the continued success of Clothes-4-Us Ltd.
(30 marks)

Sample Answer (2C)

(i) Market research is the systematic gathering, recording and analysing of facts about some element of the marketing mix in order to identify and satisfy customer needs in an informed and effective manner. Reasons for market research include – competition / new opportunities / business growth / risk minimisation.
(ii) Desk Research involves accessing information that has already been gathered

It is secondary research and can be both internal and external. Desk research is relatively cheap. Different types of desk research include the internet, internal sales reports, trade reports, Central Statistics Office publications and newspapers.

Contribution: The daily sales records of Clothes-4-Us Ltd. would indicate if consumer spending patterns have changed and the CSO would provide national figures on trends in the fashion industry.

Link: ‘The company’s daily sales records and data from the Central Statistics Office (CSO) on market size and consumer expenditure patterns are continually analysed’.
Field research involves going into the marketplace to gather first-hand / new business information. It is primary research which is carried out by making direct contact with customers / potential customers. It tends to be expensive. Methods include: surveys, observation, questionnaires and customer panels. Surveys involving personal interviews and/or questionnaires with a sample of the population are very effective.

Contribution: Consumer attitudes and opinions. Field research in Clothes-4-Us Ltd. ascertains attitudes and opinions of its customers and the company can make specific changes to their stores / products / staff based on the feedback received.

Link: “the marketing department is carrying out regular consumer surveys.”

Student Activity – Sample ABQ


Rural Broadband Ltd.

Liam Daly, a civil engineer, established Rural Broadband Ltd. four years ago. The business offers a reliable, cost effective wireless broadband service in remote locations. It offers the service to business and residential customers and geographically it covers parts of Cork, Tipperary, Kilkenny, Limerick and Waterford. Rural Broadband Ltd. services suits people who want to pick and choose telecommunications content from different sources. This company has very good customer service and is number one on RatemyISP.ie

Competition exists from large multinational telecommunications companies. However, Liam focuses on locations where these companies have coverage issues. Rural Broadband Ltd. is successful as they are a small, nimble company that can do things faster and cheaper than big operators mainly because they don’t have their traditional mindset or overheads. Basic package is available at 30 euro per month.

Liam has twenty years’ experience in project management of large civil engineering projects. However, 2011 was a very difficult year for the construction business. With no opportunities in this area, he decided to start his own business. Impressed with Liam’s knowledge and belief in his product / service, Liam’s bank manager and a number of private investors were happy to provide the necessary finance. The business grew rapidly and now has a workforce of twelve.

In his former life Liam was familiar with the basics of business. However he feels that the business is now at a stage when a professional business manager should be recruited, who would help the expansion of the service. Such a person would give Rural Broadband Ltd. the necessary expertise and confidence in all areas of management, for example, profitability and liquidity.

2014 2013
Sales 1,500,000 1,000,000
Net Profit 100,000 80,000
Current Assets 450,000 400,000
Current Liabilities 220,000 250,000
(A) Draft a report for Liam setting out four characteristics of managers to be looked for when interviewing candidates for the management position.
(25 marks)
(B) (i) From the figures given above calculate the net profit percentage and the current ratio for 2013 and 2014.

(ii) Analyse the significance of trends for Rural Broadband Ltd.
(25 marks)

(C) Describe how you see the future of the enterprise. Make relevant assumptions that you feel may be necessary given the details above.
(30 marks)

Template for Solution

(A) – Report identifying four characteristics of managers.

Title: Report to Liam Daly identifying four characteristics of managers.

Prepared by:  Mary Murphy, Management Consultant.

Terms of Reference: Identifying four characteristics of managers to be looked for when interviewing candidates for the management position.

Findings:

Control: Managers usually need to be in control of situations. They are independent and have a need for achievement.

Link: Such a person would give Rural Broadband Ltd the necessary expertise

Flexibility: Managers accept change as natural.

Link:

Leadership.

Link:

Planning and goal setting.

Link:
Signed: Mary Murphy
Date:

 

(B) – Ratios and Analysis

(i)

net_profit_margin

 

 

 

2013

 

 

 

=

2014

 

 

 

=

 

Current Ratio = Current Assets:Current Liabilities

2013 = 400,000:250,000

2014 =             :

 

(ii)

Trend in Profitability:

Analysis of Profitability:

Trend in Liquidity:

Analysis of Liquidity:

 

(C) – Describe how you see the future of the enterprise.

1 – Ownership and Management (Key Personnel): This indicates who the owners of the business are. The quality, experience and training of the management team will have a great effect on the success of the business.

In the future Liam will have to will have to get more people involved as he is planning to enter the international market. Future personnel requirements might also be dealt with under this heading.

Link:  Liam and a number of private investors who were happy to provide the necessary finance.

2 – Product/Service (Operations):

 

In the future…

 

Link:  

 

3 – Market Analysis (Marketing Strategies):

 

In the future…
Link:  

 

4 – Financial Analysis:

 

In the future…

 

Link: