IB BM Paper 2 SL Marking Scheme
IB BM Paper 2 SL Marking Scheme
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(working capital) for 2016 (show your working)
all
(c) Calculate net current assets
liabilities
calculated by subtracting current
Net current assets (working capital) is
from current assets (all in millions of dollars):
Current assets Current liabilities Net current assets
$700 $300 $400
answer. Award up to a
Award [1] for the corect working and [1] for the correct
maximum of [2]
2 [21
State two elements, other than a cash flow forecast, of a business plan.
(a)
A n executive summary
A business description
A market analysis
Financial forecasts
Marketing strategies
Organization strategies
Business objectives
Mission/vision statement
.Human resources plan
Type of organization
Analysis, provided the candidate gives some specifics (PESTLE, SWOT, ratio, etc)
.Forecasted: profit and loss and balance sheet
N.B. Ifa candidate states mission and vision statements, award [1]. Ifa candidate states
either vision or mission statement, award [1]. Ifa candidate states forecasted profit and loss
account or forecasted balance sheet, award [1]. Ifa candidate states both forecasted profit
and loss account and forecasted balance sheet, award
[1
Do not award a mark for information such as table of contents, name and address of
business, index, etc. Also, do not accept executive personnel introduction, as in this case
that would be totally irrelevant.
Award [1] for stating an appropriate element of a business plan (application not
required), up to a maximum of [2].
(b) Prepare a cash flow forecast for Las Migas for the first four months of operations. 61
All figures in $
Interest 45 45
Electricity 15 5 35 35
Total payments (outflows) 1900 1855 2520 2475
Net cash flow
(400) (355) 980 1025
Opening balance 100 (300) (655) 325
Closing balance (300) (655) 325 1350
4
Month 1 Month 2 Month 3 Month 4
it is not in a generally
Award [2-3] ifa cash flow forecast is drawn, but either
forecast contains three or more errors,
it is untidy, and/or the
accepted fomat or
which could include, in addition to number placement problems and mathematica
word profit" rather than "net cash filow) or
erors, conceptual errors (using the
omissions, such as not having a line like "closing balance" or totals.
Award [6] if the cash fiow forecast is drawn accurately and neatly in a generaly
candidate provides a heading of total
accepted format, and is error free. If the or outflow- do not
infiow/outfiow without using another heading above of inflow
penalise as an omission.
the
f the candidate omitted both headings of outfiow/infiow one error substituting
=
tem "net profit in the cash flow forecast for "net cash fiow" is inaccurate and [1]
should be deducted. If the candidate has only one row for all
cash outflows, deduct
[1] from the total mark awarded.
flow issue
N.B. Accept cash flow problems/a need for finance, referring to the cash flow forecast
constructed.
Award [1 for a relevant generic problem identified or described and [1] for any
additional explanation in context
(2] cannot be awarded for the problem if the response lacks either explanation
and/ or application.
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Section B
3
and outsourcing.
Disagreement exists over the relationship between offshoring
Two possible relationships are
offshoring occurs only by foreign direct investment (a company bullding
or
and understanding
Award [1] for a basic definition that conveys partial knowledge
moves a business process to
another
that offshoring occurs when a company
Country.
Award [2] for a full definition that conveys knowledge and understanding similar
to the answer above.
1
(b) Explain one advantage and one disadvantage for Vinn of using an identical
marketing mix. 41
Possible advantages include:
could
Vinn develop a brand identitywhich in turn could improve Vinn's
Customer and brand recognition and loyalty everywhere they sell. Customers
decision making in favour of Vinn could be enhanced.
Vinn is likely to experience a promotion/ advertising economies of scale. With
increased movement by consumers and the
widespread use of media,
uniformity in promotion could be less expensive regionalized marketing
allowing Vinn to use resources for other purposes.
Without a need for product adaptation, Vinn can cut costs of production of its
jeans substantially. Product and promotional adaptation (or any adaptation)
can create a material extra cost.
Accept any other relevant beneft for Vinn due to any use of identical
marketing mix like price/ distribution and so on.
N.B. just using the name Vinn does not constitute application to the stimulus
Mark as 2+2.
[2] can not be awarded per advantage / disadvantage if the response lacks either
explanation and/ or application.
For example:
For an identification or a description of an advantage / disadvantage with or
without application [1.
For explanation of an advantage / disadvantage with no application [1]
For explanation of an advantage / disadvantage and application [2].
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(c) Explain one advantage and one disadvantage for Vinn of operating as a public
limited company. [41
could include
of as a public limited company (plc)
Attracts greateroperating
Disadvantages media coverage, which can be negative when used by anti
could be tarnished
globalization pressure groups/ Vinn's brand image
everywhere it sells.
as greater efforts have to be
Decision making tends to be more cumbersome,
coordinate with stakeholders. Vinn has
made to communicate with and even
back to the US. Some shareholders
to communicate their decision to offshore
of strategic focus.
may disagree with a complete change
The re-shoring and re-direction
Lack of privacy or the required transparency.
for Vinn, which could
of focus could lead to a reduction in short-term profits
damage its reputation in the market place.
to a public limited
N.B. advantages and disadvantages do not have to be unique
could have as an advantage "limited
company. For example, a candidate
liability", which is also an advantage for private limited companies.
Mark as 2+2.
Award [1] for each correct advantage /disadvantage identified ordescribed and
maximum of
1] for a relevant explanation with application to Vinn. Award up to a
[2]
[2] can not be awarded per advantage / disadvantage if the response lacks either
explanation and/ or application.
For example:
For an identification or description of an advantage /disadvantage with or
without application f1].
For explanation of an advantage/ disadvantage with no application [1].
For explanation of an advantage/ disadvantage and application [2].
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(d) Discuss Vinn's decision to re-shore back to the US and to produce only
individually designed jeans. (10)
Re-shoring:
In the near future Vinn may not be able to benefit from lower manufacturing costs
as labour costs in China are rising faster than in the US. Producing jeans in
China and Turkey will be less attractive and cost effective for Vinn and generally
for multinational companies.
offshoring resulted in some quality issues that negatively affected Vinn's brand
image given customers' complaints. Given the increase in global competition,
communication issues and the erosion of costs advantage, perhaps the decision
to reshore is appropriate, especially if coupled by the repositioning strategy. With
a
change/re-shoring, brand reputation may be gained and communication
problems with offshored employees will be eliminated as manufacturing will now
take place in the US. Moreover,
re-shoring the production process could improve
quality control processes and improve Vinn's quality standards.
10
However, Vinn is moving into a new market. one it is unfamiliar with There are
risks assoCiated with possible misjudgments about the size and nature of the
target market - how good is its market research? Designer branded jeans are not
Although the potential profits per unit in niche markets are usually high. by their
nature, niche markets are small and success may attract other manufacturers
that are possibly smaller and more flexible. Stil, further niche markets usually
emerge as part of trends, and this is especially so in fashion
N.B. candidetes do not have to favour both decisions to (1) re-shore and (2) to
switch strategic direction However, they are expected to evaluate both and
make a judgment about both. For example, a candidate could conclude that Vinn
should re-shore but not switch strategic direction.
Candidates are not expected to use the term "a change in strategic focus"
A "balanced response" means that the response covers at least one argument for
and one argument against each decision (re-shoring and producing individually
designed jeans).
A nominal conclusion
(conclusion paragraph)
does not necessarily
mean
judgments/conclusions.
7-8 Balanced Judgments/conclusions
based upon analysis and
explanation in the body of
the response
9-10 Balanced Judgments/conclusions
based upon analysis and
explanation in the body of
the response.
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State two types of business, other than grocery stores, that operate in the tertiary sector. [2]
4. (a)
The tertiary sector is the service sector of an economy, including retal outlets
Candidetes may name any type of service sector business. Do not give credt tor
"online grocery stores" but award a mark for convenience store (or some other
small shop where some grocery items might be sold)
Award [1] for each type of busines in the service sector identified up to [2]
(b) Explain two elements of UFoods marketing mix other than price. 41
The four Ps of the marketing mix that candidates may write about are place
promotion, and product. In the stimulus, place and product can be identified:
Place: retail stores.
Product: According to the stimulus, U-Foods sells all-organic foods. High-
quality, all-organic products are its USP.
Award 1] for identificetion of one of the three Ps and an additional [1] for
application to the stimulus and explanation.
Mark as [2+2
(ii) NS 507s net profit before interest and tax (no working required)
Net profit before interest and tax =
3% x 20 000 000 $600000.
Award [1] for the correct answer
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(d) Explain oneeconomy of scale, other than
which NS might benefit.
purchasing economies of scale, from
[21
Other economies of scale from which NS
might benefit include:
.Marketing economies of scale
Financial Economies of scale
Managerial economies of scale
Human resources economies
of scale
Network economies of scale
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also go to U-Foods for certain items. One way that NS could attempt to recover
those lost sales is to determine which specific items have seen their sales go
down. It is likely that, for these items, shoppers are going to U-Foods. Once NS
has identified which items customers are going to U-Foods for, NS can make
modifications: improve the product, alter the price, or have better promotions A
disadvantage to this strategy is that it may not work or may be too expensive to
Work. For example, some customers are probably going to U-Foods for locally
produced organic meats. However, probably few opportunities exist for
economies of scale when U-Foods (or NS) purchase this type of meat. For
U-Foods, passing on high costs to customers is probably not a problem. U-Foods
is more expensive than NS and customers expect that. For NS customers,
however, prices lower than U-Foods is the expectation. Were NS to start
charging more, many customers may resist.
A third option is to start allowing customers to order online and have home
delivery. This option would be expensive to set up and operate, and NS would
lose impulse sales.
Accept any other relevant way that NS 507 can recover lost market share
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(b) Using Table 1, construct a product position map/perception map for all four
hotels prior to the opening of GR. [41
High-quality service
A
D Low-quality service
Award [1] for the overall layout of the map with both axes labelled correctly
(price: high or low; service: high or low).
N.B. It does not matter which one is horizontal/vertical.
The correct positioning is as shown above. Adjust appropriately if a candidate
makes the price the vertical axis and quality the horizontal axis.
Award [2] for a correctly labelled position map with two of the companies properly
placed.
Award [3] for a correctly labelled position map with three of the companies
properly placed.
Award [4] for a correctly labelled position map with all four companies properly
placed
The position map has been scaled from $155-$245 for the horizontal axis and 3
stars to 5 stars for the vertical axis. If candidates scale the perception map
differently (1 to 5 stars, for example), mark accordingly and per the explanation
for [1]. [2]. 13] and [4] above.
The candidates were asked to position the four hotels prior to the opening of the
GR. The four hotels represent the full range of the market (at the time, before
GR opened) and, therefore, the positioning should be as shown above.
However, candidates may consider a 3-star hotel to be "middle quality" rather
than low quality because three is the mid-point between 1 star and 5 star. Thus,
some candidates may position the four hotels more toward quadrant one than
they should.
Nevertheless, examiners should have some forbearance: as long as the relative
position of the hotels is accurate, award marks appropriately. For example, the
position map below would earn 4].
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High-quality service
Low pnce D
High pric
Low-quality service
N.B. If the relative position is correct but the candidate has compressed the
positions of the four hotels into one quadrant (which would typically be quadrant
1), awarda maximum of [3].
(c) Explain two ways in which GR is able to offer rooms at a lower price than IF. [4]
Three ways in which GR is able to have lower costs than traditional hotels
include:
more modest rooms, which include smaller room size and less elegant
furniture
lower personnel costs, as much ofthe traditional staff is replaced by kiosks
and automated billing
Feweramenities, likea swimming pool and a high-quality restaurant.
Accept any other relevant example.
If a candidate refers to the airport versus city-centre location and assumes that the
airport location is less expensive, award [1].
Mark as [2 + 2.
Award [1] for identification of a way to lower costs and an additional [1] for an
explanation thereof.
(d) Discuss possible changes to IF's marketing mix to reduce the loss of customers
to GR. [10
Main differences in the marketing mix of the two hotels are
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business travellers, though not elegant.
Price High Lower cost, though there is the membership fee.
Place Same/City centre Same/Near airport.
Promotion Limited Both above-the-line promotion and social media marketing
The question of place is tricky. At one level of argument, place is different than
location. However, in the case of a hotel, place and location are virtually
hotels ontologically a venue where customers rent
indistinguishable, as are
rooms for the night. Thus, in the case of hotels, place devolves to location.
It is expected that the candidate explains the chosen theoretical direction / content of their
response. Additional guidance in relation to the assessment criteria For each criterion, the aim is
to find the descriptor that conveys most accurately the level attained by the candidate, using the
best-fit model. It is not necessary for every single aspect of a level descriptor to be met for that
mark to be awarded.
The highest-level descriptors do not imply faultless performance and should beachievable by a
candidate
A candidate who attains a high level of achievement for one criterion will not necessarilyreach
high levels of achievement for the other criteria and vice versa.If only one concept is addressed:
Criteria A, B, C and E: award up to a maximum [3].
Criterion D: full marks can be awarded. Where the question asks for impacts of two concepts on
content, examiners must allow for unbalanced treatment of the two concepts throughout a
candidate's response. One concept may be more significant than the other.
In section C, the question rubric explicitly states that "organizations featured in sections A and B
and in the paper 1 case study may not be used as a basis" to candidate's answers to questions
6,7 and 8. When this happens please award marks as follows:
Criterion A Award a maximum of [1]. The business management content cannot be relevant if the
organization is fictitious.
Criterion B0 marks - there is no connection to a real-world organization.
Criterion C Award a maximum of [1]. The arguments cannot be relevant if the organization is
fictitious.
Criterion D Mark as normal.
Criterion E Award up to a maximum of [1].
The individual and/or group perspective(s) cannot be relevant if the organization isfictitious
Criterion B For (2"...connection is notdeveloped" should be treated the same as superficial.
Criterion C .Questions 6 to 8 require consideration of the impact of one concept on a second
concept- therefore accept 2+2 arguments for a balanced response.Justification is through
logic or data.For [2] there is no balance as there are no counter arguments at all, or the
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arguments areeall one-sided then this would be unjustified..For [3] there is some balanced
arguments some of which are justified.
Criterion D
Introductions need to be concise and related to the question.
The candidate's response does not to have explicit headings for each structural element.
A body is the area in which the substance of arguments occur. It is usually located between the