NCEA Level 2 Business Studies (90845) 2013 — Page

ncea level 2 business studies (90845) 2013 — page 12 of 12 assessment schedule – 2013 ========================== business studies: a

NCEA Level 2 Business Studies (90845) 2013 — page 12 of 12
Assessment Schedule – 2013
==========================
Business Studies: Apply business knowledge to a critical problem(s) in
a given large business context (90845)
======================================================================
Evidence Statement
------------------
Q 1
Sample answers
(a)
Explain ONE long-term consequence for Frozen Clothing Ltd if it
remains focused on its traditional retail outlets
A long-term consequence for Frozen Clothing Ltd would be loss of
market share to competitors. This is because Frozen Clothing Ltd will
lose customers to competitors who provide an online presence.
Traditional retail outlets (shop front), can cost more to operate (due
to greater overheads) than an online retail store. In the long term,
this could affect Frozen Clothing Ltd’s economic
sustainability/profits.
(b)
Fully explain TWO causes of the sales problem (causes must link to
technological developments)
Factors:
*
No website to enable customers to buy Frozen Clothing Ltd’s
clothes online.
*
No social media presence to build relationships with its online
customers.
*
Overseas competitors have access to newer and better technology.
*
No smart phone applications to view clothes online.
*
No online advertising through social media or one-day deal sites.
Situation:
*
Frozen Clothing Ltd, and in particular Bruce Long as the CEO, is
still operating in a traditional bricks and mortar retail
environment and has not kept pace with changing technology.
Fully explain how each cause has contributed to the problem
If Frozen Clothing Ltd continues only to have traditional retail
shops, then its sales will decrease. This is because its competitors
have an online presence, which they use to sell their clothes
(Explained). New Zealand consumers of clothes are choosing to make
more of their purchases online (62%). This is partly because consumers
are becoming familiar with internet technology. Online purchases can
be cheaper (particularly if the product is sourced from overseas).
Without a website to sell its clothes online, Frozen Clothing Ltd is
not catering to customers’ changing needs and wants. Customer loyalty
will decline and sales will continue to fall (Fully explained).
Having a social media presence such as Twitter, Facebook, or a blog
means companies can interact with their online customers and can
quickly meet their customers’ expectations, which could lead to an
increase in sales (Explained). This builds positive relationships with
their customers. Frozen Clothing Ltd has no such presence and is
failing to interact with this market, and hence is not maximising its
sales (Fully explained).
Bruce Long originally started Frozen Clothing Ltd as a solid bricks
and mortar retail store. Thirty years ago there was no internet, so an
online presence was not required (Explained). Businesses operate in a
dynamic environment and Bruce has failed to keep Frozen Clothing Ltd
up with new technology. As a result, Frozen Clothing Ltd has lost
customer loyalty and market share, and sales have been decreasing
(Fully explained).
Overseas competitors have access to newer and better technology. This
allows them to produce clothes more efficiently; they experience lower
production costs, and therefore can sell their clothes for a lower
price (Explained). Consumers may prefer to buy the cheaper overseas
products, so Frozen Clothing Ltd may see a decrease in demand for
their products, and therefore lower sales (Fully explained).
(c)
Provide TWO solutions to the problem
The better solution must relate to the specific causes discussed in
Part (b). TWO appropriate solutions must be explained – a full
explanation of how each solution would deal with the causes, and a
justification of why one solution is better than the other to solve
the problem.
Examples:
*
Frozen Clothing Ltd needs to investigate setting up a website to
sell its clothes online.
*
Frozen Clothing Ltd needs to engage in social media and set up a
Facebook or Twitter page.
*
An IT specialist employed specifically for this task may be
required.
*
Frozen Clothing Ltd could outsource production overseas, or invest
in new machinery.
Solution 1: If Frozen Clothing Ltd sets up a website, this would allow
customers to buy clothes online from anywhere in the world and have
them conveniently delivered to their home or work (Explained).
Customers would find this easier and simpler than having to visit a
physical retail outlet and find parking, etc. It may increase sales
for Frozen Clothing Ltd (Fully explained).
Solution 2: Frozen Clothing Ltd needs to change how it approaches its
customers, because with new technology the traditional retail clothing
shop has become less effective. Frozen Clothing Ltd could promote its
products through social media. It could set up a Facebook page to
promote its website and products to online customers. It could offer
internet-only deals to customers who “like” its web-page (Explained).
The page could be used for feedback on its products from customers,
which would allow Frozen Clothing Ltd to be more innovative in its
product range and respond more quickly to customer requests (Fully
explained).
Solution 3: Frozen Clothing Ltd could outsource production overseas,
or invest in new machinery. This would enable them to produce more
garments in less time, thus increasing productivity and reducing costs
(Explained). This means that Frozen Clothing Ltd could lower their
prices and compete with cheaper overseas products (Fully explained).
Justification
Setting up a website may be the better option than the other solution,
because it can have a more significant impact on sales. Frozen
Clothing Ltd could set up web pages in new markets (Australia), and
reach more customers, thus increasing sales. The web page would
effectively be its “shop front”, and this could be set up with minimal
costs. Using social media will increase dialogue with customers, but
may not lead to an increase in sales.
Having a web page would allow Frozen Clothing Ltd to effectively
compete with its overseas competitors and continue to build the brand,
increase sales, and improve profits for the long term, to make Frozen
Clothing Ltd a financially stronger company (Justified).
Achievement
*
Explains long-term consequence.
*
Explains how EACH of TWO factors, issues, or situations
contributed to the decrease in sales.
*
Identifies TWO appropriate solutions (to the causes identified).
*
Explains how EACH of TWO solutions will deal with the causes.
(Answers will typically state relevant examples, business knowledge,
and / or Māori business concepts.)
Achievement with Merit
*
Fully explains how EACH of the TWO factors, issues, or situations
contributed to the decrease in sales.
*
Fully explains how EACH of the TWO solutions will deal with the
causes.
(Answers will typically include relevant examples, business knowledge,
and / or Māori business concepts.)
Achievement with Excellence
The issue is discussed by:
*
fully explaining how EACH of the TWO solutions would deal with the
causes
AND
*
providing a justification, with TWO reasons, why one solution
would be better than the other.
(Answers will typically integrate relevant examples, business
knowledge, and / or Māori business concepts into explanations.)
N1
N2
A3
A4
M5
M6
E7
E8
Very little achievement evidence.
Some achievement evidence.
Most achievement evidence.
Nearly all achievement evidence.
Some merit evidence.
Most merit evidence.
All points covered. One part may be weaker.
All points covered.
N0 = No response; no relevant evidence.
Q 2
Sample answers
(a)
Explain why Frozen Clothing Ltd shareholders would be interested in
the investment decision
*
Shareholders are ultimately concerned about a return on their
investment. They are concerned whether or not they will still
receive a dividend pay-out (share of the profits) at the end of
the financial year.
*
They would be concerned about the amount of money required in the
rebuild which could be better spent on other areas of the
business.
*
Shareholders may be concerned that if the store was closed, what
that may do to the brand.
(b)
Issues that have caused the investment problem
Ongoing cost of having a retail outlet
If Frozen Clothing Ltd were to rebuild, it would need to spend income
on ongoing costs (expenses) such as wages for the staff, increased
insurance premiums from the earthquakes, and higher rates for the
council. This will have a negative effect on cash flow (Explained).
Frozen Clothing Ltd may be better not to rebuild and instead use the
money to focus on online selling, or on improving the retail outlets
in other main centres. This would reduce costs in the short term and
improve the financial situation in the long term (Fully explained).
Loss of sales due to customers leaving Christchurch
Customers have left Christchurch due to the earthquakes, resulting in
reduced income for Frozen Clothing Ltd (Explained). With fewer
customers and a lower customer base, there is less chance of improving
the financial situation for Frozen Clothing Ltd, and the brand /
customer loyalty declines. Long term, Frozen Clothing Ltd may fall
into bankruptcy (Fully explained).
Loss of sales due to customers buying online
Mass produced clothes can be made more cheaply overseas. This is
because these countries have cheaper resource costs, eg wages.
Globalisation has allowed an increased flow of these clothes into New
Zealand at lower prices (Explained). Frozen Clothing Ltd cannot
compete against these cheaper imported mass produced clothes, as its
production costs are higher, eg energy and wages. The higher costs and
lower sales have led to a decrease in sales and profits for Frozen
Clothing Ltd. It may be better to close the Christchurch retail shop
and focus on its other retail stores or an online presence (Fully
explained).
Others:
Loss of sales due to customers in the Christchurch region not having
money to spend.
Increased costs have already put pressure on the company’s margins.
(c)
Provide two possible solutions to the problem
The better solution must relate to the specific causes discussed in
Part (b). TWO appropriate solutions must be explained – a full
explanation of how each solution would deal with the causes, and a
justification of why one solution is better in the short term, and the
possible consequences of not using the other solution in the long
term.
Solution 1: Close the store and abandon the idea of rebuilding.
Solution 2: Keep the store open and rebuild.
Solution 3: Temporarily close the store and relocate to another store
in Christchurch.
Fully Explain how each solution would deal with the causes
Close the store and abandon the idea of rebuilding
By closing the store and not rebuilding, Frozen Clothing Ltd would
save money from not having to take out a loan (Explained). It would
also save the company from paying out wages, insurance, rates, and
other ongoing costs of maintaining a retail outlet in Christchurch in
the future. This saving could be better spent on creating an online
presence or upgrading its other retail outlets to increase its
business in the future (Fully explained).
Keep the store open and rebuild
Frozen Clothing Ltd could decide to rebuild and use the chance to
upgrade the store to make it more attractive to their consumers. New
dressing rooms and display areas could be built, which could increase
sales and profits (Explained). By keeping a physical outlet in
Christchurch, the business would ensure that its regular customers are
looked after, giving them the chance to come in and sample the range,
as opposed to buying online. Frozen Clothing Ltd could also invest in
its sales techniques to develop excellent customer service. This would
further improve the brand reputation and customer loyalty in the long
run (Fully explained).
Temporarily close the store and relocate to another store in
Christchurch
By temporarily moving to a new store in Christchurch, Frozen Clothing
Ltd would still have a shop-front presence. This would enable Frozen
Clothing Ltd to maintain sales from existing customers (Explained).
Frozen Clothing Ltd would be able to keep its business open, thus
continuing to service its existing customer base, improving customer
loyalty, and enhancing its long-term reputation (Fully explained).
Justify, with reasons, why one solution is better in the short term,
and the possible consequences of not using the other solution in the
long term
Sample answers:
Solution 1: Close the store and abandon the idea of rebuilding
Frozen Clothing Ltd would save money in the short term and instead use
the money to focus on upgrading other stores or using it to develop an
effective IT system with an online shopping feature. By not
rebuilding, Frozen Clothing Ltd could shut the existing store and
avoid paying any further wages, insurance, rates, and energy costs. It
would also avoid interest charges on a loan. This would be attractive
to the shareholders, as profits and dividend pay-outs should increase.
However, in the long term, Frozen Clothing Ltd may miss out on the
extensive rebuild in Christchurch, where the size of the city will
actually increase, along with a rise in customers and sales. Brand
loyalty may decline, as people will not have a chance to try on the
clothes, and see no difference between Frozen Clothing Ltd and cheaper
online competitors. This may affect the long-term financial
performance of the company (Justified).
Solution 2: Keep the store open and rebuild
If Frozen Clothing Ltd were to rebuild at the existing site, it would
be able to upgrade the store to make it more attractive to its
customers. By having a physical presence, Frozen Clothing Ltd could
provide a customer experience; customers would be able to come in and
try on the clothes, which would allow Frozen Clothing Ltd to hone its
customer service techniques and build customer relationships. This
would result in increased sales and profits, and the ability to
maintain and improve its customer loyalty. In the long term, the
rebuild may mean incurring more debt, and the company would then be
forced to keep paying high, ongoing costs such as insurance, power,
wages, etc, making it uncompetitive with the cheaper overseas online
clothing companies (Justified). It may also mean that Frozen Clothing
Ltd will lack funds to develop an online presence in the long term
(Justified).
Solution 3: Temporarily close the store and relocate to another store
in Christchurch
If Frozen Clothing Ltd were to temporarily relocate its store, it
would be able to maintain sales to its customers. Frozen Clothing Ltd
could continue to operate its business. Relationships with current
suppliers and customers could be maintained, as Frozen Clothing Ltd
continues to purchase from current suppliers and sell to existing
customers. This solution is better in the short term, as it provides
Frozen Clothing Ltd with revenue. Product lines and existing customer
base can be retained. In the long term, this option may mean incurring
more debt and paying high ongoing costs, which means that Frozen
Clothing Ltd will lack funds to develop an online presence
(Justified).
Achievement
*
Explains why shareholders would be interested in the investment
decision.
*
Explains how EACH of TWO issues contributed to the investment
problem.
*
Identifies TWO appropriate solutions (to the causes identified).
*
Explains how EACH of TWO solutions will deal with the cause(s).
(Answers will typically state relevant examples, business knowledge,
and / or Māori business concepts.)
Achievement with Merit
*
Fully explains how EACH of TWO issues contributed to the
investment problem.
*
Fully explains how EACH of TWO solutions will deal with the
causes.
(Answers will typically include relevant examples, business knowledge,
and / or Māori business concepts.)
Achievement with Excellence
The issue is discussed by:
*
fully explaining how EACH of the TWO solutions would deal with the
causes
AND
*
providing a justification why one solution would be better than
the other in the short term, AND a possible consequence of not
using the other solution in the long term.
(Answers will typically integrate relevant examples, business
knowledge, and / or Māori business concepts into explanations.)
N1
N2
A3
A4
M5
M6
E7
E8
Very little achievement evidence.
Some achievement evidence.
Most achievement evidence.
Nearly all achievement evidence.
Some merit evidence.
Most merit evidence.
All points covered. One part may be weaker.
All points covered.
N0 = No response; no relevant evidence.
Q 3
Sample answers
(a)
Fully explain the consequences of keeping Leon employed
Productivity is the amount of output per unit of input. Leon’s
productivity will decline, as he is unmotivated and less will be
achieved than previously (Explained). Frozen Clothing Ltd’s overall
output will be affected by Leon’s behaviour, and profits could fall in
the future (Fully explained).
Leon’s decline in productivity will influence the other employees, who
will need to complete more work to make up for Leon’s lack of effort
(Explained). Leon is a poor role model, and his behaviour may mean
that other employees become demotivated. Profits and sales could fall
as a result (Fully explained).
Leadership development is stalled at Frozen Clothing Ltd (Explained).
Other younger, energetic managers do not get the chance to step up and
show their skills. Leon would be unwilling to take on any extra
leadership himself, so others in the business also suffer (Fully
explained).
(b)
Provide two solutions to the problem
*
Bruce to hold a meeting with Leon to improve his behaviour.
*
Leon dismissed from Frozen Clothing Ltd (“golden handshake”).
*
Leon to train up a replacement.
*
Relocate Leon to another section of Frozen Clothing Ltd.
*
Leadership training for Leon.
*
Incentives for Leon such as shares in the company.
Solution 1: As CEO, Bruce will need to schedule a meeting with Leon to
discuss his poor work performance. Leon must be made aware of the
decline in his motivation and how it is impacting on the other
employees at Frozen Clothing Ltd (Explained). Goals could be set and a
performance appraisal implemented to review and improve Leon’s
performance. If Leon does not improve his performance / productivity,
then disciplinary action could be taken (Fully explained).
Solution 2: Leon to be dismissed immediately from Frozen Clothing Ltd.
Leon could be given notice to leave the company, based on his recent
declining productivity (Explained). Bruce would need to be careful
that he has enough evidence about Leon’s poor performance – otherwise,
Frozen Clothing Ltd may be taken to the Employment Court for unfair
dismissal. If Leon left immediately, another enthusiastic manager
could step in and improve the declining productivity at Frozen
Clothing Ltd (Fully explained).
Solution 3: Leon could be asked to train up another regional manager.
This would be part of Frozen Clothing Ltd’s succession policy. This
would indicate to Leon that the firm is looking to the future, and
perhaps to replace him (Explained). This extra responsibility for
training may motivate Leon (Fully explained).
Solution 4: Leon could be relocated to another section of Frozen
Clothing Ltd. This would give Leon the opportunity to focus on
something new, and could re-motivate him (Explained). This would
provide a leadership path, and allow for leadership development for
other employees to move into management (Fully explained).
Justification, with reasons, why one solution is better than the other
Example:
Scheduling a meeting would be the best decision to deal with Leon to
improve Frozen Clothing Ltd’s overall employee culture. Once Leon has
been made aware of his declining work performance, and the
implementation of a performance appraisal is set in place, he should
improve his attitude and behaviour. This should rub off on his
employees, who will also become more motivated. This is a better
solution than to dismiss Leon immediately, as Leon has been a faithful
employee in the past. Bruce may also find it difficult to dismiss his
friend when he has been with the company so long. Also, if Leon was to
be dismissed, he may choose to take legal action, which may result in
Frozen Clothing Ltd being fined for unfair dismissal.
Achievement
*
Explains THREE consequences of keeping Leon employed.
*
Identifies TWO appropriate solutions.
*
Explains how EACH of TWO solutions will deal with the cause.
(Answers will typically state relevant examples, business knowledge,
and / or Māori business concepts.)
Achievement with Merit
*
Fully explains the consequences of keeping Leon employed.
*
Fully explains how EACH of TWO solutions would deal with the cause.
(Answers will typically include relevant examples, business knowledge,
and / or Māori business concepts.)
Achievement with Excellence
The issue is discussed by:
*
fully explaining how EACH of TWO solutions would deal with the
cause
AND
*
providing a justification, with TWO reasons, why one solution is
more appropriate.
(Answers will typically integrate relevant examples, business
knowledge, and / or Māori business concepts into explanations.)
N1
N2
A3
A4
M5
M6
E7
E8
Very little achievement evidence.
Some achievement evidence.
Most achievement evidence.
Nearly all achievement evidence.
Some merit evidence.
Most merit evidence.
All points covered. One part may be weaker.
All points covered.
N0 = No response; no relevant evidence.
Judgement Statement
-------------------
Not Achieved
Achievement
Achievement with Merit
Achievement with Excellence
Score range
0 – 6
7 – 12
13 – 18
19 – 24