Paper 1 Specimen 2023 Solutions

Section A ✍🏽

1 (a) Define the term ‘secondary research’. [2]

Secondary research is not conducted by the business but by another organisation or business

so is usually not up to date or tailored exactly for a specific business’s needs.

For example, newspaper reports or a government census.

(b) Explain one advantage to a business of data collected using primary research methods. [3]

Tailored to the specific business needs.

As primary research is conducted for the business the information is much more likely to be relevant to find the information which is required by the business for market research.

For example, if a takeaway pizza business carries out primary market research into customer preferences for its products it can ask questions to its customers about their pizzas.

2 (a) Define the term ‘sustainability’. [2]

Production that minimises waste by using renewable resources and avoiding non-recyclable materials so a business can meet its present needs without compromising the ability of future generations to meet their own needs.

For example, an electricity supplier generates power only from renewable sources like wind turbines.

(b) Explain one reason why a manufacturing business might take measures to improve the sustainability of its operations. [3]

To meet the increasing demand from consumers for eco-friendly and socially responsible products.

If manufacturers don’t improve their environmental performance they may lose a competitive advantage against rival businesses that can offer more sustainable products.

For example, a surfboard manufacturer using recyclable materials may increase sales over a producer that uses non-environmentally friendly materials.

3 (a) Define the term ‘zero budgeting’. [2]

A budgeting approach in which all expenses must be justified for each new period. It involves building a budget from scratch each time, with no reference to previous budgets and requires managers to justify all expenditures, not just increases from the previous year.

For example, if Coca-Cola’s marketing department has to create its budget for advertising for the new financial year in 2023 without copying from 2022’s budget.

(b) Explain one benefit to a business of using budgets. [3]

To improve financial control.

By setting out clear targets and objectives for revenue, expenses, and profits, budgets can provide a framework for monitoring and controlling a company’s financial performance.

This can help managers to identify areas where expenses are exceeding expectations or where revenue is falling short, and take corrective action before these issues become more serious.

For example, a biscuit company with many different varieties of biscuits can see the costs of each producing each product and ensure costs are closely controlled.

4 Analyse one way in which ethics may influence the activities of a business. [5]

Ethics are the guiding principles which govern how businesses make decisions – essentially deciding “right” from “wrong” when making choices.

Businesses will face ethical dilemmas when faced with a choice between improving profits or considering the potential negative impact of their operations. A business may have to decide between paying their employees a fair salary or making great profits.

A business may decide to behave ethically by ensuring that its supply chain is free from exploitation and child labour. These policies can help to improve the company’s reputation and brand image, which can increase sales by attracting ethically minded customers who share its values.

Section B ✍🏽

  5 (a) Analyse two reasons why it is important for a business to set SMART objectives. [8]

Provides a clear direction and focus.

This is because SMART objectives are specific, measurable, achievable, relevant, and time-bound.

This means they can provide employees a clear understanding of what needs to be achieved and can motivate staff to achieve these aims.  For example, A SMART objective for the marketing department to increase customer referrals for a B2B service by 20% in 2023.

This clarity of purpose helps to align the efforts of employees and resources towards achieving the objectives of the business and avoids wasted time and resources on activities that are not contributing to the business’s goals. A non-SMART goal may lead to confusion as to what employees are striving to achieve leading to demotivation, lower productivity and less likelihood of the goal being achieved.

Facilitates monitoring and evaluation of targets.

SMART objectives are measurable and time-bound, which means that they can be used to assess business performance. For example, leaders can assess if the finance department achieved its 20% increase in a decrease in production costs in 2022.

This means the business can see if it is on track to achieve its objectives, and make adjustments to its strategies and tactics as needed. By regularly reviewing progress against SMART objectives, a business can identify areas where it is performing well and areas where improvements are needed. This enables the business to take corrective action and make effective decisions about resource allocation, investment, and strategic planning.

(b) Evaluate the view that a mission statement is only important to a bank if it significantly influences the strategy and tactics of that business. [12]

A mission statement is a statement of a company’s purpose and values, which guides its actions and decision-making processes.

A mission statement can be created by the banks’ directors but will direct all employees towards achieving long-term strategic goals, for example, “we will use innovation to be the world’s leading bank in customer service”.

This means that a mission statement can provide guidance and inspiration to employees, by setting out a clear purpose and direction for the bank. For instance, a bank that has a mission statement that emphasizes customer service or innovation may inspire employees to go above and beyond in their work, even if the mission statement does not directly impact their compensation or promotion prospects. This can help to improve employee motivation and job satisfaction and can contribute to the overall success of the bank.

However, mission statements can be criticised for being too vague and aspirational so in a large organisation like a bank there may be many employees who are not influenced by the mission statement.

A mission statement may not help a bank achieve its strategy and tactics is that it may be too broad or abstract, and does not provide specific guidance on how to achieve its goals, may not be useful in guiding day-to-day decision-making or operations.

A mission statement on improving customer service may not be relevant to bank employees in non-customer-facing roles.

 If the mission statement is not communicated effectively to employees or stakeholders, or if it is not reinforced through actions and behaviours of leaders in the bank it may not have a meaningful impact on the bank’s strategy and tactics.

Therefore, it is important for a mission statement to be aligned with the practical realities of the business and to be communicated effectively to employees and stakeholders to be useful in achieving the bank’s strategy and tactics.

A mission statement can only have a limited impact on the strategy and tactics of a bank.

Even a clearly worded mission statement is brief and lacking in detail. It can provide a direction of travel for a bank like providing class-leading customer service but strategy and tactics require much greater planning and guidance.

Furthermore, banks are often multinational organisations working with both individual consumers and business customers. Therefore their tactics and strategy will have to adapt to each of these varied markets – a mission statement cannot provide this level of differentiated guidance.

Furthermore, mission statements can become outdated or fail to adapt to the dynamic business environment of banking. Changes in interest rates may significantly change bank’s profits or innovation in the FinTec sector may mean mission statements are no longer influential on strategy and tactics.

6 (a) Analyse two possible disadvantages to a business of using performance-related pay to motivate its employees. [8]

It can lead to conflict between workers.

Performance-related pay (PRP) is a system where an employee’s salary or bonus is linked to their performance, for example, teachers may be rewarded for additional effort in after-school activities.

PRP can create an atmosphere of competition among employees, which can lead to unhealthy workplace relationships and excessive stress. Employees may focus solely on meeting the targets or goals that are tied to their pay, rather than working collaboratively with colleagues or focusing on the overall success of the business. This can lead to reduced teamwork, lower morale, and less trust within the business.

PRP can lead to accusations of favouritism or discrimination.

In many jobs, for example, police or security guards, it can be difficult to measure output and PRP may be rewarded based on managers’ or leaders’ subjective opinions.

For example, managers may be more likely to reward employees who share their opinions, ideas, or personalities, while discriminating against those who do not. This can lead to favouritism, bias, and discrimination. This may create a bad reputation for businesses for not promoting diversity and inclusion or may lead to legal cases where employees may claim they have been discriminated against because of the leader’s bias.

(b) ‘The most important role of human resource management (HRM) in a fast food restaurant is to maintain a high level of employee morale and welfare.’ Evaluate this view. [12]

Employee morale is a measure of how satisfied, engaged, and motivated employees are in their work, welfare refers to employees’ well-being both emotional and physical.

There is an increasing focus on employee morale and welfare and an increased responsibility for HRM to look after staff. The fast food restaurant can be a highly stressful place to work with managers expecting a high work rate and quick service.

Focusing on the morale and welfare of employees could lead to higher productivity of staff and lower labour turnover. This will lead to less pressure on other HRM functions such as staff recruitment and training as employees feel content to stay in their role in the fast food restaurant.

However, HRM is also responsible for recruitment and selection of fast food workers.

If they don’t select the right candidates that are suited to a fast-paced workplace

it could lead to a highly negative impact on customer service and the quality of the food prepared. If there is a shortage of suitable workers due to poor recruitment and selection this will mean the remainder members of the kitchen staff will left with more tasks to complete. This will lead to more stress and workload, therefore having a negative impact on morale and well-being.

Morale and welfare is an important role for HRM but it can’t be viewed in isolation. Successful HRM will should have policies to ensure high employee welfare but these will become important in retaining staff after the right candidates have been selected and trained effectively so they feel comfortable in the quick-moving fast food environment.

In reality, as working in a fast food restaurant is such a demanding job there may be high turnover which is not so much a result of the policies for welfare and morale but because of the tough nature of the work. Therefore, recruitment and selection may be the most important to ensure there are enough staff on the team at all times.

This may depend on the labour market in the particular country, if there are worker shortages recruiting staff will become even more important as potential employees will be in high demand.