The Ultimate Guide to BUSS4 - Beaconsfield High School

The Ultimate Guide to

Essay WritingBUSS4

Resources for Courses

Author: Mark MitchellEditor: Jim Riley

AQA A2 Business Studies

EXAM TECHNIQUEBUSS4

Section 1

2 : The Utimate Guide to BUSS4 Essay Writing

BUSS4 – The Ultimate ChallengeHaving moved through BUSS1, BUSS2 ad BUSS3 you will have noticed the examination questions getting longer and more challenging. Now it is time to really show what you can do in this final examwhich involves just 2 essays in the 1 hour 45 minutes of the exam. You select one essay from Section Aand one from Section B.

As you prepare to take BUSS4 you will gather research for a pre-released theme for Section A andbuild up a bank of examples and key knowledge in relation to this research task and all the other topicsin Section B. This is the only exam where you really need to know about the real business world anduse a variety of examples from your own research.

Exam TimingThe BUSS4 exam is 105 minutes long. You have two essays to write. That is plenty of time, particularlyif you have practiced the exam technique described in this guide.

Take 5 minutes to read the item provided for Section A which is a mini case study relating to theresearch task. Pick your essay from Section A and spend 10 minutes planning and 40 minutes writing.Then move onto Section B, select an essay and again spend 10 minutes planning and 40 minutes writing. A typical essay length is around 3 sides of A4 depending on the size of handwriting.

Choosing Your Essay TitlesIn Section A you have a choice of one from 2 essay titles and in Section B a choice from one from 3.

Selecting the right essay is really important as it may be much easier for you to develop analysis, application and evaluation for some rather than others. In Section A the essays often draw on two ormore of the research bullet point tasks. You will have to use the case study given plus your own examples when answering the essay. Choose an essay that you feel most confident in being able toaddress the question with good examples and analysis.

With Section B you must be careful not to get distracted by the chatty example given at the start of theessay title. Find the sentence with the question mark and underline just this question. You do not needto make any reference to the example given and can use all your own examples. Never choose anessay title just because it mentions a firm you know about such as Facebook or McDonalds. Think ofthe question being asked. Can you plan a good answer to show analysis, good examples and evaluation?That is the one to choose. Spend a few minutes choosing the best essay for you could make all the difference to your performance.

©Copyright Mark Mitchell & tutor2u 2013

The Utimate Guide to BUSS4 Essay Writing : 3

Plan

Agree

Cautious business will not change quickly e.g. Kodak –

rivals will innovate quicker – outdated products.

Cautious businesses will may reject some plans as

higher risk and lose market share as new competitors

stay ahead e.g. Morrisons failed to embrace online

shopping

Disagree

By rejecting high risk strategies = less chance of

failure/damage to brand - avoiding Dasani Water

incident.

By doing market research and thorough scientific

analysis –more chance of success e.g. Cadbury Test

Marketing products like Wispa.

Trigger Words in EssaysEssay titles will contain key words on which you need to focus in your essay. They often enable you to“challenge” these words with arguments both in favour and against. For example:

The key words in the essay title above are highlighted in bold. The term “inevitably” enables the writerto challenge the proposition that if a business is cautious it will see falls in its market share. Manyfirms such as Kellogg’s have arguably been cautious by sticking to their existing market of cereals foryears yet have not seen serious falls in market share. It allows us to put arguments for and againstthe proposition. Any point made in this essay and any example chosen needs to focus on its impact on“market share”. It is no good talking about profit falls or cash flow falls unless they relate to marketshare.

So essays titles need to be thought about carefully and planned out so the answer is totally focusedon the trigger words.

Planning Your EssayIn the following pages we talk about the PEEL approach to writing paragraphs. This approach isproven to deliver better exam performance in BUSS4 when (properly applied) because it provides anappropriate structure and depth for each point that you make in your essay.

However, the PEEL approach is only effective if you firstly plan the key points you are going to make in each essay. Usually (not always) an answer will develop arguments both for and against the underlyingassertion in the essay question. If this is the case, we recommend that you plan to make two separatepoints FOR the statement and two separate COUNTER ARGUMENTS. Plan the points you are going to make e.g. that a cautious culture will lead to a lack of new product development. Examples chosenwill then help support your point. In relation to the essay title above you could set out a plan as follows:

Evaluation: not inevitable; depends on nature of business e.g. high tech, amount of competition

Over the past few years, Nokia has been losing market share to more innovativesmartphones, such as the Apple iPhone. Some analysts argue Nokia has beentoo cautious in its approach. To what extent will a ‘cautious’ business inevitablyexperience further falls in its market share? Justify your answer with referenceto Nokia and/or other businesses that you know.

©Copyright Mark Mitchell & tutor2u 2013

Where the Marks are AwardedThe Examiner Mark scheme for BUSS4 essays is as follows:

Level Descriptor Marks

L5 Application/analysis Both good 26–23

L5 Application/analysis 1 good and 1 reasonable 22–18

L3 Application/analysis Both reasonable or1 good and 1 limited 17–13

L2 Application/analysis 1 reasonable and 1 limited 12–8

L1 Limited response Answer based primarily on knowledge 7–1

Level Descriptor Marks

E3 Good evaluation Ideas are communicated using a coherant structure with consistent andappropriate use of technical terms. There are few errors in accepted conventions of written communication. 14–11

E2 Reasonable evaluation Ideas are communicated using a logical structure with some appropriate use of technical terms. There are occasional errors in accepted conventions of written communication. 10–6

E1 Limited evaluation Ideas are communicated with some structure evident, with occasional use of appropriate technical terms. There are some errors in accepted conventions of written communication. 5–1

For Evaluation, you should award marks using the grid below.

Note: Evaluation also assesses candidates’ quality of written communication. When deciding on thelevel to be awarded, consider the degree to which the candidated orders his/her ideas.

As with other business studies examinations the skills required in the essay are Application, Analysisand Evaluation. However, how these apply to the BUSS4 paper differs to BUSS1, BUSS2 and BUSS3. Guidance on how to score highly in BUSS4 for each skill is given below.

ApplicationIn Section A of the exam you are provided with a case study item. In order to achieve good applicationyou will need to use the item plus your own real business examples.

Try to make at least 2 references to the case study but use it to explain the point you are making. Forexample the fact the combined businesses saved £40m of costs after the takeover could have been due to economies of scale in bulk purchasing.

Examples used must help to answer the question and must be detailed enough. It is much better touse 3 or 4 of your own examples in depth, perhaps quoting some facts and figures rather than manybrief references to examples.

Businesses chosen must be relevant to the context of the question. E.g. if the question is about “cautious” businesses then the examples must relate to this. Examples chosen should also contrastto allow a weighing up of the question.

4 : The Utimate Guide to BUSS4 Essay Writing ©Copyright Mark Mitchell & tutor2u 2013

In Section B there is no case study except a brief mention of a business at the start of the essay title. You do not need to mention this business so only do this if you know some detail about it and can use it to make your point. Otherwise bring in a few of your own real business examples in detail to helpmake your points. Your example must be used to support a relevant argument in order to achieve the top level for this skill.

Examiners always enjoy reading about firms they haven’t seen time and time again so keep one or twoWOW (unique) examples up your sleeve to add to any essay, perhaps from a local business you haveresearched.

As you use your research examples in both Section A and Section B it is important to avoid "story-telling"and the regurgitation of too much irrelevant detail. The examiner does not want to know how much youknow about your real-life business examples. Rather, he/she wants you to explain HOW and WHY theexamples you have chosen support the points you are making.

A good way to think about using research examples in both Section A and Section B is that they addcredibility to your answer. As you make and explain a point relevant to the chosen essay question, youruse of evidence is there to support the argument.

As you introduce research examples into each paragraph point, also try to compare and contrast theevidence. How does one example compare with another - or do they both lend support to the point youare making?

AnalysisAnalysis involves building a logical chain of argument using connectives such as “because…”, therefore…” and “leading to…”.

Analysis can also be awarded for applying business theory to help explain a point. Great examples oftheories would be Ansoff’s matrix, price & income elasticity and Porter’s generic strategies. There needs to be several steps of analysis and it must link to the trigger words in the question. There areseveral examples in this pack. Think of analysis as a series of stepping stones that you need to use tobuild up a chunky paragraph.

A common criticism of BUSS4 essays is that students do not explain there points well enough - i.e. toofew connections are made to help develop a point. Good analysis can be achieved relatively simply byusing the trigger words in the question to make logical connections. For example, WHY might a changein leadership result in a decision to implement a change management process, WHAT steps wouldnormally be required to make this happen and WHY might it not be successful.

EvaluationEvaluation needs to take place during the essay and not just at the end. A simple way to evaluate atthe end of the paragraphs is to say “however, this would depend on…..” as shown in some of the student examples provided in this booklet.

If the judgement depends on certain issues e.g. the culture of the business, the leader, the businessobjectives then bring this in. It is good practice to follow your judgement with a paragraph which dealswith this. The “it depends” section tries to explain what the issue set in the question really dependsupon and why. So a final paragraph is vital to make a justified judgement and answer the question set. You need to make a decision which emerges from your previous paragraphs.

Try to prioritise e.g. “given that China has problems with protecting patents and its wage levels are rising, the best emerging market to focus on would be India…” “further reasons for focusing on Indiawould be….”. Try to address trigger words in the question like inevitable – things are rarely inevitablein business.

The Utimate Guide to BUSS4 Essay Writing : 5©Copyright Mark Mitchell & tutor2u 2013


Take Aim at the End of Each EssayWhen writing your final paragraph try to include the following:

Answer/Address the trigger words in the question. E.g. is it essential for managers totake ethics into account? Do not sit on the fence but make a clear judgement e.g. “it is not essential to take ethics into account because…” and justify your reasoning.

It Depends. Discuss what the overall issue depends upon – for example does it dependupon consumer reaction as to whether it is essential for managers to consider ethics? Try to come up with a few of these issues and explain fully perhaps with an example.

Most Important. What is the most important issue when considering the conclusion? For example is the most important issue when taking note of ethics the extent to whichthe media are interested in the business. Explain why this is important.

AI

MIdeally you will produce one large concluding paragraph which pulls all of this together. In many of theexamples that follow the student does the “it depends” part before answering the question which isanother way to tackle the evaluation.

A further tip to consider in any evaluation is the short versus the long term. For example a firm in financial trouble like HMV could be seen to not prioritise ethics in the immediate term but in the longterm it may be important due to the amount of media attention in the company.

Remember, you will probably not be able to reach the highest levels for evaluation if you do not referdirectly to the trigger words in your chosen essay question during your final evaluation paragraph.

So a good tip is to re-read the question you have been answering before your start the final paragraphto ensure that your closing evaluative remarks directly answer the question.

So take AIM and fire!

Writing the EssayUse your plan. Use paragraphs for each point you are making and ensure these are very well developed“chunky” paragraphs with several stages of analysis and use of good real world business examples. Keep looking back at the essay title to ensure you are focused and link your answer back to the triggerwords in the question. Towards the end of each paragraph you may want to bring in some evaluatione.g. “however this would depend upon the price elasticity of demand and whether the firm was importingor exporting as… “

A useful acronym for writing each paragraph is PEEL

PEEL

make a POINT

use EXAMPLES and EVIDENCE

EVALUATE

LINK BACK to the QUESTION


Example:To what extent do you think mergers/takeovers inevitably lead to business success?

A typical paragraph: Point ExampleA reason for success can be revenue synergies. This is where extra revenue can be gained by integrating the 2 companies as opposed to running them separately because they can share customers therefore target these customerswith successful products from both companies meaning they are increasing distribution for these products. For example Virgin Money have credit cardsand insurance which can be sold to Northern Rock customers and NorthernRock have mortgages and savings accounts which can be sold to Virgin customers. This potentially will increase the revenue and profits of the combinedbusinesses and lead to success by this cross selling of products. However giventhe competition in the market, larger rivals such as Natwest could still offercheaper mortgages if they can receive cheaper finance due to their economies of scale so it could still be difficult for Virgin to compete and achieve success interms of market share.

Link

Recent changes therefore do not make survival inevitably difficult if the correct strategy is chosen. The reason why Woolworths and others have suffered was more to do with competition and technology and the businesscould and should have changed their strategy such as relying on selling CDsand DVDs. In fact, many companies have used recent economic changes totheir advantage and used low interest rates to expand the business, Sainsburybeing a great example. With a carefully chosen strategy such as extendingtheir basics range a firm can survive through economic changes and actuallyincrease market share.

Answer / Address the trigger words

Finishing your essay – using the acronym AIMHere are the last 2 paragraphs from the essay:

Do recent changes in the UK economy inevitably make it difficult for UK businesses to survive?

It Depends

CommentaryHere we see a student end the essay with the AIM approach mentioned earlier. They answer the question with reasoning and address the trigger words in the question. It is crucial to make a decision and not sit on the fence. This is followed by an “it depends” paragraph which says what survival ultimately depends upon. Prioritising has also taken place by saying what the key factor is affecting survival.

It Depends

As to whether it is difficult to survive depends on several factors. One factoris the strategy chosen by the business. In Sainsbury’s case the decision tolaunch the basics range in the recession allowed them to gain market sharefrom rivals which shows that effective leadership can avoid problems in a recession. Another factor would be the type of economic change. The recentfall in interest rates as a result of the recession has made it easier for manycompanies to pursue strategies such as growth, such as Sainsbury Shoreheadexpanding the store onto 2 floors and financing the renovations through borrowing. This proves that even in recession there can be opportunities aswell as threats. Overall, the key factor affecting survival would be the typeof business as one like Honda, selling new cars is bound to find it difficult inthe recession as consumers cut back on income elastic goods because theycan survive with their existing car and do not have to replace it. But evenHonda have proven with adequate cash flow and a strategy to survive theywill not go out of business.



Essay Structure

Introduction

Argument 1

Argument 2

Counter Argument 1

Counter Argument 2

Concluding Paragraph

with COMMENTS

Example EssaysSection 2

In the exemplar essays that follow, our comments are provided in theshaded boxes


Sample Section A EssaysPlease note: these essays were based on the research theme given to students in advance. In the exam students are given a small case study to use as well as their own examples.

To what extent should the government intervene and provide financialsupport to firms during a recession? (40 marks)


So, to what extent does the UK motor industry deserve government support more than

others? A major benefit of supporting the car industry in the UK is that it is a high

employer employing 190,000 people in the UK. So, by supporting the car industry not

as many people will be made redundant and so far less people will be unemployed,

therefore not as many people seeking Job Seekers Allowance, so not as much spending

by the government.

An example of this is Jaguar Land Rover which employs in the UK 15,000 people, mainly

in the Midlands. This therefore is a highly important employer in the region, so if this

was left to go out of business, the local region will lose a major employer and so lose the

benefit of employed people working, so further businesses may go out of business like

suppliers and services. This is called the multiplier effect.

Clear line of analysis here – a chain of argument with use of theory (multiplier effect) applied. Theexample shows specific figures and already we sense good application – the 190,000 figure wasfrom the case study but data like the 15,000 came from the student’s own knowledge.

Government financial support is aid given by the government to help aid an

industry in struggling times either by guaranteeing loan repayment or by

boosting sales by the car scrappage scheme. This was where any car over 10

years old could be turned in to a car dealership and the owner would receive

£2,000 to buy a new model, £1,000 from the government and the other half

from the manufacturer.

A nice introductory definition of what government support might involve, setting the scene for the analysis that comes on the next page.

Another benefit is that it creates exports which is a component of aggregate demand

so a part of GDP. This is the measurement of total value of services and products being

made by a country. If GDP was to fall dramatically due to the UK car manufacturing

industry declining then the credit rating of the country will be downgraded and so the

ability to pay off national debt will cost more. This happened to Greece in 2010 where its

credit rating was downgraded to a B and had to be rescued by the Euro countries. If

this happened to the UK interest rates would have to increase and so total spending

by the country will go down so either cause a double dip recession or slow growth.

However, this all depends on whether £50 billion drop from the UK would damage the

UK and by how much to have a significant effect.

The student has grasped the skill of analysis showing the cause and effect clearly with a chain ofargument. The last sentence shows evaluation. Application is again strong using student’s ownexample of Greece with data from the case like the £50bn contribution to GDP. Application is beingused to build an argument and answer the question.

A benefit of supporting the car industry is that by introducing the car scrappage

scheme it helped reduce the amount of old cars and increased the amount of newer

model cars in the UK. The benefit of newer cars is that these are more fuel efficient

and so this will help lower the carbon emissions by the UK by quite a substantial

amount. As during the scheme just under 400,000 cars were bought and they usually

on average provide 27% less emissions. This therefore helps tackle the cutting of carbon

emissions and also the UK can avoid being fined by the EU if they fail to reach that

target, which would further harm the amount the government has to spend. However,

this is on average so if the owner buys a Toyota land cruiser, and traded in an old mini

cooper the carbon emissions would be more and so not help the targets.

The student is starting to evaluate at the end of paragraphs making use of the word “however”.


The student is now making counter arguments that industry should not always be supported bythe government.

There is, however, issue with why the car industry and not other industries such as

Zavvi, Woolworths etc. Woolworths, a high street store, which employed 35,000 people in

the UK went bust after not being able to pay off debtors due to cash flow difficulties.

If the government had helped guarantee their loans Woolworths would have been able

to stay afloat and carry on trading. This would help the government get the country

out of recession through spending by the employer/employees etc. However, the reason

why was because Woolworths was in a declining market and facing competition from

Amazon. It had high retail costs of leases on high street shops and so couldn’t compete

with Amazon on price and quality of different goods in store.

Also by ‘bailing’ out the UK car manufacturer you help firms become inefficient. This

is where firms lose their ability to provide a good or service as quickly and cheaply as

possible. As firms will feel they do not have to work efficiently as the government will

help them. The UK car industry is in a highly competitive market from the USA with GM,

Ford etc and from Japan; however, the firms have manufacturing firms in the UK.

Other competition comes from Nissan, Honda UK and Vauxhall. The new emerging markets

like India have the economies of scale and cheap workforce to produce cars cheaply

and are producing the cheapest new car in the market at only £2000. More than ever

UK firms need to remain efficient otherwise this may leave the UK car industry in a

declining industry in the UK and so we may have to let them go like Woolworths and Zavi.


Also, by protecting an industry a government may start a price war against anothercountry. This is where a country protects an industry by guaranteeing loans and in addition another country may put tariffs or quotas on the goods entering their countryso increasing price and so losing customers in that country. This happened when Chinawas producing cheap toys and the USA under pressure from unions put a tariff on thesegoods as they hurt American goods and the Chinese retaliated by putting a quota onAmerican tyres. This may happen to the UK, if other countries feel that the UK isprotecting itself and helping their domestic car manufacturing companies.

So, in conclusion, does the UK motor industry deserve financial support when other firms are left to fail? Yes as the UK car manufacturing is a major sector in the UK in employment, manufacturing and export. This helps the UK in many aspects. By supporting the UK car industry through financial means, means that local areas withhigh levels of unemployment like Sunderland with Nissan, Jaguar and Range Rover inthe Midlands. This helps though the creation of wealth in the area through the multiplier effect and help reduce the reliance on wealth being created solely in theSouth. Another major advantage is that as the UK manufacturing is perceived to be reducing and firms move abroad, this may leave an over reliance on imports and so harmthe economy. The government gains tax from not just the 190,000 people employed butthe 850,000 others employed in the component and retail sectors. And all the profitsmade by these firms as well.

Also the reason why Woolworths was not chosen or Zavvi etc is that these firms are indeclining markets and their corporate plan was not working and had no viable way ofdiversifying. However HMV who was in a similar situation to Zavvi improved their strategywith a diversification and takeover of MAMA a live music entertaining business whichhelped impress shareholders. Also the UK car manufacturers made decisions which wereviable and had to be made in the recession. Honda UK with its people first culture haltedproduction for 4 months but made no redundancies. Nissan UK made 2,000 people redundant but Nissan is one of the most highly technological manufacturers in theworld and gave the UK advanced methods such as JIT and kaizen which added cashflow and continuous improvement which improved efficiency in UK domestic firms. Sothese types of businesses should be supported during a recession. So in conclusion theUK car industry deserved financial support as during a recession highly income elasticgoods like cars are going to suffer and as this is a major employer it is a viable industryto maintain where as Woolworths and Zavvi were in declining markets and faced majorcompetition from Amazon and had no viable or workable plans to move out of this situation and so fell victim of the recession.

The student has spent the last 2 paragraphs weighing up and concluding that not all industriesneed to be supported but the car industry is worthy of government help. There is strong judgementgiven in relation to the question set.

Overall the student made good use of the case study on the car industry and combined this withgood self knowledge and examples. Evaluation was evident throughout and at the end. This essaywould score the maximum 40 marks out of 40.


With reference to your own research and the item above, do you thinkthat the ability of a business to act successfully in a socially responsiblemanner is mainly determined by the products it produces? (40 marks)

Corporate Social Responsibilities are actions undertaken by firms which are not required

by law. CSRs benefit the stakeholders (employees, customers, shareholders, governments

and communities) and the environment. Firms undertake CSR to show that they have

moral values e.g. Marks & Spencer’s “Plan A”.

Again a simple introduction, defining corporate social responsibility and setting the scene.

The type of product sold by a firm does affect how successfully they can be socially

responsible. It is difficult for companies selling demerit goods including cigarettes and

alcohol to be socially responsible. BAT, who sell tobacco, are trying to behave responsibly

by helping the environment, employees and communities. However for them to be truly

socially responsible, would stopping selling tobacco be the only real solution? BAT are

trying to prevent underage smoking as a CSR which is difficult because they want

high sales of cigarettes to be successful. Whereas products such as beauty products

can be sold socially responsibly much more easily, for example, The Body Shop sells

fair-trade beauty products where employees in foreign countries are paid fairly and

they do not test on animals. These CSR policies look good as they do good for stakeholders

both inside and outside the business. The firm seems more socially responsible because

they are not selling a damaging good such as cigarettes.

The student makes reference to the case study about BAT and addresses the question. Chain ofargument is reasonable but not good as there needs to be a long series of stepping stones to buildup the analysis. For example, why would stopping selling tobacco be socially responsible? Don’tassume the examiner knows. Constantly explain WHY and HOW.


Products can be inferior, normal or luxury. It is harder for an inferior good to be sold in

a responsible manner because the firm sells at low prices so will have low profit margins

and may struggle with added costs of CSRs. For example, Primark, and Nike who sell low

priced clothing have been criticised for being socially irresponsible by producing in

Asian countries where children are exploited to work for low wages. However Primark

would not be able to act successfully and pay fair wages because their profit margins

are too small to cope with added costs. On the other hand, luxury products are designed

to target people with high incomes, who care about social responsibilities e.g. Divine

Chocolate sell high priced chocolate, which 40% of profits go to the cocoa farmers.

Divine can afford to charge high prices for their social products because the customers

want socially responsible products. The manner of the product influences whether

people are prepared to spend more on socially responsible goods, so therefore influences

the success of a socially responsible business.

Reasonable use of own examples with two contrasting ones. Again the student fails to developanalysis through several stages. For example the Primark example could bring in price elasticityand competitiveness in what is a very competitive market. It is important to develop analysis as faras possible before bringing in the second contrasting example. It would be good to focus more onthe trigger word “successfully” and what this means. There is potential to evaluate more throughout.

On the other hand, the success of acting in a socially responsible manner depends on

which social responsibility policies are undertaken, for example, policies such as those

used by SONY which aim to reduce energy consumption help a business to perform

successfully because the development of using renewable energy sources leads to

lower costs, greater efficiency and a wider profit margin. Some CSRs lead to extreme

cost savings which means that business perform better due to their CSRs. However,

some CSR policies prevent a business from being successful because they add to costs

e.g. Syngenta in Huddersfield used to dump chemicals in the River Calder but now have

a CSR policy where they dispose of waste in a responsible manner. This adds to costs. It

may not always be possible for a business to be successful if all their CSR policies add

to their costs and do not generate long-term savings.

This paragraph strays away from the question a little. It is really a counter argument to the questionbut it needs a LINK back to the question – CSR is not just about the product sold, there are manyother constraints to behaving responsibly like costs and the economic situation – see below. Oneconcern at this point is that little reference has been made to the BAT case study provided.


The ability of a business to act in a successful yet socially responsible manner depends

on the economy. In a recession, demand for products (especially those with income

elastic demand) falls. With lower revenue it may be difficult for a firm to keep up to

the cost of acting socially responsible, for example, in the 2008/09 global (and UK)

recession, Divine Chocolate had problems in staying profitable because lower incomes

led to lower sales of the income elastic good, so their CSR led to difficulties. A recession

can ruin a firm unless they sacrifice some CSR policies for survival. Whereas in a boom,

the most successful firms often undertake CSR to differentiate themselves from the

competition, for example, Co-Op who are known to sell fair-trade goods, operated

extremely successfully in the early half of the 2000s because consumers thought

that CSR was value for money.

Furthermore, a product such as BAT’s tobacco has remained socially responsible and

successful despite being a demerit good. The employee workshops, shareholders inputs

and socially reporting have led to a more motivated workforce and a better brand image

leading to a successful business despite their products.

To conclude, I would say that the product does influence the ability of a successful

business being socially responsible; however I would say that it is not the main factor.

To me, the main factor determining the success of a socially responsible business is the

attitudes of the stakeholders. If customers would sacrifice low prices for CSRs, then a

successful business would be socially responsible; however if low prices are essential

then firms may suffer low profits if they invest in CSR. If employees are treated fairly

through CSR then they will be more motivated and the business will be more efficient

due to its social responsibilities, and most importantly, if managers believe that CSR is

a good strategy then they will be more successful because they will be focused.

The ability for a business to act successfully whilst socially responsibly also depends on

the economy. The economy hugely influences consumer spending patterns, which often

causes lower revenue for business, meaning that socially responsible ones may suffer

due to the cost of CSR.

A good essay with a couple of useful references to the BAT case study and using the student’s ownexamples yet with potential to add further to the use of application with more thorough examples.Analysis was reasonable although the chain of argument could have been developed further inmany areas. The last 2 paragraphs showed good evaluation with a well supported conclusion.Some evaluation throughout the essay may have added to the grade for this. The essay wouldscore 33/40 marks.


With reference to your own research and the item, do you think thattakeovers and mergers inevitably improve the performance of thebusinesses involved? Justify your answer. (40 marks)

Mergers and takeovers are the joining of 2 or more businesses. The performance of

the business may improve but on the other hand it can also cause problems and lead

to a business failure. On the one hand a merger or takeover could inevitably improve

performance. This is because they are able to receive synergies – cost and revenue. This

is where the whole of the business is worth more than the separate areas. AT&T taking

over T- Mobile USA could lead to revenue synergies. This is because they would become

a monopoly with 43% of the mobile market and 128 million customers. This means that

customers have less choice as to which business to choose. They would receive higher

sales by joining with T-Mobile and so higher revenue. They would also receive cost

synergies due to generating over $40 billion savings. This could be because they have

reduced any duplicated departments and so labour costs were reduced and so they

were saving on their fixed costs. Another company that received synergies was

Morrisons when they took over Safeway. This was because it was horizontal integration

and so they were able to close 3 distribution centres due to duplication and also had

more buying power from suppliers and could receive bulk buying economies of scale;

therefore receiving cost synergies. They were then able to reduce 7500 of Safeway’s

prices due to the cost savings which generated more sales due to them being in a price

elastic market. This takeover inevitably improved performance because they were both

too small in the supermarket market to compete against the larger supermarkets like

Tesco and Asda but now they can as they are 4th largest in the UK..

After a short definition the student gets straight down to business by using both the case study onAT&T and another example (Morrisons) to explain the benefits of synergy. The last sentence linksnicely back to the question making judgement about the improvement in performance and scoresevaluation marks.


Secondly a merger or takeover can improve the performance because the two businesses

can be a good strategic fit by working off each other’s advantages and therefore

improving performance. When Kraft took over Cadbury they started to use Cadbury’s

distribution links in India and Russia and also the supermarkets in the UK. This now

means that more customers have access to their products and so it increases sales. A

quarter of Kraft’s $50 billion sales are from Cadbury’s distribution links. Kraft, being

one of the largest US companies, has links with some of the world’s largest sugar

farmers and so Cadburys was able to use this as a benefit as they were able to

receive cost synergies. By using the other company’s advantages it makes a good

strategic fit and therefore improves performance.

By now the examiner has decided to award good application given the relevance of the specific example to improved performance.


On the other hand, a takeover may not always result in an improvement of performance.

This is because a clash of culture could cause problems within this business. If AT&T

did take over T-Mobile USA they could find that there were different cultures due

to T-Mobile USA having German owners. This over the border takeover could cause

problems as it could result in disagreements due to different beliefs and so therefore

result in slow decisions and customers choosing to go elsewhere. Another take over that

found they had a culture clash was when News Corporation took over Myspace for

$580 billion. They were a large bureaucratic company whereas Myspace was a small

company with an innovative culture. This led to indecisive ideas being too slow and

Myspace were eventually taken over by competition from Twitter and Facebook. They

also lost finance from advertisers as they weren’t willing to advertise on a company

that’s customer base was declining. Eventually News Corporation sold it for $35 million.

This shows how a clash of culture can actually badly affect the performance of a

business and cause it to lose the majority of customers. Also if the employees resist the

take over and it becomes hostile, then this can affect the performance. This is because

they can become demotivated and also decide to take industrial action. The employees

at Cadburys didn’t want Kraft to take them over because they knew Kraft has a

harsh cost cutting, profit maximising culture and so the employees felt they didn’t

have job security – one of Maslow’s needs. This led to Kraft increasing the offer to 50%

above the market price, which could have led to possible synergies being outweighed

by the large cost and affecting performance as they’d be less cost effective. It also

led to 400 job losses at the Somerdale factory and so resistance from the Birmingham

plant’s workers. This affected performance because the low morale of workers caused

lower productivity of Cadbury products. The employees also took industrial action and

this caused low productivity and so supermarket’s large demand couldn’t be met

and they lost customer confidence in their products evidently leading to a bad

performance.

Again the paragraphs show good application. Analysis could go a little further and is reasonable.It would be much better to link one argument via several stepping stones to the impact on performance rather than trying to make several points e.g. It also led to... The term “also” doesnot encourage a chain of argument as it introduces a new point.


The performance of a merger or takeover can depend on the type of takeover. If it’s

horizontal then they can benefit from cost and revenue synergies such as a larger

customer base and bulk buying economies of scale. They can also find a good strategic

flow and improve in areas that the other business is established in and benchmark off

each other and therefore improving performance. However, a conglomerate takeover

or one that has no strategic fit like Myspace and News Corporation could find that

they have no synergies as Myspace is online networking and News Corporation sells

newspapers and so therefore not saving costs or increasing revenue. This would lead

to a fall in performance for one or more of the businesses.

It also depends on the size of the business as to how much performance would affect

them in the long term. Myspace was a small business that had only been established

for 2 years and so its performance was important because they hadn’t got a sufficient

loyal customer base yet. However, Cadbury’s employee resistance didn’t affect the

company in the long term and they were able to improve their performance over time

and didn’t lose out – the overall company is now worth $39 billion.

To conclude, the takeover or merging of two businesses could cause problems in the

short term for performance with conversion costs, employee resistance and removing

duplicated departments. However, in the long term the business would improve their

performance. However, this is only if there is an obvious strategic flow with synergies.

If there isn’t then the takeover company should re-think their proposal as it could lead

to the business to change its culture and competition to overtake it, leading to failure.

A takeover or merger won’t inevitably improve performance.

3 final evaluative paragraphs here using “it depends” and referring to short versus long term impact in the final paragraph. This would be awarded good evaluation and ended on a sentencewhich answered the question. Overall the essay would score 34 out of 40 with good application andevaluation but reasonable analysis.


EssaysSection B

These essays usually start with reference to a specific business or industry however you are under no obligation to write about that business and can simply use your own examples.



The UK bottled water market has been dominated by firms such asNestle and Danone for many years. Coca-Cola the soft drinks producer,recently entered the bottled water market in a number of countries,including the UK, with brands such as Malvern and Glaceau. What doyou think is the best strategy for existing businesses to adopt in responseto the entry of a new market competitor? Justify your answer withreference to the UK bottled water market and/or other markets thatyou know. (40 marks)

If a firm enters the market, such as Green and Blacks which had a USP of high quality

and supplier friendly, Cadbury’s had a major competitor with a growing market share

in large chocolate bars and singular chocolate products. So Cadbury’s simply did not

attempt to complete with Green and Blacks but bought them out and took over the

company. This acquired Cadbury’s a larger market share in the market, higher sales

and still higher profits. However, this can only happen if the firm which is facing

competition has either low gearing or has lots of spare cash to obtain the company.

Also it depends on if the competitor is too big to simply take over eg Coca Cola or if it

is not a Plc and the shareholders do not want to sell.

A good example used and some nice evaluation and judgement – and we are only in the secondparagraph.

A strategy is, where a business makes a decision on what it wants to achieve through

corporate aims and how it plans on achieving this through its different departments

of HR, Production, Marketing and Finance. So if a firm is in a market that has been

dominated by a few firms and then a larger competitor joins them the firm must make

some strategic decisions on what it plans on doing.

The question is fairly typical in setting the scene with an example that may or may not beused by the student. The student here starts with a nice concise introduction to set the scene.This will now be followed by a first argument.


Great points made and examples but the student would be much better taking one or two of theseand really building up a chain of analysis rather than making several points about Tesco’s strategy.Keep asking why? and explaining fully to gain maximum marks for analysis. The paragraph oncash flow shows some good analysis as it links to investing in self service checkouts and loweringcosts – but this should have linked to lower prices.

Another way is to cut running costs, this means that by cutting costs either by investing in new technology, staff redundancies etc. This was done when BA wascompeting against competition on short haul flights from RyanAir. Willy Walsh of BArealised that at BA total cost 60% was made up of staff and Ryan Air was 30%. Sohe proposed to cut costs by having one less flight crew per flight on long hauls. Thiswould cut costs drastically and improve the competitiveness of BA as they couldcompete more on price with less costs and so the savings could be passed onto theconsumer. However, he was challenged by the Unite Union and so had to contendwith strike action and passenger disruption when making redundancies. If the planhad worked BA would certainly have become more effective and tackled the £217million loss that it had incurred.

Again the student uses a good example but this time with some facts and figures. Applicationis good. Analysis could be developed further using price elasticity for example. Good practiceshown in attempting to evaluate the strategy.

Another way was by finding a new target market niche. This is what Sainsbury’s did when competitor Lidl entered and during the recession saw record sales and soexpanded. Sainsbury’s tackled this by increasing its basics range from 400 to 450and also had the marketing campaign of ‘feed the family for a fiver’. This sawSainsbury’s market share grow, therefore seeing off competition from Aldi and Lidl.

Also, by increasing cash flow business can increase their market position by beingable to charge less and invest in new technology. Tesco is a cash rich business. SoTesco decided to use its market dominance of over 30% to increase payment terms to suppliers from 30 to 60 days. This increased cash flow and it also introduced selfservice checkouts which lowers costs through staff wages being less. This led toTesco being able to target different market niches through Tesco Extra. Anotherway is for firms to export abroad. This was done by Tesco when it moved to India,China, the two most growing nations in the world. This would lead to less reliance onthe British market and avoid national recessions etc. However, they would have toobserve difficult cultures and law. They tried an Express format in the USA but itwas seen as a failure and expansion halted. Therefore, by doing these differenttechniques, Tesco maintained its dominance in the UK but also spread risk throughniche markets and market development through starting in developing nations.


The question set here was not a 2-sided one. When asked about the best strategy a studentshould provide a discussion of 3 possible strategies then make judgement about what thechoice depends upon and try to make an overall decision on which is the best strategy. Thestudent here has shown a range of good examples used to answer the question with somedecent analysis. Evaluation took place throughout as well as at the end. The essay scores 36out of a possible 40.

So in conclusion, what is the best strategy? It all depends on the market structure,

the size of the competitor etc. however if the competition is large I would advise

moving abroad and competing internationally. As buying out a large competitor is

expensive and sometimes can involve buying a business with large amounts of debt.

The other options of cutting costs though is achievable but can lower the quality of

service given and so in the case of Tesco self service may cut costs but can damage

public image eg Unites attack on BA and also Tesco may face union issues if

redundancies are made. The strategy of targeting niche markets is good if the

competitor is smaller and so you can compete and actually fund these changes that

are required but can cause costly product development costs and may not payback

as Ansoff argued that product development was a risky strategy. Therefore

expansion internationally is advised as it gives a market with large growth prospects

as China and India are emerging so it spreads the risk if UK sales are falling.


A good link from UK markets being saturated and regulated to the need to exploit emerging markets and take risk in order to increase profit.

The concept of globalisation is the movement and expansion of firms into new

markets and geographical locations all around the globe. It is becoming increasingly

popular as a means of expanding the business and a method of generating high

profit margins if successful. Many businesses such as Coca Cola have been

extremely successful and have remained market leader in the soft drinks market

as a result.

On the one hand it is apparent that organisations will need to change their strategies

to achieve high profits based on globalisation. With emerging markets such as China

and India it is extremely important for firms to take advantage of these new markets

and exploit them. In these emerging markets there are less regulations compared

to the UK with the rules of the competition commission and government legislation

restricting growth and expansion. In order for businesses to achieve higher profits

they must develop strategies to expand into these emerging markets and establish

their brand name early to reduce threats of competition when expanding. Many

companies such as Costa Coffee recognised that the UK coffee bar market is

saturated and in order to generate higher levels of profit they must exploit emerging

markets in India and China. In saturated markets such as the coffee bar market it

is difficult to carry out other strategies such as market penetration or market

development in relation to Ansoff’s matrix and instead must take a more risky

approach in order to boost profits. Furthermore, after a recently failed attempt at

Tesco expanding to the US in order to increase profits, they have instead recognised

the opportunities that lie in the EU, a less risky approach due to the similarities of

European countries and the UK. Furthermore Tesco have expanded their company

to China in order to establish the brand name early and consequently gain greater

market share than rival competitors that relocate later.

The business world is becoming increasingly global. As a result ofthis, many companies, such as Costa Coffee and Dyson, have changedtheir strategies in relation to the markets they target or where theyproduce. Does the increasingly global nature of business mean that allorganisations need to change their strategies significantly to achievehigher profits? Justify your answer with reference to Costa Coffee,Dyson and/or other organisations that you know. (40 marks)


Again the student shows a need to change strategy in order to take advantage of cheapercosts overseas. The use of Apple serves as an evaluation that adverse publicity may be an effect of this. A good chunky paragraph with strong chain of argument means good analysis is awarded.

Furthermore, organisations must change their strategies due to globalisation because

in emerging markets, and the EU there can be many economies of scale as a result,

particularly in relation to methods of production. Many companies have chosen to set up

factories in countries with no set minimum wage which leads to reduced costs in terms

of cheap labour as well as cheap production costs compared to the UK, leading to an

overall reduction in unit costs. In many cases it is cheaper for companies to produce

products overseas and then import them to the UK. Furthermore other economies of

scale can be achieved in terms of specialisation. Within other countries there may be

access to a much larger, more diverse workforce as well as other companies which may

provide specialisation in terms of outsourcing. All of these factors lead to reduced costs,

increased efficiency and therefore may lead to higher profits. However, producing

overseas in some cases can be seen as unethical if the workforce is being exploited or

not being treated in an ethical manner. This can be seen in the case of Apple with their

Foxconn factory in China in which many of the staff working at the factory were

committing suicide. Once the media had discovered this they blamed Apple for poor

treatment of labour. In some exceptional cases, as with Apple, the company’s reputation

suffered.


However, on the other hand, not all organisations need to change their strategies in

terms of globalisation. Other strategies can be adopted in order to achieve higher

profit levels. In many cases it depends on the market in which the business is in. For

example, companies such as Primark have instead adopted strategies such as Porters

low –cost model in which they sell their products at a low price aiming at low income

groups and therefore have still achieved high profits as a result. If companies such

as Primark are already generating high levels of profit with the strategy they have

adopted at present then they do not necessarily need to enter the global market.

Furthermore, entering the global market may not actually be the right strategy in

some cases due to the high risk factor it holds and instead of generating high profits

it may significantly cost the business. Firstly, when entering a new market such as

an emerging market there are unknown competitors and due to the completely

different culture and traditions of that particular area the consumers may not

necessarily accept the product being offered. For example, in the UK the coffee bar

market is saturated because coffee is a British tradition and years of our culture. As

Costa Coffee expands globally they must take into account the type of consumer

they are aiming at. It is also apparent that in new markets the customer may have a

much lower income due to it being a newly industrialised country (NIC) therefore

pricing is key. This may affect the methods of production as the coffee Costa sell

may be of good quality and in order to meet the needs of the new consumer in terms

of price, they must find new suppliers to ensure a profit can still be made.

Also, the strategy of globalisation is extremely expensive and if unsuccessful it could

cost the company millions damaging both profits and reputation. This occurred in the

case of Tesco extending to the US but unaware of the power of Wal-Mart and their

brand loyalty. Tesco soon accepted it would be unsuccessful and had to close their

‘fresh and easy’ stores. The same issue occurred when Coca Cola launched their

brand of Dasani water in the saturated UK bottled water market and when the

media discovered it was purified tap water sales declined as the UK market was

completely different to the US market which Coca Cola hadn’t accounted for, costing

them millions.

The student presents counter-arguments that changing strategy may not be worthwhile ornecessary with relevant examples. Depth of analysis could go further at times to develop alonger chain of argument.


The final paragraph brings in various “it depends” points as to whether changing strategy isneeded. It ends by saying that powerful and successful companies should take advantage ofglobalisation. A little more on the need to change strategy would have been useful. Overallthe student has used a range of examples to answer the question with some decent analysisand a strong conclusion. The essay would score 37/40

Higher profits can instead be achieved by concepts such as innovation via the use of

research and development to tap into new areas of the market and to recognise new

opportunities within the market you are already established in. A good example of

innovation would be Land Rover investing £900 million into new technology much

would reduce the carbon footprint. Here Land Rover has recognised the increasing

concern for the environment within the UK and as a result has created a product

that meets consumer needs and therefore will generate high profits without a need

to expand based on the global nature of the market.

Overall, it depends on the size of the market the business is in. For example ,saturated,

competitive markets such as the bottled water market, the coffee market and the

chocolate market, globalisation is important in order to expand and grow and generate

higher profits as many areas of innovation have already been adopted. Furthermore,

it depends on the level of risk a business is willing to take. Heavy investment is

needed to ‘go global’ and a business must be well prepared before choosing to expand

and to exploit these emerging markets. However, with increased competition for new

firms entering markets within the UK it may become more difficult for businesses to

establish themselves and maintain their level of market share if they remain within the

UK. Eventually many of the larger businesses will need to expand into global markets

in order to achieve higher profits. With the potential for extremely high profits to be

generated if companies become well established in the emerging markets of India

and China then successful businesses such as Costa and Tesco should exploit this

opportunity for globalisation, though not all companies have the power to do so on

such a large scale.


A good attempt at analysis but it would be good to explain the link between the BA strikes anddamaged short term profits – why has this happened and what did Willly Walsh do that upset theunion? What impact might this have on long term profitability?

A leader makes a great difference to the long-term success of a company through

their attitudes towards staff. Autocratic leaders make all the decisions and only pass

information downwards. High skilled workers would not want an autocratic leader

because their opinions would not be considered so they may feel demotivated leading

to lower productivity, higher absenteeism and higher labour turnover, leading to lower

profitability, for example, Willie Walsh, Manager of British Airways, is known to be

autocratic and staff at BA are known to be treated as ‘equipment rather than people’

which has led to significant levels of industrial action, mainly strikes, from workers

which has damaged short-term profits for BA and their reputation. As a result, their

demand has fallen as they can be perceived as unreliable. Whereas a paternalistic

leader, such as Anita Roddick, founder of The Body Shop, makes decisions in the best

interest of staff. This leads to a more motivated workforce which leads to better

productivity and customer service. This means the business has a better brand image

leading to higher success.

Some analysts claim that the achievements of chief executives, such asTerry Leahy at Tesco and Philip Green at Arcadia, show the difference aleader can make to the performance of a business. To what extent do youthink that a leader can make a significant difference to the long-termsuccess of an organisation? Justify your answer with reference to Tesco,Arcadia and/or other businesses or leaders that you know. (40 marks)


Examples chosen refer to strategic success and therefore application is looking good. Furtherexplanation and some facts and figures would add to this.

A leader in a business decides which strategies are taken. Democratic leaders usually

follow highly focused R & D strategies because they know that their high skilled staff

can produce ideas e.g. Steve Jobs, Apple’s Manager, delegates lots of responsibilities as

he needs staff to develop new ideas to remain at the top of the rapidly changing

technology market. This leads to long-term success from new, innovative designs and

processes increasing efficiency and decreasing costs.

A more autocratic leader takes all the decisions. The success of the firm depends highly

on what strategy they decide to follow, for example, Terry Leahy, Tesco’s CEO decided

that global expansion was the most important strategy. He successfully managed to

open stores in developing markets including China and India. Terry Leahy understood

that local tastes were important in his strategy so adapted Tesco to meet local

desires e.g. selling live frogs and turtles in China. If a leader followed the wrong

strategy then it could lead to less long-term success because the leader did not

make the correct decision e.g. Terry Leahy opening ‘fresh and easy’ in the USA

which quickly failed and led to slight problems with Tesco in the UK.


However, the long-term success of an organisation depends on the competition that

the firm is faced with, for example, in an oligopoly market, such as the supermarkets

(ASDA, Sainsbury’s and Tesco), the long- term success depends on the actions of

competitors, for example, if Tesco had a huge price cut, it could cause Sainsbury’s and

ASDA to fall further behind in the market because they did not expect the action.

Furthermore, in other markets greater competition is likely to lead to less long-term

success because the customer had more choice. The organisations success could be

damaged by the arrival of a strong competitor e.g. a local pizza shop losing high levels

of demand to a newly opened Pizza Hut.

The long-term success of an organisation also depends on the products or services which

they sell. A business selling necessities, such as a supermarket, should benefit from

long-term success because their products will always be needed so there will always be

sales. Whereas a business selling one off products, such as Crocs (plastic shoes which never

need replacing), do not have long-term success because they do not gain repeat sales.

A business will be more long-term successful if they have a diverse range of products,

such as the Virgin Group, who sell phones, flights, TV etc because they have less risk.

The student has now discussed 2 counter-arguments as to why long term success does notsolely depend on leadership. It is thus a well focused essay again using relevant examples tomake the point. Notice how the student regularly uses the words “because” and “it depends”which automatically lead to further analysis and evaluation marks.


The last 3 paragraphs evaluate what long term success might depend upon. It may have beenworthwhile discussing what we mean by long term success as this is assumed. The very lastsentence is very judgemental and pulls together a strong overall evaluation. The essay wasdeemed to show both good application and analysis, was well focused and scored 37 out of 40.

To conclude, I would say that a leader has significant impact on the long-term success

of a business, through their leadership styles which can influence staff behaviour,

the success of strategies and the brand image. However, I think it depends highly on

the economy. In a recession, even the best leader may struggle to keep their business

alive because people purely do not want their luxury goods e.g. M & S’s Stuart Rose

having to sell off less profitable stores in recession because costs were too high.

It also depends on whether the staff believes that the leader’s style is the best, for

example, staff at Google work well to help the business be successful because their

democratic leader recognises their skills, motivating then. Whereas British Airways

autocratic leader Willie Walsh does not gain staff co-operation as they do not agree

with his leadership style.

Finally, I think that the long-term success of the organisation depends on the market

they are selling in, for example, rapidly changing markets e.g. the music industry

caused problems for HMV because their products became outdated. Whereas Ryanair’s

market is slowly changing so they will benefit from long-term success because

strategies do not need changing often. The leader cannot influence trends in the

market, they can only try to stay ahead of competitors and react quickly to changes

in the marketplace.


So far the examples fail to link to the best method improving profitability in emerging markets soboth application and analysis is limited. For example, Costa relates to setting up in Europe ratherthan in an emerging market

Emerging markets are countries in which they have potential to grow in terms of

GDP. For a business that wants to increase its profits the best way is to expand into

these markets, however there are other ways of improving profits too.

On the one hand if the market that a business is in is saturated and growth is

declining then they would have to find other growing markets. Costa set up in Europe

when the coffee market in the UK became saturated with competitors such as

Starbucks and Cafe Nero. It meant that they could expand without the risk of

competition. They also priced their products to the local market and so could increase

prices in some areas due to the lack of competition making it less price elastic.

Another example is Tesco already having over 25% of the UK’s supermarket share

and the government preventing them from expanding anymore. Instead they have

expanded into China and in the next 5 years are expecting sales to increase by $4

billion annually. This means that their profits have grown because they have been

in emerging markets which don’t have any restrictions.

Unilever sells many well-known food, personal care and home carebrands, such as Ben and Jerry’s, Persil and Dove, in over 180 countries.Its recent results have been boosted by profits in emerging markets. To what extent is targeting emerging markets for sales the best way forbusinesses to achieve a major growth in their profits? Justify your answer with reference to Unilever and/or other organisations that youknow. (40 marks)


Again the focus is more on spreading risk rather than the best way to increase profit (whichneeds to relate to revenue or costs) so the answer could be better focused on the question,but now the application has been classed as reasonable due to some decent examples

Also, by setting up in an emerging market then businesses are able to spread

their risk of failure. This is because if one of the countries is experiencing

economic recession and low consumer spending then they can expand in other

countries with high sales. Rolls Royce had a 47% rise in sales in China due to

the high economic growth, meaning customer’s disposable income is rising and

so are willing to pay for more expensive luxury goods in an income elastic

market such as cars. This outweighs the lack of sales in the UK and US where

spending has decreased on luxury goods because of the bad economic climate.

Rolls Royce aren’t experiencing problems because they have spread their risk

and set up in emerging markets, however if they hadn’t then they could be

at risk of insolvency. British American tobacco is also facing problems in the

UK as laws are not allowing them to have “attractive” packaging or to be on

display to the customer. This could lead to a lack of sales as the UK’s consumer

health tastes are changing. Instead they are expanding in India with an 8%

rise in sales due to them finding smoking “western and glamorous”. This shows

how emerging markets are the best way to improve profits.


On the other hand setting up in an emerging market may not be the best method.

Instead companies could improve their current business structure before expanding.

Starbucks in America found they were declining in sales. The CEO Howard Schultz

decided to stop growth and improve the product, retail layout and to make the service

more unique. This meant that over time sales improved and it’s now the biggest coffee

retailer in the US. Stephen Gillet of Starbucks also spent time on the shop floor to

experience 1st hand any problems that employees and staff were facing so that the

changes they made were the right ones - especially after the $400 million cost cutting.

By improving what they already had, Starbucks were able to improve their brand

image and reputation and customers were willing to buy their coffees and so increasing

revenue and overall profits.

By analysing why Stephen Gillet spent time on the shop floor the student is heading towardsreasonable analysis now.

Also by adapting to the economic climate in the country would help boost profits.

Sainsbury’s in the time of economic growth brought out their Taste the Difference

range whereas in the 2008 recession they expanded their cheaper Basic Range which

increased sales by 60%. By targeting different socio-economic classes in the country, it

means that a mass market is attracted to the company and so improving their revenue

and gaining a large growth of profits. Dominoes Pizza was also able to grow and

increase its profits in the recession. This is because they made a strategic plan to

target customers who wanted a cheap luxury and to treat themselves, but still

couldn’t afford more expensive luxuries such as a holiday or car because they had less

spending allowance and disposable income. Dominoes therefore priced themselves

higher than supermarket pizzas but cheaper than restaurant food. Customers were

willing to buy their products and so they expanded from 400 to 550 stores in the

recession and now own 686 stores located in town centres with a high footfall. This

lipstick effect from customers meant Dominoes profits doubled and they were able

to do it without expanding into other emerging markets.

This focuses on the question much better and the example shows a strategy that is a counter-argument to targeting emerging markets in order to increase profit. Application is now goodwith some excellent use of real data. The linking back to the question at the end of paragraphsis scoring reasonable evaluation marks.


The last 3 paragraphs use “it depends” and then try to answer the question. However the lastparagraph really fails to focus on the question in terms of whether it is the best method toachieve a major profit growth and so it would be awarded for reasonable evaluation. The overallessay showed good application but reasonable analysis. This could have been improved by alonger chain of argument related to increasing profitability which was a key trigger word inthe essay title. Long, chunky paragraphs are worth practising in order to develop this skill.Overall mark would be 32 out of 40.

A major growth in profits for a business depends on whether the emerging market

is willing to accept the product/service. Businesses would have to adapt to the local

needs such as Tesco selling turtles in China. The locals eat that like UK consumers eat

chicken or beef and so they had to supply the consumers demand, despite the

complaints from other customers. They could also find that markets have different

laws and so it depends on countries legislation. Cobra beer found that they have to

advertise 0% alcohol because of the advertisement laws in India.

It also depends on the current market that a business is in. If it is saturated like the

UK coffee market then there is little chance of improving the current situation and

so an expansion in another market would be the best idea. This is because it would be

highly competitive in the current market and so price elastic, therefore any changes

such as store’s layout would have to financed by possibly increasing the product

price and so lower sales would occur.

To conclude, an emerging market could bring benefits to a company such as spreading

risks and increasing the customer base. However, it is expensive and as Ansoff’s

Matrix it is Market Development in which a large proportion of businesses fail. In

order to do well a business would have to be possibly a large cash rich, already

established company such as McDonalds or Tesco and so customers in the new country

would have heard of the brand and so willing to buy their products and also so they

could finance it and the market research. The best way to increase profits significantly

would be to expand, however if there is still a chance of growth in the current

market this would be easier, cheaper and less risky.

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