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Topic Tests for Unit 4a: Making Business Decisions
For the 2015 examination, based around the Center Parcs pre-release material
For Edexcel’s Business Studies A2 level, 6BS04
By Gerald Wood
Contents
These Topic Tests are designed to give teachers assessment tools which they may use at the end of teaching successive sections of Unit 4a. There are four tests outlined below:
Topic test title / Specification reference / PageSection 1: Corporate objectives and strategy / 4.3.1a / 3
Section 2: Making strategic decisions / 4.3.2a / 15
Section 3: Assessing competitiveness / 4.3.3a / 27
Sections 4: Company growth / 4.3.4a / 39
Each Topic Test has four key features:
1. They are laid out in the general format of the Unit 4a examination, and so help students to become familiar with the approach which they will face when they sit the Unit. Each Topic Test uses the 2015 pre-release material on Center Parcs.
2. They cover the core concepts in the relevant section of the syllabus.
3. Accompanying each test is a mark scheme, based around Edexcel’s own mark schemes. These both assist the teacher in marking students’ work, and help students understand what they need to do to improve their mark.
4. Also accompanying each test is a set of suggested answers. These are rather longer than most students would have time to produce in an examination setting, and also contain more analysis and detail than students would be expected to know. They will therefore be useful as a source of further study.
Licence
The printed material is sold with a licence to photocopy for the benefit of staff and students within the purchasing institution, but not further afield.
Disclaimer
While the author is an experienced teacher of Edexcel’s A level specifications, the endorsement of Edexcel has neither been sought nor given for this work.
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Instructions
Use black ink
Fill in the boxes at the top of this page with your name, centre number and candidate number
Answer all questions in both Section A and Section B
You may use a calculator
Information
Total marks for this paper is 80
Quality of written communication will be taken into account in Questions 7a and 7b in Section B. This is indicated with an asterisk*. You should take particular care on this question over spelling, punctuation, grammar and clarity of expression.
Advice
Read each question carefully
Keep an eye on the time
Try to answer every question
Check your answers if you have time at the end
SECTION A
Evidence A to J was pre-issued before the date of the examination.
Using ALL the evidence and your own knowledge, answer all six questions (total 30 marks).
Time allowed (35 minutes).
Additional Evidence K
Every day, the perfect break – naturally
The title of this Evidence is the mission statement of Center Parcs. Whether the short-break holidays on offer are ‘perfect’ or not, they are certainly expensive. For example, a mid-week four day holiday for four can easily cost £900 for the accommodation alone, coming out at over £50 per person per day. Customers typically spend 53% of their outlay on the accommodation with the rest paying for on-site spending, essentially restaurants and the extensive leisure activities on offer.
How does Center Parcs manage to make a net profit of over £100 million a year from a turnover of £300 million when operating in a competitive environment? The company is a product differentiator, offering an enormous range of activities. Target markets include well-off families with young children and ‘empty nesters’ – couples whose children have left home. In its own words:
“The Center Parcs concept is to provide short breaks in the forest, bringing families together and back to nature with high quality accommodation, a range of outstanding leisure facilities and over 200 activities, all set within a protected and enhanced woodland environment ... Each village is set in 400 acres of natural woodland, with trees, streams and wildlife surrounding Apartment and Lodge accommodation. At the heart of each village is the Subtropical Swimming Paradise,an extensive range of restaurants, cafes and retail outlets, plus Center Parcs’ own Aqua Sana spa facility.”
Source: adapted from Center Parcs’ website, 2014
- What is meant by the term ‘Corporate Social Responsibility’? (see Evidence E, line21) (2)
- What is meant by the term ‘competitive environment’? (see Additional Evidence K, paragraph 2) (2)
- Briefly comment on Center Parcs’ mission statement (see the heading of Additional Evidence K). (4)
- Briefly comment on whether portfolio analysis might be of benefit to a company like Center Parcs. (6)
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Unit 4a, Section 1 – Corporate objectives and strategy: mark scheme
Note: Any acceptable answer which shows the range of skills required may score full marks
Q. 1 / What is meant by the term ‘Corporate Social Responsibility’? (see Evidence E, line21) / MarkKnowledge up to 2
1 mark for basic idea e.g. The extent to which a business accepts social responsibilities over and above the legally required minimum.
Second mark for example or extension e.g. reference to reducing carbon emissions or operating electric vehicles. / 1-2
Total: 2
Q. 2 / What is meant by the term ‘competitive environment’? (see Additional Evidence K, paragraph 2) / Mark
Knowledge up to 2
1 mark for basic idea e.g. a business situation where the company in question has rivals.
Second mark for example or extension e.g. all the other companies offering short breaks. / 1-2
Total: 2
Q. 3 / Briefly comment on Center Parcs’ mission statement (see the heading of Additional Evidence K). / Marks
Knowledge up to 1
Of a mission statement e.g. “the main aim or purpose of the business, usually set out in published form such as in an annual company report”.
Application up to 2
e.g. emphasis on high quality (the ‘perfect’ break); the short duration (‘every day’) and the natural, green environment (‘naturally’).
Analysis up to 1
e.g. the way in which the mission statement encapsulates the key features of Center Parcs’ product offering. / 1
1-2
1
Total: 4
Q. 4 / Briefly comment on whether portfolio analysis might be of benefit to a company like Center Parcs. / Marks
Knowledge up to 2
Of portfolio analysis e.g. “the classification of a company’s product range” with some expansion such as the Boston Matrix.
Application up to 2
Center Parcs has essentially one product i.e. short-break holidays in woodland villages, but could classify them by, for example, their five different locations.
Analysis up to 2
Likely to be of benefit e.g. if more modern villages generate greater returns then that might indicate that investment on upgrading facilities was worth undertaking. / 1-2
1-2
1-2
Total: 6
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Unit 4a, Section 1 – Corporate objectives and strategy: suggested answers
SECTION A: about 35 minutes, 6 questions, 30 marks
The total of 30 marks is split roughly 10 for Knowledge/Understanding, 10 for Application, 6 for Analysis and 4 for Evaluation:
- Knowledge – show that you know and understand relevant business concepts
- Application – show that you know how these concepts are relevant to the question asked
- Analysis – show that you can make thoughtful observations about the business situation, using these concepts
- Evaluation – come to a balanced and considered conclusion, showing depth of understanding
1. What is meant by the term ‘Corporate Social Responsibility’? (see Evidence E, line21) (2)
Answer:Corporate Social Responsibility refers to the extent to which a company accepts obligations to stakeholders over and above the legally required minimum. For example, Center Parcs demonstrates CSR when it showed a willingness to introduce electric vehicles even if they did not generate a financial return.
2. What is meant by the term ‘competitive environment’? (see Additional Evidence K, paragraph 2) (2)
Answer:A competitive environment is one where a business has rivals. For example, there are many companies apart from Center Parcs that offer short UK breaks (such as Hoseasons and Country Cottages), so Center Parcs is in competition with them.
3. Briefly comment on Center Parcs’ mission statement (see the heading of Additional Evidence K). (4)
Answer:A mission statement sets out the main aim of the business, in other words, its ultimate objective or goal. This may be expressed in financial or non-financial terms. In this case, Center Parcs’ mission statement focuses on the high quality of the product (its breaks are ‘perfect’), their short duration (‘every day’) and their green credentials (‘naturally’). Since these characteristics lie at the heart of what Center Parcs is offering, its mission statement is an excellent tool for communicating what the company is all about.
4. Briefly comment on whether portfolio analysis might be of benefit to a company like Center Parcs.(6)
Answer:Portfolio analysis refers to the classification of a company’s products. In the case of the analysis associated with the Boston Matrix, the classification revolves around whether the market is in its growth or mature phase, and whether each product has a high or low market share. Where a company has just one main product – in this case short-break holidays in woodland settings – portfolio analysis is of less relevance than it would be for a company which manufactures or sells a wide range of different goods.
However, Center Parcs UK has five separate villages and these can be viewed as separate products. The senior management will be very interested in working out which sites are generating the greatest returns on capital and why this might be. This may help them to decide where, for example, to locate their next village, and which particular activities are most attractive to prospective guests. In other words, portfolio analysis will help Center Parcs formulate its investment strategy.
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