CAMBRIDGE INTERNATIONAL AS & A LEVEL BUSINESS: TEACHER’S RESOURCE

Exam-style questions and sample answers have been written by the author. In examinations, the way marks are awarded may
be different.

Workbook answers
Answers to questions that ask for ‘one or two’ points, reasons or impacts may contain more than the
required number of points, indicating that alternative responses exist that could be equally valid. The
suggested answers to questions that are testing the skills of analysis and evaluation, apart from the worked
examples and the ‘improve this answer’ examples, are in a ‘building block’ form. This means they provide
an outline of the key knowledge, application, analysis and evaluation skills required to help learners
construct a complete answer. For further details of the annotation used in some of the completed answers,
refer to the ‘How to use this book’ section.

Chapter 9
Key skills exercises
1 It helps make sure that resources are available; it makes managers consider the future.
2 It can become outdated quickly because of external environmental changes; managers may become too
tied to the plan and it becomes inflexible.
3 The values, attitudes and beliefs of the people working in an organisation that affect the way they
interact with each other and with external stakeholders.
4 Task culture is based on cooperation and teamwork; person culture is when individuals are given the
freedom to express themselves fully and make decisions for themselves.
5 This encourages manageted and workers to take risks, to come up with new ideas and to test out new
business ventures.
6 Leading change is providing the vision that makes people want to follow and accept change; managing
change is ensuring that the resources and processes needed for change are in place.
7 The leader works with teams to identify the need for change, creates a vision to inspire people to accept
change and implements change with the cooperation of the team.
8 Learners’ answers will vary (e.g. in the car industry, the switch to EVs and the growth of China’s car
manufacturing capacity).
9 Identify the potential disasters that could affect the business; assess the likelihood of these occurring;
minimise the potential impact of crises; plan for continued operations.
10 The process of dealing with a sudden emergency event.
11 Planning helps to make sure resources are ready (e.g. finance, employees, operational resources);
it helps to ensure that functional departments are coordinating their work towards the goal of
each strategy (e.g. Strategy B needs careful planning as resources will need to be provided for detailed
market research in Country Y).
12 Operations management seems to have a power culture; clothing design seems to have a person culture.
13 If Strategy A was chosen (online selling), the CEO could lead the changes by explaining to all
employees the need for change and how the impact on sales representatives would be managed.
He could also provide a clear vision about what this change to online selling would lead to.
14 WE. There appears to have been no contingency planning. ‘We were taken completely by surprise’
suggests that OC’s managers never even considered the possibility of a factory fire and therefore did
not plan for this contingency. Contingency planning would have given managers experience in what to
do and they would have reacted much more quickly than they did.

1 Cambridge International AS & A Level Business – Stimpson © Cambridge University Press 2021
 CAMBRIDGE INTERNATIONAL AS & A LEVEL BUSINESS: TEACHER’S RESOURCE

Second reason: Failure to communicate with workers and suppliers led to confusion and uncertainty.
An effective contingency plan would allow for communication with stakeholders.
15 It is likely to create a new vision of OC for employees to follow; it should inspire people to follow that
vision and change the culture of OC.
16 It is not just about ensuring that resources are in place to sell to another country. There needs to be a
vision about what this means for the business. Clear reasons also need to be given for why this change
is considered necessary.
17 Financial costs such as having to reproduce all of the records lost; reputational damage as a result
of being seen as unprepared for the crisis caused by the fire.
18 WE. Benefit 1: Under Rajev’s leadership, OC’s culture seems more interested in cutting costs and
increasing returns to shareholders than looking after other stakeholders. Factory workers are paid low
wages, some marketing employees might lose their jobs with Strategy A and customers might be misled
by the sale pricing claims. A corporate culture that puts people and not profit first might lead to good
publicity, a positive brand image and a quicker response to crises. These developments could improve
the reputation and sales of OC and, in the long term, its level of profits.
Benefit 2: Perhaps a more task-based culture would be appropriate (e.g. teamwork to analyse the
impact of these three new strategies and to help decide which one to adopt). This will give a greater
sense of ownership of the changes that need to be made.
19 Outline: Analyse the business changes needed within OC if Strategy A is chosen (e.g. large increase
in IT employees; bigger warehouse as retailers will not be holding inventories; loss of jobs of selling
staff who used to sell to and communicate with retailers; direct contact with customers, so OC must
have, for example, social media systems in place to deal with these contacts). Vision and resources are
needed; employees need to be kept informed to get them to accept the need for change; sales staff need
to be re-deployed after further training. Rajev’s culture would probably have led to poor leadership.
Evaluate and stress the importance of the new CEO having the qualities needed to change the culture.
20 Outline: Explain business culture and analyse why a change in business culture is often necessary.
Explain why a change in culture might be important to the future success of OC. Evaluate the
problems OC might experience in future if the culture created by Rajev is not changed. Assess whether
changing culture should be the first priority. Yes: it needs to reassure all stakeholders that things will
be different from now on; this will help to retain employees and stop investors from selling shares
(for example). No: the need to rebuild the factory is a first priority to get production going again.
An overall conclusion/judgement is required.

Exam-style questions
Decision-making question
1 Outline: Analyse the potential consequences (e.g. company image and potential bad publicity) of a
crisis such as this, which would not be well managed by trying to cover up the incident, for example.
Analyse how effective contingency planning/crisis management seems to have reduced the impact of
this crisis. Consider if planning could have reduced the chance of the crisis occurring. Evaluate the
impact the new power supply invention could have on HPS. Consider if it could lead to a new core
competence. Evaluate whether inadequate management of this crisis put the business in such a risky
position with consumers and government (if laws have been broken) that even a new power supply
invention might be insufficient to lead the company towards future success.

Business strategy question

1 See ‘Annotate this answer’.

2 Cambridge International AS & A Level Business – Stimpson © Cambridge University Press 2021
 CAMBRIDGE INTERNATIONAL AS & A LEVEL BUSINESS: TEACHER’S RESOURCE

Annotate this answer

The sample answer for business strategy Q1 has been annotated.
Strategic implementation means putting a strategy into effect in a planned way with the purpose of
reaching a desired objective [K]. Both of these options are major strategic decisions involving significant
change and substantial resources. Detailed corporate and departmental planning will be needed,
including contingency planning [K]. For example, a political crisis in the country where the buses are
manufactured could prevent production from continuing. HPS will need to plan for this and other
eventualities. The distance between the country and where HPS is based will also make handling disasters
more difficult [Ap/An].
Strategic implementation requires adequate resources to be prepared, especially finance and people
Both options will require much finance and HPS must plan for this or it might face liquidity problems
later [K/Ap]. A share issue, as HPS is a public limited company, could possibly be sufficient to provide the
finance needed for either option. Issuing shares will avoid the increase in long-term loans that would be
the other likely source of external finance. It would also help to reduce the financial risk of either strategy
as no interest would be payable and share capital is permanent finance [An+]. Employees with foreign
language skills might be required for either option. The language spoken in the BRICS or African country
might not be the same as the language spoken within HPS [Ap]. HR recruitment strategies must take this
into account. HR could undertake a workforce audit to see if any existing employees have foreign language
skills or have expressed an interest in working overseas [Ap]. The involvement of the HR department in
strategic implementation will help to ensure that the appropriate human resources are in place for the
changes that the business is about to experience [An].
These two strategic options may take away vital resources from HPS’s existing operations, which could be
damaging, especially as the business is dealing with the hybrid engine explosion [Ap/An].
Managing these resources will be important. However, of even greater importance will be the need for the
directors to lead the change [E]. A clear vision will be needed to reassure workers, shareholders and other
stakeholders that HPS has a clear objective and sense of purpose for whichever option is chosen [An]. The
directors will have to explain the reasons for the chosen strategy and the objectives of it to employees and
other stakeholders. For example, Strategy 2 seems to fit in best with the original mission statement of HPS,
so the vision for this strategy would be well understood by most stakeholders [Ap/An/E].
Successful implementation of either strategy will be vital to the success of HPS. I advise the directors that
failure to plan for and implement effectively either of these strategies could put at risk the entire business,
given that it faces increasing competitive rivalry from the company developing the hydrogen engine [E+].

3 Cambridge International AS & A Level Business – Stimpson © Cambridge University Press 2021