Return to flip book view

2019 Standard Level Paper 1 Mock Examination Accord Exemplar Answers Interactive Click or Tap to go Question 1 1 A B Question 2 A B Question 3 A B Question 4 A B C D

IB Business Management Standard Level Paper 1 Examination IB Business Management www BusinessManagementIB com N19 3 BUSMT SP1 ENG TZ0 XX BUSINESS MANAGEMENT STANDARD LEVEL PAPER 1 Practice examination 2019 Accord 1 hour 15 minutes INSTRUCTIONS TO CANDIDATES Do not open this examination paper until instructed to do so A clean copy of the IB Business Management case study Accord is required for this examination paper Read the case study carefully A clean copy of the IB Business Management formulae sheet is required for this examination paper Section A answer two questions Section B answer question 4 A calculator is required for this examination paper The maximum mark for this examination paper is 40 marks P a g e 2 17

IB Business Management Standard Level Paper 1 Examination IB Business Management www BusinessManagementIB com SECTION A Answer two questions from this section QUESTION ONE With reference to Accord distinguish between revenue and capital expenditure line 93 4 marks Capital expenditures are for fixed assets which are expected to be productive assets for a long period of time An example is the bottling machines that Accord has purchased to produce its energy drink Revenue expenditures are for costs that are related to specific revenue transactions or operating periods such as the cost of goods sold salaries and wages or repairs and maintenance expenses Thus the differences between these two types of expenditures are as follows Timing Accord s capital expenditures are charged to expense gradually via depreciation and over a long period of time Accord s revenue expenditures are charged to expense in the current period or shortly thereafter Consumption Accord s capital expenditure is assumed to be consumed over the useful life of the related fixed asset Accord s revenue expenditure is assumed to be consumed within a relatively short period of time For example ingredients of Enrich are used in the production process They are purchased used and sold hopefully in relatively quick succession which is why they are classified as cost of goods sold a revenue expense Size A more questionable difference is that capital expenditures tend to involve larger monetary amounts than revenue expenditures This is because an expenditure is only classified as a capital expenditure if it exceeds a certain threshold value if not it is automatically designated as a revenue expenditure However certain quite large expenditures can still be classified as revenue expenditures as long they are directly associated with sale transactions or are period costs The initial capital expenditures at Accord when they are expanding their manufacturing facility will be high However perhaps after this revenue expenses such as wages salaries or raw materials components will be larger Information about Accord s revenue expenditures would typically be found in the firm s profit and loss statement and its capital expenditures are found in Accord s balance sheet fixed assets Award 3 4 marks if the student s answer meets the following criteria The student demonstrates knowledge and understanding Appropriate terminology is used and explained The response is applied to the stimulus material P a g e 3 17

IB Business Management Standard Level Paper 1 Examination IB Business Management www BusinessManagementIB com b With reference to Accord explain why organisations set ethical objectives 6 marks Corporate or strategic objectives are important broadly defined targets that a business much reach to achieve its overall aim Ethics are the moral principles and values that underpin human behaviour Morals are concerned with what is right or wrong Ethical objectives are therefore the moral principles that underpin business behaviour in pursuit of its overall aim Whether actions carried out by organisations and their employees are morally acceptable must however be judged in the context of the society and the times in which they operate An ethical business such as Accord is one which applies a set of moral principles to all interactions with stakeholders such as its treatment of employees customers suppliers and shareholders Being ethical means Accord will go beyond merely complying with laws and regulations but makes choices about what it is prepared to do and what it will not Therefore an ethical business strategy may exclude behaviour which is legal but conflicts with the businesses ethical policy such as marketing energy drinks with high caffeine and sugar levels at teenagers Setting ethical objectives is the process by which organisations apply ethical values to their targets and the actions by which they will achieve them These ethical values should cover all the actions of the organisation from tactical to strategic Accord may be faced with some of the following issues which have ethical dimensions Should it promote products that might damage health Should it seek to undermine our competitors Should it pay minimum wage rates to our employees Should it seek the lowest cost suppliers Firms such as Accord will set ethical objectives for reasons that follow Ethical objectives and profits As with any business decision much will rest on whether it is costeffective to adopt an ethical stance Some firms for example Accord make an ethical stance part of their unique selling point USP However the majority of large corporations claim to have high ethical standards and have a range of policies on their websites that support their claims and so it is now harder to use ethics as a USP Ethical objectives and corporate culture Accord s ethical approach could have a number of benefits including improved motivation among employees feel good factor many employees will be more committed if they can see an ethical approach adopted by Accord reduced labour turnover improved motivation is also likely to result in improvements in the recruitment and retention of staff who will be more loyal to an ethical company like Accord improved customer perception consumers will often react positively to a more ethical approach and this is used as a USP for Accord It also helps provide the brand with a more positive association which should enhance brand values P a g e 4 17

IB Business Management Standard Level Paper 1 Examination IB Business Management www BusinessManagementIB com Ethical objectives and investment Many investors would prefer to invest in a business with ethical objectives guiding their strategy and business operations We can see this as Accord has attracted a potential angel investor who is interested in investing in ethical businesses Such investment would enable Accord to grow and expand Award 5 6 marks if the student s answer meets the following criteria An analysis of the relevant issues is made with good use of business management tools where applicable techniques and theories Appropriate terminology is used throughout the response There is effective use of the stimulus material QUESTION TWO a Describe two disadvantages of Accord using job production line 65 4 marks Job production is producing a one off item specially designed for the customer Job production is normally used to produce single one off products The products may be small or large and are often unique In order to be called job production each individual product must be completed before the next product is started At any one time there is only one product being made New small firms such as Accord often use labour intensive job production before they get the chance to expand and purchase advanced equipment However this production method has distinct disadvantages It tends to result in high unit costs This is a big disadvantage for Accord We can see this with the pricing information in the case study Accord has a significant price premium over its competitors Aran wants to lower unit costs It often takes a long time to complete because it is usually labour intensive Comparative to other production methods e g the mass flow production that MNCs likely use job production therefore uses more man hours multiplied by more units of labour per bottle of Enrich produced Award 3 4 marks if the student s answer meets the following criteria The student demonstrates knowledge and understanding Appropriate terminology is used and explained The response is applied to the stimulus material P a g e 5 17

IB Business Management Standard Level Paper 1 Examination IB Business Management www BusinessManagementIB com b With reference to Accord explain the importance of brand value line 52 6 marks A brand is an exclusive name symbol or design used to identify a specific product or business And a brand identity is how a business presents itself to and wants to be perceived by its consumers Accord s brand value is the net present value or the future value of the cash flows that are attributable to its brand name or brand identity Thus the brand is an intangible asset of Accord and helps in differentiating between the business s book value and market value As branding is a way for Accord to differentiate its products from that of its competitors Branding can have a real influence on the marketing of Accord It can create a powerful image or perception in the minds of consumers either negative or positive and it can give Accord s products a unique identity Successful brands can often charge premium prices as consumers are loyal to their products and the image that it generates Attempting to establish a weak brand or rebranding is often expensive Increasing brand awareness and brand loyalty would be primary goals of any promotional activities of the business It can cost millions of dollars to attempt to create an effective brand image and success cannot be guaranteed If a brand image receives bad publicity such as poor product quality and product failures then the image of any products in the corporate brand will be damaged Thus Accord needs to be sure that its suppliers are supplying a quality product Brand value reflects the advantages that accrue to a brand A low brand value reflects lower net present value of the cash flows that are attributable to the brand name and a high brand value reflects higher net present value of the cash flows that are attributable to the brand name Thus by increasing the brand value of Enrich will reflect the following distinct advantages of Accord having a successful brand Price advantages Firms that s sell undifferentiated products that have a variety of substitutes tend to compete on price and find it difficult to charge higher prices than their rivals Recognition and loyalty Having a recognisable brand increases Accord s competitive advantage as there is a greater chance of the product being sold brand loyalty or perceived trustworthiness Supplier trust Having an established brand would enable Accord to secure supply contracts with important healthcare providers such as a large hospital chain this could be an important factor in the company s growth and evolution Award 5 6 marks if the student s answer meets the following criteria An analysis of the relevant issues is made with good use of business management tools where applicable techniques and theories Appropriate terminology is used throughout the response There is effective use of the stimulus material P a g e 6 17

IB Business Management Standard Level Paper 1 Examination IB Business Management www BusinessManagementIB com QUESTION THREE a Distinguish between snowball sampling line 49 and random sampling line 57 4 marks Snowball sampling using existing members of a sample study group to recruit further participants through their acquaintances Random sampling every member of the target population has an equal chance of being selected Accord used snowball sampling and the representativeness of the sample is not guaranteed The researcher has no idea of the true distribution of the population and of the sample Sampling bias is also a fear of researchers when using snowball sampling Initial subjects tend to nominate people that they know well Because of this it is highly possible that the subjects share the same traits and characteristics thus it is possible that the sample that the researcher will obtain is only a small subgroup of the entire population Award 3 4 marks if the student s answer meets the following criteria The student demonstrates knowledge and understanding Appropriate terminology is used and explained The response is applied to the stimulus material P a g e 7 17

IB Business Management Standard Level Paper 1 Examination IB Business Management www BusinessManagementIB com b Explain one advantage and one disadvantage of Aran and Kayla forming Accord as a partnership line 41 6 marks A partnership is a business formed by two i e Kayla and Aran or more people to carry on a business together with shared capital investment and usually shared responsibilities A legal contract would have been drawn up to establish Accord as a partnership This is known as a deed of partnership or a partnership deed partnership agreement This would be likely to include The amount finance contributed per person The roles obligations and responsibilities of each partner How profit or losses will be shared Conditions for new partners Clauses for the withdrawal of a partner Procedures for ending partnership One advantage of establishing Accord as a partnership is that the business benefits from division of labour and specialisation We can see this in the case study as Kayla and Aran take on different responsibilities for different functional areas of Accord e g Marketing Kayla Operations Aran If there is more than one general partner it is possible for multiple people with diverse skill sets to run a business which can enhance its overall performance In general this may mean that there is more expertise within the business However the partnership is an unusual choice of business structure for Accord s business model not only because a partnership structure is going to make it more difficult to attract investors who usually seek an equity stake form their investments More importantly partnerships have joint and several liability for the business s debts At least one partner must have unlimited liability as partnerships are unincorporated business Unlimited liability is where the owners are personally liable for the business departments Normally everyone has a share of the liability jointly and severally liable New businesses have a very high failure rate If Accord goes into bankruptcy then any of the two partners can be pursued by creditors for the entire debt owed by the firm Award 5 6 marks if the student s answer meets the following criteria An analysis of the relevant issues is made with good use of business management tools where applicable techniques and theories Appropriate terminology is used throughout the response There is effective use of the stimulus material P a g e 8 17

IB Business Management Standard Level Paper 1 Examination IB Business Management www BusinessManagementIB com SECTION B Answer the compulsory question from this section QUESTION FOUR Aran s mother has become interested in supporting Accord and has offered to guarantee a bank loan This support is conditional on her business advisor being happy with certain aspects of the business The objective of securing external finance would be to increase productive capacity line 108 Both an operations management plan and a marketing plan would be needed to support an increase in production Aran s mother had one reservation She knew both her son and Kayla very well and had spent time helping in the business She believed that the difference in leadership styles of the two owners could be a real source of conflict especially if the business continued to grow Aran s leadership style would best be described as autocratic and Kayla s democratic The business advisor asked for and received an up to date balance sheet for Accord This balance sheet is shown in Table 1 below The investment advisor was particularly interested in the break even level of production and capacity utilisation of the processing plant The business advisor strongly suggested that job customised production was unsuitable to increasing the production volumes of Enrich She said that Accord should change to a method of batch production If finance was secured Accord would take over the entire lease of the small factory they currently share with other small food and beverage manufacturers Aran and Kayla forecasted the following Maximum production capacity would increase from 60 000 to 280 000 bottles per month Fixed costs would increase from 20 000 to 260 000 per month Unit variable costs including direct labour and raw materials would decrease from 2 10 to 1 10 per bottle Delivery costs would decrease from 0 50 to 0 30 per bottle The price received by Accord for each bottle of Enrich sold would decrease from 3 00 to 2 45 per bottle The current level of demand for Enrich averages 40 000 bottles per month Several major supermarket and convenience store chains have expressed interest in taking large orders of Enrich if Accord s promotional campaigns are successful in increasing the level of demand Aran and Kayla know that they must make changes to the current marketing mix to support a better defined and agreed upon unique selling point The business advisor also introduced Kayla and Aran to a new angel investor This new potential angel investor was impressed that Kayla and Aran had managed to grow Accord on their own and was willing to make a substantial investment in the business Unlike the P a g e 9 17

IB Business Management Standard Level Paper 1 Examination IB Business Management www BusinessManagementIB com previous business angel line 109 this business angel was willing to leave the day to day management of Accord to the two cofounders In return for providing this finance the angel investor would receive a 30 percent equity stake in Accord and the firm would become a private limited company with three owners Kayla and Aran would each have control of 35 percent of the company Table 1 Accord balance sheet Accord Balance Sheet as of 30 October 2019 000 000 Fixed assets Fixed assets 500 Accumulated depreciation 26 Net fixed assets 474 Current assets Cash 10 Debtors 12 Stock 35 Total current assets 57 Current liabilities Overdraft 30 Creditors 45 Short term loans 12 Total current liabilities 87 Net current assets Working capital 30 Total assets less current liabilities 444 Long term liabilities debt 500 Net assets 56 Financed by Paid in capital 20 Retained profit 76 1 Equity 56 1 Accumulated deficit P a g e 10 17

IB Business Management Standard Level Paper 1 Examination IB Business Management www BusinessManagementIB com This option would allow for the expansion of the current production facility to increase the production of Enrich It would also enable Accord to start producing three new drinks which had tested well in focus groups in quantities that would probably meet short to medium term sales targets Enrich and the three new drinks could be marketed under a new healthy lifestyle brand a Define two characteristics of a democratic leadership style 2 marks Two of the primary characteristics of democratic leadership include Two way communication is used which allows direct feedback from staff to the leader and other members in the team Group members are encouraged to share ideas and opinions even though the leader retains the final say over decisions Members of the group feel more engaged in the process as creativity is encouraged and rewarded Award 2 marks if the student s answer meets the following criteria b Two characteristics of democratic leadership are correct Calculate the break even level of output and profit or loss for Accord at its i Current level of production 2 marks Break even point Fixed costs unit contribution Current break even point 20 000 3 00 2 00 0 50 40 000 bottles per month Current profitability Break even point of 40 000 bottles level of demand of 40 000 bottles thus profit 0 Award 2 marks if the student s answer meets the following criteria The calculations are correct P a g e 11 17

IB Business Management Standard Level Paper 1 Examination IB Business Management www BusinessManagementIB com ii Increased level of production 2 marks New break even point 260 000 2 45 1 10 0 30 247 619 bottles per month Possible profit at full capacity contribution per unit x full capacity break even point 2 45 1 10 0 30 x 280 000 bottles 247 619 bottles 34 000 05 per month Award 2 marks if the student s answer meets the following criteria The calculations are correct c Explain why Accord needs to make changes to its marketing mix if its objective is to increase sales of Enrich 4 marks The marketing mix is the key decisions around product price place and promotion that must be taken in the effective marketing of a product All aspects of the marketing mix must be coordinated so that the key marketing decisions complement each other and work together to give customers a consistent message about the product If just one part of the marketing is inconsistent or does not integrate with the rest it may lead to the failure of even the best marketing plan The most appropriate marketing mix decisions will therefore be Based on marketing objectives that are affordable within the marketing budget Coordinated and consistent with each other Targeted at the appropriate consumers Unless a business can pinpoint what makes its product unique in a world of homogeneous competitors its sales efforts will not be targeted effectively Customers are often attracted towards goods or services that offer a distinctive image service feature or performance Establishing a USP is about differentiating Enrich and its products from its competitors Enrich has a perception problem It is difficult to see how the firm can market Enrich as an energy drink An energy drink that is based on 100 percent natural ingredients will not provide a similar energy boost i e stimulant that other energy drinks such as Red Bull or Monster do The only common stimulant that is naturally sourced and legal is caffeine found in such plants as coffee and tea Enrich is caffeine free From what we know of Enrich there is no unique ingredient nor patented formula that gives Enrich an advantage in terms of a natural formulation that provides an energy boost This confusion negatively effects the USP that Accord s marketing is centred The firm needs to rework its integrated marketing mix for the following reasons P a g e 12 17

IB Business Management Standard Level Paper 1 Examination IB Business Management www BusinessManagementIB com Product Is it an energy drink or a natural plant based drink Price Can price be made more competitive or can consumers be convinced that the premium is justified Place Distribution is expensive at small scale and low brand recognition limits retail takeup of the product Promotion How can low brand recognition be improved Award 3 4 marks if the student s answer meets the following criteria d The student demonstrates knowledge and understanding Appropriate terminology is used and explained The response is applied to the stimulus material Recommend which option outlined above is best for Accord to finance its expansion debt or equity finance 10 marks The BEA showed that Accord must expand to be able to increase profitability The balance sheet shows that Accord has limited time to borrow funds or take on investment partners to expand production The weakness of the firm s balance sheet would exclude all but the highest rate lenders of corporate debt e g finance companies rather than banks The firm s current working capital is negative meaning that it does not have sufficient current assets to pay its current liabilities the partnership faces a liquidity crisis and new funds must be raised soon or the firm will become insolvent Further if the partnership was forced into insolvency followed by bankruptcy procedures each partner becomes jointly and severely liable for Accords debts Accord s balance sheet shows that the partnership has net liabilities total assets are less than the firm s total liabilities Accord does not have the option of doing nothing it needs funds and it needs funds now The only funds on offer are in relation to the expansion of its production capacity Accord has the option of obtaining a bank loan guaranteed by Aran s mother or to exchange 30 percent of the business in return for a significant investment from the angel investor Such external financing for small businesses falls into two categories Debt financing involves borrowing a fixed sum from a lender which is then paid back with interest Equity financing is the sale of a percentage of the business to an investor in exchange for capital There are six factors influencing the choice of finance The use to which finance is to be put which affects the time period for which finance is required It is very risky to borrow long term finance to pay for short term needs Businesses P a g e 13 17

IB Business Management Standard Level Paper 1 Examination IB Business Management www BusinessManagementIB com should match the sources of finance to the requirement Thus the funds raised by long term debt finance should be used to finance the expansion of Accord rather than pay down its current liabilities Short term finance would be advisable to finance a short term need to increase stocks or pay creditors Permanent capital may be needed for the long term business expansion This is because long term loans need to be repaid resulting in reduced cash flow cash that could be used for expansion and interest payments reduce net profits and lower retained profits as a source of internal finance Cost Obtaining finance is never free even internal finance may have an opportunity cost Loans may become very expensive during a period of rising interest rates Conversely in today s low interest environment more can be borrowed and or debt can repaid be more quickly The opportunity cost of equity finance must be considered In addition to giving up a large share in their company 30 percent of future profits will be foregone as this will be the new investor s share Flexibility When a firm has a variable need for finance e g it has seasonable sales and cash receipts flexible forms of finance are better than long term and inflexible source Equity finance allows Accord more flexibility because equity finance does not preclude the firm from using debt finance in the future In fact by using equity to finance Accord s expansion the balance sheet will be stronger and the firm could access other forms of credit such as a bank overdraft to stave off the impending liquidity crisis Legal structure and desire to retain control This is an important consideration here Share issues can only be used by limited companies Doing this runs the risk of current owners losing some control If the owners want to retain control of the business at all costs then a sale of shares may be unwise Size of existing borrowing This is a key issue the higher the existing debts of a business compared to its size the greater the risk of lending more Banks and other lenders will become anxious about lending more finance This concept is referred to as gearing The gearing ratio looks at the long term liquidity position of a firm Creditors and investors will be interested in this ratio as a high degree of gearing could mean that a firm is risky in that it may have difficulty meeting its debt repayment obligations especially if interest rates rise From the balance sheet we can see that Accord has a high gearing ratio 50 would indicate a highly geared business and Accord s is more than 100 The higher the ratio the greater the risk taken by management when investing in assets or financing operating costs with long term loans Amount required Share issues and sales and debentures because of their administration and other costs would generally only be used for large capital sums Small bank loans or reducing debtors payment period could be used to raise small sums Obviously such a significant expansion means that a large sum of money is required by Accord The price paid by Accord for this finance will be onerous debt repayment obligations to an unforgiving bank that has sought and received collateral guaranteed by Aran s mother or giving up 30 percent of their firm and future profits We can summarise the advantages and disadvantages of debt and equity finance P a g e 14 17

IB Business Management Standard Level Paper 1 Examination IB Business Management www BusinessManagementIB com Pros of equity financing For businesses that are yet to attain profitability equity financing can be the best if not the only option Investors take on almost all the risk they receive their returns only if the business succeeds No percentage of Accord s revenues will be diverted to pay loans Cons of equity financing The cofounders give up a percentage of their business and future profits The angel investor may have control over key decisions and influence the culture of the firm even if he or she is uninvolved in the day to day running of Accord Landing investment can be a full time effort Accord is lucky in this respect and reporting to investors regularly can take precious man hours Investors or equity partners usually do not expect a return on their investment for 3 5 years but they often exit after 5 7 years Pros of debt financing Can be used by almost any kind and size of business Kayla and Aran retain ownership of their business which means they will not have to share profits long term They know when they need to make repayments There are a range of options different kinds of loans credit cards lines of credit etc Accord would seek and receive a long term bank loan and these other forms of credit may also be made available increasing the firm s flexibility to use the best form of credit for any given situation and eventuality Interest on the debt can be deducted from the firm s tax return Interest rates on loans are usually lower than the return on equity investments Cons of debt financing Requires repayment of both principal and interest whether Accord s business is good or bad Debt is an expense and expenses prevent the owners from reinvesting revenue in the business There is always a risk Defaulting will cost the partners the assets or the personal guarantee that has been pledged as collateral Lenders may restrict what Accord can use the money for or whether the partners can look for more financing elsewhere With some analysis and information we can determine whether debt or equity funding will most benefit Accord My recommendation is that Accord use the equity being offered by the angel investor to finance the business expansion Accord is already highly geared The competitive market is ferocious with large multinational corporations such as company ABC which increases the risk that the loan cannot be repaid and Aran s mother could lose her house or whatever other asset or assets she would have used to guarantee Accord s bank loan Repayment obligations will place further strain on Accord s cash position Parting ways P a g e 15 17

IB Business Management Standard Level Paper 1 Examination IB Business Management www BusinessManagementIB com with 30 percent of a marginal business and 30 percent of future profits is less costly than having full control of a business with a low book value and lower market value and little if any profits The real key to this recommendation is the fact that this investment will enable Accord to diversify away from the single product it currently relies on Enrich Accord needs to be further diversified and this must be an important strategic objective now The debt option does not allow for any diversification as the factory will be operating near full capacity It does not make sense to cut back on the production of Enrich to produce another product as revenues and profitability would decrease Having four products means that the firm will have reduced risk in the external environment it operates in Reduced risk lowers the discount rate the firm will use in investment appraisal e g net present value and increases the likelihood such an investment meets expected rates of return e g average rate of return An example of such diversified risk would be the new teabased drink If the government regulated against the sale and marketing of all energy drinks to under 18 year olds then sales of Enrich would decrease Sales of the tea based drink would become another revenue stream Perhaps the most basic reason for Accord to diversify is survival By definition a company that focuses on a narrow range of products will only have access to a finite number of customers This is fine if the market as it stands is big enough to support several competing businesses but if the pool of potential customers remains small the cost of running Accord may outstrip the potential for revenue In these circumstances diversification into new product lines may be essential to the long term viability of this firm But diversification is not just about survival It is a tried and trusted growth strategy New products or business lines will enable Accord to make more sales to existing and new customers and depending on how it diversifies expand into markets that would otherwise have been closed to it There are many ways in which to diversify The most straightforward of these is to provide a natural extension of the product that Accord already offers to customers and this is exactly what having a strategy aimed at increasing the product range and distribution reach aims to achieve for Accord These strategies are borne out in the Ansoff s matrix see figure left The Ansoff s matrix is a model used to show the degree of risk associated with the four strategies of market penetration market development product development and diversification Market penetration The objective of achieving higher market shares in existing markets with existing products P a g e 16 17

IB Business Management Standard Level Paper 1 Examination IB Business Management www BusinessManagementIB com Product development The development and sale of new products or new developments of existing products in existing markets Market development The strategy of selling existing products in new markets Diversification The process of selling different unrelated goods or services in new markets There is increased risk in shifting into new markets and new products It is important to highlight that risk is a cost in business so it should be factored into any strategy Therefore it is suggested that the management of Accord exclude debt finance market penetration as it still leaves Accord overly reliant on Enrich and without much further capacity to increase sales in its existing market Thus Accord should definitely pursue expansion using the equity finance on offer Award 9 10 marks if the student s answer meets the following criteria Good understanding of the demands of the question including implications where relevant Relevant business management tools where applicable techniques and theories are explained clearly and applied purposefully and appropriate terminology is used throughout the response Effective use of the stimulus material in a way that significantly strengthens the response Evidence of balance is consistent throughout the response The judgments are relevant and well substantiated P a g e 17 17