ATL Activity - Give it a go!

Working on your own, or as a pair with another student, investigate a social enterprise of your own choice. In particular, your research should enable you to answer the following questions:

1. What is the human need that your chosen social enterprise is striving to meet? How does this link to the IB Business Management syllabus?
2. What are the two main challenges facing your chosen social enterprise? In particular, how do these two challenges limit the social enterprise's ability to meet the identified human need in Question 1 above?
3. What is your proposed plan of action to address these two main challenges? What else would the social enterprise need to do to ensure it is sustainable, competitive, and successful in the next 5 years? Provide full justifications for your plan of action.

Be prepared to present your findings to your teacher and the rest of the class. You may choose to use visuals in your presentation. An example is shown below for reference.

Top tip 1!

It is advisable to avoid using Herzberg's two factor theory (hygiene and motivators) in Question 1 of this paper. This is because Herzberg's theory relates to employees, i.e., internal stakeholders of the social enterprise. Question 1 is about the social need or human need (in general) that the social enterprise tries to address, rather than the specific interests of its own employees.

Top tip 2!

When structuring your answers to this question in Paper 3, use the following format for each of the two challenges (you do not need to exceed two paragraphs for this).

• Identify the specific challenge facing the organization.
• Explain how this is a challenge.
• Apply the stimulus material to support your explanation.

  Top tip 3!

A useful way to remember the above assessment criteria for Question 3 is the acronym ATES:

• Application (Criterion A - Use of resource materials)
• Tools and theories (Criterion B - Business management tools and theories)
• Evaluation (Criterion C - Evaluation)
• Sequencing (Criterion D - Sequencing of ideas and plan of action).

  Top tip 4!

For the extended response question in Paper 3, you are expected to demonstrate your (i) knowledge, (ii) understanding, (iii) the capacity to explain, (iv) summarise, and (v) evaluate all of the evidence provided in the stimulus material in order to provide a recommendation (business strategy or plan of action) for the social enterprise.

Note that recommending a plan or action (or business strategy) requires you to write a synoptic response. What this means is that you must write a comprehensive and integrated answer that draws upon multiple areas of knowledge (relevant tools and theories) and stakeholder perspectives to address the question. Rather than focusing solely on one aspect (such as marketing), a synoptic response demonstrates your ability to synthesize information from the given sources to offer a well-rounded analysis and solution to the problem (the challenges faced by the social enterprise).

Essentially, the plan of action requires critical thinking, analytical skills, and the ability to connect and apply content across different contexts. In essence, your synoptic response to the 17-mark question must demonstrate a deep understanding of the subject by exploring its broader connections and implications.

Top tip 5!

In Question 3 of Paper 3, students may be required to recommend a plan of action to ensure the sustainability of the given social enterprise (as in the case of the specimen paper). Please note that the word "sustainability" in this context does not refer to the key concept but to the viable, feasible, unceasing or continual operations of the business.

In some cases, it may be appropriate to refer to people, planet, and profits (the triple bottom line model of sustainability) as part of the plan of action. However, this is not a formal requirement or expectation.

Top tip 6!

When structuring your answers to Question 3 in Paper 3, make sure your answer to the 17-mark essay contains the following:

• Introduction - include any key terms that may need to be defined.
• Body - three or four main paragraphs that address the demands of the question.*
• Conclusion - answer the question in its entirety.
• Fit for purpose paragraph - use the PEEL framework. Each paragraph is about one point, contains evidence (from the stimulus material) and explanations (using appropriate terminology, tools, and/or theories), and is directly linked to the question).

* The body of the extended response should have elements of an action plan that address each of the two challenges you explained in Question 2 of Paper 3.

Top tip 7!

The IB asks students to avoid using numbered lists or bullet points in AO2 and AO3 (extended response) questions. Instead, students should answer both the 6-mark and 17-mark questions with proper (full) sentences and paragraphs.

They should answer the questions as though they are management consultants or business analysts.

Source: adapted from Teacher Support Material (TSM), page 66)

Top tip 8!

“No matter how sharp your teeth are, you can't bite water.” - African Proverb

Meaning: Each problem comes with its own solution. Take time to understand the nature of the situation before taking action.

What exactly is a plan of action?

Note that a plan of action is not a single strategy used in isolation. An action plan (or strategic plan) will have numerous elements to it, i.e., it is essentially a business plan. Therefore, a well-designed plan of action may include relevant aspects of the following (depending on the specific case study in question):

Therefore, it is worthwhile revising BMT 5 - Business Plans prior to tackling any Paper 3 practice questions.

Also, note that any plan of action must align with the social enterprise's mission or vision - so look out for indications of these in the stimulus material.

Top tip 9!

Students often ask how many functional areas need to be covered in the plan of action. Given that Question 2 in Paper 3 is about two challenges that the social enterprise faces, the plan of action should address these these challenges using the most relevant tools and theories as appropriate.

For example, both human resources and/or marketing strategies can be used to address the first challenge, whereas finance and/or operations management strategies could be more appropriate for the second challenge.

The important point is to focus on addressing the two challenges in this question.

Top tip 10!

Do not make any reference to real-world examples of social enterprises that you have studied. There are two main reasons for this:

1. The examiner may not be aware of the organization.
2. Such an approach shows a lack of application of the stimulus material.

Instead, focus your extended response (essay) on the actual social enterprise in the Paper 3 case study.

Top tip 11!

Although it is not a formal requirement to include a key concept in the Paper 3 extended response question, it may be useful to consider the concept of sustainability, change, or ethics when evaluating the plan of action.

Note: acknowledging limitations of the plan of action is not the same as acknowledging limitations of the case study or stimulus materials (as is expected in the 10-mark extended response questions in both Paper 1 and Paper 2).

Top tip 12!

Given that assessment criterion A (Use of resource materials) requires candidates to make reference to "all resource materials provided", it is worth citing this in your extended response answers, e.g., "As resource 1 shows..." or use brackets (parentheses) to show where you have applied the stimulus materials, e.g., "(Resource 4)".

Top tip 13!

“However beautiful the strategy, you should occasionally look at the results.”
- Sir Winston Churchill, British Prime Minister (1940 - 45 and 1951 - 55)

So, what happens if a student does not address the two challenges (in Question 2) in their plan of action in the extended response question?

The 17-mark question is sufficiently broad to allow for a range of responses within a strategic focus. This means there is no definitive or prescribed plan of action.

However, it can be self-penalising is students ignore the two challenges in the previous question given that the extended response question is strategic and forward-looking in nature. Logically, Question 2 in Paper 3 asks students to explain two organizational challenges - there is no need to ask this question if the challenges can then be ignored in the plan of action.

As stated in the Teacher Support Material (TSM) on My IB, students should be "analysing issues facing the organization and the possible ways forward." (page 67). These issues clearly refer to the challenges identified earlier by the candidate. However, it also requires students to consider plans for the future (or long-term) in dealing with these challenges as well as other considerations as part of a holistic and strategic plan of action.

Top tip 14!

As a general rule, remember that all business decisions (the recommendations in the plan of action) will have at least two wider implications or trade-offs on an organization:

• The impact on human resources - Students should consider how their recommendations (in the plan of action) are likely to affect employees, perhaps in terms of training needs or their level of motivation and productivity.
• The impact on finances - Every business decision / plan of action / strategy will have a direct impact on the organization's finances. Students should consider how their recommendations (in the plan of action) will affect the organization's finances. For example, are the recommendations viable (realistic) given the firm's budgets and current financial position?

Recall that to score top marks in Criterion C (evaluation), students must acknowledge the possible trade-offs of their plan of action, i.e., the compromises, sacrifices, or opportunity costs. Other more generic examples of trade-offs include:

• Internal growth strategie vs. External growth strategies – Expanding organically ensures control and stability, but it is slower compared to inorganic methods such as the acquisition of other businesses. However, external growth methods carry more risk and are more costly.
• Financial rewards vs. Cost control – Offering better pay and employment conditions (such a higher salaries and improved staff benefits) can improve employee retention and productivity but this comes at the opportunity cost of higher operational costs.
• Debt financing vs. Equity financing – Taking on debt (such as using loans from commercial lenders) allows a company to retain full ownership with diluting control, but this increases financial risks (such as the comany's gearing ratio). By contrast, issuing shares reduces such financial risk but will dilute ownership and control of the company.
• Short-term pains vs. Long-term gains – A business that focuses on immediate profits (such as cost-cutting measures) can gain in the short-term but such actions may hinder its long-term investment and sustainability efforts. Consider the long-term impacts on student outcomes if a school chooses not to invest in staff training by not sending teachers on IB training courses(!)
• Market expansion vs. Brand dilution – Expanding into new markets may increase an organization's sales revenue and revenue streams, but could dilute brand identity and alienate existing and loyal customers.
• Price vs. Quality – Lowering prices can attract more customers and encourage brand switching, but this can be at the opportunity cost of lower profit margins and reliance on sales volume to maintain profits. By contrast, focusing on premium-priced products can raise product margins but limit the market size.
• Market share vs. Market penetration – Lowering prices can help a business to gain market share but the sacrifice is reduced profit margins. By contrast, maintaining higher prices helps to improve profit margins but may limit market penetration.
• Specialization vs. Diversification – Specializing in one particular product or market can create expertise but makes the business vulnerable to market fluctuations and changes in the external environment. In contrast, diversification spreads risks but also dilute strategic focus so can lead to diseconomies of scale.
• First-mover advantage vs. Market uncertainties – Entering a market first can build brand recognition and establish a loyal customer base, but involves higher risks. Entering the market at a later stage brings advantages the firm can learn from competitors already in the market, but may mean missing out on early opportunities (first-mover advantages).
• Cost vs. Quality – A business may choose to reduce costs by using cheaper materials or outsourcing, but this may come compromise product quality and therefore harm the its corporate or brand reputation.
• Automation vs. Employment – Automating production methods can improve operational efficiency and lower costs per unit for a business, but this may be at the opportunity cost of staff layoffs (redundancies) and lower employee morale.
• Customization vs. Standardization – Offering customized products (using job production methods) can attract niche markets and increase profit margins, but this can also increases production complexity and costs compared to standardized output using mass production methods.
• Outsourcing vs. In-house production (or Cost to buy vs. Cost to make) – Outsourcing can reduce per unit costs of production and improve efficiency, but it may lead to quality control issues and over-reliance on external suppliers.
• Innovation vs. Risk – Investing in research and development (R&D) can lead to new market opportunities, but it can also carry huge higher financial risks for the sustainability of the business if the product fails.

Top tip 15!

Click on the links to these two documents that provide additional advice and top tips about how to write high-scoring answers for the 17-mark extended response question.

I am extremely grateful to the teachers who have worked so hard to create and share these resources with the InThinking Business Management community.

• Top tips for the 17-mark essay (Susan Brownsword)
• Top tips for the 17-mark essay (Kim Forbes and Bradley Deren)
• Top tips for the 17-mark essay - Business strategy