AQA A Level Business 2017 - Getting Ready for Paper 3

Paper 1 and Paper 2 are done – one more to go on Friday! The first two papers covered a wide range of topics, with many opportunities to briefly include relevant theories and models in your responses as well as use the data and other contexts provided. What lies in store in Paper 3?

The answer of course is ‘who knows”? Ofqual require exam boards to make A Level papers unpredictable. The same topic can be examined more than once in the same series of papers – or not at all for years. Question spotting is a mug’s game. 

The only way is to ensure you’ve covered as much of the specification content as possible, but more importantly, provide answers that directly meet the demands of the question. Answer every question using the words of the question and demonstrate the skills required. You won’t go far wrong.

For those students who are reasonably confident they’ve covered the specification in their revision for Paper 1 and Paper 2, are there specific topics it might be worth spending a little extra time on before Friday?

Here’s my hunch (but NOTE - NOT, REPEAT NOT A PREDICTION)

I would be hoping /preparing for a Paper 3 case study / business that includes some (though probably not all) of the following features:

• A business that has needed to make a change in strategic direction
• Perhaps because of strategic drift – it has found itself losing a market leadership position in recent years, partly due to a loss of competitiveness, a rapidly changing external environment and perhaps also through some strategic mistakes by previous management
• Perhaps the business grew too fast through ill-advised external growth (takeovers).
• Perhaps the share price has fallen significantly as investors have become wary of profit warnings, falling market share, slower revenue growth or declining profits.
• Has the business previously enjoyed some impressive competitive advantages, perhaps created partly through economies of scale meaning it could out-muscle smaller, weaker competitors?
• Has the industry that the business operates been significantly disrupted through technology, particularly new entrants using e-commerce, meaning that barriers to market entry have fallen?
• Has quality become an issue in the business? Are competitors gaining market share because they can offer better quality at the same or lower price?
• Has the culture of the business come under scrutiny through some problems that point to ethical issues in the business?
• Has the business struggled to replicate its UK success in international markets? Has internationalisation proved costly?
• Has diversification proved a costly mistake in the past? Would the business be better advised to "focus" on its core customers and markets, and retrench to a smaller, but better managed organisation?
• Has new leadership been brought in to attempt a significant change in both organisational culture / structure as well as a refocusing of strategy?
• What changes has the new leader / management tried to implement? Delayering?  Better relations with employees and external stakeholders like suppliers?
• Will new leadership prove enough to turn the business around?

I’d be hoping for a case study where the following theories / models might be relevant:

• Porter’s Five Forces (particularly barriers to entry and the impact of digital disruption)
• Globalisation (particularly the emergence of new competition from emerging markets in the Far East)
• Kotter & Schlesinger (causes of change / overcoming resistance) / Lewin’s Force Field (driving forces)
• Competitive advantage
• Core competencies
• Strategic drift
• Retrenchment (business closures, exits from failed expansion, organisational structure change)
• Ansoff's matrix (watch out for diversification, market development)
• Internal v external growth
• Porter's generic strategies (again - as in paper 2) along with Bowman's Strategy clock

I’d be anticipating Appendices that encourage interpretation (including ratios) of:

• Balance sheet (including gearing, ROCE)
• Income statement (particularly profitability ratios)
• Share price / market capitalisation
• Market share / growth rate
• Investment returns
• Evidence of lack of competitiveness (e.g. labour productivity, unit costs)

Make sure you are on top of your profitability ratios and can argue the case for and against high gearing.

In the case study, look out in particular for changes in corporate objectives - and how these might influence a new strategic direction.

If the Paper 3 case study is based on a real business that students ought to be fairly familiar with, then the best fit for all the above I can think of would be Tesco.  

Cases like Royal Mail, Microsoft, Rolls-Royce and Starbucks would also fit quite well with the above - as would any large-scale business that has needed to undergo a significant change in strategy and leadership. ITV and Sainbury's - which featured in the two specimen papers would also fit the bill, but don't expect them to turn up again.

In any event, I think it is definitely worth spending 30-60 minutes refreshing your awareness of Dave Lewis’ turnaround strategy at Tesco as it is a great example to use as additional context in your answers, where relevant.

Now all of the above is just my hunch. None of the topics above has featured significantly in Paper 1 or Paper 2 and neither it there any guarantee they will feature at all in Paper 3.

 But if it helps to focus some parts of revision over the remaining hours, hopefully the above is useful.