Answers

Strategic Professional – Essentials, SBL

Strategic Business Leader (SBL) Specimen Exam 2 Answers

In the Strategic Professional Examinations, it is not always possible to publish suggested answers which comprehensively cover all
the valid points which candidates might make. Credit will be given to candidates for points not included in the suggested answers,
but which, nevertheless, are relevant to the requirements. In addition, in the integrated case study examination candidates may
re‑introduce points made in other questions or parts of questions as long as these are made in the specific context of the requirements
of the question being answered.
The suggested answers presented below inevitably give much more detail than would be expected from most candidates under
examination conditions and include most of the obvious points evidenced from both the pre-seen information and the additional
information provided in the case study exam information. These answers are therefore intended to provide a structure of the approach
required from candidates and cover the range and depth of knowledge relating to each task which might be demonstrated by the most
well prepared and able candidates. They are also intended to support revision and tuition for future examinations.

1 Report to board of Yexmarine

Introduction
This report evaluates the two proposed investment projects – a new range of sailing dinghies versus a new range of luxury yachts.
There is $10m available to invest in either project, but not enough funds to complete both. This report evaluates the two projects
and makes a recommendation.
Sailing dinghies
Financial benefits
The project has a positive net present value of $5·5m, indicating it should create value for Yexmarine. It seems that revenue would
soon be earned from the sailing dinghies and the payback period of under four years appears acceptable, given the five-year time
horizon for improvements in Yexmarine’s financial performance set by the chief executive. The investment would leave surplus funds
of $6m for investment elsewhere.
As a cheaper and simpler craft, the market for sailing dinghies is likely to be wider, and the demand may not vary as much as for
cruising yachts due to economic conditions, so the investment may represent effective diversification. Fashion changes are unlikely
to affect the demand for sailing dinghies and they have the potential to become a steady long-term cash cow for Yexmarine.
As Yexmarine is larger than the other companies which currently manufacture sailing dinghies in Neoland, it should be able to take
advantage of economies of scale, particularly after the move to the new premises.
Financial drawbacks
The gross and operating profit margins of 35% and 12% are lower than Yexmarine’s current margins and the chief executive’s
targets. Having a price of $4,000, which is lower than the sector average of $5,000, may initially help Yexmarine establish itself in
this segment of the market, but often sailing dinghies will be bought as a one-off purchase, so having low prices to encourage repeat
purchases is not effective.
Having the lowest price might also be a problem if the dinghies are seen as lower quality. The target market appears to be families
who are learning to sail with their children, and who are likely therefore not to wish to compromise on a perceived lack of safety
features which they may associate with a lower price option.
Non-financial benefits
By entering this market, Yexmarine would be differentiating itself from its main competitors. It would be adopting a clear cost
leadership strategy in the new market, going some way to address the concern that it is losing market share in the cruising yacht
market. The standard design of sailing dinghies is simpler than cruising yachts, so this may allow for a learning curve effect and
ultimately more efficient production.
A customer purchase of a dinghy could be the start of a relationship which will result in subsequent business for Yexmarine,
including repair and maintenance work and perhaps, in some instances, eventual trading up to a more expensive cruising yacht.
Non-financial drawbacks
Yexmarine faces a significant amount of local competition in this market. Although other manufacturers are smaller, they are
long‑established. As the design of sailing dinghies is simpler than cruising yachts, it may be difficult for Yexmarine to differentiate its
dinghies from its competitors.
The move may also lead to confusion as to what Yexmarine’s overall strategic position is. Yexmarine being associated with a cheaper,
simpler product will potentially cause confusion as to where it stands in the cruising yacht market.
Luxury yachts
Financial benefits
This investment also has a positive net present value of $7m. Both the gross and operating profit margins on luxury yachts of 62%
and 28% are higher than the current targets. The yachts are aimed at very rich customers, who may be less affected by an economic
recession and may not economise on luxury products. High returns from this product could generate surplus funds for investment
elsewhere.

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 Financial drawbacks
The net present value calculation is likely to be an expected value based on figures which are very uncertain, because Yexmarine
does not currently have a presence in this market. The figures may hide considerable variations, including the possibility that
Yexmarine will fail to succeed in this market. Given the high selling price, the forecast figures will be significantly affected by quite
a small number of sales, indicating the need for sensitivity analysis.
The difference between the gross and operating profit margins of 34% is rather larger than for Yexmarine overall (25% current and
forecast), indicating relatively high fixed costs which would be incurred whatever the sales level.
As Yexmarine will also be selling to foreign customers, it will face foreign exchange risk if it bills in their currencies.
The planned investment utilises all the available surplus funds of $10m from the sale of the two Hameldon sites. This means that
Yexmarine’s future would be very dependent on the success of this investment over the next few years and raises the question of
additional finance requirements if expenditure turns out to be higher than expected. Costs would not start being recouped until
revenue was received in three years’ time. No payback target has been set, but a payback period of six years appears to be lengthy
in light of the chief executive’s targets relating to improving performance within the next five years.
Non-financial benefits
Producing luxury yachts would mean Yexmarine was clearly differentiated from its main local cruising yacht competitors. Success in
this market would give Yexmarine an international presence and may also make the company more appealing to investors if it sought
a listing. Production of bespoke yachts could make better use of the craftsmanship skills which Yexmarine’s employees have. Once
Yexmarine has started constructing luxury yachts, some of the features could perhaps be incorporated into the cruising yachts.
Non-financial drawbacks
Yexmarine faces established foreign competition in this market, including larger manufacturers. The number of customers in the
market is likely to be limited. Breaking into this market will not only involve considerable expenditure but also time resource from
management, with no certainty of success. It is difficult to see how Yexmarine could differentiate itself sufficiently from established
competitors. The benefits from the move to the new premises, the ability to produce standardised products more efficiently, would
not be relevant for luxury yachts constructed individually.
Recommendations
Yexmarine should not enter the luxury yacht market. The prospect of success against established manufacturers is insufficiently
high and the commitment of current financial and non-financial resources too great and quite uncertain. Possibly the board might
reconsider the investment if Yexmarine achieves a listing and additional finance becomes available.
Yexmarine should consider entering the sailing dinghies’ market, as its size may give it economies of scale and it would be
compatible with the planned changes in moving to new production facilities. However, diversifying into sailing dinghies would not
help Yexmarine address the issues it currently faces in the cruising yacht market.

2 (a) Tranart Consultants

Anystreet
Lympool
5 September 20X3
Dear Tony
Establishment of strategy committee at Yexmarine
Thank you for giving me the opportunity to comment on your proposal. I agree that there is a case for establishing a strategy
committee, given the important strategic decisions which Yexmarine may need to take over the next few years if financial
performance is to be improved and the proposed transformation of Yexmarine’s business takes place. There will also be a need
for reappraisal of governance structures if Yexmarine seeks a listing.
Governance regulations will require the setting up of other board committees, for example, the audit committee, and you will
need to consider how the strategy committee fits within the overall committee structure.
Benefits of strategy committee
Strategic planning
The terms of reference you propose include strategic planning. Decision-making will be enhanced if investment projects are
viewed in the light of plans to achieve long-term strategic objectives. Long lead times and the large capital expenditure required
make it important for decisions on investments to fit within the strategic planning framework.
Review of environment
The terms of reference emphasise the importance of the committee actively seeking to be aware of environmental factors and
particularly what competitors are doing. Consideration of these factors is very important in determining the suitability and
feasibility of strategic options. If competitors are already established or planning a large investment in a particular market,
Yexmarine may not succeed in that market or will need to spend too much to make an impact in it.

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 Consideration of strategic options
Establishing a strategy committee should ensure that sufficient time is given to considering strategic options. Board meetings
have to consider a range of issues, and this may limit the time available for a full discussion of strategy.
Problems with strategy committee
Confusion of responsibilities
Governance best practice states that certain decisions must be reserved for the main board, including decisions about major
investments. This is to ensure proper board accountability. The proposal that the strategy committee should be responsible
for choosing strategic options to be recommended for board approval may lead to confusion between the responsibilities of
the committee and the board. It could also mean the board being required to act as a ‘rubber-stamp’ for decisions made in
this committee, which would limit the input of directors who are not members of the strategy committee. It would be more in
line with governance best practice for the committee to evaluate strategic options and to then present them to the board for
consideration and decision-making.
Role of non-executive directors
Governance requirements also recommend the need for strategic proposals to be scrutinised and challenged. This is, in
particular, the responsibility of non-executive directors. However, the proposed membership of the committee does not include
any non-executive directors. Non-executive directors can bring wider perspectives, based on their own experience, to strategic
decision-taking and can also help ensure decisions are taken in the light of what is acceptable to key stakeholders.
Frequency of meetings
The frequency of meetings is not defined. But the committee’s terms of reference include environmental monitoring, which
needs to be continuous. Therefore, meetings will need to be regular. A minimum number of meetings each year, to ensure
that regular consideration is given to environmental issues, should be specified, with one-off meetings being held if there is a
particularly significant opportunity or threat arising from the environment which needs to be considered.
Financial aspects
There is no specific mention in the terms of reference to the committee considering the financial aspects of strategies. The
finance director has not been included as a member of the committee. This may mean that financial aspects are given
insufficient consideration, so you should consider whether the finance director should be a committee member. The terms
of reference also should specify the need for the committee to consider financial aspects. This should be supported by
specification of the financial information which the committee needs to consider.
Links between corporate and operational strategy
The terms of reference also fail to mention the links between corporate strategy and operational strategy. There may potentially
be confusion about how much autonomy functional directors have in decision-making in the light of the overall strategic
framework determined by the strategy committee.
Human resources
In addition, the terms of reference do not have anything about the committee considering internal resources and capabilities.
Whilst members of the committee can provide assessment of the areas where they have operational responsibilities, the
exclusion of the human resources director from the committee means there is a danger that personnel issues may not be
considered. These may be particularly important in the light of the changes which employees will experience when they move
to the new facility in Lympool.
I hope you find these comments constructive. Please do not hesitate to get in touch if you wish to discuss these points further.
Yours sincerely
Consultant

(b) Briefing notes for board of Yexmarine on the impact on the change process
Impact on the change process
The organisational change process can be viewed using a standard model of change. The stages are getting employees
prepared for changes in behaviour, processes and operations (unfreezing), the move to new premises itself (change) and the
rapid settling down into the new situation (refreezing). Employee dissatisfaction could have consequences for each stage of this
process.
Unfreezing
Employees’ beliefs that their opinions will be ignored will hinder any process of consultation during this stage. Employees may
be reluctant to offer opinions if they feel no notice will be taken of them, or if they fear that expressing opinions which are
unpopular with management could be held against them. There also seems to be a risk that more experienced or specialist
employees will leave the company. This will mean that there will be a lack of motivated employees who could lead the process
of change and help convince other employees.

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 Change
The actual move to the new premises is likely to require employees making a commitment of time greater than their normal
employment to ensure disruption is kept to a minimum. Employees may be unwilling to make this extra commitment if they
are not rewarded for it.
This is also the time when new processes will be introduced. If employees have not tried to learn them properly or resent them,
there is a risk that management could face active resistance from employees, increasing the level of disruption which the move
will cause. This could result in service to customers being disrupted.
Refreezing
There is a significant risk that employees will revert to old routines after the move has taken place. This will require management
time to correct and is likely to increase resentment, particularly if employees still regard Yexmarine’s management as coming
from a different culture. This could mean decreased operational efficiency due to significant employee turnover. As a result,
Yexmarine may find that the quality of service given to customers falls.

3 (a) Report to chief executive

Introduction
This report deals with suggestions to mitigate risks made by the operations director.
Flooding risk
The assessment of flooding risk as non-serious could be justified if the risk was said to be remote. However, as Yexmarine’s
new site will be in a coastal town where flooding is predicted to occur, the risk seems potentially serious. Further investigation
should be undertaken to determine the overall impact and probability of flooding.
If the risk is assumed to be low probability but high possible impact, transferring the risk to an insurance company would be
an appropriate general strategy. However, if the risk is considered to be higher probability, insuring might become very costly
or the insurance options open to Yexmarine may become limited.
Watching for flood warnings would give advance warnings of trouble, but there is no mitigating activity to reduce the impact of
floods if they do occur. Yexmarine will be dependent on the state of local flood defences, but they may not be enough.
Further risk mitigating activities
Yexmarine should take some flood precautions itself to prevent or slow the impact of flooding. Yexmarine should also have a
contingency plan to reorganise premises or move some assets, for example, electrical machinery or computers. The plan should
also include steps to clean its premises up as quickly as possible if they have been flooded. However, contingency planning
will not be able to prevent damage to the premises or the yachts themselves if flooding is serious.
Product obsolescence risk
Yexmarine needs to be aware of what its main competitors are doing. However, just trying to catch up with competitors will
take time and is essentially a reactive strategy.
Adding additional features to current models may be seen as being reactive and not making Yexmarine distinct from its
competitors, and expenditure on limited changes could produce negative returns.
Further risk mitigating activities
Yexmarine needs to take steps to be aware of developments internationally as well as locally, so it can recognise innovations
which may take it ahead of its competitors.
Yexmarine also needs an overall innovation strategy. This would start by developing an infrastructure which includes advanced
information technology, human resource design capability and production processes flexible enough to be able to cope with
continual evolution. Product development processes can be built on the back of this infrastructure. Yexmarine also needs a new
marketing message and refreshed image, and to make better use of marketing media.
Data risk
The activities listed will provide some protection provided they are operated thoroughly. All software used must be regularly
updated and back-ups taken regularly and stored separately using cloud storage. Passwords will help restrict access, although
to enhance security there should be different levels of passwords allowing access to different information, and password
protection procedures including the requirement for regular changes. Physical access barriers will help exert control over
non‑staff onsite, but cannot protect against loss of data on computers taken offsite or when data is being transferred.
Further risk mitigating activities
The controls given will also be strengthened by general controls which promote risk awareness or review risks, including
training, identification of unusual online activity and appointment of an information security officer.
Reputation risk relating to products and services
The activity of monitoring public opinion is clearly justified. Benchmarking against competitors can be helpful for both products
and services. For products it can establish where Yexmarine may be able to differentiate itself, for services it can establish where
its levels are better or worse than competitors and suggest targets.

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 A quality management programme is relevant to repair services (customers want their products repaired properly) and also to
yacht construction. However, customers, when buying a boat, will assume it conforms to specifications and is safe, and that
will not determine their buying decision.
Further risk mitigating activities
There is no mention of monitoring the opinion of existing customers. This needs to be highlighted as a separate activity, as it
may provide early warnings of product problems and also identify threats to maintaining relationships with customers.
Yexmarine also needs to take action on factors which will influence buying, deciding the focus it will give and ways it will
make existing products appear more appealing than its competitors’. Marketing initiatives will also be needed to reinforce these
messages.

(b) Briefing notes for board of Yexmarine on benefits of e-marketing

Building communities
E-marketing can enhance Yexmarine’s customers’ perception of belonging to a community. Discussion forums on Yexmarine’s
website, or groups on social media, can help answer customers’ questions. They also can encourage customer responsiveness,
customer-to-customer contact, and customer-generated content on issues connected with yachting which interest them.
Further sub-communities could also be developed. Owners who have recently bought their first yacht would be one possibility.
Communities could be a source of direct commercial advantage – for example, yacht purchasers being entitled to membership
of an extranet. Yexmarine can also use the information gleaned from the online communities to feed into product development
and other process improvements.
Individualisation
E-marketing can result in marketing being better targeted at individual customers. E-marketing allows for a more systematic
collection of information about individuals and their preferences than face-to-face contact allows. It provides opportunities for
individuals to initiate contact by means such as banner ads. Individualised content can be delivered through webpages and
email, with users supplying details which ensure they receive what will be of interest to them. Websites or social media can
provide ways for users to express likes and dislikes or ask questions, giving the impression that their concerns matter and also
enabling Yexmarine to understand what its customers’ requirements are.
Use of social media
It is certainly true that the more use is made of social media, the wider the reach is likely to be. Making use of the most
currently popular forums can help correct the impression that Yexmarine has an old-fashioned approach. Wide social media
use by a younger demographic can mean that Yexmarine’s reach can be extended beyond its current, older, customer base,
which is important for the company’s long-term appeal. Social media use can also be a part of an international marketing
strategy, which may become more important for Yexmarine depending on the product investment decisions it makes.
Promotion of employee expertise
E-marketing can offer a number of avenues to promote staff expertise. Blogs by senior or specialist staff offer the chance to
display knowledge. Their benefit can be enhanced by interaction by customers, so that they address the areas of interest to
customers or questions customers have. Video links on websites can film staff demonstrating their work. This can promote
interest from customers, and can also strengthen the relationships with them, as customers see staff whom they have dealt
with in action.
Marketing major product developments
E-marketing provides many ways in which major product developments can be promoted. Some of these, such as mailshots,
will be linked to the individualisation of marketing. E-marketing offers various methods to create interest. Social media gives the
chance to communicate key features, sustaining a ‘buzz’ by releasing details. Yexmarine can use a viral marketing campaign
by supplying a promotional message by email, which is then forwarded on by other users. The response sites offered by
social media allow for adaptability by responding to concerns raised. The website can offer still images with a wider potential
circulation than promotional brochures and can offer video tours or demonstrations, highlighting yachts’ particular selling
points.

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Strategic Professional – Essentials, SBL
Strategic Business Leader (SBL) Specimen Exam 2 Marking Scheme

1 Investment projects
For each project
1 mark for each financial issue identified relevant to project
(Up to a maximum of 7 marks)
1 mark for each non-financial issue identified relevant to project
(Up to a maximum of 7 marks)
Points can include:
Sailing dinghies
Financial benefits
– Positive NPV, therefore financially acceptable
– Revenue earned soon and payback short
– Leaves surplus cash for other investments
– Bigger market
– Demand less vulnerable to economic conditions
– Demand less vulnerable to fashion changes
– Potential long-term steady earner
– Economies of scale
– Lower price than competition may help generate demand
Financial drawbacks
– Gross and operating profit margins lower than current and target
– Low starting price unlikely to encourage additional dinghy purchases
– May be seen as lower quality and possibly unsafe
Non-financial benefits
– Simple to develop
– Differentiation from competitors
– Clear cost/market leader strategy
– Learning curve
– Broader customer base
– Start of relationship with customers
Non-financial drawbacks
– Significant competition
– Difficult to differentiate design from competitors’
– Fails to solve market positioning in cruising yachts market
Luxury yachts
Financial benefits
– Positive NPV, therefore financially acceptable
– Gross and operating profit margins higher than current and target
– Appeal to rich customers not affected by adverse economic conditions
– High earning product generating surpluses for other investments
Financial drawbacks
– NPV figure hides considerable uncertainties
– Sensitivity to few, large sales
– High fixed costs
– Foreign exchange risk
– Utilisation of all the surplus and may need additional finance
– Revenue not for some time and lengthy payback period
Non-financial benefits
– Clear differentiation from competitors in Neoland
– International presence
– Star product attracting investors if listing takes place
– Use craftsmanship skills
– Incorporate some features into other yachts
Non-financial drawbacks
– Global competition from established manufacturers
– Limited number of customers
– Success uncertain and may involve considerable time resource
– Difficult to differentiate itself
– Customisation contrasts with standard models of cruising yachts

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 Recommendation
1 mark for clear and reasonable recommendation
1 mark for justification
(Up to a maximum of 2 marks)
(Up to a maximum of 26 marks in total)

Professional skills may be additionally rewarded as in the following rubric:

How well has Not at all Not so well Quite well Very well
the candidate
demonstrated
professional skills
as follows:

1 The candidate has The answer is not The answer is reasonably The answer is very
completely failed to well- balanced between well- balanced between well- balanced between
Evaluation skills
discuss one of the the two projects, the two projects, the two projects,
Making justified project’s financial or their financial and their financial and their financial and
recommendations non-financial aspects, non‑financial aspects, non‑financial aspects, non‑financial aspects,
which are based benefits or drawbacks. and benefits and and benefits and and benefits and
on a balanced drawbacks. drawbacks. drawbacks.
The answer contains no
assessment of
evidence of the use of The answer contains The answer contains The answer contains
both projects.
professional judgement limited evidence of reasonable evidence of strong evidence of the
Report to board to evaluate the proposed the use of professional the use of professional use of professional
investments in the judgement to judgement to judgement to
light of the strategic evaluate the proposed evaluate the proposed evaluate the proposed
positioning of, and investments in the investments in the investments in the
the organisational light of the strategic light of the strategic light of the strategic
implications for, positioning of, and positioning of, and positioning of, and
Yexmarine. the organisational the organisational the organisational
implications for, implications for, implications for,
The candidate
Yexmarine. Yexmarine. Yexmarine.
has not made any
recommendations of Although there The candidate has The candidate has
whether to proceed with is a section on supported their made reasonable
either investment. recommendations, what recommendations by recommendations which
the recommendations reference to points made are clearly justified by
are is not clear. in the rest of the answer. reference to points made
in the rest of the answer.
The candidate has not The candidate has
given reasons for their presented the answer in The candidate has
recommendations, or a report format. presented the answer in
the reasons given do not a report format.
relate to the rest of the
answer.

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2 (a) Up to 2 marks for each benefit of the proposal. These can include:
– Discussion of individual projects within strategic planning framework
– Active consideration of environment
– Active consideration of competitors
– Sufficient time to consider strategies
– Opportunity to review how well strategies are working and whether they need to be changed
– Better use of board time
– Can respond quickly to opportunities/threats
– Increasing investor confidence when Yexmarine becomes a listed company
(Up to a maximum of 8 marks for benefits)
Up to 2 marks for each problem with the proposal. These can include:
– Confusion between strategic committee’s and board’s responsibilities
– Lack of NED involvement to challenge strategies
– Membership not diverse
– No mention of employee representative – may be helpful as employees are concerned about direction of strategy
– No minimum for how frequently committee should meet – needs to meet regularly, e.g. to assess business environment
– No mention of financial aspects of strategies
– No mention of links between higher-level corporate strategy and operational strategies
– No mention of capabilities and human resources
– No mention of consideration of customer requirements
(Up to a maximum of 10 marks for problems)
(Up to a maximum of 14 marks in total)

Professional skills may be additionally rewarded as in the following rubric:

How well has Not at all Not so well Quite well Very well
the candidate
demonstrated
professional skills
as follows:

2 (a) The candidate has not The candidate has given The candidate’s The candidate’s
clarified the proposals limited clarification of clarification of the clarification of the
Communication
in the context of the the proposals in the proposals is mostly proposals is linked to the
skills
corporate governance context of the corporate linked to the corporate corporate governance
In clarifying the needs of Yexmarine. governance needs of governance needs of needs of Yexmarine. The
benefits of, and The candidate has not Yexmarine and has not Yexmarine The candidate candidate has identified
problems with, discussed significant linked the proposals has identified omissions omissions from the
the proposal. aspects of the proposals. clearly to these needs. from the proposals. proposals.
Letter The candidate has not
The candidate has not The candidate has The candidate has
identified any omissions
identified any omissions presented the answer in presented the answer in
from the proposals.
from the proposals. a letter format. a letter format.

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 (b) Up to 2 marks per impact of staff dissatisfaction on the change process. These can include:
– Loss of senior staff who could lead change
– Unwillingness to offer opinions
– Unwillingness to contribute extra when change occurs
– Active resistance when new processes introduced
– Return to old ways after changes introduced
– Increased staff turnover affecting operations
– Adverse impacts on efficiency and customer service
(Up to a maximum of 10 marks in total)

Professional skills may be additionally rewarded as in the following rubric:

How well has Not at all Not so well Quite well Very well
the candidate
demonstrated
professional skills
as follows:

2 (b) The candidate has The candidate has made The candidate has The candidate has linked
failed to link evidence of a few links between linked evidence of evidence of employee
Analysis skills
employee dissatisfaction evidence of employee employee dissatisfaction dissatisfaction to all the
By considering to problems with the dissatisfaction and to problems with the main problems with the
the impact organisational change problems with the organisational change organisational change
of employee process. organisational change process. process.
dissatisfaction process, but the linkage
The candidate has The candidate has
on the change is not always clear.
presented the answer in presented the answer in
process.
a briefing notes format. a briefing notes format.
Briefing notes

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3 (a) For each risk:
– 1 mark for each relevant point made in relation to the associated risk mitigating activities
– 1 mark for each further mitigating activity suggested
(Up to a maximum of 5 marks for each risk discussed)
(Up to a maximum of 16 marks in total)
Points can include:
Flooding risk
Adequacy of risk mitigating activities
– Need to assess probability and level of impact
– Insurance would transfer risk
– Keeping informed of flood warnings ok
– Local flood defences may not be enough
Further mitigating activities
– Need for flood precautions – its own defences and workplace organisation to limit impact
– Need for contingency plan
– Some physical damage inevitable if flooding is serious
Product obsolescence risk
Adequacy of risk mitigating activities
– Need to be aware of what competitors are doing but not just reacting to them
– Adding additional features may be seen as reactive strategy
Further mitigating activities
– Need for awareness of wider developments
– Need for innovation strategy, including conducting market research and way products are introduced into market
– IT, HR and production processes need to support innovation
– Need for new marketing approach
Data risk
Adequacy of risk mitigating activities
– Regular updates required
– Regular backups required
– Passwords provide protection but need for different levels and changes
– Physical barriers do not protect information taken offsite
Further risk mitigating activities
– Need for general controls which promote awareness and review risks
– Training
– Identification of unusual activity
– Information security officer
Reputation risk relating to products and services
Adequacy of risk mitigating activities
– Monitoring public profile starting point
– Benchmarking provides useful indications
– Quality management programme will address something which customers buying yachts assume will be fine
Further risk mitigating activities
– Need to monitor existing customer opinion as well
– Need for actions to differentiate products from competitors, supported by marketing campaigns

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Professional skills may be additionally rewarded as in the following rubric:

How well has Not at all Not so well Quite well Very well
the candidate
demonstrated
professional skills
as follows:

3 (a) The candidate has failed The candidate has The candidate has The candidate has made
to challenge the current made a limited attempt made a good attempt an excellent attempt at
Scepticism skills
risk mitigation activities. at challenging the at challenging the challenging the current
By questioning The answer is purely adequacy of Yexmarine’s current risk mitigation risk mitigation activities.
the adequacy of descriptive. No attempt current risk mitigation activities. Most of the The whole answer is
risk mitigation has made to suggest activities. There is limited answer attempts to an evaluation of the
activities. improvements in risk evidence of evaluating evaluate the operations operations director’s
Report mitigation activities. the effectiveness of the director’s suggestions of suggestion for risk
operations director’s risk risk mitigation activities. mitigation activities. All
mitigation activities, but The opinions given and the opinions given and
the opinions given and the challenges made are the challenges made
the challenges made are mostly justified. Most of have been justified.
mostly not justified. the challenges relate to The challenges reflect
significant concerns. significant concerns.
The candidate has The candidate has
presented the answer in presented the answer in
a report format. a report format.

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 (b) Up to 2 marks per relevant benefits of e-marketing discussed. These can include:
Community
– Building on sense of community
– Community features allow active customer participation
– Two-way communication can feed into product development
Individualisation
– Systematic collection of information about individuals
– Allows customers to initiate contact and tailor approach
– Gives customers opportunities to ask questions and express opinions
Social media
– Wider geographical reach
– Wider generational reach
– Use of social media gives impression of being up-to-date
Promotion of employee expertise
– Blogs allowing demonstration of knowledge and address customer interests
– Promoting customer interest by videos showing employees at work
– Interaction and strengthened relations between employees and customers
Promotion of major product launches
– Mailshots tailored to interested parties
– Promotion of interest on social media
– Viral marketing creating interest
– Website providing wider audience and range of features for promotion of new products
(Up to a maximum of 14 marks in total)

Professional skills may be additionally rewarded as in the following rubric:

How well has Not at all Not so well Quite well Very well
the candidate
demonstrated
professional skills
as follows:

3 (b) The answer is a list of The candidate has The candidate’s answer The candidate’s answer
e-marketing techniques made some attempt is focused on the is focused on the most
Commercial
with no attempt made to to discuss the benefits benefits of e-marketing important benefits of
acumen skills
link them to Yexmarine’s of e-marketing and to Yexmarine and the e-marketing to Yexmarine
By linking competitive situation address the issues raised candidate has addressed and the candidate has
e-marketing and address the issues in the board meeting. the issues discussed in fully addressed the
methods to the discussed in the board However, some of the the board meeting. Most issues discussed in
issues which the meeting. benefits discussed are of the benefits would be the board meeting. All
directors have not realistic or clear in relevant to Yexmarine’s of the benefits would
raised. relation to Yexmarine competitive position. The enhance Yexmarine’s
Briefing notes and some of the issues candidate has presented competitive position. The
discussed in the board the answer in a briefing candidate has presented
meeting have not been notes format. the answer in a briefing
addressed. notes format.

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