Answers

Part 3 Examination Paper 3.5 Strategic Business Planning and Development

December 2002 Answers

In the level 3 papers it is not always possible to publish a suggested answer which is fully comprehensive and therefore credit will be given to candidates for points not included in the suggested answers but which, nevertheless, are relevant to the questions. The suggested answers presented below give more detail than would be expected from a candidate under examination conditions. The answers are intended to provide guidance on the approach required from candidates, and on the range and depth of knowledge which would be expected from an excellent candidate. 1 (a) From: Date: December 2002 To: Kenneth Murphy, Managing Director World-Wide Agricultural Machinery Company

A Review of The Position of the World-Wide Agricultural Machinery Company (WAMC) Introduction I have chosen to evaluate WAMC by assessing its current internal capabilities and by considering the external environment and trying to identify where the company is failing to match its capabilities with the requirements of the environment.* I will also, where feasible, attempt to identify any critical differences in performance between the two companies. This will not be as a special sub-section but will be integrated into the main body of the text. Internal capabilities Manufacturing WAMC has a reasonable range of products but specifically lacks a tractor unit which is critical as this is a lead product which influences customers in buying additional ancillary equipment. The company has traditionally neglected product development and has little history of innovation. Although the company has had a number of regional factories these have recently been reduced in number. Whilst manufacturing flexibility might have been reduced there has supposedly been a saving in the cost base as fragmentation in production has been eliminated and more economic manufacturing routines have been put in place. The French company, however, appears to be a leaner manufacturing organisation. They have only two factories with modern plant, even though the product range is restricted. Although the cost saving measures undertaken by WAMC seem to be working, the value of output per employee is still low compared with AM in 2001 it was 40,000 compared with 49,000 for AM. The French company also spends significantly more on R & D than does WAMC although recently Agricole Mecanique has reduced its expenditure in this area by about 10%. Marketing Neither company has a strong reputation in this field. WAMC has traditionally neglected market development and even when it moved into overseas markets Europe it did not gather sufficient market intelligence about its customers or even its competitors. Nevertheless it has its own distribution network which should give it more control and easier access to customers and it spends significantly more on marketing than does AM, although the costs of this distribution network are likely to be included in this total. It appears that AM has a weak brand name in comparison to that of WAMC. In summary it would appear that whereas the French company has a strong technical reputation it is rather weak in marketing. The UK firm spends more on marketing and appears to have a stronger marketing infrastructure but much of this effort seems to be unfocused. Human Resources There is little data here. The firms are not too dissimilar in terms of numbers employed. However the UK firm has savagely reduced numbers of a loyal and long established workforce which appears to have resulted in an alienated group, possibly reluctant to accept further changes. They have already seen specialisation imposed on a seemingly craft-based manufacturing process in pursuit of cost savings. How much more will they be prepared to accept? However the French company is young, having only been established 10 years, and it is likely that the workforce may be more flexible. It has also not had the trauma of large-scale redundancies. Finance A major problem of WAMC, possibly accounting for the current losses is the cost of sales. For WAMC this accounts for 65% of total revenue whereas for the French company it is just over 52%. The spending on marketing is higher in the UK company (as previously stated this may be accounted for by the larger costs of the wholly owned distribution outlets) whereas the French spend more on R & D. This could be an argument for synergy to be obtained from merging the two companies operations. The French administrative costs are relatively higher but unlike those in WAMC they appear to be stable. A major area of concern for the French company might be its level of debt and its inferior gearing ratio as compared with that of WAMC. This could account for the improved price/earnings ratio of Agricole Mecanique as the French company has correspondingly less equity capital. However one must recognise that this improved ratio may be offset by the reduced flexibility of a company with a much heavier debt burden. These factors need to be considered when contemplating a merger or acquisition. External environment Two seemingly obvious models to use for such an external evaluation are (a) a SLEPT analysis and (b) the Porter five force model. Unfortunately the amount of data provided does not permit a comprehensive review and so I will summarise what the limited material suggests under the following headings.

Buyer requirements Varied agricultural policies require different products and possibly differing marketing techniques when attempting to enter foreign markets, particularly in Continental Europe. Demand tends to be more limited as farmers now require more specialist equipment. It is increasingly unlikely that one buyer will buy a whole range of products. Nevertheless they do seem to want to buy their specialist equipment from the company which supplies the tractor unit. Buyers are also looking for innovative products which are less costly to repair and which are more flexible. It is uncertain as to whether WAMC can meet these requirements. Buyers also are looking for better and more comprehensive service facilities as well as to financial credit when purchasing these capital items. There is evidence that WAMC does not have the capacity to provide this level of support. Competition There is little data on competition but it would be surprising if each European nation with an agricultural sector did not have its own traditional equipment producer. It is probable that many, similar to WAMC, will not have reacted to changes effectively, but there are likely to be a number of new companies such as Agricole Mecanique which will be now threatening the established producers. The farming sector has traditionally been seen as conservative in its buying habits and there could be some residual loyalty to the older suppliers, but one must never forget that farming has been seeing margins squeezed and so it is to be expected that price will be a pertinent factor. The only established fact about the competition is that the large automobile manufacturers, particularly the US ones, are now strong in the tractor unit production sector. This must act as a deterrent to existing agricultural equipment producers. The US companies have the volume, income and reputation to defeat any local-based rivals. They can afford the investment for innovation and new product development. They have the funds to maintain the required infrastructure service and credit facilities which customers desire. Conclusion The evidence suggests that WAMC, in its current form, is ill-equipped to satisfy market needs, whilst maintaining its position as a major supplier within the UK market. It has attempted to improve its productivity but this may prove to be inadequate in the long term. It needs to focus more precisely on market needs, and match these to its capabilities. It will be unwise to aim to return to its traditional position. The world has moved on. Small fragmented producers are unlikely to be able to survive other than as niche market players. There will probably need to be consolidation in the market place. I hope that this brief overview will be of use to you. * (Some candidates may choose to use a SWOT analysis or the 6 M model and some may apply the value chain, demonstrating that the company has not successfully integrated all its activities clearly. Some candidates may even focus on the need to market more comprehensively using the marketing mix model to show the need for more cost-effective distribution channels and the development of a more powerful brand name. Even lifecycle analysis could be employed, demonstrating the urgent need for new product development. The answer could contain all these models (and even more) and marks will be awarded where appropriate. There is no one precise and correct methodology in answering this section.) (b) Kenneth Murphy is currently proposing four strategies to improve the situation of the World-Wide Agricultural Machinery Company. These are 1. selling off the distribution network 2. re-entering the tractor market by buying in products which have been manufactured by another tractor manufacturer 3. setting up a financial structure for making loans to customers 4. developing new products for the road construction industry Each of these strategies has merits but there are associated disadvantages which may worsen WAMCs overall position. Selling off the distribution network. It is estimated that this would result in a cash injection for WAMC of 15 million. Given its current financial position this would provide the company with both funds and a breathing space to initiate both product and market development. This suggestion should be evaluated. However it will also be necessary to investigate how much of the companys current business is dependent upon having a wholly owned and controlled distributor network. One must remember that withdrawing from tractor manufacturing did not have the beneficial effect that was expected. A cost-benefit analysis should be carried out. Furthermore in the light of the proposed merger between the two companies the strength of WAMCs marketing infrastructure may supply a necessary synergy to complement the R & D expertise of Agricole Mecanique. Buying in tractors. Recognising the importance of the tractor unit in selling ancillary agricultural equipment, WAMC is belatedly seeking to rectify the situation. Understandably setting up a new production facility would be financially expensive for the company, although a merger with AM would achieve this objective for little financial outlay (control being a different matter). There are dangers of relying on subcontracters for the supply of critical products. Firstly will the quality be up to WAMCs requirements? It will be foolish to jeopardise ones reputation by using products manufactured outside ones own control but carrying the all-important brand. Secondly will the supplier be prepared to change production schedules when and if demand requires it to do so? Furthermore if the products prove to be popular for WAMC it will certainly affect the sub-contractors other markets. How will this sub-contractor react? Refuse to supply or will there be an incursion into WAMCs domain? This strategy appears to have more disadvantages than merits.

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Making loans to customers. This would appear to be a dangerous exercise. Admittedly customers would like access to financial credit, but does WAMC have to provide the service itself? Many producers of capital equipment and consumer durables have a relationship with a financial institution bank or credit provision agency referring a proposed buyer to such an institution on the proviso that given a good credit rating the prospective purchaser will be given a loan. They (the producers of capital goods) do not carry the financial risk (non payment and bad debts) themselves. WAMC has no expertise in this field. By borrowing from a bank and re-lending they are unlikely to be as competitive as other lenders. As price is probably critical in many equipment sales this structure will disadvantage WAMC. It should stick to its core competences and liaise with an independent financial institution to provide the service required by customers. New product development. This strategy of diversification (Ansoff product/market vector analysis) could lead WAMC into new and profitable growth areas. However it is a high risk venture. The technology, although not complex, is new to the company and the market the public sector is certainly unknown to them. There is no data about competition and with a market this size any competitors are likely to be large and well established. The market itself could be volatile, given the nature of public investment programmes. Furthermore the low-tech nature of the product implies that barriers to entry will be low. Is this the type of industry which will provide the stability which WAMC is looking for or will it divert its attention away from the core business and impede it from putting necessary improvements in place? This strategy does not seem to have much commercial logic to it and requires far more research before it should be considered in depth. Conclusion. These four strategies appear to be reactive. The decision to re-enter into tractor production (albeit indirectly) and to provide financial facilities both are responses to consumer demand. It must be remembered that the satisfaction of consumer demand should only be undertaken where this can be done effectively and profitably, otherwise losses will be incurred. Whilst both the objectives are reasonable there are other ways of providing the financial services and supplying tractor units and these should be explored. The diversification strategy offers both risk and profit. However, given the current precarious situation of WAMC it seems advisable that the company should pursue a more conservative strategy, operating in technologies or markets where it has some expertise or experience. The proposed sale of the distribution outlets could provide the company with some well-needed finance, but the company could also be losing a distinctive competence and a bargaining counter in its likely negotiations with AM. Also the value of the distributor network appears to be mainly based on the development value of the land. This is likely to appreciate in value and a delay now could result in higher returns later. (c) For the proposed merger to be considered successful a number of conditions must be complied with. Firstly it must be shown that the merger adds value to the performance of the two companies. Outcomes must be better than those achieved by the two companies individually. It would be a mistake to merge if the main driving force was the ego of senior management. Furthermore one must not be influenced by potential volume increases if these could be at the expense of profit. The key criterion here should be to achieve long term profitable growth. Another issue to be taken into consideration is the attitude of the customers the farmers. If the merger reduces choice and appears to be leading to market dominance (unlikely here) this could lead to a build up of buyer resistance and possibly a referral to governmental anti-monopoly agencies. Mergers must also be seen to be in the interests of the customer. The costs of the merger must be taken into consideration. The costs of incorporation may offset any of the perceived benefits of the merger. This is particularly true if the merger is pursued in an irrational manner with little reference to economic logic. Both of these agricultural equipment producing companies may see the merger as providing them with the strengths they currently lack and, as a result, they may choose to ignore unpalatable facts such as the costs that may be incurred. It is important to ask whether the two firms are operationally and culturally compatible. In this particular case the companies appear to have certain functional synergies WAMC being proficient at marketing and AM at R & D and manufacturing. However the cultural fit may be more problematical. The French company is younger and has historically been smaller. The UK company is older-established with a unionised workforce which has seen draconian cut-backs. With the proposal to move a substantial part of the manufacturing to France there is every likelihood of resistance within the UK. The chance of a smooth incorporation of the merger, with both workforces being involved harmoniously, is not high. The financial structure of the two companies is dissimilar. One (WAMC) is mainly financed through an equity stake whereas the other is more dependent upon debt finance. WAMC shareholders must ensure that the merger does not leave them vulnerable to heavy interest payments and unacceptable payback clauses. It may be possible to adapt Porters tests for assessing the effectiveness of a diversification strategy to this merger situation. 1. 2. 3. The attractiveness test: Is the industry in which this merger takes place attractive or capable of being made attractive? The cost-of-entry test: the cost of the merger must not damage future profits. The better-off test: the two companies must gain competitive advantage from their association with the merger.

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(d)

Kenneth Murphy needs to be very careful when negotiating the merger terms. It would not only be unethical for him to seek personal financial advantage by arranging for the WAMC share price to be low, it would also be illegal. It is hardly the action of a reputable and honest senior manager to negotiate away the independence of a company whilst, at the same time, ensuring his own personal survival. Murphy must recognise that in his position he must not prioritise his own interests but he has to safeguard the interests of all stakeholders. By artificially lowering the share value of WAMC for the benefit of AM and himself he is effectively stealing from the companys shareholders, hardly an ethical action. Furthermore by agreeing to relocate significant amounts of manufacturing to France he is not protecting the interests of the workforce, many of whom will become unemployed, and any associated stakeholders suppliers to WAMC and any other companies within the local communities which will be adversely affected the local community, shops etc. Customers will also be affected, particularly if products are now not so readily available. Although the company is small there will, nevertheless, be some impact on tax receipts and the earning of foreign exchange by WAMC. At all times Murphy must act with utmost propriety. He is in a position of trust, to represent the best interests of WAMC and all its stakeholders. The proposal put to him requires him to act selfishly and in doing so place other stakeholders at a disadvantage. He has access to inside information but he must beware of acting in a unilateral manner. He seems to have questioned the commercial wisdom of the merger and there is also some evidence that he has questioned the morality of the method by which the merger could be accomplished. He feels he is too personally involved in the situation. He recognises that personal gain can influence his decision making and wisely he has asked for a dispassionate and unbiased view from a consultant. Murphy may be correct to pursue a policy which results in a large reduction of the work force. It is better to safeguard the position of some of the workers rather than see the whole firm collapse. However he must be careful not to be seen to be protecting his own position at the expense of the rest of the company.

(a) To: Members of the Board: Rameses International: Date: December 2002 Reasons for Strategy Failure at Rameses International Introduction I believe that there are a number of reasons why our organisation has not been able to successfully implement strategies. These causes must be addressed if Rameses is to grow profitably in the future years. We need to provide a more professional and committed environment for any strategic changes. Possible reasons for failure A major cause for concern is the amount of strategic change which we have attempted to implement in a short period of time. We have sought to move into new product and market areas simultaneously as well as develop closer links with new suppliers. It would appear that there has been no clear priority. There has probably been a confusion in activities which has diverted the attention of both staff and suppliers and so led to inadequate strategic development. This may have led to inadequate planning and resource utilisation. Many of our actions have been reactive and it is likely that our organisational structure is too traditional. For strategy implementation to be successful decisions often must cut across organisational lines. Without a flexible structure activities may be restricted and actions delayed. Our information monitoring may be poor. In attempting to juggle with too many strategies it is possible that we have failed to obtain or even utilise valuable environmental information. It would not be unsurprising if there was resistance to change. In attempting to implement so many changes it is probable that we have alienated or, at least, worried a number of our stakeholders, whether they be employees or associated suppliers. We must ensure that these stakeholders are committed to any changes which we propose. We need to explain the purpose of our changes to our suppliers, customers and employees so that they will be more committed to our strategic moves. Issues which need to be addressed will include: priorities for management, timescales, lessons learned from previous strategy implementation efforts, risk factors and any likely impact on either staff or organisational structure. We know that our competitors can make life difficult for us. It is almost certain that they will not ignore our strategic moves. A reason for our failure to develop appropriate strategies may be that we have failed to anticipate any competitive reactions to our strategic initiatives. From: Jeanette Singh Strategic Policy Director

Conclusion It is imperative that our strategic decisions should be implemented effectively. It is pointless investigating ways in which we can improve our long-term profitability if we fail to put in place mechanisms to ensure that our intentions are carried out.

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(b)

Apart from ensuring that the above-mentioned problems listed in 2(a) do not occur i.e. getting stakeholder commitment to strategies there are a number of issues which must be addressed. Firstly it is important that managers do not forget their existing business. They must not become obsessed with the new strategies and neglect core business. Shareholders will be unhappy if managers, by successfully implementing new strategies, let profits fall or customer service deteriorate. The process of strategy implementation should be accompanied by relevant milestones and controls. The milestones measure what progress is being made towards final implementation. These intermediate measurements, whether financial or structural, can show whether remedial action needs to be taken. The controls are to ensure that financial, HR, and other guidelines i.e. mission statement are not breached during this implementation process is it costing too much? Is the progress contrary to the organisations objectives or mission? Responsibilities and accountability must be clearly allocated so that every stakeholder knows what he/she must accomplish. If this is not accomplished there will be both problems of things being done which should not be done and some things will not be carried out when they should have been. Staff must be aware of the necessity for their participation in the strategy process. Senior management must be committed to the strategic change. They must not remove themselves from the scene once it is time for a selected strategy to be implemented. Their role is not limited to strategy identification, evaluation and selection. They need to see the whole process through. In this way the rest of the organisation can see that the strategy implementation has a high priority. It is also important that management should be prepared for the unexpected. There are always likely to be upsets. There must be a contingency plan in place with flair and innovation not being neglected.

(a)

There are a number of factors which should persuade Mark Roberts to focus his attention on retailing and buy in the garden plants, for Greenfield Nurseries to sell, from outside independent suppliers not least being that higher margins are usually obtained from the retailing side of the business. In addition by selecting from a number of suppliers it is possible to have access to a wider range of plants than could have been grown in the single nursery. Furthermore by relying on specialist growers Roberts may be able to take advantage of the other growers expertise. Also their production costs may be lower, resulting from production economies giving access to cheaper plants. However there are several reasons why companies may choose to make rather than buy but they are probably not all applicable in this scenario. By being responsible for growing its own plants Greenfield Nursery does have control over the quality of the products and also has a guaranteed supply. There is always a possibility that reliance on others for key supplies involves high risks. If quality is sub-standard the consumer identifies the retailer as the source of the problem. It is rarely the ultimate supplier, who is usually unknown to the consumer, whose reputation is tarnished. Companies may also grow rather than buy if they feel that the guarantee of supply is a critical issue. However in these circumstances there are a number of alternative suppliers and it is unlikely that the nursery will be threatened by having to rely on one supplier. In such circumstances, with a large number of suppliers, few being dominant, buyer power should be quite large. Similarly companies often choose to make rather than buy in because of the specialist nature of the production and they wish to maintain a presence in that arena. This is not a critical issue here. The production technology and associated expertise is rather low, with relatively small capital costs (land excluded) and so barriers to entry will be low. Should the necessity arise Roberts and his Nursery could soon be able to re-enter this production area.

(b)

If one is going to rely on outsourcing as a means of obtaining supplies there are a number of management issues which will need to be addressed. Firstly there is the issue of reporting and responsibility. This is where the line management concept breaks down. To whom are the employees responsible? If deliveries are late and/or are of poor quality then Mark Roberts has no direct link with the personnel responsible. He has to complain indirectly to his supplier at corporate level. Whilst this is possible it can prove to be expensive and it would certainly be time-consuming. This leads to the second significant management problem there is a loss of direct control the chain of command has effectively broken down. This can lead to a lack of discipline and little opportunity for remedial actions to be taken. By allowing an independent entity to provide important, but non-core, functions there is the necessity for the buyer to set up systems to manage and monitor the contract contract compliance. There is also the potential for dispute which now can less easily be reconciled and may ultimately end up in court. Although many managers have seen outsourcing as a means of saving money and possibly accessing expertise there is also now the prospect that operational flexibility might be curtailed.

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(a)

To: The Main Board: Kirkbride Weston Inc Date: December 2002 The Difference Between Polycentric and Geocentric Orientation and its Impact on Multi-National Organisations

From: Adrian Green Marketing Department

Introduction Perlmutter developed a typology of companies which are involved in overseas marketing. As companies become more committed to their overseas customers their orientations and philosophy change and so do the degrees of devolvement to these overseas markets products, and organisational structure. The difference as described in Perlmutters typographies The logical orientation for a company which is new to overseas marketing is that of ethnocentricity. Here the company perceives foreign markets as being similar in nature to its own domestic market. The company recognises no distinctions between domestic and foreign customers. Products and the use of the marketing mix are all constant. This strategy of standardisation saves the company both time and money. It seems to be a supply-driven policy and is understandable for a company which is small or has little overseas business. As companies become more committed to overseas markets they are driven to become polycentric. Here they see each overseas market as distinctive and consequently its products and marketing activities are all customised. As one might expect overseas sales volumes tend to increase but without a commensurate increase in profits. These are likely to fall as costs rise because there is limited ability to obtain any economies of scale. As global competition becomes more severe companies are attracted to becoming geocentric in orientation. Wherever possible there should be standardisation. Kenichi Ohmae suggests that firms will not be able to survive profitably unless they can amortise their costs over a wide, global customer base. Functions which can be beneficially standardised include R & D, investment decisions, certain aspects of marketing (in particular branding). The existence of transnational segments (market convergence) may also permit the standardisation of certain product lines. However unlike ethnocentrically oriented companies the drive here is more demand-driven. However where different cultural, climatic (et alia) conditions prevail customisation of certain aspects of the marketing mix may be appropriate. The phrase think global, act local is relevant here. Conclusion The key distinction between a polycentric and a geocentric focused company is that whereas the former believes in the supremacy of localisation and the necessity of customisation to satisfy customer needs, regardless of cost, the latter recognises that a balance must prevail and that costs and volume must be counter-balanced. It is still possible to achieve production economies without sacrificing customer satisfaction. (b) Despite the advantages of product standardisation economies of scale by having long production runs as well as potential savings on both management time and effort there are still powerful reasons why companies still customise products for the individual foreign markets. In looking for reasons one might begin with a SLEPT analysis. Varying environmental conditions will have different effects on consumer purchasing actions. For example in the social or demographic sphere, products may have to be adapted to satisfy differing tastes age and social position will have an influence on purchasing activity: this will affect fashion goods, expenditure on services such as holidays and financial investments etc. Frequently it is not easy to distinguish between political and legal factors in foreign markets. However both these aspects can influence purchasing activity sales of tobacco goods (the amount of nicotine permitted within products). Some companies use these restrictions as a trade barrier, hoping that the increased costs of adaptation will deter the would-be exporter or trader. For example in the fork-lift truck business it is not unknown for certain countries to insist upon product design changes before products are accepted (often based on safety criteria) petrol driven trucks may have to have a separate petrol tank attached to the truck and not one built into the chassis. Economic factors may require a more basic and standard product being supplied without the addition of expensive, differentiating features (cars) where the standard of living is lower than that experienced in the home country of the supplying company. Where the technological infrastructure is basic minimum service level facilities then products may have to be engineered to last longer and be more robust and durable. There are other environmental variables which may necessitate product adaptation climatic differences, transportation capabilities. Whether products should be customised or standardised depends upon whether the product is perceived differently by consumers product positioning and whether it satisfies the same consumer need in each market. It is also useful to reflect whether local, indigenous competitors produce a differentiated product and for what reasons. If so then it may be sensible to pursue a localised policy.

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Part 3 Examination Paper 3.5 Strategic Business Planning and Development

December 2002 Marking Scheme

The marking scheme is used as a guide only to the markers in the context of the suggested answer. Scope is given to markers to award marks for alternative approaches to a question, including relevant comment, and where well reasoned conclusions are provided. This is particularly so in case scenario questions where there may be more than one acceptable solution. Unless otherwise stated it is expected that the candidates will set their answers within the context of the question case scenario. Marks 8 marks 4 marks 8 marks maximum 20 marks up to 6 marks up to 6 marks up to 6 marks up to 6 marks maximum 20 marks up to 3 marks each

(a)

internal review external review including competition comparison between two companies advantages and disadvantages of each strategy selling distribution network buying in tractors setting up financial facility product development

(b)

(c)

Aspects to consider added-value consumer and governmental acceptability costs cultural fit operational fit financial acceptability

maximum 12 marks (d) discussion on Murphys position needs of stakeholders: for each stakeholder mentioned up to 3 marks up to 2 marks maximum 8 marks Total 60 marks

(a)

too many strategies poor planning inappropriate structure information inadequacy competitive actions inadequate understanding of purpose of strategy competitive activity resistance to change

up to 2 marks up to 2 marks up to 2 marks up to 2 marks up to 2 marks up to 2 marks up to 2 marks up to 2 marks maximum 12 marks up to 2 marks up to 2 marks up to 2 marks up to 2 marks up to 2 marks up to 2 marks maximum 8 marks Total 20 marks

(b)

maintain existing business use of milestones and controls explain strategy allocate responsibilities and accountability be prepared for every eventuality involvement of senior management

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Marks 3 (a) reasons to buy in increase margins lower costs access to expertise access to wider range reasons to grow control of quality control of delivery maintain expertise maintain presence within the industry up to 2 marks up to 2 marks up to 2 marks up to 2 marks maximum 7 marks up to 2 marks up to 2 marks up to 2 marks up to 2 marks maximum 6 marks up to 2 marks up to 2 marks up to 2 marks up to 2 marks maximum 7 marks Total 20 marks

(b)

reporting structure chain of command broken managing and monitoring contract dispute procedure

(a)

description of a polycentricity with cost implications of customisation description of geocentricity balancing local with global needs

up to 6 marks up to 6 marks maximum 12 marks up to 2 marks up to 2 marks maximum 8 marks Total 20 marks

(b)

ability to see difference and benefits of standardisation versus customisation application of SLEPT analysis (for each variable)

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