Please check the examination detals below before entering your cancldate Information ria. Mociawn Candidate Number Pearson Edexcel cuetree eae (eee eyes) Wednesday 13 January 2021 Ppa ions WOBTSION Business International Advanced Level Unit 3: Business Decisions and Strategy (otal Marks 6 ‘You must have: Source Booklet (enclosed) Instructions © Use black ink or ball-point pen. Lin the boxes at the top of this page with your name, centre number and candidate number. © Answer all questions in Sections A, B and C. © Answer the questions in the spaces provided ~ there may be more space than you need. Information © The total mark for this paper is 80. © The marks for each question are shown in brackets use this as a guide as to how much time to spend on each question. © Calculators may be used. Advice © Read each question carefully before you start to answer it. © Try to answer every question. © Check your answers if you have time at the end. eeorcors UNNI ©, Scanned with CamScannerSECTION A Read Extracts A-D in the Source Booklet before answering Question 1. Write your answers in the spaces provided. | | 1 @) Explain one benefit of test marketing for McDonald’, Bee to inclusion of Jest meneling Ne Donalds WN neduce tek launching a. nev2 product in tre | mare: According to Ane evidence He Donalds aims te | Se\\ the PLT 's a new product and is being launched | Wo a small nomben “t ovtlels throughout Canada. Howevens Me Denald’s rain menv. is. mainly meat | | Based As a resol, 12 tre, Plant-loased products | Fails in Us desk eotlets tren UcDonalds may be | | able to ove. signiPeank cosh “They_usill not ince] = VAUV SIH NISL LON OG, WM LON OG | SigniPicant- amount: ob loss im, there. Lewnching 2 o& Pit. >= |2 = | ) | LA | \ ls \2 |.8 3 ; a 0 : Scanned with CamScanner(b) Using Extract B, calculate, to two decimal places, the mark-up on an Impossible Foods burger. You are advised to show your working. “) k | Honk up = Bisfit Pen ea. x leo fz cost Pot \iem | ye E 2 | 2 (a2a- 2:64). x 100 2 ~ B64 a| AITWUS % a Lea =| =| ‘| | 3 | | | UY | 3 | | | 3 — 7 AOA ET Turn over ‘Scanned with CamScanner| (6 Discuss h | by ‘ow the physical resources in McDonald's restaurants might be affected Y the introduction of plant-based products. | Physical Tesounces Tens Jo the oll Reed assed of sho | busimess {nok concerned. usthh Premises ,eqpipemon yond then Mesounces, needed to meal cuckemen needs: | tee plank based, Preduchion WeDonalds need to | imeneace, Amare finvestmentlo pondhase. new mochines | which ustll belpdo increase tne. prededion oPnon-meot | | VEY SIHL NI 241 LON OF ems | NeDenelds hove to Seperate non. meat aleanatives| | wort ‘menk by having, A.seperale storage ond supily, | chain. Por inckance, \n.onden to seve \n bolk amount in 28 peslourants Ahrovghovk Canada Heloneidds uail| | hove to enecte, a sepercle base Sn PLT loungers. As al | Teel, they wi nol gek mired up asithe there | = | Dhysical pesounces and con make PLT too | SSately Rom meal borgens ePReavently They have te! | Melnoin heir stoRRe in orden Ao handle Mrece non | meat toased ems properly, Rr intence, Me Donalds) a | CO) wit be Providing special Ancintng Ra thouste meke ex, | BE Vheire Plont-based burgers pene 4 As anesult, | NeDonclds sill be, alole. to dodge. cuckomen nespanse | omd moyloe. able to meet austamen calisReellan. Hedoeal | he usill Nave to work on anes channel 2 dedritootion| | Baris nonemees ems. Ton inchonce HelJoedel's will} * | hove to devaop Tielohonghips usithy Reymd Heet on | 4 _ ggg ‘Scanned with CamScanner7, (d) Using Extracts A, B and C, assess the opportunities and threats for McDonalds of l its strategic decision to develop plant-based fast food products in the US. y (12) E | Cpportonities ond Ihroals ane external anings thet ane gong, on ovtside -he company 1 Ine. \ooge marvel. ‘Tha ownen con tole. cduanlege. P epponkunires, conc rokect) | againel threats, but trey, can'-change tems (dv iis | Accessing, Jo Ae. evidence, peopleawho ognee Lindne gonvey to voonk faci Rod restaurants to more veyelasian ond vegan ore 36% compenest to Yhe | people. oho disagree. is olso. 6 ° | The ovicone of Ine survey seems dha there. \s a tise wn nenned Rist Rood opin is musing: foe jrelence odulls aged Prom 18 264 Ihave the gyrecles | ‘demand Rr plant-based produds Asc reslt, Mis may | bent Me Dora's interns oPwre tonger cudience Lobo 6 generally, boy, Ris\-Red and.con oshieve. evsiomen sohicRedi " Fy, Nctiangy, on oclvantegge of Ahis, epportonity. Plant base | God is. eso \nomeasing, due be heallh ond.cavieonmentec| | Percspedive: Pr \asieme, Goilup sonvey Shousing that | S by LOY the. pecentoge cl Americans. aho eansiden | dhemselves bo be veyelenian on. vegan hos incnessed te} 6% end 37+ As a mesvlt, this opportunity usillbe | an advaniagg of HaDenalis 4o serve PLT bonges- | ace most ol Ane. people who want fo ccd: plant based | Roa ‘is Beom (S-2% Aig oullune osi\\ Increase es these age gooP gtows LP TESLA In O17 INcrecdiAg Stone | DO Not wR 0 = Turn over Scanned with CamScanner— | Qvtlomers Pore. ‘wdonce, McDonald's might choose 1S edend Shei donation of ceavine) PLT products Gram (2 weeks lo mone. ‘th ondento ce vneet custornar cemard However, there ase many Hnreats be WYcDorclars! Eee Bie agg ge dared om chorap or i nee srllLadelts eho agree usith sowing Meatless, bongens and disagree ane actly, eqpal {habs 26% + Aitnough As a nisi qa nend bub major People sti\\ prefer, yon- Plant fest ado inaleree only Ve/o od \ne bs dossihy Anemselves a8 vex any om vege and this has remained vachanged gince 2012 Overall, eccanding to AnscPPis malnti x, Prteduck development: As more. rasky) thon mone | Penetration TE WeDoncld’s can prodeee, o non-mreat Produck Lot appeals bo both vegelanexn and mec aolers , then Mois shrokegy, will help to widen is mew. | Uabiich. WS Comtiently, very Beosed on meal prcdoc!s. 00004 ‘Scanned with CamScannerfe ra ° 8 ¢ hrovgias vail be, happening simulleneously- As «cesult | & | be .completed..1n Whe. chordest time. possible, and thes usill| (e) Assess the likely benefits for McDonalds of using critical path analysis (CPA) to 1 help redesign its drive-throughs. | 12) Caitical poy analysis identiRes the precise seqpence | oP activites Mal need to be. compleled sini Anick Vimelrame ond chou Inetsest wey 1© ovoid any [Lnnecessony delay. | Acconainngy Jodhe evidence McDonald's conse. [CPA bo-echedote. 1S going to use oatiPiccul imbelligence technology amd tedesign ils drive throughs: | MoDonald’s canuse CPA Jo scheclule the redesign | of driwe ~\nrrovghas- Rarinctonce ,10% of ordens of | | McDonald ’s comes. through chive rows and they “wank to make. the experience mone Fuskenlorthe | Customers. Acc. result, 2PA usill help each stage to | be. able to mech customer. sctiePockinn. CPA helps to | redice Ihe wick and casis oP complex Preyeds «Tore inslance, Neus Jechnalegyy and tebulding B-O00 drive- | HeDonald's will be alle, fo neduce the average time of | drive throughs and they usill beable to gpin compel hue | advantage: TU can also hapepot which eictivities hove sone, slock on Hoot: Por instance, by using eaiticedl path ores Meoneid's will be alle to Wenliy tre glack due so whieh! Loaikiqg Lernes wxene geting, kmqen ond asill be able to annonge | CT nr Scanned with CamScanner oo _—| The seepence of oclivities precisely: Ms. a mesult, costorens | Sil nok have Je voit ony longer of tha drive Hanoy which wail also help thom fe tncnease Seles. __, Mosmonredesianing Zeeocdysioagea> might be very difReull, Fon ‘instance, the campany IS | Alrece\yy Planning te intnoduce he redesign of daive thraxs he ‘intornadioned monkels in 9-60-2070. Pxlennal Gctors Such os the weelnon, might impact an thon Wmescele nealed to neborld dhe drive, Anroughs - For instance, Wea\hen jemditiont sock as hunmicane. ortorincdes Iright slots devon, | Ha technical process redesigning, Arive Ahrovgins- | Neneover, CPA is a memagement tool and in | Orden to ose this. one must be. expert in consinuclitg- | Hence, UcDonalds. mighk need lo bine. anexpentise om | Anoin one In ene onden lo esastauct nedlesign Anivethreghs, | bsinG) CPA On Ahe oben hand CPA Is a maneggment and | decision Making tool Weeemmotte® would nol be usise fo | | Sclely depend on CPA since Ibs Lsed imeapunction uaith othe deasion -moking fools te ‘nenenee its | ePRectivencss. VIMY SIHANI LRU LOND v SIME NE yaw (Total for Question 1 = 40 marks) TOTAL FOR SECTION A = 40 MARKS. 00 0 8 ‘Scanned with CamScannerSECTIONB Read Extracts E and F in the Source Booklet before answering Question 2. ! | fe fe 2 Write your answer in the space provided. 2 2 Evaluate the extent to which the transformative leadership of Dave Lewis was the rc main reason for Tesco's improved financial position. a 5 20) 5. Trare(Snmedive. leodershiya is a shyle & lecdenship 3-| thakaims. to change the. Hhings one done. in a business. As Tesco. was sinvgging, 4° compele usith [Aldi ond Lidl Dove Lewis looltne reign te torn thing | amaund amd he wos opite. cuecessRi.invdoingso, Re | converted the Ted Reyes fo green, Renes Por Tesco and [ndlined os one.of the. succes) CBO in tne. company’s histony. David Lewis chongedt the Way Ahings hoppened in ‘Veeco. We cot back Whe. non came activities We | HIS AREA o| & | gpmlenng, and. SAneceening, senice and updeled own brand prodects oP Tesco. This helped Tesco to get rid off vnrecessany, cost ‘ney were Ihecawngy and helped Tesco to retunn to prokt: ‘in Gps: coin Ge yeas. Ms drashe decicion was to Focus on profit over sales- Th doing, so | he is having, more prokt centers. now here ond ony loss making, units were. completely removed Rom the | ceves o@ Tesco. Se,the stone. space wos Led in more, | predoctive use. Than bere Helping Darid lewis to RR his target. Tn octition David Lewis. step is ceonstlened | fo be Part oP transRrmedive leadership as it changed Pee TEODOR AOD 3 wn Tum over Scanned with CamScanner .Whe uy Tesco used to operate it mode them. more Compelitive and extended theire puke stream heyond Wei. expeclation . | Wowever, the success oP Tesco & not a eanteti- botion, coming, Grom a single. person »Wove Levsis -Indead| his decisions were. bold and drastic bot ging, nim onedit Porte. Sumoarnovnd is. cb overt SxeyQErading the. sitvcdion. According, le ednoct P Ane sales oP Ok interest tate. was, ovo. \ lower. tele of interes Motivated customers Jo save. les and spend mone: Anotnere Adennal reason for. Tesco's. Rrancical, umn ano; | is addition. the Parency, oP Tesco's monegents and | Sto in onder to. cecvte dhe Plan Bb made by Dwe | lewis. should nok be, undermined. TR the execution | WES nok. properly, done Men ochieving, such amet | | Resolh might nok be. pessiole - | “TheneHre.considening) a\\ne options a single mans. contribution did nok junn around Tesco's | Cate. We wae cided way. bby various esdennal Rectors, | suck and a bunch of dedicated and eient tor | becked Up QY WK SHtN..corponcte collune +o | ensune 4tnis Lask. XK \ ea 10 _~ IM Scanned with CamScanner | | | | | | | | VOUV SIEL NI ALISA LON OG WaUY SIH NISL LON, Vauy SIML NI ALUM LON 0SECTION C Read Extract G in the Source Booklet before answering Question 3. Write your answer in the space provided, Richer Sounds s giving employees shares in the business. 3 Evaluate the eff ' fectiveness of this strategy to Increase productivity and employee retention for a business, such as Richer Sounds. VIMY SIHLNI 3LIUA LON (20) Praployee cumercshiP 18. ven interest inc. company is held by no GIMPANY’S. oonlSnce » Accorsting, jo Ane. evidence. Richen. Sounds now has 60% cP? the business ouoned by She. employee Suonenship Arwst. | ‘Amployce. Ovnership...con aneale. veces incentives In Ahe Pour of employee .rotivalion -Aactinsance. each | employee. usill neceive, shames and Liooo Ra eveyy yeaa they | have worked of Richen Sounds: Mis Wray Mesvlt In on | | "rerease. in employge. Puadeclivityy asthe employes ctor | | the majorly, de dhe losmess one cam bent rom oo _ | | shane cP tne. prokts. Dee bo Anis, Cvoning, ehanes in Richer Sournls mgt improve company, Pamoamence- | | Aaconding to he evidence. the. gross, eroht of 208 | Nas increased Gompaned jo Previous \uso Mears: | | This = result in greater level o? Noyealty . engagement and individvel penRoamence , Yheneby improving overall | Prodoctivity, ond relention- By oeoning, a sheore eR tre. bueiness ,employees ot Richen Sounds might aim do) LLIUM.LON OG 2 ig 0 2 Scanned with CamScanner| mant do improve \nis tielun pion investment Tbr ‘instance » he percentage of ne} | prof MeN in DOF eslimetes the the Company | generated a usholecome, revenue. A anesult dnene >| g | might loo. edited ipack gn sales ond pro ei | thot Aho employees bene Rem. ael\ more eleciiced 2cpr Donor wai However, iF Jne chone price decreases this cary hove o negative Impact on Vhe vedve & the. | Shanehelding, Qe an employee. onc Anenene reduces the incentive to wsonk hand. Pon inelaince the earnings par [Shane has decrease in ZO" compened to 2014+ | By OWNY GO% of the chanes, employees ot Ricken | Sounds wlll have. greater participation ‘in ded’sion | molding omd might have. more poe than ‘Julian | | EIN THIS AREA | | Richer: Mon tabinstance, i@ tnese dec employees B | Participate in decision making, process , Khe company “ownership might get heampened omds clecisions might | conch usitiy he ono.o® due. The ROCE oven dhe | Via. pened has. declined. {5 23 -6°% in. 2oig. Kream FA in 2O\6.%@ This slates \not the company’s | proftedoitity has declined oven the. yeas. ParackS indicates Yhot mest of the. employees at Richen Sovrds have worked Urine business Rrw many yeens osith 2a employees working Rr Oven 20 yeas Wd iced ng red Richen Pounds does nok hove ct problem wit, empkyee Telention and {hat employees ane already eontent. oH, Scanned with CamScanner| : *BMereoven Pnomeiol. incentives comnot he. Ne sole SArolegs \a onder fo increase pcodoctiviky Sirs employee. rele-ntion “Mere ome othen ways to | prove. Prodeckivi ty and relention euch as erapowscre Strcleges ond consslalen. On tre ofhen hard a Combination of Bronce omd non-Rrencial human Mesounce, Shrokegies, Might be the. loesk way to i \mprove ovencl\ Preecloctividy as.employees one Pen | | mokivaled oy di Penent- shings. . |. SIHANI 341M 4ON, | | |—-+¢ | hee any sii Mad (Total for Question 3 = 20 marks) TOTAL FOR SECTION C= 20 MARKS | TOTAL FOR PAPER = 80 MARKS nc NLO RHR Scanned with CamScanner - itiPearson Edexcel International Advanced Level Wednesday 13 January 2021 Paper Reference WBS13/01 Business International Advanced Level Unit 3: Business Decisions and Strategy Source Booklet Do not return this Source Booklet with the question paper. Turn over escsom IIMA ® Pearson Scanned with CamScannera Sources for use with Section A Extract A ‘McDonald's introducing plant-based products |Meat. McDonald's is finally introducing plant-based products produced by Beyond Meet 4 McDonald's will sell what it calls the PLT, which stands for plant, a vce 12 weeks starting September 2019 in 28 restaurants throughout Canada. “AS customer interest in plant-based products accelerated rapidly, our curio: a 5 increased too. We have been observing this emerging trend, and now we are ready to learn more by running a test in one of our markets, We are in learning mode,’ said Ann Wahlgren, Vice President of Global Menu Strategy at McDonald’. Plant-based meat substitute products have increased in popularity, with start-up 10 Companies such as Beyond Meat and Impossible Foods selling pea or soy-based burgers ‘that copy the taste and texture of meat. 'tis not McDonald's first experience of using plant-based meat substitutes. In April 201 9, it launched a soy and wheat burger, called the Big Vegan’ in Germany, one of McDonald's biggest international markets. It offers vegan’ items in Sweden and Finland, New test marketing in North America suggests McDonald's could soon introduce 15 Meatless burgers to all its restaurants, Other fast food chains that have already put plant-based products on their menus in 2019 include Burger King, Kentucky Fried Chicken and Tim Horton's, * vegan: 2 product that dees not contain any animal ingredients or animal-derived ingredients, P66160RA Scanned with CamScannertract B Cost of making a beef burger versus plant-based Impossible Foods burger Beef burger Pl $0.45 $0.05 $0.07 $0.03 $0.02 $0.14 $0.02 $0.81 $1.59 $5.99 t-based burgers more costly to produce than beef burgers cost per burger average selling price $0.45 $0.05 3 soo7 3 $003 = sor 8 sora $002 § s286 8 $3.64 $9.99 P66160RA Turn over » Scanned with CamScannerExtract C Selected data on changing tastes for fast food in North America Servings of meatless burgers Percentage of people surveyed who ‘and sandwiches at fast food want fast food restaurants to offer more restaurants (in 000s) 2014-2018 ‘vegetarian® and vegan** options G Agree | Don't know / No opinion | BB Disagree All adults [36% | 26% [JEG Age 18-29 [48% 24% Age 30-44 [38% | 27% [MEE Age 45-54 [_33% | 32% [NEE Age 55-64 [29% | 31% Years Age 65+ [29% | 29% 4256 Number of servings (in 000s) Gallup survey showing percentage of Americans who consider themselves to be vegetarian* or vegan**: 1999 | 2001 | 2012 | 2018 Vegetarian | 5% | 5% | 6% | 6% | Vegan - - | 2% | 3% “vegetarian: a person who does not eat fish, meat or chicken ** vegan: a person who does not eat or use animal products P661GORA, ‘Scanned with CamScannerv7 | teed ‘McDonald's Bigger, Bolder Vision 2020 growth plan | McDonald's drive-through waiting times keep getting longer and longer. The average time to go through a drive-through at McDonald's was 273 seconds, an increase of almost | 11 seconds on the previous year. With 70% of orders coming through drive-throughs, itis | easy to see why McDonald's would want to make the experience a faster one. 5 McDonalds is investing millions of dollars to reverse this trend. As part of its growth plan McDonald's is going to use artificial intelligence technology and redesign its drive-throughs. This technology will be used in its 8,000 drive-throughs in the US. to speed up delivery. The company is planning on introducing this technology to | international markets in 2020. At the same time, McDonald's will redesign all single lane 10 -throughs so that a second lane is added to meet demand during peak times. P66160RA = Turn over ‘Scanned with CamScannerSources for use with Section B Extract E Transforming Tesco In the autumn of 2014 Tesco was in a crisis. The retail giant had lost market share to Aldi and Lidl and its customers were dissatisfied. The new CEO, Dave Lewis, completely changed the way things were done at Tesco. His immediate task was one of increasing profits rather than sales, He cut back on non-core loss-making activities such as garden centres and online streaming services. He updated all Tesco's own brand products. Fast forward to 2019; the business was again growing with its sustainable growth plan. Profits were rising with margins reaching 3.7% and cost savings of £1.6bn. The £22bn of, debt Dave Lewis took on had almost halved, Tesco is expected to make a £2bn profit in 2019 compared to a £6.4bn loss in 2015. 10 “The Tesco brand is stronger and customer satisfaction is the highest it has been for many years’ said Dave Lewis as he announced he was resigning as CEO in September 2019. He had done what he had set out to do. P66160RA, ‘Scanned with CamScannerSelected UK data The annual percentage change in UK retall sales 2013-2019 | | | 2013 2014 2015 2016 2017 2018 2019 Years | Bank of England interest rates (96) 2014-2019 0.80 075 0.70 06s 0.60 05 0.50 | 045 0.40 035 0.30} 0.25 0.20+ 6) fp __— 2014 2015 | 2016 | 2017 | 2018 "2019 Years 7 P66160RA Turn over » ‘Scanned with CamScanner cataSource for use with Section C Richer Sounds founder hands over shares in the business to employees the company when he was 19 and it now has more than 500 employees. He recently announced that he would put 60% of Richer Sounds’ shares into an Employee Ownership Trust to mark his 60th birthday. He said: "Having reached the age of 60 in March, I felt the time was right to ensure that the transition goes smoothly and I can | / a | Julian Richer founded Richer Sounds an electronics retail business. Julian Richer set up | | | be part of it.I still really care about the business | buritistime forthe next generation” | Each employee will receive shares and £1000 fo Sounds, which will mean an avera r every year they have worked at Richer 4ge payout of £8000. A number of employees will | Césive more: one has worked there for more than 40 years, while 39 employees have bean at Richer Sounds for more than 20 years, Julian Richer said the Trust weld operate according to a set of principles to ensure it sticks to the values set by him, The company | Willset up an employee advisory council to represent the interests of employees, 10 Key Performance Indicators for Richer Sounds 2o18| 2017 2016 | —————_| as L ee | Turnover £188992196 | £187062984 £185743.213 | Gross profit margi 25.4% 25.2% 245% | eo | t — — | Net profit margin | 6.2% 6.8% 5.9% | Profit per employee £19690, £21187 ROCE Earnings per share (pence) P66160RA Scanned with CamScanner