Business Management

Higher Level
Paper 3

MARKSCHEME

1 hour 15 minutes Candidate Session Number

Instructions to Candidates
● Do not open this examination paper until
instructed to do so.
● Read the stimulus material carefully.
● Answer all questions.
● You are permitted access to a calculator for
this paper.
● The maximum mark for this examination
paper is [25 marks].

Name: _______________________

Date: _______________________
 Venus Trades

Read the resources and answer the questions that follow.

Resource 1: NGO Review Website

Venus Trades is a registered nonprofit organization founded in 2018.

Mission and overview: Venus Trades is a training program that prepares women for
work in the skilled trades related to construction, including electrical work, welding,
and much more. Programs range from 10 weeks for an apprenticeship track to 1 year
for the most complete job training for full-time employment. Venus Trades aims to
contribute to UN sustainable development goals 5, 8, and 10 by increasing equality
of opportunity for women.

Overall Rating: B (above

average) Finance Score: 80/100
Transparency and accountability: 95/100
Participant feedback: 84/100
Impact and results score: 95/100
 Key financial data:

Current ratio 1.03:1

Gearing ratio 22%

Annual expense growth 7.1%

Annual revenue and funding growth 6.2%

Sources of funding

Fees from firms 35%

Corporate and NGO donations 35%

Graduate payback (2% of first-year 25%

employment earnings, up to max of
$1500)
Local government grants 5%

Salary of key people

Executive Director $104,000 (4.8% of

expenses)

Assistant Director $81,000 (3.7% of

expenses)

Resource 2: Excerpt from a radio interview with the executive

director

Interviewer: Your expense ratio on administrative costs versus expenses going

towards delivering the training program is…decent. I checked it against several of the
A and A+ rated NGOs, and your administrative costs are 5-10% higher. Expenses are
rising pretty quickly. Are you financially sustainable?

Director: I think we need to keep this in context. From the beginning, we cut out many
of the organizational layers that a lot of schools have, and we keep the bureaucracy to
a bare minimum. Many of our positions, including teaching roles, actually use
performance-related pay in a way that isn’t common in schools. We spend very little on
above-the-line promotion because we’re really good at public relations, and we get a
ton of great publicity through word of mouth. But a large portion of our budget will of
course need to go to salaries for instructors and administration, so the expenses will
be higher than other nonprofits. Our donations have declined a bit, but we also don’t
want to rely on donations, and our revenue from fees that firms pay us is rising.

Interviewer: And you’re not concerned about criticism over the money that these
women, many of them from low-income families, have to pay back? Or that you’re
helping businesses find cheap labour?

Director: Not at all. The money students pay back to us costs them much less than
the cost of traditional trade school, and many of them will soon be earning well above
the median income. They’re helping to open these skilled trade fields to other
women. Firms pay for access to our hiring platform because they see the high quality
of the program, but many graduates get jobs without using our platform at all.

Resource 3: Email from the assistant director to the executive

director

Hi Priya,

I have a few items that we need to add to the next board meeting agenda.

1. Drop the national government grant application, or make the program

free?
The national government is only going to give us a grant if we make the
program free, and the funding level would be based on the number of women
who complete the program. If we make it free, then I think we need to increase
the fees for firms to use our hiring platform, and probably add a fee for
students who don’t complete the program.

2. Develop a relationship with a temporary contract recruiter?

Our mission will always be to get women into meaningful careers, particularly
in unionized positions. But many big businesses are going with a shamrock
organizational structure, eager to hire people as “private contractors” instead
of direct employees with benefits. A few of our largest corporate sponsors are
doing a lot of their hiring through temporary placement agencies. It’s not great,
but you’ve seen how many women in some of our programs are resorting to
gig work.
 3. Cut our training programs that are in the bottom 10% of hiring rates for
graduates?
Our graduate satisfaction ratings are being dragged down by fields like
plumbing where firms are really cutting back on new hires. I don’t like this
option though, because I think employment in a lot of these fields will rebound
soon. This would also cut our costs and let us focus on the trades with the
greatest market need.

Resource 4: Group text from recent graduates

Gina: By a show of hands, how many of us are doing gig work right now? Rahel: Me
Akiko: Me. Not enough hours. Sara: Me. I can barely pay my rent.
Felicia: Not me - I’m full-time in plumbing. Juanita: Full-time plumbing for me too.
Gina: Gig work for me. Felicia and Juanita - you two are super lucky. No one is hiring in
plumbing right now.
Sara: Wish we’d known that when we were in the program, right? Gig work just isn’t
paying enough.
Rahel: I’m actually OK with my gigs - I need the flexibility because of my family life.

Resource 5: Social media post from Venus Trades

So proud of our strong women who completed our trade skills programs this year!
Over 400 women are ready to enter full-time work or apprenticeships in 12 different
industries! Here are some numbers:

5% of skilled trade jobs that are filled by women nationally

78% of employers reporting that there is a skilled labour shortage
90% of tradespeople saying being more welcoming to women can alleviate
the labour shortage
86% of tradespeople report satisfaction with their job
29% of annual earnings by electricians above the average earnings of general
population
71% of Venus Trades graduates receiving a new hire bonus
24% of Venus Trades graduates owning their own business within 5 years of
program completion
0% of Venus Trades graduates with student debt from the programme
 Answer all the questions

1. Using an appropriate business management theory, describe a human need that

Venus Trades (VT) meets through its trade school. [2]

Answers may include, but are not limited to the following.

Maslow’s hierarchy provides the most obvious connections to theory:

- Safety: The trade school is providing women with employment opportunities,
which is a subset of safety needs.
- Esteem: Women will be trained to become an apprentice or to enter full time
employment in a skilled trade, so they should hopefully be building confidence, a
sense of achievement, etc.
- Self-actualization: Many of the skilled trades probably involve aspects of problem
solving and other higher order skills that lead people to a sense of fulfilment.

2. Explain two possible challenges facing VT. [6]

Answers may include, but are not limited to the following:

- Finances: The financial score is low, administrative expenses are high (and expense
growth
is higher than revenue growth), and the director has acknowledged that donations have
declined
- Outside criticism that women need to pay back a portion of their earnings to
the organization.
- Difficulty in securing government funding, or at least without dropping an important
revenue stream for VT.
- Women getting employment as gig workers or private contractors rather than as full
time employees. This means that in some ways, VT may not be really fulfilling its
mission.
- Graduate satisfaction ratings are OK, but not necessarily outstanding. We don’t know
how an 84% for participant feedback compares to other nonprofit orgs, but there are
hints that VT sees the number as at least somewhat problematic.

3. Using all the resources provided and your knowledge of business management,
recommend a possible plan of action to ensure the sustainability of VT. [17]

Answers may include, but are not limited to the following:

- Take the gov grant. This could be a big boost to cash flow, though we’re not sure how
big.
The current ratio isn’t great, so added financing could help, especially because the
government funding isn’t dependent on women’s future earnings. The interview
references underprivileged women, and making it free could really help their social
 mission by allowing women from non-wealth backgrounds to get a free education. It
could also be a more stable form of funding in the event of a recession if the hiring
rate and thus graduate paybacks drop.

Challenges: They’d be giving up 25% of their funding from graduate paybacks, and it’s
not clear how much the gov funding would offset that. If the government funding totally
covers the drop in funding, then it’s not a problem. However, the resources talk about
it in a way that sort of hints that they don’t necessarily want the program to be free. It’s
unclear if firms would pay a higher fee to offset that lost revenue too. They also may
have more school applications if it’s free, meaning possibly more gov funding b/c of
added enrollment, but also added difficulty in work to process the applications and
potentially to expand enrollment.

- Develop a relationship with a temporary contract recruiter. This has the benefit of
getting more women into positions because the trend is for more firms to hire on a
temporary basis. It could also help them avoid doing gig work for which it can be
hard to earn a decent living and you typically don’t fringe benefits like full
employees do.

Challenges: It’s a much less stable career for graduates, and it wouldn’t be unionized
like VT prefers. Thus, a grad could have a better shot at employment only to see it be
worse employment. This could damage the school’s reputation, and it’s also not clear
what a “relationship” with a temp agency means, so this one can be harder to justify
because we don’t really have all the info that we need.

- Cut costs through cutting programs with the worst job prospects. The higher chance of
employment though can boost the success rate numbers they could present to the
public, and lead to more student satisfaction with the program all at the same time as
cutting costs. Their goal is to train women to be employable, so cutting the programs
with the lowest success rates could make sense.

Challenges: Cutting costs here probably means firing teachers who would’ve taught
those programs. Also, just because they’re the lowest 10% of hiring rates though
doesn’t mean job prospects are poor (we aren’t told how much worse their hiring rates
are, so there’s no context), so they could be cutting programs that really benefit the
students. There is also a possibility that skilled trades that have lower hiring rates right
now may be ones with higher employer needs later on. We also don’t know if these
jobs pay more or less than in other fields. It could be that women have a better chance
of employment in a different trade, but that that trade is one in which wages are lower.

- Seek some other funding source, like corporate or other donations, or perhaps do
more to seek donations from individuals. Donations have declined, and even though
the director wants to rely on donations less, it’s still tied for the largest funding
source. Also, seeking donations doesn’t necessarily mean that they would give up
other sources of funding.
Challenges: Donations are often one-time sources of funding though, and this may
not be as sustainable a source of income as grants, fees from firms, or graduate
paybacks. If the goal is to make the school financially sustainable in the long term,
then it probably needs a business model in which it’s generating stable revenue
through business activities.