Evaluate the importance to TK of contingency planning when implementing strategies to diversify the activities of the business.

Mark scheme

Marking points from the official mark scheme (May/June 2022). The mark or mark type is shown in brackets.

1. [3] Knowledge: Definition of contingency planning
2. [3] Knowledge: Preparing an organisation's resources for unlikely events that may have a significantly detrimental impact on the business.
3. [3] Knowledge: May also be referred to as scenario planning or business continuity planning.
4. [3] Knowledge: Understanding of strategies
5. [3] Knowledge: Understanding of diversification of business activities
6. [3] Benefits: Reassures customers and staff that their interests are being considered.
7. [3] Benefits: Reduces potential impact on customers resulting from a significant disruptive event.
8. [3] Benefits: A plan will enable a business to respond more quickly when a significant disruptive event occurs.
9. [3] Benefits: Recognising major risks may actually reduce the risk of the event happening.
10. [3] Limitations: Disruptive events will still occur.
11. [3] Limitations: Cannot have contingency plans for all eventualities.
12. [3] Limitations: Need and cost associated with developing a plan.
13. [3] Application: Recognising major risks, associated with option 1 and option 2, such as:
14. [3] Application: Food contamination in either option
15. [3] Application: Failure of equipment – could impact storage of food in either option
16. [3] Application: Failure of snack supplies in option 2
17. [3] Application: Fire in restaurants or kitchens in option 1
18. [3] Application: Lockdowns/recession keeping people in their homes and away from restaurants
19. [3] Application: Cyber attack on restaurant booking system
20. [4] Analysis: Planning can be expensive and time consuming. There is the planning process and also the need to train staff for each possible eventuality.
21. [4] Analysis: Dynamic markets make regular updates to contingency planning essential, so ongoing time and expense.
22. [4] Analysis: With contingency planning the public relations response to disasters is much more likely to be quick and appropriate so that senior managers can manage media attention and customer and employee concerns.
23. [4] Analysis: Effective communication of what the company intends to do, by when and how will reduce the impact of bad PR and loss of customer loyalty.
24. [4] Analysis: Contingency planning makes crisis management easier when a crisis occurs leading to a lower chance of sales being negatively affected.
25. [4] Analysis: Contingency planning will mean that TK is less reliant on which employees happen to be present when a crisis occurs.
26. [10] Evaluation: Judgement of extent to which contingency planning is important to success of option 1 and option 2.
27. [10] Evaluation: Contingency planning is just one element of business planning to implement a diversification strategy.
28. [10] Evaluation: Avoiding significant disruptions may be better than planning what to do if they happen.
29. [10] Evaluation: Plans need to be updated frequently as the business develops increasing costs.
30. [10] Evaluation: Cost to TK needs to be balanced against the potential costs of not doing it. Which potential disasters could/should be planned for?
31. [10] Evaluation: Evaluation of time spent on preparing and testing contingency plans.
32. [10] Evaluation: It is impossible for TK to plan for all eventualities.