Kitchen Favourites (KF) KF was set up by Liam and Samir as a limited company. It operates a 'cloud kitchen' business. Cloud kitchens are facilities rented to catering businesses that operate a delivery service. KF rents out kitchen space and provides support workers. The catering businesses cook meals in the cloud kitchens which they then deliver to consumers. Liam and Samir's objectives are to exploit rapid growth in the sector and maximise the profits made by KF. Timeline of KF 2018 KF's first cloud kitchen rents space to five catering businesses (see Appendix 1). 2019–2020 Global pandemic drives up growth of the food delivery market. A second cloud kitchen is opened and all spaces are rented out. KF starts its own delivery service for the catering businesses in both cloud kitchens. KF employs delivery riders on zero-hours contracts. Approximately 45 riders on electric bikes are used each week. 2021 KF opens a third cloud kitchen. Delivery riders increase to 75. KF develops an app to track delivery riders and improve efficiency (see Appendix 2). Delivery riders are unhappy about the tracking data provided by the app (see Appendix 3). 2022 Orders for takeaway food from households decline. The government introduces legislation banning zero-hours contracts by the end of 2023. 2023 One cloud kitchen is closed as the delivery market continues to shrink. KF responds to the changes in legislation on zero-hours contracts (see Appendix 4). Developing a new business strategy Liam and Samir are concerned about the decline in the food delivery market and want to secure the future of KF. Liam thinks that Ansoff's matrix is the best approach to develop a business growth strategy. However, Samir wants to consider other approaches to develop business strategy. Appendix 1: Extract from KF's business plan 2018 – Human Resources • Two directors – Liam and Samir • One office manager – full time contract $21000 per year • 15 kitchen support workers – flexitime contracts $10.50 per hour Appendix 2: Extract from delivery app functionality report 2021 The app communicates between the kitchen, the delivery rider, and the consumer to provide real-time tracking. The map function provides the quickest routes across the target area for delivery riders to use. Management can track speed, time and efficiency of the delivery riders both on delivery and on return to KF kitchen through the data provided by the algorithms. Appendix 3: Feedback from delivery riders 2021 • The new delivery app has introduced time targets that are unreasonable. • We are getting abused by customers who claim food is late, but the app is not calculating times correctly. • Our performance and bonuses are not being judged fairly. Appendix: 4 KF's response to the government ban on zero-hours contracts 2023 New legislation banning zero-hours contracts meant that KF had to make a decision between the following two options: • 25 of the current 75 delivery riders would become full-time employees of KF or • all 75 would become self-employed and part of the gig economy. Liam and Samir decided that all 75 delivery riders should become self-employed and operate within the gig economy.

Mark scheme

Marking points from the official mark scheme (May/June 2024). The mark or mark type is shown in brackets.

1. AO1 Knowledge and understanding [3]
2. [1] Knowledge (max 1 mark) can be awarded for any relevant business knowledge about human resources, including:
3. Purpose and roles of HRM
4. Workforce planning
5. Recruitment and selection
6. Redundancy and dismissal
7. Morale and welfare
8. Training and development
9. Management and workforce relations
10. Motivation as a tool of management and leadership
11. Motivation theories
12. Motivation in practice
13. Management and managers
14. Organisational structure
15. Business communication
16. Leadership
17. The difference between hard and soft HRM
18. Flexible working contracts: advantages and disadvantages of temporary contracts or flexible contracts including zero hours contracts, part-time, full-time, annualised hours, flexi-time, home working, shift working, job sharing, compressed working hours, the gig economy
19. The measurement, causes and consequences of poor employee performance
20. Strategies for improving employee performance
21. Management by objectives
22. The changing role of IT and Al in HRM.
23. [2] Knowledge and understanding (max 2 marks) DEV can be awarded for any relevant business knowledge and understanding about marketing strategy.
24. AO2 Application [2]
25. [1] Application (max 1 mark) can be awarded for any relevant use of context linked to KF's Human Resources.
26. [2] Application (2 marks) can be awarded for applying knowledge of HR strategy, to KF between 2018 and 2023:
27. Small staff – one office manager, 15 kitchen support workers
28. Use of full-time contracts and flexi-time contracts
29. Objectives of growth and profit maximisation
30. New delivery service – 45 riders hired, increasing to 75
31. Use zero-hours contracts
32. Use of tracking software for staff performance
33. Tracks speed, efficiency of deliveries
34. Unreasonable time targets
35. Bad timing within the app
36. Bonuses and performance judged unfairly
37. Compliance with new legislation banning zero-hours contracts
38. Staff moved to self employed and will operate as part of the gig economy
39. Use of performance data to judge staff for restructure.
40. AO3 Analysis [8]
41. Analysis is likely to be based on KF's objectives in 2018 to exploit rapid growth in the sector and maximise profits.
42. Analysis of the impact of KFs HR strategy ( and and ) including:
43. KF operates a simple organisation structure that supports the restaurants renting the space – keeping their costs low to aid profit maximisation and growth.
44. Kitchen support workers are supplied on zero-hours contracts – keeping costs low on wages.
45. The launch of their own delivery service is easy through the use of zero-hours contracts meaning they do not have to pay full-time wages – keeping staff costs low.
46. Expansion (and contraction) of the business has been easy due to the flexible working practices KF uses – it is easy to reduce or increase hours/contracts.
47. By using zero-hours contracts KF doesn't have to provide paid holiday or benefits – again saving KF costs and helping keep profits high.
48. Office manager will spend a lot of time planning the staff on zero-hours contracts – matching the demand from restaurants to the staff available.
49. The use of the zero-hours contracts means that calculating the pay for these workers takes longer – this needs to be accurate.
50. The delivery app provides key performance indicators that Liam and Samir can use to evaluate the performance of their riders - this can then be used to help decide who continues to be used for work.
51. The new technology in the app may not be working properly or staff may not be using it properly – This may need further investigation – leading to costs of redevelopment and/or training for staff.
52. The problems with the app may be causing issues with business reputation – leading to further costs.
53. KF are complying with the law change on zero-hours contracts – which has implications on the current staff.
54. Once the new legislation starts, KF will have much less responsibility for the staff – decreasing the cost of running the business.
55. Once riders are self-employed, albeit with an insecure income, what will the impact be on customer service and efficiency of deliveries – will this increase or will the riders not care as much?
56. AO4 Evaluation [7]
57. Evaluation will largely depend on the points raised in the analysis.
58. Evaluation ( and and ) including:
59. The use of zero-hours contracts has helped KF keep costs down but it may cause motivation issues with staff if there are not enough hours for people to earn 'full-time' money.
60. Aiming for profit maximisation has kept Liam and Samir focused on lower costs – decisions about ZHC, the tracking app, the business model have all been designed to keep costs low and make this objective achievable. But has the pursuance of this meant HR has been very 'hard'?
61. The use of the gig economy means that expansion is much easier for KF but they have little control over who and how many riders are available at any one time, this might upset the restaurants who may not have a delivery rider available to deliver food.
62. The issues with the app are causing problems with staff – how useful is the technology if it is inaccurate? Will this mean less riders log on – they are not employees, so they don't have to. This could lead to KF not having enough riders and having to use a third party (Deliveroo for example).
63. KF are responding to the change in law but this is going to increase their costs – affecting the prices for its clients – and will require a new training structure and recruitment process this will also influence its profit maximisation objective.
64. KF approach to HR has been successful in keeping the costs low. How they approach the HR from 2023 onwards may need to change given the potential growth strategies.
65. Accept all valid responses.