Evaluate whether the information in Appendix 2 is sufficient to allow the Board of BKC to make the strategic choice between strategy 1 and strategy 2.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2018). The mark or mark type is shown in brackets.

1. [K] Decision tree understanding
2. [K] Investment appraisal understanding
3. [K] Porters 5 forces model understanding
4. [K] Market penetration less risky than product development.
5. [APP] 1 gives increased market power and subject to government investigation/control
6. [APP] 2 is in a 'crowded' market with other competitors
7. [APP] 2 to same customers – tastes may be known
8. [APP] 1 gives BKC wider customer base
9. [AN] Market power – some opportunity to control prices (raising profit margins?) and important to face increased international competition
10. [AN] Wider customer base – important if customer incomes are being squeezed by fiscal policy as customers may prefer lower priced clothing
11. [AN] Sale of complementary goods with 2 will increase revenue – these products might have higher gross profit margin than clothes.
12. [EVAL] DT and Payback data – how reliable are these estimates when the future for clothing industry in country X is so uncertain?
13. [EVAL] 2: Will BKC be able to manufacture these new products to required standard?
14. [EVAL] Final conclusion regarding the sufficiency of data based on preceding analysis - may include supported reasoning why other data is important in this decision.