Evaluate whether the strategic analysis undertaken by Artur is sufficient to provide QH with a framework for business strategy.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2019). The mark or mark type is shown in brackets.

1. [0] Examiners note: This is not a question about strategic choice (to expand into steel houses). An answer that uses SA to make a choice should be limited to L1 AN & EVAL
2. [1] Knowledge: Strategic analysis is the process that provides information to enable strategic choices to be made
3. [1] Knowledge: Strategic analysis uses 5 techniques – SWOT, PEST, Boston Matrix, Porter's Five Forces, Core Competencies and a consideration of vision/mission statements
4. [1] Knowledge: Place of strategic analysis in strategic management
5. [1] Application: Use of Appendix B information
6. [1] Application: Established reputation will improve chances of success in (steel) market
7. [1] Application: High gearing ratio will impact ability to borrow for expansion and risk
8. [1] Application: Porter's Five Forces looks favourable as power of seller, threat of substitutes and threat of new entrants are all low
9. [1] Application: PEST or Boston matrix carried out
10. [1] Application: Reference to core competency of QH, e.g. specialist supplier of complete wooden homes
11. [1] Application: Relative price of steel compared to wood houses: $100 to $80 per square metre
12. [1] Application: Steel houses last longer, more expensive to insulate refs?
13. [1] Application: New equipment, skills, labour, premises needed
14. [1] Analysis: SWOT analysis enables a business to make a judgement about the balance of internal and external factors that will impact strategy
15. [1] Analysis: More research needed into costs, foreign competition
16. [1] Analysis: Porter's Five Forces looks favourable as power of seller, threat of substitutes and threat of new entrants are all low therefore suggesting that competitive rivalry is low. Potential for first mover advantage in this market
17. [1] Analysis: PEST analysis – P has government action, e.g. the changes to macro policies plus indicators in Table 1 showing possible decline in demand
18. [1] Analysis: Core competency is house supply so new product fits well
19. [1] Analysis: Place of strategic analysis as part of strategic management process. Gives direction for choosing possible options to consider
20. [1] Analysis: Discussion of how techniques are a framework for strategy, e.g. identifying strengths to build on or weaknesses that should be addressed
21. [1] Evaluation: What else is needed to provide a framework for strategy? Are these two techniques enough?
22. [1] Evaluation: All analysis relies on accurate data
23. [1] Evaluation: Analysis gives clear indications on which to base a decision but insufficient
24. [1] Evaluation: All techniques are more qualitative than quantitative so further information required
25. [1] Evaluation: Porter's Five Forces analysis that is provided is basic and lacks detail
26. [1] Evaluation: Little financial information in techniques
27. [1] Evaluation: Results may depend on the attitude of the person preparing them
28. [1] Evaluation: Must carry out the rest of strategic management, not just rely on analysis