APF operates in a dynamic business environment. Evaluate the importance to APF's future profitability of contingency planning.

Mark scheme

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

1. [1] (Knowledge) Profitability relates to the ability of the business to generate profit from revenue and capital employed. Measured by operating profit margins and ROCE.
2. [1] (Knowledge) Contingency planning: preparing an organisation's resources for unlikely events. This may also be referred to as crisis management, scenario planning and business continuity planning.
3. [1] (Knowledge) Allow reference to business having a 'Plan B'.
4. [1] (Knowledge) (Benefits) Reassures customers and staff that their interests are being considered.
5. [1] (Knowledge) (Benefits) Reduces potential impact on customers in the event of a major disaster.
6. [1] (Knowledge) (Benefits) Recognising major risks may actually reduce the risk of the disaster happening.
7. [1] (Knowledge) (Limitations) Disasters still occur.
8. [1] (Knowledge) (Limitations) Can't have contingency plans for all eventualities.
9. [1] (Application) Recognising major risks, such as: disease of crops e.g. destruction of 30% of avocado crop in 2014.
10. [1] (Application) Recognising major risks, such as: impacts of weather on production of fruit e.g. rains and flooding in 2017.
11. [1] (Application) Recognising major risks, such as: trade disputes as APF is an exporter e.g. 2018.
12. [1] (Application) Recognising major risks, such as: failure of equipment – could impact juice production etc.
13. [1] (Application) Recognising major risks, such as: fire in factories producing juice.
14. [1] (Application) Recognising major risks, such as: food safety.
15. [1] (Analysis) Can be expensive and time consuming especially for small businesses. There is the planning process and also the need to train staff for each possible eventuality.
16. [1] (Analysis) With fore planning the public relations response to a disaster is much more likely to be quick and appropriate so that senior managers can manage the media attention and communicate effectively what the company intends to do, by when and how from disasters both in terms of costs and bad PR and loss of customer loyalty.
17. [1] (Analysis) Avoiding disasters is better than planning what to do if they happen.
18. [1] (Analysis) Plans need to be updated frequently as the business develops increasing costs.
19. [1] (Evaluation) Judgement of extent to which CP is important to success.
20. [1] (Evaluation) Recognition that other factors will have significant impact on success of APF, for example, leadership, financing and culture of the business.
21. [1] (Evaluation) Cost of CP needs to be balanced against the potential costs of not doing it. Which potential disasters should be planned for?
22. [1] (Evaluation) How much time is spent on preparing and testing contingency plans?