Skills Exercises Analysis (AO3) and Evaluation (AO4) : Cambridge International AS & A Level Business 9609

Skills Exercises
Analysis (AO3) and Evaluation (AO4)
Cambridge International AS & A Level

Business 9609
For examination from 2023
Version 1
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Contents
Introduction.................................................................................................................................... 4
Analysis (AO3) ............................................................................................................................... 5
Exercise 1: Spotting analysis ........................................................................................................ 5
Exercise 2: Focus of analysis ...................................................................................................... 14
Exercise 3: Developed analysis ................................................................................................... 21
Evaluation (AO4) .......................................................................................................................... 33
Exercise 4: Answering the question.............................................................................................. 33
Exercise 5: Early evaluation........................................................................................................ 43
Skills Exercises
Introduction
Cambridge International AS & A Level Business attracts a variety of learners from many different
backgrounds. For some learners Business is a new subject and an opportunity to explore an area of study
that interests them, while developing a set of transferable skills. Other learners have previously studied
Business and are looking to continue developing their knowledge of the subject. Either way, the study of
Business allows learners to experience the diverse and dynamic world within which businesses exist and
gain the knowledge needed to understand how businesses operate within real contexts, analyse alternative
courses of action and develop the ability to make justified recommendations.
Skills and why they are important?

Skills are the key to success. The performance of candidates in Cambridge International AS & A Level
Business exams have shown a range of areas where improvement would be helpful. These areas of
improvement tend to centre around the assessment objectives (AOs) of the course and we have addressed
these four AOs in three Skills Exercises booklets.
• Knowledge and understanding (AO1)

• Application (AO2)
• Analysis (AO3) and Evaluation (AO4)
The skills exercises in these booklets make use of examination questions and data and include activities and
worksheets to help skills development and incorporate suggested teaching approaches, such as group work,
discussion, structured support and writing in sequence. They do not attempt to cover all possible aspects of
the examinations, only those problem areas which have presented consistently over time.
How will these skills be developed?

The Skills Exercises booklets aim to help learners develop skills in:
• using knowledge and numerical data to answer examination questions
• using the context given in the examination to make answers relevant
• developing skills of analysis – including understanding analysis, spotting analysis and developing
analysis skills
• building evaluation skills – including making judgements, what the judgement depends upon and
early evaluation in a response.
The skills exercises provide suggestions so you can have confidence that the materials you prepare and use
in the classroom are building skills and resilience in your learners. This document should be used alongside
the other teaching and learning resources provided on the School Support Hub at:
www.cambridgeinternational.org/support
4
Skills Exercises
Analysis (AO3)
Exercise 1: Spotting analysis
Analysis is often considered to be the least understood skill. However, it is the skill that unlocks higher marks
and top grades. Learners who can effectively analyse in their answers will be able to build arguments and
come to conclusions.
Analysis is about:
• effects
• consequences
• reactions.
Many learners think that analysis is about description or explanation and often spend too much time
explaining and describing elements of an answer without getting to the all-important analysis. Analysis is
about effects, consequences or reactions.
Activity 1: Analysis or not
Give learners a series of sentences where one sentence involves analysis and the other does not. The
sentences in Worksheet 1: Analysis or not can be used or replaced with other sentences.
For each sentence, learners decide which is the analytical one.
5
Skills Exercises
Worksheet 1: Analysis or not
For each of the following pairs of sentences, decide which one is analytical and which one is not. Remember
that analysis is about effects, consequences or reactions.
1.
Sentence 1 Sentence 2
The business has three shops, and each shop has The business has three shops, and the large
a large inventory. inventory has a high cost.
2.
This led to an increase in revenue. The revenue of the business was high.
3.
By changing the method of production, the The chosen method of production will affect how
business could produce more products. many products can be produced.
4.
Profit is the difference between sales revenue and By reducing total costs, the business is able to
total costs. make more profit.
5.
High income customers could lead to more sales The customers in country Z have a higher income
revenue by expanding into country Z. and this is why the business should expand there.
6.
The profit margin is calculated by profit / revenue x

This increased the profit margin.
100.
7.
In May, the business has a negative cash flow and By choosing an external source of finance, the
this could be solved by using an external source of business could keep the cash flow positive.
finance.
8.
The purpose of effective marketing is to increase By using effective marketing, the business can
the sales of a business. increase its sales.
6
Skills Exercises
Worksheet 1 answers may include:
1. Sentence 2 – the effect of the large inventory is the high cost.
2. Sentence 1– the effect was an increase in revenue. Sentence 2 is just descriptive.
Sentence 1 – the reaction of a change in the method of production was the ability to
3. produce more products. Sentence 2 states that there will be an effect, but not what it might
be.
4. Sentence 2 – shows the consequence of reducing costs.
Sentence 1 – shows an effect, whereas sentence 2 is making a judgement (which is an

5.
evaluative skill) without showing the effect of the higher income.
6. Sentence 1 – a consequence, whereas sentence 2 is a piece of knowledge.
Sentence 2 – the effect of choosing an external source of finance, whereas sentence 1 is

7.
making an observation.
Sentence 2 – a possible effect of effective marketing, whereas sentence 1 is showing

8.
knowledge.
7
Skills Exercises
Activity 2: Identifying analysis

Show learners one or two sentences containing analysis, that is explanations of causal connections. These
can be everyday examples or enterprise related. Choose examples suitable for the topic being studied. For
example:
• The shop was shut therefore I wasn’t able to buy what I needed.
• Changing tastes and fashion offer an opportunity to enterprises because there is a new potential
customer or market.
Learners identify the decisions made and the reasons given for those decisions in each statement. Introduce
the idea of connecting words including, ‘because’, ‘this means’, ‘so’, ‘therefore’.
In groups learners consider other possible connecting words. Remind them that not all connecting words
such as ‘and’ are relevant for developing analysis.
Extend this by asking further questions such as, ‘Why does this develop the statement?’ or ‘How will this
help explain the point being made?’
Learners make notes on their discussion before sharing ideas with the class. These could be used later as
part of a display about connecting words.
Use Worksheet 2: Identifying analysis in simple sentences to encourage learners to practise spotting
analysis and adding development.
8
Skills Exercises
Worksheet 2: Identifying analysis in simple sentences
Complete the following sentences by choosing a suitable connecting word to develop each point in this
exercise. Note connecting words can be used more than once.
Because therefore as a result so lead to
a) A successful entrepreneur needs to be able to delegate ________ it allows them more time to focus on
more important tasks.
b) The advantage of a government grant is that it’s a free fund, which you don’t have to pay back. ________
we can save money on interest payments.
c) Setting a high price is a problem ________ fewer people would be able to afford our products.
d) Having ethically produced products is important to increase customer trust. This can ________ a more
loyal customer base.
e) The advantage of setting up the enterprise as a sole trader is that you are your own boss. ________ you
don’t have to waste time consulting anyone else so can take decisions straightaway.
f) A disadvantage of using a questionnaire is that if the questions are poorly worded, people might not
understand them properly. ________ we might get biased information leading to the wrong decisions being
made.
9
Skills Exercises
Worksheet 2 answers:
a) A successful entrepreneur needs to be able to delegate because it allows them more time to focus on
more important tasks.
b) The advantage of a government grant is that it’s a free fund, which you don’t have to pay back. Therefore
/ As a result we can save money on interest payments.
c) Setting a high price is a problem because fewer people would be able to afford our products.
d) Having ethically produced products is important to increase customer trust. This can lead to a more loyal
customer base.
e) The advantage of setting up the enterprise as a sole trader is that you are your own boss. Therefore / As
a result you don’t have to waste time consulting anyone else so can take decisions straightaway.
f) A disadvantage of using a questionnaire is that if the questions are poorly worded, people might not
understand them properly. Therefore / As a result / So we might get biased information leading to the
wrong decisions being made.
10
Skills Exercises
Activity 3: Identifying analysis in paragraphs

Give learners a copy of Worksheet 3: Identifying analysis in paragraphs.
Using a highlighter pen or a pencil, learners identify the analytical components of each paragraph.
Discuss whether the analysis could be extended further to make a better analytical point.
11
Skills Exercises
Worksheet 3: Identifying analysis in paragraphs
For each of the following paragraphs, identify the analysis by either highlighting or underlining the focus of
the analysis.
1.
If the business wants to recruit a new employee, then the owners should put a job advert in the local
newspaper. Hopefully, potential employees will see the advertisement, and this will increase the number of
people who apply for the job. However, putting an advertisement in a newspaper will increase the costs of
the business.
2.
The accounts of the business show that it has a profit margin of 12%. This means that 12% of the revenue
of the business is profit. If the business can decrease the total costs, then this could lead to an increase in
the profit margin and increase the profits of the business. However, if the quality of the products also
decreases, then this might mean that fewer customers purchase the products which might lead to less sales
revenue and less profit. It depends on whether the business can decrease the total costs without reducing
the quality.
3.
Tom could take out a bank loan so that he has enough cash to be able to purchase the new machine. If he
does purchase the new machine, then he can produce twice as many products and eventually pay back the
bank loan. By taking a bank loan Tom can also have plenty of time to repay the loan, because loans are
usually repaid over years. This is likely to give the other investors more confidence in the business and they
may not sell their shares.
4.
The government of country Z has increased the taxation on exports. This means that any business that sells
their products abroad will face higher costs and this might lead to an increase in price. If the prices increase,
then sales are likely to reduce depending on the price elasticity of demand.
5.
One of the biggest advantages of introducing flow production into the factory is that the business will be
more productive. This means that more products will be made in a shorter period of time. However, the
machinery needed to introduce flow production will have a high cost, increasing the total costs of the
business.
12
Skills Exercises
Worksheet 3 answers might include:
1.
If the business wants to recruit a new employee, then the owners should put a job advert in the local
newspaper. Hopefully, potential employees will see the advertisement, and this will increase the number of
people who apply for the job. However, putting an advertisement in a newspaper will increase the costs of
the business.
2.
The accounts of the business show that it has a profit margin of 12%. This means that 12% of the revenue
of the business is profit. If the business can decrease the total costs, then this could lead to an increase in
the profit margin and increase the profits of the business. However, if the quality of the products also
decreases, then this might mean that fewer customers purchase the products which might lead to less sales
revenue and less profit. It depends on whether the business can decrease the total costs without reducing
the quality.
3.
Tom could take out a bank loan so that he has enough cash to be able to purchase the new machine. If he
does purchase the new machine, then he can produce twice as many products and eventually pay back the
bank loan. By taking a bank loan Tom can also have plenty of time to repay the loan, because loans are
usually repaid over years. This is likely to give the other investors more confidence in the business and they
may not sell their shares.
4.
4.
The government of country Z has increased the taxation on exports. This means that any business that sells
their products abroad will face higher costs and this might lead to an increase in price. If the prices increase,
then sales are likely to reduce depending on the price elasticity of demand.
5.
One of the biggest advantages of introducing flow production into the factory is that the business will be
more productive. This means that more products will be made in a shorter period of time. However, the
machinery needed to introduce flow production will have a high cost, increasing the total costs of the
business.
13
Skills Exercises
Exercise 2: Focus of analysis

Analysis must be focussed on a business or a stakeholder group. It is essential that learners focus their
analysis in the right way. An examination question will always have a clear focus for the analysis.
Activity 1: Who is the focus?

Give learners a series of possible or past examination questions. The questions on Worksheet 4: Who is
the focus? can be used or changed with other analytical or evaluative questions.
For each sentence, learners highlight or underline the focus of the analysis.
Discuss how the focus of each question could be misinterpreted.
14
Skills Exercises
Worksheet 4: Who is the focus?
For each of the following questions, identify and underline the focus of the analysis.
1. Analyse two advantages to the owners of TG of the introduction of batch production into the factory.
2. Analyse one internal source of finance and one external source of finance that ES could use to purchase a
fracking licence.
3. Analyse two factors which might affect the demand for the performances at GT’s theatre.
4. Analyse two likely effects on the other employees if Jack is dismissed.
5. Analyse two reasons why clear business objectives are important for EC.
6. Analyse two economies of scale that AP might lose if the business reduces the total number of pies
produced.
7. Analyse one advantage and one disadvantage for Lewis operating as a small business.
8. Analyse two disadvantages for the owners of increasing the pay of the factory workers.
15
Skills Exercises
1. Analyse two advantages to the owners of TG of the introduction of batch production into the factory.
Many learners will analyse the effects on the factory without analysing the effects on the owners.
2. Analyse one internal source of finance and one external source of finance that ES could use to purchase a
fracking licence.
Some learners might be tempted to analyse the effects of fracking (on the environment).
3. Analyse two factors which might affect the demand for the performances at GT’s theatre.
When this question was asked, many learners analysed the effect on the customers (demand) without linking
this to how it will affect the business itself.
4. Analyse two likely effects on the other employees if Jack is dismissed.

Some learners might be tempted to analyse the effect on Jack, not the other work ers.
5. Analyse two reasons why clear business objectives are important for EC.
Some learners might analyse the effects on other stakeholders, such as the customers or employees.
6. Analyse two economies of scale that AP might lose if the business reduces the total number of pies
produced.
When this question was asked, many learners analysed the effects on other stakeholders, such as the
employees.
7. Analyse one advantage and one disadvantage for Lewis operating as a small business.
Some learners might analyse the effect on the business as a whole, but the question is clearly focussed on
Jack .
8. Analyse two disadvantages for the owners of increasing the pay of the factory workers.
When a question mentions two stakeholder groups, some learners often mis-focus their analysis, in this case
on the factory work ers.
16
Skills Exercises
Activity 2: Who might be affected?

Sometimes a question asks you to analyse the effects or impacts of a business’s actions on different
stakeholders. Learners need to be able to identify all the potential stakeholders who might be affected by a
business action and how they might be affected.
Give learners a series of business actions. The actions on Worksheet 5: Who might be affected? can be
used or changed with other business actions.
For each business action, learners identify as many stakeholders as they can that might be affected.
For each of these stakeholders, discuss how they might be affected.
17
Skills Exercises
Worksheet 5: Who might be affected?
For each of the following business actions, identify which stakeholders might be affected by adding a spoke
to the mind-map. The first stakeholder has been added for you.
1.
The owners – may make the
business more efficient, leading
to lower costs and higher

profitability.
A business is planning to automate its factory.
The local community –

2.
more lorries delivering
supplies – more noise and
pollution.
A business starts to use Just in Time

production.
18
Skills Exercises
Worksheet 5: Who might be affected? (continued)
3.
The workers – may expect
higher wages and regular pay
increases – may be
demotivated if their real

wage does not keep up with
A business is operating in a country with high
inflation. inflation.
4. The owners – will gain limited

liability meaning that their
personal possessions are no longer
at risk.
A business changes from being a partnership

to a public limited company.
19
Skills Exercises
1. A business is planning to automate its factory. Accept any reasonable answer including:
• The owners – may make the business more efficient, leading to lower costs and higher profitability.
• The employees / managers / supervisors – may lose their job, leading to financial hardship.
• The suppliers of the automation equipment – gain a new sale.
• The suppliers of raw materials – may get more orders if the business can now operate more
efficiently.
• Local community – may be less traffic going to and from the factory as there are less workers.
2. A business starts to use Just in Time production. Accept any reasonable answer including:
• The local community – more lorries delivering supplies – more noise and pollution.
• The employees – their job / tasks may change, may need to be retrained.
• The suppliers – may be expected to deliver more often, increasing their costs.
• The owners – may reduce the businesses costs, increasing their profit / dividends.
• The customers – may reduce business costs, so price may decrease.
3. A business is operating in a country with high inflation. Accept any reasonable answer including:
• The workers / managers / supervisors – may expect higher wages and regular pay increases – may
be demotivated if their real wage does not keep up with inflation.
• The suppliers – may need to increase their prices to maintain their profitability.
• The customers – may face higher prices.
• The government – may need to increase taxation to keep up with inflation.
4. A business changes from being a partnership to a public limited company. Accept any reasonable answer
including:
• The owners – will gain limited liability meaning that their personal possessions are no longer at risk.
• The customers – may trust the business more since it is listed on the stock exchange.
• The government – the business will pay corporation tax instead of the owners paying income tax.
• The suppliers – may be more willing to give the business good credit terms.
• Lenders – may be more willing to lend to the business.
20
Skills Exercises
Exercise 3: Developed analysis

Analysis can be limited or developed. Limited analysis does not go far enough. For example, it may identify
an impact, effect or reaction, but does not continue and demonstrate how it will really affect the business or
stakeholder.
Developed analysis is about creating a chain of analysis. This means that there is a clear link between the
initial impact, effect or reaction and how this might develop to really affect the business or stakeholder.
Activity 1: Chains of analysis

Developed analysis can be seen as a chain of effects. This activity helps learners think about the links in the
chain that go from the initial effect through to the end effect.
Give learners a starting effect and how this might end. The chains on Worksheet 6: Chains of analysis can
be used or changed with other effects.
For each sentence, learners complete the missing links in the chain that match up to the initial effect to the
end effect.
There may be many ways to get from the first effect to the last, so discuss the different routes learners have
taken and whether any of the links are more realistic than others.
21
Skills Exercises
Worksheet 6: Chains of analysis
For each of the following questions, identify the focus of the analysis.
1. A business increases its prices. Develop a chain of analysis of how this might affect the customer.
Prices Customer has a

increase worse standard
of living
2. A business changes its remuneration system from time-based to piece-rate. Develop a chain of analysis of
how this might affect an employee.
Pay is Increases their

changed from standard of
time-based to living
piece-rate
3. A company faces higher taxes. Develop a chain of analysis of how this might affect the shareholders.
Tax rate Lower

increases dividends paid
to the
shareholder
4. A business successfully uses above the line promotion. Develop a chain of analysis of how this might
affect the business.
Successful Increases
above the line profit
promotion
22
Skills Exercises
Worksheet 6 answers may include:
1. A business increases its prices. Develop a chain of analysis of how this might affect the customer.
Prices Customer has Cannot afford Customer has a

increase to pay more other goods worse standard
of living
2. A business changes its remuneration system from time-based to piece-rate. Develop a chain of analysis of
how this might affect an employee.
Pay is Employees can Employees can Increases their

changed from work harder to standard of
afford to spend
time-based to living
earn more money more money
piece-rate
3. A company faces higher taxes. Develop a chain of analysis of how this might affect the shareholders.
Tax rate Business costs Less profit Lower

increases increase made dividends paid
to the
shareholder
4. A business successfully uses above the line promotion. Develop a chain of analysis of how this might
affect the business.
Successful More people Increases sales Increases

above the line are aware of profit
promotion
the product
23
Skills Exercises
Activity 2: Developing advantages and disadvantages

Analysis questions often ask for advantages and / or disadvantages of something. Being able to analyse the
advantages and disadvantages is an essential part of analysis and needs to be in context as well as
developed.
Give learners a business scenario that may have advantages and disadvantages for a business or a
stakeholder. The scenarios in Worksheet 7: Developing advantages and disadvantages may be used or
replaced with other scenarios.
For each scenario, learners think of two advantages and two disadvantages and explain the impact on the
business or stakeholder.
Learners are likely to find a range of answers, so different responses should be discussed. Are any of the
advantages or disadvantages more realistic than others?
24
Skills Exercises
Worksheet 7: Developing advantages and disadvantages

Complete the following tables for the given business scenario. Use the scenario to make sure the
development is in context.
1. A supermarket operates in a competitive business environment. The owners of the business know that the
majority of their products are price elastic. Analyse one possible advantage and one possible disadvantage
to the business of reducing their prices.
Advantage Disadvantage
2. A restaurant operates in a tourist destination. It is very busy in the peak holiday season but there are very
few customers for the rest of the year. Analyse one possible advantage and one possible disadvantage to
the business of increasing the size of the restaurant.
3. A manufacturing business is labour intensive and produces clothing for many well-known brands. The
business has a contingency plan in case of a fire in the factory. Analyse one advantage and one
disadvantage to the business of having a contingency plan in case of a fire in the factory.
4. Max is a sole trader who has recently set up a business that sells jewellery. All of his products are sold
over the internet. Analyse one advantage and disadvantage to Max of using the internet to sell his products.
5. A large manufacturing business that produces and sells smartphones is planning to introduce Total
Quality Management (TQM) into its factory. Analyse one possible advantage and one possible disadvantage
to the workers from the introduction of Total Quality Management (TQM).
25
Skills Exercises
1. A supermarket operates in a competitive business environment. The owners of the business know that the
majority of their products are price elastic. Analyse one possible advantage and one possible disadvantage
to the business of reducing their prices.
Because the products are price elastic, a fall However, it is a competitive business
in price is likely to lead to more customers environment, so the other supermarkets are
buying their products, an increase in sales likely to also reduce their prices, leading to
revenue and an increase in profit. the supermarket not getting more
customers, a reduction in sales revenue,
because the price has reduced, and reduced
profit.
2. A restaurant operates in a tourist destination. It is very busy in the peak holiday season but there are very
few customers for the rest of the year. Analyse one possible advantage and one possible disadvantage to
the business of increasing the size of the restaurant.
If the restaurant increases the size of the However, the restaurant does need the
business ten it can serve more customers increased size for the rest of the year, so the
during the peak season and gain more business costs will increase because of the
revenue and profit. increase in size and this could lead to less
profit.
3. A manufacturing business is labour intensive and produces clothing for many well-known brands. The
business has a contingency plan in case of a fire in the factory. Analyse one advantage and one
disadvantage to the business of having a contingency plan in case of a fire in the factory.
Because the factory is labour intensive it is However, the contingency plan may involve
important to have a fire contingency plan to practicing evacuation of the factory, which
reduce the chance of people being injured in could delay production and the well-known
the fire which could lead to bad publicity brands may start to use a different supplier,
and increasing business costs if they were decreasing sales revenue and profit.
sued by the injured employees.
26
Skills Exercises
4. Max is a sole trader who has recently set up a business that sells jewellery. All of his products are sold
over the internet. Analyse one advantage and disadvantage to Max of using the internet to sell his products.
Using the internet is a low-cost way to sell However, jewellery is often a product that
the products and cheaper than having a people like to try on and they will not be
shop. This reduces Max’s costs and since he able to do this using a website. Therefore,
has just set up the business it reduces his potential customers may go to a high-street
risks and gives Max a better chance to make shop and Max may not get any customers
a profit. which could lead to his business failing.
5. A large manufacturing business that produces and sells smartphones is planning to introduce Total
Quality Management (TQM) into its factory. Analyse one possible advantage and one possible disadvantage
to the workers from the introduction of Total Quality Management (TQM).
The workers are likely to be given more However, the employees may be expected to
responsibility when using TQM, which may do more work to implement TQM and there
motivate them to increase production of the is no guarantee that they will get higher
smartphones. If they are paid using piece- wages, so this may demotivate them and
rate then this could increase their pay and they may want to leave the business.
improve their standard of living.
27
Skills Exercises
Activity 3: Marking analysis

Show learners the responses to the question on Worksheet 8: Marking analysis.
Learners highlight the analysis.
Learners decide if the response has a developed chain of analysis.
Discuss how the response could be improved.
28
Skills Exercises
Worksheet 8: Marking analysis
Read the following data and then highlight / underline the analysis in each response. Award marks for each
response using the mark scheme below:
Knowledge and
Application Analysis
understanding
(max 1 mark) (max 2 marks)
(max 1 mark)
A developed chain of
analysis in context
2 marks
Knowledge of the key term Applied to the data Limited analysis
1 mark 1 mark 1 mark
29
Skills Exercises
Worksheet 8: Marking analysis (continued)

1. Analyse one method of primary market research that the Marketing Director could use to help develop a
new variety of vegetable chip. [4 marks]
Response 1: TT could use a questionnaire to research the market. This means that they would
ask random people some questions about the flavours that they would most like.
Questionnaires would be good because they can get all the data they want, and it is specific to
the vegetable chips.
Response 2: TT could use random sampling. The big advantage of this is that there will not be
any bias. This is an advantage because if there was bias then they might get the wrong data.
If that happened then the business could spend lots of money making a new variety and this
could lead to increased business costs. If the product does not sell then TT will have a lower
profit margin and less overall profit or even a loss for TT.
Response 3: TT could use a focus group by getting a group of people together and give them
the new product. The interviewer can then ask the group questions that they want an answer
to, such as ‘do you like this?’ This information can be used by the managers of TT to make
sure that a normal group of people like the product and try to estimate the demand. By
estimating the demand TT can forecast how many to make and set their prices so that they
can increase sales revenue and make more profit.
2. Analyse one concern that the factory manager might have about the joint venture between TT and the
supermarket group. [4 marks]
Response 1: TT will produce more crisps for the supermarket to sell. Which may mean that TT
has to open the factory for six days a week instead of five. This will increase TT’s costs and
with a lower profit margin, TT may make a loss from this joint venture.
Response 2: One concern the factory manager might have is that the profitability of the new
chips is lower than their normal chips. This means that the difference between the cost of the
new chips and the selling price is less than the difference between the cost and price of the
normal chips. Profitability is vital to a business because it is likely to be the businesses’ main
objective.
Response 3: The factory manager will be pleased that there would be a better cash flow
because it is likely to mean that his job is more secure. This means that he can relax and not
worry about his job and should motivate him. If he is more motivated then he will work
harder and this may mean that he motivates the other workers, produce more chips for the
business and end up giving the business more profit.
30
Skills Exercises
1. Analyse one method of primary market research that the Marketing Director could use to help develop a
new variety of vegetable chip. [4 marks]
Response 1: TT could use a questionnaire to research the market. This means that they would
ask random people some questions about the flavours that they would most like.
Questionnaires would be good because they can get all the data they want, and it is specific to
the vegetable chips.
Mark awarded = 3
The analysis is only limited. It could be improved by developing the analysis further, for example by showing
why having specific data would benefit the business; customers more likely to purchase – more sales – more
revenue – more profit.
Response 2: TT could use random sampling. The big advantage of this is that there will not be
any bias. This is an advantage because if there was bias then they might get the wrong data.
If that happened then the business could spend lots of money making a new variety and this
could lead to increased business costs. If the product does not sell then TT will have a lower
profit margin and less overall profit or even a loss for TT.
Mark awarded = 0
This answer confuses primary market research with sampling methods. The attempt at analysis is developed
into a chain, but because it is not what the question asked for it would not gain any marks.
Response 3: TT could use a focus group by getting a group of people together and give them
the new product. The interviewer can then ask the group questions that they want an answer
to, such as ‘do you like this?’ This information can be used by the managers of TT to make
sure that a normal group of people like the product and try to estimate the demand. By
estimating the demand TT can forecast how many to make and set their prices so that they
can increase sales revenue and make more profit.
Mark awarded = 3
There is a clear, developed chain of analysis, but does not mention context.
31
Skills Exercises
2. Analyse one concern that the factory manager might have about the joint venture between TT and the
supermarket group. [4 marks]
Response 1: TT will produce more crisps for the supermarket to sell. Which may mean that TT
has to open the factory for six days a week instead of five. This will increase TT’s costs and
with a lower profit margin, TT may make a loss from this joint venture.
Mark awarded = 4
This response has all of the elements. There is context used (six days a week instead of five) and a
developed chain of analysis.
Response 2: One concern the factory manager might have is that the profitability of the new
chips is lower than their normal chips. This means that the difference between the cost of the
new chips and the selling price is less than the difference between the cost and price of the
normal chips. Profitability is vital to a business because it is likely to be the businesses’ main
objective.
Mark awarded = 2
This response uses the context and shows knowledge, but does not demonstrate an effect of beyond what is
copied from the data. Repetition of the data is not analytical.
Response 3: The factory manager will be pleased that there would be a better cash flow
because it is likely to mean that his job is more secure. This means that he can relax and not
worry about his job and should motivate him. If he is more motivated then he will work
harder and this may mean that he motivates the other workers, produce more chips for the
business and end up giving the business more profit.
Mark awarded = 0
This is not a concern; it is the opposite and shows why and how the factory manager might benefit. Although
there is analysis here, it is not of the right kind, so cannot be awarded any marks.
32
Skills Exercises
Evaluation (AO4)
Exercise 4: Answering the question
Evaluation is usually considered to be the hardest assessment objective and the one that is essential for a
top grade. At its heart, evaluation is about answering the question.
Here are some command words that learners might come across to let them know that they need to
evaluate:
Command word What you need to do

Build chains of analysis, weigh up the arguments and then make a judgement
Evaluate over which arguments are most persuasive.
Does your judgement depend on anything, such as market research?
Build chains of analysis and weigh these up. Whilst this does not necessarily
Discuss require a judgement to be made, it is usually a good idea to come to a judgement
if you can.
Build chains of analysis, weigh up the arguments and then make a

Recommend … recommendation for the business or stakeholder.
justify your answer. Does your recommendation depend on anything or would it change in different
circumstances?
Build chains of analysis, weigh up the arguments and then advise the business or
stakeholder on what it should do.
Does your advice depend on anything or would it change in different
Advise
circumstances?
Advice is often linked closely with strategy and as such may require more than
just a judgement or recommendation.
Activity 1: How to answer the question

When a learner sees an evaluative question, it should be clear what the judgement will be about.
Knowing what the judgement is about helps learners structure their answer because all of the analytical
points will create arguments to back up that judgement.
Give learners a series of evaluative questions from either past or specimen papers. Learners will not need
the case study or data to work out what the judgement should be. The questions on Worksheet 9: How to
answer the question can be used or any other evaluative questions.
For each question, learners decide what the first sentence of the conclusion should be. This gives a target
for the analytical arguments to work towards.
33
Skills Exercises
Worksheet 9: How to answer the question
For each of the following questions, decide what your judgement will be.
1. Evaluate the factors which could influence the successful operation of Just-in-Time (JIT) inventory
management.
What are you making a judgement about?
What should the first sentence of your conclusion be?
……………………………………………………………
……………………………………………………………
2. Discuss how break-even analysis could be useful for a business decision on introducing a new product.
……………………………………………………………
……………………………………………………………
3. Evaluate the factors that CC should consider in making a decision on whether or not to become a more
ethical business.
……………………………………………………………
……………………………………………………………
4. Advise GG on the most appropriate sources of finance they might use to pay for the new swimming pool.
……………………………………………………………
……………………………………………………………
34
Skills Exercises
5. Recommend to PC’s Board of Directors which one of the two strategies should be adopted for entering
new markets in Asia and Africa. Justify your recommendation.
……………………………………………………………
……………………………………………………………
6. Evaluate the advantages and disadvantages to GT of their marketing mix.
……………………………………………………………
……………………………………………………………
7. Advise Sue on which approaches she should use to develop a new business strategy for RF2.
……………………………………………………………
……………………………………………………………
35
Skills Exercises
1. Evaluate the factors which could influence the successful operation of Just-in-Time (JIT) inventory
management.
What are you making a judgement about? Which factor is most likely to influence the successful
operation of JIT. OR Whether the factors are more likely to have a positive or a negative
effect on successful operation of JIT.
What are you making a judgement about? Whether break-even analysis is useful (or not) for a
business decision on introducing a new product.
3. Evaluate the factors that CC should consider in making a decision on whether or not to become a more
ethical business.
What are you making a judgement about? Which factor is most important when making a
decision on whether or not to become a more ethical business.
What are you making a judgement about? Which sources of finance are most appropriate to use
to pay for the new swimming pool.
The question requires more than one to be advised.
What are you making a judgement about? Which of the two given strategies should be adopted
for entering new markets in Asia and Africa.

Whether GT’s marketing mix is more advantageous for the business or not. Or Which
advantage and / or disadvantage is the most important when looking at GT’s marketing
mix.
What are you making a judgement about? Which approaches Sue should use to develop a new
business strategy for RF2.
This question requires more than one approach to be advised.
It is very common for learners to get this type of question wrong and they start to advise Sue on the
business strategy, as opposed to what the question has actually asked for.
36
Skills Exercises
Activity 2: Find the conclusion

A good conclusion is an essential part of a response to a question.
Give learners a copy of Worksheet 10: Find the conclusion and ask them to decide which of the two
conclusions best answers the question.
Discuss ways in which common mistakes can be avoided.
37
Skills Exercises
Worksheet 10: Find the conclusion
Look at the start of each conclusion below, written to answer the questions. Based on only the first sentence
of the conclusion, identify which is better and why.
1. Evaluate the most appropriate below the line promotion methods that FD could use to promote their new
product.
Response 1 Response 2
The most appropriate below the line There are many different below the line
promotion methods are direct mail and promotion methods and FD will need to
public relations. choose the most appropriate.
2. Advise TY on the most suitable marketing mix for it to use to launch its new shop.
Promotion is the most important element of The most suitable marketing mix for TY to
the marketing mix that TY should focus on use to launch their new shop would to have
because they need to inform people about a wide range of products, a low price, TV
the new shop. advertising and to allow customers to
purchase on the internet as well as in store.
3. Recommend whether Ranjit should relocate to country F. Justify your recommendation.
Based on the arguments, Ranjit should Relocating to country F has many

relocate to country F. advantages and disadvantages and Ranjit
will need to decide whether she wants to
relocate or not.
4. Discuss the external factors that may affect the business over the next three years.
All of the external factors analysed will External factors are more likely to affect the
affect the business, but the most important business than internal ones.
will depend upon what objectives the

business uses.
38
Skills Exercises
1. Evaluate the most appropriate below the line promotion methods that FD could use to promote their new
product.
Response 1 is the better response because it makes a judgement that the question has asked
for. Response 2 is more of a summary which is not evaluation.
2. Advise TY on the most suitable marketing mix for it to use to launch its new shop.
Response 2 is the better response because it gives a clear answer to the question about the
entire marketing mix. Response 2 is answering a different question (about which element is
most important). You must read the question carefully.
3. Recommend whether Ranjit should relocate to country F. Justify your recommendation.
Response 1 is the better response because it does what the question asks, by making a
recommendation. Response 2 ‘sits on the fence’ and does not come to a recommendation.
4. Discuss the external factors that may affect the business over the next three years.
Response 1 is focussed on the question and starts to weigh up the factors. ‘Discuss’ does not
require a judgement but it makes sense to state which of the factors will have the biggest
effect. Response 2 is has brought in internal factors, which are irrelevant and not answering
the question.
39
Skills Exercises
Activity 3: Making judgements

Most evaluation questions require a judgement. However, a business is a dynamic organisation that changes
regularly. It also operates in an external environment of which the business has little control. Therefore, it is
important to make a provision in your judgement that it might need to change if the circumstances change.
Give learners a series of evaluative questions. The ones on Worksheet 11: Making judgements can be
used, or these can be replaced with other suitable questions.
Learners decide what judgement they would make and state two things that the judgement could depend
upon.
Discuss which ‘depends upon’ is most appropriate.
40
Skills Exercises
Worksheet 11: Making judgements
For each of the following evaluative questions, decide what your judgement would be and then think about
what that judgement might depend upon.
1. Evaluate the benefits to a business of having a business plan.
What does your judgement depend upon?
2. Recommend whether Gill should reduce the price of her service. Justify your recommendation.
3. Advise OP on how it can improve the quality of their production process.
41
Skills Exercises
1. Evaluate the benefits to a business of having a business plan.

The most important / influential benefit of having a business plan.

What is happening with the external environment.
Whether the business needs external finance.
The short- or long-term view.
The objectives of the owner.
2. Recommend whether Gill should reduce the price of her service. Justify your recommendation.

A recommendation about whether or not Gill should reduce the price of her service.

More market research.
The price elasticity of demand.
Gill’s objectives.
The likely reaction of Gill’s competitors.
3. Advise OP on how it can improve the quality of their production process.

The best way OP can improve the quality of their production process.

The cash available in the business.
The reactions of the workforce.
The needs of the customers.
The cost of implementing the strategy.
42
Skills Exercises
Exercise 5: Early evaluation

Many learners assume evaluation only happens at the end of their answer, in a conclusion. However, the
best responses evaluate throughout the answer.
Many of the higher mark questions in the Cambridge International AS & A Level Business examinations have
a large proportion of evaluation marks. However, just evaluating in a conclusion, no matter how detailed, is
unlikely to gain all of these marks.
The table below shows the mark allocations for the higher mark questions on the examinations.
AO1 Knowledge
Total marks AO2 Application AO3 Analysis AO4 Evaluation
and understanding
12 2 2 2 6
20 3 2 8 7
Since the assessment objective for evaluation (AO4) is such a large proportion of the marks, it is essential
that you take as many opportunities as you can to evaluate when answering these questions.
Activity 1: Mini-conclusions
Learners can begin to include evaluation in an answer by developing a mini-conclusion after every analytical
point.
A mini-conclusion can occur after a chain of analysis and brings the point back to provide an answer to the
question.
Give each learner a copy of Worksheet 12: Mini-conclusions.
The first analytical point has been evaluated in the second paragraph. Discuss why it is evaluation and how it
is different from analysis.
Learners evaluate the second analytical point using the same style as the example.
43
Skills Exercises
Worksheet 12: Mini-conclusions
Look at the following question and part-response. The first analytical point has a mini-conclusion for the
second paragraph.
Q. Evaluate the view that a mission statement is only important to a bank if it significantly influences
the strategy and tactics of that business. [12 marks]
A mission statement allows a business to have a focus for its strategy and tactics. For
example, there are some banks which have socially responsible mission statements. These
banks use their mission statement to help formulate their objectives, which then give it a focus
for both strategy and tactics. Without this mission statement the strategy and tactics will not
be socially responsible and the vision of the bank will be lost because other stakeholder
concerns, such as profitability, and it will no longer be able to e socially responsible.
Therefore, it is true that a mission statement is only important to a bank if it significantly

influences the strategy and tactics, especially where that mission statement involves corporate
social responsibility to make sure the bank keeps it vision. However, this depends on the
objectives of the business, if the objectives are purling profit driven, then the mission
statement might not matter.
Now write a mini-conclusion for the next analytical point by following the same structure as the mini-
conclusion above.
A mission statement is often simply a way of marketing a business and is sent to the
stakeholders so that it can make the business look good. Many banks do not want all of their
stakeholders to know their objectives. For example, most commercial banks, which are public
limited companies, are run with profit and return for the shareholders as the main objectives.
This objective must form the basis of the strategy and tactics, otherwise the shareholders will
sell their shares and the business might get taken over by a competitor and not survive.
……………………………………………………………………
……………………………………………………………………
……………………………………………………………………
……………………………………………………………………
……………………………………………………………………
44
Skills Exercises
A good mini-conclusion should have:

• Something that marks it out as an end of the analysis. ‘Therefore’ works well.
• A judgement linked to the wording of the question (the command word is ‘Evaluate) so a clear
judgement is needed).
• What that judgment depends upon.
• Context.
The following could be used as a good example:
Therefore, it is not true that a mission statement is only important to a bank if it
significantly influences the strategy and tactics, especially for a bank that is also a public
limited company as most large banks are. However, this depends on the public perception of
the business. As a marketing tool the mission statement can still feed into the strategy and
tactics, but is unlikely to be part of the strategies and tactics linked to making profit.
45
Skills Exercises
Activity 2: Two-sided arguments

One of the most important routes into evaluation is by spotting the two sides of each question. There is
always a way to argue both sides of any evaluative question and in doing so learners can include evaluation
in their responses.
Give learners a number of evaluative questions. The data or case that goes with these questions is not
important to be able to spot the two sides of the response. The questions in Worksheet 13: Two-sided
arguments can be used or any other evaluative questions from past examination papers.
Learners decide what the two sides of the question are.
There are sometimes different perspectives; discuss as a class why different approaches are sometimes still
appropriate.
46
Skills Exercises
Worksheet 13: Two-sided arguments
For each of the following questions, decide what the two sides of the argument are.
1. Evaluate factors which may influence the successful operation of Just-in-Time (JIT) inventory
management.
One side Other side
One side Other side
3. Evaluate factors that CC should consider in making a decision on whether or not to become a more ethical
business.
One side Other side
One side Other side
One side Other side
One side Other side
One side Other side
47
Skills Exercises
1. Evaluate factors which may influence the successful operation of Just-in-Time (JIT) inventory
management.
One side Other side
That the factor(s) could influence the That the factor(s) could not influence the
successful operation of JIT. successful operation of JIT.
One side Other side
That break-even analysis could be useful. That break-even could not be useful. OR
That something could be more useful.
3. Evaluate factors that CC should consider in making a decision on whether or not to become a more ethical
business.
One side Other side
That the factor(s) should be considered. That the factor(s) should not be considered.
One side Other side
That the source(s) of finance are the most That the source(s) of finance are not the
appropriate. most appropriate.
One side Other side
Arguments for the first strategy. Arguments for the second strategy.
One side Other side
The advantages of the marketing mix. The disadvantages of the marketing mix.
One side Other side
Arguments for the approaches Sue should Arguments against the approaches Sue
use. should use. OR Alternative approaches Sue
should use.
48
Cambridge Assessment International Education
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t: +44 1223 553554
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Skills Exercises

Analysis (AO3) and Evaluation (AO4)

Cambridge International AS & A Level

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Copyright © UCLES 2021

Skills and why they are important?

• Knowledge and understanding (AO1)

How will these skills be developed?

Activity 1: Analysis or not

For each sentence, learners decide which is the analytical one.

Worksheet 1: Analysis or not

The profit margin is calculated by profit / revenue x

Worksheet 1 answers may include:

1. Sentence 2 – the effect of the large inventory is the high cost.

2. Sentence 1– the effect was an increase in revenue. Sentence 2 is just descriptive.

4. Sentence 2 – shows the consequence of reducing costs.

Sentence 1 – shows an effect, whereas sentence 2 is making a judgement (which is an

6. Sentence 1 – a consequence, whereas sentence 2 is a piece of knowledge.

Sentence 2 – the effect of choosing an external source of finance, whereas sentence 1 is

Sentence 2 – a possible effect of effective marketing, whereas sentence 1 is showing

Activity 2: Identifying analysis

Worksheet 2: Identifying analysis in simple sentences

Because therefore as a result so lead to

Activity 3: Identifying analysis in paragraphs

Worksheet 3: Identifying analysis in paragraphs

Worksheet 3 answers might include:

Exercise 2: Focus of analysis

Activity 1: Who is the focus?

Discuss how the focus of each question could be misinterpreted.

Worksheet 4: Who is the focus?

4. Analyse two likely effects on the other employees if Jack is dismissed.

Worksheet 4 answers might include:

4. Analyse two likely effects on the other employees if Jack is dismissed.

Activity 2: Who might be affected?

For each of these stakeholders, discuss how they might be affected.

Worksheet 5: Who might be affected?

to lower costs and higher

A business is planning to automate its factory.

The local community –

A business starts to use Just in Time

Worksheet 5: Who might be affected? (continued)

demotivated if their real

4. The owners – will gain limited

A business changes from being a partnership

Worksheet 5 answers might include:

Exercise 3: Developed analysis

Activity 1: Chains of analysis

Worksheet 6: Chains of analysis

Prices Customer has a

Pay is Increases their

Tax rate Lower

Worksheet 6 answers may include:

Prices Customer has Cannot afford Customer has a

Pay is Employees can Employees can Increases their

Tax rate Business costs Less profit Lower

Successful More people Increases sales Increases

Activity 2: Developing advantages and disadvantages

Worksheet 7: Developing advantages and disadvantages

Worksheet 7 answers might include: