Business Studies Notes: External Economic Influences, Investment Appraisal, and more - PDF

External Economic Influences on Business Growth =============================================== Economic factors such as inflation, interest rates, and government policies play a critical role in shaping business growth. These factors affect demand, production costs, and investment decisions. -...

External Economic Influences on Business Growth =============================================== Economic factors such as inflation, interest rates, and government policies play a critical role in shaping business growth. These factors affect demand, production costs, and investment decisions. - Inflation: A rise in prices that reduces purchasing power and increases production costs. - Interest Rates: Higher rates increase borrowing costs, making expansion more expensive. - Government Policies: Fiscal (taxation, government spending) and monetary (control of money supply) policies influence business growth. Advantages: ✔ Government support in downturns (stimulus packages, subsidies).\ ✔ Lower interest rates encourage borrowing and investment.\ ✔ Stable inflation leads to predictable pricing and wages. Disadvantages: ✖ High inflation increases costs and reduces demand.\ ✖ Rising interest rates discourage expansion.\ ✖ Government policy changes can create uncertainty for businesses. Advanced Investment Appraisal Techniques ======================================== Investment appraisal is used to evaluate whether business investments are worth pursuing. Beyond traditional methods (payback period, ARR, NPV), more advanced techniques are used for risk assessment. - Sensitivity Analysis: Examines how changes in variables (costs, revenues) impact the outcome. - Risk Assessment: Identifies potential risks and their impact on profitability. - Monte Carlo Simulation: Uses probability models to predict various investment outcomes. Advantages: ✔ Allows businesses to prepare for worst-case scenarios.\ ✔ More accurate risk evaluation compared to traditional methods.\ ✔ Helps in decision-making under uncertainty. Disadvantages: ✖ Complex calculations and reliance on assumptions.\ ✖ Time-consuming and requires expertise.\ ✖ Results depend on data accuracy, making them potentially unreliable. Financial Instruments for Risk Management ========================================= Businesses use financial instruments to hedge against risks such as currency fluctuations, interest rate changes, and commodity price swings. - Futures Contracts: Agreements to buy/sell assets at a fixed price in the future (used for commodities like oil, wheat). - Options: Contracts giving the right (but not obligation) to buy/sell assets at a predetermined price. - Swaps: Exchange of cash flows to manage interest rate or currency risks. Advantages: ✔ Protects against market volatility (e.g., currency depreciation).\ ✔ Provides businesses with financial stability.\ ✔ Can be customized to fit specific business needs. Disadvantages: ✖ Complex to understand and implement.\ ✖ High costs associated with some hedging strategies.\ ✖ Incorrect hedging can lead to losses rather than protection. Corporate Governance and Ethical Dilemmas ========================================= Corporate governance refers to the systems and processes by which businesses are directed and controlled. Ethical dilemmas arise when businesses must balance profit-making with social responsibility. - Board of Directors: Ensures transparency and accountability in decision-making. - Shareholder vs. Stakeholder Interests: Conflict between maximizing shareholder wealth and considering social/environmental impact. - Whistleblowing & Ethical Leadership: Encourages ethical behavior and accountability. Advantages: ✔ Enhances company reputation and investor confidence.\ ✔ Prevents fraud and financial scandals.\ ✔ Ensures fair treatment of employees and customers. Disadvantages: ✖ Compliance with governance rules can be costly.\ ✖ May slow down decision-making due to regulatory requirements.\ ✖ Conflicts between profit goals and ethical responsibilities. Technology and Automation in Business Efficiency ================================================ Technological advancements, including automation and artificial intelligence (AI), help businesses improve efficiency and reduce costs. - Robotic Process Automation (RPA): Automates repetitive tasks (e.g., data entry). - AI & Machine Learning: Improves decision-making with predictive analytics. - Internet of Things (IoT): Enhances supply chain management and production tracking. Advantages: ✔ Reduces labor costs and increases efficiency.\ ✔ Improves accuracy and reduces human errors.\ ✔ Allows businesses to scale operations more easily. Disadvantages: ✖ High initial investment in technology and training.\ ✖ Potential job losses due to automation.\ ✖ Cybersecurity risks from increased reliance on digital systems. Cultural Impact in Mergers and Acquisitions =========================================== When businesses merge or acquire other companies, differences in organizational culture can lead to integration challenges. - Communication Barriers: Different workplace cultures can lead to misunderstandings. - Employee Resistance: Workers may resist changes in policies or leadership. - Operational Differences: Different corporate structures can create inefficiencies. Advantages: ✔ Creates new opportunities for growth and market expansion.\ ✔ Access to new skills, resources, and technologies.\ ✔ Potential for cost savings through economies of scale. Disadvantages: ✖ Cultural clashes can lead to poor employee morale and productivity.\ ✖ Difficulties in integrating different management styles and systems.\ ✖ High costs associated with restructuring and legal compliance. Scenario Analysis & Stress Testing in Budgeting =============================================== Scenario analysis helps businesses plan for future uncertainties by evaluating different financial scenarios. - Best-Case Scenario: Assumes favorable market conditions. - Worst-Case Scenario: Assumes economic downturns and high costs. - Most Likely Scenario: A balanced projection based on market trends. Advantages: ✔ Prepares businesses for financial risks and unexpected challenges.\ ✔ Improves strategic decision-making.\ ✔ Enhances investor confidence in financial planning. Disadvantages: ✖ Difficult to predict all possible future events.\ ✖ Assumptions in models may not always be accurate.\ ✖ Can be time-consuming and require significant resources. Advanced Strategic Decision-Making Tools ======================================== Businesses use various tools to improve decision-making in uncertain environments. - Game Theory: Helps businesses anticipate competitors\' moves and responses. - Decision Trees: Maps out different choices and their potential outcomes. - Real Options Analysis: Evaluates flexibility in investment decisions (e.g., delaying, expanding, or abandoning projects). Advantages: ✔ Improves accuracy in complex decision-making.\ ✔ Helps businesses navigate competitive markets.\ ✔ Provides a structured way to analyze risks and rewards. Disadvantages: ✖ Complex and requires expertise to implement effectively.\ ✖ Can be costly and time-consuming.\ ✖ Relies on assumptions that may not always hold true. Strategic Decision-Making in Business ===================================== Strategic decision-making involves long-term planning to achieve business objectives while considering internal and external factors. These decisions affect the overall direction of the company and require careful analysis of market conditions, competition, and financial resources. Businesses use strategic tools like SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to assess their position and PEST analysis (Political, Economic, Social, Technological) to evaluate external influences. Effective strategic planning can lead to sustainable competitive advantages, helping companies adapt to market trends and technological advancements. Decision-making at the strategic level is often done by senior management and involves high-risk, high-impact choices.  Advantages: ✔ Provides a long-term vision for the company.\ ✔ Helps businesses anticipate market trends and changes.\ ✔ Encourages informed decision-making through SWOT & PEST analysis.\ ✔ Increases competitiveness and long-term sustainability.\ ✔ Aligns business operations with strategic goals. Disadvantages: ✖ Requires significant time and effort from senior management.\ ✖ Involves high risk due to long-term commitments.\ ✖ May fail due to poor market predictions.\ ✖ Resistance from employees can slow down implementation.\ ✖ Expensive to conduct thorough market research. Financial Statements and Their Use ================================== - Financial statements provide crucial information about a company\'s financial health, performance, and liquidity. - Income Statement (Profit & Loss Statement): Reports a company\'s revenues, expenses, and profit/loss over a specific period. It helps businesses evaluate profitability and cost management. - Balance Sheet (Statement of Financial Position): Shows a company's assets, liabilities, and shareholder equity at a specific point in time. It provides insights into financial stability and solvency. - Cash Flow Statement: Records cash inflows and outflows, showing how a company manages its cash and short-term liquidity. A healthy cash flow ensures smooth operations and investment opportunities. Advantages: ✔ Helps assess a company's financial health.\ ✔ Essential for investment decisions and securing loans.\ ✔ Ensures transparency and regulatory compliance.\ ✔ Enables businesses to track profitability and cash flow.\ ✔ Assists in financial planning and forecasting. Disadvantages: ✖ Requires accounting expertise to interpret correctly.\ ✖ May not reflect real-time financial position.\ ✖ Can be manipulated through creative accounting.\ ✖ Only provides historical data, not future predictions.\ ✖ Complex for small business owners to manage. Business Growth Strategies ========================== - Companies pursue growth strategies to expand their market presence, revenue, and competitive position. - Internal Growth (Organic Growth): Expanding production, opening new locations, or launching new products. This is a slower but more sustainable approach. - External Growth (Mergers & Acquisitions): Companies join forces or acquire competitors to increase market share and resources. This can be faster but involves risks such as integration challenges. - Diversification: Expanding into new industries to spread risk. Companies like Amazon started as an online bookstore but later diversified into e-commerce, cloud computing, and AI. - Growth strategies should align with a company's resources, market demand, and risk tolerance. A poorly executed growth strategy can lead to financial strain and operational inefficiencies. Advantages: ✔ Increased market share and revenue potential.\ ✔ Diversification reduces dependence on a single product/market.\ ✔ Economies of scale lower production costs.\ ✔ Improved brand recognition and customer base.\ ✔ Access to new customer segments and geographies. Disadvantages: ✖ Requires significant investment and funding.\ ✖ Can lead to operational inefficiencies if not managed well.\ ✖ High risk of market saturation and overexpansion.\ ✖ Mergers & acquisitions may create cultural conflicts.\ ✖ New market entry may face regulatory and legal barriers. Costing and Pricing Strategies ============================== Setting the right price is critical to profitability and competitive positioning. - Full Cost Pricing: A markup is added to total production costs to ensure a profit margin. This method ensures cost recovery but may lead to higher prices than competitors. - Contribution Pricing: Focuses on covering variable costs first and contributing to fixed costs, allowing for flexible pricing strategies. - Penetration Pricing: Involves setting an initially low price to attract customers and gain market share. This is useful for new businesses or entering competitive markets. - Skimming Pricing: High initial pricing is used to maximize revenue from early adopters before gradually lowering the price. Common in technology industries like smartphones. - Businesses must consider consumer demand, competitor pricing, and production costs to set the most effective pricing strategy. Advantages: ✔ Helps set competitive prices while ensuring profitability.\ ✔ Flexible strategies cater to different customer segments.\ ✔ Enables businesses to respond to market changes.\ ✔ Improves financial stability by covering costs effectively.\ ✔ Can be used to position a brand strategically (e.g., premium pricing). Disadvantages: ✖ High pricing may reduce demand.\ ✖ Low pricing may lead to losses and brand devaluation.\ ✖ Difficult to balance between cost recovery and competitive pricing.\ ✖ Frequent price changes may confuse customers.\ ✖ Competitors may undercut pricing strategies. Investment Appraisal Methods ============================ Investment appraisal techniques help businesses assess the viability of projects before committing capital. - Payback Period: Measures how long it takes for an investment to recover its initial cost. This method is simple but ignores profitability beyond payback. - Accounting Rate of Return (ARR): Calculates return as a percentage of investment, considering accounting profits rather than cash flows. - Net Present Value (NPV): Discounts future cash flows to present value, helping assess whether an investment is worthwhile considering the time value of money. - Internal Rate of Return (IRR): Determines the discount rate at which NPV is zero. A higher IRR suggests a more attractive investment. Choosing the right appraisal method depends on factors like investment size, risk tolerance, and company objectives. Advantages: ✔ Helps businesses make informed investment decisions.\ ✔ Techniques like NPV and IRR consider time value of money.\ ✔ Identifies projects with the highest returns.\ ✔ Reduces the risk of financial loss.\ ✔ Helps in long-term planning and capital allocation. Disadvantages: ✖ Payback period ignores long-term profitability.\ ✖ ARR does not consider cash flow.\ ✖ NPV is complex and depends on accurate discount rates.\ ✖ IRR can give misleading results for non-conventional projects.\ ✖ Assumptions in models may not always hold true. Business Efficiency Metrics =========================== Measuring efficiency ensures optimal use of resources and cost control. - Break-even Analysis: Identifies the sales volume at which revenue equals costs, helping businesses set sales targets and pricing strategies. - Capacity Utilization: Measures how effectively a business uses its production capacity. A low utilization rate may indicate underperformance or overinvestment. - Productivity Ratios: Evaluate efficiency in using labor and capital. Higher productivity can lead to lower costs and increased competitiveness. - Lead Time Reduction: Reducing the time taken to produce and deliver goods improves customer satisfaction and efficiency. - Waste Minimization: Cutting waste in raw materials and energy consumption leads to cost savings and environmental benefits. Advantages: ✔ Helps identify inefficiencies in operations.\ ✔ Enables better resource allocation.\ ✔ Improves productivity and cost-effectiveness.\ ✔ Reduces waste and enhances sustainability.\ ✔ Aids in setting realistic business targets. Disadvantages: ✖ Difficult to measure efficiency in qualitative aspects (e.g., employee satisfaction).\ ✖ Data collection can be time-consuming and costly.\ ✖ Misinterpretation of metrics can lead to poor decision-making.\ ✖ Too much focus on efficiency may compromise quality.\ ✖ Requires continuous monitoring and adjustment. Risk Management in Business =========================== Risk management identifies, assesses, and mitigates potential business threats. - Financial Risks: Exchange rate fluctuations, interest rate changes, and credit defaults. Businesses hedge against these risks using derivatives and insurance. - Operational Risks: Supply chain disruptions, equipment failures, and compliance violations. Strong contingency planning can reduce these risks. - Strategic Risks: Poor business decisions, technological changes, and shifting consumer preferences. Companies must continuously innovate to stay competitive. - Reputation Risks: Negative publicity, legal disputes, and unethical practices can harm brand value. Transparent operations and ethical leadership help maintain credibility. - Cybersecurity Risks: Data breaches and hacking can lead to financial losses and legal liabilities. Implementing strong IT security protocols is crucial. Advantages: ✔ Helps prevent financial and operational losses.\ ✔ Protects business reputation and brand value.\ ✔ Ensures regulatory compliance and reduces legal risks.\ ✔ Improves decision-making under uncertainty.\ ✔ Increases investor and stakeholder confidence. Disadvantages: ✖ Implementing risk management strategies can be costly.\ ✖ Cannot eliminate all risks, only mitigate them.\ ✖ Requires expertise and continuous monitoring.\ ✖ Overemphasis on risk avoidance may limit business growth.\ ✖ Unexpected external factors (e.g., global pandemics) may still cause disruptions. Ethical and Social Responsibility in Business ============================================= Corporate Social Responsibility (CSR) ensures businesses operate ethically and sustainably. - Ethical Sourcing: Using fair labor practices and environmentally friendly materials enhances brand reputation. - Employee Welfare: Providing fair wages, safe working conditions, and career growth opportunities boosts motivation and productivity. - Environmental Responsibility: Reducing carbon footprint and waste disposal helps businesses comply with regulations and appeal to eco-conscious consumers. - Community Engagement: Supporting local initiatives, charities, and disaster relief fosters goodwill and strengthens public trust. - Long-term Profitability: Companies that prioritize ethics and sustainability often gain customer loyalty, brand differentiation, and investor confidence. Advantages: ✔ Improves company reputation and customer trust.\ ✔ Attracts ethical investors and loyal customers.\ ✔ Enhances employee satisfaction and retention.\ ✔ Reduces legal and regulatory risks.\ ✔ Contributes to long-term sustainability and profitability. Disadvantages: ✖ Can increase short-term operational costs.\ ✖ Ethical sourcing and sustainability efforts may limit supplier options.\ ✖ Requires ongoing commitment and resources.\ ✖ Ethical decisions may conflict with profit maximization.\ ✖ Negative publicity from ethical failures can be damaging. Role of Leadership and Organizational Culture ============================================= Strong leadership and culture shape business success. - Autocratic Leadership: Centralized decision-making with strict control. Suitable for crisis situations but may demotivate employees. - Democratic Leadership: Encourages employee participation in decision-making, leading to higher engagement and innovation. - Laissez-faire Leadership: Grants employees autonomy with minimal supervision, fostering creativity but requiring self-disciplined teams. - Organizational Culture: The shared values, behaviors, and attitudes that define a company\'s environment. A strong culture enhances collaboration and employee retention. - Transformational Leadership: Inspires employees with a clear vision and motivates them to achieve higher performance levels. Advantages: ✔ Strong leadership motivates and guides employees.\ ✔ A positive organizational culture improves productivity and teamwork.\ ✔ Encourages innovation and adaptability.\ ✔ Reduces workplace conflicts and enhances job satisfaction.\ ✔ Helps businesses navigate change and uncertainty effectively. Disadvantages: ✖ Poor leadership can lead to low employee morale.\ ✖ Resistance to cultural change can hinder progress.\ ✖ Leadership styles may not suit all situations.\ ✖ Toxic workplace culture can drive away talent.\ ✖ Requires continuous effort to maintain and improve. Budgeting and Financial Planning ================================ Proper budgeting ensures financial stability and goal achievement. - Zero-Based Budgeting: Requires every expense to be justified from scratch, promoting cost control and efficiency. - Incremental Budgeting: Adjusts past budgets slightly to reflect inflation and minor changes. It is simple but may not address inefficiencies. - Flexible Budgeting: Adjusts expenditure based on business performance and economic conditions. - Rolling Budgets: Continuously updated to adapt to market changes, ensuring financial agility. - Cash Flow Forecasting: Predicts cash inflows and outflows, helping avoid liquidity issues and ensuring smooth operations. Advantages: ✔ Helps businesses manage cash flow and avoid liquidity issues.\ ✔ Enables better allocation of financial resources.\ ✔ Improves financial discipline and cost control.\ ✔ Provides a roadmap for long-term business objectives.\ ✔ Helps secure loans and investor funding. Disadvantages: ✖ Rigid budgets may not adapt to changing market conditions.\ ✖ Inaccurate forecasting can lead to financial instability.\ ✖ Time-consuming and requires constant updates.\ ✖ Requires expertise in financial planning and analysis.\ ✖ Overemphasis on cost-cutting may reduce business growth potential. Porter's 5 Forces Analysis ========================== a. **Barriers to Entry** = This means the ease with which other firms can join the industry and compete with existing businesses. This threat of entry is greatest when: - economies of scale are low in the industry - the technology needed to enter the industry is relatively cheap - distribution channels are easy to access (e.g. retail shops are not owned by existing manufacturers in the industry) - there are no legal or patent restrictions on entry - the importance of product differentiation is low, so extensive advertising may not be required to get established. b. **Power of Buyers** = This refers to the power that customers have over the producing industry. For example, if there are four major supermarket groups that dominate this sector of retailing, their buyer power over food and other producers will be great. Buyer power will also be increased when: - there are many undifferentiated small supplying firms (e.g. many small farmers supplying milk or chickens to supermarkets) - the cost of switching suppliers is low - buyers can realistically and easily buy from other suppliers. c. **Power of Suppliers** = Suppliers will be relatively powerful compared with buyers when: - the cost of switching is high (e.g. from Microsoft computers to Macs) - the brand being sold is very powerful and well-known (e.g. Cadbury's chocolate or Nike shoes) - suppliers could realistically threaten to open their own forward-integration operations (e.g. coffee suppliers open their own cafés) - customers have little bargaining power as they are small firms and fragmented (e.g. dispersed around the country, as with independent petrol stations). d. **Threat of Substitutes** = In Porter's model, the idea of substitute products does not mean alternatives in the same industry, such as Toyota for Honda cars. It refers to substitute products in other industries. For instance, the demand for aluminium for cans is partly affected by the price of glass for bottling and the price of plastic for containers. These are substitutes for aluminium, but they are not rivals in the same industry. Threats of substitution will exist when: - New technology makes other options available, such as satellite TV instead of traditional antenna reception. - Price competition forces customers to consider alternatives. For example, lower bus fares might make some travellers switch from rail transport. - Any significant new product leads to a switch in consumer spending. For example, increasing spending on mobile (cell) phones by young people reduces the available cash they have to spend on clothes. e. **Competitive Rivalry** = This is the key part of this analysis. It sums up the most important factors that determine the level of competition or rivalry in an industry. It is based on the other four forces. This is why it is often illustrated in the centre of the five forces diagram. - Competitive rivalry is most likely to be high where: i. it is cheap and easy for new firms to enter an industry ii. there is a threat from substitute products iii. suppliers have much power iv. buyers have much power. - There will also be great rivalry between competing firms in an industry when: i. there are a large number of firms with similar market share ii. high fixed costs force firms to try to obtain economies of scale iii. there is slow market growth that forces firms to take a share from rivals if they wish to increase sales. Advantages: ✔ Provides a structured framework for industry analysis.\ ✔ Helps businesses understand competitive dynamics.\ ✔ Identifies threats and opportunities in the market.\ ✔ Aids in strategic decision-making and positioning.\ ✔ Applicable across various industries. Disadvantages: ✖ Does not consider rapid industry changes.\ ✖ Focuses more on external factors than internal capabilities.\ ✖ May not be relevant in highly dynamic or niche markets.\ ✖ Requires additional analysis for accurate insights.\ ✖ Cannot predict future competition with certainty. Ansoff Matrix ============= ### Market penetration Market penetration is the least risky of all four possible strategies in the Ansoff matrix, because there are fewer unknowns -- the market and product parameters both remain the same. However, it is not risk-free. If low prices are the method used to penetrate the market, they could lead to a potentially damaging price war that reduces the profit margins of all firms in the industry. ### Product development Product development often involves innovation and these brand-new products can offer a distinctive identity to the business. ### Market development Market development could include exporting goods to overseas markets or selling to a new market segment. ### Diversification Related diversification, vertical integration in the same industry, is usually less risky than unrelated diversification, which involves entering a completely different industry. Since diversification means dealing with new products and markets, it is the riskiest strategy and may go beyond the company\'s core strengths. However, it can be worth considering if the potential profits justify the risk. Another benefit is the opportunity to enter a growing industry. Advantages: ✔ Provides clear strategic options for business growth.\ ✔ Helps businesses assess risk levels in growth decisions.\ ✔ Market penetration allows low-risk expansion.\ ✔ Product development can enhance brand value.\ ✔ Diversification spreads risk across multiple markets. Disadvantages: ✖ Market penetration may lead to price wars.\ ✖ Product development requires high R&D investment.\ ✖ Market development faces cultural and regulatory barriers.\ ✖ Diversification is risky and may divert focus from core business.\ ✖ Growth strategies may not guarantee success. FORMULAS ======== **[Price Elasticity of Demand (PED)]** - \% Change in Demand / % Change in price **[Income Elasticity of Demand (YED)]** - \% Change in Demand / % Change in Consumers' Income **[Promotional Elasticity of Demand]** - \% Change in Demand / % Change in Promotional Spending **[Absenteeism Rate]** - (Total Absences×100) / Total Working Days **[Labour Productivity]** - Total Output / Number of employees **[Capacity Utilization]** - (Actual Output / Maximum Possible Output)×100 **[Break-even Point]** - Fixed Costs / (Selling Price per Unit−Variable Cost per Unit) **[Contribution per Unit]** - Selling Price per Unit−Variable Cost per Unit **[Total Contribution]** - Contribution per Unit \* Quantity **[Gross Profit Margin]** - (Gross Profit / Revenue) \* 100 **[Operating Profit Margin]** - (Operating Profit / Revenue) \* 100 **[Net Profit Margin]** - (Net Profit / Revenue) \* 100 **[Return on Capital Employed (ROCE)]** - (Operating Profit / Capital Employed) \* 100 - Capital Employed = Non-Current Liabilities + Shareholders' Equity - Shareholder's Equity = Issued Shares + Reserves **[Current Ratio]** - Current Assets / Current Liabilities **[Acid Test Ratio]** - (Current Assets−Inventory) / Current Liabilities **[Gearing Ratio]** - (Long-term Liabilities / Capital Employed) \* 100 **[Inventory Turnover Ratio]** - (Cost of Goods Sold / Average Inventory) **[Dividend Yield]** - (Dividend per Share / Market Price per Share) \* 100 **[Dividend per share]** - Total Annual Dividends / Total Number of Shares Issued **[Price/earning ratio]** - Market share price / EPS - EPS= Net Profit / Number of Shares Outstanding **[Critical Path Analysis (CPA) - Earliest Start Time (EST)]** - EST= Earliest time the previous activity finishes **[Critical Path Analysis (CPA) - Latest Finish Time (LFT)]** - LFT= Latest time an activity can finish without delaying the project **[Payback period]** - (12 \* additional cashflow) / inflow of last year **[Additional Cashflow]** - Total of Cumulative Inflow (or Discounted Cashflows) -- investment **[ARR]** - (avg profit / avg investment) \* 100 - avg profit = total profit / years - avg investment = investment / 2 **[NPV]** - Total amount for all years Answer Structures ================= Answer Structure (8 Marks) - ***Definition/Context (1-2 sentences)*** - ***Two clear impacts (each impact = explanation + analysis)*** - ***Use business concepts*** - ***Link back to the business scenario*** Answer Structure (12 Marks) - ***Introduction (1-2 sentences) -- Define the topic stated in the question and set the context based on the insert.*** - ***Three methods (Explain + Pros + Cons of each)*** - ***Evaluation (Which is most effective & Why?)*** - ***Conclusion (2 sentences summarizing your evaluation)***