IB DP Business Management Unit 5: Operations management -: 5.5 Break-even analysis HL Paper 1

Ans:

a. Possible benefits include:

MM staff are not specialists of HRM: they know a lot about marketing, design and communications, but not about HRM. Outsourcing HRM means that they can focus on their core business, and let specialists from an HR agency deal with all HR tasks (recruitment, contracts etc.).
As MM becomes more international, HRM is getting more complex and requires a lot of advanced HR knowledge, as labor laws vary from country to country, for example between UK and India (about working conditions, workers’ rights etc.).
Outsourcing HRM will help MM deal with difficult situations, which could prove costly (and even give a bad image of MM to external stakeholders), for example if they are taken to court by dissatisfied employees, such as the ones who feel bullied by Claire.
When they have HR questions, for example about payment schemes or holidays, MM employees will benefit from working with HR specialists: this will aid communication, which is better for the business.
Reduction in costs. HRM managers no longer required.
May lead to a consistency of HR operations across the whole of MM.

Accept any other relevant benefits.

Mark as a 2 + 2.

Award [1] for each relevant benefit identified and an additional [1] for further outline in context. Award a maximum of [2] for each benefit.
b.

Refer to Paper 1 markbands for May 2016 forward, available under the “Your tests” tab > supplemental materials.

This question assesses candidates’ knowledge and understanding of differentiation, both in general (what it means, how it may be achieved) and in the specific case of MM.

Companies differentiate themselves from their competitors in many ways, such as:

through their products (USP of their goods and services), or the range/portfolio of products they may offer their customers;
through their pricing strategies (e.g. price leadership or premium pricing);
through the relationships they build with their customers (customer service);
through their reputation and image (branding);
through other marketing aspects, such as the packaging they use, or the type of promotion and advertising they do;
through their ethical objectives (CSR) and particular values they may defend;
through their workforce (e.g. talented creative workers, cultural diversity);
through their operations (e.g. what they do, where, how);
through their innovative practices (e.g. R&D leading to particular product features or performance);
through their strategies (e.g. franchising, international growth etc.).

The case study explicitly mentions about customer service, as MM “aims to respond to customers more quickly than others in the industry” (line 65). Other methods of differentiation are implied, for example MM has strong ethical objectives (e.g. only accepting customers with strong equal opportunities policies) and highly values cultural diversity (e.g. having multicultural content in the marketing strategies it creates). Their competitors may share those same ethical objectives and value cultural diversity too. The case study does not provide much information about MM competitors, yet this is not a problem to answer this question:

Accept any other relevant explanation.

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.

Award a maximum of [3] for a theoretical answer about differentiation.

Award a maximum of [4] for a descriptive answer.