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NATIONAL
QUALIFICATIONS
2013

thursda y , 2 3 M A Y
1.00 PM 3.45 PM

BUSINESS
MANAGEMENT

ADVANCED HIGHER

100 marks are allocated to this paper.

Candidates should spend 15 minutes reading the case study material and the questions.
Answer all questions in Section One (50 marks).
Answer two questions in Section Two (50 marks).
Note: The questions are printed on a separate sheet inserted inside the front cover of this paper.

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STV GROUP plc

Background Information
STV Group plc is based in Glasgow. It is a Scottish media company which incorporates
broadcasting and production of television programmes and internet services, which it sees
as its core functions. The Group also sells advertising airtime on television and advertising
space on the Internet. STV Group holds licences for North Scotland and Central
Scotland, allowing it to produce dedicated regional programming for over 35m viewers
across Scotland each week. STV Productions, together with its sister company, Ginger
Productions, has produced a wide range of programmes for a variety of networks, including
top quality drama like Taggart and Rebus for ITV1.
Non-core Businesses
Recently the Group has sold the last of its non-core businesses including Virgin radio. It
also sold the cinema advertising company Pearl & Dean for 1 in 2010. Pearl & Dean is
currently the second largest cinema advertising contractor in the UK with an iconic brand
in the film world, covering 1478 screens, and has a 366% share of the market by admissions.
Due to its contract with Vue cinemas, Pearl & Dean had to pay a minimum rent regardless
of the size of the audience. This meant it had been making a loss. Because of the contract
with Vue, in 2009 the Group increased its provision for future losses from 133m to
143m. STV Group wanted to reduce its exposure to this uncapped trading risk.
STVs Strategy
Internet
A main part of STVs strategy is to become Scotlands local media company. STV is
committed to delivering high quality public service content and it has continued to enhance
this through the introduction of new platforms and the launch of STV Local. STV Local
is a series of websites with information about local areas eg different towns and cities in
Scotland. The websites contain information including whats on, and news specific to
the local area.
In 2011 STV launched 3 new hyper-local websites in Edinburgh (websites which cover
different areas within towns or cities) to add to a growing number across Scotland. The
Edinburgh websites give STV 19 hyper-local sites and it plans to cover 75% of Scotlands
population through hyper-local sites, ending up with 100 or more of them. Each website
is run by a professional journalist working in partnership with representatives of the local
community, whether from the local authority, emergency services or arts and sports groups.
Whilst other mainstream media reduce services to local marketplaces, STV has taken a
contrary view, seeing a service and commercial opportunity with the development of STV
Local. The Group wants to ensure STV branded services are available anywhere and at
any time in Scotland, while trying to tap new sources of advertisingin this case classified.
The low cost structure will enable the venture to be profitable and it is estimated that
breakeven might only be 18 months away.

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Television
Other local plans involve launching a new Edinburgh edition of its 30 minute STV News
at Six programme to add to the current services from Glasgow and Aberdeen. All 3 will
continue to carry national and international news, but STV has identified that the most
popular part of their news show is when it serves the ultra-local. The STV strategy fits in
with the Governments enthusiasm for creating more local television in the UK.
Growth
STV is expanding organically in a number of ways and also through relationships and
partnerships with other organisations to deliver sustainable growth.
Broadcasting
STVs content team continues to increase commissions from other broadcasters, including
the BBC, and ITV, to produce programmes providing clear evidence of its capability and
creativity. In 2010 STV Productions produced 25 more hours of programming than in
previous years including Antiques Road Trip for BBC 2 and Missing Mums for Sky Real
Lives. This has reduced dependence on ITV to 30% of total programme sales compared with
80% in the past.
Advertising
Another part of STVs stated ambition is to increase its share of display advertising in
Scotland. The aim is to develop closer relationships with advertisers beyond the traditional
30-second spot to get into everything from sponsorship and market research to product
placement, which is now permitted on UK television.
Digital Media
STV is continuing to extend its reach through the development of new methods to provide
audiences with an increased choice of ways in which they can access STVs content. Chief
Executive Rob Woodward has called STV Scotlands digital media company. These
platforms include a High Definition service and further enhancement of the Video on Demand
service through the highly commended STV Player.
Exhibit 1 gives information on STVs digital media platforms.
Partnerships and Joint Ventures
In 2010 STV entered into a joint venture with US production company, Kinetic Content.
The 2 companies work closely together to develop brand-new formats to be pitched to
broadcasters both in the UK and the US.
Exhibit 2 gives some examples of partnerships and joint ventures.

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Opting out of the Network

Recently STV has dropped some of the ITV network programmes it thought would
not play well in Scotland or cost too much. There were complaints about dropping
programmes like The Bill and showing STVs own produced or acquired content but, on
the whole, viewers responded well. STV achieved an increase in audience share against
ITV itself across the all-important peak period. However 95% of programmes are from the
the ITV network, to which STV pays a considerable sum of money. STV is mindful that it
is a Scottish based service, independent of ITV, and therefore has a clear responsibility to
produce a balanced schedule relevant for audiences in Scotland.
Instead of Downton Abbey, STV showed the new series of Taggart and matched ITVs 33%
audience share. Other programmes shownabout 5% of the peak-time programmes
have ranged from local football to films and the Australian acquired series Underbelly.
These programmes attracted younger, more up-market audiences that, overall, were 0.24%
higher than the ITV average. However in 2011 STV broadcast Downton Abbey. A core
part of STVs strategy is the right of opt-out from ITV.
Employee Relations
STVs culture is based on the core principle that everyone in the business can make a
difference and everyone has a contribution to make. It achieves this in a number of ways:
STV holds quarterly staff briefing sessions at which the Chief Executive Officer provides
an update on business performance.
The Group encourages participation in e-learning via the BBC CD-ROM safety course
for journalists and production teams.
An employee opinion survey is undertaken to assess motivation and obtain feedback.
MYSTV where employees are assigned goals related to key performance indicators so
they can maximise their performance.
Corporate Social Responsibility
STV believes community relations are of paramount importance and undertakes a variety of
programmes to foster community links.
Exhibit 3 gives information on STVs CSR initiatives.
Exhibit 4 gives information on STVs performance.
NB Unless stated otherwise, the above, and the accompanying exhibits, are current at
1 November 2011 and refer to the situation at that date.

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Exhibit 1: Digital Media

STV news app

A free application for mobile phones which

provides users with instant access to news, sport
and high quality video reports. It allows users
across the globe to access STV branded news
content. At the time of writing it had been
downloaded 100,000 times.

www.stvjobs.com

Website which provides access to thousands of

Scottish jobs online.

www.stv.tv/local

People can log on to discover and share their

local news, sport, weather, reviews, events,
announcements, places and community.

www.stv.tv

During 2010 STVs primary digital channel,

www.stv.tv, secured the position of Scotlands
most popular commercial website, attracting
over 22m unique users every month.

www.youtube.com/stvplayer

A dedicated YouTube channel for STV showing

archive programmes, news and a daily one-hour
entertainment magazine-style show called The
Hour. Currently has over 2m users per month.

www.stv.tv/player

STVs TV-on-demand service which provides

viewers with the ability to catch up on their
favourite STV programmes and watch highlights
from the vast STV archives. The system was
developed entirely in-house and on a modest
budget. This is also available on Playstation 3.

Daily Deals

Daily email alerts give consumers the

opportunity to register free to receive the very
best deals available in Glasgow and Edinburgh.
STVs Classified team is working closely with
a host of local businesses including restaurants,
beauty salons, adventure day organisers and
hotels to source the widest possible range of deals
across Scotlands 2 biggest cities.

STV Live Casino

Up-to-the-minute technology allows online

players to view all the casino action live on their
computers, with the wheel and cards being spun
and dealt in real time. Players can choose to take
part in a range of live games, including Roulette,
Blackjack and Baccarat.

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[Turn over

Exhibit 2: Partnerships and Joint Ventures

Brightcove
Brightcove is an online video platform. Media companies, businesses and organisations
worldwide use Brightcove to publish and distribute video on the Web. A partnership with
Brightcove produced the STV equivalent of the BBCs iPlayer in 6 weeks. STV scored 76%
in usability stakes, making it the highest scoring commercial player. STV Player was second
only to BBC iPlayer, which scored 88%.
MirriAd Ltd
STV took a stake in MirriAd which is a company that can digitally insert products into
programmes at the post-production stage. MirriAd is the market leader. This means that
brand names and products can be advertised during programmes rather than during breaks.
This form of advertising has just become legal in the European Union. It is a fact that people
skip TV advertisements whenever possible, and that viewing figures drop off by an average of
25% during breaks. MirriAd is helping STV tap into a rapidly expanding market for product
placement worldwide. The market for this in the US has been growing by 25% a year.
Kinetic Content
This joint venture allows the companies to license each others original formats exclusively
in their respective countries. Existing and newly developed formats from STV Productions
and Ginger Productions are now available to Kinetic Content to co-produce with STV in the
USA. Similarly, STV holds the exclusive UK rights to co-produce formats developed and
owned by Kinetic Content. The 2 companies will work closely together to develop brandnew formats to be pitched to broadcasters both in the UK and the US. This deal provided
STV with a targeted and cost-effective means of accessing US broadcasters, and opened up
the American market to them. Similarly it opened up the UK market to formats developed
and owned by Kinetic Content. STV has now secured its first pilot in the US through this
venture. For the first time in its 53-year history STV is able to start to provide high quality
Scottish content to Scottish people no matter where in the world they live.

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Exhibit 3: Corporate Social Responsibility

STV studio tours

Tours of Aberdeen and Glasgow studios for

community groups, school pupils and media
students.

Work placements

Students across Scotland carry out work

experience placements on the Taggart set.
Each student can spend one week working with
various departments and their second week in an
area of their choice eg wardrobe, make-up, postproduction, direction or script editing.

STV Appeal

Celebrities and ordinary people undertake

various activities to raise funds to tackle poverty.
One in 4 children lives in poverty in Scotland.

Common Purpose

STV is working in partnership with Common

Purpose which is a youth organisation. This
partnership has produced a long-running regular
educational course, Your Turn, which aims
to encourage leadership, raise aspirations and
increase confidence among young people.

Princes Trusts Get Started in

Presenting programme

This is designed to help young people

improve communication skills. As part of this
partnership, STV organises 6 visits to their
premises across the year. This offers participants
an insight into the work behind the scenes, as
well as a chance to meet STV newsreaders and
learn more about the day-to-day running of a
television company.

Green Office Week

STV participates in this. During this event it

encourages staff to recycle and conserve energy
wherever possible.

Green Travel Plan

Based at STVs Glasgow headquarters, this aims

to encourage staff to use more sustainable means
of transport to commute to work. To promote
cycling, STV provides shower facilities, cycle
parking and lockers for employee use.

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Exhibit 4
This contains some information on the overall performance of STV Group plc.
Some financial data:
2010

2009

2008

2007

1048

903

1112

1203

Operating profit (m)

144

92

132

111

Net operating expenses (m)

904

811

980

1092

Revenue (m)

Some data on the broadcasting side of the business

In 2010 STV player was voted the best commercial catch-up site in the UK.

The Group has achieved a year-on-year increase in traffic to its online news content.

Over 55% of the Scottish population watch STV news at least once a week.

In 2010 the TV series Taggart achieved a 33% audience share and outperformed the
alternative drama which was showing on the ITV Network.

Some data about the other operations of the group

In 2010 debt was reduced to 52m from 180m in 2009.

In 2010 revenue from digital operations was up 50% to 42m from the previous year.

[END OF CASE STUDY]

ACKNOWLEDGEMENTS
Case StudyInformation and data is adapted from www.stvplc.tv. Reproduced by kind
permission of STV Group plc.
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QUESTIONS

Marks

You should spend 15 minutes reading through the case study material on
STV Group plc and the questions.
SECTION ONE
Answer ALL questions.
1. Explore STV Groups reasons for pursuing a strategy of becoming more
local.
8
2.

Using examples from the Case Study, analyse the importance to STV Group of
6
developing digital media.

3.

Examine the advantages and disadvantages to STV Group of partnerships and

joint ventures with other companies such as Kinetic Content.
4

4.

Assess the ways in which STV Groups approach to employee relations has helped
it to develop a committed workforce.
4

5. Using force field analysis, explain STV Groups decision to opt out of the
Network.
10
6. Using examples from the case study, discuss the importance of STV Groups
policy of corporate social responsibility.
6
7.

Using evidence from the case study, explain how STV Group might measure its
4
success.

8.

Explain the advantages and disadvantages to STV Group of selling off its noncore businesses.
8
(50)

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SECTION TWO

Marks

Answer any TWO of the following questions.

You may illustrate your answers in this section with examples from the case
study or from other firms with which you are familiar.
9. (a) Firms may expand their operations into other countries through setting up
their own facilities abroad and buying existing overseas firms. Examine the
advantages and disadvantages of these options.
14
(b) Small businesses find it increasingly difficult to operate in the current
economic climate. Describe and justify sources of assistance available to such
11
businesses.
(25)
10. (a) In 2011, five countries, including Turkey and Croatia, were waiting to join the
EU. Discuss ways in which EU enlargement could impact on UK businesses. 13
(b) Describe the Classical School of Management and the Contingency School of
Management and assess their relevance to modern business practice.
12
(25)
11. (a) Examine the characteristics that teams should have if they are to operate
13
effectively.
(b) Explain the importance of any 2 of the following for UK businesses.

Financial incentives
Transfer pricing
Cash flow forecasts
Market segmentation

12
(25)

12. (a) With reference to Mintzberg, describe the different roles that managers play
12
and assess their impact on achieving organisational objectives.
(b) Assess the extent to which a decision to become greener might affect the
13
functional areas of an organisation.
(25)

[END OF QUESTION PAPER]

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