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YOUR NOTES
IB Business Management SL 

6.1 The Business Management Toolkit

CONTENTS
6.1.1 SWOT Analysis
6.1.2 Ansoff Matrix
6.1.3 STEEPLE Analysis
6.1.4 Boston Consulting Group (BCG) Matrix
6.1.5 Business Plan
6.1.6 Decision Trees
6.1.7 Descriptive Statistics
6.1.8 Circular Business Models

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6.1.1 SWOT Analysis YOUR NOTES


Understanding SWOT Analysis
SWOT Analysis is an analytical tool used by businesses to identify
Internal strengths and weaknesses
External opportunities and threats
Effective SWOT analysis can help senior managers to understand the current business
position and future changes that may occur so that appropriate strategic decisions may
be made

Factors Often Considered in a SWOT Analysis

STRENGTHS WEAKNESSES

What the business is good at What the business does poorly

For example:
For example:
Qualities that separate the business
Ways in which the business lags
from rivals
behind competitors
Internal resources such as skilled staff
Resource or capital limitations
or a particular innovation
including labour and finance
Possession of assets such as capital,
Lack of a competitive advantage
patents or intellectual property
Lack of a unique selling proposition
A loyal customer base
(USP)
Effective leadership
Poor online presence

OPPORTUNITIES THREATS

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YOUR NOTES
Options a business may exploit to enjoy Hazards that have the potential to
further success damage business performance 

For example: For example:

Developing markets for specific New or emerging competitors are
products become apparent gaining market share
Few competitors exist A changing legal or political
A changing legal or political environment negatively impacting on
environment positively impacts on business processes and decisions
business processes and decisions Social or technological developments
Social or technological threaten obsolescence of products
developments create an emerging Economic indicators becoming less
need for the businesses products favourable
Economic indicators becoming more Negative press coverage
favourable Changing customer attitudes
A potential for positive media towards the business
coverage of the business

Example of a Swot Analysis

Once a SWOT Analysis has been completed by a business, appropriate decisions can be
made to improve performance
Strengths should be harnessed
Weaknesses should be eliminated
Opportunities should be seized
Threats should be mitigated

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YOUR NOTES


An example of a SWOT Analysis for a small cafe business

Having compiled the SWOT Analysis the owner of the cafe may conclude that the business
should
Seize the opportunity presented by the growing interest in locally sourced ingredients
by promoting the cafe's strength of its seasonal, locally sourced menu, especially
given the threat from large competitors
Make use of the government funding for staff training to attempt to reduce staff
turnover
Increase the volume of sales to a geographically wider target market by teaming up
with delivery apps and establishing an inexpensive social media presence

The usefulness of SWOT analysis

The usefulness of SWOT analysis depends on a range of factors

Factors Affecting the Usefulness of SWOT Analysis

Factor Explanation

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YOUR NOTES
1. The quality & The accuracy and reliability of the data used for SWOT analysis
relevance of data greatly influence its usefulness 
used If the information used for analysis is outdated, incomplete or
biased it can lead to flawed conclusions and ineffective decision-
making

2. Objectivity & bias SWOT analysis requires a fair and unbiased assessment of the
organisation's internal and external factors
If the analysis is influenced by personal biases, preconceived
notions or subjective opinions it can undermine the usefulness of
the analysis

3. Depth of analysis Superficial analysis may overlook important factors or fail to

capture the complexity of the organisation's environment
A comprehensive and thorough analysis can provide more
accurate insights and improve the usefulness of SWOT analysis

4. Stakeholder SWOT analysis should involve input from various stakeholders

involvement within the organisation, including employees, managers,
customers, suppliers, and industry experts
Their diverse perspectives can provide a broader understanding
of the organisation's strengths, weaknesses, opportunities and
threats thus increasing the usefulness of the analysis

5. Dynamic nature of As market conditions, technology and consumer preferences

the environment change over time the relevance of identified strengths,
weaknesses, opportunities and threats may also shift
Regular updates and revisions to the analysis are necessary to
ensure its usefulness

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6.1.2 Ansoff Matrix YOUR NOTES


Development of Corporate Strategy
Ansoff’s Matrix is a tool for businesses who want to grow quickly and have a growth
objective
It is used to identify an appropriate corporate strategy and identify the level of risk
associated with the chosen strategy
The model considers four elements, which are broken down into two categories
The market - existing and new markets
The product - existing and new products

Ansoff’s Strategic Matrix

The least risky strategy to achieve growth is to pursue a strategy of market penetration
This involves selling more products to existing customers by encouraging
More regular use of the product
Increased usage of the product
Brand loyalty of customers

Market development involves finding and exploiting new market opportunities for
existing products by
Entering new markets abroad
Repositioning the product by selling to different customer profiles (selling to other
businesses as well as direct to consumers)
Seeking complementary locations
E.g. M&S Food has achieved significant growth since teaming up with fuel
retailers such as BP and Applegreen and providing express retail outlets

Product Development involves selling new or improved products to existing customers

by
Developing new versions or upgrades of existing successful products
Redesigning packaging and aesthetic features
Relaunching heritage products at commercially convenient intervals

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E.g. Lindt relaunches Christmas-themed products each year, often with a subtle YOUR NOTES
design change, to recapture the interest of customers 

Diversification is the most risky growth strategy as it involves targeting new customers
with entirely new or redeveloped products
Examples of diversification include
UK supermarket Tesco launching a range of financial products including current
accounts and credit cards
Café chain Greggs launching a range of themed clothing products

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6.1.3 STEEPLE Analysis YOUR NOTES


STEEPLE Analysis
STEEPLE analysis examines factors outside of the business (external) that are likely to
impact the business
diagram here
STEEPLE analysis can support effective decision-making as senior managers will gain a
better understanding of the complex context within which the business operates

STEEPLE Analysis is particularly useful in the following situations

Product development
STEEPLE analysis can provide guidance on whether the business should keep selling a
product to a particular region

Workforce planning
STEEPLE analysis can help identify emerging business changes that can affect the
future job market

Strategic business planning

STEEPLE analysis is beneficial when starting a business planning process as it provides
a detailed guide that includes growth targets, brand positioning, and potential risks

Marketing planning
STEEPLE analysis provides a business with information on external factors which could
be used to create a marketing strategy

An Explanation of the STEEPLE Factors

External Factor Explanation Examples

The extent to which personal Greater numbers of people

Social
attitudes and values, culture and graduating from university
demographic change are expected have increased the quality of
to affect the business including workers available to European
Social mobility businesses
Education
Ethics & Religion A more health-conscious
Migration population provides a
Health profile lucrative market for
Population growth and businesses selling fitness and
demographic structure lifestyle products

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YOUR NOTES
Technological The extent to which technological Developments in
change and innovation are expected communication technology 
to impact the business including have reduced the need for
Research & development business travel
Production and distribution
processes and efficiency Rapid developments in
Quality and new materials technology have reduced the
Intellectual property length of product life cycles
Online presence and increased the need for
The technology used in businesses to carry out
communication ongoing research,
development and innovation

Economic The extent to which economic High rates of fuel and food
indicators are expected to directly inflation in parts of Europe
impact business performance have reduced the level of
including disposable income for most
Inflation households
Exchange rates
Cost of living A historically low
The stage of the Business Cycle unemployment level has made
and GDP growth recruitment more challenging
Unemployment levels for many EU businesses

Environmental The extent to which changes in Increased interest in

attitudes and government policy environmentally responsible
towards environmental protection as and ethically-produced goods
well as the impact of global warming has created new markets for
expected to impact the business businesses to exploit
including
Changing infrastructure - for Strict rules on the disposal of
example in favour of green commercial waste have
transportation networks increased costs for
Energy availability & cost businesses
Disposal of materials
Changes in climate and weather
patterns
Air quality

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YOUR NOTES
Political The extent to which local and national The UK’s decision to leave the
government is expected to influence EU in 2016 has led to the 
the business including reintroduction of trading
Government stability and restrictions for British
relationships with key trading businesses importing goods
partners from suppliers in Europe
Tax regulations
Trade restrictions The reduced level of threat
Political Ideology and attitude to from terrorism in Ireland has
Business helped to boost tourism
Fiscal policy
National security status
Investment in public services

Legal The extent to which changes in law Changes to the level of tax
and regulations are expected to levied on high sugar products
impact the business including (sodas) across Europe has
Taxation increased selling prices and
Employment prompted some businesses to
Advertising redevelop their product to
Health & Safety reduce the sugar content
Compliance and ‘red tape’
created by regulatory bodies A rise in the level of the
such as the Health and Safety minimum wage increases
Executive business staffing costs

Ethical The extent to which moral principles

ought to be considered in the Many supermarkets have
decision-making process, for implemented 'above and
example beyond' policies related to the
Being truthful about products sale of alcohol and tobacco
and using responsible marketing and require customers to
practices prove that they are
Paying staff and suppliers on significantly older than the
time and in full minimum legal age of sale
Trading fairly
Being accurate and realistic
about financial performance
Avoiding discrimination

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6.1.4 Boston Consulting Group (BCG) Matrix YOUR NOTES


Boston Matrix & the Product Portfolio
The Boston Consulting Group (BCG) Matrix is a tool used by businesses to analyse their
product portfolio and make strategic decisions about each product

The matrix classifies products into four categories based on their market share and the
market growth rate
Cash Cow
Problem Child/Question Mark
Star
Dog

The classification of products in the Boston Matrix according to their market share and the
growth rate in the market as a whole

By categorising products into these categories, businesses can allocate resources more
effectively, optimise their cash flow and develop marketing strategies that align with the
product's potential

The Implications of Product Classification in the Boston Matrix for the cash flow and
Marketing Strategy

Product Type Explanation Implications

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YOUR NOTES
Cash Cow Cash cows are products with a They generate significant positive
high market share in a mature cash flow but have low growth 
market (the entire market is no potential
longer growing) The business invests minimal
resources in cash cows as they are
seen as stable sources of income
Marketing efforts focus on
maintaining their market share
and profitability
Cash cows are valuable assets and
can be used to fund the
development of new products

Problem Problem child or question mark There is often a negative cash flow
Child/Question products have a low market as businesses usually invest in
Mark share in a high-growth market problem child products to increase
These products have the their market share and turn them
potential to become stars if the into stars
company invests in their If the investment does not result in
development growing the business may
discontinue the product
Marketing efforts focus on
increasing their market share and
brand recognition

Star Star products have a high They generate significant positive

market share in a high-growth cash flow and have the potential
market for continued growth
The company typically invests in Marketing efforts focus on building
stars to maintain or increase brand recognition, increasing
their market share market share, and maintaining
profitability
Stars are valuable assets and the
business should focus on
maximising their potential

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YOUR NOTES
Dog Dog products have a low They generate little revenue for the
market share in a low-growth company and have no growth 
market potential
Businesses often move away
(divest) from these to focus on
more profitable products
Marketing efforts for dog products
are minimal or zero

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6.1.5 Business Plan YOUR NOTES


Business Plan
A business plan sets out key aspects of a business and how the owners intend it to
develop
The main aim of producing a business plan is to reduce the risk associated with starting a
new business and help the owners to raise finance
Producing a business plan forces the owner to think about every aspect of the
business before they start which should reduce the risk of failure

Common Elements of a Business Plan

Having carried out research to support the plan, the business will be well-informed about
the potential problems and chance of success and can select the most
appropriate source of finance based on this information

A well-written business plan can help a business to obtain finance

Lenders (e.g. banks) and other investors will be able to explore the plan and make an
informed decision about whether the business is credible and worth the financial risk
Investors (e.g. venture capitalists) will use the business plan to explore whether there is
an opportunity to increase the value of their investment and make a worthwhile profit
The business, having carried out research to support the plan, will be well-informed
about the potential problems and chance of success and can select the most
appropriate source of finance based on this information
A business plan should be a regularly-updated working document

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As the business grows plans are likely to change as it faces new threats and YOUR NOTES
opportunities 

Key Elements in a Business Plan

Element Explanation

Executive Summary This section provides an overview of the business idea, its unique
selling proposition, target market, and financial projections
It should be concise yet compelling enough to grab the
reader's attention

Company Description A description of the business mission, vision, and values

Information about the legal structure, location and any unique

advantages or intellectual property the business may have

Market Analysis A thorough analysis of the target market including its size, growth
potential and key trends

Identification of target customers and their needs

A competitor analysis to understand their strengths and

weaknesses

Products or Services A detailed explanation of the products/services the business will

offer, highlighting their features, benefits and any competitive
advantages they may have

Marketing & Sales A description of the intended marketing and sales approach
Strategy including marketing channels, pricing strategy and promotional
tactics
A description of how customers will be attracted and their loyalty
captured

Organisation & An overview of the organisational structure of the business and the
Management key members of the team including their qualifications, experience
and responsibilities

Operations & A description of how the business will operate on a day-to-day

Implementation basis including the production process, stock management and
any key partnerships or suppliers

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YOUR NOTES
Financial Projections A detailed financial forecast for the business including projected
income statements, balance sheets and cash flow statements 
An outline of funding requirements and any existing or potential
sources of finance

Risk Analysis A consideration of the potential risks and challenges the business
may face and the intended strategies for mitigating them

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6.1.6 Decision Trees YOUR NOTES


Decision Tree Diagrams
A decision tree is a quantitative method of tracing the outcomes of a decision so that the
most profitable decision can be identified
Research-based estimates and probabilities are used to calculate likely outcomes
The net gain from a decision can be identified and used to consider whether an
investment is worthwhile

Using decision trees provides several key advantages to the decision making process
Constructing a decision tree diagram may reveal options that haven't previously been
considered
Managers are forced to consider the risks associated with their choice, ahead of
implementation
The quantitative approach requires deep research to be carried out

Decision Tree Diagrams

The key elements in a decision tree diagram are
Decision points
Outcomes
Probabilities
Expected monetary values

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A simple decision tree based on the choice of whether to invest in opening a new store or YOUR NOTES
expand its website 

Points where decisions need to be made are called Decision Points and are represented by
squares
Square A represents the fact that a choice is required on opening a new store or
expanding the website

Points where there are different outcomes are represented by circles called nodes
Circles B and C represent points at which the different options have a range of
outcomes - success or failure

The probability or likelihood of each outcome is shown on the diagram

A certain outcome has a probability of 1
An impossible outcome has a probability of 0
Opening a new store has a 0.7 probability of success and a 0.3 probability of
failure
Expanding the website has a 0.6 probability of success and a 0.4 probability of
failure

The monetary value of each decision is based on the expected profit or loss of the
outcome
If opening a new store is successful a £420,000 profit is expected
If opening a new store is unsuccessful a £24,000 loss is expected
If expanding the website is successful a £480,000 profit is expected
If expanding the website is unsuccessful a £32,000 loss is expected

Calculating Expected Monetary Values

To compare the options a business should take into account the expected values of each
decision presented in the decision tree diagram

To calculate the expected monetary value of a decision, the following formula is used
(Expected value of success x Probability) + (Expected value of failure x Probability)

Using the example above the expected value of opening a new store is
(£420,000 x 0.7) + (-£24,000 x 0.3)
= £294,000 + -£7,200
= £286,800

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Using the example above the expected value of expanding the website is YOUR NOTES
(£480,000 x 0.6) + (-£32,000 x 0.4) 

= £288,000 + -£12,800
= £275,200

As the expected value of opening a new store is higher at £286,800, than that of
expanding the website at £275,200, based purely on financial terms the business should
choose the option to open a new store

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YOUR NOTES
 Worked Example

Caramelac is a lactose-free chocolate product manufactured by a large
multinational confectionery business. In recent years increased competition from
other well-known brands has started to impact on sales of the product and
managers are determined to maintain Caramelac’s market share.

Market research has shown that the business has two options:
a) Redevelop the product
b) Create a new advertising campaign

The expected outcomes and the probabilities of success and failure are shown in
the decision tree below

Calculate the expected values of each option and decide, on financial grounds,
which option the Caramelac's brand managers should choose. (6 marks)

Step 1 - Calculate the expected value of redeveloping the product

(£840,000 x 0.5) + (-£84,000 x 0.5)

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= £420,000 + -£42,000 YOUR NOTES

= £378,000 (2 marks) 

Step 2 - Calculate the expected value of the advertising campaign

(£660,000 x 0.6) + (-£76,000 x 0.4)

= £396,000 + -£30,400
= £365,600 (2 marks)

Step 3 - Interpret the outcomes and make a decision

As the expected value of redeveloping the product is higher at £378,000 than
that of the advertising campaign at £365,600 (1 mark), the business should
choose the option to redevelop the product (1 mark).

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YOUR NOTES
 Worked Example

In some cases the decision tree diagram provides expected revenues rather
than profit or loss for the range of outcomes
In these diagrams the costs related to each outcome are also provided
To calculate the expected value of each outcome costs must be deducted
from expected revenues

A decision tree based on a decision whether to launch a new product or improve

an existing product

To calculate the expected monetary value of a decision where revenues and

costs are included in the diagram
(Expected value of success x Probability) + ( Expected value of failure x
Probability) - Cost

The expected value of launching a new product is

(£520,000 x 0.6) + (-£54,000 x 0.4) - £280,000
= £312,000 + -£21,600 - £280,000
= £290,400 - £280,000

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= £ 10,400 YOUR NOTES


The expected value of improving the existing product is
(£225,000 x 0.9) + (-£22,000 x 0.1) - £190,000
= £202,500 + -£2,200 - £190,000
= £200,300 - £190,000
= £ 10,300

As the expected value of launching a new product is marginally higher at

£10,400 than that of improving the existing product at £10,300, the business
should choose the option to launch a new product

In this case the decision tree has demonstrated that there is little between the
two options and the business should look at other factors that may inform
their decision

 Exam Tip
Expected values are not the same thing as profit or revenues generated by a choice.
In the above example, launching a new product is expected to either generate a
positive revenue figure of £520,000 or generate a negative revenue figure of
£54,000. It is never forecast that a revenue figure of £200,300 will be achieved.
This is purely a figure used in making the choice between this option and the
alternative and does not represent the actual amount of revenue that is expected to
be achieved.

Limitations of Using Decision Trees

Constructing decision trees that can support effective decision-making requires skill to
avoid bias and take significant amounts of time to gather reliable data
A decision tree is constructed using estimates which rarely take full account of external
factors and cannot include all possible eventualities
Qualitative elements such as human resource impacts are not considered which may
affect the probability of success of a decision
The time lag between the construction of a decision tree diagram and the implementation
of the decision is likely to further affect the reliability of the expected values

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6.1.7 Descriptive Statistics YOUR NOTES


Mean, Median & Mode
Simple statistical analysis may include calculating the average of a given set of numerical
data, using one of three methods
The mean is commonly considered the true average - where all the numbers in a data
set are added and then divided by the number of numbers
The median is the middle value in the list of numbers
The mode is the value that occurs most often in a set of data

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YOUR NOTES
 Worked Example

RapidKleen kept a record of mobile vehicle valets carried out each day during a
busy holiday period.
Find the mean, median, mode, and range of mobile valets during the period using
the following data.

Day 1 2 3 4 5 6 7 8 9

No. of 13 18 13 14 13 16 14 21 13
valets
sold

[6 marks]
Step 1: To calculate the mean, first add together each of the values

13 + 18 + 13 + 14 + 13 + 16 + 14 + 21 + 13 = 135

Step 2: Divide the total by the number of values

135 ÷ 9 = 15
[2 marks]
Note that the mean in this case isn't a value from the original data set
This is a common result - you should not assume that your mean will be one of
your original numbers and you should not be surprised when it isn't
Step 3: To calculate the median first rewrite the data set in numerical order
13, 13, 13, 13, 14, 14, 16, 18, 21

Step 4: Identify the middle number

There are nine numbers in the list, so the middle one will be the (9 + 1) ÷ 2 = 10 ÷ 2
= 5th number:
13, 13, 13, 13, 14, 14, 16, 18, 21
So the median is 14
[2 marks]
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Note: The formula for the place to find the median is "([the number of data YOUR NOTES
points] + 1) ÷ 2", but you don't have to use this formula 
You can just count in from both ends of the list until you meet in the middle
if you prefer, especially if the data set is small

Step 5: To calculate the mode rewrite the data set in numerical order
13, 13, 13, 13, 14, 14, 16, 18, 21
Step 6: Identify the number that occurs most often in the list
13 occurs four times
14 occurs twice
16 appears once
18 appears once
21 appears once
As it appears most frequently the mode number of valets sold is 13
[2 marks]

Standard Deviation
The standard deviation is a measure of the spread of numbers within a set of data
It is a particularly useful tool for planning when managers have wide ranges of data and
need to organise resources effectively

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YOUR NOTES
 Worked Example

FreshBite is a pre-packaged sandwich manufacturer which produces a range of
products that are sold in cafés and refreshment stands in tourist attractions such
as theme parks.
Freshbite's sales are highly variable - the business regularly suffers from high levels
of wastage as a result of having large quantities of unsold stock. On several
occasions it has also been unable to fulfill orders from customers as it has not
produced enough units.
The business has recently employed a new operations manager who has
suggested that calculating the standard deviation of sales would aid planning. He
has requested the last month's sales data to allow him to calculate this.

Product Last month's sales

($)

A 110,000
B 27,000
C 12,000
D 54,000
E 7,000
Calculate the standard deviation of last months' sales for Freshbite.
[4 marks]
Step 1: Calculate the mean
110,000 + 27,000 + 12,000 + 54,000 + 6,000 = 210,000
210,000 ÷ 5 = 42,000
[1 mark]
Step 2: For each product, subtract the mean and square the result

Product Last Minus Squared

month's mean = =
sales (000's)
($000s)
A 110 68 4,624
B 27 -15 225
C 12 -30 900
D 54 12 144
E 7 -35 1,225
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[1 mark] YOUR NOTES

Step 3: Add up the squared differences and express in an expanded form 

4,624 + 225 + 900 + 144 + 1,225 = 7,118

= 7,118,000
[1 mark]
Step 4: Find the square root to identify the standard deviation

7, 118, 000 = $ 2667 . 96

[1 mark]

Note - in this instance, a significant standard deviation from the mean informs
Freshbite's managers that they need to carefully plan for significant variations in
sales. This may include detailed market research as well as capital investment to
reduce wastage (for example, further freezers).

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Quartiles YOUR NOTES

Quartiles 
Quartiles are the values that divide a list of numbers into quarters
Analysis of data using quartiles allows a business to see the distribution and spread of
data
The first quartile is the lower 25% of a list of numbers
The second quartile is the lower 50% of a list of numbers
The third quartile is the lower 75% of a list of numbers
The top quartile is the highest 25% of a list of numbers
The interquartile range excludes outlying data in the top and bottom quartiles and
examines the middle spread of data
The Application of Quartile Ranges to a set of data
First Quartile
Second Quartile
Third Quartile
Top Quartile
Interquartile Range
3 3.5 4.5 5 6 6.5 7.5 8

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YOUR NOTES
 Worked Example

BestGrip is shoe manufacturing business that employs a team of sales managers
who receive performance-related monthly bonuses on top of their monthly
salaries.
Bonuses are awarded to those sales managers who achieve sales in the top
quartile.
Sales data for the month of May are shown in the table below.

Volume of
Salesperson
Sales

A 24,300
B 25,350
C 26,650
D 22,100
E 26,200
F 27,800
G 22,950
H 28,450
I 23,750
J 29,200
K 27,350
L 27,900
Identify the sales managers to be awarded a bonus in May.
[4 marks]
Step 1: Put the list of data into order, from smallest to largest
Volume
Salesperson of
Sales
D 22,100
G 22,950
I 23,750
A 24,300
B 25,350
E 26,200
C 26,650
K 27,350
F 27,800

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L 27,900 YOUR NOTES

H 28,450 
J 29,200
[2 marks]
Step 2: Divide the list into four equal parts:
Volume of
Salesperson
Sales
D 22,100
G 22,950 Quartile 1
I 23,750
A 24,300
B 25,350 Quartile 2
E 26,200
C 26,650
K 27,350 Quartile 3
F 27,800
L 27,900
H 28,450 Quartile 4
J 29,200
[1 mark]
Step 3: Identify the data within the top quartile
In this case, sales managers L, H and J will receive a performance-related
bonus in May
[1 mark]

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Graphs & Charts YOUR NOTES

Analysis of data contained in graphs and charts and the communication of complex data in 
these forms are important business skills
Data may be presented in a range of forms

1. Bar charts
Bar charts show data that are independent of each other such as sales per store

An example of a bar chart showing sales revenue of a selection of home video entertainment
formats in the USA in 2017
(Source: British Council)

2. Pie charts
Pie charts show how a whole is divided into different elements such as total sales divided
amongst different product types

An example of a pie chart showing Apple's quarterly revenue by category in April 2021
(Source: Six Colours)

3. Infographics
Infographics are easy to understand visual representations of data

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An example of an infographic used by Mars to communicate key business statistics YOUR NOTES
(Source: Mars) 

 Worked Example
Maggri Spice Ltd manufactures a range of hot curry pastes that are sold online and
in specialist stores.
In 2022 total sales were $180,000, with sales for individual products shown in the
pie chart below.

Calculate the value of sales of Blue Heat curry paste in 2022.

[2 marks]
Step 1: Identify the percentage of total sales attributed to Blue Heat
In this case 23.9% of total sales can be attributed to Blue Heat

Step 2: Convert the percentage to a decimal

23.9% = 0.239
[1 mark]
Step 3 - Multiply total sales by the decimal
$180,000 x 0.239 = $43,020
Blue Heat curry paste achieved sales of $43,020 in 2022
[1 mark]

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Exam Tip YOUR NOTES

 You can make use of descriptive statistical techniques throughout both exam

papers.
They are particularly useful when making comparisons or supporting chains of
analysis to lead to a judgement. You do not have to wait to be told to use them in
your work - become accustomed to applying them to data in your work as you
move through the course.
Interpreting data using these tools is a higher level approach to application and
demonstrates that you are making optimum use of data presented in case study
materials - this really does impress the examiner!

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6.1.8 Circular Business Models YOUR NOTES


Circular Business Models
A circular business model is an approach to business designed to minimise the
consumption of scarce resources and reduce waste whilst maximising the use and value
of resources
Materials and products are recycled, reused, or regenerated rather than being
disposed of after use
A circular business model is also known as the cradle-to-cradle approach

In a circular business model, products are designed with durability, reparability, and
recyclability in mind
The focus is on creating products that can be easily disassembled and their
components reused or recycled
This promotes the use of renewable resources, reduces dependence on finite
resources and minimises a businesses environmental impact

Adopting a circular business model requires a shift in mindset including

Involving multiple stakeholders including businesses, governments, consumers and
investors
Rethinking business processes, product design, supply chains, and waste
management practices

Key Principles of a Circular Business Model

Principle Explanation

Design for Products are designed to have a longer lifespan reducing the need for
longevity frequent replacement

Resource Resources are used efficiently throughout the product lifecycle,

efficiency minimising waste and optimising material usage

Recycling & reuse Materials from products that have reached the end of their life cycle
are recycled or reused to create new products or components

Product as a Instead of selling products businesses provide them as services, such

service as leasing or renting, encouraging product sharing and extending
their lifespan

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YOUR NOTES
Biomimicry Nature-inspired design principles are used to create products and 
processes that mimic natural systems resulting in greater
sustainability

Collaboration & Businesses collaborate with suppliers, customers and other

partnerships stakeholders to create closed-loop systems and promote the
exchange of materials and knowledge

Advantages of a circular business model include

reduced waste generation
decreased reliance on finite natural resources
cost savings through resource efficiency
enhanced brand reputation
increased resilience to resource scarcity and price volatility

Patagonia as an Example of a Circular Business

One example of a business with a circular business model is outdoor clothing company
Patagonia which has implemented several initiatives to promote sustainability and
reduce waste

Its circular business model focuses on extending the life of products, promoting repair
and reuse, using recycled materials and encouraging responsible consumption

The "Worn Wear" program encourages customers to repair and reuse their clothing
instead of buying new items
The business offers free repairs for their products and also sells used clothing
through their online platform, extending the lifespan of their products and
reducing the overall demand for new clothing
Patagonia has made efforts to use recycled and environmentally friendly materials
in their products
E.g. they have introduced a line of clothing made from recycled plastic bottles
and recycled polyester and use organic cotton to minimise the environmental
impact of their manufacturing processes
Patagonia encourages responsible consumption by actively discouraging
customers from purchasing products they don't need
E.g. advertising campaigns with slogans like "Don't buy this jacket" raise
awareness about the environmental consequences of excessive consumption

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