BUSS3 How To Nail Good Application – Crunch the Connections and Calculations!

The skill of application is still neglected by too many students taking A Level business studies exams and nowhere is this more important than in the AQA BUSS3 exam (Strategies for Success)...

In our popular exam coaching workshops for BUSS3 we emphasise the importance of good application as a way of opening the door for good analysis and reaching the higher levels of evaluation. We make no apologies for this – an A2 exam like BUSS3 is not an invitation for students to demonstrate all they know about a subject. It is designed to show how students can apply their understanding in the context of realistic business case studies.

BUSS3 provides students with an un-seen case study (until the exam that is) which contains all the information students need to develop strong, high mark-earning answers to each of the four compulsory questions.

As we say in the workshops, students should treat the case study as their friend. By consistently keeping their answers in the context of the case study, they are much more likely to write relevant and well-developed answers. Good application opens the door to good analysis and strong evaluation!

Not convinced? Look at this comment from a recent examiners report on BUSS3:

“Students should apply their knowledge to the business context in which the question is set, through recognition of some specific business aspect, the management of the business or the problems or issues faced by the business”.

…and this from a recent BUSS3 post-standardisation mark scheme:

“Good application can be demonstrated by being consistently in context. An answer may be in context throughout with each argument related to the scenario”.

The benefits of a student achieving good application in each of the four BUSS3 exam questions are clear. Good application alone enables a student to reach Level 3 (L3) in the mark scheme for Knowledge, Application and Analysis (students will remember this as Mount KAA from the workshops). In the 34-marker question, this gives the student a minimum of 11-15 marks out of the maximum 24 available for KAA.

So what is meant by good application and how does this differ from limited or reasonable application?

An example can help explain the difference.

Let’s use the SunTravel case study which over 3,000 students used during the Nov/Dec 2012 workshops:

Imagine you want to refer to the fall in operating profit experienced by SunTravel in 2011 to help make the point that a move towards a cost minimisation strategy is a sensible option given SunTravel’s current position.

A response which achieves only limited application might read like this:

“SunTravel ‘s profit is low. In 2011 it was £50million which was much lower than in 2010 when revenues were higher. So I SunTravel is about to significantly reduce its costs by a cost-minimisation strategy then operating profit should rise strongly.“

Why only limited? The use of the data from Appendix 1 will get some credit because relevant data has been extracted from the case which supports the point being made. But the data isn't used very convincingly.

A slightly better response which might be awarded reasonable application would make a somewhat stronger reference to the case study information. For example;

“A cost minimisation strategy would seem to be appropriate for SunTravel because it only achieves a low level of profitability in a low margin industry. For example, in 2011 SunTravel made an operating profit of £50m which is an operating profit margin of 0.6% (profit of £50m divided by revenue of £8.4bn) so if large cost savings can be made then both the operating margin and operating profit could rise even if revenues continue to fall“.

Why does this reach “reasonable application”? Reasonable application is normally achieved if a student correctly calculates an appropriate financial ratio (i.e. picks the right financial data and calculates the ratio accurately). In this case, the operating profit margin has been calculated and referenced to a comment in the SunTravel case study about tour operating being a low margin industry. But that is as far as that piece of application goes.

However, with good exam technique, it is possible to make the same data earn many more marks – as shown by this example which is likely to have been awarded good application:

“SunTravel’s operating profit margin worsened significantly in 2011 falling to just 0.6% from 2.9% in 2010. Operating profit fell by £205m in just one year, a decrease of 80%. Whilst revenues also fell (by approx. 5%), the high fixed costs in the business meant that the fall in revenue had a dramatic effect on profitability. Even worse for SunTravel, their operating margin is now substantially below the market leader GoSTAY (3.9% in 2011) which is likely to make it harder for the Board to achieve its objective of significantly increasing the share price since potential investors may conclude that GoStay is a more efficient business and better investment option“.

What makes this good application?

Firstly, it is wholly in context – the answer is simply about the case study business and data. It also makes a nice link between different functional areas (e.g. finance and operations).

Secondly, the response combines and manipulates data. For example, the percentage change in SunTravel’s operating margin is calculated and compared with the (lower) fall in revenues; also the SunTravel data is compared and contrasted with GoSTAY to draw some relevant insights into why investors are more likely to back GoSTAY.

A thirdly, the data is used to support and develop an argument – it is not simply presented as a series of calculations.

Just a bit more thought and careful use of the data in the case study can really make the world of difference to the application marks you can achieve in each of the four questions.