September 2010

Exam-style Questions

1.

a) Why is it important for a business to specify its objectives?

b) Explain, with examples, why differing stakeholder and organisational objectives might cause problems for managers.

(Marks available: 10)

Answer

Answer outline and marking scheme for question: 1

Give yourself marks for mentioning any of the points below:

a) Focus for all employees, measure by which to judge the performance of the business, informs strategic planning.

(5 marks)

b) Conflict, e.g. local community objective - clean environment, company objective - profit (cost cutting creates pollution).

Decision making: e.g. Shareholders may demand high dividends, but management seek to invest profits for long term.

(5 marks)

(Marks available: 10)

2.

Explain, with examples, what is meant by the stakeholders in a company.

Is it in the interests of all stakeholders that a company should try to maximise its profits?

(Marks available: 20)

Answer

Answer outline and marking scheme for question: 2

Stakeholders are those persons who hold a stake in the company; they include shareholders, banks, the local community, customers, employees, government - if the American definition of "anyone who may be affected by the actions of the corporation" is adopted, even competitors.

(max 12)

A candidate might wish to refine the question and write of "long term" profits and then argue, with Milton Friedman, that the objective of the company is to increase shareholder wealth.

Many will argue that the company has a duty to other stakeholders. Johnson and Johnson, for example, put the customer first, then the employees, and the shareholders last. Green issues may be mentioned.

(max 12)

Excellent A clear and concise explanation of the stakeholder concept and a well sustained argument for or against the maximising of profits.
Competent An informed account of the stakeholder concept and a reasoned argument for
or against maximising profits.
Adequate A knowledge of what is meant by stakeholders and some reasons for or against
maximising profits.
Weak A limited knowledge of what is meant by stakeholders and ill-connected
comments for or against maximising profits.

(Marks available: 20)

S-Cool Revision Summary

Aims

These are the long-term goals that provide direction for setting objectives. They are often expressed in the form of a mission statement. A typical corporate aim might be 'to become Europe's number 1 car manufacturer'. From this aim, a company can set a number of objectives and targets, such as to increase the quality of its products, to improve productivity levels, or to increase the effectiveness of its promotional campaigns.

Contingency planning

This means preparing for unwanted and unlikely possibilities. A business may produce a contingency plan in case of:

  1. a severe recession
  2. an environmental disaster
  3. a sudden strike by its workforce

Contingency plans enable a business to be in a better position to manage a crisis, rather than to try and simply cope with it when it occurs.

Corporate objectives

These are the goals of the whole company. These should be based upon the company's aims and mission statement. Each department should then set its objectives based on the corporate objectives. Examples of corporate objectives include:

  1. to achieve long-term growth.
  2. to diversify the range of products and markets.
  3. to maximise profits.

Crisis management

This is the response of an organisation to a crisis (e.g. a fire, terrorist activity, natural disaster). Many companies will have some sort of contingency plan to cater for such situations, but it is rare that the actual crisis will go according to plan. It is likely that the person in charge at the time of the crisis will manage the crisis in a very authoritarian fashion, as he needs to make quick and effective decisions without the time for discussion and consultation with others.

Decision tree

This is a diagram that sets out the various possible options available to a business when it makes a decision (such as an investment) plus the probable outcomes that might result from each option. A decision tree also shows the likely probability of each option occuring and it sets out the likely amounts of money that can be expected at the end of each branch. Essentially, a decision tree shows the average amounts of money that are likely to be received if the decision was taken many times.

Mission statement

This outlines the aims of a business in an attempt to provide a sense of direction and shared purpose for the stakeholders of the business. It often states what the business has done, what it would like to do and the strategies that it will use to achieve its overall aims.

Objectives

These are the medium- to long-term goals and targets of a business. Objectives must be achievable and realistic if they are to be of any use to employees, since an unrealistic objective is likely to act as a demotivator to the workforce. Objectives need to be agreed through consultation with employees, rather than simply being set by the managers and Directors. This gives the employees a sense of belonging and responsibility - which is likely to lead to higher levels of motivation and job satisfaction.

Stakeholder

This is an individual, or a group of people, with a direct interest (financial or otherwise) in a business. The main stakeholders are employees, shareholders, customers, the government, suppliers, creditors, pressure groups and the local community. Each group of stakeholders is likely to want the business to achieve a different objective or to follow a different course of action. These differing opinions and views often, inevitably, result in conflict between the stakeholder group and the business.

Strategy

This is a medium- to long-term course of action, which will enable the business to achieve its objectives. The strategy would include what needed to be done, the resources required and the likely timescale involved.

SWOT analysis

This is an investigation into the strengths (e.g. high level of market share), weaknesses (e.g. high gearing), opportunities (e.g. new markets to break into), and threats (eg new competitors entering the industry) that a business is faced with at a specific point in time. Strengths and weaknesses are internal factors which the business has direct control over, while opportunities and threats arise from the external environment and are, therefore, more unpredictable and potentially dangerous.

"What if...?" questions

Before contingency planning can take place, a business must consider many possible threats and crises that it may face, in order to be able to react to them swiftly and efficiently if they do ever occur. These are often computer-simulated and they can predict to a high level of accuracy the likely effects of a crisis on the finances and resources of a business.

Stakeholders

There are many groups of people who have an interest, financial or otherwise, in the performance of a business - these different groups are known as stakeholders. The main stakeholders are considered to be:

Shareholders

These people have a clear financial interest in the performance of the business. They have invested money into the company through purchasing shares and they expect the company to grow and prosper so that they receive a healthy return on their investment. The return that they receive can come in two forms. Firstly, by a rise in the share price, so that they can sell their shares at a higher price than the purchase price (this is known as making a capital gain). Secondly, based on the level of profits for the year, the company issues a portion of this to each shareholder for every share that they hold (this is known as a dividend). The shareholders are also entitled to vote each year at the A.G.M. to elect the Board of Directors, who will run the company on their behalf.

Employees

This group also has an obvious financial interest in the company, since their pay levels and their job security will depend on the performance and the profitability of the business. It is employees who perform the basic functions and tasks of the business (producing output, meeting deadlines and delivery dates, etc.) and over recent years their traditional role has started to change. They are often now encouraged to become involved in multi-skilled teamworking, problem solving and decision making - thus having a significant input to the workings of the business.

Customers

Customers are vital to the survival of any business, since they purchase the goods and services which provides the business with the majority of its revenue. It is therefore vital for a business to find out exactly what the needs of the consumers are, and to produce their output to directly satisfy these needs - this is done through market research. The goods and services must then be promoted in such a way as to appeal to the target market and to inform them of the availability, price, etc. Once the goods and services have been purchased by the customer, it is essential that after-sales service is offered and that the customer is happy with his/her purchase. The business must try to keep the customer loyal so that they return in the future and become a repeat-purchaser.

Suppliers

Without flexible and reliable suppliers, the business could not guarantee that it will always have sufficient high quality raw materials which they require to produce their output. It is important for a business to maintain good relationships with their suppliers, so that raw materials and components can be ordered and delivered at short notice, and also so that the business can negotiate good credit terms from the suppliers (i.e. buy now, pay at a later date).

The Government

The government affects the workings of businesses in many ways:

1. Businesses have to pay a variety of taxes to central and local government, including Corporation tax on their profits, Value-Added Tax (V.A.T) on their sales, and Business Rates to the local council for the provision of local services.

2. Businesses also have to adhere to a wide-ranging amount of legislation, which is aimed at protecting the consumers, the employees and the local environment from business activity.

3. Businesses will be affected by different economic policies, (for example, if interest rates are increased, then this will discourage businesses from borrowing money since the repayments will now be significantly higher). However, businesses can also benefit from government incentives and initiatives, such as new infrastructure, job creation schemes and business relocation packages, offering cheap rent, rates and low-interest loans.

The Local Community

Businesses are likely to provide significant amounts of employment for the local community and often will produce and sell much of their output to the local residents. The sponsorship of local events and good causes (such as local charity work) can also help the business to establish itself in the community as a caring, socially responsible organisation. Many businesses develop links with local schools and colleges, offering sponsorships and resources to these under-funded institutions. However, businesses can also cause many problems in local communities, such as congestion, pollution and noise, and these negative externalities may often outweigh the benefits that the businesses bring to the community.

Due to the demands placed on businesses by so many different stakeholders, it is no surprise that there are often disagreements and conflict between the different groups. Some of the more common areas of conflict are:

Shareholders and management

Profit maximisation is often the over-riding objective of shareholders - resulting in large dividend payments for them. However, it is far more likely that the managers of the business will aim to profit satisfy rather than profit maximise (that is, they will aim to earn a satisfactory level of profits, and then use the remaining resources to pursue other objectives such as diversification and growth). This conflict between these two groups is often referred to as divorce of ownership (the shareholders) and control (the management).

Customers and the business

Customers are unlikely to remain loyal and repeat purchase from the business if the product that the have purchased is of poor quality and/or is poor value for money. More customers are prepared to complain about the quality of products and after-sales service than ever before, and the business must ensure that it has in place a number of strategies designed to satisfy the disgruntled customer, reimburse any financial loss that they may have incurred and persuade them to remain loyal to the business.

Suppliers and the business

Suppliers are often quoted as complaining about the lack of prompt payments from businesses for deliveries of raw materials, and if this became a regular problem then the suppliers may well refuse credit to the businesses or may even cease all dealings with them. On the other hand, many businesses have been known to complain about the late deliveries of raw materials and components from suppliers, and the dubious quality of the parts once they have been inspected.

The community and the business

As outlined previously, the local community can often suffer at the hands of a large company through the negative externalities of pollution, noise, congestion and the building of new factories in areas of outstanding beauty. However, if the business faces strong protests from residents and from pressure groups concerned about its actions, then it may decide to relocate to another area, causing much unemployment and a fall in investment in the community it leaves behind.

Strategy

A strategy is a way of achieving an objective

Businesses of all sizes have to make many decisions each day - some are fairly simple and routine, whilst others are more complex and require significant management time and effort. Some examples of decisions that all businesses need to make are:

  • Where should we locate the business?
  • What goods should we produce?
  • What price should we charge?
  • What should we do if a supplier fails to deliver on time?
  • Which job agency should we use to provide us with some temporary workers?
  • Which employee appraisal system should we use?

Decision-making is the basic task of all managers in all departments of the business, and both in the private and the public sectors. These decisions are, effectively, designed to influence the actions of other people.

A strategic decision is one which is very high-risk and is likely to influence the overall long-term policy and direction of the business. As such, it is likely to be dealt with by senior management (e.g. what new products to develop).

A tactical decision is a fairly routine, predictable, short-term decision, which is normally handled by middle management (e.g. what price to charge for products). Other decisions which are repetitive, day-to-day and fairly risk-free are handled by lower-level management, and are generally referred to as operational decisions (e.g. how long should tea-breaks be?).

Businesses have to make decisions in order to achieve their objectives.

There are eight key stages involved in the traditional decision-making process:

  1. Set objectives. The decision-making process cannot proceed without an achievable, realistic and identifiable target to be met.
  2. Gather data. Use market research to collect as much information as possible from inside and outside the business, so to enable the decision-makers to have the necessary data with which to make an effective decision.
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  3. Analyse the data. Look at the different courses of action and decide which ones look the most achievable and realistic to meet the objective.
  4. Make a decision. This stage is vital to the whole process. The decision-makers must ensure that they follow the correct course of action and do not reject a better alternative.
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  5. Communicate. This to the whole organisation. The relevant people, both inside and outside the organisation, need to be informed about the decision and how it may affect them.
  6. Implement the decision. The course of action that has been decided upon is implemented, using the available resources of the business.
  7. Look at the results. Obtain as much feedback as possible concerning the recently implemented decision, from as many sources as possible.
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  8. Evaluate the outcome. Did the decision work ? Was it the best course of action ? How can it be improved next time? What went wrong?

Businesses can rarely carry out their decision-making in a totally open and risk-free environment, and there are often many constraints which exist, that will limit the possible options available to a business. These constraints can be internal (such as the lack of available finance, or the lack of a multi-skilled workforce) and external (such as a rise in interest rates, a new competitor entering the market, or new legislation which restricts the activities of the business).

There are many tools available to a business that will help it limit both the risk involved and the chance of failure, when making a vital decision (such as launching a new product, taking over a competitor, or breaking into foreign markets). Three types of decision making tools are shown below:

A decision tree is a diagram that sets out the different options that are available to a business when making decisions and it also shows the chance (or probability) of their occurrence. It sets out the actual values to be expected should a particular course of action be followed. These can then be multiplied by the relevant probability of that event happening, to give an expected value, which represents the average pay-off if the decision was taken many times.

For example: Mr. Smith owns a piece of land and he wants to sell it to raise some money for his ailing business. He has been informed that he has just two options open to him:

1.He could sell the land now for a guaranteed price of £250,000, with associated selling costs of £5,000.

2.He could wait for 12 months for the market price to hopefully rise and he could then sell it, with associated selling costs of £7,000. An estate agent has informed him that the chance of receiving a higher price for the land is 0.6, while the probabilities of the price remaining the same or worsening are 0.3 and 0.1 respectively. If the market price does rise, then the land is likely to be valued at £325,000. However, if the price deteriorates, then it is likely to be valued at £200,000 in 12 months.

The decision-tree below illustrates the above scenario:

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Calculation of expected value at node B:

£325,000 x 0.6 = £195,000
£250,000 x 0.3 = £75,000
£200,000 x 0.1 = £20,000

Total expected value = £290,000

The tree diagram points in favour of delaying the sale of the land for 12 months, since it predicts that IF THE DECISION WAS TAKEN MANY TIMES then Mr.Smith would ON AVERAGE receive £283,000 (£290,000 minus £7,000 costs), instead of the £245,000 (£250,000 minus £5,000 costs) that he would receive by selling the land now. There are several points to note from the diagram:

1. The tree diagram is laid out from left to right.

2.Node A is represented as a square and it is called a decision node (i.e. at this node, the decision-maker can only choose one branch to follow).

3.Node B is represented as a circle and is called a chance node (i.e. there are several possible outcomes from this node, one of which will definitely happen).

4.Each event stemming from a chance node has a probability attached to it (these probabilities must always add up to 1).

5.The actual values are always listed at the end of each branch.

In order to calculate the expected value at a chance node (e.g. node B) then the decision-maker must calculate along the branches from right to left, by multiplying the actual value by the probability and adding the results. Hence, £325,000 is multiplied by 0.6, the £250,000 is multiplied by 0.3, and the £200,000 is multiplied by 0.1. These are then all added together to give the expected value of £290,000 at node B.

The cost associated with each branch is written beside it, and these costs have to be deducted before a decision can be made.

Each branch is cut-off as it is rejected (this is represented by two parallel lines cutting through the start of the rejected branch). This leaves just the best alternative option remaining.

There are several advantages of using decision trees to analyse a particular situation:

1.They set out problems clearly and logically.

2.They show the likely amounts of money involved in the decision, and the probabilities of their occurrence.

3.Constructing a decision tree may show possible courses of action which had not been previously considered.

4.They are tangible and therefore people can easily see the issue that they are faced with, rather than attempting to visualise somebody's description.

However, decision trees are not without their faults:

1.The probabilities are only estimates and are, therefore, subject to change.

2.They can only show quantitative data - they do not take account of peoples' feelings, legal constraints, etc.

3.The results can be biased, in order to show just one side of an argument.

4.There can be significant time delays whilst making the decision, and some of the data may be out-of-date by the time the decision is finally made.

This is another method of helping management to reduce the risk involved in making decisions in a dynamic industry. It involves analysing the current position of a product, a department or even the whole organisation, and trying to identify its possible future courses of action, by looking at its Strengths, Weaknesses, Opportunities and Threats.

A strength is a factor which a business currently possesses and which it performs effectively, such as having a strong management team, a profitable portfolio of products, or a loyal customer base.

A weakness is an area in which the business currently performs poorly, such as having a high level of industrial disputes, falling profitability, or falling productivity levels.

An opportunity is a potentially successful or profitable activity that the business could take advantage of in the future, such as the take-over of a competitor, the development of new products, or breaking into new markets.

A threat represents a potential future problem which the business may face in the future, such as new competitors entering the industry, new legislation restricting the use of certain raw materials, or the possibility of being taken-over by another company.

Remember, the strengths and weaknesses are internal factors which the company currently faces. The opportunities and threats are external factors which the company may face in the future.

The S.W.O.T. analysis is represented in a simple four-box diagram, as illustrated below:

Example of a S.W.O.T analysis for a Chocolate manufacturer.

Strengths: Weaknesses:

Plenty of R&D, leading to many new product ideas

Achieving economies of scales in production

High level of customer loyalty and repeat purchasing

Effective promotion

Several of our products are reaching the end of their life-cycle

Too many marketing personnel are leaving the business

Restricted product range

Opportunities: Threads:

New markets in Far East

A joint venture with a foreign chocolate manufacturer

Product extensions, such as different sizes of bars

Competitors are threatening a price war

Take-over by domestic rival

New legislation may affect the source of our ingredients

This diagram is simple and easy to follow, and it can provide the basis for discussion of business strategy at meetings. The results of a S.W.O.T. analysis may often identify possible courses of action that had not been considered, as well as categorising and prioritising the problems that the business faces. In most large businesses, the marketing department will carry out a S.W.O.T. analysis as part of its annual marketing audit - this highlights the products which are performing effectively, those which are reaching the end of their lifecycle, potential new markets to break into and the overall effectiveness of its personnel.

Not all the opportunities and events that a business faces will go to plan, and some may prove detrimental to the continuity of the business (such as a huge downturn in demand for their products). Contingency planning means preparing for these unwanted and unlikely possibilities. A business may produce a contingency plan in case of:

1.a severe recession;

2.an environmental disaster;

3.a sudden strike by its workforce.

Contingency plans enable a business to be in a better position to manage a crisis, rather than to try and simply cope with it when it occurs.

Before contingency planning can take place, a business must consider many possible threats and crises that it may face, in order to be able to react to them swiftly and efficiently if they do ever occur. These potential scenarios are often computer-simulated, and they can predict to a high level of accuracy the likely effects of a crisis on the finances and resources of a business.

Crisis management is the response of an organisation to a crisis (e.g. a fire, terrorist activity, natural disaster). Many companies will have some sort of contingency plan to cater for such situations, but it is rare that the actual crisis will go according to plan. It is likely that the person in charge at the time of the crisis will manage the crisis in a very authoritarian fashion, as he needs to make quick and effective decisions without the time for discussion and consultation with others. Effective planning should reduce the impact of a crisis on a business, but nevertheless to overcome any crisis is likely to cost the business a significant amount of time and money.

Some crises will be long-lasting and will affect the whole economy (such as a recession, or a natural disaster), some crises will affect all the businesses in a particular industry (such as the collapse in demand for UK ship building) and others crises will simply affect a single business (such as the Perrier Water contamination scandal, or a strike by a workforce).

Any crisis is likely to have implications for the finances of the business, the effectiveness of personnel and communications and the production patterns. The business must be seen to be acting swiftly when faced with a crisis, and it must try to ensure that the damage to the business (especially to its reputation and its image) is minimised by using which ever resources are at its disposal.

Successful public relations campaigns, adequate finance, strong leadership, rapid action and effective communication (both internal and external) are the key ingredients for a crisis to be solved effectively. Crises will always pose a number of unexpected and unforeseen problems and dilemmas for businesses. However, as long as the business is seen to be limiting the effects of the crisis upon its various stakeholder groups (especially its customers) then its reputation may well remain intact.

Objectives

An objective is a goal that needs to be achieved.

Under both UK and EU law, a company must state what it is in business to do - this is known as its overall aim and it can be embodied in a mission statement. This is often a simple and memorable sentence which explains what the organisation is in business to do and what it wants to achieve. A mission statement can often be found in the front of a company's annual report and it is, effectively, a summary of its day-to-day activities and long-term objectives, showing a sense of underlying purpose and direction.

It is often argued that mission statements are best when they are simple and informal. For example:

Ford Motor Company PLC "...is a worldwide leader in automative products and services, as well as in newer industries such as aerospace and communications. Our mission is to improve continually and meet our customers' needs, allowing us to prosper as a business and to provide a reasonable return for our shareholders."

Cadbury Schweppes PLC "...is a major international company with a clear focus on its two core businesses - confectionery and beverages. Our quality brands are bought and enjoyed in more than 110 countries around the world..."

The Body Shop PLC "...to dedicate our business to the pursuit of social and environmental change..."

A good mission statement should be clearly defined, realistic and achievable, and at the same time it should ensure that the employees' attention is focussed towards the overall company aim.

Mission statements normally express the organisation's objectives in qualitative terms, (as opposed to quantitative, that is, facts and figures) and many businesses include the following variables in their mission statement: their number one priority, their product definitions, their non-financial objectives and their overall values and beliefs.

Although many people view mission statements as a focus for employees and for other stakeholders, they are still viewed by their critics as nothing more than a publicity seeking exercise.

It is important to understand how business ojectives 'fit in' with business aims and strategies.

-An aim states what you want

-An objectives set out what you need to have achieved to get what you want

-A strategy is a course of action which enables you to meet your objectives.

In order for objectives to be effective, they must:

1.provide detail about what specifically needs to be achieved (often in a quantitative form)

2.have a time limit by when they need to have been achieved

3.need to state the necessary resources that they require in order to be met.

Setting clearly defined and realistic objectives will enable many employees to understand exactly what their job entails and achieving clearly stated objectives might be linked to bonus payments - this can easily act as an incentive and motivator to employees.

A primary objective is an ultimate long-term goal of the business (e.g. survival, profit maximisation, diversification and growth). They are often referred to as strategic objectives.

A secondary objective is a day-to-day objective, and it makes a direct contribution to meeting the primary objectives (e.g. increase sales by 5% each year, keep labour turnover at less than 4%). They are often referred to as Tactical objectives.

Private sector

Private sector objectives will often differ considerably from objectives set in the public sector. Profit maximisation is often quoted as the over-riding objective for businesses in the private sector. This will involve trying to produce at the point where there is the maximum difference between the firm's total revenue and its total cost - resulting in large dividend payments for the shareholders. However, it is far more likely that businesses will aim to profit satisfy rather than profit maximise (that is, they will aim to earn a satisfactory level of profits to keep shareholders content, and then use the remaining resources to pursue other objectives such as diversification and growth).

Another objective in the private sector, for a rapidly growing business, may well be to maximise sales (or sales revenue) and so increase their market share in order to gain a competitive advantage.

Many businesses set objectives to improve their image and to appear more socially responsible and environmentally friendly - this is often achieved through strategies of recycling materials, sponsoring local events and strictly adhering to all employee legislation (e.g. pay levels, Health & Safety, discrimination, etc.).

Public sector

Public sector objectives have, traditionally, been centred around providing a public service, rather than make a profit (e.g. when British Gas was a public corporation it had to provide gas supplies to all areas of the UK, many of which were isolated and very unprofitable for the organisation). This regularly led to loss-making organisations being subsidised by the government, and complacency crept in with regards to customer service, quality levels and response times. However, in the UK in the 1980s and 1990s, a massive privatisation programme by the government was implemented and many large utilities such as British Gas, British Telecom and the Electricity Boards were sold to the private sector.

The remaining public sector organisations were told to run in a more cost-efficient manner and to improve the quality of their services to consumers. Performance targets were set for many Local Health Authorities, Local Education Authorities and council services in an attempt to make them more accountable, to reduce their costs and to improve the quality of their output.

Short-term objectives will often differ from long-term objectives, especially if the business is experiencing poor financial performance at present. A short-term objective may be to consolidate, or even simply to survive the difficult trading conditions that it is experiencing. Once this has been achieved and the business has stabilised its performance, then it may well look to achieve its long-term objective of diversification into new products and new markets, or growth through amalgamation.

Exam-style Questions

1. Read the following passage and then answer the questions that follow.

Cancers occur when cell division gets out of control. Faults in a gene called p53 are associated with nearly all cancers. A test that could be used to detect a faulty p53 gene would obviously be a good idea.

There are genes in a cell that prevent it dividing. The protein produced by the p53 gene switches on these genes and so stops cell division. If p53 stops working the cell is likely to become cancerous.

Faulty p53 can now be detected simply and cheaply with a test based on yeast. The test is much cheaper than gene sequencing. It is much more reliable because knowing the sequence of bases in a DNA molecule does not allow us to distinguish harmless mutations from potentially harmful ones.

The new test works by inserting the p53 gene into yeast DNA in which another gene, called ADE2 has been inserted. If the p53 gene works, it switches on the ADE2 gene. As a result the yeast cells appear white in colour. If the p53 gene does not work, the ADE2 gene is not switched and the yeast cells appear red in colour.

a) (i) Draw a simple flow chart to show how the p53 gene helps to prevent cancer.

(ii) Explain how the product of the ADE2 gene might act to change the colour of the yeast cells.

b) Explain what is meant by gene sequencing.

(Marks available: 5)

Answer

Answer outline and marking scheme for question: 1

Give yourself marks for mentioning any of the points below:

a) (i) Flow chart showing:

p53 gene produces protein.

Protein switches on gene preventing cell division.

(ii) Red products converted into white;

ADE2 controls enzymes governing this step.

(4 marks)

b) Determining base and sequence (of gene)

(1 mark)

(Marks available: 5)

2. One of the aims of genetic engineering is to produce a protein as cheaply and easily as possible.

In order to do this, the gene that triggers production of the desired protein is inserted into a host organism.

a) State three reasons why bacteria make good host organisms.

b) (i) Define a vector in relation to genetic engineeing?

(ii) Define a plasmid in relation to genetic engineering?

(Marks available: 5)

Answer

Answer outline and marking scheme for question: 2

Give yourself marks for mentioning any of the points below:

a) Asexual reproduction, parent cells produce identical daughter cells.

Grow quickly.

Easily manipulated.

Has simple chromosome.

Contains plasmids.

(3 marks)

b) (i) A carrier DNA molecule, the desired gene can be inserted.

(ii) A small extrachromosomal circular piece of DNA naturally found in bacteria. Often used as a vector.

(2 marks)

(Marks available: 5)

3.a) (i) What is non-coding DNA?

(ii) Why is non-coding DNA used in genetic fingerprinting?

b) Suggest two uses for genetic fingerprinting.

(Marks available: 4)

Answer

Answer outline and marking scheme for question: 3

Give yourself marks for mentioning any of the points below:

a) (i) Does not code for a protein.

(ii) Contains repetitive sequence of bases/variable number tandem repeats

The size of these VNTRs varies according to the individual. Half come from one parent half from the other. only identical twins have the same VNTRs.

b) Identifying particular plants/animals with particular alleles of a gene for selective breeding.

Identifying a particular microbe so correct treatment can be given.

Establishing paternity

Confirming animal pedigrees.

Establishing genetic diversity for gene banking.

(Marks available: 4)

Exam-style Questions

1. a) Draw and label a simple diagram of an RNA nucleotide containing uracil.

In 1961 biologists made synthetic mRNA. When they produced mRNA containing only uracil nucleotides, it coded for one type of amino acid, phenylalanine. When mRNA was produced with alternating uracil and guanine nucleotides, two types of amino acid were coded for, valine and cysteine. This is summarised in the table.

Nucleotide sequence in mRNA

Amino acids coded for

UUUUUUUUUUUUUUU

phenylalanine

UGUGUGUGUGUGUGU

valine and cysteine

b) For the amino acid phenylalanine what is

(i) the corresponding DNA base sequence,

(ii) the tRNA anticodon?

c) Explain how the information in the table supports the idea of a triplet code.

(Marks available: 8)

Answer

Answer outline and marking scheme for question: 1

Give yourself marks for the following:

a) Drawing shows phosphate, pentose and uracil;
arranged in correct sequence;
details of molecular structure correct;

(3 marks)

b) (i) AAA

(ii) AAA

(2 marks)

c) Single base coding for 4 amino acids;
double base coding for 42 amino acids;
GUG/UGU for valine;
UGU/GUG for cysteine;
only possible code UUU for phenylalanine.

(3 marks)

(Marks available: 8)

2. The diagram shows the structure of a tRNA molecule.

a) Give two ways in which the structure of a tRNA molecule differs from that of a DNA molecule.

b) Explain how the specific shape of the tRNA molecule shown in the diagram is determined by the pattern of bonding.

c) (i) Give the base sequence of the anticodon of this tRNA molecule.

(ii) Which mRNA codon would correspond to this anticodon?

(Marks available: 6)

Answer

Answer outline and marking scheme for question: 2

Give yourself marks for mentioning any of the points below:

a) ribose/deoxyribose;
single strand/double strand/helix;
uracil/thymine

(max 2 marks)

(b) bases pair by hydrogen bonding;
complementary pairing/GC/UA;
clover leaf shapes have no bonds/not compatible.

(max 2 marks)

c) (i) GAA

(ii) CUU

(2 marks)

(Marks available: 6)

3. Write an essay on:

Now nucleic acids are suited to their functions in living organisms.

(Marks available: 25)

Answer

Answer outline and marking scheme for question: 3

You can give yourself up to 2 marks for discussing any of the following issues in A, B, C and D up to a maximum of 16:

a) Types and structure of nucleic acid:

1. The types of nucleic acids - DNA, mRNA, tRNA;

2. The basic structure of a nucleic acid (e.g. DNA) -nucleotide chain, sugar phosphate backbone;

3. How DNA and RNA are different (to include both U vs T and ribose vs deoxyribose).

b) Storage of genetic information:

1. DNA is stable - because it has a double-stranded structure/is retained in the (eukaryote) nucleus - so is less likely to be corrupted;

2. mRNA is labile, (because it is single-stranded) so it is 'around' to promote (specific) protein synthesis for only a limited amount of time;

3. Explanation of general structure of tRNA/need for having a range of tRNA molecules.

c) Genetic information is able to be copied/transcribed:

1. Explanation of complementary base pairing - principle and detail - A=T(U), G=C;

2. Nature of replication of DNA (idea of 'accuracy' in mitosis/semi-conservative nature);

3. Nature of transcription of mRNA (location, enzymic process).

d) Genetic information is used in protein svnthesis:

1. Principle of coding/information transfer/'central dogma' (DNA to RNA to protein);

2. Details of the genetic code - triplet per amino acid, idea of 'dictionary' , sense and nonsense;

3. Way in which the sequence of nucleotides in DNA controls/is translated into - the amino acid
sequence in a polypeptide gene product;

4. Way in which a change in DNA sequence may alter the gene product/its potential activity.

Breadth (max 3 marks)

Does the answer appropriately:

  • deal with each of DNA, mRNA and tRNA?
  • locate the different processes in the cell?
  • Consider the breadth of functions (C & D)?

Selection of appropriate material ('Depth') (max 3 marks)

Does the answer appropriately:

  • describe/ give diagram of NA structure?
  • distinguish transcription & translation?
  • and fully explain the process of translation?

(Award one mark within each category for each point to maximum of 3)

In the real exam you will also be awarded marks for quality of language (in this case, there were 3 marks available). It may be difficult for you to judge your own text, however you may be able to get someone else to give you an opinion.

(Marks available: 25)

Exam-style Questions

1. Tongue-rolling and red-green colour blindness are two genetically controlled conditions which occur in humans. Tongue-rolling is controlled by the dominant allele, T, while non-rolling is controlled by the recessive allele, t.

Red-green colour blindness, is controlled by a sex-linked gene on the X chromosome. Normal colour vision is controlled by the dominant allele, B, while red-green colour blindness is controlled by the recessive allele, b.

a) Complete the genetic diagram to show the possible genotypes and phenotypes which could be produced from the following parents.

 

Female

Colour blind and heterozygous for tongue-rolling.

Male

Normal colour vision and non-roller.

Parental genotypes

 

 

Genotypes of gametes

 

 

Genotypes of children

 

 

Sex and phenotypes of children

 

 

b) Explain why a higher percentage of males than females in a population is red-green colour blind.

c) Sex-linked genes on the y chromosome have been found in humans and other animal species. Suggest and explain one piece of evidence which would support the presence of such a gene.

(Marks available: 6)

Answer

Answer outline and marking scheme for question: 1

Give yourself marks for mentioning any of the points below:

a)

Female

Colour blind and heterozygous for tongue-rolling.

Male

Normal colour vision and non-roller.

Parental genotypes

XbXbTt

XBYtt

Genotypes of gametes

XbT

Xbt

XBt

Yt

Genotypes of children

XBXbTt

XbYTt

XBXbtt

XbYtt

Sex and phenotypes of children

female

normal

roller

male

colour-blind

roller

female

normal

non-roller

male

colour-blind

non-roller

(4 marks)

b) Males have one X chromosome so if allele present they are affected/females have two X chromosomes so need both affected as recessive;

(1 mark)

c) All males posses Y chromosomes so all affected / only males possess Y chromosomes so no females affected.

(1 mark)

(Marks available: 6)

2. a) Doctors in some clinics claim that they can separate individual sperm cells so that the sex of a human child can be pre-determined.
Explain the genetic principles which enable the sex of a child to be pre-determined.

b) The diagram shows the inheritance of a rare hereditary form of rickets in a human family.

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The condition is caused by a dominant allele, R. This allele may be present on the X chromosome, XR, but not on the Y chromosome.

Complete the genetic diagram to explain how this type of rickets was inherited by the children of parents A and B.

Parental phenotypes

A

Affected female

B

Unaffected male

Parental genotypes

   

Genotypes of gametes

     

Gentoypes of children

     

Phenotypes of children

affected male unaffected male affected female unaffected female

(Marks available: 5)

Answer

Answer outline and marking scheme for question: 2

Give yourself marks for mentioning any of the points below:

a) two types of sperm; X sperm and Y sperm. Select X sperm for female child / Y sperm for male child.

(2 marks)

b)

Parental phenotypes

A

Affected female

B

unaffacted male

Parental genotypes

XRXr XrY

Genotypes of gametes

XR Xr Xr Y

Gentoypes of children

XRY XrY XRXr XrXr

Phenotypes of children

affected male unaffected male affected female unaffected female

(3 marks)

(Marks available: 5)

3. The inheritance of colour in sweet peas is controlled by two pairs of alleles (A and a, and B and b) at two different gene loci.

The diagram shows how the dominant alleles at these two gene loci determine flower colour by controlling the synthesis of a purple pigment.

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a) Plants with the genotypes aaBB, aaBb and aabb all have white flowers. Use infonnation in the diagram to explain why plants homozygous for the mutant allele, a, have white flowers.

b) Use a genetic diagram to explain the genotypes and the expected ratio of phenotypes when plants with the genotypes Aabb and aaBb are crossed.

Parental Phenotypes

White

White

Parental Genotypes

Aabb

Exam-style Questions

1. Cepaea nemoralis is a common British snail which is found in a variety of habitats. The shells of this species of snail vary in the pattern of dark bands found on the surface. The drawings show a banded snail and an unbanded snail.

Song thrushes feed on these snails. A bird finds a snail and takes it to a suitable stone known as an anvil. It hits the snail shell against the stone, breaks it open and eats the soft parts. The remains of the shell can be found on the ground near the thrush's anvil stone.

In one investigation, two areas of woodland floor were cleared of all snails and equal numbers of banded and unbanded snails were then introduced. Over the next two weeks the snail shells found around the anvil stones in one area were compared with the shells of living snails found in a control area where there were no thrushes. The results are shown in the table.

Number of unbanded snails

Number of banded snails

Snail shells found around anvil stones

153

264

Shells of living snails found in control area

204

217

a) Describe and explain the effect of predation by thrushes on the snails in this investigation.

b) The presence of bands on the shells of C. nemoralis is controlled by a single gene with two alleles. Explain how natural selection might account for different proportions of these alleles.

Explain how natural selection might account for different proportions of these alleles in different habitats.

c) In order to collect the sample of living snails in the control area, quadrats were placed at random in the area and all the snails found in the quadrat were collected.

Explain why it is necessary to:

(i) Place the quadrats at random;

(ii) Ensure that every snail found within the quadrat was collected.

d) In a seperate investigation, the population of C. nemoralis was estimated using the mark-release-recapture method.

(i) Giving a reason for your answer, describe where on the shell you would mark the snails.

(ii) Explain why the results would be more accurate if there was only a short time between releasing the marked snails and catching the second sample.

(Marks available: 8)

Answer

Answer outline and marking scheme for question: 1

Give yourself marks for mentioning any of the points below:

a) Take higher proportion of banded snails;
Unbanded better camouflaged/less conspicuous
to predators.

(2 marks)

b) Different proportions of banded and Unbanded snails survive in different habitats;
Able to breed and pass on selected alleles/genes.

(2 marks)

c) (i) Avoid bias/get representative sample/enable
statistical test to be applied

(ii) Otherwise more conspicuous snails might be
collected.

(2 marks)

d) (i) Mark undersurface/inside lip otherwise they will be more conspicuous/likely to be predated/harm the animal.

(ii) They would be removed from the population by the thrushes/snails dying/immigration/emigration/breeding.

(2 marks)

(Marks available: 8)

2. Write an essay on the causes and nature of the variation on which natural selection depends.

(Marks available: 25)

Answer

Answer outline and marking scheme for question: 2

You can give yourself up to 2 marks for discussing any of the following issues up to a maximum of 16:

Nature of variation:

  • Clear explanation of continuous variation, including the idea of frequency distribution.
  • Explanation of the roles of genetics .and. the environment in producing variation;
  • Continuous variation -accounted for in terms of polygenic characters.

Causes of variation:

  • Reshuffling of genes via sexual reproduction e.g. meiosis, independent assortment, crossing over, random fertilisation - (any two of these);
  • Mutation as the random/main cause of (persistent) variation affecting natural selection;
  • Types of mutation explained (chromosomal and gene) OR given in terms of heritability i.e. germ cf. somatic cell mutation;
  • Cause of mutation (high energy radiation/ particles OR named chemical mutagen);
  • Gene mutation as the result ofa change in (sequence of bases) in DNA which may result in change in the (amino acid sequence of a) polypeptide;
  • Such a change in polypeptide structure may result in change in way protein functions;

Variation in relation to Natural Selection:

  • Explain how (any 2 of) predation, disease, competition give differential survival/reproduction;
  • Explain that organisms with selective advantages are more likely to survive, reproduce and pass on their genes to the next generation;
  • Explain how the process ofnatural selection may result in changes in the allele and phenotype frequency and may lead to the fonnation of new species;
  • Quote a specific example to explain how variation is acted upon via natural selection to produce changes within species.

Breadth (max 3 marks)

Does the answer appropriately:

  • Distinguish continuous/discontinuous variation.
  • Consider variation in relation to natural selection.
  • Show a wide view of causes of variation.

Depth (max 3 marks)

Does the answer appropriately explain:

  • Effects of genetics or environment on variation.
  • That genetic variation/mutation is necessary for natural selection.
  • Consider variation in terms of DNA.

(Marks available: 25)

3. Write an essay on:

The interactions between organisms of the same and different species

(Marks available: 25)

Answer

Answer outline and marking scheme for question: 3

You can give yourself up to 2 marks for discussing any of the following issues in A, B, C and D up to a maximum of 16:

A. General:

1. Explain that interactions may (profoundly) influence the distribution OR size of populations;

2. Make clear that an ecosystem can only support a certain size of population, which varies according to limiting factors;

3. Gives factors affecting population size (3 or more of) food supply space, light, predation and disease;

4. Explains niche - position or status of organism within community resulting from its adaptations, physiology and behaviour, including its energy source, period of activity etc.

B. Types of interaction:

1. Explains predation, giving nature and example, and balance between predator/prey populations (relative population sizes, that are rarely stable, and periodically fluctuate);

2. Explains principle of competition - i.e. when niches overlap - interactions between populations in which each adversely affects the other (in e.g. food, nutrients, space, light, or other common need);

3. General explanation of (1 interspecific) association - parasitism, commensalisms, mutualism (symbiosis);

4. Pollination/dispersal - discussion of either, with a suitable example;

5. Suitably explains coloration -cryptic or disruptive example;

6. Suitably explains mimicry and warning coloration, with example of Batesian, Mullerian, automimicry.

C. Inter and intraspecific interactions:

1. Detailed example of one interspecific association e.g. parasitism or mutualism;

2. Suitable example of intraspecific association e.g. social organisation in insects, or in mammals;

3. Clear explanation of interspecific competition with suitable example;

4. Clear explanation of intraspecific competition with suitable example.

D. Possible additional areas:

1. Suitably thorough treatment of human influence, with e.g. explanation of biological control;

2. Suitable treatment of competition in relation to natural selection - competitive exclusion, specialization through competition, competition and evolution.

Breadth (3 marks)

Does the answer appropriately:

  • deal with a full range of factors (in A3)?
  • give examples for both animals and plants?
  • discuss at least 4 types of interaction?

Selection of appropriate material Depth) (3 marks)

Does the answer appropriately:

  • make clear the concept of a niche?
  • distinguish interspecific/intraspecific interaction?
  • distinguish density independent and dependent factors?

In the real exam you will also be awarded marks for quality of language (in this case, there were 3 marks available). It may be difficult for you to judge your own text, however you may be able to get someone else to give you an opinion.

(Marks available: 25)

Exam-style Questions

1. The graph shows the changes in the size of the collared dove population in Britain following the introduction of these birds in 1955.

Install Flash

a) Describe the pattern of population growth shown in the graph.

b) Explain how a named density dependent factor might have affected population size in the 1980s.

(Marks available: 5)

Answer

 

Answer outline and marking scheme for question: 1

Give yourself marks for mentioning any of the points below:

a) Description contains elements of slow increase and stability/slight decline;

Quantitative definition of change in rate of increase and peak.

(2 marks)

b) Identity of an appropriate density dependant factor (e.g. food supply/predation)

When population at high density leads to decrease;

When population at low density allows recovery.

(3 marks)

(Marks available: 5)

 

2. The diagram shows a profile along a transect showing succession on some coastal sand dunes.

Point

A

B

C

D

Index of diversity

1

2.3

5.4

6.1

 

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a) What data must be collected in order to be able to calculate an index of diversity of plants at one of the points along the transect?

b) Suggest an explanation for the trend in diversity along the transect.

(Marks available: 5)

Answer

 

Answer outline and marking scheme for question: 2

Give yourself marks for mentioning any of the points below:

a) The number of different plans/organisms of each species present;

Total number of species/plants of all species.

(2 marks)

b) Harsher/less stable environmental conditions at start;

Such as dry sand/high salt content/low nitrate/humus;

Few species able to tolerate these conditions.

(3 marks)

(Marks available: 5)

 

3. The wren is a small, insect-eating bird. The percentage change in size of the wren population from one year to the next was estimated over a number of years.

The number of days with snow lying in the previous winter was also recorded. This information is shown on the graph.

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a) (i) Describe the relationship between the number of days with snow lying and the change in population size.

(ii) Suggest and explain a reason for this relationship.

b) A comparison was made between the number of breeding pairs of wrens each year and their breeding success.

Number of breeding pairs of wrens/ millions

Percentage increase in population size

1.2

1.9

2.5

2.9

3.9

55

48

35

25

2

 

Suggest an explanation for the relationship between the size of the breeding population and breeding success.

(Marks available: 6)

Answer

 

Answer outline and marking scheme for question: 3

Give yourself marks for mentioning any of the points below:

a) (i) The more days of snow the lower the increase in the population/fewer birds (or converse).

Negative correlation/above 11-13 days of snow.

Negative change/decrease in population.

(ii) Fewer birds to breed.

Explanation using data (e.g. food hidden under snow/too cold for birds to survive).

b) More breeding pairs produces more competition.

Less breeding success.

(Marks available: 6)