SL IA Requirements - Internal Assessment - Business Management

1. Prepare a research question that is forward looking.

You must have a focused research question approved by the teacher.

Eg. "Should Apple go ahead with its dividend and share buyback programme?"

Eg. “Can airline X successfully target segment Y?”

The commentary could then examine business management topics such as market segmentation, consumer profiling, promotion, and measure of financial success.

Eg. “Should company Y outsource its manufacturing?”

The commentary could then examine areas within business management such as operations management and human resource management.

Your IA must arrive at an answer to this question

Eg. "In conclusion, Apple should initiate its dividend and share buyback programme."

2. Choose analytic tools and theories.

You need to arrive at this answer through the use of IB Business and Management-specific analytic tools, concepts and business theories:

Analytical Tools:

	A: SWOT
	B: Average rate of return analysis
	C: Lewin's Force Field analysis (nb., an excellent tool for turning qualitative data into quantitative)
	D: Ratio analysis (e.g., earnings per share, gearing ratio)
	E: Cash Flow analysis

Other theories, concepts and tools that can be highly relevant to the Standard Level IA include:

• Ansoff's matrix

• Boston matrix - product portfolio analysis

• Economies of scale

• Investment appraisal - payback period

• Marketing strategies

• Outsourcing

• Position/perception maps

• Ratio analysis - profitability and liquidity.

Relates to Criterion B: Choice and application of tools, techniques and theories - 5 marks.

See Activity A - Analysis Planning below.

3. Gather resources.

You will need to include three to five secondary sources from which the majority of the information for the IA has been obtained. Ensure that each of your supporting documents covers one of the analytic tools, concepts and theories you will use to answer the research question.

ADD GOOD PRIMARY DATA SEE word doc

Choose a large company. A large company is going to have plenty of useful information, research and analysis that have been conducted by their own departments, as well as other researchers, analysts and journalists.

The selection of the documents is very important. It is expected that the IA’s will present contrasting ideas and views and be prepared by different authors and publications. The selection of five documents, for instance, produced by a single company would provide no balance or objectivity.

Secondary documents must be current (within two years) and could include some of the following:

• Market research surveys

• Articles from the local, national or international press

• Financial reports

• Business accounts

• Company annual reports

• Mission statements

• Web based reports and surveys

• Extracts from company websites or printed materials

• Government and other statistics

• Academic publications

• Audio (e.g., podcasts) or video (e.g., documentaries, news items, interviews). Warning! These need to be transcribed.

Relates to Criterion A: Supporting Documents - 5 marks.

Refer to the Guide to Writing the SL IA for more details.

4. Document your findings.

The choice of analytic tools MUST be able to be clearly related BOTH back to the research question AND forward to the answer of your research question. If they cannot do this then don't use that tool, you will lose marks.

You must justify the use of your chosen analytic tools or business concepts ie. How are you going to use them to answer your research question.

You must comment on your findings from your chosen analytic tools or business concepts in a way that directly relates to your research question answer.

Relates to Criterion C: Choice and analysis of data and integration of ideas - 5 marks.

Criterion F: Structure - 2 marks.

See Activity B - Linkage between research questions and analysis below.

5. Summarise the main findings for each analytic tool used.

The way to know you have an analysis that covers all three ESSENTIAL requirements for each analytic tool, concept or business theory, is to complete a table like the one set out below.

The three essential requirements for each analytic tool, concept or business theory are:

i. Justify the use of each analytic tool by linking it to your research question.

ii. Perform each analysis correctly.

iii. Comment on your findings for each analytic tool in a way that relates directly to the answer of your research question.

Interrelates to Criterion D: Conclusions - 3 marks.

Criterion E: Evaluation - 4 marks.

Criterion G: Presentation - 2 marks.

Guide to Writing the SL IA

ACTIVITY A - Analysis Planning

Activity A: Construct a table like the one below to show which analytic tools, concepts and business theories you could use to answer your research question (RQ).

Table 1: Planning for the use of Analysis Tools - An example
Analytic tools, concepts and theories	How it could help answer your RQ
A) SWOT analysis	• Helps to identify questions of importance: • Is company's cash assets a strength or a weakness? • Could it finance an opportunity or help the firm respond to a threat?
B) Stakeholder model	• Identity main stakeholders in the company • Determine how key stakeholders may be differentially affected
C) Opportunity cost	• Determine other options the firm's cash could be used for • Identify the next best option for use of the cash and compare and contrast to dividend and share buyback policy
D) Ratio analysis	• How will the share buyback affect profitability? • Does the company have good enough liquidity to finance the option?
E) Growth forecasts	• Determine strategic objectives for company growth • Establish whether internal finance is needed to finance growth plans

ACTIVITY B - Research Question

ACTIVITY B - Construct a table like the one below to show the linkages between the RQ, the analysis and the answer to your research question

**RESEARCH QUESTION - Should Apple go ahead with its dividend and share buyback programme?**
Analytic Tool to be used	Analytic Tool A: SWOT Analysis	Concept B: Stakeholder model	Theory C: Opportunity Cost	Analytic Tool D: Ratio Analysis
How tool is linked to RQ	Identifies question of importance eg Are the company's cash assets a strength or a weakness? Could it finance an opportunity of help the firm respond to a threat?	Identify main stakeholders in the company that could be affected by this programme. Determine how key stakeholders may be differentially affected by the programme	Determine other options the firm's cash could be used for Identify the next best option for use of the cash and compare and contrast to dividend and share buyback policy	How will the share buyback affect profitability? Does the company have good enough liquidity to finance the option?
Summary of main findings	Approximately US$100 billion in cash Rapid expansion into China High share price	Shareholders and managers are the two stakeholders that will be most directly affected	Apple could use the cash assets in other ways Promising start-ups could be acquired.	Apple has a current ratio of 1.6 which is at the low end of the recommended range (1.5-2.0)
	Approximately $50 billion needed for the programme Widened variety of investors in the company Less liquidity Perception of current growth opportunities	Shareholders will benefit an increase in the value of their shares and an increased dividend payment Managers will receive shares as bonuses, and thus benefit as shareholders, themselves	Further investment in R&D programmes could produce new and profitable products for the future, perhaps entering the television market Low interest rate environment produces disappointing returns on cash	Apple has a quick ratio of 1.3, where anything above 1.0 is considered liquid. Net profitability will reduce as non-operational income (interest earned on cash) will reduce, but not significantly
	Something needs to be done with the company’s cash assets	Shareholders are a key stakeholder group in the firm and would stand to gain substantial benefit from the programme Likewise for management Some investors would push for other options, such as an acquisition programme, new projects and or expansion into different markets.	Leaving cash in the bank is inadvisable due to the low rates of interest currently being earned $50billion dollars spend on the programme is moneys that could finance other opportunities The company will still have a large cash assert that can be used to finance new projects and opportunities Other methods of finance will be available too.	Apple is liquid at present Reducing its cash holdings by half to finance the deal could lead to future liquidity issues CEO insures that the programme will not lead to liquidity issues Lost non-operational income negligible
Relate findings to answer of RQ	Something needs to be done with the company’s cash assets	Shareholders are a key stakeholder group in the firm and would stand to gain substantial benefit from the programme Likewise for management Some investors would push for other options, such as an acquisition programme, new projects and or expansion into different markets.	Leaving cash in the bank is inadvisable due to the low rates of interest currently being earned $50billion dollars spend on the programme is moneys that could finance other opportunities The company will still have a large cash assert that can be used to finance new projects and opportunities Other methods of finance will be available too.	Apple is liquid at present Reducing its cash holdings by half to finance the deal could lead to future liquidity issues CEO insures that the programme will not lead to liquidity issues Lost non-operational income negligible
Does the tool favour the dividend and share buyback policy?	Not necessarily the cash probably should be used by Apple but whether if should fund the dividend and share buyback requires further analysis	Yes to a large extent, especially as the two key stakeholder groups in the company stand to benefit without detriment to the firm.	No, to a limited extent. Investing in new strategic projects, investing in R&D and acquiring promising companies is probably a better use of the company’s cash in pursuing growth objectives. But if better alternatives are not apparent or available, or fail to be financed by other means, the cash should be returned to shareholders	Favours the programme to some extent, especially if it does not impact the firm’s pursuit of other opportunities.

Weigh up the findings to answer the RQ - In light of the analyses, Apple should initiate its dividend and share buyback programme.

By the time you have integrated the information from your table into your main findings and results, analysis and discussion section, this will make for a good report, which would be more useful to your manager because you've shown the manager, step-by-step:

1. Why this analysis is necessary,

2. What the analysis shows, and

3. How that analysis relates to what the business should actually do.

You have therefore made your analysis much easier to understand and much more convincing.