Business Plans & Descriptive Statistics: Sunset Sails Tours

The Purpose of the Business Management Case Study Below

The business management toolkit is a set of situational, planning and decision-making tools. These tools should be to analyse and evaluate the syllabus content in terms of a real world example
This suite of decision-making tools is designed to help business leaders assess their current situation and implement strategies for the future
To evaluate these tools, you can
- Consider the reliability of the data fed into these tools
- Comment on the the subjectivity of their outcomes
This evaluative approach will help you to apply your knowledge and to engage with decision-making as a process and a skill
You will be assessed on your knowledge of important contemporary business topics through the the analysis of a fictitious or real business. The case study below provides an example of how to effectively use the business Management Toolkit

Sunset Sails Tours was established in 2005 as the first catamaran excursion business to operate in the beautiful harbour town of Manuel Antonio, Costa Rica. Its mission is to provide the best tourist catamaran boat cruise service in the coastal Quepos region.

sunset-sails-ibdp-business-management-case-study

Sunset Sails Tours Ltd provides small-scale sailing tours in the Quepos region on its two sailing boats Lorelei and Camaradien

Sunset Sails Tours offers daily small-scale sailing tours which include refreshments and snorkeling equipment for adults and children. Tours provide opportunities for dolphin, turtle and whale spotting. With its focus on providing excellent customer service, the business receives outstanding reviews from satisfied holiday makers.

Keen to expand the business, the owners of Sunset Sails Tours have carried out limited primary and secondary market research to identify suitable growth strategies. Some of the results are shown below.


Fig. 1: Confirmed Corporate Hotel Bookings in Quepos: August 2023 to January 2024	*Fig. 2: Sunset Sails Tours: Trip Advisor Ratings - July 2023*

*Fig. 3: Purchase prices of nearly-new trimaran models - June 2023*

They have decided to pursue a strategy of market development by offering larger scale catamaran tours to corporate groups, which they intend to launch in time for the International Conference on Environmental Pollution and Prevention in October 2023. This will involve the purchase of a larger trimaran sailing boat for which external finance will be required and the owners have drawn up a business plan before approaching the local bank.

Questions

(a) Define the term 'primary market research'? [2 marks]

(b) Using the market research data:

(i) Calculate the mean Trip Advisor rating received by Sunset Sails Tours up to July 2023 to one decimal place. [2 marks]

(ii) Calculate the median price of nearly-new available trimarans. [2 marks]

(c) Explain one advantage and one disadvantage to Sunset Sails Tours of calculating the standard deviation of confirmed corporate hotel bookings. [4 marks]

(d) Discuss the implications for Sunset Sails Tours Ltd of producing a business plan. [10 marks]

Solutions to the Questions: Sunset Sails Tours

(a) Define the term 'primary market research'? [2 marks]

Model Answer

Guidance & Commentary

Primary market research is the collection of original, first-hand data [1] using tools such as surveys, focus groups or observation [1].

Define questions require you to provide a full definition that demonstrates good knowledge and understanding
Examples are a good way to do demonstrate good knowledge and understanding
The model answer is awarded 2 marks because provides a clear definition of primary market research with examples

(b) Using the market research data:

(i) Calculate the mean Trip Advisor rating received by Sunset Sails Tours up to July 2023 to one decimal place. [2 marks]

Step 1: Calculate the total volume of reviews

$537 + 60 + 17 + 13 + 16 = 643$

Step 2: Calculate the total of all review ratings

$5 \times 537 = 2, 685 4 \times 60 = 240 3 \times 17 = 51 2 \times 13 = 26 1 \times 16 = 16 2685 + 240 + 51 + 26 + 16 = 3, 018$

Step 3: Divide the total of all review ratings by the volume of reviews

$3, 018 \div 643 = 4.69$

Step 4: Round the outcome to one decimal place

$4.69 = 4.7$

(ii) Calculate the median price of nearly-new available trimarans. [2 marks]

Step 1: Place the trimarans in order, from smallest to greatest price

Sunsailor T	FL 479X	Bateux Sol Ranger V	DMAX 800
$390,000	$430,000	$450,000	$520,000

Step 2: Identify the two mid-price trimarans

FL 479X	Bateux Sol Ranger V
$430,000	$450,000

Step 3: Calculate the half-point value between these two trimarans

$($ 450, 000 + $ 430, 000) \div 2 = $ 440, 000$

(c) Explain one advantage and one disadvantage to Sunset Sails Tours of calculating the standard deviation of confirmed corporate hotel bookings. [4 marks]

Indicative content	Guidance
Advantages of calculating standard deviation include It gives an accurate idea of how the data is distributed It is less affected by data fluctuations than other statistical methods Disadvantages of calculating standard deviation include It is more complex to calculate than other statistical methods Standard deviation gives more weight to outlying data	In this type of explain question you can be awarded one mark for each correct advantage or disadvantage identified A further two marks can be awarded if you apply both the advantage and disadvantage to the business.
Model answer 1	Commentary
An advantage of using standard deviation is that it is a reliable and widely-used statistical tool that takes into account all of the relevant data [1 mark]. However standard deviation is complex to calculate and may need an expert to interpret correctly [1 mark].	In this example, the candidate has been awarded 2 marks Whilst one valid advantage and one valid disadvantage have been provided, the response has not been applied to the business
Model answer 2	Commentary
An advantage of using standard deviation of confirmed hotel bookings is that it is a reliable and widely-used statistical tool that takes into account all of the relevant data over the five months of hotel bookings in which Sunset Sails Tours is interested [1 mark + 1 mark]. However standard deviation is complex to calculate and may need an expert to interpret correctly which, as a small local business, Sunset Sails Tours is unlikely to employ [1 mark + 1 mark].	In this improved response the candidate is awarded 4 marks One valid advantage and one valid disadvantage have been provided, and the response has been applied to the business

(d) Discuss the implications for Sunset Sails Tours Ltd of producing a business plan. [10 marks]

Indicative content	Guidance
Implications of producing a business plan include: Detailed research related to a new market segment is required → initial research already compiled is unlikely to be sufficient Effective business plans require time and expertise to construct → does this small, local business have this expertise or time to produce such a plan? The business has a clear mission and growth objective → this is likely to help in developing a focused business plan	This is a 'Level of response' answer where the examiner judges how well you have displayed the key skills of knowledge, application, analysis and judgement In particular your answer will need to show the following elements in order to gain top marks: Appropriate business terms are used throughout Business plans are explained clearly and knowledge applied purposefully The case study material is used in a way that significantly strengthens the response Chains of balanced analysis are evident throughout the response Judgments are relevant and well substantiated
Model answer extract	Commentary
Overall, producing a detailed and thorough business plan would be likely to play an important role in persuading the bank to finance the purchase of a new trimaran. The lender will be able to analyse the financial performance of the business as well as the research it has conducted to determine whether it is in a position to pay back upwards of $350,000 and whether the idea has commercial merit. It is likely, though, that other factors such as Sunset Sails Tours' past credit history as well as how convincing their case is presented by the business owners will influence the bank's decision and the business plan should be seen as just one, albeit influential, part of the finance application.	In this judgement extract, the candidate demonstrates clear knowledge and understanding of the business plan They have used the case study material effectively to support the judgement Judgement is balanced and reasoned, considering 'both sides' of the point and considering wider factors

Business Plans & Descriptive Statistics: Sunset Sails Tours (HL IB Business Management)

Revision Note

The Purpose of the Business Management Case Study Below