Evaluation in Business

Sometimes (normally in 8-mark questions) you will be asked to evaluate. This is about going beyond the insights you have made from doing your analysis (your Dr Tests).

But let’s make sure you are clear on the difference between analysis and evaluation. By analyzing in Business we mean giving your Defi­ni­tions, Expla­na­tions, Exam­ples and Development (making sure you have fully answered the question) (Doing the ‘DEED’). And then, after you analysis is done, you go on to evaluate, to make sense of it for the reader. You are telling us, in clear terms, what we should think about the situation.

This is a bit like Theory of Knowledge because you are not only showing that you can think about things using the course theories, but also showing that you can think about things in a complicated (or complex, or advanced) way. You can contrast the results of two ways of appraising an investment opportunity for example and tell us which insights are most important for this particular company. Business people (if you tell them some theories) will often say, “So what?!” They want to know what these insights of yours (from your analysis) really mean for their business. So it is often by doing good evaluation that you are really helping businesses to cope and improve.

Students generally struggle with this. Even if you feel like they know good evaluation when they see it, they don’t know HOW to do it. So this note shows you exactly what to do when you’re evaluating in business.

This acronym will help you to remember the 7 different aspects of good business evaluation:

Seriously Fantastic Leaders Will Profit People Consistently

Or

 Some Foreign Leader Wrote Phoney Public Comments

Try to do all 6 parts.

Stake­hold­er Impacts

– What effects would this change (i.e. a focus on Corporate Social Responsibility) have on different stakeholders (Suppliers, Owners, Con­sumers, Government, Rivals, Investors, Managers and Employees — the “SOC GRIME”)?

– Are there some unde­sir­able effects on some of these stakeholders?

– Is the pol­icy great for some (i.e. owners), but bad for others (i.e. consumers)?

Functional Area Effects

– What will this change mean for the different parts of the business: the Marketing, HR, Production and Finance teams?

– In a way, these are the internal effects, whereas in the stakeholder effects you will look at employees and owners in general, but you will mostly focus on external stakeholders).

Long-term and short-term Consequences

– Some changes can have great benefits for a business in the long-term change good in the short-term, but over in a few years it will have unde­sir­able consequences?

– Will the pol­icy be really hard on short-run profits, but better for profits in the long-run, maybe due to increased customer loyalty?

– Or, will this pol­icy fix one prob­lem, but cre­ate another?

Weaknesses of the Analysis

– How sure can we be about the conclusions we’ve made? Is the answer completely obvious? Or are there some weak­nesses in the approach we’ve taken?

– Is there some other data  (i.e. financial data) which we would need in order to answer the question with complete confidence?

Pri­or­i­ties

– Dis­cussing the pri­or­i­ties of the business is also a good way to keep things in per­spec­tive. For example, an ethical pol­icy may be good for society, but social welfare is not generally the priority of a business.

– You can never go wrong, connecting a question back to profit or survival of the business –the main aims most businesses.

– So what are the priorities of the different stakeholders and which of these stakeholders (and therefore which priorities) will come first?

Pros and Cons

– What are the advan­tages and dis­ad­van­tages (costs and benefits) of this change or approach? Are the costs worth the benefits?

– What are the argu­ments for and against this change or approach?

Con­clu­sions

– What have our models and our theories (our Dr Tests) shown us? And then take this a step further: what do all of the tests together show us?

– What big conclusions can we draw?

So there you go. Try to go through each of the evaluation types, in order whenever you are asked to evaluate in IB Business exam questions.

To help you remember the mnemonic, you may want to consider, firstly, whether you agree with it. Does it seem true to you? Is leadership about consistently profiting people? What do you think? The other thing you might try to do is to create your own mnemonic. By thinking creatively about it you can stick it in your own mind.

(Also, if you take Economics as well, you might like to read this post on Evaluation in Economics.)

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2 Responses to Evaluation in Business

  1. Tim Woods says:

    Yes, it can indeed be applied to those questions. However, in IGCSE Business we are normally especially interested in the pros and cons (advantages and disadvantages) of a thing.

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