Business Management
Higher Level
Paper 3
1 hour 15 mins
Roots of Hope (RH)
Read the resources and answer the questions that follow
Resource 1: Background information:
Jenny James, widely known as JJ, is a renowned social entrepreneur and the president of Roots of Hope (RH). RH is a transformative organization dedicated to empowering rural artisans who lack access to formal banking systems. The organization provides financial assistance to these artisans, supplies raw materials at significantly discounted prices, and supports them in marketing their products, enabling them to earn a sustainable livelihood.
Resource 2: Business News Article – March 2019: Social Enterprise in Expansion Mode
To expand its reach among
rural artisans, RH has acquired the Rural Cooperative Bank, The Rural Credit TRC)
intending to transform it into a for-profit social enterprise. However, the
bank’s financial health is currently concerning. With a poor loan recovery rate
and unethical lending practices, the bank lacks the capacity to lend new loans
or secure funding from higher banks. Additionally, it has no resources to
promote its financial lending services.
The uncertainty surrounding the bank’s future has led to significant employee turnover, disrupting day-to-day operations. Contract employees have also voiced grievances about irregular salary payments, even resorting to protests outside the bank.
JJ’s immediate priority is to stabilize the organization by building a new team and restoring confidence among existing staff to prevent further resignations. A new manager has been appointed to replace the current one, signaling the start of a restructuring process. As a part of its recovery strategy, JJ has taken proactive measures to engage loan defaulters directly, communicating the bank’s new vision and purpose to rebuild trust and foster a fresh start.
Resource 3: Marketing strategies (from the board meeting excerpts July 2024)
JJ introduced new
strategies. The summary is given below:
·
Draft a new vision statement to reflect ethical banking
practices and inclusivity for artisans and underserved communities.
·
Expand social media presence to engage with a broader
audience and promote banking services.
·
Design a new logo that symbolizes ethical banking and
accessibility for artisans excluded from formal banking systems.
·
Enhance loan recovery rates by introducing flexible repayment
options, such as extended installment plans.
·
Boost lending to rural artisans to support their growth and
development.
·
Provide commercial loans to medium-sized businesses with
strong credit ratings and proven creditworthiness.
·
Sponsor events to increase brand visibility and community
connection.
·
Host free workshops focused on financial literacy and
effective money management to empower rural communities and small businesses.
Resource 4:Selected financial data for The Rural Credit ( Bank)
Note: Loan recovery is the process where a lender tries to get back
money from a borrower who has not repaid the loan as promised.
Resource 5: Competitive environment and business strategies.
Many rural cooperative banks, along with several commercial banks, are now extending their services to rural communities, unorganized small businesses, and artisans who lack awareness of banking facilities. Beyond financial assistance, these banks are also offering craft training and promoting marketing awareness through their rural outreach programs. If RH does not take timely and appropriate action, the bank (TRC) will continue to face losses and fail to achieve its forecasted targets for 2028.
Resource 6: Excerpts from the interview with Jenny James (JJ) – The future
·
Acquire smaller rural cooperative banks to expand market
reach and achieve cost leadership.
·
Develop user-friendly mobile apps in local languages to
increase banking awareness and provide easy access to banking services.
·
Set up temporary mobile banking booths to offer instant loan
approvals and promote savings schemes in rural areas.
Questions:
|
1.
Using an appropriate business management theory, describe one
human need that RH meets by providing financial assistance to rural artisans. |
[2] |
|
2.
Using the resources given, explain one internal and one
external challenge that The Rural Credit ( Bank) is facing |
[6] |
|
3.
Using all the
resources provided and your knowledge
of business management tools and
theories, recommend a possible plan of action for The Rural Credit ( TRC) to ensure the 2028
forecast target is met |
[17] |
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