What makes a problem critical

The definition that decides every answer

• The standard defines a critical problem as one threatening the continuation of the business.
• That is a high bar, and it is the reason marks are lost. A problem that is annoying, expensive or embarrassing is not automatically critical.
• Ask: if nothing is done, could this business stop existing?

Not critical	Critical
A supplier raises prices by 3%	The only supplier of a key input stops supplying
A staff member resigns	The staff member holding every customer relationship resigns
One customer complains publicly	The business's core market has moved to a competitor's product
Sales fall for a month	Sales fall every month for a year while fixed costs continue

Causes and effects

• Achieved requires you to explain the causes and effects of the problem. Merit requires both to be fully explained.

• Cause — why the problem has arisen. Usually a decision the business made, or an external factor it did not respond to.

• Effect — what it does to the business. Effects are almost always one of five things:

  • falling sales revenue
  • rising costs
  • cash flow problems — the business cannot pay what it owes when it falls due
  • loss of capability — people, skills or assets it can no longer replace
  • damaged brand reputation, which feeds back into sales

• The strongest answers show a chain, because that is what makes the problem critical:

Cause → immediate effect → financial effect → threat to continuation.

• A new competitor opens nearby (cause) → the business loses 20% of customers (immediate effect) → revenue no longer covers fixed costs (financial effect) → the business cannot pay its lease and must close or sell (threat to continuation).

Threats and opportunities

• The paper often asks about a threat in part (i) and an opportunity created by the same change in part (ii).
• Every critical problem has an opportunity inside it, because the business is being forced to change something it would otherwise have left alone:
  • A new competitor forces a business to find out what actually makes it different.
  • A technology change offers the business the same advantage it is giving a rival.
  • A fraud discovered exposes weak controls before something larger happens.
• Be ready to argue both sides of the same fact.

Using evidence from the given context

• In this standard, evidence means information sourced from the given context — the background information and Resources A to D in the paper.
• Achieved is stating evidence; Merit is including detailed evidence to support explanations; Excellence is integrating it so it supports a justified recommendation.
• Practically:
  • Quote or paraphrase specific details from the resources — a figure, a quoted comment, a stated constraint.
  • Do not simply restate the resource. Use it as the reason your explanation applies to this business.
  • Weak: "Resource B says new competitors are considering entering the market."
  • Strong: "Because Resource B states that better weather is forecast and new competitors are considering entry, the business faces the loss of market share at exactly the point its own volumes recover — so a good season will not restore its margins."