Evaluation - mitigation and exacerbation (making worse)

Evaluation is a critical skill in the coming U4 examination. All of you can comfortable manage the direct evaluation that I call "So what?" style.

In the examination a question based around the RECESSION theme may bring in some other external factor. We introduced the impact of the volcanic activity as such a random factor.

We identified that the fall out from the volcano has affected the airlines, BAA, other businesses supporting the industry as well as those engaged ion IMPORT and EXPORT.

But: How bad would it be and what could be done?

Firstly, firms exiting the recession may have fared badly. Their cashflow may have been WEAKENED by few customers, lower priced tickets necessitated by increased competition for customers.

The volcanic activity would worsen their plight. No flights means no revenue. The overheads still have to be paid, this would cause a period of NEGATIVE cash flow (- this is where AT would have been correct). This could push firms who had survived the recession into administration or towards commercial partnership with other firms (perhaps BA and Iberia would have merged earlier). In this way the Volcanic activity therefore exacerbates the cash flow problems.

[For the highest evaluation a solution to the problem may be appropriate.]

Something that mitigates the impact could be suggested. The Government could subsidise the Airline, if the candidate developed this to identifie such a subsidy would need the agreement of the EU, the candidate would score very highly. Perhaps an awareness of the need to preserve jobs as a reason for the EU to act would add value to the answer.

To maximise the score the candidate would need to clearly say that the subsidy would lower the Airlines costs, and therefore increase its chances of survival. This is critical as it is the solution to the problem.