Cambridge A Level Business (for first examination in 2016) 9609 — 2016 Oct/Nov Paper 2 · Variant 1

This document consists of 5 printed pages, 3 blank pages and 1 Insert. DC (NF/SG) 125609/1 © UCLES 2016 [Turn over Cambridge International Examinations Cambridge International Advanced Subsidiary and Advanced Level * 5 5 0 3 2 5 8 0 8 2 * BUSINESS 9609/21 Paper 2 Data Response October/November 2016 1 hour 30 minutes No Additional Materials are required. READ THESE INSTRUCTIONS FIRST An answer booklet is provided inside this question paper. You should follow the instructions on the front cover of the answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet. Answer all questions. The businesses described in this paper are entirely fictitious. The number of marks is given in brackets [ ] at the end of each question or part question.

2 9609/21/O/N/16 © UCLES 2016 1 Barbeque House (BH) BH is a fast food restaurant and takeaway business which sells a range of burgers, kebabs, pizzas and side orders. BH also has a delivery service to the local area. BH is owned by Amir who mortgaged his home to finance the start-up of the business. Amir operates BH as a sole trader. His son also works within the business as a chef. Amir has been advised to change the legal structure of BH and become a private limited company to protect the business and himself. BH is located on a busy high street. There are a number of other similar businesses on the high street and in the surrounding area. Amir is aware that the continued success of the business requires him to differentiate BH from the competition and develop a Unique Selling Point (USP). Amir has carried out some market research. Table 1: Market research data about competitors within 2 kilometres of BH Total number of competitors 8 Number of competitors who offer delivery services 4 Number of competitors who do not sell oriental food 6 Average price $2 Fig. 1: Market share of BH and competitors within 2 kilometres of BH BH 3DSD-RH·V 10% 0DPD0LD·V 10% &KDR·V 20% 3HSH·V 10% :RN·V 20% *URVHWWR 5% 7-·V 5% 3L]]D+RXVH 5% 7RWDOPDUNHWYDOXH  000 5 10 15

3 9609/21/O/N/16 © UCLES 2016 [Turn over The two market leaders are Wok’s and Chao’s. Both businesses specialise in oriental food but neither has a delivery service. Amir would like to increase BH’s market share and he is considering starting to sell oriental food. None of his staff have any experience cooking or selling oriental food, but Amir believes that the possible increase in income would be worth any extra costs. (a) (i) Define the term ‘Unique Selling Point’ (lines 9–10). [2] (ii) Briefly explain the term ‘sole trader’ (line 4). [3] (b) (i) Refer to Fig. 1. Calculate the market value of BH’s share of the market. [3] (ii) Explain one benefit to Amir of carrying out market research. [3] (c) Analyse the advantages and disadvantages to Amir of becoming a private limited company. [8] (d) Recommend whether BH should start to sell oriental food. Justify your answer. [11] 20

4 9609/21/O/N/16 © UCLES 2016 2 Software Creations (SC) SC is a producer of specialised software for computers, mobile (cell) phones and tablet computers. SC targets the industrial market, selling mainly to small businesses which need a specific piece of software that is unique to that business. SC employs a number of highly skilled workers who produce each piece of software. Most of the workers are under 30 years old and all have university degrees in computer related courses. All the workers are organised into teams. Corina is the Head Designer and she is in charge of all the teams. She mainly uses a laissez-faire style of leadership. Fig. 2: Organisation chart of production teams Corina - Head Designer Computer software design team Mobile phone software design team Tablet computer software design team Testing team Targets are set for the teams. Each worker is paid by performance related pay based on how many of the targets the team meets. Table 2: Production team data Team Number of workers in team Number of workers from team who left SC in 2015 Average annual performance related pay of workers in team % of targets met in 2015 Computer 5 0 $35 000 96% Mobile phone 12 3 $32 000 87% Tablet 10 2 $32 000 86% Testing 8 4 $25 000 62% The Testing team is responsible for making sure that the final product meets the needs of the customer. When a piece of software has been completed it is handed over to the Testing team who perform a series of tests on the software before it is released to the customer. The team has suffered from high labour turnover, which has led to a reduction in the number of targets being met. 5 10 15 20 25

5 9609/21/O/N/16 © UCLES 2016 (a) (i) Define the term ‘industrial market’ (line 2). [2] (ii) Briefly explain the term ‘laissez-faire style of leadership’ (line 7). [3] (b) (i) Refer to Table 2. Calculate the labour turnover rate for the Testing team in 2015. [2] (ii) Analyse the disadvantages to SC of a high labour turnover rate in the Testing team. [8] (c) Explain how the Testing team add value to the software created by SC. [4] (d) Evaluate the motivation methods used at SC. [11]

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® IGCSE is the registered trademark of Cambridge International Examinations. This document consists of 9 printed pages. © UCLES 2016 [Turn over Cambridge International Examinations Cambridge International Advanced Subsidiary and Advanced Level BUSINESS 9609/21 Paper 2 Data Response October/November 2016 MARK SCHEME Maximum Mark: 60 Published This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the details of the discussions that took place at an Examiners’ meeting before marking began, which would have considered the acceptability of alternative answers. Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for Teachers. Cambridge will not enter into discussions about these mark schemes. Cambridge is publishing the mark schemes for the October/November 2016 series for most Cambridge IGCSE®, Cambridge International A and AS Level components and some Cambridge O Level components.

Page 2 Mark Scheme Syllabus Paper Cambridge International AS/A Level – October/November 2016 9609 21 © UCLES 2016 1 (a) (i) Define the term 'Unique Selling Point' (lines 9-10). [2] Answers could include: • A factor which makes the businesses product/service different from competitors. • Can be used in marketing. • Can be any element of the marketing mix. • Examples. Level Knowledge and Application Marks 2 Good definition 2 1 Partial definition 1 0 No creditable content 0 (ii) Briefly explain the term 'sole trader' (line 4). [3] Answers could include: • A business owned and controlled by one person. • A sole trader has unlimited liability. • The owner has full control of the business • Able to keep all the profits. • Does not have to publish accounts • May contrast with a partnership • No continuity • Amir is an example of a sole trader or any other relevant example. Level Knowledge and Application Marks 2 Good explanation 2–3 1 Partial explanation/understanding 1 0 No creditable content 0

Page 3 Mark Scheme Syllabus Paper Cambridge International AS/A Level – October/November 2016 9609 21 © UCLES 2016 (b) (i) Refer to Fig. 1. Calculate the market value of BH's share of the market. [3] Papa Joe's 10% Mama Mia's 10% Chao's 20% TJ's 5% Pizza House 5% Pepe's 10% Wok's 20% Grosetto 5% TOTAL 85% Other = 85% of the market 100%-85% = 15% market share of BH 15% of $600,000 = $90,000 Answer = $90,000 Correct answer 3 Right method with correct use of figures/attempt (e.g. calculates wrong % for market share so final answer incorrect) 2 Attempt by using appropriate figures/right method but incorrect figures i.e. formula given/only calculates market share % (15%) 1 No creditable content 0 (ii) Explain one benefit to Amir of carrying out market research. [3] Answers could include: • Allows Amir to understand what his customers want (or potential customers) and then adapt his business to these requirements. So he could start offering different foods if customers want this. • Amir can minimise the risk of launching a new product/service, such as Oriental food • Allows Amir to know his main competitors and use this to develop a USP, such as lower prices, better delivery etc. • Helps Amir to establish trends in the market and then develop his marketing to anticipate these, such as identifying a trend for Oriental food. Context could come from: • Launch of new product such as Oriental food • Developing a USP • Very competitive market

Page 4 Mark Scheme Syllabus Paper Cambridge International AS/A Level – October/November 2016 9609 21 © UCLES 2016 Level Knowledge and Application Marks 2 Shows understanding of one benefit of market research in the context of the business 3 2 Shows knowledge of market research in the context of the business 2 1 Shows knowledge of market research - simple statements 1 0 No creditable content 0 (c) Analyse the advantages and disadvantages to Amir of becoming a private limited company. [8] Level Knowledge and Application (4 marks) Analysis (4 marks) 2 Explanation of advantage(s) and disadvantage(s) in context – 4 marks Explanation of advantage(s) or disadvantage(s) in context – 3 marks Analysis of advantage(s) and disadvantage(s) in context – 4 marks Analysis of advantage(s) or disadvantage(s) in context - 3 marks 1 Identification of (but no further explanation) advantages and disadvantages – 2 marks Identification (but no further explanation) of advantages or disadvantages – 1 mark Shows knowledge of a private limited company – 1 mark Analysis of advantage(s) and disadvantage(s) – 2 marks Analysis of advantage(s) or disadvantage(s) – 1 mark 0 No creditable content 0 marks Analysis will come from developing the issues Answers could include: Advantages • Amir would gain limited liability, which would mean that his potential loss from the business would be limited to the amount that he has invested, not his personal possessions and wealth (e.g. his house). • BH would gain its own legal personality, which would mean that if BH was taken to court (e.g. for selling poor/contaminated products) then the business would be sued not Amir. • BH would gain continuity, which would mean that Amir's son could inherit the business on Amir's death. • BH could potentially take on more investors by selling shares which would increase the sources of finance open to BH and could fund the potential expansion into Oriental food.

Page 5 Mark Scheme Syllabus Paper Cambridge International AS/A Level – October/November 2016 9609 21 © UCLES 2016 Disadvantages • There will be some legal formalities and paper work involved in becoming a private limited company which will be an additional cost to the business that Amir must fund. • End of year accounts must be made available for public inspection, which could lead to competitors gaining information about BH which Amir would not want to be known. This is especially important in such a competitive market. • Staff may feel that the business is becoming larger and may worry that they could lose their personal relationship with Amir. • If Amir takes on further investors as shareholders of the business, then this may lead to a loss of control and less profit for him. (d) Recommend whether BH should start to sell oriental food. Justify your answer. [11] Level Knowledge and Application (4 marks) Analysis and Evaluation (7 marks) 2 Two or more reasons in context – 4 marks One reason in context – 3 marks Fully justified and balanced judgement in context – 7 marks Fully justified judgement in context – 6 marks Judgement based on contextual analysis – 5 marks Good analysis of two or more reasons in context – 4 marks Good analysis of one reason in context – 3 marks 1 Identification of two or more reasons – 2 marks Identification of one reason – 1 mark Analysis of two or more reasons – 2 marks Analysis of one reason – 1 mark 0 No creditable content 0 marks Answers could include: • BH does not currently sell Oriental food but 40% of the market purchases Oriental food, so this would allow BH to take customers away from Wok's and Chao's and increase market share. • Neither Wok’s nor Chao's offer a deliver service which could give BH a USP over these businesses and increase their market share. • By offering more than one type of food, BH could gain a competitive advantage over its current rivals. They could cater for families who want more than one type of food in an order, again giving them a competitive advantage.

Page 6 Mark Scheme Syllabus Paper Cambridge International AS/A Level – October/November 2016 9609 21 © UCLES 2016 However: • BH has no experience of selling Oriental food. Therefore they may not be able to offer a quality service which could damage their reputation. • BH may need to provide training and/or hire new workers to offer Oriental food which would increase the costs of the business. • Wok's and Choa's may decide to do the same and start selling burgers, kebabs, pizzas and side orders and therefore make the market even more competitive and possibly reduce BH's market share. • There are likely to be increased marketing costs involved in launching this new service; new menus, advertising etc. 2 (a) (i) Define the term 'industrial market' (line 2). [2] Level Knowledge and Application Marks 2 Good definition 2 1 Partial definition 1 0 No creditable content 0 Answers could include: • An industrial market is one where the goods or services are sold by one business to another business. (2 marks) • An industrial market is one where the goods or services are sold to business. (1 mark) • As opposed to a consumer market or an example (1 mark) (ii) Briefly explain the term 'laissez-faire style of leadership' (line 7). [3] Level Knowledge and Application Marks 2 Good explanation 2–3 1 Partial explanation/understanding 1 0 No creditable content 0 Answers could include: • Laissez-faire leadership allows workers to make decisions and carry out tasks themselves. (1 mark) • As opposed to other (named) leadership style. (1 mark) • Little input from management. (1 mark) • Most effective when there is a level of expertise or creativity required in the work, e.g. creating software or other relevant example. (1 mark)

Page 7 Mark Scheme Syllabus Paper Cambridge International AS/A Level – October/November 2016 9609 21 © UCLES 2016 (b) (i) Refer to Table 2. Calculate the labour turnover rate for the Testing team in 2015. [2] No. of workers who left = 4 Total No. of workers in the team = 8 4 / 8 *100 = 50% Answer = the team has a 50% labour turnover rate 2 marks – correct answer (accept 50) 1 marks – right method (e.g., forgets to multiply by 100 i.e.0.5), correct use of figures, attempt (i.e. uses other figures from the table) 1 mark – attempt by using appropriate figures/right method but incorrect figures e.g. formula given (ii) Analyse the disadvantages to SC of a high labour turnover rate in the Testing team. [8] Level Knowledge and Application (4 marks) Analysis (4 marks) 2 Explanation of two or more disadvantages in context – 4 marks Explanation of one disadvantage in context – 3 marks Analysis of two or more disadvantages in context – 4 marks Analysis of one disadvantage in context – 3 marks 1 Identification of two or more disadvantages (but no further explanation) – 2 marks Identification (but no further explanation) of one disadvantage – 1 mark Shows knowledge of labour turnover – 1 mark Analysis of two or more disadvantages – 2 marks Analysis of one disadvantage – 1 mark 0 No creditable content 0 marks Analysis will come from developing the issues Limited analysis in context: Marks limited to 4+2=6 Analysis of only one disadvantage in context: Marks limited to 3+3=6 Answers could include: • Unable to design, create and test software • Poorer quality software • May be a sign of low motivation • Could increase costs at SC (temporary workers, overtime etc.) • Poor motivation/training may mean software may not run correctly causing customers to be dissatisfied, especially important because of the nature of the industrial market • Customer complaints may increase and the customers may demand refunds which can increase SC's costs • The reputation of SC may reduce - in an industrial market (and also an IT market) such as this, it is likely that recommendations will form a large part of their marketing and recruitment • Poor quality software (due to inexperience in the team) could cause IT systems to crash which may lead the customer to sue SC • May make recruitment difficult

Page 8 Mark Scheme Syllabus Paper Cambridge International AS/A Level – October/November 2016 9609 21 © UCLES 2016 (c) Explain how the Testing team add value to the software created by SC. [4] Level Knowledge and Application Marks 2 Shows understanding of methods to add value in the context of the Testing team 4 2 Shows understanding of adding value in the context of the Testing team 3 1 Shows understanding of methods to add value – simple statements 2 1 Shows understanding of adding value - simple statements 1 0 No creditable content 0 Answers could include: • Can market their product as being more reliable • Can market their product as having better quality • Creates a better image for the firm giving a better reputation in the market • May create a USP for SC (d) Evaluate the motivation methods used at SC. [11] Level Knowledge and Application (4 marks) Analysis and Evaluation (7 marks) 2 Shows understanding of two or more motivation methods in context – 4 marks Shows understanding of one motivation method in context – 3 marks Fully justified judgement of two or more methods in context – 7 marks Fully justified judgement of one method in context – 6 marks Judgement based on contextual analysis – 5 marks Good analysis of two or more methods in context – 4 marks Good analysis of one method in context – 3 marks 1 Shows understanding of two or more motivation methods- 2 marks Shows understanding of one motivation method -1 mark Analysis of two or more motivation methods – 2 marks Analysis of one motivation method -1 mark 0 No creditable content 0 marks

Page 9 Mark Scheme Syllabus Paper Cambridge International AS/A Level – October/November 2016 9609 21 © UCLES 2016 Context is likely to come from: • Work in teams • Laissez-faire leadership • Specialisation • Target setting • Performance related pay • Skilled workers Answers could include: • Teamwork; workers may feel more motivated if they work in teams, could link with Maslow and Herzberg. Likely to be very useful in creative areas such design teams. May also reduce mistakes in quality and testing teams. • Laissez-faire leadership; useful in creative industries and allows workers to achieve objectives in whatever way is most appropriate. Likely to motivate because of the nature of the workers (i.e. skilled workers), more likely to be Theory Y. • Specialisation; allows workers to become experts in their area and this may link to Maslow and allow recognition and eventually self actualisation by becoming masters of their area. However could also become boring and repetitive but unlikely in this industry. • Targets/Management by objectives; ensures/encourages minimum requirements/productivity is met – customer focussed business. Allows for laissez-faire leadership. Skilled workers may be able to manage their own time/workload to meet targets best – link to Maslow/Herzberg • Performance related pay; Link to Taylor, can reward harder workers. Links with laissez- faire leadership.