Cambridge A Level Business (for first examination in 2016) 9609 — 2022 Oct/Nov Paper 2 · Variant 1

1 Drone Development (DD) DD produces a range of drones, which are unmanned aircraft flown by remote control. These drones are used to help farmers identify whether their fields have enough water. They can also help farmers to see how fast crops are growing on large farms. The drones are individually designed using Computer Aided Design (CAD). DD’s mission statement is: ‘To be the leading company in drone technology’. 5 DD’s employees are skilled and highly motivated. This has enabled DD’s managers to use a laissez-faire style of leadership. The Research and Development (R&D) team at DD has developed a drone designed for high-volume production for the consumer market. The new drones will be called Robodz. Secondary research indicates that these drones can be used for taking aerial photographs 10 and videos of sporting and other events, such as cycle races and outdoor parties. The drones will send photographs and videos directly to a user’s smartphone. There are few competitors in this market even though demand is growing particularly from consumers in the 30– 45 years age group. The Marketing Director has done primary research into the consumer market for drones. 15 The results are shown in Table 1.1. Table 1.1: Important features of a drone for the consumer market (number of responses) Important Quite Important Unimportant Price 16 4 10 20 Performance 30 0 0 Colour 15 5 10 Ease of use 18 2 10 Durability 12 11 7 Producing Robodz will mean changes in operations at DD: 25 • greater cooperation between the design, production and marketing departments • each designer will have less opportunity for individual design • more automation will be involved. The Board of Directors has agreed to produce Robodz. (a) (i) Define the term ‘Computer Aided Design (CAD)’ (line 4). [2] (ii) Explain the term ‘primary research’ (line 15). [3] (b) (i) Refer to Table 1.1. Calculate the total percentage of consumers who stated that ‘ease of use’ is either important or quite important. [3] (ii) Explain one possible limitation of the Marketing Director’s primary research. [3] (c) Analyse two factors that could influence the leadership style used as DD moves into the production of Robodz. [8] (d) Recommend a suitable marketing mix for the Robodz. Justify your recommendation. [11]

Mark scheme: Question Answer Marks 1(a)(i) Define the term ‘Computer Aided Design (CAD)’ (line 4). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No credible content 0 A correct definition should cover the following: • The use of technology/software/computer programmes • To improve the design process/create 2D or 3D models Exemplar Rationale Marks The use of technology makes Both elements covered 2 designing a product more flexible Using technology to speed up Both elements covered 2 the design process Using technology to design a An understanding of computer 1 product aided (no expansion) Using computers to speed up Only one element of the flow 1 the design process identified Using computers to design a A generic answer 0 product 1(a)(ii) Explain the term ‘primary research’ (line 15). 3 Award one mark for each point of explanation Point Explanation Marks C Example or some other way of showing good 1 understanding – e.g., questionnaires, focus groups, test marketing etc. Contrasts with secondary. B Carried out to produce information directly related to the 1 business. A Gathering new / first hand data / field research about 1 markets (size, trends, competitors, customers, likely sales etc.). Content Primary research is research conducted by the business itself (or commissions it to be done). It involves going directly to a source – usually customers and prospective customers in a target market – to ask questions and gather information. Exemplar Rationale Marks It means a business can get new information All three 3 about likely sales relevant to the business, elements unlike secondary research which is second hand data Carried out to gather new information, first All three 3 hand, about customer tastes using elements questionnaires Provides first hand data about market trends A and B 2 Produces information for the business B only 1 Researching the market NAQ 0 1(b)(i) Refer to Table 1.1. Calculate the total percentage of consumers who 3 stated that ‘ease of use’ is either important or quite important. Rationale Mark Correct answer (with or without working and/or %) 3 Correct answer for important only or quite important only 2 Correct formula/identifies correct figures (ie 20 and 30) 1 No credible content 0 Number stated ease of use important + quite important = 20 Number think ease of use important + unimportant  100 Total respondents = 20  100 30 = 66.67% (0r 66.6 or 66.7 or 67) Note: % not required for full marks Note: full marks if two correct answers for each of ‘important’ (60%), ‘quite important’ (6.67% (0r 6.6 or 6.7 or 7)) Common answers Answer Mark Rationale 66.67% 3 Correct answer 67 3 Correct answer without the % 60% 2 Important only 6.67% 2 Quite important’ only Unimportant/total 1 Formula only respondents  100 20/30 1 Correct figures identified 20/150  100 1 Wrong denominator but formula implied 1(b)(ii) Explain one possible limitation of the Marketing Director’s primary 3 research Level Knowledge and Application Marks 2 Explanation of one limitation in context 3 (APP) 1b (KK) Explanation of one limitation 2 1a (K) Identification of one limitation 1 0 No creditable content 0 Note: only award limitations NOT disadvantages Content could come from: • Small sample size (only 30 asked) • May be other features important to customers such as the quality of the photographs or does it have video capability • Doesn’t say who was asked – are they a sample from the target market? • How the research was conducted e.g. questionnaires, focus group? Could bias answers depending on this • Doesn’t consider existing competition in the market, price an important feature can DD compete in the market? ARA Exemplar Mark Rationale Small sample size of 30 3 Limitation in context unreliable Sample chosen may not have 2 Limitation explained but not in knowledge of drones context (referring to drones not sufficient for context) Doesn’t look at competition in 1 Identification only the market Time consuming 0 Disadvantage not a limitation 1(c) Analyse two factors that could influence the leadership style used as DD 8 moves into the production of Robodz. Level Knowledge and Marks Analysis Marks Application (4 marks) (4 marks) 2b Shows knowledge 4 Developed 4 of two factors analysis of two DEV APP influencing + factors influencing + leadership style in leadership style in context APP context DEV 2a Shows knowledge 3 Developed 3 of one factor analysis of one influencing factor influencing leadership style in leadership style in context APP context DEV 1b Shows knowledge 2 Limited analysis of 2 of two factors two factors AN influencing K+ influencing + leadership style K leadership style AN 1a Shows knowledge 1 Limited analysis of 1 of one factor one factor influencing influencing leadership style K leadership style AN 0 No creditable content Indicative content AO1 Knowledge and understanding • Depends on skills required • Organisation • Situation • Individual leader/preference of the leader • The team • Environment AO2 Application • Current style laissez faire • Highly skilled workforce • Already very motivated • Greater cooperation between departments required • Less opportunity for individual design • More automation 1(c) AO3 Analysis • New situation requires new skill. Less scope for individuality. Therefore, more direction/control needed? • Currently laissez faire. OK since workforce is highly skilled and motivated and will lead to better motivation • Greater integration of different areas required (drones/photography) which means that needs more direct control • To ensure smooth workflow between departments. • Some kind of democratic management would suit skills/attitude of work force but there needs to be strong guidance/coordination ARA 1(d) Recommend a suitable marketing mix for the Robodz. Justify your 11 recommendation. Knowledge and Marks Analysis and Marks Application Evaluation (4 marks) (7 marks) Annotation Annotation Justified judgement(s) 7 that follows on from a discussion based on + + an integrated marketing mix for DD EVAL EVAL Recommendation(s) 6 that follows on from a balanced argument + relevant to DD EVAL EVAL A simple 5 recommendation based on a balanced argument relevant to DD EVAL Shows knowledge of 4 A balanced argument 4 two elements of the based on analysis of marketing mix in more than one DEV APP context + element of the + APP marketingcontext mix with DEV Shows knowledge of 3 Argument based on 3 one element of the analysis of one marketing mix in element of the context APP marketingcontext mix with DEV Shows knowledge of 2 Limited analysis of 2 two elements of the two elements of the AN marketing mix marketing mix K + + K AN Shows knowledge of 1 Limited analysis of 1 one element of the one element of the marketing mix marketing mix K AN No creditable content 0 1(d) Note: marketing mix could be 4Ps or 4Cs Indicative content AO1 Knowledge and understanding 4Ps • Price • Product • Place • Promotion 4Cs • Consumer wants • Cost • Convenience • Communication AO2 Application • Niche market? Used for sport events and area photography, mainly in the 30–45 year age group • Competition? Few competitors in a growing market. • Performance and ease of use more important than price – price skimming? • Innovative product, innovative price? • Internet or shop sales. Direct selling? Special events e.g. at sport venues. • Promotion issues e.g. Media - specialist sport or photography magazines. • Target market? Sport enthusiasts in 30–45 year age group. Property owners trying to sell (aerial photography). • Reference to Table1.1/answer to 1(b)(i) AO3 Analysis • Pricing strategy to maximise revenue e.g. price skimming at launch of a new product • Promotion needs to be cost effective • Consider target markets • Niche markets so need to consider distribution so convenient to the customer • New product so important to communicate features clearly • Product should be suitable for customer wants/needs • Quality important in a product like this – must be reliable AO4 Evaluation Evaluation will come from justified recommendations on two or more elements of the marketing mix applied to the product

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2 Move Well (MW) MW is a business that organises the transportation of people’s possessions when they move from one house or apartment to another. One of MW’s corporate objectives is to achieve internal growth. MW has expanded rapidly from a local business to a national business. It now has locations in many major cities in country Q. Local success was built on customer recommendations. National success is a 5 result of carefully targeted advertising and effective use of social media. The growth of the business has put pressure on MW’s cash flow. MW receives payment from customers one week after the house move is completed, which is, on average, one month after the house move was booked. MW’s costs include rent, vehicle maintenance, fuel, local taxes, wages and advertising. 10 Following some successful years, there has been a large decline in MW’s sales. This is due mainly to fewer people moving home in country Q. Each city location made a loss last year. The Managing Director, John, has noticed that the housing market is growing in some other countries. He thinks there is an opportunity for a new location in country P. Table 2.1 shows the forecast costs and revenue for the new location in country P. 15 Table 2.1: Forecast costs and revenue for the new location in country P in year one ($000) Revenue 110 Direct costs 50 Indirect costs 20 20 Effie, the Operations Manager, would prefer to achieve cost savings rather than expand into another country. She thinks a lot of time is wasted due to uncoordinated information systems which are not kept up to date. MW currently keeps its customer records on paper. It also has three separate computer-based systems. Table 2.2 shows details of the computer systems. 25 Table 2.2: MW’s computer systems Computer system Process A Tracks vehicles used on each home move B Records employee pay and other HR data C Produces accounts and other management information 30 (a) (i) Define the term ‘corporate objectives’ (line 3). [2] (ii) Explain the term ‘internal growth’ (line 3). [3] (b) (i) Refer to Table 2.1. Calculate the forecast profit margin for year one. [3] (ii) Explain one method MW could use to improve its cash flow. [3] (c) Analyse two benefits to MW of introducing process innovation to update its information systems. [8] (d) Evaluate the factors that John needs to consider before opening the new location in country P.

Mark scheme: 2(a)(i) Define the term ‘corporate objectives’ (line 3). 2 Knowledge Marks Reference to long term goals/over a period of time or 2 focus/direction or helps form strategic business plan / should be SMART Reference to goals/aims/targets 1 No credible content 0 A correct definition could cover the following: • The (long term) goals of a company • Give focus and direction to the business. Exemplar Rationale Marks The long-term goals of a Two elements covered 2 company Goals of a company giving Two elements covered 2 direction to employees Gives focus to a business A simple statement 1 Company goals An understanding but too vague 1 Aims Vague but alternative for 1 objectives 2(a)(ii) Explain the term ‘internal growth’ (line 3). 3 Award one mark for each point of explanation Point Knowledge Marks C Example or some other way of showing good 1 understanding – by means of opening new branches, shops, factories. Contrasts with external (takeovers, mergers etc.) B From within – organic 1 A Expansion of a firm/business. 1 Content: Internal/organic growth is when a business uses its own funds to reinvest in itself and increase the capital. Exemplar Rationale Marks Increase of the business scale All three elements 3 (A), from within (B), does not involve external parties such as mergers (C) Expansion of a business, from All three elements 3 within, which can be slow when compared with external growth through a merger Expansion of a business, from All three elements 3 within, which requires investment to open new branches Expansion of a business, from A and B 2 within, which can take a long time and requires investment Slow growth of a business. B only 1 Expansion of a business Identified key themes only, no 1 real understanding Increase market Not necessarily growth as e.g. 0 share/employees market share could increase because of successful promotion without growth 2(b)(i) Refer to Table 2.1. Calculate the forecast profit margin for year one. 3 Rationale Marks Correct answer (with or without formula or %) 3 Correct calculation of profit 2 Correct formula 1 No credible content 0 profit  100 sales revenue Profit = 110 – (50+20) = 40 40 110 = 36.36% allow 36, 36.3, 36.4 (3) Common answers Answer Mark Rationale 36.3% 3 Correct answer 110-70 = 40 2 Correct calculation of profit 40/110 2 Correct calculation of profit Profit/sales revenue  100 1 Correct formula Profit/sales revenue 0 Incorrect formula (no  100) 2(b)(ii) Explain one method MW could use to improve its cash flow. 3 Level Knowledge and Application Marks 2 (APP) Explanation of one method to improve cash flow in 3 context 1b (K+K) Explanation of one method to improve cash flow 2 1a (K) Identification of one method to improve cash flow 1 0 No creditable content 0 • Reducing costs – to reduce outflow • Increasing revenue – to increase inflow • Bank overdraft • Debt factoring Context is likely to come from: • The time between booking and receiving revenue • Higher costs due to inefficiency in systems • Take a deposit at the time of booking ARA Exemplar Mark Rationale Take a deposit at the time of booking a 3 Explanation in context move to increase revenue Reduce costs by finding a cheaper 2 Explanation of method supplier Get a bank overdraft 1 Identification only 2(c) Analyse two benefits to MW of introducing process innovation to update 8 its information systems. Level Knowledge and Marks Analysis Marks application Annotation 2 Understanding of 4 Developed 4 two benefits of analysis of two process benefits of DEV APP innovation in + process + context APP innovationcontext in DEV Understanding of 3 Developed 3 one benefit of analysis of one process benefit of process innovation in innovation in context APP context DEV 1 Knowledge of two 2 Limited analysis of 2 benefits of two benefits of AN process K+ process + innovation K innovation AN Knowledge of one 1 Limited analysis of 1 benefit of process one benefit of innovation process K innovation AN 0 No creditable content 0 ARA Indicative content AO1 Knowledge and understanding • Information – keep up-to-date, • Time saved • Increase cash flow • Reduce costs • Increase quality • Increase efficiency • Ease of access to information AO2 Application • Wants to achieve internal growth • Many locations in country Q • Successful business • Growth affecting cash flow 2(c) • Want to locate to other countries • Want to achieve cost savings • Current system uncoordinated • Use paper customer records • 3 different computer-based systems • Records not kept up to date • Need to improve cash flow AO3 Analysis • Information – keep up-to-date, easier to co-ordinate • Time saved – quickly find the correct information • Increase cash flow – Decrease the time between booking and receiving revenue • Reduce costs – improve profit/help fund expansion 2(d) Evaluate the factors that John needs to consider before opening the 11 new location in country P. Knowledge and Marks Analysis and Marks Application (4 Evaluation marks) (7 marks) Annotation Annotation A justified 7 judgement on the + + importance of each factor EVAL EVAL EVAL A judgement on the 6 + importance of each factor EVAL EVAL An evaluation 5 statement of the given arguments of two factors in context EVAL Understanding of + 4 Developed analysis 4 + two factors in of two or more context APP APP factors in context DEV DEV Understanding of 3 Developed analysis 3 one factor in of one factor in context APP context DEV Knowledge of two + 2 Limited analysis of 2 + factors K K two factors AN AN Knowledge of one 1 Limited analysis of 1 factor K one factor AN No creditable comment 0 Indicative content AO1 Knowledge and understanding • Language barriers, • Costs, • Opportunities, • Competition, • Available resources • Infrastructure • Communication 2(d) AO2 Application • Growth in housing demand in other countries. • Business successful in the past • Decline in sales in country Q • Fewer people moving in country Q • Each city location made a loss last year • Requires good transport infrastructure • Tracking vehicles requires a good communication system AO3 Analysis • Expensive to set up operations in another country, can MW afford it? • Might be a competitive market so hard to break into • Might be legal barriers such as licence requirements • Will require employees in the new country adding to expense • Important to consider culture of new country – will it be a good fit for MW? AO4 Evaluation • Inefficient operation – should they expand internationally if own business inefficient • Will need to spend a lot on infrastructure in another country, can they afford it if made losses last year • Inefficient systems could be a major issue when trying to coordinate internationally • But declining market in country Q • Need to research carefully before making a decision • Will take a long time to establish ARA

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