Cambridge A Level Business (for first examination in 2016) 9609 — 2024 May/June Paper 2 · Variant 3

1 Recruitment Process (RP) RP is a private limited company based in country Z. RP is an employment agency that operates in a dynamic business environment. To survive in the market RP must be efficient and maintain a good reputation. RP uses social media to attract customers and relies on word-of-mouth recommendations. RP has recently won an award for its diversity and equality practices. 5 RP’s customers provide details of the roles and number of employees required. RP quotes a price to its customer and then agrees a contract to provide its services at the price quoted. Ray, Managing Director, has asked Adjil, Finance Director, to provide a budget breakdown of a recent customer contract. RP’s staff are specialist recruiters who find the appropriate employees for each job role. 10 Table 1.1 RP’s budget for a recent customer contract, March 2024 Job role Number of Specialist Cost per specialist Total cost employees recruiters recruiter ($000) required required ($000) Warehouse 70 1 100 100 15 Sales 225 3 120 360 Technology 145 3 140 420 Management 10 2 190 380 Total 450 1260 Adjil noted that the actual cost per employee recruited showed an adverse variance of $500. 20 Ray is concerned that the budget does not accurately show the costs to RP. Ray thinks this is because of inefficient practices in the recruitment process. (a) (i) Identify one element of a dynamic business environment. [1] (ii) Explain the term employment agency. [3] (b) (i) Refer to Table 1.1 and other information. Calculate RP’s actual cost per hire for the customer contract in March 2024. [3] (ii) Explain one benefit to RP of using a budget. [3] (c) Analyse two methods RP could use to select sales employees. [8] (d) Evaluate the impact on RP of diversity and equality in the workplace. [12]

Mark scheme: 1(a)(i) Identify one element of a dynamic business environment Responses may include: Any feature of a dynamic business environment , including:  Rapidly/constantly changing  businesses must quickly adapt  very competitive  new competitors  innovative  technological change  changes in the economy  changing regulations/legislation Accept all valid responses. 1 Question Answer Marks 1(a)(ii) Explain the term employment agency. AO1 Knowledge and understanding 1 mark AO2 Application 2 marks 2 marks Developed application of one relevant point to a business context. 1 mark Knowledge of one relevant point is used to answer the question. 1 mark Limited application of one relevant point to a business context. 0 marks No creditable response. 0 marks No creditable response. Indicative content AO1 Knowledge and understanding Knowledge of employment agency may include:  provides recruitment services to other business  a business outsources recruitment of employees to another business  find ideal candidates for a specific job role AO2 Application Explanation of employment agency may include:  customer provides details of job roles and numbers required: the agency selects and recruits employees  specialist recruiters used: providing expertise which may not exist in a business  increased efficiency/lower cost: especially where may and varied roles/employees required.  Can provide training/manuals: reducing costs for other business Context applied to a business , including:  An example of a business using an employment agency Application can be made to RP or any other scenario/context/business/person. Accept all valid responses. 3 Question Answer Marks 1(a)(ii) Guidance in awarding marks Knowledge & understanding Knowledge of employment agency 1 mark Explanation Explanation of employment agency 1 mark Context Applied to a business context / business environment 1 mark 1(b)(i) Refer to Table 1.1 and other information. Calculate RP’s actual cost per hire for the customer contract in March 2024. Total cost/total hires (1) or 1 260 000/450 (1) = 2800 (1) or 1260/450 = 2.8 (OFR) or 1 260 000/450 (1) +500 (1) = 2800 +500 = $3 300 (3) OFR Note: Correct answer 3300 ($ not required) required for full marks. 3 Question Answer Marks 1(b)(ii) Explain one benefit to RP of using a budget. AO1 Knowledge and understanding 1 mark AO2 Application 2 marks 2 marks Developed application of one relevant point to a business context. 1 mark Knowledge of one relevant point is used to answer the question. 1 mark Limited application of one relevant point to a business context. 0 marks No creditable response. 0 marks No creditable response. Indicative content AO1 Knowledge and understanding Knowledge of a benefit of using a budget , including:  Can plan for the future / forecast revenue/profit/costs  Allocate resources  Monitor performance  Improve decision making No further marks can be gained without knowledge and understanding of a benefit of a budget. AO2 Application Explanation of a benefit of using a budget , including:  Can use to price work done for other businesses  Can see variance once work completed/improve future contract pricing 3 Question Answer Marks 1(b)(ii) Context of a benefit of using a budget , including:  Use of Table 1.1 – Reference to any row / numbers required/costs – OFR from answer to Q1(b)(i)  Adverse variance of $500  Concerns that budget is not accurate Accept all valid responses. Guidance in awarding marks Knowledge & understanding Knowledge of a benefit of using a budget 1 mark Explanation Explanation of a benefit to a business of using a budget 1 mark Context Context linked to a benefit to RP of using a budget 1 mark Question Answer Marks 1(c) Analyse two methods RP could use to select sales employees. Level AO1 Knowledge and understanding 2 marks AO2 Application 2 marks AO3 Analysis 4 marks 2 3–4 marks Developed analysis  Developed analysis that identifies connections between causes, impacts and/or consequences of two points.  Developed analysis that identifies connections between causes, impacts and/or consequences of one point. 1 1–2 marks  Knowledge of two relevant points is used to answer the question.  Knowledge of one relevant point is used to answer the question. 1–2 marks  Application of two relevant points to a business context.  Application of one relevant point to a business context. 1–2 marks Limited analysis  Limited analysis that identifies connections between causes, impacts and/or consequences of two points.  Limited analysis that identifies connections between causes, impacts and/or consequences of one point. 0 0 marks No creditable response. 0 marks No creditable response. 0 marks No creditable response. Indicative content AO1 Knowledge and understanding Knowledge of first selection method (max 2 marks – annotate first method on left and second method on right), may include:  Curriculum vitae 8 Question Answer Marks 1(c)  Résumé  application forms  interview  references  testing  assessment centres Note: Must be selection NOT recruitment AO2 Application Context applied to relevance of each selection method to sales employees (max 1 mark per method):  Requires customer contact and selling skills so assessment centre  225 required but only 3 recruiters so simple, quick method best  Most relevant probably application form and references  Sales staff will need to be personable so may interview to make sure character and personality fit with the job role, but could be an inefficient way to recruit for this many employees  Already showing adverse variance  Use of Table 1.1 AO3 Analysis Limited analysis – candidate shows one link in the chain of analysis. Developed analysis candidate shows two or more links in the chain of analysis or a two-sided analysis.  High cost of selection – could lower profits  May attract lots of applicants – so need a quick/efficient method  What time scale is required for hiring – may not have time to interview all  Most relevant probably application form and references  Need to ensure equality and diversity in selection process – what is best way to do this? Accept all valid responses. Question Answer Marks 1(d) Evaluate the impact on RP of diversity and equality in the workplace. Level AO1 Knowledge and understanding 2 marks AO2 Application 2 marks AO3 Analysis 2 marks AO4 Evaluation 6 marks 3 5–6 marks Developed evaluation in context  A developed judgement/conclusion is made in the business context.  Developed evaluative comments which balance some key arguments in the business context. 2 2 marks Developed knowledge of relevant key term(s) and/or factor(s) is used to answer the question. 2 marks Developed application of relevant point(s) to the business context. 2 marks Developed analysis that identifies connections between causes, impacts and/or consequences. 3–4 marks Developed evaluation  A developed judgement/conclusion is made.  Developed evaluative comments which balance some key arguments. 1 1 mark Limited knowledge of relevant key term(s) and/or factor(s) is used to answer the question. 1 mark Limited application of relevant point(s) to the business context. 1 mark Limited analysis that identifies connections between causes, impacts and/or consequences. 1–2 marks Limited evaluation  A judgement/conclusion is made with limited supporting comment/evidence.  An attempt is made to balance the arguments. 0 0 marks No creditable response. 0 marks No creditable response. 0 marks No creditable response. 0 marks No creditable response. 12 Question Answer Marks 1(d) Indicative content AO1 Knowledge and understanding Knowledge of diversity and equality (max 2 marks), including:  Equality – Ensuring a fair organisation so everyone has the opportunity to fulfil their potential.  Diversity – Creating a mixed workforce, placing a positive value on diversity in the workplace. Knowledge of an impact of diversity and equality in the workplace (max 2 marks), including:  May be required by legislation  Good employer reputation  Easier to attract new employees  May get the best applicants  Introduce new ideas/innovation AO2 Application Context applied to an impact of diversity and equality in the workplace (max 2 marks), including  Outsourcing company so other businesses most likely to require a diverse work organisation so better fit with customers  Businesses more likely to use them if good equality practices  Adverse variance of $500 per hire – indicates need to ensure efficiency  Dynamic market environment requires creative employees  Uses social media to attract customers – variety of languages help global expansion  Won an award for good equality and diversity practices  Use of Table 1.1 AO3 Analysis Limited analysis – candidate shows one link in the chain of analysis. Developed analysis – candidate shows two or more links in the chain of analysis.  Change of working culture may be required – increasing costs/unsettled environment  Training in equality and diversity for existing employees – higher costs/lower profit  Costs of recruiting – additional requirement leading to higher costs  Need to employ diverse ways of working and thinking to bring in new ideas and increase competitiveness  Increase productivity – employees motivated by good working practices/leading to increased profit  Better able to operate in a global marketplace – attracting more customers/businesses/– leading to increased sales/revenue Question Answer Marks 1(d) AO4 Evaluation Limited evaluation - unsupported judgement and/or a weak attempt at evaluative comment Developed evaluation – supported judgement and/or reasonable evaluative comment Developed evaluation in context – supported judgement in context and/or reasonable evaluative comment in context.  Weighing up of risks vs. reward of diversity  Short term costs vs. long term benefits  Judgement of consequences to RP impact on stakeholders it will most likely impact  Challenges posed to company culture Accept all valid responses.

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2 Festival Wear (FW) FW is a partnership started by two friends, Maz and Jane. FW manufactures and sells high quality T-shirts at $40 each. The business can manufacture 35 000 T-shirts per month using mass customisation. The T-shirts are only sold at music festivals and concerts and are customised to each event. FW has never advertised the T-shirts, relying on a sales team to attend a festival or concert and personally sell the T-shirts. 5 Current costs: • variable: $10 per T-shirt • fixed: $200 000 per month. Sales average 27 000 T-shirts per month. Currently the sales team is paid a monthly salary, but Maz is proposing a new payment method in order to increase sales volume. This will 10 mean a lower monthly salary but a commission of $2 per T-shirt will be paid. Maz estimates that sales volume would increase to 30 000 per month. Costs if the new payment method is introduced: • variable: $12 per T-shirt • fixed: $182 000 per month. 15 This proposal has been discussed with the sales team. Some members of the team are enthusiastic about the proposal, but others are not happy with what they see as a reduction in their pay. The business is expanding and considering moving to a bigger factory. This would require a $4 million investment in new machinery and staff training. 20 Jane would also like to consider methods to increase sales volume. She has suggested that FW should expand its product portfolio to manufacture other items such as baseball caps. (a) (i) Identify one fixed cost. [1] (ii) Explain the term mass customisation. [3] (b) (i) Calculate FW’s break-even output per month if the new payment method is introduced. [3] (ii) Explain one advantage to FW’s employees of the new payment method. [3] (c) Analyse two external sources of finance that FW could use to invest in new machinery. [8] (d) Evaluate whether FW should expand its product portfolio to increase its sales volume. [12]

Mark scheme: 2(a)(i) Identify one fixed cost. Indicative content Fixed cost  rent  interest  salaries  wages Accept all valid responses. Question Answer Marks 2(a)(ii) Explain the term mass customisation. AO1 Knowledge and understanding 1 mark AO2 Application 2 marks 2 marks Developed application of one relevant point to a business context. 1 mark Knowledge of one relevant point is used to answer the question. 1 mark Limited application of one relevant point to a business context. 0 marks No creditable response. 0 marks No creditable response. Indicative content AO1 Knowledge and understanding Mass customisation is the use of flexible computer-aided technology on production lines to make products that meet individual customers’ requirements for customised products. Knowledge of mass customisation (max 1 mark), including:  Bulk production  Flexible  Made to order  Customer preferences AO2 Application Explanation of a characteristic of mass customisation , including:  Lower unit costs combined with personalisation / Increased product choice  Higher customer retention/loyalty  Customers prepared to pay a higher price  Higher profit margins 3 Question Answer Marks 2(a)(ii) Context applied to mass market(s) , including:  Relevant example of mass customisation (including the T-shirt market) Application can be made to FW or any other scenario/context/business/person. Accept all valid responses. Guidance in awarding marks Knowledge & understanding Knowledge of mass customisation 1 mark Explanation Explanation of a characteristic of mass customisation 1 mark Context Applied to a business context/ business environment 1 mark 2(b)(i) Calculate FW’s break-even output per month if the new payment method is introduced. FC/contribution = BE (1) FC = 182 000, VC = 12 (1) Contribution = 40 – (12) (1) = 28 (1) 182 000/28 = 6500 (3) OFR 3 Question Answer Marks 2(b)(ii) Explain one advantage to FW’s employees of the new payment method. AO1 Knowledge and understanding 1 mark AO2 Application 2 marks 2 marks Developed application of one relevant point to a business context. 1 mark Knowledge of one relevant point is used to answer the question. 1 mark Limited application of one relevant point to a business context. 0 marks No creditable response. 0 marks No creditable response. Indicative content AO1 Knowledge and understanding – Note: Must be linked to employees NOT FW Knowledge of an advantage of lower salary + commission , including:  Payment made according to number of sales – commission  Possibility of higher monthly pay  Incentive so motivating Do not accept disadvantages. AO2 Application Explanation of an advantage of lower salary + commission , including:  If sales forecast correct employees would earn more  Can choose to work harder/longer for increased pay  Investment could expand sales possibilities so higher pay  Rewards successful selling Context applied to a limitation of using break-even analysis including:  Maz estimates sales volume to increase to 30 000 per month  Commission $2 per T-shirt 3 Question Answer Marks 2(b)(ii)  Business is expanding  Diversification of product portfolio – baseball caps  OFR from Q2(b)(i) Accept all valid responses. Guidance in awarding marks Knowledge & understanding Knowledge of an advantage of the change in payment method 1 mark Explanation Explanation of an advantage of the change in payment method 1 mark Context Context linked to an advantage of the change in payment method 1 mark Question Answer Marks 2(c) Analyse two external sources of finance that FW could use to invest in new machinery. Level AO1 Knowledge and understanding 2 marks AO2 Application 2 marks AO3 Analysis 4 marks 2 3–4 marks Developed analysis  Developed analysis that identifies connections between causes, impacts and/or consequences of two points.  Developed analysis that identifies connections between causes, impacts and/or consequences of one point. 1 1–2 marks  Knowledge of two relevant points is used to answer the question.  Knowledge of one relevant point is used to answer the question. 1–2 marks  Application of two relevant points to a business context.  Application of one relevant point to a business context. 1–2 marks Limited analysis  Limited analysis that identifies connections between causes, impacts and/or consequences of two points.  Limited analysis that identifies connections between causes, impacts and/or consequences of one point. 0 0 marks No creditable response. 0 marks No creditable response. 0 marks No creditable response. 8 Question Answer Marks 2(c) Indicative content AO1 Knowledge and understanding Knowledge of an external source of finance (max 2 marks – annotate first source on left and second source on right), including:  bank loan  another partner  convert to a limited company  venture capital  leasing  hire purchase  bank loans  mortgages  debt factoring  trade credit  micro-finance  crowd funding  government grant AO2 Application Context applied to an external source of finance (max 2 marks), including:  $4m needed  Low break-even so good contribution to help get a loan  Good business attractive to shareholders  Required for expansion  New product could be risky  Market research needed to assess viability  Partnership Question Answer Marks 2(c) AO3 Analysis Analysis of a relevant external sources of finance, including: Limited analysis – candidate shows one link in the chain of analysis. Developed analysis candidate shows two or more links in the chain of analysis or a two-sided analysis.  Long term loan may be suitable – would banks lend to a partnership?  Venture capitalist will want quick returns – so less time to make returns  Probably no debts to factor – so unavailable source  Government grant unlikely – unless help available to help (small) businesses to expand  Too much for micro-finance  Loss of ownership if convert – danger of takeover  Effect on liquidity – depending on length of time involved  Cost of finance – could be high interest rates Note: Analysis must relate to a suitable source for financing machinery. For example, a mortgage is an external source so would get a K mark but not realistic for financing machinery unless linked by, e.g. saying a mortgage on the factory building to get finance to purchase the machinery. Accept all valid responses. Question Answer Marks 2(d) Evaluate whether FW should expand its product portfolio to increase its sales volume. Level AO1 Knowledge and understanding 2 marks AO2 Application 2 marks AO3 Analysis 2 marks AO4 Evaluation 6 marks 3 5–6 marks Developed evaluation in context  A developed judgement/conclusion is made in the business context.  Developed evaluative comments which balance some key arguments in the business context. 2 2 marks Developed knowledge of relevant key term(s) and/or factor(s) is used to answer the question. 2 marks Developed application of relevant point(s) to the business context. 2 marks Developed analysis that identifies connections between causes, impacts and/or consequences. 3–4 marks Developed evaluation  A developed judgement/conclusion is made.  Developed evaluative comments which balance some key arguments. 1 1 mark Limited knowledge of relevant key term(s) and/or factor(s) is used to answer the question. 1 mark Limited application of relevant point(s) to the business context. 1 mark Limited analysis that identifies connections between causes, impacts and/or consequences. 1–2 marks Limited evaluation  A judgement/conclusion is made with limited supporting comment/evidence.  An attempt is made to balance the arguments. 0 0 marks No creditable response. 0 marks No creditable response. 0 marks No creditable response. 0 marks No creditable response. 12 Question Answer Marks 2(d) Indicative content AO1 Knowledge and understanding Knowledge of product portfolio (max 2 marks), including:  Range of products in one business  Product diversification  Meet customer demand for more product choice Could relate to product life-cycle, Boston matrix Could consider impact on the 4ps/4cs e.g.  Price  Product  Promotion  Place AO2 Application Context applied to features of FW (max 2 marks), including:  Reliance on one product is risky so maybe should diversify into baseball caps  May need to change distribution method - sell at music festivals only – maybe could sell elsewhere e.g., other retailers, online  Other products more suitable e.g., posters  Move to a bigger factory provides opportunity  Requires $4m investment  FW is expanding Question Answer Marks 2(d) AO3 Analysis Limited analysis – candidate shows one link in the chain of analysis. Developed analysis – candidate shows two or more links in the chain of analysis.  Requires research to establish demand  Single product portfolio – is the market saturated?  Satisfy more customers – increasing sales volume and increasing revenue and profit  There is a lack of direction for the future of the business and so there is a risk to the security and stability of FW.  Need for an integrated marketing mix to increase sales volume AO4 Evaluation Limited evaluation - unsupported judgement and/or a weak attempt at evaluative comment Developed evaluation – supported judgement and/or reasonable evaluative comment Developed evaluation in context – supported judgement in context and/or reasonable evaluative comment in context.  An evaluation is likely to come from candidates making a judgment and justification of expanding product portfolio.  Any changes that might need to be made to make it more effective/less risky.  Are there more suitable methods of increasing sales volume?  Business expanding is now the right time to increase products.  High investment in the new factory needs careful consideration of equipment if expand portfolio. Accept all valid responses. . Note: Developed evaluation in context should link to sales.

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