Cambridge A Level Business (for first examination in 2016) 9609 — 2025 May/June Paper 2 · Variant 2

1 Town Trucks (TT) TT is a private limited company in country J. TT has contracts to deliver products to secondary, tertiary and quaternary sector businesses. QZ is one of the largest manufacturers in country J and plans to outsource its supply chain management. A contract has been agreed between TT and QZ based on the following cost and revenue data (see Table 1.1). TT’s Sales Manager has forecast that TT will make 5 5 000 deliveries with the new contract. Table 1.1 Cost and revenue forecast for the QZ contract $ Direct costs (average per delivery) 5 Total indirect costs 9 000 10 Total revenue 40 000 TT employs 120 drivers. The majority of these drivers are white men aged between 40 and 60. A national newspaper has recently criticised the truck industry in country J for not having diversity and equality in the workplace. Klide, the Marketing Manager, has been set an objective to increase TT’s revenue. He has 15 decided to target small online retailers. TT will pick up individual products from the small online retailers and deliver them to households. This would require a new fleet of smaller trucks but has the potential to increase TT’s revenue. Klide plans to use digital promotion to target these small online retailers. (a) (i) Identify one business activity within the quaternary sector. [1] (ii) Explain the term supply chain management. [3] (b) (i) Refer to Table 1.1 and other information. Calculate TT’s forecast total profit from the QZ contract. [3] (ii) Explain one reason why TT needs accurate cost information. [3] (c) Analyse two advantages to TT of improving diversity and equality in the workplace. [8] (d) Evaluate the usefulness of digital promotion to TT when targeting small online retailers. [12]

Mark scheme: Question Answer Marks 1(a)(i) Identify one business activity within the quaternary sector. 1 Responses may include: The quaternary sector consists of those industries providing knowledge/communication and information services, such as • computing • ICT • consultancy • research and development (R&D) • digital marketing • digital recruitment and selection • Intellectual property (copyright, patents) Allow examples of specific business’, industries etc. that exist in the quaternary sector, including • web/internet design • Education • Training • Media • Government • Cyber security Note: – allow any activity that could be in the quaternary sector Accept all valid responses. 1(a)(ii) Explain the term supply chain management. 3 AO1 Knowledge and understanding AO2 Application 1 mark 2 marks 2 marks Developed application of one relevant point to a business context. 1 mark 1 mark Knowledge of one relevant point is used to answer the Limited application of one relevant point to a business question. context. 0 marks 0 marks No creditable response. No creditable response. Responses may include: AO1 Knowledge and understanding Knowledge of supply chain management (max 1 mark), including: The coordination (allow management) of the flow/movement of goods and services. Allow – management of inventory –management of raw materials AO2 Application Limited application applies knowledge of supply chain management from one aspect of the supply chain (ie suppliers to a business, within a business or from the business to customers). Developed application + applies knowledge of supply chain management in two or more aspects of a business. Explanation of supply chain management (max 2 marks), including: From suppliers to business Within the business To the customer 1(a)(ii) • From suppliers – and to customers . • Between different parts within the business – and to the customer. • Raw materials within the business – and to distribution channels. • Involves the complete chain of inventory from suppliers – to customers. • Involves inventories, from raw materials – to finished goods. Accept all valid responses. Exemplar and annotations Mark Rationale Coordination of the movement of products . For example, how 3 Explicit knowledge of supply chain raw materials are delivered to the business and how the management and explanation of two business delivers products to customers . elements of the supply chain. The coordination of products from the suppliers delivering to 3 Poorly defined, but there is clear the business and how the business moves these through its knowledge that the supply chain involves production process . movement. Two elements of the movement, from the supplier to the business and then the business through the production process. Movement of inventory around a factory , and to the 3 Knowledge of movement with movement customers around a factory and to customers, so all three marks. Management of the raw materials being turned into products 2 Clear knowledge, but only one type of which can be sent to customers . movement. Managing the movement of products . 1 Not a perfect definition, but enough to award the knowledge mark. No attempt to apply. Looking after how products are offered to customers. 0 No explicit knowledge of movement. Can not award APP without K. Managing the supply chain. 0 Tautology 1(b)(i) Refer to Table 1.1 and other information. Calculate TT’s forecast total profit from the QZ contract. Formula: Profit = TR – TC (direct costs + indirect costs) (1) OR Calculation of total direct costs = $5  5000 = $25 000 (1) Calculation of TC: TC = $25 000 + $9000 = $34 000(1) Answer $40000 – $34000 = $6000 (1 – OFR rule applies) Ans = $6000 (3 marks) 1(b)(i) Exemplars and annotations Marks 3 marks Correct answer Working and $ sign do not 6000 matter. An answer of 6 is incorrect. 2 marks Correct calculation of total costs To award two marks, there must (TC) ($34 000 – with working). be • Two and a OR OR • One , one and one Correct calculation of gross profit ($15 000 – with working) OR • Two and a OR An incorrect answer with one mistake allowing OFR for final stage. 1 mark One of the following: To award one mark, there must • Correct formula be: • Correct calculation of total • One and two direct costs ($25 000) 0 marks No creditable content. To award zero marks, there must be a minimum of one 1(b)(ii) Explain one reason why TT needs accurate cost information. 3 AO1 Knowledge and understanding AO2 Application 1 mark 2 marks 2 marks Developed application of one relevant point to a business context. 1 mark 1 mark Knowledge of one relevant point is used to answer the Limited application of one relevant point to a business question. context. 0 marks 0 marks No creditable response. No creditable response. Responses may include: AO1 Knowledge and understanding Identification of a reason why a business needs accurate cost information (max 1 mark), including: • To calculate the total cost of production • To make sure a profit is made • To identify the profit margin • To identify the break even point / margin of safety / target profit level • To know how much finance is needed • To categorise costs • To forecast sales • To budget/plan • To set prices 1(b)(ii) AO2 Application Explanation of a reason why a business needs accurate cost information (max 1 mark), including: • To calculate the total cost of production – to calculate profit levels • To make sure a profit is made – which can increase dividends • To identify the profit margin – to benchmark against other businesses • To identify the break-even point / margin of safety / target profit level – to ensure the business sells enough to cover the costs • To know how much finance is needed – so that a bank can see how much profit may be made • To categorise costs – to budget for cost centres • To forecast sales – to estimate the break-even level of sales • To budget – so that the business can plan for future expansion • To set prices – by knowing the total costs which need to be covered. Context applied to TT (max 1 mark), including: • TT has shareholders • Specialises in supply chain management • Contracts to deliver raw materials • To secondary and tertiary sector businesses • Agreed contract between TT and QZ • Use of Table 1.1 • TT employs 120 drivers • Objective to increase sales • Targeting small, online retail businesses • Requires a new fleet of smaller trucks 1(b)(ii) Exemplar and annotations Mark Rationale To set prices by calculating the total costs and setting a price 3 A reason identified, explained higher than the cost per unit when delivering 5000 products for and in context, so all 3 marks. QZ . To set budgets for the 5000 QZ deliveries . 2 A reason identified, but not explained. The context about QZ is fine. So that TT can know how much finance it needs to cover the 1 Identification of a reason, but no QZ order. explanation and the context is TV. Names are not enough for context. So that TT can survive. 0 No specific reason identified. • Plans to use digital promotion. Accept all valid responses. 1(c) Analyse two advantages to TT of improving diversity and equality in the workplace. 8 Level AO1 Knowledge and AO2 Application AO3 Analysis understanding 2 marks 4 marks 2 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 1–2 marks 1–2 marks • Knowledge of two • Application of two Limited analysis relevant points is relevant points to a • Limited analysis that identifies connections used to answer the business context. between causes, impacts and/or consequences of question • Application of one two points. • Knowledge of one relevant point to a • Limited analysis that identifies connections relevant point is business context. between causes, impacts and/or consequences of used to answer the one point. question. 0 0 marks 0 marks 0 marks No creditable response. No creditable response. No creditable response. 1(c) Note: Annotate the first advantage in the left-hand margin and the second advantage in the right-hand margin. Responses may include: AO1 Knowledge and understanding Identification of an advantage of improving diversity and equality , including: • Increase potential supply of workers • Reduce the chance of being sued • Increase motivation • Improve reputation/ brand image • Attract more diverse employees • Reduce labour turnover AO2 Application Application of the advantage to TT , including: • TT is a private limited company • Specialises in supply chain management • Contracts to deliver raw materials • To secondary and tertiary sector businesses • Works with one of the largest manufacturers in country J • Agreed contract between TT and QZ • Use of Table 1.1 • TT employs 120 drivers • Objective to increase sales • Targeting small, online retail businesses • Requires a new fleet of smaller trucks • Plans to use digital promotion • Industry has been criticised for not having diversity and equality 1(c) AO3 Analysis • Limited analysis of an advantage of improving diversity and equality to a business – developed analysis , including: • Increase potential supply of workers: reduce labour costs – increase profitability. • Reduce the chance of being sued – decrease business costs – increase profit. • Increase motivation – increase efficiency of the business – increase profitability. • Improve reputation – increase sales / contracts – increase profit. • Attract more diverse employees – brings new ideas into the business – increase sales / profit. • Reduce labour turnover – reduce business costs – increase profitability. Accept all valid responses. Exemplar and annotations AO1 Knowledge AO2 Application AO3 Analysis Motivate drivers , as there are 120 of them , so this might lead to more productive employees leading to lower average costs . Attract better employees . Which will help TT reach its by having more skilled employees, objective to increase sales , TT can increase the number of deliveries and therefore increase the profit . 1(d) Evaluate the usefulness of digital promotion to TT when targeting small online retailers. 12 Level AO1 AO2 Application AO3 Analysis AO4 Evaluation Knowledge and 2 marks 2 marks 6 marks understanding 2 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 2 marks 2 marks 3–4 marks Developed Developed Developed Developed evaluation knowledge of application of analysis • A developed judgement/conclusion relevant key relevant point(s) to that identifies is made. term(s) and/or the business connections • Developed evaluative comments factor(s) is used context. between causes, which balance some key to answer the impacts and/or arguments. question. consequences. 1 1 mark 1 mark 1 mark 1–2 marks Limited Limited application Limited analysis Limited evaluation knowledge of relevant point(s) that identifies • A judgement/conclusion is made of relevant key to the business connections with limited supporting term(s) and/or context. between causes, comment/evidence. factor(s) is used impacts and/or • An attempt is made to balance the to answer the consequences. arguments. question. 0 0 marks 0 marks 0 marks 0 marks No creditable No creditable No creditable No creditable response. response. response. response. 1(d) Responses may include: AO1 Knowledge and understanding – knowledge of digital promotion Knowledge of digital promotion (max 2 marks), including: • Social media • Email • Using the internet /technology (marketing) • Online (marketing) • Spam • Influencer • Search engine optimisation • Mobile/smartphone/ app-based (marketing) • Viral (marketing) • Pay per click AO2 Application Application to TT , including: • TT is a private limited company • Specialises in supply chain management • Contracts to deliver raw materials • To secondary and tertiary sector businesses • Works with one of the largest manufacturers in country J • Agreed contract between TT and QZ • Use of Table 1.1 • TT employs 120 drivers • Objective to increase sales • Requires a new fleet of smaller trucks 1(d) AO3 Analysis Analysis of the usefulness of digital promotion, including • Limited analysis of the use of digital promotion – developed analysis , including: • To communicate: relatively inexpensive which reduces business costs – increases profit. • To inform: digital promotion can be very fast with messages reaching customers instantly, this is likely to increase customer knowledge of a business and increase sales – increasing profit. • To persuade: people spend vast amounts of time on digital devices so digital promotion is likely to target these customers more than other types of promotion, increasing sales – increasing profit. Always on: especially with the increase in wearable technology, digital promotion increases the chances of customers seeing the promotion and being persuaded to make a purchase – increasing profit. AO4 Evaluation Limited evaluation of the usefulness of digital promotion – developed – developed in context , including: • Relative usefulness of digital promotion in targeting smaller online retailers. • Comparison with non-digital types of promotion • Comparison of different digital promotion methods. • Use of digital methods may depend upon; cost of method, target market of customers for the online retailers, advances in technology (speed, influence etc.), budget available, geographical spread of market etc. • The impact of the chosen digital promotion methods method(s) and the impact of the methods themselves. • The likely response from competitors. • A judgement of the most useful method of digital promotion. Accept all valid responses. 1(d) Exemplars for awarding evaluation Evaluate the usefulness of digital promotion to TT when targeting small online retailers. L1 (limited L2 (developed supporting L3 (developed supporting evidence supporting evidence) with context) evidence) Digital promotion is Digital promotion is very useful for TT Digital promotion is very useful for TT very useful for TT. because it is a low-cost way to change because it is a low-cost way to change customers opinion about the business. customers opinion about the business. Low cost is important so that TT can make the new QZ contract successful. Digital promotion is Digital promotion is not useful for TT Digital promotion is not useful for TT not useful for TT. because it is more likely to be ignored by because it is more likely to be ignored by customers as spam. customers as spam because of the newspaper criticism.

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2 Personalised Blankets (PB) Kaia left university with a degree in textile design. Using her entrepreneurial qualities, Kaia set up PB as a sole trader. Her current objective is to break even. Kaia uses job production to make blankets which are personalised with a picture. Each customer logs into the PB website and chooses the size of blanket. The customer then uploads a picture that they want printed onto the blanket. 5 Many of Kaia’s customers buy the blankets as gifts for special occasions. Kaia has employed a social media influencer to promote her blankets. The influencer will be paid a salary of $250 a week and a 5% commission on revenue that comes directly from the influencer. Fig 2.1 shows the revenue that came directly from the social media influencer in February. 10 4500 4000 3500 3000 2500 Revenue ($) 2000 1500 1000 500 0 Week 1 Week 2 Week 3 Week 4 Fig. 2.1 Revenue directly from the social media influencer in February Kaia would like to relocate PB to larger premises. She is applying for external sources of finance, and she has written a five-year business plan to support her applications. (a) (i) Identify one external source of finance. [1] (ii) Explain the term business plan. [3] (b) (i) Refer to Fig. 2.1 and other information. Calculate the total payment to the social media influencer in February. [3] (ii) Explain one disadvantage to Kaia of using a commission payment method. [3] (c) Analyse one advantage and one disadvantage to Kaia of using job production. [8] (d) Evaluate the most likely reason for Kaia’s objectives to change over the next five years. [12]

Mark scheme: 2(a)(i) Identify one external source of finance. 1 Responses may include: Knowledge of an external source of finance: • share capital • debentures • new partners • venture capital • (bank) overdrafts • leasing • hire purchase • (bank) loans • mortgages • debt factoring • trade credit • micro-finance • crowd funding • government grants • peer to peer Accept all valid responses. 2(a)(ii) Explain the term business plan. 3 AO1 Knowledge and understanding AO2 Application 1 mark 2 marks 2 marks Developed application of one relevant point to a business context. 1 mark 1 mark Knowledge of one relevant point is used to answer the Limited application of one relevant point to a business question. context. 0 marks 0 marks No creditable response. No creditable response. Responses may include: AO1 Knowledge and understanding Knowledge of a business plan , including: • formal written document containing the goals of a business. • the methods for attaining business goals/objectives/targets etc. • a written document that describes a business and its objectives. • a document outlining the direction of the business and how to get there. AO2 Application Explanation of a business plan (max 2 marks), including: • Any example of a section from a business plan (1 mark for each up to max of 2 marks); HRM plan, marketing plan, operations plan, finance plan. • Any other relevant data which might be included in a business plan. • Examples of potential uses of a business; gain finance, find investors etc. • A business plan may have a specific timeframe for achieving its objectives • May include internal and external influence data Accept all valid responses. 2(a)(ii) Exemplar and annotations Mark Rationale A written document showing the objectives for the business and 3 Clear knowledge that objectives form the functional areas, such as Marketing that are involved. part of the business plan. A functional Business plans are often used to apply for finance . area also identified, as well as a use of a business plan. Can be used to inform external stakeholders about the business 3 Some idea of what is in a business plan . A business plan can be created for a specific time period, such (details and environment), and a use of a as 5 years . It is the details about the business and its plan. Also the time period. environment A document outlining what the business does for a specific time 2 Knowledge of what is in a business plan period . and time period. A future plan for how a business will achieve its objectives . 1 Clear knowledge. A plan of the business for the future . 0 Tautology – candidates need to show they know what ‘business’ and ‘plan’ mean. A forecast of the sales made by a business. 0 No understanding of a business plan. 2(b)(i) Refer to Fig 2.1 and other information. Calculate the total payment to the social media influencer in February. Formula: Total payment = salary + commission (% of sales) (1) OR Correct calculation of revenue that comes directly from the influencer in Feb = Total sales in four weeks – $4000 + $3000 + $500 + $3000 = $10 500 (1) OR Correct calculation of total salary for influencer for Feb = $250 + $250 + $250 + $250 = $1000 (1) Calculation: 5% of $10 500 = $525 (1) Total payment = $1000 (salary) + $525 (commission) = $1525 (1 – OFR applies) Ans = $1525 (3 marks) 2(b)(i) Exemplar and annotations Marks 3 marks Correct answer Working and sign do not matter. $1525 $ 2 marks Correct calculation of commission based on total To award two marks, there must be revenue that comes directly from the influencer in • Two and a Feb ($525) OR • One , one and one OR OR An incorrect answer with one mistake allowing OFR • Two and a for final stage. OR An answer that misses out the commission ($11 500 with working) 1 mark One of the following: To award one mark, there must be: • Correct formula • One and two • Correct calculation of total revenue that comes directly from the influencer in Feb ($10 500). • Correct calculation of total salary for FEB ($1000). 0 marks No creditable content. To award zero marks, there must be a minimum of one 2(b)(ii) Explain one disadvantage to Kaia of using a commission payment method. 3 AO1 Knowledge and understanding AO2 Application 1 mark 2 marks 2 marks Developed application of one relevant point to a business context. 1 mark 1 mark Knowledge of one relevant point is used to answer the Limited application of one relevant point to a business question. context. 0 marks 0 marks No creditable response. No creditable response. Responses may include: AO1 Knowledge and understanding Knowledge of a disadvantage of using commission (max 1 mark), including • Increases business costs • Reduces profit/ profit margin • Difficult to predict / forecast • May lead to aggressive sales techniques • May cause anxiety/stress/demotivation (for the employee) • May prioritise short-term gains, over long-term business objectives • May be difficult to recruit new workers • May cause employees to compete with one another • Paid from revenue, not profit (may need to be paid even if PB does not make a profit) AO2 Application Explanation of a disadvantage of using commission payment method (max 1 mark), including: • Increases business costs – as the business increases revenue, commission also increases • Difficult to predict / forecast – which can mean that PB may not be able to calculate the break-even point • May lead to aggressive sales techniques – as salespeople push to increase their own income 2(b)(ii) • May cause anxiety/stress (for the employee) – leading to lower motivation • May prioritise short-term gains, over long-term business objectives – as employees focus on increasing short term revenue and not profit margins • May be difficult to recruit new workers – because of the uncertainty of their likely income • May cause employees to compete with one another – and work towards their own utility, not the good of the business • Paid from revenue, not profit – so may need to be paid even if PB does not make a profit Context applied to PB (max 1 mark), including: • 5% commission on direct sales • OFR from Q2(b)(i) • Social media influencer gets a salary as well ($250 a week) • Use of data in chart 2.1 Exemplar and annotations Mark Rationale A commission adds to PBs costs which can reduce 3 A disadvantage identified and explained with the profit available to relocate PB to larger premises context. . It may lead to competition between workers which 3 A disadvantage, which is explained and context could lead to demotivated employees reducing the used. $10 500 revenue from the influencer . May be difficult to recruit new influencers if 5% 2 A disadvantage and context. However the commission seems low. disadvantaged is not explained as to how/why recruitment may be more difficult based on commission. Reduce profit , and may demotivate the employees. 1 There are two pieces of knowledge here, but they are not linked (ie the candidate has not stated that there is less profit because of the demotivation). Only K so max 1 mark. Paying a 5% commission means that for every $1 of 0 There is no knowledge of a disadvantage of using revenue the influencer sells, they get $0.05. commission. Accept all valid responses. 2(c) Analyse one advantage and one disadvantage to Kaia of using job production. 8 Level AO1 Knowledge and AO2 Application AO3 Analysis understanding 2 marks 4 marks 2 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 1–2 marks 1–2 marks • Knowledge of two • Application of two Limited analysis relevant points is used relevant points to a • Limited analysis that identifies connections to answer the business context. between causes, impacts and/or consequences question. • Application of one of two points. • Knowledge of one relevant point to a • Limited analysis that identifies connections relevant point is used business context. between causes, impacts and/or consequences to answer the of one point. question. 0 0 marks 0 marks 0 marks No creditable response. No creditable response. No creditable response. Note: Annotate the first advantage in the left-hand margin and the first disadvantage in the right-hand margin. 2(c) Responses may include: AO1 Knowledge and understanding Knowledge of an advantage of using job production (max 1 mark), including: • High quality • High price • Flexibility • Customisation / customer satisfaction • All finished products are sold Knowledge of a disadvantage of using job production (max 1 mark), including: • High production costs • Long lead time • Requires specialist equipment AO2 Application Application of an advantage or disadvantage to PB , including: • Kaia has a university degree in textile designs • Kaia thinks she has entrepreneurial qualities • Sole trader • Current objective to break even • Blankets personalised with a picture • Picture supplied by customer • Customers design their own blanket (customisable size and picture) • Many customers buy the blankets as gifts for special occasions (birthdays, holidays etc.) • Being promoted by a social media influencer • Use of data in Chart 2.1 AO3 Analysis Limited analysis of an advantage of job production – developed analysis , including: • High quality: increases customer satisfaction and leads to sales – increases profit. • Customisation / customer satisfaction; likely to lead to increased sales – increased profit. • All finished products are sold; more likely to have costs lower than revenue – increased profitability. 2(c) Limited analysis of a disadvantage of job production – developed analysis , including: • High production costs: may need to increase price to cover costs – less chance to break even and make a profit. • Long lead time; may irritate customers leading to bad reviews – lower sales and profit. • Requires specialist equipment; may need to purchase expensive capital equipment increasing costs – reducing profitability. Accept all valid responses. Exemplars and annotations AO1 Knowledge AO2 Application AO3 Analysis Higher prices , For individual blankets that are This is likely to lead to higher revenue personalised with a picture . leading to higher profit . Takes longer to produce . Which may be a issue if customers So, customers may go to a different are purchasing for a special occasion, business, reducing PBs revenue like a birthday , and therefore decrease the profit . 2(d) Evaluate the most likely reason for Kaia’s objectives to change over the next five years. 12 Level AO1 Knowledge AO2 Application AO3 Analysis AO4 Evaluation and understanding 2 marks 2 marks 6 marks 2 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 2 marks 2 marks 3–4 marks Developed Developed Developed analysis Developed evaluation knowledge of application of that identifies • A developed judgement/conclusion relevant key term(s) relevant point(s) to connections is made. and/or factor(s) is the business between causes, • Developed evaluative comments used to answer the context. impacts and/or which balance some key arguments. question. consequences. 1 1 mark 1 mark 1 mark 1–2 marks Limited knowledge Limited application Limited analysis Limited evaluation of relevant key of relevant point(s) that identifies • A judgement/conclusion is made term(s) and/or to the business connections with limited supporting factor(s) is used to context. between causes, comment/evidence. answer the question. impacts and/or • An attempt is made to balance the consequences. arguments. 0 0 marks 0 marks 0 marks 0 marks No creditable No creditable No creditable No creditable response. response. response. response. 2(d) Responses may include: AO1 Knowledge and understanding Knowledge of why business objectives may change over time (max 1 mark), including: • As the business grows • If the previous objective has been met • As the business declines • As the business maintains • As the market changes • As competitors act / react • When aims / vision / mission changes • As the business environment changes (not required at AS level, but rewarded) – SLEEPT AO2 Application Application to PB (max 2 marks), including: • Kaia has a university degree in textile designs • Kaia thinks she has entrepreneurial qualities • Sole trader • Current objective to break even • Blankets personalised with a picture • Picture supplied by customer • Customers design their own blanket (customisable size and picture) • Many customers buy the blankets as gifts for special occasions (birthdays, holidays etc.) • Being promoted by a social media influencer • Use of data in Chart 2.1 • Thinking of relocating PB AO3 Analysis Limited analysis of how the objectives change – developed analysis , including: • As the business grows; objectives may change to profit maximisation – so that the owners can start to receive an income for their risk. • As the business declines, objectives may change to survival – and the business may reduce prices in an effort to gain a new market of customers. 2(d) • As the business maintains; the business owner may decide not to continue the business – leading to trying to recover as much of the capital invested as possible. • As the market changes, the business will need to adapt to the changing market, perhaps by making significant changes to the type of product being sold or doing some expensive market research into the new customer preferences – leading to an increase in costs and a reduction in profitability. • As competitors act / react; the business may become a price taker and change their marketing mix – so that they can maintain and grow their market share. • When aims / vision / mission changes; if the owner decides to change the mission of the business, then all the functions of the business may also need to be changed. For example, buying new capital items that allow it to make a different product – leading to an increase in business costs and reduced profit. • As the business environment changes (not required at AS level, but rewarded); for example, if the economy goes into recession, then luxury items may not be demanded, reducing customers – leading to a decrease in sales revenue and profit. AO4 Evaluation Limited valuation of the most likely reason why objectives may change – developed – developed in context , including: • A judgement of the most likely reason for Kaia’s objectives to change over the next five years. • What the judgement may depend upon; the owners desire to continue / grow the business, the market research, dynamism of the market, competitors’ actions / reactions etc. • Kaia has only just started the PB, so the objectives may change significantly over the next five years. Does she have the knowledge / research / experience to judge how the objectives might change over such a long period of time? • To what extent is PB in a growing or declining market and how many of her customers choose to repeat purchase? • Kaia’s own objectives – she thinks she has entrepreneurial qualities, so will she be looking at new products / business ideas over the next five years, which may mean that PB might not even exist, or be in a very different format to what it is today. Is it sensible to try and plan for five years with such limited experience? • A judgement about likeliness of the business objectives needing to change over five years. Accept all valid responses. 2(d) Exemplars for awarding evaluation L1 (limited L2 (developed supporting evidence) L3 (developed supporting evidence supporting evidence) with context) The most likely reason is The most likely reason is because PB has The most likely reason is because PB has because PB has reached reached its previous objective. This means reached its previous objective, to break its previous objective. that Kaia will need a new objective, such as even. This means that Kaia will need a new profit maximisation. objective, such as profit maximisation. It depends on her personal It depends on her personal objectives, It depends on her personal objectives, objectives. because she is the owner, the objectives because she is a sole trader, the objectives will need to change to adapt to her needs. will need to change to adapt to her needs.

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