Stakeholders in a business — Paper 2 — A Level Business (for first examination in 2016) 9609 topical questions

Question 1

Online Travel (OT) OT is a private limited company in country X that sells international holidays on the internet. All of OT’s current rang…

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Question Answer Marks 1(a)(i) Define the term ‘private limited company’ (line 1). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 Note: A correct definition must distinguish a private limited company from any other legal structure on the syllabus, i.e. PLC, sole trader, partnership etc. Content A business where shares can be sold, but not to the general public. The owners benefit from limited liability. Accounts must be produced but not necessarily published. ARA Exemplar Rationale Marks A private limited company has Could only be a private shareholders but does not sell on 2 limited company the stock exchange Whilst this could be an It has limited liability and but LLP that structure is not 2 cannot sell shares to the public on the syllabus True but this could also A business which cannot sell be a sole trader or 1 shares to the public partnership True but this could also It has limited liability 1 be a PLC True but this could also Sells shares 1 be a PLC A business that is not owned by All true but could still be the government but can sell 1 a PLC shares A business that is owned by This is true but does not private individuals not the distinguish between any 0 government of the legal structures A tautology – just uses A company that is privately words form the question 0 owned so no understanding 1(a)(ii) Briefly explain the term ‘contract of employment’ (line 4). 3 Award one mark for each point of explanation: Knowledge Marks Example of the content of a contract or some other way C of showing good understanding e.g. a sense of 3 security, protection, example of contents Understanding that is between employer/business and B 2 employee Understanding of legal document/agreement or sets out A 1 terms and conditions of employment An agreement between an employee and employer Examples of content: • the business details • the employee’s details • job title or a description of work • start date • how much and how often an employee will get paid • hours of work • holiday entitlement (and if that includes public holidays) • where an employee will be working 1(a)(ii) ARA Exemplar Rationale Marks An agreement between a worker and an employer that shows the All three elements 3 details of their job An understanding of what the All three elements – employer must do and what the ‘must do’ covers 3 employee must do content just Employee signs a contract with an A and B 2 organisation It shows what an employee and A and B only 2 employer have agreed to at work A document stating terms and conditions between HR manager A mark only 1 and employee A mark only – must have an idea of An agreement about an employee 1 employee and employer for B mark States what a worker must do in C mark only 1 their job A contract of employment will Lots of C marks – include the details of the job, the can only be gained 1 employees hours of work, pay rate, once holidays etc.. 1(b)(i) Refer to Fig 1. Identify the age group with the highest average income. 1 Answer = 40+ (1) (allow ‘oldest group’) Do not accept 40 (no plus) 1(b)(ii) Refer to Fig 1. Calculate the percentage of the whole sample which would 2 prefer skiing holidays. Rationale Marks Correct answer with or without working or % 2 Correct calculation of number of people who prefer skiing 1 holidays (100) AND total number of respondents (300) No creditable content 0 Content 100 × 100 = 33.33% (2) 300 Allow 1 mark for incorrect rounding supported by working (ie 100/300 × 100 = 34) 1(b)(iii) Explain one possible disadvantage to OT of using secondary market research. Level Knowledge and Application Marks Explanation of a disadvantage to OT of using 2b (APP) 3 secondary market research Explanation of a disadvantage of using secondary 2a (K+K) 2 market research Identification of a disadvantage of secondary 1 (K) 1 market research 0 No creditable content 0 Note: only mark the best disadvantage written by the candidate is there is more than one. Content • Not specific to the needs of OT in finding a new market segment • Can be ‘old’ – no date on the research – does it reflect recent changes in the holiday market? • No idea of the quality of the original researcher – is it biased? • Cost – OT may have had to pay for the research • Were the respondents the type of consumer to use the internet? ARA Possible disadvantage (K) Possible context (APP) OT need to identify a new market segment and this data is not specific to this Not specific to the needs of the business Is the data based on OT’s market of people who book holidays on the internet? May not reflect the holiday market as it is now Can be out of date Demand is falling No knowledge of the quality May not give OT good data upon which to base of the research their decision of a new market segment 1(c) Analyse the effect on two stakeholders, other than employees, of the 8 decision to make 20% of employees redundant. Knowledge and Analysis Level Marks Marks Application (4 marks) (4 marks) Shows understanding of Developed analysis of the effect of the the effect of the 2b 4 4 redundancies on two redundancies on two stakeholders of OT stakeholders of OT Shows understanding of Developed analysis of the effect of the the effect of the 2a 3 3 redundancies on one redundancies on one stakeholder of OT stakeholder of OT Shows knowledge of Limited analysis of the 1b redundancy and 2 effect of redundancies on 2 stakeholders two stakeholders Shows knowledge of Limited analysis of the 1a redundancy or 1 effect of redundancies on 1 stakeholders one stakeholder No creditable content 0 Note: The business (OT) is NOT a stakeholder Content: Customers – worse service leading to a poor experience using OT Owners – may have less profit as there are high redundancy costs. May eventually have higher profits as the business is more efficient. Managers – may have less workers to supervise Banks/lenders – may worry about the future of OT and not lend for any future ventures Local community – increased unemployment, lower average income Government – increased unemployment, lower income tax revenue. Competitors – OT may lose sales so the competitors may gain sales, competitors may gain new trained employees 1(c) ARA Examples of Example of Examples of Examples of possible effects on stakeholders application/context analysis stakeholder Because the Which means they are website may be frustrated because they Unable to down due the cannot use the website Customers book a redundancies and have to search for a holiday amongst the holiday elsewhere taking technical specialists extra time. Leading to a lower Dividends (OT is a income for the Ltd) may decrease Owners Less profit shareholders and a because of the extra chance that they will redundancy costs want to sell their shares Question Answer Marks 1(d) Recommend how OT can use the internet in the marketing mix for holidays 11 aimed at the new target market. Justify your recommendation. Knowledge and Analysis and Evaluation Application Marks Marks (7 marks) (4 marks) A justified recommendation based 7 on a developed argument A developed recommendation 6 based on a developed argument A basic recommendation/judgement based 5 on a developed argument Shows Developed argument based on the understanding of the use of the internet in one or more internet in one or 3–4 3–4 elements of the marketing mix for more elements of the OT marketing mix for OT Shows knowledge of Limited analysis of the use of the 1–2 1–2 the marketing mix internet in the marketing mix No creditable content 0 Note: Candidates can gain all the marks from use of one element of the marketing mix Content • Promotion – many ways in which the internet could be used, especially in this target market. Social media, viral marketing etc.. Allow use of specific platforms, such as Facebook, Twitter, Snapchat etc.. Relatively cheap methods of promotion, can show elements of the holiday (ie skiing) in videos etc.., good for targeting this age group and accessible on various devices. • Price – use of dynamic pricing to change prices based on demand, timing etc. Easy to adapt prices and change in short period of time. • Product – Could be tied into the product, so offer free WIFi with holidays, online catalogues and search facilities showing the product portfolio. • Place – can be sold through the internet, reduces labour costs, more likely to be suitable for this target market. 1(d) Candidates can also use the 4C’s: • Cost to the customer • Convenience to the customer • Customer solution • Communication with the customer To award APP a candidate requires all three elements: • Marketing mix (the knowledge to back it up) • The target market (16–30) • Internet ARA

Question 2

Swimming Pools (SP) SP is a public sector organisation. SP operates many swimming pools across country X. The main objective for SP is to p…

Accepted Answer

Question Answer Marks 1(a)(i) Define the term ‘market segment’ (line 3). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 Content • Part of a market • Made up of groups of customers who share similar characteristics, interests, etc. Exemplar Marks Rationale Sub-group of a whole market (1)for Identifies that it is part of a consumers with similar 2 market aimed at specific characteristics such as age(1) customers Again Identifies that it is part of a market but no A group or portion of a whole market 1 reference to target group of customers It is the whole market 0 Incorrect definition 1(a)(ii) Briefly explain the term ‘public sector organisation’ (line 1). 3 Award one mark for each point of explanation: Knowledge Marks Example or some other way of showing good understanding C e.g. Product that might not be adequately provided by the 1 private sector/profit not an objective. To provide a service to the local community/ social B 1 objectives A Owned/controlled by the state/government 1 Note: Must have an answer from section A or B Content A business owned and controlled by the government to provide services and products that might not be adequately provided by the private sector. Exemplar Marks Rationale Owned and controlled by the state All 3 elements included – A + (1) to provide a social benefit (1) 3 B + C profit not an objective (1) Owned by the government (1) e.g. 2 Only 2 elements A + C fire service (1) Not run with the aim of making a profit (1) but aim to a service to 2 Only 2 elements B + C the community (1) State owned enterprise (1) 1 Only 1 element A Too vague – private sector Organization funded by the 0 organizations may be funded government by the government 1(b)(i) Calculate the gross profit margin (%) for The Lido. 3 Rationale Marks Correct answer with or without correct working 3 Identifies correct data 2 Formulae* 1 No creditable content 0 *Could be implicit from the figures Content (GP / Revenue) × 100 (70 / 280) × 100 = 25% accept 25 Exemplar Marks Rationale 25% 3 Correct answer (70 / 280) × 100 3 Correct numerical answer = $25 (70 / 280) × 100 Not converted to a % but correct formula and 2 = 2500 data Correct formula but cost of sales used instead of (70 / 210) × 100 2 TR. OFR rule applies so 1 mark for correct = 33.3% formula and 1 mark for (OFR) answer 1 mark for formula but used profit rather than GP. OFR does not apply here, as the answer (30 / 280) × 100 1 should have a decimal point after 10 i.e. = 1007140 10.07140. If the decimal point in the correct position then 2 marks 1(b)(ii) Explain how one stakeholder of SP might be affected by the Lido making 3 a loss. Level Knowledge and Application Marks 2b (APP Explanation of an effect on a stakeholder in context 3 + APP) 2a (APP) Identification of an effect on a stakeholder in context 2 1 (K) Identification of an effect on a stakeholder 1 0 No creditable content 0 Content: • Government/owners: more government spending needed – opportunity cost of spending • Customers: prices may increase, may have to travel to further swimming pool • Local community: poor service, travel to other pools • Workers: may be made redundant, lower wages Reference to owners not having dividends, etc. are unlikely to be in context. Closure is not an impact unless it is taken through to show how the stakeholder would be impacted, i.e. The Lido may close leading to an increase in the funds available for the government to spend. ARA 1(c) Analyse one advantage and one disadvantage to SP of using price 8 discrimination. Knowledge tation marks) tation Level Applicationand Marks Anno- Analysis (4 Anno- Marks (4 marks) Good analysis of Shows one advantage understanding APP+ and one DEV+ 2b of price 4 4 APP disadvantage to DEV discrimination SP of using price in context discrimination Good analysis of Shows one advantage or understanding one disadvantage 2a of pricing 3 APP 3 DEV to SP of using methods in price context discrimination Limited analysis of Shows one advantage knowledge of and one AN+ 1b 2 K+K 2 price disadvantage of AN discrimination using price discrimination Limited analysis of Shows one advantage or knowledge of 1a 1 K one disadvantage 1 AN pricing of using price methods discrimination No creditable 0 content Content Advantages: • Increase number of customers – particularly important for a publically owned business • Gives access to the swimming pool to more people, not dependent on income • Can be used to increase demand during off peak times • Can be used to decrease demand at peak times. Disadvantages: • Reduce income – may be contributing to the loss made by The Lido • May be seen as a poor quality service • May be seen as unfair against people who pay full price • May lead to excess demand at off peak times and low demand at peak time 1(d) Recommend whether SP should close The Lido. Justify your answer. 11 Knowledge and Analysis and Anno- Anno- Application Evaluation tation tation Marks Marks (4 marks) (7 marks) A justified recommend- ation based on 7 a developed two sided argument A developed recommend- ation based on 6 a developed two sided argument A basic recommend- ation based on 5 EVAL a developed two sided argument Developed argument based APP + on closure of 4 APP the Lido and Shows understanding of keeping the Lido factors affecting open business performance 3-4 of The Lido or the Developed impact of closing/ argument based staying open in context on either APP 3 closure of the Lido or keeping the Lido open Limited analysis of closing a Shows knowledge of 1-2 K + K business and 2 business performance keeping a business open Limited analysis of closing a K business or 1 keeping a business open No creditable content 0 1(d) Content Arguments for closure: • The Lido will be subsidised by other swimming pools/the Government – is this a good use of taxpayers’ money? • Would a different facility be better – one that could make a profit or cover its own costs? • Is the local area the best for a swimming pool – would government money be better spent on creating jobs? Arguments against closure: • Publically owned so profit is not the objective of the business – does it matter if The Lido makes a loss? • The Lido only makes a loss when the allocation of Head Office costs are included – is this a fair allocation? • The local community has high unemployment – closure is likely to affect these the most • There are many schools in the local area – the closure would reduce the ability for these to teach swimming. • The Lido benefits local fitness/combats obesity

Question 3

Fish and Chips (FC) Min is a sole trader who is the owner and overall manager of FC. Min started the business as a restaurant but FC has gr…

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2(a)(i) Define the term ‘unique selling point’ (line3). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 Content • Different/differentiates about a business’s product/service • Factor or feature Exemplar Mark Rationale A factor that differentiates a product 2 Full definition from its competitors A feature that differentiates a product 2 Implied competition service A feature that sets you apart from 2 Full definition competitors No relation to A special feature of your product 1 competition 2(a)(ii) Briefly explain ‘Herzberg’s motivation theory’ (line 18). 3 Award one mark for each point of explanation: Knowledge Marks Example or some other way of showing good C* 1 understanding Explaining hygiene and motivating: B e.g. may motivate but will not demotivate and 1 e.g. do not motivate but may demotivate A Identifying ‘Hygiene factors’ and ‘motivating factors’ 1 *C is dependent on A and B being identified Content Herzberg’s two factor theory; Motivating factors – may motivate but will not demotivate, e.g. unexpected bonuses, praise, etc. Hygiene factors – do not motivate but may demotivate, basic pay, health and safety, etc. Exemplar Mark Rationale Hygiene factors which may demotivate and motivation which does not 3 A, B and C covered demotivate but motivates e.g. a bonus (is a motivator) Hygiene factors which may demotivate and motivation which does not 2 A and B only demotivate but motivates Identification not Motivating factors and hygiene factors 1 explanation Keeping your staff happy and motivated 0 Too vague / one only Bonuses are a motivating factor 0 No A or B Herzbergs theory is about motivation/ 0 TV two factor theory 2(b)(i) Using Table 1, calculate the total annual profit for FC. 3 Rationale Marks Correct answer with or without correct working 3 Two correct percentage calculations 2 Correct percentage calculation or formula 1 No creditable content 0 Content Formula = TR – TC OR Profit margin × annual revenue 2% of $50 000 = $1000 1% of $70 000 = $700 15% of $200 000 = $30 000 Total profit = $31 700 Rationale Marks 31 700 with or without working 3 1000 + 700 + 30 000 2 100 + 70 + 3000 = 3170 (one error – decimal place) 2 OFR (formula wrong way round) 2 18% of 320 000 = 57 600 1 Revenue × profit margin 1 2(b)(ii) Explain one problem that Min might have in allocating costs. 3 Level Knowledge and Application Marks Explanation of a problem of allocating costs in 2b APP 3 context Explanation of a problem of allocating costs no 2a (APP) 2 context 1 (K) Identification of a problem of allocating costs 1 0 No creditable content 0 Content • May make one aspect of the business seems unprofitable – however all interdependent • If a fish is bad/inedible – which part of the business should have the waste as a cost? • The restaurant and kitchen are part of the same building – how can costs be separated (utilities, rent etc.) • The kitchen staff could easily be seen as restaurant staff • Min makes the decision – what qualifies her as able to allocate the costs? ARA Explanation Problem (K) Possible context (APP) (APP APP) Separating similar How would which costs E.g. kitchen or costs apply to each area restaurant To be able to know May not have E.g. is the chef which costs are in which appropriate skills secondary or tertiary area 2(c) Analyse two appropriate ways that could be used to measure the size of 8 FC. Knowledge and Analysis Level Marks Marks Application (4 marks) (4 marks) Shows Developed analysis of understanding of two 2b 4 two ways to measure 4 ways to measure the the size of FC size of FC Shows Developed analysis of understanding of one 2a 3 one way to measure 3 way to measure the the size of FC size of FC Shows knowledge of Limited analysis of two 1b two ways to measure 2 ways to measure the 2 the size of a business size of a business Shows knowledge of Limited analysis of one 1a one way to measure 1 way to measure the 1 the size of a business size of a business 0 No creditable content Note profit is NOT an acceptable measurement of size – 0 marks FC is a sole trader so share price is a non-contextual answer Content • Revenue – whole business or individual part. What to compare it to? • Number of customers – only applicable to the restaurant • Number of employees • Capital employed – kitchen, restaurant, boat, etc. • Market share 2(c) Examples Examples of Examples of Examples of possible of ways application/ possible developed analysis context analysis Can compare So that Min/potential Revenue 31 700 with other investors can judge the businesses success of the business However is only Number of Who buy fish Will tell Min the applicable to the customers and chips size of her market restaurant Shows Min how However does not take Number of E.g. 3 chefs much growth year into account productivity/ employees on year automation Kitchen, boat Which may attract future Capital Can show growth and investors/ allow bank employed over years restaurant loan Market Met growth Satisfied initial However the market may share objective objectives have shrunk 2(d) Evaluate which stakeholders might be most affected by the change in 11 FC’s business objective from growth to profit maximisation. Knowledge and Marks Analysis and Evaluation Marks Application (4 marks) (7 marks) A justified judgement based on a developed argument of 7 at least two stakeholders A developed judgement based on a developed 6 argument of at least two stakeholders A basic judgement based on a developed argument of at 5 least two stakeholders Arguments based on how two Shows understanding of or more stakeholders may be how two or more 4 4 affected by the change in stakeholders in context business objectives in context Argument based on how one Shows understanding of stakeholder may be affected how one stakeholder in 3 3 by the change in business context objectives in context Limited analysis of how two Shows knowledge of two stakeholders may be affected 2 stakeholders by the change in business 2 objectives Limited analysis of how one Shows knowledge of one stakeholder may be affected 1 stakeholder by the change in business 1 objectives No creditable content 0 Content • Min – as owner this may increase her personal income – better lifestyle, etc. • Employees – may see a reduction in costs as a way of increasing profits, so may lead to redundancies or cut in wages, longer hours, etc. • Customers – may be lower quality standards (costs cutting) and prices may increase • Government – increase in taxation revenue • Local community – increased trade, noise, etc. • Competitors – May see a chance to compete with lower prices, attracted by higher profit margins. ARA

Question 4

UPlane Components (UC) UC is a private limited company providing engine parts for commercial aircraft. It uses batch production in factory …

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Question Answer Marks 1(a)(i) Define the term ‘corporate social responsibility (CSR)’ (line 3) . 2 Knowledge and Application Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 Answers could include: When a company aims to act ethically and responsibly to ensure that the public perceives it positively and may help to attract new customers. A correct definition should include the following elements (allow one mark for each element): • Acts ethically / in the interests of society / the environment • Helps attract new customers / considers impact on stakeholders / business objective beyond legal obligations Exemplar Mark Rationale Businesses act ethically and consider 2 Both elements – the impact of their actions on customers ethically and impact on a stakeholder (customers) Where a business considers the impact 1 One element only on the environment CSR is a business objective 0 Not defined 1(a)(ii) Explain the term ‘triple bottom line’ (line 15). 3 Rationale Marks C An explanation of all three elements of a triple bottom 1 line to include, e.g. an example or some other way of showing a good understanding B An understanding of all three elements of a triple 1 bottom line A An understanding of two elements of a triple bottom line 1 Answers could include: The 3Ps of people, planet and profit. Broader measure than the financial bottom line to include a measure of businesses social responsibility, economic value, and environmental impact. Exemplar Mark Rationale It is to maximise profits for 3 All 3 elements + shareholders, taking care of the example ‘maximising environment and benefitting the profits for community shareholders’ The triple bottom line includes social, 2 All 3 elements but no environmental and economic objectives expansion Triple bottom line puts the planet before 1 Only 2 elements profit The triple bottom line refers to the base 0 NAQ – no explanation objectives of a business or evidence of understanding 1(b)(i) Refer to Table 1.1. Calculate the forecast profit margin for the year 3 ending 30 November 2020. Rationale Marks Correct answer with or without correct working or % 3 Formula and correct calculation of profit 2 Formula or correct calculation of profit for end of Nov 2020 1 No creditable content 0 e.g. Profit margin = (profit / total revenue) x 100 (1) Profit for end of Nov 2020 = 6.4m – (3.4m + 1.6m + 200 000) = $1.2m (1) $1.2m / $6.4m = 0.1875 (2) ($1.2m/$6.4m) x 100= 18.75% (3) Accept any answer between 18.7% and 19% (3) % not required for full marks OFR* 1(b)(i) Common incorrect/correct answers Answer Mark Rationale 18.75 3 Correct answer – does not need % 18.8% 3 Correctly rounded answer (1 dec place) 19% 3 Correctly rounded answer (0 dec places) 0.1875 2 Incomplete calculation – did not x100 [3 – (1.6 – 0.2)] / 6.4 x 2 Method is correct except (1.6 – 0.2) 100 = 25% should be (1.6 + 0.2), a mistake in the sign. This is an example of *OFR below 25% (no working) 0 No calculation and wrong answer Profit margin = 1 Formula only (profit/total revenue) x 100 $1.2m 1 Correct calculation of profit *OFR means the use of the own figure rule – this aims to reward a candidate for the stages of a calculation that are correct, even if an earlier stage or figure used is incorrect. An early mistake, for example, would create all following calculations to have wrong answers, but these are still rewardable (if correct when using a candidate’s own figures) Therefore the candidate cannot gain marks for the stage that was incorrect, but can gain all the subsequent marks. 1(b)(ii) Explain one likely effect on UC of a decrease in profit. 3 Level Knowledge and Application Marks APP Explanation of an effect of a decrease in profit 3 on UC K+K Explanation of an effect of a decrease in profit 2 K Identification of an effect of a decrease in profit 1 0 No creditable content 0 Context and content is likely to come from: Possible effects may include: • May affect surplus for reinvestment in the apprenticeship scheme • May affect demand if business confidence in UC falls • May delay plans for factory A • May cause employees to worry which could lead to demotivation Identification of Explanation Possible context an effect (K+K - 2 marks) (APP - 3 marks) (K - 1 mark) May have to to avoid getting into so may cut its training decrease costs debt scheme for the long-term unemployed They have less which could affect such as the automation of to invest in the expansion plans factory A business 1(c) Analyse two likely effects on the other employees if Jack is dismissed. 8 Level Knowledge and Marks Analysis Marks Application (4 marks) (4 marks) 2 Shows 4 Developed analysis of 4 understanding of two two effects, on other effects, on other employees, of employees, of dismissal in context dismissal in context Shows 3 Developed analysis of 3 understanding of one one effect, on other effect, on other employees, of employees, of dismissal in context dismissal in context 1 Shows knowledge of 2 Limited analysis of 2 two effects of two effects of dismissal dismissal Shows knowledge of 1 Limited analysis of 1 one effect of one effect of dismissal dismissal 0 No creditable content Dismissal is when an employee is asked to leave the workplace for misconduct or for disobeying company rules and policies. Context could come from • Jack’s negligence causing faulty part – Is the dismissal fair? • Because of the recall cost, there will be a reduction in profit - some employees may be asked to leave • Accelerate the automation of factory A – less need for production supervisors or other workers • Effect on motivation to work overtime • Uncertainty/distrust of management 1(c) Example Examples of Examples of possible analysis of an application/context (AN + DEV) effect (K) (APP) Other as they may have to hence this increased workload employees cover Jack’s supervisor could cause them to become may have role tired, (AN) make more mistakes an and fear dismissal (DEV) increased workload It could Jack’s mistake, which with more consistent production lead to the lead to his dismissal, (due to automation) there will be firm could accelerate plans less need for production becoming to automate factory A supervisors (AN) or other more workers. They may find it hard to capital get another job as those workers intensive were previously long-term unemployed (DEV) 1(d) Recommend whether UC should automate factory A. Justify your 11 recommendation. Knowledge and Marks Analysis and Evaluation Marks Application (4 marks) (7 marks) Justified recommendation 7 based on arguments in context Developed recommendation 6 based on arguments in context A recommendation based 5 on arguments in context Shows understanding of 4 Arguments (two-sided) 4 two aspects of based on the advantages automation in context and disadvantages of automation in context Shows understanding of 3 Argument (one-sided) based 3 one aspect of on the advantages or automation in context disadvantages of automation in context Shows knowledge of two 2 Limited analysis of 2 aspects of automation advantages and disadvantages of automation Shows knowledge of 1 Limited analysis of 1 one aspect of advantages or automation disadvantages of automation No creditable content 0 Context/content: • Faulty part made in factory A which uses batch production • Costs of recall may delay change • Effect on employees especially skilled workers • Effects on apprenticeship scheme • Will they be able to meet their social enterprise objectives? • Lower unit costs in factory B • Cost of investment may mean less to invest in employee training • Why the need to reduce unit costs? Social enterprise is already making a good profit, even after recall • Could reduce price, asked by customers, through efficiency savings 1(d) Examples of how an answer could develop and how it should be annotated. K APP AN DEV EVAL Automated The This should Therefore UC To some machinery company mean that could re-invest extent is more will be the average the extra profits automation consistent able to unit cost will into the could be produce fall company, as a damaging to engine source of UC because parts finance, and of high start- more help it achieve up costs quickly its CSR (EVAL) objective. However, I would UC should The cost This could Consequently, recommend not of sales mean that as UC is a that UC automate are UC’s private should as it would already profitability company it automate have high forecast will cannot sell Factory A set-up costs to rise by decrease shares to the (EVAL) as it $1.1m in public to cover will have a 2020 these costs so higher level of they may face consistent a cash-flow output leading problem and to lower their liquidity average costs may not be and higher sustainable. profits in the long-run (EVAL)

Question 5

Flora’s Fitness (FF) Flora is a self employed personal trainer and she trades as Flora’s Fitness (FF). She invested $10 000 as start‑up cap…

Accepted Answer

Question Answer Marks 1(a)(i) Define the term ‘corporate social responsibility’ (CSR) (line 4). 2 Knowledge Marks A full definition 2 A partial, vague or unfocused definition 1 No credible content 0 A full definition should cover the following: • objectives/strategy focused on • economic, social and environmental benefits (people, profit and planets), triple bottom line (at least two) Content: A business which aims to benefit society, the environment as well the owners (2) Economic, social and environmental benefits not just about making profit (2) An objective to look after the environment (1) Economic, social and environmental benefits (1) 1(a)(ii) Explain the term ‘start-up capital’ (line 2). 3 Award one mark for each point of explanation: Rationale Marks Example or some other way of showing good 1 understanding. Can be a use of start-up capital or a source. Understanding that it is to launch a business / set-up / 1 seed money Understanding of the concept money invested, used in a 1 business Content: Money invested (1) to purchase everything necessary to set-up (1) a business, e.g. machinery (1) Money used (1) to purchase everything necessary to launch (1) a business Other appropriate responses should also be credited. Do not accept ‘start’ as it is in the question. Do not accept $10 000 invested in FF as this is repetition from the data. The money needed for a business does not NAQ. 1(b)(i) Refer to Table 1.1 and any other relevant information. Calculate the 3 maximum weekly revenue for pricing strategy 1. Rationale Marks Correct answer (with or without working or $) 3 Correct use of figures 2 Correct formula 1 No credible content 0 $5 × 20 = $100 (per session) $100 × 2 = $200 (per day) $200 × 5 = $1000 (per week) Answer = $1000 (accept with or without $) OFR applies Do not reward incorrect answers e.g. $500 or $200 without working. 1(b)(ii) Explain one advantage to FF of pricing strategy 2. 3 Level Knowledge and application Marks 2b Explanation of one advantage to FF of pricing 3 (APP + strategy 2. APP) 2a Identification of one advantage to FF of pricing 2 (APP) strategy 2. 1 Knowledge of one or more pricing strategies. 1 (K) 0 No creditable content 0 Knowledge of pricing strategies may include: competitive, penetration, skimming, price discrimination, cost-based pricing. Knowledge of pricing strategies can be implied. Possible advantages of pricing strategy 2 include: • Guaranteed income – no matter how many people Flora would get $75 • Helps with cash flow – when Flora is starting the business. Other appropriate responses should also be credited. 1(c) Analyse two sources of secondary market information Flora could use 8 to find out more about trends in the fitness market. Knowledge and Marks Analysis Marks Application (4 marks) (4 marks) 2b Shows 4 Good analysis of 4 understanding of two sources of two sources of secondary market secondary market information in information in context context 2a Shows 3 Good analysis of 3 understanding of one source of one source of secondary market secondary market information in information in context context 1b Shows knowledge 2 Limited analysis of 2 of two sources of two sources of secondary market secondary market information with no information context 1a Shows knowledge 1 Limited analysis of 1 of one source of one source of secondary market secondary market information with no information context 0 No creditable content Note: annotate the first source in the left-hand margin and the second source in the right-hand margin. Knowledge and understanding may include: Examples of sources of secondary market information • Reports • Census data • News reports • Magazines • Newspapers • Internet Application may include: • Fitness activities (fitness market is in the question) • $10 000 start-up capital • ABC is a national bank with a focus on CSR • ‘Healthy employer’ • Why employees do not go to fitness centres 1(c) Analysis may include: • Impacts on the business that could arise from the secondary source research • Costs/limitations of the secondary research (out-dated) • Benefits of the secondary research (quicker, cheaper etc.) Exemplars: • Published reports about keeping fit can provide data on current fitness trends which can influence her work out routines. • News reports detailing fitness trends which can be done in lunch hours to meet target market needs. Other appropriate responses should also be credited. 1(d) Evaluate the benefits to ABC of offering employees fitness sessions. 8 Knowledge and Marks Analysis and Evaluation Marks Application (4 marks) (7 marks) Justified evaluation/ 7 judgement based on argument in context Developed evaluation/ 6 judgement based on argument in context An evaluative statement/ 5 judgement based on argument in context Shows understanding 3–4 Argument(s) based on two 4 of motivating benefits of ABC offering employees in context employee fitness sessions Argument(s) based on one 3 benefit of ABC offering employee fitness sessions Shows knowledge of 1–2 Limited analysis of two 2 motivating employees benefits of motivating employees Limited analysis of one 1 benefit of motivating employees No creditable content 0 Knowledge and understanding may include: • Motivation; theory and practice • Fringe benefits and perks • HRM Application may include: • ABC – a national bank • ABC – focus on CSR • One session before work and one session at lunchtime • Paid by bank (discount/fringe benefit) for employees • Survey revealed that high prices and lack of time are reasons employees do not go to the gym • Fitness is becoming a trend in country P Analysis may include: • Benefits of fitness sessions to employees • Impact on ABC of fitness session 1(d) Evaluation: • Extent of the benefit(s) to ABC • Benefit(s) of sessions vs costs to ABC • What the benefit(s) might depend on; number of participating employees, interest from ABC employees, etc. • A judgement over whether fitness sessions are more of a benefit than a cost to ABC • A judgement over which is the most important benefit to ABC. Other appropriate responses should also be credited.

Question 6

Tin Mines (TM) TM is a private limited company in the primary sector. Tin is found underground and is extracted by mining. TM operates seve…

Accepted Answer

2(a)(i) Define the term ‘primary sector’ (line 1). 2 Knowledge Marks B Provide to secondary / manufacturing business / first stage of 1 production / example A Extraction or collection of natural resources / raw materials 1 No creditable content 0 Indicative content AO1 Knowledge and understanding Industry involved in extraction/collection – of natural resources (e.g. farming, mining, etc.). First part of the supply chain/provide to secondary/ manufacturing process. A correct definition should include: • Extraction of natural resources/raw materials • First sector/stage of production Content Exemplar Marks Rationale Extraction of natural resources (A), e.g. 2 A + B tin mining (B) Extraction of raw materials (A) in order 2 A + B for production and manufacturing to happen (B) First stage of production, e.g. mining 1 B only Collection of raw materials 1 A only 2(a)(ii) Explain the term ‘market’ (line 19). 3 Award one mark for each point of explanation: Knowledge Marks C Example or some other way of showing good understanding, e.g. sum total of buyers and sellers interact 1 to exchange goods and services for a price/the interaction between price, demand and supply in an area/region B Buyers and sellers interact 1 A (Place) where goods/services are sold 1 Indicative content AO1 Knowledge and understanding Consumers who want a product/service / the demand for a product/service (1) from different types/groups/segments of consumers (1) who are willing/able to pay for it (1) in the area or region considered. The term ‘market’ has a number of different meanings. Any legitimate definition can be used. The most common definition (as a means of trade) is likely to include: • A system/place/facility whereby products are bought (1) and sold (1) • Where businesses and consumers (1) trade (1) However, other definitions may include: Market as a group of potential customers for a product: • The customers/consumers (1) who may potentially purchase a product (1) • The businesses (1) which are competing to sell a product (1) • The group of people (1) to whom the business is trying to sell (1) AO2 Application Application of a market to a business, such as: • an example of a market • the interaction of supply and demand in a market • an example of the agents in a market • area/region, e.g. could be local, national, international, virtual, physical • sum/total of all buyers and sellers/consumers/producers • market can exist without agents meeting 2(a)(ii) Content Exemplar Marks Rationale Where consumers buy goods and 3 A correct definition with services and businesses sell goods and an example services (A+B). Markets tend to be in specific groups, e.g. McDonalds sell in the fast food market (C) Where buyers and sellers (B) come to 2 A correct definition trade (A) Where goods and services (A) are 2 A correct definition exchanged (B) The market is a group of businesses (B) 1 An idea of the market (from the businesses’ point of view) but not selling/competing 2(b)(i) Using the information in Table 2.1, calculate the value of the opening 2 balance (X) for 2022. Rationale Marks Correct answer, with or without working 2 Attempt/correct approach/method 1 No creditable content 0 Content X + 0 – 60 – 0 = –80 X = – 80 + 60 Opening balance = –$20m accept –20 Common incorrect answers Exemplar Marks Rationale (20) 2 Correct answer – $ or million not needed 20 1 Minus sign missing X – 60 = –80, 1 Mark for attempt, miscalculation shown X = 140 from working out 2(b)(ii) Using the information in Table 2.1, calculate the value of the sales (Y) for 2 2026. Rationale Marks Correct answer, with or without working 2 Attempt/identifies correct figures/correct method 1 No creditable content 0 Content 5 + Y – 0 – 15 = 240 (1) Y = 240 – 5 + 15 Y = 240 + 10 (1) Sales = $250m accept 250 Common incorrect answers Exemplar Marks Rationale 250 2 Correct answer – $ or million not needed 5 + Y – 0 – 15 = 240 1 Correct method 2(c) Explain one use of the cash flow forecast for TM. 2 Level Knowledge and Application Marks Explanation of one use of a cash flow forecast in 1(APP) 1 context 1(K) Identifies one use of a cash flow forecast 1 0 No creditable content 0 Indicative content AO1 Knowledge and understanding Uses of a cash flow forecast: • identifies potential cash shortfalls – if a business runs out of cash and is able to obtain new finance, it will become insolvent • to measure the financial performance of the business • makes sure the business can pay debts/bills • identifies potential problems with customer payments • allows better management of a business’s cash • to give information to other stakeholders, e.g. banks • to identify potential shortfalls in cash balances in advance – ‘early warning system’ A cashflow forecast does not forecast profit/loss. AO2 Application Application to QF, including: • expansion • use of numbers from Table 1.1 • opening of new mine • answer to 1(b)(i) (OFR) Example of how responses should be marked. Identification of a way Application (K –1 mark) (APP – 1 mark) Helps in future planning as in 2023, where a negative balance indicates cash flow issues so managers can seek a source of finance May be used to get a bank loan as TM will have $240m cash in 2024, the bank will be willing to lend to TM 2(d) Analyse two methods of recruitment that TM’s Human Resources 8 Director can use to recruit employees for the new mine. Level Knowledge and Marks Analysis Marks Application (4 marks) (4 marks) 2b Shows understanding 4 Good analysis of two 4 of two methods of methods of recruitment recruitment in context of new mine employees 2a Shows understanding 3 Good analysis of one 3 of one method of method of recruitment recruitment, in context of new mine employees 1b Shows knowledge of 2 Limited analysis of two 2 two methods of methods of recruitment recruitment 1a Shows knowledge of 1 Limited analysis of one 1 one method of method of recruitment recruitment 0 No creditable content Indicative content AO1 Knowledge and understanding Knowledge of methods of recruitment, including: • employment agencies • online recruitment • internal • external • job advertising, e.g. newspaper, flyers, etc. • recruitment events AO2 Application • Seven mines in country C. • Different types of employees required such as miners, construction, managers, etc. • New mine will be in a remote area. • High local unemployment. • Average incomes are low. • Locals may be unhappy with development. 2(d) AO3 Analysis • Employment agencies – reduces hiring time, may cost less although can be expensive, culture may not fit, may have a pool of potential recruits, communication difficulties, quantity v quality. • Online recruitment – larger potential pool, quick, cheap, flexible, reduces paper files, informal, lots of competition as hope to recruit from local community where incomes low may miss some potential applicants. • Internal – move from one of existing mines, already trained, know culture, known to management but may not want to move to remote location and will still mean vacancies in mines left. • External – from local community, pool of unemployed but may lack required skills/need more training adding to costs. Examples of how an answer could develop and how it should be annotated. K APP AN DEV External from country C easier to recruit this will increase the recruitment since people have and train reputation of TM as low income and they are getting high most of their unemployment employees from the local area. However, this could take a long time Internal from within the easier to recruit they will already be recruitment other seven mines as they will be skilled and will not in country C known to the need much training. company However, this will lead to vacancies in those other mines Recruitment pick the people can advertise to training costs will be agency with the right a greater lower and will lead mining skills for the number to efficient and job effective mining before it runs out Advertising in a mining where highly however, this might vacancies magazine skilled not be possible in engineers or the local area where miners will see low incomes and it high unemployment means local people will not see the advert ARA 2(e) Evaluate possible conflicts between the aims of two of TM’s 11 stakeholders. Knowledge and Analysis and Application Evaluation (4 marks) Marks (7 marks) Marks Annotation Annotation A justified judgement based on a developed + + analysis of two or more 7 possible conflicts EVAL EVAL EVAL between stakeholder aims of TM A developed judgement based on a developed + analysis of two or more 6 possible conflicts EVAL EVAL between stakeholder aims of TM A basic judgement based on a developed argument of at least one 5 EVAL possible conflict between stakeholder aims of TM Shows Developed analysis of + + understanding of two or more possible 4 4 two stakeholder APP conflicts between DEV APP DEV aims, in context stakeholder aims Shows Developed analysis of understanding of one possible conflict 3 3 one of stakeholder APP between stakeholder DEV aims, in context aims Limited analysis of two Shows knowledge K + possible conflicts of two 2 + 2 AN K between stakeholder AN stakeholders’ aims aims Shows knowledge Limited analysis of one of one 1 K possible conflict between 1 AN stakeholder’s aim stakeholder aims No creditable content 2(e) Indicative content AO1 Knowledge and understanding Knowledge of the aims of stakeholders, including: • local community – nice place to live/work, clean environment • managers – high pay, status, perks • employees – high pay, holidays, security • suppliers – security, sales, profit • customers – low prices, quality product, good service • owners – profit, dividends • government – welfare, tax revenue, economic growth, low unemployment Note: Aims may be implied rather than explicitly state that it is an aim. AO2 Application Application of stakeholder aims to TM: • local community, e.g. environmental impact, pollution of water supplies, employment/unemployment, living standards • employees/recruits, e.g. training, skilled work, higher incomes • manufacturers of electric vehicles / batteries / mining equipment, etc. Note: Take reference to TM if using as a proxy for owners. AO3 Analysis Analysis of conflicts between stakeholder aims may include: • government and local community – higher employment/tax revenue so likely to give planning permission, whilst community concerned about pollution of water, buildings in local area or longer term impact when mine closes • employees and owners – employees want higher payments, job security, permanent contracts – all increase costs and conflict with owner’s aims to maximise profits/keep costs low • suppliers and owners – both aim to maximise profits so owners want low priced supplies whilst suppliers would like higher prices AO4 Evaluation • A judgement may consider the importance of conflict, the potential impact of conflict, whether some stakeholders are more important than others and the need to prioritise stakeholders’ interests and conflicts. • A judgement over the relative effects on TM of the stakeholder conflicts. • Elements that the judgement could depend upon, including how this may vary over time and in relation to different specific business decisions. 2(e) Examples of how an answer could develop and how it should be annotated. K APP AN DEV EVAL Shareholder TM is a they want to exploitation The conflict of s want to private exploit as of minerals the aim for obtain high limited much as they from the increasing profits (K), company can from the ground will output would local ground to pollute the highly conflict community obtain higher local water with the aim of aims for a profits, but supplies, the community clean this conflicts damaging (eval) since environment with the local the the mining of (K) community’s environment tin comes with aim for a for future negative clean generations. externalities. environment But reducing This will also the pollution increase the will reduce conflict with the profits, the so increasing shareholders’ the conflict aim of high between the profits (eval of two aims two conflicts) as they may face fines or be required to clean up the pollution or face being shut down (justified judgement of two conflicts ) ARA

Question 7

Farm Produce (FP) FP is a primary sector co-operative made up of six farms in country G. Each farm grows a range of fruit and vegetables. F…

Accepted Answer

Question Answer Marks 1(a)(i) Define the term ‘labour intensive’ (line 8). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 Content: Production based on a high level of employee input compared with capital equipment. A correct definition will include the following points:  use of a high number of employees/manual/workers  as opposed to a high level of capital (no/limited machinery involved) Exemplar Marks Rationale Using a higher proportion of 2 Both elements employees than capital. covered When something is made by people 2 Both elements instead of capital. covered A hand made product. 1 One element Where more labour than capital is 1 One element – used. ‘labour’ is a tautology. The intensity of the labour used. 0 A tautology. ARA 1(a)(ii) Explain the term ‘co-operative’ (line 1). 3 Award one mark for each point of explanation: C Example or some other way of showing good 1 mark understanding, e.g. bulk buying, common in agriculture, motivational, slow decision-making, allows the achievement of economies of scale, mutual benefit, types of co-operative (worker and customer) etc. B Knowledge of the operation of a co-operative: 1 mark  Responsibilities are shared  Owners may contribute to the running/operation/control of the business  Shared decision-making  All members have one vote  Profits are shared A Knowledge of the ownership of a co-operative: 1 mark  Owned / financed by workers / customers / members Note: Using the case as an example is repetition and not rewardable as the C mark A and B must be awarded before C mark can be given. Content: A co-operative is a business structure where the workers are the owners. The profits are shared with workers. Workers (owners) do not have to manage the business: they may vote for Directors. In smaller co-operatives, such as worker co-operatives, workers may also manage the business. Exemplar Mark Rationale Members (A) own a co-operative and 3 A, B and C share the running (B) of the business. Co-operatives can be slow when making decisions (C). A co-operative can be owned by 3 A, B and C customers or workers (A) who will each have a vote (B). Because they own it, they are motivated for it to do well (C). A co-operative has shared ownership 2 A and B by workers (A) and responsibilities (B) 1(a)(ii) Exemplar Mark Rationale Members (A) who join together to 1 A only – cannot benefit from bulk buying award C without both A and B A co-operative is made up of people 1 Three points but all who share the responsibilities of the from B, so only one business (B). Each person has a vote, mark. and the decision-making is shared. ARA 1(b)(i) Refer to Table 1.2. Calculate the profit made by FP in April 2022. 4 Rationale Marks Correct answer with or without correct working or $ 4 Three correct stages in calculation 3 Two correct stages in calculation 2 Formula (may be implied) or one correct stage in calculation 1 No creditable content 0 Method 1 Method 2 TR – TVC – TFC Small ($10  400) – ($8  400) – 400  $10 = $4000 $2000 300  $20 = $6000 = $4000 – $3200 – $2000 150  $35 = $5250 = -$1200 (1) TR = $15 250 (1) Medium ($20  300) – ($10  300) – 400  $8 = $3200 $2000 300  $10 = $3000 = $6000 – $3000 – $2000 = $1000 (1) 150  $15 = $2250 Large TVC = $8450 (1) ($35  150) – ($15  150) – $2000 + $2000 + $2000 = $2000 $6000 (1) = $5250 – $2250 – $2000 (TFC) = $1000 (1) –$1200 + $1000 + $1000 = $15 250 – $8450 – $6000 = $800 (1) $800 (1) Method 3 Answer = $800 (4) Small: $2  400 = $800 (1) Medium: $10  300 = $3000 (1) Large $20  150 = $3000 (1) Answer = $6800 – $6000 = $800 (1) 1(b)(i) Common incorrect answers Answer Mark Rationale 800 (with or without working) 4 Does not need $ TR=$15250 3 There is only one mistake. FC = $6000 The candidate has used VC VC = $8 + $10 + $5=$33 per box, not TVC. In all other ways this is correct, so 3 $15250 – $6000 – $33 = marks. $9217 $9217 (no working) 0 A wrong answer, without working is always 0 marks. $4000 – $3200 = $800 3 One mistake – only one (small) share of FC has been $6000 – $3000 = $3000 subtracted. In all other ways (medium) this is correct, so 3 marks. $5250 – $2250 = $3000 (large) $800 + $3000 + $3000 – $2000 =$4800 $4800 (no working) 0 A wrong answer, without working is always 0 marks. TR=$15250 3 There is only one mistake. FC = $6000 The candidate has multiplied VC = ($8  10) + $10  $20) the VC per box by the price, + ($15  35) = $805 not output. In all other ways this is correct, so 3 marks. $15250 – $6000 – $805 = $8445 TR = 15250 1 Although we can guess how Answer = $8445 the candidate got to this number, we do not know for sure. Only mark what is there, so this is only 1 mark (for correct calculation of TR). $8445 0 A wrong answer, without working is always 0 marks. 1(b)(ii) Explain one problem FP may have when deciding how to allocate fixed 2 costs to each box size. Level Knowledge and Application Marks 2 (APP) Explanation of one problem of allocating fixed 2 costs in context 1 (K) Identification of one problem of allocating fixed 1 costs 0 No creditable content 0 Content: Knowledge of problems of allocating fixed costs (FC):  Takes time to allocate the FCs  Takes money to allocate the FCs  Separation of FCs by the box sizes  Consequence of separation of the FCs, such as: – makes a product appear unprofitable – leads to a pricing mistake. Application may include:  Three box sizes  Same FC ($2000) for each box size  Different prices ($10, $20, $35) for each box size  Different variable cost ($8, $10, $15) for each box size  Different sales for each box size (400, 300, 150).  OFR from Q1(b)(i) – allow for wrong numbers if used incorrectly in Q1(b)(i). Note: correct use of any one figure is enough for APP. However, there must be a K to be able to award APP. ARA Exemplar Mark Rationale Fixed costs are difficult to 2 Problem of separation clearly separate based on each box identified and context used. size (K). FP has allocated the same fixed costs each box size (APP). 1(b)(ii) Exemplar Mark Rationale Each box has different fixed 2 Problem clearly identified and costs so it is difficult to context used. separate them (K). However, FP makes each pay a third (APP). FP makes each box pay the 2 APP cannot be awarded same allocation of fixed costs before K, but you can (and (APP), but each box size may should) go back to reward it have different overhead costs once K has been found. (K). It makes the small box look 2 The small box only looks unprofitable (K and APP). unprofitable because of the allocated fixed costs, so that is a problem, in context. 1(c) Analyse how two stakeholders of FP might be affected by the decision 8 to stop selling the small box size. Level Knowledge and Marks Analysis (4 Marks Application (4 marks) marks) 2b Shows 4 Good analysis of 4 understanding of the impact of the two stakeholders APP decision to stop DEV in context + selling the small + size on two APP box stakeholders of DEV FP 2a Shows 3 Good analysis of 3 understanding of the impact of the one stakeholder decision to stop in context selling the small APP DEV box size on one stakeholder of FP 1b Shows 2 Limited analysis 2 knowledge of two K of the impact of AN stakeholders + stopping selling a + K product on two AN stakeholders 1a Shows 1 Limited analysis 1 knowledge of of the impact of one stakeholder K stopping selling a AN product on one stakeholder 0 No creditable content Note: – annotate the first stakeholder in the left margin and the second stakeholder in the right margin. Indicative content AO1 Knowledge and understanding Knowledge of stakeholders may include:  Managers  Owners/shareholders/members  Employees  Customers/consumers  Suppliers  Local community  Government. 1(c) AO2 Application  Managers – of one of the farms  Owners – members of FP co-operative  Employees – 26 workers, workers in distribution centre, labour intensive  Customers/consumers – 400 boxes (weekly so may be 100 customers). May be individual (living on own) customers – highest sales, most in demand by customers.  Suppliers – of farm equipment and consumables  Competitors – who provide seasonal fruit and vegetables, such as other farms and supermarkets  Local community – around FP’s farms and/or distribution centre.  Government – of country G which promotes eating fruit and vegetables AO3 Analysis  Customers – will they have to move to competitors or pay for a larger box – increased price – less disposable income – lower quality of life  Owners/shareholders/members of FP co-operative – if customers move to competitors, then less sales revenue (fixed costs will need to be allocated across two box sizes not three) – lower profitability  Government – less tax revenue (or lower need for subsidies)  Competitors – customers may move from FP (assuming they sell a similar small box size) – decreased revenue – profit  Employees – possibility of less work through loss of sales or possibility of increased work through gain of sales revenue of larger boxes – effect on income and living standards.  Local community – as customers, but also may be affected by pollution (noise and air) from the transportation – fewer small boxes may mean less transportation – lower pollution. Examples of how an answer could develop and how it should be annotated. K APP AN DEV Customers might live on so may find it and leads to a their own, difficult to afford lower standard a bigger box, of living. Shareholders who are the will make which may members of the more/less profit* decrease/increa co-operative se their income. *The small box only looks unprofitable because of the allocation of fixed costs. It makes a positive contribution, so if FP stops selling it, the owners get less profit. Allow answers which state that the owners will make more or less profit ARA 1(d) Evaluate the most important factor affecting the supply of FP’s boxes 11 of fruit and vegetables to customers. Knowledge and Marks Analysis and Marks Application (4 Evaluation marks) (7 marks) Annotation Annotation Justified evaluation 7 EVAL based on arguments in context + EVAL + EVAL Developed 6 EVAL evaluation based on arguments in context + EVAL An evaluative 5 statement based on arguments in context EVAL Shows 4 Arguments based on 4 understanding of two APP two factor affecting DEV factors affecting + supply in context + supply in context APP DEV Shows 3 Argument based on 3 understanding of one factor affecting one factor affecting APP supply in context DEV supply in context Knowledge of two 2 Limited analysis of 2 factors affecting K two factors affecting AN supply +K supply + AN Shows knowledge of 1 Limited analysis of 1 one factor affecting one factor affecting K AN supply supply No creditable content 0 Note: this is a supply question – do not allow any factors which affect demand. 1(d) Knowledge may include:  Any factor affecting supply – price (accept as affecting quantity sold) – costs – indirect tax – subsidies (government grant) – legislation – capacity – weather – technology – productivity – factors of production o land o labour o capital o enterprise. Application may include:  Agriculture  Annual government grant  Minimum wage set to increase  26 workers across farms and distribution centre  Food products  Labour intensive production  Use of Table 1.1  Use of Table 1.2. Analysis may include:  Price: – an increase in price may lead FP to an increase in (quantity) supplied – gain more revenue and increase the profitability of the boxes. – A decrease in price may lead FP to a decrease in (quantity) supplied – gain less revenue and decrease the profitability of the boxes.  Costs: – increase may lead to lower quantity of boxes and/or increase in price – lower profit/profitability. – decrease may lead to high quantity of boxes and/or decrease in price – higher profit/profitability.  Indirect tax: – increase may lead to lower quantity of boxes and/or increase in price – lower profit/profitability. – decrease may lead to high quantity of boxes and/or decrease in price – higher profit/profitability.  Subsidies/grant: a subsidy to the farm is likely to increase the quantity of boxes FP produces and/or decrease the price of FP’s boxes – increased profit. 1(d)  Legislation: such as planning laws which could make it easier for FP to expand and increase production – increasing revue/profit.  Capacity: an increase in FP’s capacity is likely to lead to an increase in the quantity produced of FP’s boxes – increased sales and profit.  Weather: poor weather may adversely affect FP’s ability to produce fruit and vegetables reducing the contents of boxes – decreased revenue/profit.  Technology: more advanced production technology or advances in administration automation may reduce FP’s costs – increasing profitability.  Productivity: increased productivity may lead to an increase in supply – increasing FP’s revenue.  Labour availability: the more workers who are available the more FP can supply fruit and veg – increased profit. Evaluation may include:  A judgement over importance of factors affecting supply of FP’s products  Evaluation of the relative impact of different factors  Elements that the evaluation/judgement might depend upon: level of competition, current pay of workers, elasticity, complements, substitutes etc. ARA Examples of how an answer could develop and how it should be annotated. K APP AN DEV EVAL Weather Is likely to If the which Overall, the affect the weather is increases most important amount of good, FP the supply. factor is the fruit and will weather vegetables increase (EVAL) that FP can the number because FP grow. of products cannot plan for to sell it in advance (EVAL). Labour because This is Which However, this costs the likely to means that depends how minimum reduce the FP will much the wage is set supply of make less climate in to increase products revenue. country G is by 10%. likely to change each year (EVAL).

Question 8

MX Bikes (MXB) MXB is a successful public limited company with many stakeholders. It has been trading for 15 years. It makes a range of bic…

Accepted Answer

2(a)(i) Identify one stakeholder of a business. Identification of a stakeholder may include:  Employees  Managers/directors  Customers  Shareholders  Lenders, e.g. banks  Local community (not public)  Government  Suppliers. Accept all valid responses. Question Answer Marks 2(a)(ii) Explain the term sustainability. 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 sustainability may include:  Sustainability refers to maintaining operations/production at the current level. Allow (but do not require) knowledge of sustainability from an environmental perspective, which may include:  the ability to maintain an environmental balance now and in the future for our planet's natural environment  to conserve natural resources to support the wellbeing of current and future generations. AO2 Application Limited application applies knowledge of sustainability to  current operations/production OR future operations/production. Developed application + applies knowledge of sustainability to  current operations/production AND future operations/production. Application can be made to MXB or any other scenario/context/business/person. Allow application to environmental sustainability. 3 Question Answer Marks 2(a)(ii) Accept all valid responses. Exemplar and annotations Mark Rationale Sustainability is about maintaining production levels . For example, MXB had to make sure its current production of mountain bikes was not damaged by launching the electric scooters . 3 An answer which starts with the knowledge and then applies it to MXB. Keeping the natural environment safe now . A business could start using glass , to reduce dependence on single use plastic . 3 Sustainability from an environmental perspective. Looking after operations today to secure future operations . So, MXB can make sustainable electric bikes in the future . 2 Clear knowledge. Some application to the future, but not now. Sustainability is a social goal about the ability of people to co-exist on Earth over a long time. . 1 A reasonable definition with the idea of now and the future. Sustainability is about looking to the future. 0 Too vague. Some idea of the future, but not about maintaining now. Question Answer Marks 2(b)(i) Refer to Fig. 2.1. Calculate MXB’s market share of the mountain bike market in country J. Formula to calculate market share in words = Sales revenue for MBX Total sales revenue for the market  100 (1) OR Formula to calculate market share in numbers =     $265 000 £1203 000  100 (1) 1 mark for calculating the sales revenue for the total market Total sales revenue for the market = 265 + 85 + 178 + 230 + 185 + 95 + 115 + 50 = $1 203 (000) Market share = (265 / 1203)  100 = 22.028% or 22.03% or 22% 3 Question Answer Marks 2(b)(i) Exemplar and annotations Marks Answer Rationale 3 marks Correct answer 22.028 or 22.03 or 22 Can be expressed as a ratio 0.22:1 Working and % do not matter. Must be three to denote the three marks. Correct rounding must be applied. 2 marks Both of the following:  Correct formula  Correct calculation of total market sales revenue (1203) OR An incorrect answer with one mistake allowing OFR for final stage. OR 0.22 (has not completed final stage to multiply by 100) OR A correct answer from an inverted formula (453.96 – OFR) OR A correct answer with incorrect rounding (ie 22.02) To award two marks, there must be  Two and a OR  One , one and one 1 mark One of the following:  Correct formula  Correct calculation of total market sales revenue (1203) To award one mark, there must be:  One and two 0 marks No creditable content. To award zero marks, there must be  One Question Answer Marks 2(b)(ii) Explain one reason why MXB’s objectives may change. 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 reason why objectives might change may include:  changing internal factors, e.g. new Managing Director  changing external factors, e.g. new competitors or technological changes  the achievement of previous objectives. AO2 Application Limited application , applies knowledge to MXB once. Developed application + applies knowledge to MXB twice. Application of a reason may include:  MXB has traded for 15 years  Public limited company / shares sold publicly  Market leader for mountain bikes  Target market are high-income leisure users  Sold in limited number of specialist bicycle shops  Use of Fig 2.1 3 Question Answer Marks 2(b)(ii)  New to electric scooter market, since launching a new electric scooter  Sales revenue for mountain bikes fell by 12% over the past year  Static demand for mountain bikes. Accept all valid responses. Exemplar and annotations Mark Rationale Changing demand , MXB’s sales have declined by 12% despite market demand remaining static . 3 A reasonable reason for objectives changing, applied using the data from the text (12% decline and market remaining static). MXB might lose market share to a competitor such as PE which has the second largest market share with 19% . 3 A change in the market is reasonable and reference to the data is . The table can provide both s. An external shock like a pandemic might mean that people are stuck indoors all the time. This would reduce the sales of MXB’s key product of mountain bikes. 2 Knowledge of a reason and applied to MXB’s main product. If MXB had a new Managing Director they are likely to come in with their own aims and objectives. This would mean that the business might change direction or focus on another market entirely. This could be the key to future sales and success for MXB. 1 A new MD would be a reason, but the rest is not specifically related to MXB. Objectives set the direction for the business and allow stakeholders to know where the business is going. Without objectives MXB is unlikely to remain successful, despite it being the market leader . Rani reviews the objectives regularly . 0 Although there is some relevant context, there is no knowledge of a reason why objectives may change, so no marks can be awarded. Question Answer Marks 2(c) Analyse one advantage and one disadvantage to MXB of growing by launching a new product range of electric scooters. 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. Annotate the advantage in the left-hand margin and the disadvantage in the right-hand margin. 8 Question Answer Marks 2(c) Indicative content AO1 Knowledge and understanding Knowledge of advantages of launching a new product / growth / increasing product portfolio (max 1 s), may include:  Increase revenue / sales  New target market  Strengthen brand image  Spread risk  Reduce average costs. Knowledge of disadvantages of launching a new product / growth / increasing product portfolio (max 1 s), may include:  Increase costs  Risk of new/unknown market  Risk of damaging brand image  Lack of market research / unknown market. AO2 Application Max one for application in the advantage and max one for application in the disadvantage.  MXB’s current market is high quality mountain bikes  Current target market is high-income leisure users  New target market is urban youth market  Market for e-scooters is expanding in country J  Use of Fig 2.1  MXB has (successfully) traded for 15 years in current market  $265 000 sales revenue  Static demand for mountain bikes  Mountain bikes are currently sold in specialist bicycle shops  Public limited company / shares sold publicly  Sales revenue for mountain bikes fell by 12% over the past year Question Answer Marks 2(c) 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. Analysis of advantages may include:  A way to enter the electric scooter market. Electric scooters are becoming increasingly popular.  MXB can develop new skills and product knowledge regarding the electric scooter market.  May benefit from economies of scale – the products may use similar materials/components.  Internal/organic growth is generally less expensive than external growth.  Electric scooters target a different market segment which helps ‘spread risk’. Analysis of disadvantages may include:  Urban youth market may not be attracted to MXB brand as the brand is associated with mountain bikes.  The electric scooter market may be dominated by well-known/larger competitors so difficult to enter.  MXB specialises in mountain bikes so has no knowledge/experience of the electric scooter market.  MXB may need to purchase expensive new equipment and train its staff so they can create the electric scooters.  High research and development costs from creating a new product.  Internal/organic growth is generally a slower way to grow a business than external growth. Accept all valid responses. Question Answer Marks 2(c) Exemplar and annotations AO1 Knowledge AO2 Application AO3 Analysis Exemplar of an advantage Annotations for the advantage should be placed in the left-hand margin. The new product may help MXB increase sales by targeting a totally new market of urban youths . This could increase the brand awareness of MXB in this new market which is likely to allow MXB to survive if the mountain bike market goes into decline . Exemplar of a disadvantage Annotations for the disadvantage should be placed in the right-hand margin. However, this may risk damaging MXB’s reputation in the mountain bike market, where it has been established for 15 years . This could lead to MXB losing even more sales of mountain bikes which may reduce the overall profitability of the business . Question Answer Marks 2(d) Evaluate how MXB can change its marketing mix to extend the product life cycle of its range of mountain bikes. 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. 12 2(d) Level AO1 Knowledge and understanding 2 marks AO2 Application 2 marks AO3 Analysis 2 marks AO4 Evaluation 6 marks 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. Indicative content AO1 Knowledge and understanding Knowledge of changing elements of the marketing mix (max 2 s), including:  The marketing mix (four Ps)  Product: new, adapt etc, including knowledge of product portfolio analysis (eg PLC, Boston Matrix)  Price: maintain, increase, reduce etc.  Place: new channels, new distribution methods etc.  Promotion: advertising, digital, direct etc. AO2 Application Limited application applies knowledge of the marketing mix to MXB’s product life cycle of mountain bikes once. Developed application + applies knowledge of the marketing mix to MXB’s product life cycle of mountain bikes twice.  Market leader for mountain bikes  Sales revenue for mountain bikes fell by 12% over the past year  MXB has traded successfully for 15 years  Public limited company / shares sold publicly Question Answer Marks 2(d) Use of Fig 2.1  Market/demand for mountain bikes is currently static  Mountain bikes are currently sold in specialist bicycle shops 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.  Increased promotion – promotions can be expensive and may have minimal impact if the market has reached the maturity stage of the product life cycle and/or other rivals are spending a lot on promotions. Promotions will offer a short-term boost to demand and can increase brand recognition, thereby supporting sales of other types of bikes  New models could be introduced – updating the mountain bike range may stimulate new sales. However, the R&D involved with developing new products could be expensive, and the additional sales may not justify the expenditure.  New brands could be created to help reposition the products.  The price of the mountain bikes could be changed to help stimulate the demand. The pricing strategy could be changed, e.g. if a price skimming approach is used the price could be lowered, or a promotional price discount offered to generate a short term boost in demand. Although the sales revenue generated for every product sold will reduce, the reduction should lead to increased demand which will increase market share and may boost profitability if a large enough increase in the volume sold is achieved.  New markets could be targeted, e.g. new market segments and/or new geographic areas. MXB could sell its mountain bikes to additional countries.  The mountain bikes are currently sold in specialist bicycle shops. MXB could sell its mountain bikes in additional shops and/or online. AO4 Evaluation Annotate evaluative judgements in the left -hand margin and evaluative comments in the right-hand margin. 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.  The most appropriate extension strategy depends on the budget available. After spending money to develop and launch the new range of scooters the business may not have as much finance available.  Will demand for mountain bikes fall in the future? Is the static demand for the product generally a sign that the product has entered the maturity phase of the product life cycle?  Should MXB focus its resources on electric scooters as this market is expanding? Question Answer Marks 2(d)  Is market share the most important measure of success, or is profitability and/or spreading risk from a diversified product portfolio more important?  The extension strategy may generate a short-term boost to sales/market share, but will it be sustained in the long- term?  Does the MXB brand extend from mountain bikes to electric scooters? Accept all valid responses. Exemplar and annotations MXB could reduce the price of their mountain bikes, which may lead to an increase in sales . However, since MXB’s consumers are high-income leisure users , a lower price may damage the brand image . Alternatively, MXB could expand their distribution channels and sell in more places than a limited number of specialist bike shops , for example through their own website. Overall, the better solution would be to change the distribution channels as this would be unlikely to damage the brand reputation . MXB already has the highest market share, so it has the most to lose by reducing price, but very little lose by selling on their own website . However, whether this is enough may depend on the actions of the competitors . If PE, the second largest producer, reduces its price, then MXB may have no choice but to also lower their prices to maintain their market share AO1 – 2 marks AO2 – 2 marks AO3 – 2 marks AO4 – 6 marks TOTAL – 12 marks

Question 9

Natalia’s Naturals (NN) NN is a small business owned by Natalia. NN produces and sells a range of natural skincare products. In 2020, Natal…

Accepted Answer

2(a)(i) Identify one internal stakeholder of a business. 1 AO1 Knowledge and understanding Indicative content Responses may include: • employees • owners • shareholders • managers • directors • investors Accept all valid responses. 2(a)(ii) Explain the term ‘distribution channels. 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 (max 1 mark), including: • stages/routes/path a good/service passes through to the final buyer/customer/consumer • how a product or service gets from the producer to the final customer/from supplier to consumer AO2 Application Explanation of distribution channels (max 1 mark), including: • can be direct/indirect/digital • help businesses access wider markets • efficient for getting products to customers • convenient for customers • reduce costs through specialisation • help gain brand recognition 2(a)(ii) Application for distribution channels (max 1 mark), including: • vary according to business type • business can use more than one channel such as selling through website and retail shop • examples of distribution channels such as: producer sells direct to the consumer involves intermediaries such as wholesalers/retailers/agents digital platforms/websites/apps/social media • example of a business distribution channel Accept all valid responses 2(b)(i) Refer to Table 2.1. Calculate the break-even level of output of the new face cream. 3 Indicative content formula: break-even output = fixed costs / selling price-variable costs (contribution per unit) (1) calculation of contribution per unit = $5 – $2 = $3 (1) calculation of output = 12 000/3 (1) = 4000 units Answer = 4000 (3) OFR applies 2(b)(ii) Explain one limitation to NN of break-even analysis. 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 limitation (max 1 mark), including: • may be based on unrealistic assumptions • price can change • fixed costs can change • variable costs do not always stay the same • some costs semi-fixed/variable • sales not the same as output • hard to calculate for a single product in a business. • does not take account of changes in the external environment 2(b)(ii) Dis AO2 Application Explanation of a limitation (max 1 mark), including: • leads to inaccurate analysis • assumes all units produced are sold • example of changing fixed costs such as rent/salaries/investments • example of changing variable costs • example of semi-fixed/variable costs • example of difference between sales and output such as unsold inventory/returns/discounts • products may have different profit margins Context applied to a limitation (max 1 mark), including: • answer to 2(b)(i) (OFR) • price of $5 • sells other products that contribute to fixed costs • use of table 2.2 • rents workshop • competitive market Accept all valid response 2(c) Analyse one advantage and one disadvantage to NN of being a small business. 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 relevant • Application of two relevant Limited analysis points is used to answer the points to a business context. • Limited analysis that identifies question. • Application of one relevant connections between causes, • Knowledge of one relevant point to a business context. impacts and/or consequences point is used to answer the of two points. question. • Limited analysis that identifies connections between causes, impacts and/or consequences of one point. 0 0 marks 0 marks 0 marks No creditable response. No creditable response. No creditable response. Annotate the advantage in the left-hand margin and the disadvantage in the right-hand margin. 2(c) Responses may include: AO1 Knowledge and understanding Knowledge of an advantage (max 1 mark), including: • more flexible and adaptable to changing customer needs or market conditions • more personal and responsive customer service • lower overheads and operating costs • easier to control and manage • able to target niche markets or segments Knowledge of a disadvantage (max 1 mark), including: • lower economies of scale • high unit costs. • low bargaining power • difficult to be competitive • may not be able to fulfil all orders • smaller customer base • fewer distribution channels • limited funding opportunities AO2 Application Max one for application to an advantage and Max one for application to a disadvantage • needs to sell 4000 units of new product to break even (OFR from 2(b)(i)) • high fixed costs of one product such as the new face cream $12 000 • niche market for natural ingredients in skincare • competitive market with large chains/established brands • can quickly adapt products for different skin types • hand-made products • Natalia manages all tasks/no employees • Natalia works long hours/stressed and exhausted 2(c) 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. Advantages, including: • can be more flexible and adaptable as a small business – such as by being able to modify its products/prices/promotions/places quickly and easily according to customer feedback or market trends. • increase customer satisfaction – leading to customer loyalty/retention. • reduced fixed costs – more profit Disadvantages, including: • small market and high costs – lead to a lower profit margin • less potential for growth – limited access to capital • difficult to compete in the market – less brand recognition • limited sources of finance – difficult to attract investors/obtain loans Accept all valid responses 2(d) Evaluate whether outsourcing is the most suitable way to increase NN’s production capacity. 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 is relevant key term(s) relevant point(s) to connections 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 with term(s) and/or to the business connections limited supporting comment/evidence. factor(s) is used to context. between causes, • An attempt is made to balance the answer the question. impacts and/or arguments. consequences. 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 – of outsourcing (max 2 s), including: • the process of contracting out a business activity or function to another business/organisation • pay other businesses to take on some tasks • can help reduce unit costs • a business can concentrate on what it does best • can reduce risks • specialists skilled in function • specialist facilities AO2 Application Limited application applies knowledge of outsourcing to NN once. Developed application + applies knowledge of outsourcing to NN twice. • growing demand for its products • small business • Natalia works long hours/stressed and exhausted • NN’s values/standards • Natalia’s passion and satisfaction as an entrepreneur • competitive market • loyal customer base • narrow distribution channels • organic ingredients • natural, handmade products • local suppliers • small, rented workshop • answer to 2(b)(i), required output/sales to break-even 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 or a two-sided analysis. Arguments for outsourcing: • outsourcing allows a business to scale up production – no need to invest in larger premises or equipment. • would free up time to focus on other tasks – like product development/marketing. • external manufacturers may have better equipment and processes – leading to improved efficiency/product consistency. • this could enhance reputation – supporting growth/sales Arguments against outsourcing: • could compromise product quality – resulting on dissatisfied customers • customers may perceive outsourced products as less personal – reducing demand • may conflict with values – especially if the external firm does not share the same environmental standards. • may involve high initial costs or long-term contracts- risky for a small business with limited financial resources. 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. Outsourcing could help NN expand production and reduce Natalia’s workload, but it also poses risks to quality, brand identity, and cost control. A hybrid approach may be more suitable – Natalia could outsource part of the production while maintaining control over key processes. This would allow NN to grow sustainably while preserving its unique brand values. Other points might include: • depends on various factors – such as her objectives, resources, capabilities, market conditions • judgement over the most important/influential factor affecting growth of NN • elements that the judgement could depend upon, such as losing control over the quality and consistency of the products, compromising on the natural and organic ingredients used in the products, or damaging the reputation and image of NN • judgement on the implications for cost and NN’s ability to compete with big brands • weighing up of the factors and their relative influence on NN’s options Accept all valid responses

Question 10

Law Advice Forum (LAF) Drake has a law degree and works for a partnership of lawyers during the day. Drake owns a website that gives free l…

Accepted Answer

2(a)(i) Identify one external stakeholder of a business partnership. 1 Responses may include: Knowledge of an external stakeholder of a partnership • Customers / consumers • Suppliers • Competitors • Government • Local community • Potential investors/owners • Banks Do not accept owners, investors or shareholders, as these are internal stakeholders. Accept all valid responses. 2(a)(ii) Explain the term outsourcing. 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 outsourcing (max 1 mark), including: • Using another business (a third party) to undertake a business function • Using an external business/producer to undertake a business function AO2 Application Limited application applies knowledge of outsourcing to a business context Developed application + applies knowledge of outsourcing to a business context • Examples of an outsourcing function; manufacturing, accounting and finance, HRM etc. • Allow explanations of reasons for outsourcing; lack of skills, cost advantage, increasing capacity etc. • Not using the business’s own resources; employees, machines etc. Accept all valid responses. 2(a)(ii) Exemplar and annotations Mark Rationale Another business producing for you . To increase capacity 3 Knowledge of outsourcing, a by using the other business’s facilities . reason to outsource and explanation of how this might happen. Using a third party to do tasks for your business , such as 3 Knowledge of outsourcing, with an outsourcing HR tasks if they can do it cheaper . example of an outsourced task and a reason. Contracting another business to do a job such as marketing 2 Knowledge of outsourcing and an example of an outsourced task. Using another business to do a business function . Drake uses 1 Knowledge of outsourcing. Do not outsourcing for some areas of his website. credit copied sections from the case. Partnering with another business to sell goods. 0 This is not outsourcing – this could be a distribution agreement. Drake uses another business for some areas of his website, such 0 No knowledge of outsourcing. Do as keeping it up to date. not credit copying of the case material. 2(b)(i) Refer to Table 2.1. Calculate the profit variance for Drake’s website in the previous month. State whether the variance is favourable or adverse. Formula: Actual – Budget = Variance (1) OR Budget – Actual (1) Calculation: Variance = $3250 – $3900 = $650 (1) Adverse (1) – only award if this is evidenced by the working/answer Ans = $650 adverse (3 marks) Accept 16.67% (must include % sign and be correctly rounded, i.e. 17%, 16.7% etc.) adverse as a correct answer Examples and annotations Marks Answer Rationale 3 marks Correct answer Working and $ do not matter. $650 adverse Award one to denote the three marks. Accept 16.67% adverse Do not award the minus sign as adverse. 2 marks • A correct answer with incorrect or To award two marks, there must be missing variance (650) • Two and a OR • One , one and one 1 mark One of the following: To award one mark, there must be: • Correct formula (can be implied) • One and two 0 marks No creditable content. To award zero marks, there must be • One 2(b)(ii) Explain one way Drake could use the budget data in Table 2.1. 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 way to use budget data (max 1 mark), including: • measuring performance • allocating resources • controlling • monitoring a business • decision making (or examples of decision making, e.g. pricing, costing) • planning. AO2 Application Explanation of a way to use budget data (max 1 mark), including: • measuring performance; by comparing actual data with budgeted data • allocating resources; by allocating more budget to priorities • controlling; by allocating less budget to low priority functions • monitoring a business; to see areas of a business with greater variances. 2(b)(ii) Context applied to Drake/LAF (max 1 mark), including: • Drake ran his website in the weekends and evenings • Drake gave free legal advice • LAF still provides free legal advice but paid legal services • Drake was the only internal stakeholder of his website • Drake uses outsourcing • Use of data in Table 2.1 • Drake has expanded LAF • Will employ five lawyers • Will employ three administrators • Labour intensive business • Sole trader Accept all valid responses. Exemplar and annotations Mark Rationale To identify variances of areas where LAF is overspending 3 A way identified, explained and in leading to the adverse profit variance of $650 . context, so all 3 marks. To monitor the business to decide if Drake should continue 2 A way identified, and in context for outsourcing . Drake/LAF. To know how much money is left 1 Identification of a way. To grow the business 0 No specific way identified. 2(c) Analyse two possible limitations for LAF as a labour intensive operation. 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 relevant • Application of two relevant Limited analysis points is used to answer the points to a business • Limited analysis that question. context. identifies connections • Knowledge of one relevant • Application of one relevant between causes, impacts point is used to answer the point to a business context. and/or consequences of question. two points. • Limited analysis that identifies connections between causes, impacts and/or consequences of one point. 2(c) Level AO1 Knowledge and AO2 Application AO3 Analysis understanding 2 marks 4 marks 2 marks 0 0 marks 0 marks 0 marks No creditable response. No creditable response. No creditable response. Annotate the first reason in the left-hand margin and the second reason in the right-hand margin Answers must be about the limitations of operating as a labour intensive business, not simply the limitations of managing/having labour. Responses may include: AO1 Knowledge and understanding Identification of a limitation of operating as a labour intensive operations , including: • High labour cost • Ongoing costs of labour (wages, salary, health care, training, induction etc.) • Inconsistent quality – human error • Labour relations problems • Potential shortage of skilled employees • Slower production 2(c) AO2 Application Application of the advantage to LAF , including: • Drake ran his website in the weekends and evenings • Drake gave free legal advice • LAF still provides free legal advice but paid legal services • Drake was the only internal stakeholder of his website • Drake uses outsourcing • Use of data in Table 2.1 • Drake has expanded LAF • Will employ five lawyers • Will employ three administrators • Developed a business plan • All employees would work in the same office in city G • Employees will need to be able to use IT equipment • Sole trader AO3 Analysis Limited analysis of a limitation of operating as a labour intensive business – developed analysis , including: • High labour cost: increasing the pressure on the business to increase revenue – so that it does not make a loss. • Ongoing costs of labour (wages, salary, health care etc.); which may make the business unprofitable – leading to bankruptcy. • Inconsistent quality: leading to customer dissatisfaction and being sued in court – increasing business costs. • Labour relations problems: workers may not get on together leading to high labour turnover – which may increase the business costs of recruitment and training and reduce profit / lead to loss. • Potential shortage of skilled employees; so, the business is unable to meet demand and loses sales – reduced profitability. Accept all valid responses. 2(c) Exemplar and annotations AO1 Knowledge AO2 Application AO3 Analysis High wage costs , of the five lawyers , Which will increase the total costs of the business leading to lower profit . A slower service . Because LAF will be using five Which may reduce demand for LAF’s human lawyers , services and therefore decrease the profit . 2(d) Evaluate the most important responsibility that Drake has as the owner of LAF. 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 relevant key term(s) relevant point(s) to connections judgement/conclusion is and/or factor(s) is the business between causes, made. used to answer the context. impacts and/or • Developed evaluative question. consequences. comments which balance some key arguments. • 2(d) Level AO1 Knowledge AO2 Application AO3 Analysis AO4 Evaluation and understanding 2 marks 2 marks 6 marks 2 marks 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 term(s) and/or to the business connections is made with limited factor(s) is used to context. between causes, supporting answer the question. impacts and/or comment/evidence. consequences. • An attempt is made to balance the arguments. 0 0 marks 0 marks 0 marks 0 marks No creditable No creditable No creditable No creditable response. response. response. response. Responsibility is the duty or state of being accountable for something, meaning Drake has the obligation to take care of it or to ensure this is done. Do not reward characteristics/qualities of an entrepreneur – it must be something that an owner/manager is responsible for in a business. 2(d) Responses may include: AO1 Knowledge and understanding Knowledge of owner responsibilities (max 2 marks), including: • To create a business plan • To develop aims, objectives, strategy and tactics • To keep track of finances and accounting • To manage marketing and sales • To make sure the business is operating legally and compliantly • Ensure excellent customer service • To employ and co-ordinate human resources • Manage day-to-day operations • Plan new initiatives • To train the employees • To facilitate operations • To oversee purchasing AO2 Application Application to Drake/LAF , including: • Drake ran his website in the weekends and evenings • Drake gave free legal advice • LAF still provides free legal advice but paid legal services • Drake was the only internal stakeholder of his website • Drake uses outsourcing • Use of data in Table 2.1 • Drake has expanded LAF • Will employ five lawyers • Will employ three administrators • Labour intensive business • Developed a business plan • All employees would work in the same office in city G • Employees will need to be able to use IT equipment • Sole trader. 2(d) AO3 Analysis Limited analysis of owner responsibilities – developed analysis , including: • To create a business plan; to give the business direction so that it can operate efficiently – reduce costs / increase revenue. • To develop aims, objectives, strategy and tactics – to give the business direction so that it can operate efficiently – reduce costs / increase revenue. • To keep track of finances and accounting; so that the business does not go into debt – and go bankrupt. • To manage marketing and sales; so that the business can gain revenue – to increase profit. • To make sure the business is operating legally and compliantly; so that the business is not sued – which could increase the costs. • Ensure excellent customer service; so that customers return – increasing revenue. • To employ and co-ordinate human resources; so that the business can operate efficiently – reducing costs and increasing profitability. • Manage day-to-day operations; to enable to business to meet its customers’ needs – increasing revenue and repeat purchases. • Plan new initiatives; to expand the business – increasing revenue. • To train the employees; to increase customer satisfaction – increasing profit. • To facilitate operations; to enable revenue to be created – increasing profitability. • To oversee purchasing; to enable efficient operations – reducing average costs and increasing profitability. AO4 Evaluation Limited evaluation of the most important owner responsibility – developed – developed in context , including: • A judgement of the most important responsibility of Drake as the owner of LAF. • What the judgement may depend upon; Drake’s own objectives/skills, the likely success of LAF as it expands, the finances available to Drake etc. • It is unknown what the legal structure of LAF is – as a shareholder, Drake would have different responsibilities than a sole trader. • Whether Drake is able to expand LAF as he plans to – his responsibilities as a ‘one-person’ business are different than his responsibilities as LAF grows and employs more people. • The type of legal advice that Drake may be providing and the laws pertaining to legal advice in the countries where LAF operates. • A judgement about the importance of one responsibility or a weighing up of the comparative importance of more than one responsibility. Accept all valid responses 2(d) Exemplars for awarding evaluation Evaluate the most important responsibility that Drake has as the owner of LAF. L1 (limited supporting L2 (developed supporting L3 (developed supporting evidence) evidence) evidence with context) The most important responsibility is The most important responsibility is The most important responsibility is to pay the lawyers. to pay the lawyers because without to pay the five lawyers because them, the business has no service without them, the business has no to provide and will go bankrupt. service to provide and will go bankrupt. The most important depends on the The most important depends on the The most important depends on the size of the business. size of the business. As a small size of the business. As a sole business, Drake might need to trader, Drake might need to focus focus on making sure there is on making sure there is enough enough finance. When the finance. When the business grows, business grows, this might change this might change to customer to customer satisfaction. satisfaction.

Question	Answer	Marks	From
1	see sheet	30	9609/22 May/June 2018
2	see sheet	30	9609/21 Oct/Nov 2018
3	see sheet	30	9609/23 Oct/Nov 2018
4	see sheet	30	9609/21 Oct/Nov 2020
5	see sheet	30	9609/22 Feb/March 2021
6	see sheet	30	9609/21 Oct/Nov 2021
7	see sheet	30	9609/22 May/June 2022
8	see sheet	30	9609/22 May/June 2023
9	see sheet	30	9609/21 Oct/Nov 2025
10	see sheet	30	9609/22 Oct/Nov 2025

Stakeholders in a business — Paper 2 · A Level Business (for first examination in 2016) 9609

Questions11 pages

Mark scheme10 answers

Another paper, or another topic

Questions as text

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