Human resource management (HRM) — Paper 2 — A Level Business (for first examination in 2016) 9609 topical questions

Question 1

Perfect Pizza (PP) Paul is a chef. He is looking to set up a new pizza restaurant in his local town in country A. He has done some research…

Accepted Answer

Question Answer Marks 1(a)(i) Define the term ‘long term sources of finance’ (lines 18–19). 2 Knowledge and Application Mark A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 A correct definition should cover the following: • Understanding of ‘source(s) of finance’ – any reference to where money/capital/cash etc. comes from i.e. reference to a source of finance, such as a mortgage or equity (i.e. shares, debentures) • Understanding of ‘long term’ – this can be reference to any time period more than a year Exemplar Mark Rationale When a business gets money from a Both elements 2 bank for more than a year covered Finance for more than a year, e.g. Both elements 2 Mortgage covered Understanding of Money that the business gets from a source of finance but bank that does not need to be paid 1 too vague about long back quickly term An understanding of A way to get new cash into the source of finance but business that does not have to be 1 ‘long time’ is too paid back for a long time vague and partly tautological. A long term source of finance is a Tautological, showing source of finance that does not have 0 no understanding. to be paid back for a long time. 1(a)(ii) Briefly explain the term ‘diversity and equality’ (line 14). 3 Award one mark for each point of explanation: Example or some other way of showing good understanding, i.e. A development of an example used C 1 mark in B, link to motivation, link to culture, legal requirements etc. Understanding of diversity – different groups of B 1 mark employees, or an example of different groups Understanding of equality – no discrimination in the A workplace – do not just reward ‘are equal’ there must 1 mark be some understanding of treating people equally No discrimination in the workplace, for example, against different groups of employees. Can be used to develop a reputation as a good employer. Helps attracts and keep employees. Exemplar Mark Rationale Getting rid of discrimination between different groups of worker, and 3 All three elements treating them equally which is a legal requirement Treating all workers the same way no matter what differences they might have, such as men and women 3 All three elements should be paid equally if they do the same job Giving employees equal rights for different people, such as different 2 A and B mark races Equal rights for different races 1 B mark only Everybody has the same treatment 1 A mark only 1(b)(i) Refer to Figure 1. The total value of market sales in country A was 3 $50m. Calculate the total value of sales for the three largest businesses. Mark Rationale Correct calculation the total value of sales for the three largest businesses (with or without working or $ or m) 3 OR Correct calculation of all three companies value of sales ($14m, $11m and $10m) (with or without working or $ or m) Correct calculation of two of the top three companies value of 2 sales (with or without working or $ or m) Correct formula or correct calculation of % share of top three companies (70%- with or without working or %) 1 OR Correct calculation one of the top three companies value of sales (with or without working or $ or m) 0 No creditable content Total value of market sales x Percentage share of market Top 3 = 28% + 22% + 20% = 70% $50m × 70% (70/100) = $35m Common incorrect answers Answer Mark Rationale Allow an answer of 35 with or without 35 3 $ or m (no working required) 28% = $14m 2 Two correct 22% = $11m Allow this for 1 mark, even without 70 1 working. Any variation of 70 worth 1 mark 28% = $14m 22% = $11m 3 All correct but no total 20% = $10m 1(b)(ii) Explain two appropriate methods (other than market share) that could 3 be used to measure the size of PP. Level Knowledge and Application Mark 2b Knowledge and understanding of TWO methods 3 (APP+APP) to measure the size of PP Knowledge and understanding of ONE method 2a (APP) 2 to measure the size of PP Knowledge and understanding of method(s) to 1 (K) 1 measure the size of a business No creditable content 0 K marks can only be awarded ONE mark in total, no matter how many instances Context and content is likely to come from: • Number of employees, national chain with 10% of the national market is likely to have a large number of employees therefore a large business • Revenue, e.g. chain 1 has 15% of $50 m which is $5 m, this would be a large business • Capital employed Method of measurement (K) Possible context (APP) National chain with 10% of the national Number of employees market is likely to have a large number of employees therefore a large business Use of figures from Fig 1 to show Revenue/Sales turnover comparative size Reference to the likely capital/assets that Capital/assets employed a pizza business might have e.g. tables, kitchens etc. Pizza-shops/restaurants – must be Number of outlets specific to PP, not generic Number of people who eat in the pizza- Number of customers restaurants Sales volume Number of pizzas/meals sold 1(c) Analyse two factors Paul should consider when selecting a restaurant 8 manager. Level Knowledge and application Analysis Shows understanding of Good analysis of TWO TWO factors of selection 4 factors of selection in 4 in context context 2 Shows understanding of Good analysis of ONE ONE factor of selection 3 factor of selection in 3 in context context Shows understanding of Limited analysis of TWO 2 2 TWO factors of selection factors of selection 1 Shows understanding of Limited analysis of ONE 1 1 ONE factor of selection factor of selection 0 No creditable content Highlight the factors as you mark One factor analysed in context, max 3+3 Contextual analysis likely to come from: • Need to have customer service experience; marketing skills, communication etc. • Will be in charge of other employees; management skills • Will require skills in inventory management • New business so may need to be willing to work on lower salary Examples of Examples of Examples of possible factors of application/context analysis selection Any relevant restaurant management Better qualified manager qualifications, customer → improved customer Qualifications service qualifications, service → more sales → inventory management more profit etc« Diversity and equality Lives near restaurant → Local town in country A – more likely to be on time Location will need to live here or to work → better staff can relocate. management Good inventory Customer service, management → less Skills supervising employees, wastage in the restaurant inventory management. → lower costs → increased profit In other (pizza) restaurants, one of the Worked in another PP competitors, other PP restaurant → knows the restaurants. Experience procedures → less training Experience in customer needed → lower costs → service, supervising increased profit employees, inventory management. Cost 1(d) Evaluate whether Paul should enter into a franchise agreement with 11 PP. Knowledge and Analysis and Evaluation Mark Mark Application (4 marks) (7 marks) Justified evaluation based 7 on arguments in context Developed evaluation based on arguments in 6 context An evaluative statement based on arguments in 5 context Argument (two sided) based on the impact(s) of Paul entering into a 4 franchise agreement with Shows understanding of PP PP entering into a 3–4 Argument (one sided) franchise agreement based on the impact(s) of Paul entering into a 3 franchise agreement with PP Limited analysis of TWO impacts of entering into a 2 franchise agreement Shows knowledge of 1–2 franchises Limited analysis of ONE impact of entering into a 1 franchise agreement No creditable content Impacts can be positive or negative – a balanced argument will cover both positive and negative impacts. Annotate analysis and arguments FOR in the left hand margin and AGAINST in the right hand margin Context/content: Advantages • less risk to Paul as he benefits from the expertise and reputation of PP brand • Assistance from PP so Paul makes less mistakes in his business- decisions such as the policies for diversity and equality; • Access to local marketing and the PP website will help generate sales; Disadvantages • Up-front costs to purchase the franchise ($40 000); • The royalty fee of 5% may be a drain on his cash flow • Clash of ideas as Paul will have to follow the criteria set out in his franchise agreement – this may limit his freedom to make decisions. Evaluation is likely to come from a candidate: 1. Judging whether the advantages outweigh the disadvantages 2. Weighting their response, for example, “this is the main advantage because” is likely to lead an evaluative response. An example of how an answer could develop and how it should be annotated. ANAN K APP AN EVAL (one sided) Which increases Overall Paul the costs of should enter into starting up a a franchise An independent Which increases restaurant to agreement restaurant would the costs of Paul and may because the cost $25 000 staring up a make it harder to extra sales are whereas a PP restaurant to break even or likely to cover the franchise is Paul. (AN) survive in his first extra costs. $40 000. (APP) year of trading. (EVAL – (ANAN – one statement) sided) However he should do some market research It is expensive to to see just how set up a much more the franchise. (K) However the sales would be in reputation of PP a PP franchise. National above may gain more (EVAL – the line Which is likely to sales in the first developed) promotion will be increase sales in year making it provided within the first year. more likely that If the extra sales the setup cost. (AN) he would break did not cover the (APP) even and extra costs then survive. (ANAN – he would two sided) probably be better opening the independent restaurant. (EVAL – justified)

Question 2

Designer Clothing (DC) DC is a medium sized private limited company. DC has three main shareholders. It has been trading for ten years. DC …

Accepted Answer

Question Answer Marks 1(a)(i) Define the term ‘shareholders’ (line 1). 2 Knowledge and Application Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 A correct definition must show the difference between a shareholder and an owner / (part) owner of a company, has limited liability etc. A shareholder is the owner/part owner of a company/incorporated business. Can be private or public limited company. A shareholder tends to buy shares and sell when they increase in value. A shareholder will expect dividends from the profits as a return on their investment. A shareholder has voting rights at the AGM and invests in a business/has voting rights. Answer Mark Reason A shareholder is a stakeholder 1 Partial definition A shareholder is an owner of a Could be a sole trader 0 business A shareholder is part-owner of a Refers to part ownership and company company 1 so not a sole trader or partner but only partial A shareholder invests money in a Two correct elements 2 business and receives dividends 1(a)(ii) Briefly explain the term ‘focus group’ (line 22). 3 Award one mark for each point of explanation: Example of some other way of showing good understanding, i.e. 1 mark Accuracy can be affected by bias, Opinions may not be C representative of the general population/target market. Not statistically significant. Can aid decision making B Consumers/potential consumers/target market/customers 1 mark A Primary/qualitative/opinions/feedback/led by interviewer 1 mark This is a method of primary research. Used by businesses to get a group of customers together for feedback on a product or service. Can be expensive. Gives more accurate and qualitative data. Allows dialogue during the research process. Accuracy can be affected by bias. Opinions may not be representative of the general population/target market. Not statistically significant. Interviewer is present to lead discussion. Answer Mark Reason A group of people 0 Too vague A group of customers 1 B mark for customers An interviewer carries out primary 2×A points with ‘interviewer’ and research on a group of customers ‘primary research’ and a B mark for 2 customers. No C element so 2 marks Primary research on potential All 3 – A, B and C elements consumers to help make decisions 3 about a product. 1(b)(i) Refer to Table 1 and other information. Calculate the price of the dress for Lydia. 3 Mark Rationale 3 marks Correct calculation of price (with or without working or $) 2 marks Correct calculation* of total costs (with or without $) 1 mark Correct formula or correct calculation* of wages 0 marks No creditable content (FC+VC) + mark-up = Price Wages = 20 hours × $10 = $200 Total costs = $200 + $250 + $50 = $500 Add 50% = $250 So selling price will be $750 *Working required or explicit identification of TC/wages Common incorrect answers Answer Mark Rationale 10 × 20 = 200 1 Correct calculation of wages $200 + $250 + $50 = $500 2 Total costs calculated with working 500 × 150% 2 Correct calculation, answer missing FC + VC then add mark up 1 Correct formula $500 0 A wrong answer with no working $200 0 A wrong answer with no working Wages=200 1 Explicit identification of wages TC=500 1 Explicit identification of TC 1(b)(ii) Explain one payment method (other than time based) that DC could use to pay its 3 employees. Level Knowledge and Application Marks 2 (APP) Explanation of a payment method other than time based 3 in context 1b (KK) Explanation of a payment method other than time based 2 1a (K) Identification of a payment method other than time based 1 0 No creditable content 0 Context and content is likely to come from: • Piece rates, e.g., employees could be paid per pair of trousers in the new batch production • Salary where dress designers are paid a an annual salary which is paid monthly • Commission for designers per dress (% of the value e.g. of the $750) • Bonuses linked to the profits paid for DC, more sales of designer clothing will lead to bonuses being paid • Similar approach for performance related pay and profit sharing. Context – designers, employees on the batch production method, designer clothing, reputation for quality Identification Explanation Possible context Piece rate Payment based on Quality may be sacrificed and output DC have an excellent reputation for quality Commission Payment based on the Dress designers would be paid value produced commission on $750 price of a dress 1(c) Analyse two human resource problems that DC might experience from the 8 introduction of the new batch production method. Level Knowledge and Marks Analysis Marks Application (4 marks) (4 marks) Shows understanding Good analysis of two (or of two (or more) 4 more) human resource human resource (ANAN problems that DC might 4 problems in context + experience from the ANAN) introduction of the new batch 2 production method. (APP’s) Shows understanding Good analysis of one human of one human resource problem that DC 3 resource problem in might experience from the 3 (ANAN) context introduction of the new batch production method. Shows knowledge of Limited analysis of two (or two (or more) human 2 (AN + more) human resource 2 resource problems AN) problems 1 (K’s) Shows knowledge of Limited analysis of one human one human resource 1 (AN) resource problem 1 problem 0 No creditable content Contextual analysis likely to come from: • Lower morale/job satisfaction – workers are used to working on unique clothing and will have immense pride in their work. This may fall if working on a batch production line. • Deskilling – if machinery is being used, this may replace the skills of the employees used to make unique clothing • Training needs – the new machinery will involve training, how will Khaleal manage this? • Fear of change/communication issues – employees are likely to be very wary of the new machinery/batch production. Khaleal needs to have a clear communication and employee participation strategy. ARA 1(d) Discuss a suitable pricing strategy that DC could use for the new range of 11 trousers. Knowledge and Marks Analysis and Evaluation (7 marks) Marks Application (4 marks) Justified evaluation based on 7 arguments in context Developed evaluation based on 6 arguments in context An evaluative statement based on 5 arguments in context Shows understanding of Arguments (two sided) based on one one or more pricing 4 or more pricing strategy in context 4 strategy in context Identifies one or more Argument (one sided) based on one 3 3 pricing strategy in context pricing strategy in context Shows understanding of Two or more pieces of limited analysis one or more pricing 2 of one or more pricing strategy 2 strategy Identifies one or more One piece of limited analysis of one 1 1 pricing strategy pricing strategy No creditable content Context must be explicit not just implied but the strategy, i.e. penetration for a new product is not context, but penetration because DC have a new range of trousers is contextual Context/content: • Competitive – the trousers are being sold to department stores. They are likely to have other competitors and so they will need to be competitive to persuade the department stores to stock the trousers. This may be feasible as the department stores will know the prices they are prepared to pay. • Penetration – DC are moving into a new market. They may look to offer high discounts on initial orders, build their relationship with the department stores and then increase prices. Can DC afford this? How will competitors react? • Skimming – unlikely to be effective as these are batch produced products – they may have a reputation for quality but batch production will mean the uniqueness of each piece of clothing will be lost so unlikely to be able to charge higher prices especially to a department store. • Price discrimination – unlikely to be effective as difficult for DC to separate the market for trousers particularly by geography. They are selling direct to the department stores who will then decide which stores to sell them in. DC does not have control of this. They are also trying to break into a new market so unlikely this will work.

Question 3

Rugged Back Packs (RBP) RBP is a manufacturing business that specialises in producing travel bags and backpacks. The products are sold by m…

Accepted Answer

Question Answer Marks 1(a)(i) Define the term ‘brand’ (line 2). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 A correct definition will contain: • A brand is a name, term, design or symbol • Distinguishes one seller's product from those of others/makes it unique. Exemplar Marks Rationale A brand-name differentiates a product 2 A correct definition from similar products A brand is a name/symbol/design that differentiates a product from similar 2 A correct definition products. Vague as brands could also A brand is a name/image/logo 1 differentiate products with names/images/ logos Distinguishes one product from Other factors could 1 another. also do this 1(a)(ii) Briefly explain the term ‘labour turnover’ (lines 11–12). 3 Award one mark for each point of explanation: C Percentage/proportion or formula 1 mark B per year/time period (this could be in the formula) 1 mark A Employees/workforce that leave 1 mark Content The proportion/percentage/rate of a firm's workforce/employees that leave during a certain time period. Number employees who left in a given time period × 100 Total number of employees Exemplar Marks Rationale The percentage of a firm’s workforce that Points from A, B 3 leave in a year and C Number employees who left in a year Formula covering × 100 3 Total employees all three points Number employees who left Formula missing × 100 2 Total employees the B point Number of employees that leave per year. 2 A and B points Does not refer to workforce/ percentage leaving 1 employees so a C point only Does not explain Numbers of employees that leave 1 ‘turnover’ so point from A only 1(b)(i) Refer to Fig. 1. Identify the size of: 3 • Maximum inventory level • Buffer inventory level • Re-order quantity Marks Rationale 3 Correct calculation of three figures 2 Correct identification of two figures 1 Correct identification of one figure 0 No creditable content No own figure rule applicable Answers: • Maximum inventory level 60 000 (1 mark) • Buffer inventory level 10 000 (1 mark) • Re-order quantity 50 000 (1 mark) Allow 60, 10, 50 Note: Reward if you are confident that they have identified the correct figures 1(b)(ii) Explain one possible use of an inventory control chart to RBP 3 Level Knowledge and Application Marks 2b Shows understanding of a use of an inventory 3 (APP+APP) control chart in context 2a (APP) Identification of a use of an inventory control 2 chart in context 1 (K) Identification of a use of an inventory control 1 chart 0 No creditable content 0 Correct use of an incorrect answer to 1(b)(i) should be fully rewarded (own figure rule –OFR). Note: identification of a figure ONLY would not gain any marks as marks have been awarded in the previous question – the answer must identify a USE Content Answers may include: • Can be used to make sure RBP do not run out of stock – v important as shops require quick response • Can analyse the lead time required for re-orders • Can make sure RBP do not hold too much stock Context may include: • RBP known for reliability • Retailers require a fast response • RPB holds high levels of inventory to ensure a fast response to retail orders • Respond to orders within 48 hours 1(c) Analyse two disadvantages to RBP of holding a high level of inventory Level Knowledge and Marks Analysis Marks Application (4 marks) (4 marks) Good analysis of two (or more) disadvantages of 4 4 holding a high level Shows knowledge of inventory in of holding a high context 2 level of inventory Good analysis of one in context disadvantage of 3 holding a high level 3 of inventory in context Shows knowledge Limited analysis of of inventory and/or two (or more) knowledge of 1–2 disadvantages of 2 holding a high holding a high level level of inventory of inventory 1 Limited analysis of one disadvantage of 1 holding a high level of inventory 0 No creditable content A non-contextual answer can only be awarded a maximum of 2 + 2 = 4 Limited analysis in context: Marks limited to 4 + 2 = 6 Analysis of only one disadvantage in context: Marks limited to 3 + 3 = 6 Content Answers could include: • Cost of storing the stock (i.e. warehousing, insurance etc.) • Possibility of stock becoming obsolete – new designs, materials etc. • Possibility of demand changing – colours, fashions etc. • Cash tied up inventory – opportunity cost Examples of knowledge of Examples of Examples of holding a high level application/context possible analysis of inventory RBP produces large Will increase the cost items (travel bags) High cost of holding of each bag produced and keep them in a stock and decrease the warehouse next to the profit of the business. factory ARA 1(d) Evaluate the importance to RBP of Maya having a high level of 11 emotional intelligence. Analysis and Knowledge and Marks Evaluation Marks Application (4 marks) (7 marks) A justified evaluation based on argument(s) of the importance of 7 emotional intelligence in context Developed evaluation based on argument(s) of the 6 importance of emotional intelligence in context An evaluative statement based on argument(s) of the importance of 5 emotional intelligence in context Argument (two-sided) about the importance of 4 emotional intelligence in Shows understanding of context emotional intelligence in 3–4 Argument (one-sided) context about the 3 importance of emotional intelligence in context Limited analysis of Shows knowledge of 1–2 emotional 1–2 emotional intelligence intelligence Justification can come from looking at the importance and/or importance of other qualities/leadership style required in a leader/manager or importance of training of workers/providing adequate resources 1(d) Answers could include: Emotional intelligence is the ability to recognise your own and other people's emotions, to discriminate between different feelings and identify them appropriately, and to use emotional information to guide thinking and behaviour. Importance in motivating employees, increasing productivity, reducing absenteeism and turnover. • 100 workers who will need to be motivated and led and this may require emotional intelligence, especially since the workers are skilled and therefore not easily replaced. • RBP has high levels of absenteeism and labour turnover – Maya will need to resolve the underlying issues if she is to make the factory more productive • The previous manager was sacked due to lack of productivity. If this is to be solved Maya will need to be able to motivate the workers • However, the productivity issue may not be due to a lack of emotional intelligence from the previous manager, but there may be a more important reasons, such as poor training, equipment etc... • The factory may need a more authoritarian approach to increase productivity An example of how an answer could develop and how it should be annotated. ANAN (one K APP AN EVAL sided) By Overall Maya having high Maya needs to understanding levels of emotional understand their emotions, intelligence is likely to be the emotions This could lead to Maya can make important, as it will help of the 100 better productivity changes to the her understand the issues workers so and hit the factory, which of the workforce that she that she can production may increase manages. (EVAL – tackle the targets. (ANAN) the workers statement) productivity motivation. Emotional issues. (APP) (AN) However, it depends upon intelligence why the productivity levels is ANAN (two- are low. If the main issue recognising sided) was the disagreement The workers your own between the previous may be absent and other Without better manager and the and leaving people’s conditions the workforce then it is likely The factory RBP because of emotions. workers are to be very important. has high poor working (K) unlikely to (EVAL – developed) levels of conditions in the improve their absenteeism factory. This absenteeism and However, this is unlikely to and labour issue requires turnover and be the only issue and turnover. action from therefore RBP will Maya will need more than (APP) Maya not an not have improved just emotional intelligence understanding productivity and to hit the production of their hit the targets. targets for RBP. (EVAL – emotions. (AN) (ANAN) justified)

Question 4

Veg Cans (VC) VC is a public limited company which produces canned vegetables. VC is supplied with fresh vegetables by 20 farms. VC process…

Accepted Answer

2(a)(i) Define the term ‘retained earnings’ (line 15). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 Content A correct definition will include: • An idea that money has been kept by a business • An idea that it is profit Exemplar Rationale Marks The money remaining in the business Both elements 2 after it subtracts its expenses No idea of profit/earnings The money kept by a business 1 element Idea of keeping within the Earnings set aside for a later day 1 business (earnings taut) The profit made by the business An idea of profit 1 The money that the business owner To vague 0 saved 2(a)(ii) Briefly explain the term ‘public limited company’ (line 1) 3 Award one mark for each point of explanation: Knowledge Marks C Example or some other way of showing good 1 understanding e.g. Published accounts, LL, etc. B To the general public/through stock exchange/ 1 A Has shareholders/can sell shares 1 Content A public limited company has shareholders who can purchase shares through the stock exchange. It also has limited liability, continuity and a separate legal identify. Exemplar Rationale Marks Owned by shareholders with limited 3 liability and bought through the stock All points met exchange A PLC is a large company that sells 2 A and B shares to the public. Has shareholders and has limited 2 A and C liability Is owned by the government, has A and C, ignore the 2 shareholders and had limited liability incorrect govt. reference Has shareholders A only 1 Owned by the government Wrong 0 Is a large company Too vague 0 2(b)(i) Calculate VC’s working capital. 2 Rationale Marks Correct answer with or without working 2 Correct use of figures/formula 1 No creditable content 0 Content Current assets – current liabilities $5m – $4m = $1m Common answers Answer Rationale Marks $1m (with or without $) Correct answer 2 $5m – $4m = $1m Correct answer 2 5 – 4 = 1 No need for $ or M 2 $5m – $4m = $6m Correct use but wrong answer 1 Current assets – current liabilities Correct formula 1 $5m + $4m = $6M Incorrect use of figures 0 4/5 × 100 = 0.1 Incorrect formula 0 $4m – $5M = –$1M Incorrect formula 0 2(b)(ii) Explain two ways in which VC could improve its working capital. 4 Level Knowledge and Application Marks 2b (APP + Explanation of two ways to improve working capital in 4 APP) context 2a (APP) Explanation of one way to improve working capital in 3 context 1b (KK) Identification of two ways to improve working capital 1 1a (K) Identification of one way to improve working capital 1 0 No creditable content 0 Content Has to refer specifically to a current asset or a current liability (less than 12 months) Increase current assets: • Increase cash/money – retain more profit, sell fixed assets, sell shares, negotiate discounts, find cheaper suppliers etc. • Increase debtors – only if they are new sales that would not have been cash sales • Increase inventory – again only if this does not have a detrimental effect on cash at the same time Decrease current liabilities: • Replace short term debt (overdraft and creditors for example) with long term debt – will not improve WC if it is paying debt off with cash Possible context (APP) • Reduction of Current liabilities from $4m • Increase in Current assets from $5m • Increase their stock of veg/cans • Decrease their trade receivables (debtors) from customers/food retailers • Increase their trade payables (creditors) from suppliers of veg/cans 2(c) Analyse two methods of selection VC could use when choosing a new manager for 8 the factory. Knowledge and Analysis Level Marks Marks Application (4 marks) (4 marks) Shows understanding of Developed analysis of how VC could use two or 2b 4 two method of selection 4 more methods of in context selection Shows understanding of Developed analysis of 2a how VC could use one 3 one method of selection 3 method of selection in context Shows knowledge of two Limited analysis of two 1b or more methods of 2 or more methods of 2 selection selection Shows knowledge of one Limited analysis of one 1a 1 1 method of selection method of selection 0 No creditable content 0 Content • CV/application forms – look for experience in the industry, advantages and disadvantaged of using CVs. All on paper. Does not bring the candidate to life and show motivation or finance skills • Interviews – ask questions that shows knowledge and how the applicant would deal with situations e.g., employee relations • Tests – e.g., role play could be used as part of the selection process. This would have good advantages for VC – can see who has the best inventory management and finance skills • Trial period (probation) before formalizing any job offer. Advantages and disadvantages of this. ARA Examples of Examples of Examples of possible analysis methods application/context Minimises the number of CV/application Identify relevant experience applicants to be interviewed to forms of inventory management those who identify skills Allows for the selection of Ask questions relating to Interviews managers who can explain employee management problems or situations Work based tests of Can select manager with the best Tests inventory management and demonstrable skills which finance skills reduces mistakes Ensures that the manager isn’t Trial period Trial as factory manager exaggerating the truth and can do his job 2(d) Evaluate the usefulness of the product life cycle to VC when making marketing 11 decisions. Knowledge and Analysis and Evaluation Marks Marks Application (4 marks) (7 marks) A justified evaluation based on a developed argument of one or 7 more uses of the Product Life Cycle in context A developed evaluation based on a developed argument of one or 6 more uses of the Product Life Cycle in context A basic evaluation based on a developed argument of one or 5 more uses of the Product Life Cycle in context Shows knowledge of the Developed argument of two or product life cycle AND 4 more uses of the product life cycle 4 marketing decisions in in context context Shows knowledge of the product life cycle OR Developed argument of one use of 3 3 marketing decisions in the product life cycle in context context Shows knowledge of the Limited analysis of two or more product life cycle AND 2 2 uses of the product life cycle marketing decisions Shows knowledge of the Limited analysis of one use of the product life cycle OR 1 1 product life cycle marketing decisions No creditable content 0 Note: Full marks can be gained from only ONE use of the product life cycle; two DEV’s must still be awarded (pros and cons) 2(d) Content 11 • Can identify the varieties which may require extension strategies (i.e. develop product) • Can identify varieties which should be discontinued (in in decline) • Can identify where promotional spending should be – i.e. on varieties in growth stage • Can help to know which pricing strategies to use • Can help to know which distribution channels to use • Can help to introduce the new frozen veg into the market • Can help to manage a large portfolio of varieties/products An example of how an answer could develop and how it should be annotated. K APP AN ANAN EVAL Could The product lifecycle is identify Which could Which could very important for VC canned then be influence (Basic vegetables reformulated promotional recommendation) in their or rebranded activities Product mature/ to extend and because it means they lifecycle is decline their life spending can manage their the stages phase product lines and from birth/ maximise revenue invention (Developed Which could to death/ Can recommendation) Which may minimise decline manage a result in a the product large however it depends on reduction in range and portfolio of the quality of the product reduce canned information gathered duplication inventory products (Justified costs recommendation)

Question 5

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…

Accepted Answer

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 6

Delivery To You (DTY) DTY is a public limited company in the tertiary sector. DTY delivers packages for businesses in country A. DTY’s main…

Accepted Answer

Question Answer Marks 1(a)(i) Define the term ‘tertiary sector’ (line 1). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 Content Made up of businesses which sell services to consumers. 1(a)(ii) Briefly explain the term ‘human resource manager’ (line 15). 3 Award one mark for each point of explanation: Knowledge Marks Example or some other way of showing good 1 understanding Explanation of manager/management 1 Explanation of human resource 1 Content Human resources are the workers/labour used within a business Management requires the planning, co-ordination, organisation, motivation etc. of these human resources 1(b)(i) Calculate the retained earnings for DTY in 2017. 2 Rationale Marks Correct answer with or without working 2 Correct use of figures/formula 1 No creditable content 0 Content 80% of profit for the year $15m – $10m = $5m (profit for the year) $5m × 80% = $4m 1(b)(ii) Explain two possible effects of DTY’s Board of Directors’ decision to 4 have a high level of retained earnings. Level Knowledge and Application Marks 2b (APP Explanation of two effects of a high level of 4 +APP) retained profit in context 2a Explanation of one effect of a high level of retained 3 (APP) profit in context Explanation of two effects of a high level of 1b (KK) 2 retained profit Explanation of one effect of a high level of retained 1a (K) 1 profit 0 No creditable content 0 Content • Shareholders may sell their shares (DTY is a PLC) reducing the share price and leading to a potential takeover of DTY • Poor image for DTY – may be seen as a sigh of weakness in the market • Shareholders may expect a bigger dividend in the future • Can afford to expand the business – retained profits will be a source of finance • DTY might avoid taking expensive external finance • Will reduce the gearing of DTY • Can be used to improve cash flow/working capital 1(c) Analyse two methods of recruitment that DTY could use for the new 8 delivery drivers. Knowledge and Level Marks Analysis (4 marks) Marks Application (4 marks) Shows understanding Good analysis of two of how DTY could use 2b 4 method of recruitment 4 two or more methods in context of recruitment Shows understanding Good analysis of one of how DTY could use 2a 3 method of recruitment 3 one method of in context recruitment Shows knowledge of Limited analysis of 1b two or more methods 2 two or more methods 2 of recruitment of recruitment Shows knowledge of Limited analysis of 1a one method of 1 one method of 1 recruitment recruitment 0 No creditable content 0 Content • Internal recruitment – unlikely to be possible because of expansion • Job advertisements – obvious places such as newspaper. Qualifications are not specialist so could be in mass media • Job centres • Specialist online job websites • Recruitment agency • Personal recommendations • Social media recruitment • Recruitment from schools • Direct recruitment – poster in window, advert on vans etc. ARA 1(d)(ii) Discuss methods of market research that DTY could use to help the directors decide which country to expand into. Knowledge and Analysis and Evaluation Marks Marks Application (4 marks) (7 marks) A justified judgement of the methods of market research 7 DTY could use to decide on locations for expansion A recommendation of the methods of market research 6 DTY could use to decide on locations for expansion A balanced argument (two- sided) that evaluates methods 5 of market research in context Argument (one-sided) based on two methods of market 4 Shows understanding of research in context methods of market 3–4 research in context Argument (one-sided) based on one method of market 3 research in context Limited analysis of two 2 methods of market research Shows knowledge of 1–2 market research Limited analysis of one method 1 of market research No creditable content 0 Content Primary: • Surveys • Focus Groups • Interviews • Observation • Field Trials/Testing Secondary: • Internal source – accounts, sales figures, inventory figures etc. • External sources – competitors, government, census data, internet ARA

Question 7

Sadiq’s Social Restaurant (SSR) SSR is a small social enterprise located in a low-income inner city area. SSR employs young people who have…

Accepted Answer

2(a)(i) Define the term ‘induction’ (line 12). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No credible content 0 Note: Do not reward ‘training’ as it is too generic A correct definition could cover the following: • Introduction to the business rules, regulations and procedures (or an example) • Provided when first joining a business Exemplar Marks Rationale A general introduction to the business 2 Two elements rules provided to all new starters covered Generic training such as fire safety 2 Two elements provided to new employees covered Provided to new employees 1 A simple statement General training and information about 1 An understanding the rules and regulations in a business but too vague A type of training 0 Too vague 2(a)(ii) Briefly explain the term ‘social enterprise’ (line 5). 3 Award one mark for each point of explanation Knowledge Marks C Example or some other way of showing good 1 understanding – triple bottom line, not a charity, people, planet and profit B Profits are reinvested in order to meet the organisations 1 aim or a loss allowed to meet aims of organisation A Understanding of social enterprise – main aim/objective 1 is to fulfil a social need/not maximisation profit The organisations aim is to make a profit not for the shareholders but to meet a social or environmental need. It is often referred to as the triple bottom line. Exemplar Marks Rationale Business making a profit to meet the 3 All three elements social needs of a section of society, often called the triple bottom line Business venture whose main aim is 2 All and C only to help a social need (A) rather than make a personal profit (C) Meeting the needs of society 1 A only The 3 Ps/ People, planet and profit 1 Identified key themes only, no real understanding No identifiable content 0 2(b)(i) SSR uses cost-based pricing to add 60% to variable costs when 3 pricing each meal. Refer to Table 2.1. Calculate the average price of each meal in the proposed city centre restaurant. Level Rationale Marks 2 (APP) Correct calculation (with or without working 3 and/or $) 1b (KK) Correct process 2 1a (K) Correct formula or correct calculation of VC 1 ($3.75) 0 mark No credible content 0 Total price = Total variable costs × 1 + mark-up (1) OR Total variable costs × 60 + TVC (1) 100 Allow any reasonable formula City Centre = ($1.50 + $2.25) = $3.75 (1) × 1.6 (1) = $6.00 (3) Allow full marks for a correct answer with or without working or $ (3) Common incorrect/incomplete answers Answer Mark Rationale $6 3 Correct answer ($1.50 + $1.30) x 1.6 2 Edge of city figures (correct process =$4.48 but wrong figures – one mistake) $4.48 (no working) 0 Incorrect answer 60% of $3.75 = $2.25 2 Correct calculation of VC and mark up $2.25 (no working) 0 An incorrect answer with no working Total variable costs x 1 Correct formula 1.6 $5.50 x 1.6 = $8.80 1 Used price not VC but process is correct 0 No creditable content 2(b)(ii) Briefly explain one advantage to SSR of using cost-based pricing. 3 Level Knowledge and Application Marks 2 (APP) Explanation of 1 or more advantages to SSR of 3 using cost-based pricing 1b (KK) Explanation of 1 or more generic advantages of 2 cost based pricing 1a (K) Knowledge of cost based pricing 1 0 No creditable content 0 Context is likely to come from: • Food is seasonal and prices change so ensures a suitable profit margin is kept • Customers are happy that they are paying reasonable prices based on what they are eating/ not being charged premium prices 2(c) Analyse two possible impacts on stakeholders of SSR if the second 8 restaurant is successful. Knowledge and Level Marks Analysis Marks application 2 Shows knowledge 4 Developed analysis 4 of two stakeholders of two impacts of in context success of the second restaurant on two stakeholder groups in context Shows knowledge 3 Developed analysis 3 of one stakeholder of one impact of in context success of the second restaurant on one stakeholder group in context 1 Shows knowledge 2 Limited analysis of 2 of two stakeholder two impacts of groups success on two stakeholder groups Shows knowledge 1 Limited analysis of 1 of one stakeholder one impact of group success on one stakeholder group 0 No creditable content 0 Note: Do not allow analysis of the impact on any stakeholder group of the factors in Tables 2.1 and 2.2. This question is about the impact of SUCCESS not the location. Major stakeholders: customers, local education provider, local government, employees, competition, investors, suppliers, job centre (any reasonable answer accepted) Contextual analysis likely to come from: • Government – increased size of training scheme impacts on jobless figures which is good for job seekers payments • Customers – more seating/bigger restaurant means more availability for local customers means lower waiting time • Employees – more jobs means that more young people will be able to work and gain new skills leading to better chances of gaining future employment • Suppliers – two successful restaurants lead to more orders and in turn increased profit. 2(d) Recommend which location SSR should choose for its second 11 restaurant. Justify your recommendation. Knowledge and Analysis and Marks Marks Application (4 marks) Evaluation (7 marks) A justified recommendation based on a developed 7 argument of both options A developed recommendation based on a developed 6 argument of both options A basic recommendation/ judgement based on a 5 developed argument of both options Shows understanding Developed argument of decision making based on factors for factors for city centre 4 city centre AND out of 4 AND out of town town location for SSR location for SSR restaurant restaurant Shows understanding Developed argument of decision making based on factor(s) for factor(s) for city centre 3 city centre OR out of 3 OR out of town location town location for SSR for SSR restaurant restaurant Shows knowledge of Limited analysis of two two factors affecting 2 factors affecting 2 location location Shows knowledge of 1 Limited analysis of one one factor affecting 1 factor affecting location location No creditable content 0 2(d) Content/context and analysis: City Centre: • Already has restaurant layout > less initial investment but no personal touch? • Competition from established restaurants > might reduce custom but a popular location for new customers? • Lack of parking > might impact on ability of people to visit but may be well serviced by public transport • Higher average price per mean – $6 • Higher sales revenue per month = $6000 • Higher net profit per month = $1750 Edge of city: • Permission to convert > can create personalised style but expensive • Location has fewer potential customers but less competition – captive audience • Lower monthly fixed costs – less pressure on the finances • Lower average price per mean – $4.48 – better for a social enterprise? • Lower forecast sales revenue per month = $3360 • Lower forecast (net) profit per month = $885

Question 8

Job Shop (JS) JS is a public sector organisation in country X. The mission statement of JS is in Fig. 1.1. To match up businesses that need…

Accepted Answer

Question Answer Marks 1(a)(i) Define the term ‘public sector’ (line 1). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 Content Organisations that are owned/controlled by the government (2). ARA* Exemplar Mark Rationale Businesses that are owned by the state 2 Correct definition The sector of the economy which is 2 Correct definition controlled by the government A business that is owned by the state 1 Partial because the and where shares are sold on the stock candidate has some exchange confusion with PLC Paid for by taxes 1 Partial understanding Run for the good of society 1 Partial understanding – it is run by the state for this reason Not in the private sector 0 No creditable content Not for profit organisation 0 No creditable content – confusion with a charity *ARA means ‘all reasonable answers. This allows for answers which are similar to the ones in the mark scheme and are correct. 1(a)(ii) Explain the relationship between a mission statement and a business objective Rationale Marks C Identification of the relationship between a mission 1 statement and a business objective B Understanding of a business objective 1 A Understanding of a mission statement 1 Note: allow any reasonable understanding of ‘aims’, ‘targets’ ‘goals’ in relation to mission statements and objectives. These terms are often used in completely different ways by different sources and so any reasonable use is acceptable if you believe the candidate has shown understanding of an objective and/or missions statement. Content • Objectives should be in line with the mission statement and move the business towards the mission statement (C) • A mission statement is a visionary aim for a business of the direction/purpose. (A) • An objective is a specific target that should have a time period in which to achieve it. (B) 1(a)(ii) ARA Exemplar Mark Rationale The mission is the aim (A) but the 3 All three elements business has the specific targets called objectives (B) to reach that aim (C) Achieving the objectives help move the 1 No explicit business towards the mission statement understanding of (C only) either an objective or a mission statement – only the relationship The mission statement sets out the 2 No explicit direction (A) and the objectives should understanding of help the business go in that direction (C). business objectives. A mission statement is something a 2 Both mission business wants to aim towards that may statement and be unattainable (A), whereas a business objective have been objective is a specific, measurable, understood but the achievable, realistic and times-based relationship is not goal that can be reached (B). explained. A mission statement is a visionary aim 2 Both mission for a business of the purpose (A). statement and Whereas an objective is a specific target objective have been that should have a time period in which understood but the to achieve it (B). relationship is not explained. 1(b)(i) Refer to Table 1.1. Calculate the rate of labour turnover for the whole 3 of JS in 2018. Rationale Marks Correct answer with or without correct working or % 3 Identification of correct figures from Table 1.1 used in formula 2 Correct formula* 1 No creditable content 0 *Formula can be implied through the correct use of figures Content Number of employees who left × 100 Total number of employees 6250 + 550 + 600 × 100 25000 + 5000 + 10000 7400 × 100 40000 = 18.5% OFR* 1(b)(i) Common incorrect answers Answer Mark Rationale 18.5 3 Correct answer – does not require % sign 7400 2 A mistake in the = 0.185 (implied) knowledge 40000 of the formula by not multiplying by 100 (turning it into a percentage) 0.185 (no working) 0 There is no reference to where this (wrong) answer came from, so no marks. 40000 2 Inverted formula – × 100 = 540.54% but correct figures 7400 and OFR for the answer. 6250 2 Implied formula × 100 = 25% correct, but wrong 25000 use of figures. However, based on those wrong figures the answer is correct using the OFR. 6250 1 Implied formula × 100 25000 *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 disadvantage for JS of having high labour turnover. 3 Level Knowledge and Application Marks 2b (APP) Explanation of one disadvantage of high labour 3 turnover in context 2a (K+K) Explanation of one disadvantage of high labour 2 turnover 1a (K) Identification of one disadvantage of high labour 1 turnover 0 No creditable content 0 Content • Increased recruitment costs – these are highly trained and skilled employees so difficult to replace. Also, as a public sector organisation, this reduces funding for other government spending. • Loss of productivity – time-lag between losing workers and gaining new workers – JS still needs to run. New employees are unlikely to be as productive as experienced employees. Might give poor customer service or result in less employment opportunities – highest labour turnover in customer service department. • Cost of training/induction – new employees will need to be trained in customer service. • Poor reputation – might be difficult/take longer to hire new workers • Lowers motivation/demotivates ARA and OFR Example of how responses should be marked Identification of a Explanation of a Explanation of a disadvantage disadvantage (2 disadvantage in (1 mark) marks) context (3 marks) Increased costs (K) Increased costs (K) Because the workers because those workers are highly skilled and who leave JS will need trained JS will have to be replaced which high recruitment costs adds to the recruitment when they leave (APP) costs (K) People might not People might not want It may be become very want to work at JS to work at JS (K) which difficult to recruit (K) will make recruitment people, especially in much more difficult (K) department A (APP) *OFR in this case is if a candidate has used an incorrect answer from 1(b)(i) – if their explanation is correct using their own figures then ALL marks can be rewarded in this question. 1(c) Analyse one economy of scale and one diseconomy of scale which 8 may affect JS. Level Knowledge and Marks Analysis (4 Marks Application (4 marks) marks) 2b Shows 4 Developed 4 understanding of analysis of one one economy economy and and diseconomy diseconomy of of scale in scale in context context 2a Shows 3 Developed 3 understanding of analysis of one one economy or economy or diseconomy of diseconomy of scale in context scale in context 1b Shows 2 Limited analysis of 2 knowledge of one one economy and economy and diseconomy of diseconomy of scale scale 1a Shows 1 Limited analysis of 1 knowledge of one one economy or economy or diseconomy of diseconomy of scale scale 0 No creditable response LARGEST is contextual as it is stated in the case. However LARGE is not as it is generic to most/all businesses experiencing economies of scale. Content A candidate does not need to name an economy or diseconomy of scale – a description is good enough (for example ‘bulk buying’ is enough to award purchasing economies of scale). 1(c) Economies of scale: • Managerial economies of scale – for example personnel managers who may be able to deal with JS labour turnover issue • Marketing economies of scale – many outlets in every main town and city means that marketing costs can be averaged out over a large number of outlets • Purchasing (allow bulk buying) economies of scale – in terms of administration items (do not accept bulk buying of inventory unless it is in context as this is a service sector business) • Technical (do not reward technological) economies of scale – better admin computer software/systems • Financial economies of scale – government backing likely to be more important than size but JS is still more likely to get favourable financial terms due to their size. • Risk bearing – unlikely to be contextual as JS only focuses on one/two services Diseconomies of scale: • Communication problems – outlets must cooperate with each other to maintain good customer service. • Poor leadership – 25% of labour turnover is due to poor leadership – too many workers to lead? • Poor motivation – Is the high labour turnover and issues due to the size of the business? • Bureaucracy – 10 000 admin workers suggest a great deal of ‘red tape’ • Duplication of effort – Each outlet likely to have the same job-role repeated. Allow external economies or diseconomies of scale – ARA Example of an Examples of Examples of possible economy of scale application/context analysis (AN + DEV) (K) (APP) Marketing Because JS has an JS can use nationwide economies of outlet in every major advertising campaigns scale town and city which are likely to have less cost per potential customer who sees it (AN) which means JS has more money to spend on finding people jobs (DEV) 1(c) Example of a Examples of Examples of possible diseconomy of application/context analysis (AN + DEV) scale (K) (APP) Communication Because JS is spread This means that diseconomies of out over the whole of messages may not get scale country X properly communicated and some jobs might not get filled (AN) meaning that JS does not get as many people out of unemployment (DEV). 1(d) Recommend how JS could improve the motivation of its employees in 11 Department A. Justify your recommendation. Knowledge and Marks Analysis and Mark Application (4 marks) Evaluation s (7 marks) Justified recommendation 7 based on argument in context Developed 6 recommendation based on argument in context An evaluative statement / 5 recommendation based on argument in context Shows understanding of 3–4 Developed argument 4 (de)-motivation in the (balanced**) based on customer service way(s) which JS could department improve motivation in the customer service department Developed argument 3 (imbalanced*) based on one way which JS could improve motivation in the customer service department Shows knowledge of 1–2 Limited analysis of way(s) 1-2 (de)motivation which a business can improve motivation No creditable content 0 1(d) *Imbalanced argument is when a candidate only looks at what is good or bad about only one way. **Balance in an argument can be gained by looking at more than one way OR by having developed analysis of is good and developed analysis about what is bad about one way Content • Increase pay/financial motivation – 30% of leaving employees are leaving for ‘poor pay’. However, can the government of county X afford a pay increase? • Non-financial motivation – 20% leaving because of a boring job (job enrichment/enlargement/rotation – improve motivating factors etc.), more delegation etc. • Increase levels of hierarchy to improve promotion chances. 5% of workers leaving for this reason. • Allow movement between outlets – 5% have moved to another town – JS may be able to keep them in the business by offering them a job in another outlet. • Improve leadership – is JS using the right leadership styles? Do the managers need training? • Improve training – employees are highly skilled and trained, but maybe they could be offered more to keep them in the business. In particular, training on how to deal with customers as this is a major reason for the turnover. • Make more social opportunities for staff • Improve recruitment and selection processes – are people leaving because they were not the right people in the first place? 1(d) ARA An example of how an answer could develop and how it should be annotated. K APP AN DEV EVAL JS could This may be This is likely Which will Overall pay pay its effective to lead to decrease could help to workers because less people the improve the better to 30% of leaving recruitment motivation of motivate people who Department costs of JS the them (K) leave think A (AN) (DEV) employees that JS has in poor pay Department (APP) A (EVAL) However, And there So, the extra Which because it money does are many pay may not means that has the not motivate other motivate the JS has less highest everyone reasons why employees money labour (K) employees but will available to turnover rate leave JS, increase meet their and the such as the costs (AN) mission biggest 25% of statement reason is people who (DEV) poor pay leave (EVAL). because of poor However, it leadership depends on (APP) whether JS can afford to increase pay enough to make a real difference to the motivation of the employees (EVAL).

Question 9

Quality Fencing (QF) QF is owned by Seojun. Seojun is a sole trader who repairs and builds wooden fences. Most of his customers own houses …

Accepted Answer

Question Answer Marks 1(a)(i) Define the term ‘training’ (line 27). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 Note: this is a definition question so there are no marks for examples of training, i.e. on-the-job, off-the-job and induction. Content A correct definition should include the following elements: • The teaching/development of skills/knowledge (1) • To perform a task, become more efficient, increase productivity, meet organisation/departmental/job objectives, etc. (1) Exemplar Marks Rationale Training involves developing skills so 2 Both elements covered that workers can do their job more efficiently Making an employee better at doing 1 ‘Better at doing their job’ their job is enough for one mark Helping an employee to develop skills 1 ‘Developing skills’ is enough for one mark The person who is employed by an 0 NAQ – describing a organisation to do a job who needs trainee experience before they can do their job Training can be on the job or off the 0 No marks for an example job as this is a definition question 1(a)(ii) Briefly explain the term ‘entrepreneur’ (line 3). 3 Award one mark for each point of explanation: Rationale Marks Three characteristics of an entrepreneur 1 Two characteristics of an entrepreneur 1 One characteristic of an entrepreneur 1 Content Allow any reasonable characteristic of an entrepreneur, for example: • Risk taking • Innovative • Multi-skilled • Leader • Resilience/able to bounce back • Sets up a business • Passion • Self-confidence • Ambition • Hardworking • Persuasive • Aiming for profit (do not allow ‘get rich’ – too vague) • Makes decisions • One of the factors of production (entrepreneurship) • Organises the factors of production • An example of an entrepreneur (do not allow Seojun) Only reward each characteristic once. 1(a)(ii) ARA Answer Marks Rationale An entrepreneur is a risk-taker (1) who 3 Three characteristics tries to make a profit (1) by organising the factors of production (1) Someone who makes decisions (1) 3 Three characteristics about factors of production (1) to make a profit (1) An entrepreneur works hard (1) and has 2 Two characteristics confidence (1) Someone who organises the land that a 1 Only one mark for business needs (1). They also organise ‘organising’ the factors the amount of workers a business needs of production – do not and they also organise the capital that a keep rewarding the business may need same characteristics An entrepreneurship is one of the factors 0 NAQ of production 1(b)(i) Refer to Table 1.1. Calculate the percentage change in profit from Year 1 4 to Year 2. Rationale Marks Correct answer with or without correct working or % 4 Correct calculation of the change in profit 3 Correct calculation of Year 1 and Year 2 profit 2 Formula or correct calculation of Year 1 or Year 2 profit 1 No creditable content 0 Content Profit = TR – TC Year 1 profit = 120 000 – (70 000 + 20 000) = 30 000 Year 2 profit = 240 000 – (110 000 + 40 000) = 90 000 Change in profit = 60 000 60000 % change = × 100 = 200% (increase) 30000 Correct answer – 200% 1(b)(i) OFR* Common incorrect answers Answer Marks Rationale 200 (no working) 4 Candidate does not need to include the % sign 60000 3 Correct calculation of the change in = 2 profit (60 000) but not calculated the 30000 percentage change 2 (no working) 0 An incorrect answer with no working to understand where the answer comes from 60000 3 Correct calculation of the change in × 100 = 67% profit (60 000) but incorrectly calculated 90000 the percentage change 60 000 (no working) 3 Correct calculation of the change in profit 30 000 (no working) 1 Correct calculation of Year 1 profit 90 000 (no working) 1 Correct calculation of Year 2 profit 90000 2 Correctly identified the two profit figures, × 100 = 300% but no attempt to find the difference 30000 *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 difficulty in measuring the market share of QF. 2 Level Knowledge and Application Marks 2 Explanation of a difficulty with measuring market share 2 (APP) in context 1 (K) Identification of a difficulty with measuring market share 1 0 No creditable content 0 Content • How is the market share measured? Number of fences? Revenue? • Where are the boundaries of City X? • How much fence building and repair is in the informal market – does this affect the market share? • Where has the research come from – Seojun has only been in the market for two years, so can he be sure of the data? • The market may be out of date – it is a very competitive market • Which products are involved – is it just wooden fences, all fences or any maintenance work? ARA Example of how responses should be marked Identification of a Explanation of a difficulty in context (3 marks) difficulty (1 mark) How is it measured (K) By number of fences or time that it takes (APP) How has the data been Seojun has only been in the market for two years, gathered (K) so may not have enough experience to know (APP) The market might have Very competitive market (APP) changed (K) 1(c) Analyse two problems with the job description created by Seojun in 8 Table 1.2. Knowledge and Level Application Marks Analysis (4 marks) Marks (4 marks) 2b Shows 4 Good analysis of an 4 understanding of effect on the business two characteristics of two problems with of a job description the job description in context 2a Shows 3 Good analysis of an 3 understanding of effect on the business one characteristics of one problem with of a job description the job description in context 1b Shows knowledge of 2 Limited analysis of 2 two characteristics two problems of a job of a job description description 1a Shows knowledge of 1 Limited analysis of 1 one characteristic of one problem of a job a job description description 0 No creditable content 0 Content A job description describes the tasks, or functions, and responsibilities of a role within an organisation. Problems: • ‘As soon as possible’ – with no date on the description, some potential workers may think this is out of date and not apply • Salary should not be based on age – this suggests age discrimination. May be illegal and the business could face sanctions. May only attract older workers (for the perceived higher wage) • Why would this role need A-Levels? This is likely to put off potentially good workers because they do not have the qualifications. In some countries A-Levels are uncommon, so this might be a very unlikely qualification. This is unlikely to get a good range of applicants • Qualifications should appear on the person specification rather than the job description – may confuse potential applicants • ‘Workman’ – this is sexist and may lead to sanctions on the business. Also, may miss out on good female applicants • ‘Local business’ – local to where – with no address applicants may assume it is local to them, wherever they are • Experience is essential, but full training will be given – too ambiguous – if full training is given why is experience needed? – Experience should appear on the person specification − How many applicants is QF likely to receive if Seojun requires experience of both building and repairing? 1(c) ARA Example of an Examples of Examples of possible aspect of a job application/context analysis (AN + DEV) description (K) (APP) A job description In this case experience This might mean that Seojun contains the of building and might not get any people experience repairing fences is applying (AN) which may needed (K) essential (APP). mean QF cannot grow in the future (DEV) 1(d) Recommend suitable promotion methods which would help Seojun to 11 achieve his objectives. Knowledge and Marks Analysis and Evaluation Marks Application (4 marks) (7 marks) Justified recommendation 7 based on argument in context Developed recommendation 6 based on argument in context An evaluative 5 statement/recommendation based on argument in context Shows understanding 4 Argument based on two 4 of two (or more) promotion methods in context promotion methods in context Shows understanding 3 Argument based on one 3 of one promotion promotion method in context method in context Shows knowledge of 2 Limited analysis of two 2 two promotion promotion methods methods Shows knowledge of 1 Limited analysis of one 1 one promotion method promotion method Note: If the candidate has attempted to analyse more than two promotion methods, then annotate the one that gain the most marks for the candidate. Content • Posters – cost effective and could be effective in the local area • Local TV/radio/newspaper – reach a large local audience – mass market product (many people may have access to a garden) • Other forms of local advertising – buses, roadside, etc. 1(d) • Garden centres/alongside complementary products • Direct promotion – door to door sales, especially if a ‘bad’ fence is spotted • Word of mouth – likely to be essential in this industry, but difficult to control • Internet – many recommendation websites – social media promotion – can be cheap and targeted, but do many people hire services this way? Allow the benefit of internet promotion allowing more online bookings. • Promotional pricing is a valid method – but only if it is specifically linked to promotion, e.g. BOGOF. Do not reward pricing strategies/changes on their own Note: Allow above-the-line and below-the-line as promotion methods. Also allow two different types of advertising (i.e. newspaper and TV) as different methods of promotion. ARA An example of how an answer could develop and how it should be annotated. K APP AN DEV EVAL Internet There is a By Which can Overall growing promoting mead to newspaper need for using the increased advertising is online internet, revenue for most likely to bookings Seojun can QF target Seojun’s drive current target customers customers to book (EVAL) because online he can advertise his Newspaper He can This would Which reduces telephone advertising target be an the costs for number and that higher efficient way QF is how most income to target his customers book people in customers (EVAL), City X who however if he are more really wants to likely to develop his own online bookings houses then the internet with may be best gardens (EVAL) Note: fully reward candidates who do not make a choice between their chosen methods – it is just as acceptable to recommend more than one method.

Question 10

The Shop (TS) Thomas worked for 30 years as a manager of a factory. Although he was very good at his job he was recently made redundant. Th…

Accepted Answer

Question Answer Marks 1(a)(i) Define the term ‘redundant’ (line 2). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 Content: Redundancy is where an employee is made to leave an organisation because their job role is no longer required. 1(a)(ii) Explain the term ‘primary market research’ (line 4). 3 Award one mark for each point of explanation: Knowledge Marks A Example or some other way of showing good 1 understanding B An understanding of primary 1 C An understanding of market research 1 Content: • Market research is when a business investigates the needs of consumers to assess who may be interested in purchasing its product/service. • Primary involves the business conducting the research themselves, first- hand. • Examples include questionnaires, surveys etc. • Can be more specific than secondary, more expensive than secondary etc. ARA 1(b)(i) Refer to Fig. 1.1. Calculate the number of respondents who think a coffee 2 shop would be most successful on Main Street. Rationale Marks Correct answer with or without correct working 2 Correct identification of figures 1 No creditable content 0 Answer = 24 Correct figures 160 shoppers in total Coffee shop = 15% Formula 160 X 15 / 100 = 24 respondents 1(b)(ii) Explain two limitations of the sampling used by Thomas. 4 Level Knowledge and Application Marks 2b (APP Explanation of two limitations of the sampling 4 +APP) methods used by Thomas 2a Explanation of one limitation of the sampling 3 (APP) methods used by Thomas 1b (K+K) Identification of two limitations of sampling 2 1a (K) Identification of one limitation of sampling 1 0 No creditable content 0 Content: • Random – is everyone likely to be in the target population for his shop? • Only 160 shoppers – is this enough on which to base such an important decision for Thomas? • At lunchtime – is this likely to have weighted the answers towards shops that sell food? • Friday 20 December – is one day likely to be representative of the whole year? • Friday 20 December – just before Christmas/holiday – is this a peak time for shoppers and would this give a representative sample? ARA 1(c) Analyse two qualities that Thomas will need to be a successful 8 entrepreneur. Knowledge and Level Marks Analysis (4 marks) Marks Application (4 marks) Shows understanding of Good analysis of two (or two (or more) qualities more) qualities needed 2b needed to be a 4 to be a successful 4 successful entrepreneur entrepreneur in context in context Shows understanding of Good analysis of one one quality needed to quality needed to be a 2a 3 3 be a successful successful entrepreneur entrepreneur in context in context Shows knowledge of Limited analysis of two qualities needed to be a (or more) qualities 1b 2 2 successful entrepreneur needed to be a successful entrepreneur Shows knowledge of Limited analysis of one 1a entrepreneurship 1 quality needed to be a 1 successful entrepreneur 0 No creditable content Note: Any relevant quality that an entrepreneur might need can be valid Content: • Risk-taking – Thomas will be taking risks in setting up his own business. • Confidence – Thomas needs to have confidence that he will make good decisions when setting up his new shop. • Ability to make decisions – about the opening of his business, i.e. the options. • Self-starter – Thomas will not have a boss in his new business so needs to motivate himself. • Creative – to gain a USP in his new business. • Determined – Thomas is likely to have to overcome setbacks in his new shop venture. ARA 1(d) Recommend which of the two options Thomas should choose for his new 11 shop. Justify your recommendation. Knowledge and Analysis and Evaluation Marks Marks Application (4 marks) (7 marks) Justified recommendation based on arguments in 7 context Developed recommendation based on arguments in 6 context An evaluative statement/recommendation 5 based on arguments in context Shows understanding of the Arguments based on the two two options for Thomas’s 3–4 options for Thomas’s new 3–4 new shop shop Shows knowledge of Limited analysis of business 1–2 1–2 business decision making decision making No creditable content Content: Option 1: A coffee shop • Hits two of the segments form the research, so could potentially sell to 35% of the market. • Synergy between coffee shop and bakery – similar customers etc. • Other shops in local area suggest that there are potential customers. • Lower profit margin than Option 2. • Higher competition than Option 2 – four takeaway shops and five cafes – will Thomas have a USP? Option 2: A sandwich shop • Job production – will it be able to keep up with demand – however may give shop a USP over the international franchise. • Low competition compared to Option 1 – however competitor spends heavily on promotion, so may be a barrier to entry. • Higher profit margin compared to Option 1. • Hits less of a market than Option 1 (25%) but it is the biggest single segment of the market. ARA

Question 11

Market Solution (MS) MS is a public limited company in the tertiary sector. MS advises businesses on elements of the marketing mix. Most of…

Accepted Answer

2(a)(i) Define the term ‘tertiary sector’ (line 1). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 Content Businesses that sell services (intangible goods) instead of end products. 2(a)(ii) Explain the term ‘performance related pay’ (lines 12–13). 3 Award one mark for each point of explanation: Knowledge Marks Example or some other way of showing good 1 understanding Understanding of performance related 1 Understanding of a pay 1 Content: • Pay is the reward given to workers for their labour. • Performance related means that this is linked to the output that the worker produces, or by meeting a required target. ARA 2(b)(i) Refer to Table 2.1. Calculate the difference between the labour turnover 4 of the specialist marketing workers and the labour turnover of the administrative support workers. Rationale Marks Correct answer with or without correct working or % 4 Correct calculation of LT for both groups 3 Correct calculation of LT for one group 2 Formula 1 No creditable content 0 Answer = 7.5% Marketing specialists 2 × 100 = 5% 40 Administrative workers 11 × 100 = 12.5% 88 Difference 12.5% – 5% = 7.5% Number of workers who left Formula: × 100 Average number of workers OFR 2(b)(ii) Analyse how Hetti could use the ideas of two motivational theorists to 8 reduce the labour turnover of the administrative support workers. Knowledge and Level Marks Analysis (4 marks) Marks Application (4 marks) Shows understanding of Good analysis of two two motivation theories motivation theories to context improve the labour 2b 4 4 turnover for the administrative support workers Shows understanding Good analysis of one one motivation theory in motivation theory to context improve the labour 2a 3 3 turnover for the administrative support workers Shows knowledge of Limited analysis of two 1b 2 2 two motivation theories motivation theories Shows knowledge of Limited analysis of 1a 1 1 one motivation theory one motivation theory 0 No creditable content Content: • McClelland (Three Needs Theory) – Workers have a need for affiliation so may be motivated by social events, opportunities to work with colleagues etc. • Herzberg (Two Factor Theory) – The factors in the table are unlikely to motivate (i.e. hygiene factors). Do workers have enough holidays and, for example, a staff restaurant? Otherwise this could be a reason for their demotivation and labour turnover. • Vroom (Expectancy Theory) – although the bonus is part of the payment system for the admin workers it is not expected so is unlikely to motivate them and keep them in the business – are targets too high? Should the bonus be paid more often to reduce labour turnover? • Taylor (Scientific Management) – is the pay high enough to motivate – low compared to national average. • Mayo (Hawthorne Effect) – is there enough supervision – PRP suggests monitoring but is it effective? • Maslow (Hierarchy of Needs) – Table suggests that social needs are most important for the workers – are these needs being met? ARA 2(c) Explain one possible advantage to MS of being labour intensive 2 Level Knowledge and Application Marks 2 Explanation of an advantage to MS of being 2 (APP) labour intensive Explanation of an advantage of being labour 1 (K) 1 intensive 0 No creditable content 0 Content: • Can be more flexible – particularly important for MS as each business is unique) • Workforce can be flexible and respond to times of high peak need • No maintenance issues (compared to being capital intensive) • May be perceived as being better quality – some businesses may feel that the customer service is better • Can employ experts who can adapt to each customer’s needs ARA 2(d) BO has an objective to increase its revenue by targeting a younger 11 market segment (lines 25–26). Recommend how BO should change its marketing mix to achieve this objective. Justify your recommendation. Knowledge and Analysis and Evaluation Marks Marks Application (4 marks) (7 marks) Justified recommendation 7 based on argument in context Developed recommendation 6 based on argument in context An evaluative/recommendation statement based on argument in 5 context Shows understanding of Argument based on changing changing the marketing 3–4 BO’s marketing mix to achieve 3–4 mix in context their objectives Shows knowledge of the Limited analysis of changes to 1–2 1–2 marketing mix the marketing mix No creditable content Note: There are many possible changes that could be made and context is likely to come from the combination of the elements of the mix to meet the needs of the new target market. Content: • Product – need to stock books aimed at a younger audience (under 30 years) – perhaps books that are not so targeted on specific areas, or make the topics more suitable for younger readers. Could start to sell e-books. • Price – younger target market are unlikely to have such high incomes, so skimming is unlikely to be successful. May need to be more competitive in their pricing strategy or use it to penetrate the market as they will be new to this target market. • Promotion – the current below the line promotion may still be suitable. However they may need to target social media and methods more suitable for a younger audience. • Place – the retail shop may still be appropriate but it may be necessary to develop an online presence or to have distribution that suits the younger audience – postal sales are unlikely to be suitable. ARA

Question 12

Super Heroes (SH) SH is a leisure (theme) park aimed at 10–18 year olds. It is owned by two companies, X and Y, which started SH as a joint…

Accepted Answer

Question Answer Marks 1(a)(i) Define the term ‘joint venture’ (line 2). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 Content A business arrangement where two or more businesses (parties) agree to pool resources for a specific task. A business entity created by two or more businesses with a common interest. 1(a)(ii) Explain the difference between ‘redundancy’ and ‘dismissal’ (line 28). 3 Award one mark for each point of explanation: Knowledge Marks Explanation of the difference between A 3 redundancy and dismissal B An understanding of redundancy (may be implied) 1 C An understanding of dismissal (may be implied) 1 Content: • Redundancy is where an employee is made to leave an organisation because their job role is no longer required. • Dismissal is where an employer ends a worker’s employment • The difference is that redundancy is about the job role not being required any more, whereas dismissal is when the employee is no longer required. (A mark, B and C implied) • Redundancy can only happen after two years’ service, whereas dismissal can occur at any point in employment. (A mark, B and C implied) ARA 1(b)(i) Refer to Table 1.1 and any other information. Calculate the total revenue 4 from entrance tickets for SH in 2019. Rationale Marks Correct answer with or without correct working or $ 4 Correct calculation of number of customers 3 Correct calculation of TVC 2 Formula 1 No creditable content 0 Note: A correct answer must (in some way) be expressed in millions (e.g. m) Answer = $110m TC − FC Quantity = VC (per unit) $42m – $12m = $30m (TVC) $30m = 10m customers $3m 10m × $11 = $110m revenue 1(b)(ii) Explain one way in which SH could increase the sales of entrance tickets. 2 Level Knowledge and Application Marks 2 Explanation of a way to increase sales of 2 (APP) entrance tickets in context 1 (K) Explanation of a way to increase sales/revenue 1 0 No creditable content 0 Note: This question is specifically about ‘entrance tickets’. Answers which focus on increasing revenue by other means (e.g. restaurants, fast-track etc.) are unlikely to be contextual. The hotel option gives customers FREE entrance tickets so is unlikely to be contextual. Content: • Develop the rides e.g. the VR ride • Decrease the price – may be elastic because of competition • Selling through different distribution channels e.g. advance tickets, online tickets etc. • Promotion – any method in context ARA 1(c) Analyse two factors that may have determined the location of SH. 8 Knowledge and Analysis (4 marks) Level Marks Marks Application (4 marks) Shows understanding Good analysis of two (or of two (or more) more) factors which may 2b factors which may 4 determine location in 4 determine location in context context Shows understanding Good analysis of one of one factor that may factor that may 2a 3 3 determine location in determine location in context context Shows knowledge of Limited analysis of two two (or more) factors (or more) factors which 1b 2 2 which may determine may determine location location Shows knowledge of Limited analysis of one 1a one factor that may 1 factor that may 1 determine location determine location 0 No creditable content Content: • Access to employees – SH employs 200 f/t workers and 50 seasonal • Access to suppliers – restaurants, shops, builders etc. • Space – large rides (2 km2 of land), car park etc. • Access to customers – 10m customers a year • Access to raw materials – water rides etc. • Infrastructure – ease of access for visitors ARA 1(d) Recommend which one of the two options SH should choose for internal 11 growth. Justify your recommendation. Knowledge and Application Analysis and Evaluation Marks Marks (4 marks) (7 marks) Justified evaluation based 7 on arguments in context Developed evaluation based on arguments in 6 context An evaluative statement based on arguments in 5 context Shows understanding of the Arguments based on the two options for internal 3–4 two options for internal 3–4 growth growth Shows knowledge of internal Limited analysis of internal 1–2 1–2 growth growth No creditable content Content: Option 1: A new Virtual Reality (VR) ride • May improve the popularity of the theme park • New modern technology (VR) is likely to appeal to the target market (10– 18 year olds) • Significantly lower cost than hotel ($2m compared to $15m) • Less time closed (3 months compared to a year) • Can be completed in off-peak time • No redundancy payments or risk of unfair dismissal Option 2: A hotel • Keep up with competitors • New revenue source – high price rooms • More opportunity to spend longer time in park – restaurants, shops etc. • May be an opportunity to get rid of poorly performing employees (are they the reason why customers have decreased on the Iron Blaster ride?) ARA

Question 13

Bilal’s Homes (BH) Bilal is a sole trader, who buys and sells apartments for a profit. Bilal left university two years ago and moved back t…

Accepted Answer

Question Answer Marks 1(a)(i) Define the term ‘market research’ (line 15). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 Gaining information about the potential customers for a product/service A correct definition should include the following elements: • Gaining information / finding out about • about the potential customers for a product/service. Exemplar Rationale Marks Finding out about potential Both elements 2 customers for a food Researching about One element 1 customers for a good Finding information about the One element and a tautology. 1 market Researching the market Tautology 0 ARA 1(a)(ii) Explain the term ‘social awareness’ (line 29). 3 Knowledge Marks C Example or some other way of showing good 1 understanding, e.g. one of Goleman’s competencies B Understanding of the issues/problems/have empathy 1 with A Understanding that it is do with 1 society/community/organisations/people Social awareness – an understanding of the problems that different members of society / the community / an organisation face; having empathy/understanding of the issues in a business e.g. is able to negotiate successfully. Exemplar Rationale Marks According to Goleman’s All three elements 3 competencies (C) it means understanding a society’s (A) problems (B). Having empathy with the A and B 2 issues (B) facing a community (A) Understanding a society (A) A only. There must be 1 understanding that it is to do with issues to gain the B mark. Being aware of social norms Tautology 0 ARA 1(b)(i) Refer to Table 1.1. Calculate the profit margin Bilal made on the last 4 three apartments that he bought and sold. Rationale Marks Correct answer(s) with or without correct working or units 4 Correct calculation of total revenue AND total profit(s) 3 Correct calculation of total revenue OR total profit(s) 2 Formula (can be implied from the correct use of figures) 1 No creditable content 0 Award full marks for a correct answer, with or without working or % Content Formula: Total revenue × 100 (1) Total profit Apartment A – $14 000 profit $14 000 × 100 = 17.5% $8000 Apartment B – $20 000 profit $20 000 × 100 = 13.33% $150 000 Apartment C – $10 000 loss $–10 000 × 100 = –14.29% $70 000 Total = $24 000 total profit Total revenue = $80 000 + $150 000 + $70 000 = $300 000 (1) $24 000 × 100 = 8% (4) $300 000 OFR 1(b)(ii) Explain one way in which Bilal may add value to the apartments he 2 buys. Level Knowledge and Application Marks 2 (APP) Explanation of a way in which Bilal may add- 2 value to the houses that he sells 1 (K) Identification of a way of adding value 1 0 No creditable content 0 Knowledge may include: • Difference between the price of a product and cost of inputs • Increase in value of a product/service created by a business • Created by the production process Application may include: • Renovation – Bilal might decorate, alter the layout, renew the bathroom/kitchen (allow any reasonable renovation of an apartment). • Brand name – Bilal has been doing this for two years and house buyers may see his houses as being of a high-quality • Buying at a low price • Increasing the quality of the house ARA 1(c) Analyse two factors which could influence the demand for buying 8 apartments in city W . Knowledge and Level Application Marks Analysis (4 marks) Marks (4 marks) 2b Shows 4 Good analysis of 4 understanding of two factors which two factors which could influence could influence demand in context demand in context 2a Shows 3 Good analysis of 3 understanding of one factor which one factor which could influence could influence demand in context demand in context 1b Shows knowledge 2 Limited analysis of 2 of two factors which two factors which could influence could influence demand demand 1a Shows knowledge 1 Limited analysis of 1 of one factor which one factor which could influence could influence demand demand 0 No creditable content Factors influencing demand could include: • Price expectations/substitutes/complements – the price of the apartment will influence demand because it will affect the disposable income for potential customers. • Mortgage rates – people often purchase apartments with a mortgage, so the rate at which the mortgage is repaid will affect their ability to purchase • Tastes and preferences – the area in which the apartment is located may affect the willingness of customers to purchase • Competition – the other apartments in the area for sale/rent will affect people’s willingness to purchase • Income levels • Fashion – how trendy an area is Context could come from relating to: • Property market • City e.g. to find jobs, avoid commuting • Value added from renovations • Renting versus buying ARA 1(d) Recommend whether Bilal should enter into a business partnership 11 with Sophie. Justify your recommendation. Analysis and Knowledge and Marks Evaluation Marks Application (4 marks) (7 marks) Justified 7 recommendation based on arguments in context Developed 6 recommendation based on arguments in context An evaluative 5 statement/recommendati on based on arguments in context Shows understanding of 3–4 Arguments based on 3–4 a partnership in context Bilal entering into a partnership with Bilal. Shows knowledge of a 1–2 Limited analysis of 1–2 partnership becoming a partnership No creditable content Knowledge may include: • Two or more owners of a business • Unlimited liability • Possibility of conflicts • Share decisions/skills/profits/losses Application may include: • Bilal will have to share his profit with Sophie – however Sophie’s profit margin (11%) is higher than Bilal’s at 8%. • Sophie has managed to buy and sell more houses than Bilal in the past year. • Sophie has a lower success rate (four out of six made profit) compared with Bilal (four out of five made profit, in total). • Sophie has working capital of $150 000 which may allow Bilal to take advantage of the housing boom. • Sophie has the social skills that Bilal lacks – may help to find buyers / be able to sell at higher prices / negotiate better rates with contractors – so add more value • Bilal does not like working with other people – will this put him outside of his comfort zone. 1(d) Arguments may include: • Have to share profits • Less control for Bilal • May disagree over direction of the business However: • Spreads the risks • Sophie’s skills complement Bilal’s • She can contribute capital Recommendation based on arguments ARA

Question 14

Delicious Chicken (DC) DC is a fast-food restaurant that specialises in fried chicken and chips (fried potatoes). DC is a small business an…

Accepted Answer

2(a)(i) Define the term ‘Unique Selling Point’ (line 8). 2 Level Knowledge and Application Marks 2 A correct definition 2 1 A partial, vague or unfocused definition 1 0 No creditable content 0 The special feature of a product/business that differentiates it from competitors’ products, e.g. lower price, extra features, lower fat… A correct definition should include the following elements: • a special, distinct, different element of a product and/or its marketing • that differentiates it from the competition / other products. Exemplar Rationale Marks A USP is something that Both elements 2 makes a product different from the competitors. Something that makes a No mention of what it is 1 product different and stand different from out. A USP is a unique point of a 0 product. ARA 2(a)(ii) Briefly explain the term ‘customer orientated’ (line 6). 3 Knowledge Marks C Example or some other way of showing good 1 understanding, such as that it is the opposite of product orientation. B Understanding that the focus is on the needs/wants 1 of the purchaser/consumer/market. A Knowledge that customer orientation is about the 1 marketing/marketing mix of a business. Putting the satisfaction of the customers’ needs at the heart of the marketing process. Opposite of product orientation where the firm places the features of the product at the centre. May be based on market research to find out customer needs. ARA 2(b)(i) Calculate the labour turnover for the Night Team. 3 Rationale Marks Correct answer with or without correct working or % 3 Use of correct calculation 2 Formula or correct figures 1 No creditable content 0 Workers who left = 4 Total workers in team = 16 Formula: Number of workers who left × 100 Total number of workers 4 × 100 = 25 (%) 16 2(b)(ii) Explain one problem for DC of high labour turnover. 3 Level Knowledge and Application Marks 2 Explanation of problem of high labour turnover in 3 (APP) context 1b Explanation of problem of high labour turnover 2 (K+K) 1a Identification of problem of high labour turnover 1 (K) 0 No creditable content 0 Knowledge may include: • Recruitment costs • Training costs • Loss of skills and expertise • Bad publicity • Poor quality customer experience Application may include: • Use of figures from Table 1, including OFR from Q2(b)(i) (Night Team = 25%, Afternoon team = 10%, combined = 19%) • DC has one shop in busy town • High level of competition • Loyal customer base (2-3 times a week) • Customer orientated business • Comparison between teams (night and day) • Autocratic leadership style (may link to increased training costs) ARA 2(c) Analyse two disadvantages to DC of being a small business. 8 Knowledge and Level Application (4 Marks Analysis (4 marks) Marks marks) 2 Good analysis of two disadvantages 4 of being a small Shows business in context understanding of 3–4 small businesses in Good analysis of context one disadvantage of 3 being a small business in context 1 Limited analysis of two disadvantages 2 of being a small business Shows knowledge 1–2 of small businesses Limited analysis of one disadvantage of 1 being a small business 0 No creditable content Knowledge may include: • Measurements of business size • Family businesses • The role of small businesses in the economy • The role of small businesses as part of the industry structure Application may include: • Restaurant (secondary and tertiary) serving fried chicken (ethically produced) and chips • One shop in a busy town, owned and managed by Kate • Highly competitive market • Loyal repeat customers • Customer orientated • Two teams (Afternoon and Night) – no swapping teams • Use of data from Table 1, linked to size/flexibility • High absenteeism and high labour turnover 2(c) Analysis may include: • Costs may be higher due to not gaining economies of scale (but not diseconomies of scale) • May not be able to compete with promotion of bigger chains • Prices are likely to have to be higher than competition • Very risky – all risk in one market • Kate may not have access to enough sources of finance • Kate may lack expertise needed in some areas of the business and not be able to employ specialists ARA 2(d) Discuss ways in which DC could solve the motivation problems in the 11 Night Team. Analysis and Knowledge and Marks Evaluation Marks Application (4 marks) (7 marks) Justified evaluation based on argument in 7 context Developed evaluation based on argument in 6 context An evaluative statement based on argument in 5 context Shows understanding of Argument based on two two ways in which DC ways in which DC could could solve the 4 solve the motivation 4 motivation problems in problems in the night the Night Team. team Shows understanding of Argument based on one one way in which DC way in which DC could could solve the 3 solve the motivation 3 motivation problems in problems in the night the Night Team. team Limited analysis of two ways to solve motivation 2 problems Shows knowledge of 1–2 motivation Limited analysis of one way to solve motivation 1 problems No creditable content Knowledge may include: • Motivation as a tool • Human needs • Motivation theories • Motivation methods in practice (financial and non-financial) 2(d) Application may include: • Restaurant (secondary and tertiary) serving fried chicken (ethically produced) and chips • Customer orientated • Two teams (Afternoon and Night) – No swapping teams • Use of data from Table 1, linked to labour turnover / conditions of work / pressure of work • High absenteeism and high labour turnover • Autocratic leadership of Bill, the team leader Arguments may include: • Bill’s autocratic leadership style – could be demotivating to Night Team workers who want more of a say in their workplace. • Links to Maslow and Herzberg. • Solutions – training Bill, new team leader, job rotation/enlargement, other forms of worker motivation etc. • Unsociable hours – the Night Team work evenings until early morning, this can affect sleep patterns and family life. • Link to other theorists. • Solutions – change hours, other forms of motivation etc. • Same pay as Afternoon Team but worse hours (and probably conditions). • Change remuneration, non-financial motivation methods, etc. • Night Team serve 100% more customers on average per hour than Afternoon Team but only 60% more workers in team – this could mean the Night Team is overworked – again link to theorists. Evaluation may include: • A judgement over the best way to solve the motivation problems in the Night Team • Evaluation of ways to solve the motivation problems in the Night Team • What the choice of method(s) may depend upon • Evaluation of the relative advantages/disadvantages of proposed methods in the given context. ARA

Question 15

Seaside Hotel (SH) SH is a large hotel located in a tourist area of country H. SH has 120 rooms and employs 42 workers during the peak (bus…

Accepted Answer

2(a)(i) Define the term ‘redundant’ (line 16). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 Content: An employee loses their job when a business no longer has the need for their job role. A correct definition will include the following points:  A form of dismissal e.g. they lose their job, ‘let go’ etc…  When the job role is no longer needed Exemplar Marks Rationale When an employee loses their 2 Both elements covered job because their role is no longer needed Redundancy is when a job is not 2 Both elements covered necessary and the worker is dismissed. When a contract is terminated 1 Only one element due to not being able to afford the wages. When an employee is dismissed 1 One element from a job. When something is no longer 1 One element – must be needed. an idea of losing a job or dismissal. When an employee is made 0 A tautology. redundant. ARA 2(a)(ii) Explain the term ‘joint venture’ (line 25). 3 Award one mark for each point of explanation: C Example or some other way of showing good 1 mark understanding, i.e. formal contract. To award C there must be understanding that this is not a merger (i.e. remain separate businesses). B Shared 1 mark risk/reward/facilities/staff/capital/knowledge/experience/ promotion etc… A Two or more businesses/parties agreeing to work 1 mark together Note: A joint venture is not a merger. 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: This is normally when two (or more) businesses agree to work together to share expertise/finance/rewards from a project. Example, two companies working together to create a new product. Will be formalised in a contractual agreement. Exemplar Mark Rationale A joint venture is when two business 3 Both elements come together to do a certain project. included and an They might share their resources. For example. example, if Nissan and Toyota worked together to make a new electric car. When more than one party work 3 Both elements and a together and they share the profits. way of showing This may require a contract to show good understanding who gets what. When two or more businesses come 2 Both elements BUT together, share the risk and reward. the example is An example is the joint venture of SH copied form the to use their restaurant facilities. data, so only two marks. 2(a)(ii) Exemplar Mark Rationale When two or more business work 1 One element – do together for example if Nissan and not award C mark if Toyota work together to produce a A and B not new electric car. awarded. When more than one party works 1 One element. together on a project. 2(b)(i) Refer to Table 2.2 and any other information. Calculate the average 2 margin of safety from April to September 2021. Rationale Marks Correct answer with or without correct working or units 2 Formula or correct calculation of current level of production 1 No creditable content 0 Content: Level of production – break-even level of production (120 / 100)  95 = 114 rooms (1) 114 rooms – 72 rooms = 42 (1) rooms (OFR) Answer = 42 rooms is the average margin of safety (2) accept 35% (must include % sign) Alternative route: BE level = 60% (1) Current level = 95% Margin of safety = 35% (2) Common incorrect answers Answer Mark Rationale 42 (no working) 2 ‘Rooms’ not needed. 35 (no working) 1 If candidate has used this method, then they must include % for both marks. 95% of 120 = 114 1 If there is a correct calculation of 120 – 114 = 6 rooms the current level of output, award 1 mark. 114 1 Correct calculation of current level 72 = 1.583 of output. 1.583 (no working) 0 You must be able to see the calculation of the current level of output to reward a mark, if the answer is wrong. 2(b)(i) Answer Mark Rationale Current production – 1 Correct margin of safety formula. BE level Current production = 1 The candidate miscalculated the 115 current level of production, but the 115 – 72 = 41 last stage is correct based on their own figure. So OFR and 1 mark. 2(b)(ii) Explain two possible limitations to SH of using break-even analysis. 4 Level Knowledge and Application Marks 2b Explanation of two limitations of using 4 (APP + APP) break-even analysis in context 2a (APP) Explanation of one limitation of using break- 3 even analysis in context 1b Knowledge of two limitations of using break- 2 (K + K) even analysis 1a (K) Knowledge of one limitation of using break- 1 even analysis 0 No creditable content 0 OFR may be based on calculation in Question 2(b)(i). One contextual limitation that is awarded K and APP must always gain 3 marks The answer must be a limitation of break-even, not a generic ‘inaccurate’ answer. Content:  Unrealistic assumptions – assumes each room is sold at the same price, unlikely for a seaside hotel  Assumes that the fixed costs are constant – such as the market costs when producing promotional materials for the hotel.  Assumes constant average variable costs – however 42 workers employed at peak season suggests that this is not true  Based on an average – may not be useful information about peak (busy/holiday) and off-peak times  Does not include any income from the joint venture with the restaurant.  Assumes all output will be sold ARA Exemplar Mark Rationale It assumes that variable costs 4 BE does assume remain constant (K), for example constant VC, and the the cleaning may be different for context of cleaning and each room (APP). It assumes the rooms. Second price is the same (K) for each room limitation is also correct (APP). and in context. 2(b)(ii) Exemplar Mark Rationale BE assumes the price does not 3 Clear limitation and change (K), which is wrong for a context. hotel (APP). Second limitation is not BE is also based on an estimate in context. (K) It is only based on an average (K) 3 Clear limitation and for peak season (APP). context. Based on estimates (K) 1 Clear limitation but no context May not be accurate, because it is 0 Not a specific limitation based on a hotel. of BE. 2(c) Analyse one possible advantage and one possible disadvantage to SH 8 of Tia’s autocratic leadership style. Level Knowledge Marks Analysis (4 Marks and marks) Application (4 marks) 2b Shows 4 Good analysis 4 knowledge of of one one advantage advantage and APP DEV and one one + + disadvantage disadvantage of autocratic of autocratic APP DEV leadership in leadership in context context 2a Shows 3 Good analysis 3 knowledge of of one one advantage advantage or disadvantage or APP onedisadvantage DEV of autocratic of autocratic leadership in leadership in context context 1b Shows 2 Limited 2 knowledge of analysis of one one advantage K advantage and AN and one + one + disadvantage K disadvantage AN of autocratic of autocratic leadership leadership 1a Shows 1 Limited 1 knowledge of analysis of one one advantage advantage or or K one AN disadvantage disadvantage of autocratic of autocratic leadership leadership 0 No creditable content Annotate advantage on the left and disadvantage on the right 2(c) Indicative content AO1 Knowledge and understanding Knowledge advantages of autocratic leadership style may include:  Speed of decision-making  Unambiguous objectives/commands  Clear chain of command  May increase productivity  Less need to train/skill employees Knowledge of disadvantages of autocratic leadership may include:  Lack of creativity  May cause demotivation  May stifle communication  Subordinates are unable to make any decisions AO2 Application  Tia is one of three managers at SH  Tia has responsibility for cleaners: – Areas must be cleaned to the required standards – Health and safety issues (chemical cleaners, use of cleaning equipment, etc.) – Coordination over 12 cleaners over 120 rooms – Half of the cleaners are temporary employees only employed during the peak season – Likely to be relatively low-skilled/pay  Tia also has responsibility for the Marketing employees: – Designing (creativity) of promotional materials – 7 marketing employees – Likely to be relatively high-skilled/pay  Most employees are likely to be customer facing in a hotel  Average of 95% capacity utilisation in peak season (busy hotel)  Objective to increase value added to the service that SH provides. AO3 Analysis Advantages may include:  Speed of decision-making: in peak season, Tia has a large span of control. Autocratic leadership may be a more efficient way of controlling and co-ordinating this number of employees – increased productivity and decreased costs.  Unambiguous objectives/commands: can ensure a standard level of quality ‘fit for purpose’, essential with cleaning – may help SH to achieve their objective of increasing value added, increase repeat customers.  Clear chain of command: enables the team to clean the 120 rooms efficiently – reduced costs, increased profitability.  May increase productivity: clear commands may allow the Marketing employees to produce standardised promotional material which is more likely to fit the image of SH – increased sales profit.  Less need to train/skill employees: new cleaners are recruited each year (in peak season) so an autocratic style is likely to be appropriate as they may only work for a few weeks/months and need to be trained and supervised quickly. 2(c) Disadvantages may include:  Lack of creativity: marketing employees are likely to need to be creative, especially with the cross advertising with the hotel. This will have a direct impact on sales – increased revenue and profit for SH.  May cause demotivation: especially for the marketing employees with reduced quality of marketing materials – poor sales/growth.  May stifle communication: Tia may not find out about problems in the hotel reduced quality – lower sales/profit.  Subordinates unable to make any decisions: 19 workers for Tia to manage – how can she be autocratic and directly supervise so many workers – might this lead to them only working hard when Tia is directly observing/supervising them – reduced productivity and increased costs. Examples of how an answer could develop and how it should be annotated. K APP AN DEV An advantage Which means This is likely to Increasing the could be that it that Tia can lead to better chance of is quick. make fast quality rooms repeat sales. decision about for customers. what cleaning needs to be done. However, it may in the marketing This is likely to reducing SH’s reduce department. lead to poor sales revenue. creativity quality promotions, 2(d) Recommend how SH can increase the value added to its service. 11 Justify your recommendation. Knowledge and Marks Analysis and Marks Application (4 Evaluation marks) (7 marks) Annotation Annotation Justified 7 EVAL recommendation based on arguments + EVAL in context + EVAL Developed 6 EVAL recommendation based on arguments + in context EVAL An evaluative 5 statement / recommendation EVAL based on arguments in context Shows 4 Argument based on 4 understanding of APP two ways of adding DEV two ways of adding + value in context + value in context APP DEV Shows 3 Argument based on 3 understanding of one way of adding one way of adding APP value in context DEV value in context Shows knowledge 2 Analysis of two ways 2 of two ways of K of adding value AN adding value +K + AN Shows knowledge 1 Analysis of one way 1 of one way of of adding value K AN adding value No creditable content 0 Note: the two ways may come from the same piece of knowledge (i.e. new facilities). 2(d) Indicative content AO1 Knowledge Knowledge of ways of adding value, including:  Branding  Advertising  USP  Additional services  Additional product benefits  Reducing cost  Increasing quality. Application may include:  Hotel – rooms  Customer service - guests  Cleaning  Promotional materials (SH branding)  Views of the sea  Local tourism  Does not currently have a restaurant  Joint venture with local restaurant Analysis may include:  Branding: common in the hotel industry, a brand name can increase the price of a room – increasing profit margin.  Advertising: to increase the number of customers who are aware of SH increasing sales of rooms – increased profit.  USP: by adding something unique to SH’s hotels it makes the service different from competitors allowing SH to charge a higher price – increased profitability.  Additional services: can differentiate SH from competitors allowing SH to charge a higher room rate – however the additional services can increase costs and reduce profit.  Reducing services: stopping the joint venture to allow higher revenue from a restaurant – higher profit.  Additional product benefits: offering refreshments, for example, can give SH more opportunities for sales, increasing revenue – increased profit.  Reducing costs – being more efficient or getting rid of unnecessary services may allow SH to reduce costs and increase profitability – however customers may demand a lower price to compensate for the reduction in perceived quality.  Increasing quality: increasing the price customers are willing to pay – increased profit. Evaluation may include:  A judgement/evaluation over the suitability/usefulness of way(s) of adding value  Evaluation of the relative benefits/costs of different ways  Elements that the evaluation/judgement might depend upon: tourism, weather, current perception of SH, response from local competitors. ARA 2(d) Example of how an answer could develop and how it should be annotated. K APP AN DEV EVAL Develop a for high- This And Overall, it would USP quality means that increases be better for SH rooms. SH can the profit to develop a USP charge a made on (EVAL) because higher each room they will maintain price their quality standards which Reduce By making This could However, it is important in a costs some of increase may mean hotel (EVAL). the the profit of lower However, it cleaners SH quality depends on how redundant. rooms and SH’s competitors less sales. respond (EVAL).

Question 16

Office Furniture Designs (OFD) Markus is an entrepreneur and is planning to set up a private limited company called OFD in four weeks’ time…

Accepted Answer

1(a)(i) Identify one quality an entrepreneur needs for success. Indicative content Identification of a quality may include:  Creativity  Innovation  Risk-taking  Effective communicator  Ability to negotiate  Confidence  Determination  Hard-working. Accept all valid responses. Question Answer Marks 1(a)(ii) Explain the term opportunity cost. 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 opportunity cost may include:  Opportunity cost is the benefits forgone/lost of the next best alternative/when a decision is made.  What is lost when a decision is made. AO2 Application Limited application applies knowledge of opportunity cost to a  choice/decision OR to the lost benefit. Developed application + applies knowledge of opportunity cost to a  choice/decision AND to the lost benefit. Application can be made to Markus/OFD or any other scenario/context/business/person. Accept all valid responses. 3 Question Answer Marks 1(a)(ii) Exemplar and annotations Mark Rationale The next best alternative that has been given up . For example, if Markus chooses to spend money on customer services and not marketing then the opportunity cost would have been the loss of the marketing benefits . 3 An answer which starts with the knowledge and then applies it to Markus. The next best thing forgone when making a decision . A business could choose to buy some desks , but they would miss out on being able to buy chairs . 3 Again, knowledge first, followed by application to a decision (choose to buy some desks) and to the lost benefit (not being able to buy chairs). If a business has £100 and they choose to buy inventory instead of fuel , then the opportunity cost is the lost benefit of the fuel because it has been lost . 3 A different way of answering the question. There is application of both elements of opportunity cost (the choice and the lost benefit) as well as clear knowledge of the concept by the end of the response. The next best opportunity forgone . For example, when you choose to buy a chocolate bar . 2 Clear knowledge. Some application of a choice, but not the lost benefit. What you miss out on when a decision is made . 1 Not a perfect definition, but enough to award the knowledge mark. No attempt to apply. It is about choices that have to be made by a business, for example choosing to buy a new piece of machinery. 0 No knowledge of opportunity cost. Too vague. Question Answer Marks 1(b)(i) Refer to Table 1.1. Calculate the forecast closing balance for August 2023. Indicative content Formula to find closing balance = Net cashflow for month + Opening balance (1) Knowledge that closing balance of one month is the opening balance of the next month (written explanation or demonstration by completing the cash flow forecast) (1) June July August Cash sales 8 12 15 Credit sales 0 15 24 Total cash inflows 8 27 39 Supplies 25 32 34 Utilities 3 3 4 Rent 15 15 15 Salaries/wages 10 11 11 Operating expenses 5 7 8 Total cash outflows 58 68 72 Net cash flow (50) (41) (33) Opening balance 10 (40) (81) Closing balance (40) (81) (114) 3 Question Answer Marks 1(b)(i) Final answer for X = (114) (1) Answer = ($114 000) or –114 000 allow –114 (3) OFR applies Allow 2 marks for $114 000 or 114 000 or 114 Marks 3 marks Correct answer (including minus) (114 000) or –114 000 allow –114 and (114) Working and $ do not matter. Allow brackets or minus sign to denote a negative number. Must be three to denote the three marks. 2 marks Two of the following:  Correct formula  Correct calculation of Net Cash Flow (33) or -33  Correct identification of opening balance (81) or -81 OR An incorrect answer with one mistake allowing OFR for final stage. OR $114 000 or 114 000 or 114 (no minus) 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 Net Cash Flow (–33)  Correct identification of opening balance (–81) 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 1(b)(ii) Explain one factor that will influence Markus’ choice of a source of finance. 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 factor that may affect the choice of source of finance :  Cost of finance  Flexibility  Need to retain control  The use/reason/amount needed  Level of existing debt/cashflow. AO2 Application Limited application , applies knowledge to Markus/OFD once. Developed application + applies knowledge to Markus/OFD twice. Application of a factor may include:  OFD is a new business  OFD will be a private limited company  Markus will have limited start-up funds  OFD will operate in a highly competitive market  Data from Table 1.1 3 Question Answer Marks 1(b)(ii)  Answer from Q1b(i) (OFR applies)  OFD will offer customers one month trade credit  OFD’s suppliers may insist on payment on delivery (immediate payment). Accept all valid responses. Exemplar and annotations Mark Rationale A factor would be flexibility , because OFD needs $40 000 in June but this increases to $114 000 by August . 3 Flexibility is a reasonable factor, explained in the specific context of OFD/Markus by using the data in Table 1.1. Markus may want to keep control of OFD , so he would not want to sell any of the shares of the new private limited company . 3 Keeping control is and there are two specific pieces of context based on this so two . OFD is a new business and Markus has limited start-up funds so the most important factor is how much debt he already has . 3 Although the appears first, it cannot be awarded until the has been found. However, there is obvious , so you can go back and award the . Markus chose trade credit so that he can have inventory which is vital to a new business . 2 The fact that Markus chose trade credit is irrelevant, however the use of the source of finance is . The context of new business linked to this is reasonable , but only one point of application. How much it costs because the more it costs the worse his cashflow will get. If the cashflow is poor, he may build up debts and the business might ultimately fail. 1 Knowledge of a factor. The rest of the answer is not applying it to the context, so (Not Answering Question). Markus has chosen trade credit, which may mean he can improve his cashflow in June by reducing the outgoings by $25 000. This means that the closing balance will only be ($15 000) and mean that he may only need a small overdraft . 0 Although there is some relevant context, there is no knowledge of a factor, so no marks can be awarded. Question Answer Marks 1(c) Analyse two benefits to OFD of offering induction training to all employees. Level AO1 Knowledge and understanding 2 marks AO2 Application 2 marks AO3 Analysis 4 marks 2 3–4 marks Developed analysis  Developed analysis that identifies connections between causes, impacts and/or consequences of two points.  Developed analysis that identifies connections between causes, impacts and/or consequences of one point. 1 1–2 marks  Knowledge of two relevant points is used to answer the question.  Knowledge of one relevant point is used to answer the question. 1–2 marks  Application of two relevant points to a business context.  Application of one relevant point to a business context. 1–2 marks Limited analysis  Limited analysis that identifies connections between causes, impacts and/or consequences of two points.  Limited analysis that identifies connections between causes, impacts and/or consequences of one point. 0 0 marks No creditable response. 0 marks No creditable response. 0 marks No creditable response. Annotate the first benefit in the left-hand margin and the second benefit in the right-hand margin. 8 Question Answer Marks 1(c) Indicative content AO1 Knowledge and understanding Knowledge of the benefits of induction training (max 2 s), may include:  Understanding workplace issues  Knowing who you are working with; organisational structure  Information about basic terms and conditions, e.g. holiday entitlement  Information about the goods/services sold, e.g. desks and office chairs  IT training to help new employee use the IT system  Basic customer service training/expectations  How to ensure that the products are fit for purpose AO2 Application Max one for application in the first benefit and max one for application in the second benefit, including;  OFD is a new business (do not reward repetition of the question)  Entrepreneur  Private limited company  Opening in four weeks’ time  Business took several months to set up  Limited start-up funds  Eight employees; five employees in warehouse, three in customer service  All employees are new / undergo induction together  Two-week induction training  Competitive service  High-quality customer service  Operate in a warehouse (but does not manufacture furniture)  Sell direct to customers (online retailer). Question Answer Marks 1(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.  All of the five employees are new and undergo induction together. It will help to ‘build’ the new team by helping them get to know each other so they will start to work productively quicker.  As it is a new business, the employees can agree the processes/procedures to operate and solve any potential issues before opening.  Markus is keen to offer a high-quality customer service. The induction training is an ideal time to embed a high-quality culture throughout the business.  The employees will become familiar with the technology used to operate the online retail business.  The training will motivate the employees as they will feel valued by their new employer which will encourage them to work hard.  The employees will settle in quicker as a result of the induction training, reducing labour turnover. This will save recruitment costs as Markus will not have to replace employees. Accept all valid responses. Exemplar and annotations AO1 Knowledge AO2 Application AO3 Analysis The workers will understand the health and safety rules by spending two weeks on the induction training. The employees are less likely to have an accident which could reduce the productivity of OFD which may mean that the business is more likely to survive its first year of trading . It will improve teamwork of the three customer service assistants which may mean that the customers get better customer service, feel loyal to the business and repeat purchase . Question Answer Marks 1(d) Evaluate whether Markus needs accurate cost information before setting up OFD. 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 Question Answer Marks 1(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 cost information (max 2 s), including:  Costs are the amounts a business incurs when producing products and services.  Cost information data may be required to set up and operate the business, including pricing.  Cost information allows a business to calculate profit, profit margins, break-even etc.  There are many different types of costs: fixed, variable, direct and indirect.  A business may not have actual cost information – only estimates. AO2 Application Limited application applies knowledge of cost information to OFD once. Developed application + applies knowledge of cost information to OFD twice.  OFD is a new business / opening in four weeks  Use of data from Table 1.1  OFD will operate in a competitive market  Limited start-up funds Question Answer Marks 1(d)  Five warehouse employees  Three customer service assistants 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.  Cost information is used to create financial forecasts. If the data is inaccurate, Markus’ predictions will be incorrect and may lead to him overspending and getting into debt.  Cost information supports the cashflow forecast which will be used for decision making. Inaccurate information will lead to poor decision making, e.g. pricing of products or applying for finance.  It is challenging to predict everything that could happen, especially for a new business. Unexpected events could have major implications for costs.  Cost information will be used to make profit predictions and monitor/improve business performance. 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.  Relative importance of cost information – are other issues more important, e.g. potential customer demand, marketing, qualities/skills of the entrepreneur setting up the business  Accuracy depends on the Markus’ market research and business knowledge/experience. Significant events may occur that could impact the accuracy of the cost information, e.g. global pandemic  Is this the first business that Markus has set up/run?  The impact of inaccurate cost predictions may be reduced by higher-than-expected income.  The more time spent on cost predictions, the more likely they are to be accurate. However, is the benefit of accurate cost information worth the opportunity cost of the time spent?  A judgement that other factors are more important than cost information. Accept all valid responses. Question Answer Marks 1(d) Exemplar and annotations Markus needs accurate cost information so that he can accurately price his products . This is particularly important as OFD is operating in a competitive market . With accurate cost information, Markus can make sure the price includes an adequate profit margin and is not too high which could put off the business customers and reduce sales which could lead to OFD not making any profit . Therefore, Markus is highly unlikely to get his pricing strategy correct without accurate cost information and pricing is likely to be the most important aspect in this highly competitive market . However, this depends on whether Markus can obtain accurate cost information . The data can only be an estimate as OFD is a new business, and he might be better to just copy the cost and price information of one of his competitors and save the time involved in calculating accurate costs for OFD . AO1 – 2 marks AO2 – 2 marks AO3 – 2 marks AO4 – 6 marks TOTAL – 12 marks

Question 17

Fretter’s Music (FM) FM is a private limited company based in country Z. FM manufactures a range of musical instruments, such as guitars an…

Accepted Answer

1(a)(i) Identify one element of the marketing mix. Indicative content Identification of an element may include:  Place  Price  Product  Promotion Accept all valid responses. Question Answer Marks 1(a)(ii) Explain the term consumer market. 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 consumer market may include:  Somebody who buys goods or services.  For their own personal use/is the end user/final consumer. AO2 Application Limited application  applies knowledge of consumer market to a product OR business. Developed application +  applies knowledge of consumer market to a product AND a business. Application can be made to FM or any other scenario/context/business/product. Accept all valid responses. 3 Question Answer Marks 1(a)(ii) Exemplar and annotations Mark Rationale Sells products directly to consumers rather than businesses FM sells instruments to customers . 3 An answer which starts with the knowledge and then applies it to FM. Sell to the final user known as B2C , FM sell musical instruments to musicians and students who are the final users . 3 Again, knowledge first, followed by application to a business scenario (B2C) and to a product (musical instruments). Selling musical instruments to students not to other businesses as musicians and students are the final consumers . 3 A different way of answering the question. There is application of both elements of consumer markets (the product and businesses) as well as clear knowledge of the concept by the end of the response (final consumers) Goods sold to end user , not sold to other businesses . 2 Clear knowledge. Some application to businesses, but not a product. The buyers are the final consumers . 1 Not a perfect definition, but enough to award the knowledge mark. No attempt to apply. Market for consumers to buy something and uses branding to promote product to wholesalers . 0 Starts with a tautology. No knowledge of consumer market. Too vague. Question Answer Marks 1(b)(i) Refer to Table 1.1 and other information. Calculate FM’s labour turnover rate for 2022. Numbers leaving = 4 + 6 + 5 + 3 + 6 = 24 (1) Total staff = 108 Labour turnover = 24 / 108  100 (1) = 22.2%. Accept 22 (3) OFR Exemplar 3 marks Correct answer 22.2% allow 22 Working and % do not matter. Must be three to denote the three marks. 2 marks Two of the following:  Correct formula  Correct calculation of numbers left (24)  Correct identification of data 24/108 OR An incorrect answer with one mistake allowing OFR for final stage. 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 numbers left (24)  Correct identification of data 24/108 To award one mark, there must be:  One and two 0 marks No creditable content. To award zero marks, there must be:  One 3 Question Answer Marks 1(b)(ii) Explain one method of reducing FM’s labour turnover. AO1 Knowledge and understanding 1 mark AO2 Application 2 marks 2 marks Developed application of one relevant method to a business context. 1 mark Knowledge of one relevant method is used to answer the question. 1 mark Limited application of one relevant method to a business context. 0 marks No creditable response. 0 marks No creditable response. Indicative content Responses may include: AO1 Knowledge and understanding Knowledge of a method that may affect reduce labour turnover :  Financial methods e.g. commission, bonus etc.  Non-financial methods e.g. training, job enrichment etc.  Reference to theorists e.g. Taylor, Mayo etc. AO2 Application Limited application , applies knowledge to FM once. Developed application + applies knowledge to FM twice OR applies once to FM AND develops answer to explain a benefit of the method given.  Pay a major factor 25% of those leaving did so for higher pay at a competitor  Opportunities for promotion/job enrichment,5 left because of lack of opportunities and 4 for better jobs in another industry  Team working/job-redesign, as 3 unhappy at work 3 Question Answer Marks 1(b)(ii) Accept all valid responses. Exemplar and annotations Mark Rationale Non-financial methods such as job enrichment , e.g. one of the reasons employees left is lack of promotion job enrichment would improve their skills and increase their opportunity of promotion . 3 A non-financial method explained in the specific context of FM by using the information in Table 1.1 and develops answer to explain a benefit of the method. Increase employee salary , 6 employees left FM because of higher pay at a competitor if FM increase wages employees will be more satisfied and less likely to leave. 3 A financial method in this one and there is context from the data in Table 1.1, also how the method given is linked to the issue, so two . . Some workers are unhappy with the work environment . Group working could be used Group working will ensure a good communications environment . 3 Although the appears first, it cannot be awarded until the has been found. However, there is obvious , so you can go back and award the . Training for new processes because employees are having difficulties in adapting to the new production method . 2 Training is a non-financial method . The context of new production method linked to this is reasonable , but only one point of application. Increase employee salary because the more workers are paid the more motivated they become . 1 Knowledge of a method. The rest of the answer is not applying it to the context so (Not Answering Question). Labour turnover refers to the number of workers leaving over the total number of workers 4 people left for better jobs . 0 Although there is some relevant context, there is no knowledge of a method, so no marks can be awarded. Question Answer Marks 1(c) Analyse two impacts on FM’s costs if it enters international markets. Level AO1 Knowledge and understanding 2 marks AO2 Application 2 marks AO3 Analysis 4 marks 2 3–4 marks Developed analysis  Developed analysis that identifies connections between causes, impacts and/or consequences of two points.  Developed analysis that identifies connections between causes, impacts and/or consequences of one point. 1 1–2 marks  Knowledge of two relevant points is used to answer the question.  Knowledge of one relevant point is used to answer the question. 1–2 marks  Application of two relevant points to a business context.  Application of one relevant point to a business context. 1–2 marks Limited analysis  Limited analysis that identifies connections between causes, impacts and/or consequences of two points.  Limited analysis that identifies connections between causes, impacts and/or consequences of one point. 0 0 marks No creditable response. 0 marks No creditable response. 0 marks No creditable response. 8 Question Answer Marks 1(c) Indicative content Knowledge of impacts on costs (max 2 s), may include: AO1 Knowledge and understanding  Increased costs – labour, delivery, capital, documents, marketing, research etc.  Reduced costs – bulk buying, cheaper labour/land costs in other country. AO2 Application Max one for application for the first impact on costs and a second for application for the second impact on costs. Application of knowledge of an impact on costs to FM (max 2 s), including: Increased costs might occur, due to:  The change to mass customisation  Not a well-known brand in other countries  After sales customer service improvement as product tailored to customer wants  Import/export taxes  Translation of documents into other languages Reduced costs could come in the long term from:  Mass customisation  Increase in market size allowing economies of scale  Labour/land in another country cheaper than country Z 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.  Extra distribution costs – require extra delivery drivers  High costs in the short term – such as promotion costs  Lower in the long term – become established in new country allow reduced marketing  Mass customisation – benefit from economies of scale  High cost of investment – if take out a loan interest will add to costs. Accept all valid responses. Question Answer Marks 1(c) Exemplar and annotations AO1 Knowledge AO2 Application AO3 Analysis There will be an increase in costs . Annotations for the first impact should be placed in the left-hand margin. FM will deliver the instruments over a longer distance So, FM will need to pay more in delivery costs as the delivery driver will take a longer time and there will be higher fuel costs . It will increase labour costs Annotations for the second impact should be placed in the right-hand margin. For example, translation employees Because the firm may not understand other countries languages and will need advertising and documents in the language of that country . Question Answer Marks 1(d) Evaluate the impact on FM’s stakeholders of a change from batch production to mass customisation. 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 Question Answer Marks 1(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 Responses may include: AO1 Knowledge and understanding Knowledge of one of the key terms (max 2 s), including:  Batch production – manufacturing process in which items or products are produced in groups.  Mass customisation – manufacturing process that combines the flexibility and personalisation of custom-made products with the low unit costs associated with mass production.  Stakeholders – A stakeholder is a person/organisation that has an interest in a company and can either affect or be affected by the business/ examples of stakeholders. Question Answer Marks 1(d) AO2 Application Limited application applies knowledge of batch/customisation/stakeholders of FM once. Developed application + applies knowledge of batch/customisation/stakeholders of FM twice.  Shareholders (a limited company)  Change of working practices/environment  Change in production methods  Move into international market  Increase in the volume of output 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. Analysis marks can be awarded without context. Employees:  Change of working practices – employees must learn new skills  Redundancies could be an issue – arising from the shift to mass customisation  Short term incomes could reduce – as profits may initially fall  Shareholders:  Forego dividends in the short term – due to the costs of the investment  Long-term gains – from increased profits  Risk increased – if the expansion fails and profits fall  Government:  Potential for more taxes – due to higher profits/output  Community:  Employees likely from the local area – if redundancies occur, it will increase unemployment in the community  Suppliers:  More business/more profits – but might need different suppliers  Customers:  Better choice – tailored to customer wants  Higher prices – due to increase in costs/quality of the product  Bank etc.:  Borrowing for investment – may require a bank loan Question Answer Marks 1(d) AO4 Evaluation Limited evaluation unsupported judgement and/or a weak attempt at evaluative comment. Developed evaluation supported judgement and/or reasonable evaluative comment. Developed evaluation in context supported judgement in context and/or reasonable evaluative comment in context.  Weighing up of risks v reward  Short term costs v long term costs  Costs v benefits  Judgement on stakeholder(s) it will most likely impact  Judgement on overall impact on a stakeholder(s) Accept all valid responses. Exemplar and annotations A change from batch production to mass customisation will have different impacts on FM’s stakeholders, such as customers, employees, suppliers, and shareholders . Shareholders are the owners of FM who invest their money in the company . They may benefit from mass customisation if it increases the sales and profits of FM by attracting more customers and creating a competitive advantage . Mass customisation may also increase the value and reputation of FM as a customer-oriented and innovative company . However, mass customisation may also reduce the returns and dividends for shareholders if it increases the cost and risk of production for FM . Mass customisation may also require more investment in research and development, technology, and marketing for FM , which may reduce the cash flow and liquidity for shareholders and may also result in a decrease their returns. To conclude, mass customisation can have both positive and negative impacts on FM’s shareholders. Therefore, FM should carefully weigh the benefits and costs of this change and implement it in a way that maximises the value, profits and dividends for the shareholders . AO1 – 2 marks AO2 – 2 marks AO3 – 2 marks AO4 – 6 marks TOTAL – 12 marks

Question 18

Gold Theme Park (GT) Gold Park was a mine where gold was extracted until 2012. Although there was still some gold in the mine, the direct c…

Accepted Answer

Question Answer Marks 1(a)(i) Identify one type of training. 1 Indicative content. Identification of a type of training: • Induction • On-the-job • Off-the-job Only accept these responses 1(a)(ii) Explain the term ‘direct costs’. 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. Indicative content AO1 Knowledge and understanding Knowledge of direct cost(s) may include: • Costs that are directly related to the production process. • Costs that are directly attributed to operations/a cost centre. No further marks can be gained without knowledge and understanding AO2 Application Limited application applies knowledge of direct to business costs, including: • Amounts/things that are payable by a business / incurred by a business OR • Example or some other way of showing good understanding of a direct cost. Developed application + applies knowledge of direct to business costs, including • Amounts/things that are payable by a business / incurred by a business AND • Example or some other way of showing good understanding of a direct cost. Accept all valid responses. 1(a)(ii) Exemplar and annotations Mark Rationale Costs which are linked to the operations of a business 3 An answer which starts with the knowledge and then . For example, a gold mine would need to pay applies it to costs with an example. the miners who extract the gold . Something a business pays to make a product or 3 APP cannot be awarded without K, but once the K has service , such as raw materials . been awarded you can go back and reward the APP. Any example (it does not need to come from the data) can be used. Paid by a business , to produce a service . The 3 One of the APPs can come from further explanation it opposite of indirect costs which are not linked to does not have to be an example. production . Costs that are directly related to the production 2 No application of costs, so max 2 marks. process such as wages . Costs that can be attributed to a specific cost centre 2 Knowledge of the direct element with good unlike indirect costs which cannot . An example understanding. The example is fine, but no of a direct cost for GT are the wages of the tour understanding of costs. guides. Production costs . 1 Simple knowledge of the direct element. Costs which are directly accountable to a cost object 1 Knowledge of the direct element – ignore anything such as the marketing of GT. that is incorrect. No negative marking. The things a business has to pay . For example, a 0 Although there is some attempt at application, these marks cannot be awarded without knowledge. business may need to pay wages and advertising . Direct costs are the same as variable costs . 0 Variable costs share some characteristics with direct costs, but they are not the same. 1(b)(i) Refer to Table 1.1. Calculate the change in GT’s total costs between 2020 and 2022. 3 Indicative content. • Formula: total costs = total revenue – profit (1) • Calculation of cost in either 2020 or 2022 (1) – Costs in 2020: $3.4m – $0.9m = $2.5m – Costs in 2022: $2.8m – 0.2m = $2.6m • Change in costs: $2.6m – $2.5m = $0.1m (1 OFR) Answer = $0.1m (3) Accept answer as a percentage 4% (with % sign) as full marks Exemplar and annotations Marks 3 marks Correct answer Working and $ do not matter. $0.1m or 4% allow 0.1 If presented as a percentage, then % sign must be included for full marks allow OR clear and correct working shown. (0.1 / 2.5)  100 = 4 (obviously meant Must be three to denote the as a percentage) three marks. 2 marks Two of the following: To award two marks, there must be • Correct formula • Two and a • Correct calculation of TC for 2020 OR (2.5) • One , one and one • Correct calculation of TC for 2022 (2.6) OR An incorrect answer with one mistake allowing OFR for final stage. 1(b)(i) Marks 1 mark One of the following: To award one mark, there must be: • Correct formula • One and two • Correct calculation of TC for 2020 (2.5) • Correct calculation of TC for 2022 (2.6) 0 marks No creditable content. To award zero marks, there must be • One 1(b)(ii) Explain one way to measure the size of GT. 3 AO1 Knowledge and understanding AO2 Application 1 mark 2 marks 2 marks Developed application of one relevant point to a business context. 1 mark 1 mark Knowledge of one relevant point is used to answer the Limited application of one relevant point to a business question. context. 0 marks 0 marks No creditable response. No creditable response. Indicative content AO1 Knowledge and understanding • Knowledge of an appropriate way to measure the size of a business; revenue, number of outlets, number of employees, market share, number of customers, market capitalisation capital employed, area/space etc. Do not allow profit – which is a measure of success or performance, but not size. No further marks can be gained without knowledge and understanding AO2 Application Limited application , applies knowledge to GT once. Developed application + applies knowledge to GT twice OR through the calculation or comparison of data (eg a percentage change). 1(b)(ii) • Use of data related to GT to show the size of the business (this data can be used more than once) 2020 2021 2022 Sales revenue ($m) 3.4 3.2 2.8 Number of 54 55 47 employees Profit ($m) 0.9 0.3 0.2 Number of visitors 0.8 0.8 0.65 (m) • GT includes a museum, tours, a roller coaster, restaurant, and gift shop • Some employees previously worked in the gold mine • Some employees are tour guides and customer service representatives Accept all valid responses. Exemplar and annotations Mark Rationale Number of employees , in 2020 GT had 54 3 Number of employees is a way to measure size and employees but this decreased to 46 in 2022 . the use of two data points shows developed application. The size of GT can be measured by revenue . GT’s 3 Revenue is a way to measure size and the candidate revenue decreased by 17.65% . has used two pieces of data (revenue for 2020 and revenue for 2022) to come to a correct calculation. It may be necessary to check calculations and allow for correct rounding. GT has got smaller since its visitors have 3 Visitors (customers) is a way to measure size and the decreased to 0.65m . use of two data points for developed application. 1(b)(ii) Exemplar and annotations Mark Rationale GT has gotten smaller, since their revenue has 3 Revenue is a way to measure size and the use of two fallen to $2.8m and its visitors have also fallen to data points for developed application. 0.65m . As a theme park, visitor numbers are an important 3 Visitors is a way to measure size. The context of a way to measure size, which has fallen to 0.65m in theme park is limited application (go back and award 2022 . after the K has been awarded) with a use of the data from Table 1.1 to develop this application. Number of employees has decreased to 46 in 3 Only limited application through the use of one data 2022 . point. It is not enough to state that it has ‘decreased’ – the figures must be used. The number of people that GT employs , such as 2 Application does not need to come from the data in the customer service operatives . Table 1.1. The number of visitors is really important because 1 No specific context used in this answer. the more visitors GT has, the more revenue it is likely to generate and the bigger its profit. This all stems from the visitors who are the customers of GT and therefore the most important way to measure the size of GT . The size of GT can be measured by the number of 1 AO1 knowledge does not need to be in context, so factories it has. The more factories the more it can can be awarded, even if the answer does not match produce. the context. A big business is likely to have more power in the 0 No valid way to measure the size of the business. market and can dominate the competition . 1(c) Analyse two possible sources of secondary market research that the Marketing Director could use to help improve 8 GT. AO1 Knowledge and AO2 Application AO3 Analysis Level 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 first source in the left-hand margin and the second source in the right-hand margin. 1(c) Indicative content: AO1 Knowledge and understanding Knowledge of sources of secondary market research (max 2 s), include; • journal articles • textbooks • dictionaries and encyclopaedias • books • newspapers and magazines • accounts and reports • previous sales/internal data • competitor data • Data collected by other businesses • Feedback found on media / other sources – do not accept ‘internet’ unless the source is clear or other named internet source. No further marks can be gained without knowledge and understanding AO2 Application Max one for application in the first source and max one for application in the second source, including; • Link to leisure markets, such as days out and entertainment. • Link to specific competitors, such as other days out, services, museums. • Link to elements specific to GT, such as: – converted mine / gold mine – guided tours – roller coaster rides – entry prices of similar services – need to reduce price – need to make GT more fun. 1(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 may be of the cost and/or benefit and/or risk of the source of market research to GT. Costs may include: • Monetary cost of research – may affect the profitability of GT. • Time cost of research – opportunity cost of time spent on other activities. Benefits may include: • Understanding of the market to increase in visitor numbers – increased sales revenue. • Relatively lower cost than more primary market research – increased profit. Risk may include: • Use of secondary research to find out more about the market and potential visitors – to increase sales revenue/profit. Accept all valid responses. Exemplar and annotations AO1 Knowledge AO2 Application AO3 Analysis Newspapers . To spot trends in what people like Which can help GT increase their when visiting roller coasters in the sales revenue by selling more theme park. tickets and make a greater profit . Competitors websites To see what their prices are because So GT can set a better price for their some customers think GT’s prices are tickets and increase customer too high . satisfaction however the data might be outdated . 1(d) Evaluate the importance to the ongoing success of GT of developing intrapreneurship. 12 Level AO1 Knowledge AO2 Application AO3 Analysis AO4 Evaluation and understanding 2 marks 2 marks 6 marks 2 marks 3 5–6 marks Developed evaluation in context • A developed judgement/conclusion is made in the business context. • Developed evaluative comments which balance some key arguments in the business context. 2 2 marks 2 marks 2 marks 3–4 marks Developed Developed Developed analysis Developed evaluation knowledge of application of that identifies • A developed judgement/conclusion relevant key term(s) relevant point(s) to connections is made. and/or factor(s) is the business between causes, • Developed evaluative comments used to answer the context. impacts and/or which balance some key arguments. question. consequences. 1 1 mark 1 mark 1 mark 1–2 marks Limited knowledge Limited application Limited analysis Limited evaluation of relevant key of relevant point(s) that identifies • A judgement/conclusion is made term(s) and/or to the business connections with limited supporting factor(s) is used to context. between causes, comment/evidence. answer the question. impacts and/or • An attempt is made to balance the consequences. arguments. 0 0 marks 0 marks 0 marks 0 marks No creditable No creditable No creditable No creditable response. response. response. response. 1(d) Indicative content AO1 Knowledge and understanding Knowledge of intrapreneurship (max 2 s), including: • Intrapreneurship is where the workers come up with innovative ideas using enterprise to increase the profitability of the business. The business may reward the intrapreneur for their ideas. • Allows employees to act like entrepreneurs / introduce enterprise within the business (employed). • The qualities of intrapreneurship, including; passion, talent, curiosity, motivation, resourcefulness, networking, confidence, knowledge and experience. • the role of intrapreneurship, including: problem solving, idea generation, identify opportunities, overcome threats, empowerment. No further marks can be gained without knowledge and understanding AO2 Application Limited application applies knowledge of intrapreneurship to GT once. Developed application + applies knowledge of intrapreneurship to GT twice. • Link to leisure markets, such as days out and entertainment. • Link to elements specific to GT’s intrapreneurship, such as: – some employees used to work in the gold mine – good knowledge about the theme of GT – some employees are younger workers on flexible contracts – falling sales ($3.4m in 2020 to $2.8m in 2022 – 17.65% fall) – fewer employees in 2022 than 2021 – loss of intrapreneurship skills – falling profit ($0.9m in 2020 to $0.2m in 2022 – 77.78% fall) – link to ability to fund ideas – fall in visitors due to; not fun, too high prices. 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. Advantages of intrapreneurship to GT may include: • Using GT’s own resources to find solutions to their falling visitor numbers may be cheaper than external management consultants – lower GT’s cost and increase profit. • GT workers may provide better / more effective solutions to GT’s problems – more likely to increase visitor numbers. • Use of the mine’s previous employees for their intrapreneurial ideas may be more likely to improve the business – increase visitor numbers. • Asking for employee involvement may increase the motivation of the staff – increased productivity/sales revenue, 1(d) Disadvantages of intrapreneurship to GT may include: • GT’s employees (especially the younger workers on flexible contracts) may not have the experience and/or knowledge to help GT increase visitor numbers – opportunity cost of spending time on tasks other than their main function. • GT’s employees may not provide adequate solutions which may not increase visitor numbers – GT may make a loss in the future. • GT needs a quick solution (because profit is likely to become loss in the near future) and intrapreneurship may not provide this – visitor numbers may not increase leading to GT making a loss or not surviving. • GT already has two possible solutions (lower price and increase fun of the park), so a focus on intrapreneurial ideas may waste time – opportunity cost. 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. • A judgement about the likely role of intrapreneurship in the ongoing success of GT. • What the judgement might depend upon; the timeframe that GT must find a solution to their falling visitor numbers, the ability/skill of GT’s workers, the ability/skill of Kayo to utilise the intrapreneurial skills of GT’s employees, the validity of GT’s previous primary market research, the findings of the secondary market research etc. • Weighing up of the arguments for the role of intrapreneurship to the ongoing success of GT. Accept all valid responses. 1(d) Exemplars for awarding evaluation L1 (limited supporting L2 (developed supporting L3 (developed supporting evidence) evidence) evidence with context) Intrapreneurship is very important to Intrapreneurship is very important to Intrapreneurship is very important to the success of GT. the success of GT because it gives the success of GT because it gives the business new innovative ideas. the business new innovative ideas for roller coasters. Intrapreneurship is not as important Intrapreneurship is not as important Intrapreneurship is not as important as finance. as finance because without enough as finance because without enough money a theme park will not survive. money a theme park will not survive against all of the other leisure businesses in the market. It depends on how good the It depends on how good the It depends on how good the intrapreneurs are. intrapreneurs are. If they come up intrapreneurs are. If they come up with innovative ideas, then it is with innovative ideas about how to important. better use the gold mine, then it is important. In the short term it is, but in the long In the short term it is to bring in new In the short term it is to bring in new term it is not. ideas for the theme park, but in the ideas for the theme park, but in the long term having the right price may long term reducing the price that is too be more important. high may be more important.

Question 19

ML Computers (MLC) MLC is a successful private limited company that has been trading for 20 years in country K. The company makes a range o…

Accepted Answer

2(a)(i) Identify one secondary market research source. 1 Responses may include: • journal articles • Government data /census • textbooks • dictionaries and encyclopaedias • books • newspapers and magazines • accounts and reports • previous sales/internal data • competitor data • Data collected by other businesses • Feedback found on media / other sources – do not accept ‘internet’ unless the source is clear or other named internet source. Accept all valid responses. 2(a)(ii) Explain the term leasing. 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. Indicative content Responses may include: AO1 Knowledge and understanding • A legal contract to enable the lessee to use an asset in return for a payment. • The ability to use something for a regular payment/rent. No further marks can be gained without knowledge and understanding AO2 Application A characteristic of leasing, such as; • The lessee will never own the asset. The asset is always owned by the lessor. • The lessor is usually responsible for maintenance of the asset. • The lessor may be responsible for insurance of the asset. • Allows a business to update their equipment more often. • An external source of finance. • Can avoid the finance needed to purchase an asset. Example of leasing or something that is usually leased by a business. Accept all valid responses. 2(b)(i) Refer to Table 2.1 and other information. Calculate the difference in labour turnover between factory A and factory 3 B. Answer Guidance Formula Award 3 marks for correct answer of 1.5% (with or Number of employees leaving business without percentage sign). =  100 (1) Average number of employees within business If rounding is used then accept 13% (and an answer OR of 1%). factory B: 25/200  100 (1) = 12.5% (2) = 14% – 12.5% (OFR) = 1.5% (3) Answer = 1.5% 2(b)(i) Exemplar and annotations Marks 3 marks Correct answer Working and % does not matter. 1.5% Must be three to denote the three marks. 2 marks • Correct calculation of labour turnover for To award two marks, there must be Factory B (12.5%) • Two and a OR OR • An incorrect answer with one mistake • One , one and one allowing OFR for final stage. 1 mark • Correct formula (can be assumed from the To award one mark, there must be: correct use of figures ie (25/200) X 100 • One and two 0 marks No creditable content. To award zero marks, there must be • One 2(b)(ii) Explain one advantage to MLC of low labour turnover. 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. Knowledge Knowledge of an advantage of low labour turnover 1 mark Explanation Explanation of an advantage to MLC of low labour turnover 1 mark Context Context linked to an advantage to MLC of low labour turnover 1 mark No marks can be awarded without knowledge. Responses may include: AO1 Knowledge and understanding • Reduced costs • Improved motivation/morale • More experienced/efficient employees / higher productivity • Better customer experience • Improved corporate culture • More attractive when recruiting new employees No further marks can be gained without knowledge and understanding 2(b)(ii) AO2 Application Explanation may include: • Reduced costs; such as lower induction costs due to fewer new employees • Improved motivation/morale; because the workers want to stay in the workplace • More experienced/efficient employees / higher productivity – so the business will have more/better/higher quality production. • Better customer experience; because the employees are likely to be more experienced • Improved corporate culture; because the employees want to stay at MLC • More attractive when recruiting new employees; because the new recruits will be joining an experienced and happy team. Context may include: • Market leader for laptops • Produces a range of laptop computers • Developing a new touchscreen laptop computer • Secondary and primary market research shows high potential demand for the new product • Private limited company • Trading for 20 years • Two factories in Country K • Capital intensive • Lease new machinery to make the new computer • 350 employees • Objective to reduce labour turnover to 8% by 2026 • Labour turnover is 14% in Factory A • Labour turnover is 12.5% in Factory B (OFR) Accept all valid responses. 2(c) Analyse one advantage and one disadvantage to MLC of using price skimming to launch the new touchscreen 8 computer. Level AO1 Knowledge and AO2 Application AO3 Analysis understanding 2 marks 4 marks 2 marks 2 3–4 marks Developed analysis • Developed analysis that identifies connections between causes, impacts and/or consequences of two points. • Developed analysis that identifies connections between causes, impacts and/or consequences of one point. 1 1–2 marks 1–2 marks 1–2 marks • Knowledge of two • Application of two Limited analysis relevant points is relevant points to a • Limited analysis that identifies connections between used to answer the business context. causes, impacts and/or consequences of two points. question. • Application of one • Limited analysis that identifies connections between • Knowledge of one relevant point to a causes, impacts and/or consequences of one point. relevant point is business context. used to answer the question. 0 0 marks 0 marks 0 marks No creditable response. No creditable response. No creditable response. Price skimming is a pricing strategy in which a firm charges a high initial price and then gradually lowers the price to attract more price-sensitive customers. The pricing strategy is usually used by a first mover who faces little to no competition. 2(c) Responses may include: AO1 Knowledge and understanding Advantages: • Quicker return on investment / cover development costs • Supports higher profit margins when the computer is first offered for sale • Can help develop a prestigious brand image / associate product with higher quality • Can help the business target a specific market segment Disadvantages: • Relies on low competition in the market/unique product • Customers may wait until the price reduces • Customers who purchase the product at the higher price may feel ‘conned’ when/if the price reduces • Reduced sales volumes (whilst the price is high) may offer an opportunity for competitors to enter the market AO2 Application • Market leader for laptops • Produces a range of laptop computers • Secondary and primary market research shows high potential demand for the new computer • New computer will use the latest technology • Private limited company • Trading for 20 years • Capital intensive • Lease new machinery to make the new computer • Objective to reduce labour turnover to 8% by 2026 • Maria is the majority shareholder / owns 55% of shares 2(c) AO3 Analysis Advantages: • Quicker return on investment / cover development costs; make a profit more quickly – allows growth of the business. • Supports higher profit margins when the computer is first offered for sale; can be reinvested in the business – allows for profit maximisation in the long term. • Can help develop a prestigious brand image / associate product with higher quality; leading to higher sales revenue – increases profit. • Can help the business target a specific market segment; niche market can have a lower cost of customer acquisition – increases profit margin. Disadvantages: • Relies on low competition in the market/unique product; if competitors are cheaper then low sales – low profit margin. • Customers may wait until the price reduces; low initial sales – may lead to business failure. • Customers who purchase the product at the higher price may feel ‘conned’ when/if the price reduces; poor brand image – low sales. • Reduced sales volumes (whilst the price is high) may offer an opportunity for competitors to enter the market; low sales – leading to a reduced profit. Accept all valid responses. 2(d) Evaluate whether MLC should change from a private limited company to a public limited company. 12 Level AO1 Knowledge and AO2 Application AO3 Analysis AO4 Evaluation 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 knowledge Developed application Developed analysis Developed evaluation of relevant key term(s) of relevant point(s) to that identifies • A developed and/or factor(s) is used the business context. connections between judgement/conclusion is to answer the question. causes, impacts and/or made. consequences. • Developed evaluative comments which balance some key arguments. 1 1 mark 1 mark 1 mark 1–2 marks Limited knowledge Limited application Limited analysis Limited evaluation of relevant key term(s) of relevant point(s) to that identifies • A judgement/conclusion is and/or factor(s) is used the business context. connections between made with limited to answer the question. causes, impacts and/or supporting consequences. comment/evidence. • An attempt is made to balance the arguments. 0 0 marks 0 marks 0 marks 0 marks No creditable response. No creditable response. No creditable response. No creditable response. 2(d) Responses may include: AO1 Knowledge and understanding Knowledge of differences between a private limited company and a public limited company, including; • In a private limited company, shares cannot be sold on the stock market / only sold to family and friends (privately) . Whereas in a public limited company shares can be sold on the stock market . • Private limited companies can be setup for a relatively low amount, whereas the capital requirements for a public limited company are much higher. • Private limited companies have a limit on the maximum number of shareholders (typically 50), whereas there is no limit to the number of shareholders in a public limited company. • Anyone can purchase shares in a public limited company, whereas only those invited can buy shares in a private limited company. • A private limited company requires fewer directors (typically a minimum of one), whereas a public limited company requires more (typically a minimum of two). • A public limited company can be at risk of a hostile takeover, whereas a private limited company has virtually no risk of a hostile takeover. • A public company must publish its accounts, whereas a private limited company just has to make them available. AO2 Application • Market leader for laptops • Produces a range of laptop computers • Developing a new touchscreen laptop product • New computer uses the latest technology • Trading for 20 years • Two factories in country K • Capital intensive • Lease new machinery to make the new product • 350 employees • Objective to reduce labour turnover to 8% by 2026 • Launch five new products over the next three years • Maria is the majority shareholder / owns 55% of shares 2(d) AO3 Analysis Analysis that MLC should change from a private limited company to a public limited company, including; • MLC (and the shareholders of MLC) could release a large amount of equity by converting to a public limited company – used to develop new products for sale – used to finance the future growth of the company. • Allows MLC to reach a much larger pool of potential investors – can be used to finance expansion in the future. • May provide positive publicity/stability for MLC – increase sales/profit. Analysis that MLC should not change from a private limited company to a public limited company, including; • There is the risk of public limited companies being taken over whereas this risk does not apply to private limited companies as permission is required to purchase shares; this means that the owners may lose control of the business – leading to having to sell their shares. • Maria can retain more control over a private limited company – may allow her to reach her objectives for the business (future growth). AO4 Evaluation • A judgement whether MLC should or should not change from a private limited company to a public limited company. • What the judgement might depend upon, such as; the objectives of the current shareholders, the likely interest from potential investors, the level of control desired by the current shareholders, the state of the economy in country K, the actions/reactions of competitors in the market (especially those who may look to takeover MLC), the level of capital that exists in MLC. • The most appropriate form of business ownership may depend upon the business’s objectives and financial situation – if the company needs more finance to support expansion a public limited company may be appropriate, but due to the drawbacks of lack of control the business should remain a private limited company if it has sufficient financial resources. • The company leases machinery to produce the new laptop computer so may not need significant amounts of finance. • How do the other shareholders feel about the change of ownership – will the change lead to shareholders withdrawing their investment? • Maria is currently the majority shareholder with a 55% share – the change may affect her control of the business. • Will the change help the business to build a stronger brand image with stakeholders – will it lead to new business opportunities? Accept all valid responses.

Question 20

Post Scent (PS) PS is a private limited company operating in country H. It sells perfume for men and women using its own website. PS purcha…

Accepted Answer

1(a)(i) Identify one feature of a private limited company. Responses may include: Any feature of a private limited company , including:  limited liability  shareholders  incorporated  shares not traded on stock exchange/publicly  must make accounts publicly available  separate legal identity  continuity  sells shares to people they know (invited). Accept all valid responses. 1 Question Answer Marks 1(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:  maintaining operations/production. Allow (but do not require) knowledge of sustainability from an environmental perspective, which may include:  environmental balance.  conserve natural resources. 3 Question Answer Marks 1(a)(ii) AO2 Application Explanation of sustainability may include:  maintaining operations/production: at the current level  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 Context applied to business of how to behave in a sustainable way , including:  An example of a business behaving in a sustainable way Application can be made to PS or any other scenario/context/business/person. Allow application to environmental sustainability. Accept all valid responses. Guidance in awarding marks Knowledge & understanding Knowledge of sustainability 1 mark Explanation Explanation of sustainability 1 mark Context Applied to a business context/ business environment 1 mark Question Answer Marks 1(a)(ii) Exemplar and annotations Mark Rationale Keeping the natural environment safe now . So that it is usable in the future , to reduce dependence on single use plastic . 3 Sustainability from an environmental perspective – what the business could do now and then explained in terms of how it might help the future – plus an example (single use plastic) Making sure a business can maintain its current production now and in the future . For example, not relying on fossil fuels . 3 Clear knowledge based on now and in the future , with a clear example. Sustainability involves looking after the environment for example by recycling 2 Knowledge and an example – no explanation. 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 1(b)(i) Refer to Table 1.1. Calculate the variances in 2023 (x, y and z) and state whether each variance is favourable or adverse. Budgeted Actual Variance $000 $000 Revenue 500 600 100 and Favourable (F) Direct costs 300 350 50 and Adverse (A) Indirect costs 150 125 25 and Favourable (F) 1 mark for each correctly calculated variance (including favourable or adverse). Ignore + and – signs. Allow unfavourable. 3 Question Answer Marks 1(b)(ii) Explain one benefit to PS of using incremental budgeting. AO1 Knowledge and understanding 1 mark AO2 Application 2 marks 2 marks Developed application of one relevant point to a business context. 1 mark Knowledge of one relevant point is used to answer the question. 1 mark Limited application of one relevant point to a business context. 0 marks No creditable response. 0 marks No creditable response. Indicative content AO1 Knowledge and understanding Knowledge of a benefit of using incremental budgeting , including:  Simplicity / easy to adjust  Speed (quicker)  Consistency  Avoids conflict between managers  Realistic  Allows business to respond to changes Must be about incremental budgeting. As opposed to budgeting in general. No further marks can be gained without knowledge and understanding of a benefit of incremental budgeting. 3 Question Answer Marks 1(b)(ii) AO2 Application Explanation of a benefit of using incremental budgeting , including:  Simplicity; by adding a small amount to the previous time period, this avoids any complicated preparations  Speed (quicker); reduced the time needed to prepare a business’ budgets  Consistency; as each budget uses the previous as a base, there is a consistent approach every time  Avoids conflict between managers; due to the consistent approach  Realistic; because based on previous data Context of a benefit of using incremental budgeting , including:  Use of Table 1.1  Each budget has a variance  OFR from answer to Q1(b)(i)  PS sells through its own website  Web sales and subscription available  PS uses the postal service  Aim to improve the sustainability of its operations  New Marketing Manager being recruited Accept all valid responses. Guidance in awarding marks Knowledge & understanding Knowledge of a benefit of using incremental budgeting 1 mark Explanation Explanation of a benefit to a business of using incremental budgeting 1 mark Context Context linked to a benefit to PS of using incremental budgeting 1 mark Question Answer Marks 1(b)(ii) Exemplar and annotations Mark Rationale It is quicker than other methods of budgeting because the Manager just adds on a small amount to budget from last year which means they can focus on PS’s website . 3 Speed/quicker is enough for knowledge, which is then explained with context. Because it is based on past data incremental budgeting is more realistic , so that the revenue variance should be less than 100 next year . 3 Starts with the explanation, followed by the knowledge. Without the knowledge, this would be 0 marks. The example has OFR based on the answer to Q1(b)(i). It is easy to use incremental budgeting because it’s based on previous figures . 2 Knowledge (easy to use) with some explanation, but no context. It is easier as they can just add 100 to the revenue budget . 2 Knowledge and context. Incremental budgeting is easier and quicker than other forms of budgeting such as zero budgeting, where the Manager has to start from scratch every year. There is also historical budgeting which is doing it based on what happened in the past. This would take longer and be more complicated than incremental budgeting. 1 Knowledge at the start – the rest of the answer is NAQ. Incremental budgeting involves adding a small amount to each of the budgets for previous years. 0 There is knowledge of incremental budgeting, but no knowledge of a benefit. Incremental budgeting is about guessing how much revenue, cost and profit a business will achieve and then comparing this to what actually happened. PS had a variance on every budget, so they must not have done their budgeting well. 0 No knowledge of a benefit of incremental budgeting. Question Answer Marks 1(c) Analyse one advantage and one disadvantage to PS of using an assessment centre when selecting a Marketing Manager. Level AO1 Knowledge and understanding 2 marks AO2 Application 2 marks AO3 Analysis 4 marks 2 3–4 marks Developed analysis  Developed analysis that identifies connections between causes, impacts and/or consequences of two points.  Developed analysis that identifies connections between causes, impacts and/or consequences of one point. 1 1–2 marks  Knowledge of two relevant points is used to answer the question.  Knowledge of one relevant point is used to answer the question. 1–2 marks  Application of two relevant points to a business context.  Application of one relevant point to a business context. 1–2 marks Limited analysis  Limited analysis that identifies connections between causes, impacts and/or consequences of two points.  Limited analysis that identifies connections between causes, impacts and/or consequences of one point. 0 0 marks No creditable response. 0 marks No creditable response. 0 marks No creditable response. 8 Question Answer Marks 1(c) Indicative content AO1 Knowledge and understanding Knowledge of an assessment centre (max 1 mark if no knowledge of advantage or disadvantage), including:  a combination of tasks and activities that test suitability for the job  chance to demonstrate a wider range of skills than during a traditional face-to-face interview.  hosted over anything from an afternoon to two days  often the final stage of the selection process  a group of candidates usually attend together. Knowledge of an advantage (max 1 mark – annotate on left) may include:  More suitable/knowledgeable/skilled recruit  Wider skilled recruit / more skills tested  More detailed process  Useful as final stage of recruitment  Allows direct comparison with other candidates  Less time involved Knowledge of a disadvantage (max 1 mark – annotate on right) may include:  Takes more time  Cost of an assessment centre  Not realistic / not linked to specific employment / may assess unnecessary skills / knowledge AO2 Application Context applied to an advantage (max 1 mark) and disadvantage (max 1 mark) of using an assessment centre, including:  To plan the recruitment and training of a new sales team.  To organise the production of digital promotions.  To advise the board of directors on changes to the PS product portfolio.  To do tasks relating to the marketing of PS (e.g. perfume, website sales, subscription sales, importance of packaging).  Five shortlisted applicants.  Use of Table 1.1 Question Answer Marks 1(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 may include:  More suitable recruit  lower costs of marketing – increase profitability  higher sales – increase profits  Wider skilled recruit  lower costs of marketing – increase profitability  higher sales – increase profits  Longer process than an interview; more likely to find a better candidate – increase sales and growth of PS.  Final stage of recruitment; may be a suitable way to distinguish between qualified and similar candidates – increase chances of getting the best candidate.  Allows direct comparison with other candidates – increases probability of finding the best candidate who can improve the marketing of PS.  Disadvantages may include:  Takes more time; increase costs – reduces profitability.  May assess unnecessary skills and provides an unrealistic image of the candidates and increases the probability of choosing the wrong candidate – increases costs in the long run (more recruitment needed).  Cost of an assessment centre; significantly more expensive than an interview – decreased profitability. Accept all valid responses. Question Answer Marks 1(c) Exemplars and annotations AO1 Knowledge AO2 Application AO3 Analysis Better skilled employees . So that PS can make sure their new manager can organise the production of digital promotions . Which can help PS to increase their sales revenue by selling more perfume and make a greater profit . Assessment centres have a high cost As all five potential managers will be invited. Which will reduce the profitability of PS and reduce the dividends for the shareholders . Question Answer Marks 1(d) Evaluate the role of effective packaging for PS. Level AO1 Knowledge and understanding 2 marks AO2 Application 2 marks AO3 Analysis 2 marks AO4 Evaluation 6 marks 3 5–6 marks Developed evaluation in context  A developed judgement/conclusion is made in the business context.  Developed evaluative comments which balance some key arguments in the business context. 2 2 marks Developed knowledge of relevant key term(s) and/or factor(s) is used to answer the question. 2 marks Developed application of relevant point(s) to the business context. 2 marks Developed analysis that identifies connections between causes, impacts and/or consequences. 3–4 marks Developed evaluation  A developed judgement/conclusion is made.  Developed evaluative comments which balance some key arguments. 1 1 mark Limited knowledge of relevant key term(s) and/or factor(s) is used to answer the question. 1 mark Limited application of relevant point(s) to the business context. 1 mark Limited analysis that identifies connections between causes, impacts and/or consequences. 1–2 marks Limited evaluation  A judgement/conclusion is made with limited supporting comment/evidence.  An attempt is made to balance the arguments. 0 0 marks No creditable response. 0 marks No creditable response. 0 marks No creditable response. 0 marks No creditable response. 12 Question Answer Marks 1(d) Indicative content AO1 Knowledge and understanding Knowledge of the role of packaging (max 2 marks), including:  information to customers  protection for the product  to attract potential customers  to promote a brand / branding  to enable efficient distribution/portability  to add value  to meet legal requirements (labelling, weight, ingredients etc.) AO2 Application Context applied to the role of packaging for PS (max 2 marks), including  website purchases  subscription purchases  Most perfumes sold in glass bottles (fragility)  all products delivered to homes by post  can be left in mailbox  can be left in safe place outside of the home (weatherproof)  PS aim to improve sustainability of operations  use of Table 1.1 Question Answer Marks 1(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.  Information to customers; to increase sales of both product lines for PS – increase profits and enable growth of SS.  Protection for the product;  Glass bottles will break if not packaged correctly – PS needs to replace products increasing costs  Packages need to be able to be left outdoors – otherwise poor customer satisfaction and lower repeat sales.  To attract potential customers; good packaging may encourage increased sales from customers – however as the products are sold through the website this may not have a large effect on sales.  To enable efficient distribution/portability; products left in mailbox so packaging needs to be small enough to post and increase speed of delivery – reduces costs of delivering the product.  To add value – sales have been 20% higher than budgeted so poor packaging might discourage customers from repurchasing products – increases sales/profit.  The packaging is not the main product and so may not add much value in a customer’s perception – increased costs without an increase in sales.  Balance between importance of packaging and sustainability – more packaging likely to protect the product but also less sustainability. 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.  A judgement over role of effective packaging.  Evaluation of the relative importance of different factors.  Elements that the evaluation/judgement might depend upon – cost of the packaging as a proportion of the total costs of the product, packaging that the perfume is purchased with (from manufacturers), likelihood of products being left outside, likelihood of moving into retail shops in the future, the new Marketing Manager’s strategy. Accept all valid responses. Question Answer Marks 1(d) Exemplars for awarding evaluation L1 (limited supporting evidence) L2 (developed supporting evidence) L3 (developed supporting evidence with context) Effective packaging is essential for PS. Effective packaging is essential for PS, so that their products are delivered safely to customers. Effective packaging is essential for PS, so that the glass bottles are delivered unbroken to customers. There are many more things that are more important to PS than packaging. There are many more things that are more important to PS than packaging. If the price is wrong, then no matter how good the packaging is, no-one will want it. There are many more things that are more important to PS than packaging. If the price is wrong, then no matter how good the packaging is, no-one will want it, that is why PS sells its perfume cheaper than high street stores. The role of packaging depends upon the cost of the packaging. The role of packaging depends upon the cost of the packaging. If the packaging increases PS direct costs, then it may be better to spend the money on more promotion. The role of packaging depends upon the cost of the packaging. If the packaging increases PS direct costs beyond $350 000, then it may be better to spend the money on more promotion. In the short term, effective packaging may cost too much. In the short term, effective packaging may cost too much, however in the long term it will make the PS brand memorable. In the short term, effective packaging may cost too much, however in the long term it will make the PS brand memorable, which is vital to keep customers paying for their subscription.

Question 21

Cobblestone Shoes (CS) Yazeem is a highly skilled shoemaker. He opened CS in 1975, as a sole trader, to design and repair shoes. When Yazee…

Accepted Answer

2(a)(i) Identify one type of training. Indicative content Types of training are:  Induction  On the job  Off the job 1 2(a)(ii) Explain the term mass market. 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 mass market (max 1 mark), including:  Aiming a product or service at the majority of people.  Made for the large part of the population  Made for most of the population/market Allow ‘not a segment of the market’ or ‘all of the market’ or ‘everyone’. 3 Question Answer Marks 2(a)(ii) AO2 Application Explanation of a characteristic of the mass market (or mass marketing) , including:  Many different size/colour products  One size fits all products /standardised  Customer wants are more general and less specific  Associated with high output/quantity (than a segment or niche market)  Associated with low(er) prices (than a segment or niche market)  May benefit from economies of scale  Lower risk than niche markets or segmented markets  High level of competition  Competition on national/international/global scale. Context applied to mass market(s) , including:  Relevant example of mass market(s) (including the shoe market) Must be an example of the market (the people who might purchase canned drinks) – not a product aimed at the mass market (Coke) Application can be made to PS or any other scenario/context/business/person. Accept all valid responses. Guidance in awarding marks Knowledge & understanding Knowledge of a/the mass market 1 mark Explanation Explanation of a characteristic of the mass market 1 mark Context Applied to a business context/ business environment 1 mark Question Answer Marks 2(a)(ii) Exemplar and annotations Mark Rationale Mass markets are aimed at everybody . For example, in the shoe market, this might be plain black shoes that anybody could wear which are all the same . 3 An answer which starts with the knowledge and then applies it to mass shoe market, with a characteristic. CS can sell in high quantity to the whole market . At a low price . 3 Two characteristics surrounding the knowledge. Aiming at the majority of people who might want to buy the product . For example, customers who might buy a blank T- Shirt . 2 Clear knowledge. Some application through an example. A mass market is one that is not focussed on a market segment . Therefore, the product could be bought by anyone. It is likely that a large number of people would be potential customers. 1 A reasonable definition but what follows is more of the same knowledge. Mass markets have high sales revenue and products are likely to have higher price than a niche market . This could give the business access to economies of scale . 0 There are two characteristics here, but no knowledge of mass markets. Therefore, no marks can be awarded. Question Answer Marks 2(b)(i) Refer to Table 2.1. Calculate the contribution per unit for the recent batch of shoes. Formula: Contribution per unit = price – VC or TR – TVC / output or Profit (TR – TC) / margin of safety (1) Method 1 $18 750 / 500 = $37.50 and $25 000 / 500 = $50 (1) $50 – $37.50 = $12.50 (1) Method 2 ($25 000 – $18 750) = $6250 (1) $6250 / 500 = $12.50 (1) Method 3 $25 000 – $23 750 = $1250 (1) $1250 / 100 = $12.50 (1) Answer = $12.50 (3) 3 Question Answer Marks 2(b)(i) Exemplar and annotations Marks 3 marks Correct answer $12.50 or 12.50 or 12.5 Working and $ do not matter. 2 marks Both of the following:  Formula  One correct stage of calculation OR An incorrect answer with one mistake allowing OFR for final stage. To award two marks, there must be  Two and a OR  One , one and one 1 mark One of the following:  Correct formula  One correct stage of calculation. 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 limitation for CS of using break-even analysis. 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 limitation of using break-even analysis , including:  not all costs and revenue can be split  assumes all costs are a straight line (constant)  assumes price is constant  assumes all output is sold/does not take into account demand/demand fluctuates  assumes all costs are fixed or variable  needs to be calculated for each product  it ignores capacity  assumes that fixed costs do not change as output increases  assumes fixed costs can be allocated  assumes no external influences. Do not accept that break-even analysis data may be inaccurate/wrong or time consuming. This is not a specific limitation of break-even analysis. 3 Question Answer Marks 2(b)(ii) AO2 Application Explanation of a limitation if using break-even analysis , including:  not all costs and revenue can be split: and break-even assumes that all costs can be split.  assumes all costs are a straight line (constant); whereas costs are likely to fall (on average) as output increases.  assumes price is constant; whereas most businesses will need to reduce the price to sell more.  assumes all output is sold; which is unlikely for most businesses – wastage, obsolescence etc.  assumes all costs are fixed or variable; whereas there are semi-fixed / semi-variable costs.  needs to be calculated for each product: only really works for a single product business.  it ignores capacity; if the capacity is below the break-even point, then the business will never break even.  assumes that fixed costs do not change as output increases; but as output increases most firms will need to source more fixed assets.  assumes fixed costs can be allocated: which is not always possible for a multi-product business. Context applied to a limitation of using break-even analysis including:  Yazeem uses a range of colours and sizes – may be impossible to do break-even for each style of shoe/size/colour.  Uses batch production – may be impossible to allocate the fixed costs to each style/size/colour.  At least two employees (Yazeem and Abir) – how can their time be allocated to production/administration etc.  Increase in low-priced shoes – may make it impossible to sell all the output.  Use of Table 2.1.  OFR from Q2(b)(i) Accept all valid responses. Guidance in awarding marks Knowledge & understanding Knowledge of a limitation of using break-even analysis 1 mark Explanation Explanation of a limitation of using break-even analysis 1 mark Context Context linked to a limitation of using break-even analysis 1 mark Question Answer Marks 2(b)(ii) Exemplar and annotations Mark Rationale Break-even analysis assumes average costs do not change but CS’s average variable costs are likely to change because CS is using batch production . 3 Knowledge of a limitation with explanation of why it is a limitation and application to the context of CS. Abir has suggested using JIT , which is likely to mean the transportation costs are not constant . 3 A backwards answer. Starts with the context, then the explanation and lastly knowledge. An equally valid approach – as long as there is knowledge somewhere in the answer. The price may not be the same for every pair of shoes which could mean that the Total Revenue is not constant . 2 The knowledge is fine. The explanation refers to a different point of knowledge, but it DOES explain this limitation, so it is valid. No context. Break even analysis assumes all output produced is sold . 1 Knowledge and no explanation or application to the context. Break even analysis is a way of calculating the quantity needed to stop making a loss and start making a profit. This is useful to CS because they can calculate how many shoes need to be sold to cover all of the costs which were $23 750 for the recent batch. 0 Although there is some relevant context, there is no knowledge of a limitation, so no marks can be awarded. Break even analysis can be wrong. If the Manager miscalculates the break-even point, then any decision made on this will also be wrong. 0 Being incorrect/wrong/inaccurate, is not a limitation of break-even analysis. It could be said about any calculation, so do not award. Question Answer Marks 2(c) Analyse two disadvantages to CS of adopting a JIT approach to inventory management. Level AO1 Knowledge and understanding 2 marks AO2 Application 2 marks AO3 Analysis 4 marks 2 3–4 marks Developed analysis  Developed analysis that identifies connections between causes, impacts and/or consequences of two points.  Developed analysis that identifies connections between causes, impacts and/or consequences of one point. 1 1–2 marks  Knowledge of two relevant points is used to answer the question.  Knowledge of one relevant point is used to answer the question. 1–2 marks  Application of two relevant points to a business context.  Application of one relevant point to a business context. 1–2 marks Limited analysis  Limited analysis that identifies connections between causes, impacts and/or consequences of two points.  Limited analysis that identifies connections between causes, impacts and/or consequences of one point. 0 0 marks No creditable response. 0 marks No creditable response. 0 marks No creditable response. 8 Question Answer Marks 2(c) Indicative content AO1 Knowledge and understanding Knowledge of just in time inventory management (max 1 mark if no knowledge of disadvantage(s)), including:  Orders made from suppliers as needed.  Products produced as required by customers.  Limited or zero inventory required to be held. Knowledge of disadvantages of just in time (max 2 marks – annotate first disadvantage on left and second disadvantage on right), including:  Risk of running out of stock.  Reliance on (new) suppliers – frequency of ordering/deliveries  Requires planning/time.  Limited scope for mass/batch production (little scope for economies of scale) – increased average cost  Finished product inventory cannot be used for promotional purposes.  Difficult to forecast/budget  Cost of infrastructure/capital  Might be difficult to respond to changing demand. AO2 Application Context applied to a disadvantage of using JIT (max 2 marks), including:  Currently selling to mass market (professionals for work or smart dress).  Currently using batch production.  Abir has suggested a move towards niche, unique (job produced) shoes.  New local supplier suggested by Abir.  Shoes on display in the shop.  Raw material of leather must be in climate controlled storage.  No current relationship to suggested new supplier.  Range of sizes and colours. Question Answer Marks 2(c) AO3 Analysis Analysis of disadvantage(s) of using JIT, including: Limited analysis – candidate shows one link in the chain of analysis. Developed analysis candidate shows two or more links in the chain of analysis or a two-sided analysis.  Risk of running out of stock;  may dissatisfy customers and lead to bad publicity – lower sales/profit.  May lead Yazeem to be idle increasing costs – lower profitability.  Reliance on suppliers; if the new local supplier is chosen then there is no current relationship, so shoe production may be delayed – decreased sales/profit.  Requires planning/time – If Yazeem/Abir are planning the logistics they may be less productive in producing shoes – lower sales/profit.  Limited scope for mass/batch production (little scope for economies of scale); increased costs – lower profitability.  Finished product inventory cannot be used for promotional purposes; customers may not come into a show shop without any shoes to try on – lower sales/profit. Accept all valid responses. Exemplars and annotations AO1 Knowledge AO2 Application AO3 Analysis CS may run out of stock . And since CS is selling to the mass market . Customers may choose to go elsewhere, reducing CS’s revenue leading to less profit . CS would need a new supplier Although Abir has already found one who is happy to deliver as required However, CS do not have a relationship with them and they might not deliver the materials on time leading to customers being dissatisfied and going to a competitor. . Question Answer Marks 2(d) Evaluate the importance to CS of being a small business. Level AO1 Knowledge and understanding 2 marks AO2 Application 2 marks AO3 Analysis 2 marks AO4 Evaluation 6 marks 3 5–6 marks Developed evaluation in context  A developed judgement/conclusion is made in the business context.  Developed evaluative comments which balance some key arguments in the business context. 2 2 marks Developed knowledge of relevant key term(s) and/or factor(s) is used to answer the question. 2 marks Developed application of relevant point(s) to the business context. 2 marks Developed analysis that identifies connections between causes, impacts and/or consequences. 3–4 marks Developed evaluation  A developed judgement/conclusion is made.  Developed evaluative comments which balance some key arguments. 1 1 mark Limited knowledge of relevant key term(s) and/or factor(s) is used to answer the question. 1 mark Limited application of relevant point(s) to the business context. 1 mark Limited analysis that identifies connections between causes, impacts and/or consequences. 1–2 marks Limited evaluation  A judgement/conclusion is made with limited supporting comment/evidence.  An attempt is made to balance the arguments. 0 0 marks No creditable response. 0 marks No creditable response. 0 marks No creditable response. 0 marks No creditable response. 12 Question Answer Marks 2(d) Indicative content AO1 Knowledge and understanding Knowledge of the features of being a small business (max 2 marks), including:  Lifestyle  Independence  Opportunities  Creative freedom  Less reliance on other people  Expertise  Unique selling point (USP)  Personal satisfaction  Personal service for customers  Focus  Easy to plan  Easy to control/coordinate/lead  Potential for growth  Encourages innovation/intrapreneurship/entrepreneurship  May struggle obtaining finance / limited finance  Increased risk Question Answer Marks 2(d) AO2 Application Context applied to features of being a small business (max 2 marks), including:  Yazeem is a highly skilled shoemaker  Sole trader  Abir is fully trained in making shoes  CS opened in 1975  Currently targeting a mass market (professional men and women)  Currently produced using batch production  Shoes sold in own shop  Range of sizes and colours  Increase in low-priced mass market shoes – reduced CS sales and repairs  Abir feels it is time for Yazeem to retire  Abir would like to design and produce unique shoes for niche markets  New products would use price skimming  Use of Table 2.1  Abir suggested adoption of JIT Question Answer Marks 2(d) AO3 Analysis Limited analysis – candidate shows one link in the chain of analysis. Developed analysis – candidate shows two or more links in the chain of analysis.  Lifestyle/personal satisfaction; Yazeem (and Abir) can choose their own hours which may increase their happiness – likely objective of Yazeem as a sole trader.  Independence; Yazeem does not have to ask anyone’s opinion when making decisions which may suit him – increased happiness.  Opportunities; as a small business Yazeem and Abir can more easily take advantage of new trends (such as the niche markets) – increased sales/profit.  Creative freedom; both Yazeem and Abir are skilled and can create shoes which suit the market without having to have decisions agreed by others – increased sales/profit.  Less reliance on other people; less opportunities for wastage – lower costs, increased profitability.  Expertise; both Yazeem and Abir are highly skilled and can focus these on their small customer base – increased customer satisfaction.  Unique selling point (USP); having expert owners may allow CS to sell at a higher price – increased profitability.  Personal service for customers; customers feel like they are being well looked after (as they are dealing with the owners) – increased sales/profit.  Focus; As Yazeem is the owner he is more likely to be motivated – increased productivity.  Easy to plan; few employees mean that CS can adapt their business to meet current demand – increased sales/profit.  Easy to control/coordinate/lead; less customers mean that CS can adapt their business to meet current demand – increased sales/profit. 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.  A judgement the importance of being a small business.  Evaluation of the relative importance of different advantages/factors.  Elements that the evaluation/judgement might depend upon – Yazeem and Abir’s personal objectives, whether Yazeem wants to retire (or not), the relative size of competitors in the market, the location of CS, changes in the shoe manufacture and retail market, changes in technology, price elasticity of demand for CS shoes. Accept all valid responses. Question Answer Marks 2(d) Exemplars for awarding evaluation L1 (limited supporting evidence) L2 (developed supporting evidence) L3 (developed supporting evidence with context) Being a small business is important for CS. Being a small business is important for CS because it means Yazeem can retain control of his business. Being a small business is important for CS because it means Yazeem can retain control of his sole trader business. It is not important for CS to be a small business. It is not important for CS to be a small business because the business should be allowed to grow to a more efficient size, where costs are lower. It is not important for CS to be a small business because the business should be allowed to grow to a more efficient size, where costs are lower, so that it can compete with the mass market retailers who are selling cheaper shoes for people to wear to work or dress smartly. The importance of CS being a small business depends on the objectives of Yazeem. The importance of CS being a small business depends on the objectives of Yazeem. If his objective was to maximise profit, then it is more important for CS to grow. The importance of CS being a small business depends on the objectives of Yazeem. If his objective was to give the business to Abir, then maybe she should decide how important the size of CS is. In the short term being a small business is important. In the short term being a small business is important, however in the long term Yazeem may need to grow to take advantage of economies of scale. In the short term being a small business is important, however in the long term Yazeem may need to grow to take advantage of economies of scale to reduce the cost of the batch production process used by CS.

Question 22

Pot Plants (PP) PP is a private limited company that grows and sells plants in pots. PP has 12 large shops in country Q and uses a variety …

Accepted Answer

Question Answer Marks 1(a)(i) Identify one promotion method. 1 Indicative content Promotion methods : • advertising/advertisement • sales • direct • digital • packaging • branding Accept only the answers above Do not accept examples of a method (i.e. social media or social media promotion), unless the method is specified (i.e. social media advertising). If more than one answer is given, only mark the first, reading from top left to bottom right. 1(a)(ii) Explain the term capital expenditure (line 16). 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. 1(a)(ii) Indicative content Definition of capital expenditure: the purchase of non-current assets that are expected to last for more than one year, such as buildings and machinery. AO1 Knowledge and understanding Knowledge of business expenditure , may include: • Purchasing • Buying • Spending money on • Investing in AO2 Application Explanation of capital expenditure may include: • Non-current assets • Fixed assets • Assets expected to last for more than a year/12 months Context applied to capital expenditure way , including: • Any example of capital expenditure, including: • Machinery • Property • Factories Accept all valid responses. Guidance in awarding marks Knowledge & understanding Knowledge of business expenditure 1 mark Explanation Application to capital expenditure 1 mark Context Applied to a business context/ business 1 mark environment 1(a)(ii) Exemplar and annotations Marks Rationale Buying non-current assets , like machinery 3 Knowledge of expenditure with explanation of capital and a valid example of something that can be bought using capital expenditure. When a business purchases things that are likely to be used 2 Knowledge of expenditure and or owned for more than 12 months explanation of what capital is. A vehicle is an example of capital that is purchased 2 An example followed by the knowledge of expenditure. Only award if the K is present. Capital expenditure is when a business purchases capital 2 Knowledge of purchasing and an items, such as a vehicle example. Buying day to day things like inventory 1 The knowledge mark for understanding of expenditure, but the rest of the answer is incorrect – this is revenue expenditure. Capital expenditure is when a business has expenditure on capital 0 This is a tautology. Although the items, like machinery. example is right, they cannot be awarded without K. 1(b)(i) Refer to Table 1.1. Calculate the labour turnover rate for PP in 2023. 3 Number of employees who left a business within a time period Formula:  100 (1) Total number of employees in a business OR 100 + 14  100 (1) 450 + 120 114  100 (1) 570 = 20% (3) If the candidate calculates each division’s labour turnover, award one mark for each correct answer, to a maximum of two marks in total. 100  100 = 22.22% (1) (accept 22.2 (recurring*), 22.2 and 22 i.e. any correct rounding) 450 14  100 = 11.67% (1) (accept 11.66 (recurring*), 11.67, 11.7 or 12 – i.e. any correct rounding) 120 Do not accept 11.6 or 11.66 (incorrect rounding) Answer of 0.2 should be awarded 2 marks with working. A recurring number can be shown as a dot above the recurring number i.e. 11.6 or three dots after the recurring number i.e. 22.2 1(b)(i) Examples and annotations Marks 3 marks Correct answer Working and % sign do not matter. 20% or 20 2 marks Both of the following: To award two marks, there must be • Formula • Two and a • Correctly calculated employees who left (114) OR AND correctly calculated total employees (570) • One , one and one OR An incorrect answer with one mistake allowing OFR for final stage. OR Candidate has correctly calculated the labour turnover for both divisions (Growing 22.22% and Retail 11.67%) OR An answer of 0.2 (candidate did not multiply by 100) with appropriate working. 1 mark One of the following: To award one mark, there must be: • Correct formula • One and two • Correctly calculated employees who left (114) AND correctly calculated total employees (570) OR Candidate has correctly calculated the labour turnover for one division (Growing 22.22% and Retail 11.67%) 0 marks No creditable content. To award zero marks, there must be • One 1(b)(ii) Explain one possible impact on PP of its employees being trade union members. 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. Indicative content AO1 Knowledge and understanding Knowledge of trade union involvement (max 1 mark), including: Positive, including: Negative, including: • collective bargaining • industrial action (strikes, work to rule etc.) • job security • loss of productive time • higher wages • increased costs • increased employee welfare • better working conditions • communication between employers and employees AO2 Application Explanation of why Trade Union involvement will have an impact on PP (max 1 mark), including: • collective bargaining; may mean higher wages for employees • job security; workers are less likely to leave • higher wages; avoid a strike 1(b)(ii) • increased employee welfare; which the business has to pay for • better working conditions; because of collective bargaining • communication between employers and employees; improving coordination Negative impacts, including: • industrial action (strikes, work to rule etc.); to improve working conditions • loss of productive time; reducing the businesses ability to manufacture products • increased costs; from increased wages. Context applied to an impact of trade union involvement at PP (max 1 mark), including: • The growing division has 100% trade union membership – which may mean more impacts (positive and negative) • The retail division has only 25% trade union membership – which may mean employees do not share the same impacts (positive and negative). • 450 employees from the growing division are trade union members – but only 30 employees from the retail division are trade union members. • In total 480 employees are trade union members – which is 84% (rounded) of the entire workforce. • The salary for the growing division may be higher – than the salary for the retail division. • PP is a private limited company • 12 large shops in in countryside within country Q with fields near the shops. • Outsourcing used in retail division, not (as far as is known) in farming division. Accept all valid responses. Guidance in awarding marks Knowledge & Knowledge of trade union involvement 1 mark understanding Explanation Explanation of an impact on PP from trade union involvement 1 mark Context Context linked to an impact on PP of trade union involvement 1 mark 1(b)(ii) Exemplar and annotations Marks Rationale An impact may be from collective bargaining , which may mean 3 An impact of trade union PP has to pay increased wages . This will have a big impact on membership is collective the Growing division which has 100% trade union membership bargaining, and this impact can increase wages for the explanation. The context is applied to this impact. One impact is that workers may insist on better working conditions 2 An impact identified and context for the 570 employees . applied to this. Collective bargaining could lead to higher wages . 2 Both higher wages and collective bargaining are their own impacts, but the candidate has linked the two together here, so they have identified and explained (but no context). 1 Four impacts here, but they are Impacts include a strike or workers picketing or better not linked at all and so the first is wages or increased costs . awarded, but the others are REP. Trade unions are a group of employees representing the interests 0 No impact here, so 0 marks. Not of its members. knowledge of Trade Union involvement – only a definition of a Trade Union 1(c) Analyse one advantage and one disadvantage to PP of outsourcing the manufacture of pots. 8 Level AO1 Knowledge AO2 Application AO3 Analysis and 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 • Application of two Limited analysis two relevant relevant points to a • Limited analysis that identifies connections points is used to business context. between causes, impacts and/or answer the • Application of one consequences of two points. question. relevant point to a • Limited analysis that identifies connections • Knowledge of business context. between causes, impacts and/or one relevant consequences of one point. point is used to answer the question. 0 0 marks 0 marks 0 marks No creditable No creditable response. No creditable response. response. 1(c) Indicative content AO1 Knowledge and understanding Knowledge of an advantage of outsourcing (max 1 mark – annotate on left) including: • Improved focus on the core business activities • Increased efficiency • Controlling/low costs • Increased capacity • Improve quality • Access to specific skills. Knowledge of a disadvantage of outsourcing (max 1 mark – annotate on right), including: • Loss of control over production process • Lack of control of quality • Reliance on an external stakeholder • Lack of flexibility • Delays/extra transportation may be inevitable. AO2 Application Context applied to an advantage (max 1 mark) and disadvantage (max 1 mark) of outsourcing to PP, including: • PP is a private limited company – limited liability, finance etc. • Sells potted plants in ceramic or clay pots – integral to product. • 12 large shops in countryside within country Q with fields near the shops. • Variety of pricing methods – requires a range of cheap to expensive priced products. • Outsourcing used in retail division, not (as far as is known) in farming division. • Use of Table 1.1 • CC is based in the same country as PP. • PP would like more variety from CC but CC does not want to afford the capital expenditure. • CC has a lead time of three days. • FF makes plastic pots in a large factory in country S (different country to PP). • FF uses mass customisation, producing any size and colour of pot. • FF has a lead time of one month. 1(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 of outsourcing, including: • Improved focus on the core business activities; lower costs – increased profit. • Increased efficiency; higher quantity of products – increased sales revenue. • Controlling costs (with CC); more cash available to overcome labour turnover problems in farming division. • Increased flexibility (with FF); better customer satisfaction – increased sales. • Improve quality; fewer defective pots – improved customer satisfaction. • Access to specific skills; better presentation of PP plants – increased sales. Disadvantages of outsourcing, including: • Loss of control over production process; may lead to poorer quality control – increased costs. • Reliance on an external stakeholder; relatively long lead times – reduced customer satisfaction. • Lack of flexibility; less able to respond to changes in customer demand – lower sales. • Delays may be inevitable (beyond the lead time); poor customer satisfaction – reduced sales revenue. • Likely to have a higher cost (due to having to cover CC or FF’s profit margin); increased prices – lower sales, Accept all valid responses. Exemplars and annotations AO1 Knowledge AO2 Application AO3 Analysis Outsourcing can reduce PPs to produce plastic and clay pots This allows PP to spend on other capital expenditure areas of the business such as marketing which could increase demand for its pots . The pots will need to be and FF is in another country . Which could increase PP’s costs transported to PP and lead to lower profits . 1(d) Evaluate the importance to PP of workforce planning. 12 Level AO1 Knowledge AO2 AO3 Analysis AO4 Evaluation and understanding Application 2 marks 6 marks 2 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 Developed evaluation knowledge of application of analysis • A developed relevant key term(s) relevant that identifies judgement/conclusion is made. and/or factor(s) is point(s) to the connections • Developed evaluative comments used to answer the business between causes, which balance some key question. context. impacts and/or arguments. consequences. 1(d) 1 1 mark 1 mark 1 mark 1–2 marks Limited knowledge Limited Limited analysis Limited evaluation of relevant key application that identifies • A judgement/conclusion is made term(s) and/or of relevant connections with limited supporting factor(s) is used to point(s) to the between causes, comment/evidence. answer the question. business impacts and/or • An attempt is made to balance context. consequences. the arguments. 0 0 marks 0 marks 0 marks 0 marks No creditable No creditable No creditable No creditable response. response. response. response. Indicative content AO1 Knowledge and understanding Knowledge of the use and/or contents of a workforce plan (max 2 marks). Uses of a workforce plan, including: • analysing the current workforce, • determining future workforce needs, • identifying the gap between the workforce you will have available and your future needs, • implementing solutions so that an organisation can accomplish its mission, goals, and strategic plan. Contents of a workforce plan, including: • number of workers/employees required • skills required • skill gap analysis • likely future human resource (HR) requirements • action plan to achieve business human resource objectives • demographic changes • talent management 1(d) AO2 Application Context applied to knowledge of workforce planning to PP (max 2 marks), including: • PP is a private limited company. • Both the farming and retail divisions rely on human resources. • 12 large shops in in countryside within country Q with fields near the shops. • Variety of pricing methods – may increase skills needed in retail workers. • Outsourcing used in retail division, not (as far as is known) in farming division. May involve communication skills. • Use of Table 1.1. AO3 Analysis Limited analysis - candidate shows one link in the chain of analysis. Developed analysis - candidate shows two or more links in the chain of analysis. • Analysing the current workforce; both divisions are likely to require skilled workers including; Farming – agricultural, chemicals, managerial, manual – all of which have a cost associated – reduced profitability. Retail – customer services, managerial, marketing – some of which may be in high supply in country Q – reduced wages – increased profitability. • Determining future workforce needs; to maintain market share in what is likely to be a competitive market. • Determining future workforce needs; both divisions are likely to be labour intensive (especially retail) – increases PP’s ability to operate in a competitive market. • Identifying the gap between the workforce you will have available and your future needs; farming division may require new product development – increased USP – increased sales. • Implementing solutions so that an organisation can accomplish its mission, goals, and strategic plan; to increase future growth/survival/profitability. 1(d) AO4 Evaluation Limited evaluation – unsupported judgement and/or a weak attempt at evaluative comment Developed evaluation – supported judgement and/or reasonable evaluative comment Developed evaluation in context – supported judgement in context and/or reasonable evaluative comment in context. • A judgement over importance to PP of workforce planning. • Evaluation of the relative importance of different factors. • Elements that the evaluation/judgement might depend upon – cost of the labour as a proportion of the total costs of the product/sales, which division is being planned for, the labour market in country Q, dynamism of the potted plant market in country Q, the USP of PP, PP’s competitors. Accept all valid responses. Exemplars for awarding evaluation L1 (limited L2 (developed supporting L3 (developed supporting evidence supporting evidence) with context) evidence) Workforce planning is Workforce planning is very important to Workforce planning is very important to PP very important to PP. PP because it is a large business with because it is a large business with 570 many employees that are essential to the employees that are essential to the success of the business. success of the business. The importance of The importance of workforce planning The importance of workforce planning workforce planning depends on the local economy. For depends on the local economy. For depends on the local example, if there was high example if there was high unemployment economy. unemployment, then PP might easily near PP’s 12 retail shops, then PP might replace workers, without the need to easily replace workers, without the need to plan. plan.

Question 23

Popular Drinks (PD) PD is a mass market fizzy drinks manufacturer in country Z. The fizzy drinks market in country Z is dominated by a few …

Accepted Answer

2(a)(i) Identify one recruitment method. 1 Indicative content Identification of a method may include: • job advertisements • employment agencies • online recruitment • internal / external recruitment • job description • person specification • headhunting • advertising media for recruitment, e.g. newspapers, websites, word of mouth, internal noticeboard, intranet Do not allow selection methods, e.g. curriculum vitae, résumé, application forms, interviews, references, testing, assessment centres. If more than one answer is given, only mark the first, reading from top left to bottom right. Accept all valid responses. 2(a)(ii) Explain the term cash flow. 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. AO1 Knowledge and understanding Knowledge of cash flow may include: • The sum of cash payments into a business less the sum of cash payments out of a business • Inflows and outflows • Into and out of the business • Receipts and payments • Money / notes / coins / funds / finance 2(a)(ii) AO2 Application Limited application applies knowledge of cashflow to a business context. Developed application + applies knowledge of cashflow to a business context. • Who the cash flow is from / to, e.g. customers, suppliers, lenders • Liquidity / solvency • Working capital • Prediction / forecast • Opening / closing balance • Different to profit • Benefits of producing a cash flow forecast, e.g. take preventative action • Uses of a cash flow forecast, e.g. predict shortfalls, apply for finance, business plans • Examples of what cash may be used for, e.g. bills, staff wages, electricity, pay debts • Example from a business context Accept all valid responses. Exemplar and annotations Mark Rationale Cash in and out measures the business’s ability to 3 The answer shows knowledge by the reference to pay debts and the solvency of the business . cash in and out. There is an explanation of how it measures the ability to pay debts which is developed by the reference to solvency. Money into and out of the business. It measures the 2 Two marks. The first for knowledge and the second liquidity of the business. mark for application to liquidity. The flow of cash receipts and payments 1 A reasonable definition The flow of cash 0 Tautological 2(b)(i) Refer to Fig 2.1. Calculate the percentage of PD’s customers with positive feedback Formula to calculate percentage: Positive feedback Positive Respondents =  100 (1 mark – formula only) Total feedback 80 + 40 Positive Respondents =  100 (1 mark – use of correct figures) 800 Positive Respondents = 15 (%) (1 mark – correct answer (no % necessary) Answer = 15 (%) (3 marks – correct answer (no working or % necessary) 2(b)(i) Exemplar and annotations Marks Answer Rationale 3 marks Correct answer Working and % do not matter. 15% Must be three to denote the three marks. Correct rounding must be applied. 2 marks Both of the following: To award two marks, there must be • Correct calculation of total respondents • Two and a (800) OR • Correct calculation of positive • One , one and one respondents (120) OR • An incorrect answer with one mistake allowing OFR for final stage. OR • A correct answer from an inverted formula (6.67 – OFR) 1 mark One of the following: To award one mark, there must be: • Correct formula • One and two • Correct calculation of total respondents (800) • Correct calculation of positive respondents (120) 0 marks No creditable content. To award zero marks, there must be • One 2(b)(ii) Refer to Fig. 2.1 and other information. Explain one reason why this data collected for PD may not be reliable. 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. Indicative content AO1 Knowledge and understanding Knowledge of one reason for data not being reliable (max 1 mark), including: • Human error • Lack of data standards • Incomplete / outdated data • Poor questionnaire design / poorly written questions / question construction • Incorrect sampling • Data collection issues • Low response rates 2(b)(ii) AO2 Application Explanation of one reason for data not being reliable (max 1 mark), including: • Human error–untrained employees enter the data incorrectly / different teams with inconsistent methods • Lack of data standards–no rules of formatting / classifying data • Incomplete / outdated data–data no longer reflects current opinions • Poor questionnaire design / poorly written questions–leading questions / confusion • Incorrect sampling–sample doesn’t represent target customers • Data collection issues–timing • Low response rates–bias / length of questionnaire Context applied to PD (max 1 mark), including: • Mass market • Market dominated by a few well-known brands • Total market value is $5.3bn • 17% share of market • Pablo became Marketing Director in 2022 • Launched promotional campaign based on trending music on social media • Used social media influencers • Poor online feedback • Sales volume decreased by 20% in a week and continued to fall • Excess inventory in warehouses • Drop in PD’s share price • Negative impact on cashflow • Questionnaire completed by previous PD customers • Data from Fig. 2.1 • 800 respondents 2(b)(ii) Exemplar and annotations Mark Rationale Low response rates may lead to biased data affecting 3 Low response rates , with further decisions to repair the damage to PD’s brand . explanation to how it may affect the data The third mark is for reference to the context . An incorrect sample size of 800 customers . 2 Knowledge of a use and applied to the number of customers who completed the questionnaire. Problems collecting the data 1 Knowledge of a reason with no application 0 No reason why the data collected may not The data will be inaccurate, incomplete and misleading be reliable. This answer is a description of . unreliable data and does not answer the question Accept all valid responses. 2(c) Analyse two possible costs to PD of holding inventory. 8 Level AO1 Knowledge and AO2 Application AO3 Analysis understanding 2 marks 4 marks 2 marks 2 3–4 marks Developed analysis • Developed analysis that identifies connections between causes, impacts and/or consequences of two points. • Developed analysis that identifies connections between causes, impacts and/or consequences of one point. 1 1–2 marks 1–2 marks 1–2 marks • Knowledge of two • Application of two Limited analysis relevant points is relevant points to a • Limited analysis that identifies connections used to answer the business context. between causes, impacts and/or consequences of question. • Application of one two points. • Knowledge of one relevant point to a • Limited analysis that identifies connections relevant point is business context. between causes, impacts and/or consequences of used to answer the one point. question. 0 0 marks 0 marks 0 marks No creditable response. No creditable response. No creditable response. First cost in the left-hand side column, second cost in the right-hand side column 2(c) Indicative content AO1 Knowledge and understanding Knowledge of possible costs of holding inventory (max 2 s), may include: • Opportunity cost of holding stock • Impact on working capital • Labour cost • Storage costs • Risk of wastage / damage • Depreciation • Insurance AO2 Application Application of cost to PD , including: • Mass market • Market dominated by a few well-known brands • Total market value is $5.3bn • 17% share of market • Pablo became Marketing Director in 2022 • Launched promotional campaign based on trending music on social media • Used social media influencers • Poor online feedback • Sales volume decreased by 20% in a week and continued to fall • Excess inventory in warehouses • Drop in PD’s share price • Negative impact on cashflow • Data from Fig. 2.1 • 800 respondents AO3 Analysis Limited analysis of cost of holding inventory – candidate shows one link in the chain of analysis. Developed analysis of cost of holding inventory candidate shows two or more links in the chain of analysis or a two- sided analysis. 2(c) Analysis may include: • Opportunity cost of holding stock–space used to store stock could be used for production reducing potential output– lower revenue • Impact on working capital–money / cash will be tied up in the stock–cannot pay suppliers • Labour cost–reduced profit–lower shareholder dividends • Increase storage costs–reduction in profit margins–reduction in share price • Increase risk of wastage–spend time disposing of the waste–inefficiency • Depreciation–reduces profits to reinvest–less future growth • Insurance–increased expenses–reduced working capital Accept all valid responses. Exemplar and annotations AO1 Knowledge AO2 Application AO3 Analysis Exemplar for one cost of Insurance To reduce risk of disruption Insurance will compensate holding inventory to operations to maintain PD if an incident destroys Annotations for the first PD’s 17% market share . stock so it can maintain cost should be placed in sales satisfying the left-hand margin. customers . Exemplar of a second cost Risk of wastage Of the unsold mass market Could lead to a reduction in of holding inventory fizzy drinks . profit and future Annotations for the expansion . second cost should be placed in the right-hand margin. 2(d) Evaluate the importance of branding to the future success of PD. 12 Level AO1 Knowledge and AO2 Application AO3 Analysis AO4 Evaluation 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 the connections between judgement/conclusion is made. and/or factor(s) is business context. causes, impacts • Developed evaluative comments used to answer the and/or consequences. which balance some key question. arguments. 1 1 mark 1 mark 1 mark 1–2 marks Limited knowledge Limited application Limited analysis Limited evaluation of relevant key term(s) of relevant point(s) to that identifies • A judgement/conclusion is made and/or factor(s) is the business context. connections between with limited supporting used to answer the causes, impacts comment/evidence. question. and/or consequences. • An attempt is made to balance the arguments. • 2(d) 0 0 marks 0 marks 0 marks 0 marks No creditable No creditable No creditable No creditable response. response. response. response. Indicative content AO1 Knowledge and understanding Knowledge of branding (max 2 s), including: • Creating a distinct identity / image • Brand values • A company's name and logo, visual design, slogan, jingle • Making consumers feel good about supporting a company and establishing an emotional connection. • Differentiates from competitors • Influence purchasing decisions • Customers identify with business / brand • Brand personality • Build trust / relationships 2(d) AO2 Application Application of branding to PD , including: • Mass market • Market dominated by a few well-known brands • Total market value is $5.3 bn • 17% share of market • Pablo became Marketing Director in 2022 • Launched promotional campaign based on trending music on social media • Used social media influencers • Poor online feedback • Sales volume decreased by 20% in a week and continued to fall • Excess inventory in warehouses • Drop in PD’s share price • Negative impact on cashflow • Data from Fig. 2.1 • 800 respondents • Need to repair damaged PD brand from promotional campaign AO3 Analysis Limited analysis of the importance of branding to PD – candidate shows one link in the chain of analysis. Developed analysis of the importance of branding to PD – candidate shows two or more links in the chain of analysis. • Create distinct identity/image – maintaining customer base and repeat sales/loyalty–long term profitability • Name and logo conjure brand values–can attract/deter new customers–increase/decrease market share • Customers buy the brand regardless of quality–repeat customers–increased market share • Differentiates from competitors–attracts customers–increased market dominance • Influence purchasing decisions–increase revenue–increased profits • Customers identify with business / brand–building brand loyalty–long-term profitability • Brand personality–helps to differentiate and create a USP–customers pay a higher price • Build trust / relationships–increased reputation–increased market share 2(d) AO4 Evaluation Limited evaluation – an unsupported judgement and/or weak attempt at an 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 external impacts that affect the future brand image, e.g. new competitors or social trends • The relative importance of other elements of the marketing mix • Other factors that affect future success, e.g. financial management, competition, social trends • An evaluation on whether branding is important to PD’s future success. Accept all valid responses. Exemplars for awarding evaluation L1 (limited supporting L2 (developed supporting L3 (developed supporting evidence) evidence) evidence with context) Branding is important to support PD’s Branding is important to support PD’s Branding is important to support PD’s future success. future success. Branding helps future success. Branding helps customer recognise PD’s drinks customer recognise PD’s drinks amongst competing brands. amongst competing brands and therefore maintain a 17% share of the market. Branding is not important to the future Branding is not important to the future Branding is not important to the future success of PD. success of PD. The taste of the drink success of PD. The taste of the drink is more important because customers is more important because customers will not buy a drink that they dislike will not buy a drink that they dislike the taste of, even if attractively the taste of, even if attractively branded. branded in the mass market.

Question	Answer	Marks	From
1	see sheet	30	9609/22 May/June 2017
2	see sheet	30	9609/23 May/June 2017
3	see sheet	30	9609/21 Oct/Nov 2017
4	see sheet	30	9609/21 May/June 2018
5	see sheet	30	9609/22 May/June 2018
6	see sheet	30	9609/23 May/June 2018
7	see sheet	30	9609/22 Feb/March 2019
8	see sheet	30	9609/22 May/June 2019
9	see sheet	30	9609/22 Oct/Nov 2019
10	see sheet	30	9609/22 May/June 2020
11	see sheet	30	9609/22 May/June 2020
12	see sheet	30	9609/23 May/June 2020
13	see sheet	30	9609/23 May/June 2021
14	see sheet	30	9609/24 May/June 2021
15	see sheet	30	9609/22 May/June 2022
16	see sheet	30	9609/22 May/June 2023
17	see sheet	30	9609/23 May/June 2023
18	see sheet	30	9609/22 Oct/Nov 2023
19	see sheet	30	9609/22 Feb/March 2024
20	see sheet	30	9609/22 May/June 2024
21	see sheet	30	9609/22 May/June 2024
22	see sheet	30	9609/22 Oct/Nov 2024
23	see sheet	30	9609/23 Oct/Nov 2025

Human resource management (HRM) — Paper 2 · A Level Business (for first examination in 2016) 9609

Questions27 pages

Mark scheme23 answers

Another paper, or another topic

Questions as text

Q1 · Perfect Pizza (PP) Paul is a chef 9609/22 May/June 2017

Q2 · Designer Clothing (DC) DC is a medium sized private limited company 9609/23 May/June 2017

Q3 · Rugged Back Packs (RBP) RBP is a manufacturing business that specialises in producing… 9609/21 Oct/Nov 2017

Q4 · Veg Cans (VC) VC is a public limited company which produces canned vegetables 9609/21 May/June 2018

Q5 · Online Travel (OT) OT is a private limited company in country X that sells international… 9609/22 May/June 2018

Q6 · Delivery To You (DTY) DTY is a public limited company in the tertiary sector 9609/23 May/June 2018

Q7 · Sadiq’s Social Restaurant (SSR) SSR is a small social enterprise located in a low-income… 9609/22 Feb/March 2019

Q8 · Job Shop (JS) JS is a public sector organisation in country X 9609/22 May/June 2019

Q9 · Quality Fencing (QF) QF is owned by Seojun 9609/22 Oct/Nov 2019

Q10 · The Shop (TS) Thomas worked for 30 years as a manager of a factory 9609/22 May/June 2020

Q11 · Market Solution (MS) MS is a public limited company in the tertiary sector 9609/22 May/June 2020

Q12 · Super Heroes (SH) SH is a leisure (theme) park aimed at 10–18 year olds 9609/23 May/June 2020

Q13 · Bilal’s Homes (BH) Bilal is a sole trader, who buys and sells apartments for a profit 9609/23 May/June 2021

Q14 · Delicious Chicken (DC) DC is a fast-food restaurant that specialises in fried chicken and… 9609/24 May/June 2021

Q15 · Seaside Hotel (SH) SH is a large hotel located in a tourist area of country H 9609/22 May/June 2022

Q16 · Office Furniture Designs (OFD) Markus is an entrepreneur and is planning to set up a… 9609/22 May/June 2023

Q17 · Fretter’s Music (FM) FM is a private limited company based in country Z 9609/23 May/June 2023

Q18 · Gold Theme Park (GT) Gold Park was a mine where gold was extracted until 2012 9609/22 Oct/Nov 2023

Q19 · ML Computers (MLC) MLC is a successful private limited company that has been trading for… 9609/22 Feb/March 2024

Q20 · Post Scent (PS) PS is a private limited company operating in country H 9609/22 May/June 2024

Q21 · Cobblestone Shoes (CS) Yazeem is a highly skilled shoemaker 9609/22 May/June 2024

Q22 · Pot Plants (PP) PP is a private limited company that grows and sells plants in pots 9609/22 Oct/Nov 2024

Q23 · Popular Drinks (PD) PD is a mass market fizzy drinks manufacturer in country Z 9609/23 Oct/Nov 2025