Market research — Paper 2 — A Level Business (for first examination in 2016) 9609 topical questions

Question 1

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 2

Car Wash (CW) CW is a national chain of car wash businesses. Each car wash is a franchise of CW and is owned and managed by an entrepreneur…

Accepted Answer

2(a)(i) Define the term ‘franchise’. (line 1) 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 A correct definition will contain: What the franchisee gains (i.e. use of name/logo/trading system/operations system etc«) What the franchisor gains (i.e. royalties/license fee/percentage of profits/sales etc...) Exemplar Marks Rationale A business that pays a licence fee/royalties to use the logo and 2 Correct definition trading systems of an existing business Partial definition but A business that uses the logo and 1 no sense of a trading systems of another business payment/licensing A business that uses the name of 1 Partial definition another business 2(a)(ii) Briefly explain the term ‘entrepreneur’ (line 2). 3 Award one mark for each point of explanation: Example of a quality, i.e. qualities required by an C entrepreneur; innovation, self-motivation, creativity, 1 mark multi- skilled, leadership, confidence. Makes the decisions/runs/manages/leads a business B 1 mark venture/owns/starts a business A Takes the risk 1 mark Content Someone who takes the financial risk of starting and managing a new venture. Qualities may include innovation, self-motivation, multi-skilled, leadership, confidence, risk taking. . Exemplar Marks Rationale An entrepreneur takes the risk of starting a business and makes the 3 All three elements decisions, An entrepreneur should be confident Someone who makes decisions about the factors of production, takes risks 3 All three elements and comes up with creative ideas. Someone who takes the financial risk of starting and managing a new 2 A and B only venture. Someone who takes the risks in a 1 A only business Running a business 1 B only 2(b)(i) Refer to Table 1 and any other relevant information. Calculate the 3 forecast closing balance at the end of Month 2. Marks Rationale 3 Correct answer (with or without working or $) Correct calculation of net cashflow for both months (can be 2 one calculation or two) Formula or one correct calculation of net cashflow; i.e. cash 1 inflow-cash outflow (can be month 1 or month 2) 0 No creditable content Formula: Opening balance + net cash flow (Cash inflow – cash outflow) Calculations: Opening balance $10 000 Cash inflow $40 000 Cash outflow $35 000 Closing balance $15 000 (3 marks for correct answer) Common incorrect answers Answer Marks Rationale M1 $20 000 – $25 000 = –$5000 (1) M2 $20 000 – $10 000 = $10 000 Missed off opening 2 (1) balance Answer = $5000 No idea where the $5000 (no working) 0 figure came from so no marks Some understanding with opening balance 10 000 + 20 000 – 10 000 1 but cash inflow and = 20 000 outflow for month 2 only No opening balance 20 000 – 10 000 and cash inflow and 1 = 10 000 outflow for month 2 only 10 000 0 No working Correct formula 1 Correct formula 2(b)(ii) Explain one benefit for Palesh of producing a cash flow forecast. 4 Level Knowledge and Application Marks 2b Explanation of one benefit of cash flow 3 (APPAPP) forecasting used in context Identification of one benefit of cash flow 2a (APP) 2 forecasting in context Identification of one benefit of cash flow 1a (K) 1 forecasting 0 No creditable content 0 Correct use of an incorrect answer to 1bi should be fully rewarded (own figure rule – OFR) Content Answers could include: • Palesh can show the cash flow forecast to CW to help get the franchise • One of the major causes of new business failure is poor cash flow. A cash flow forecast will help Palesh to foresee any potential problems such as not having enough cash to pay wages • Allows Palesh to see when he may need extra finance • May help Palesh to get external finance if required Note: a positive cashflow does not mean profit will be made – do not reward this confusion in an answer. 2(c) Analyse one advantage and one disadvantage to Palesh of how he 8 carried out his market research. Knowledge and Level Application Marks Analysis (4 marks) Marks (4 marks) Good analysis of one (or more) advantage(s) AND one (or more) 4 disadvantage(s) of market research Shows techniques in understanding of context 2 market research 3–4 Good analysis of one techniques in (or more) context advantage(s) OR one (or more) 3 disadvantage(s) of market research techniques in context Limited analysis of one (or more) advantage(s) AND one (or more) 2 disadvantage(s) of market research Shows knowledge techniques of market 1 1–2 research Limited analysis of techniques one (or more) advantage(s) OR one (or more) 1 disadvantage(s) of market research techniques Limited analysis in context: Marks limited to 4+2=6 Answers could include: Advantages • Quick – reduces costs to Palesh • This is primary research which can be more up-to-date than secondary • Cheaper than other methods that may require more preparation time • Focused on the local area where Palesh is planning to set up his business 2(c) Disadvantages • Choose random – surely Palesh is only interested in people who have cars • On high street – is this the best place to sample people who might want to use a car wash? • Limited questions – e.g. could have asked what time of day might use the car wash 2(d) Recommend how Palesh could motivate his employees. 11 Knowledge and Analysis and Evaluation Application Marks Marks (7 marks) (4 marks) A justified recommendation for for Palesh based on the given argument(s) of one or 7 more motivation methods in context A developed recommendation for Palesh based on the given 6 argument(s) of one or more motivation methods in context An evaluative statement/ recommendation based on the given argument(s) of 5 one or more motivation methods in context Argument (two-sided) based on one or more motivation 4 Shows knowledge of methods in context motivation methods 3–4 Argument (one-sided) based in context on one or more motivation 3 methods in context Shows knowledge of Limited analysis of one or motivation/motivation 1–2 1–2 more motivation methods methods No creditable content 2(d) Content: Answers could include: • Payment methods are unlikely to be in context as Palesh has already stated he must pay a low wage. Commission/bonus or piece rate could be viable options as both of these keep costs linked to revenue. Alternatively, fringe benefits (such as free car washing) could be an option. • Job rotation – there may be some way of moving employees around the different jobs to stop them becoming demotivated • Job enlargement – there may be some additional responsibilities (such as a supervisor role) that Palesh could utilise • Job enrichment – unlikely to be much scope, but it may be possible to allow employees to decide on certain aspects of their role • Team working • Quality circles • Target setting – This may work as a motivational tool as long as there are enough cars to maintain the targets (could be linked to bonus or profit sharing scheme) • Delegation • Empowerment • Participation – Allowing workers to participate in decisions about the business may be a useful form of motivation, especially in a new business 2(d) An example of how an answer could develop and how it should be annotated. ANAN K APP AN EVAL (one sided) If Palesh uses a However, not all workers are method such as motivated by the same methods allowing so Palesh might need to use CW is labour workers to Less absenteeism more than one non-financial intensive so participate in would mean higher method of motivation. (EVAL – it is important decision making productivity and statement) that Palesh they will feel they would be able finds ways to part of the to wash more cars. As car washing can be boring motivate business and (ANAN) some workers might be Motivation staff. (APP) work harder to motivated by more interesting methods make it a work such as extra are used to success. (AN) responsibilities maybe as inspire staff supervisors or by changing roles to work during a shift so not always harder. (K) being the person who cleans ANAN (two-sided) inside cars (EVAL – developed) Motivation Working conditionsmethods However, if Palesh was to ask mean thatcould be The best some to take on extra This will mean employees workfinancial methods responsibilities he might have to that they are outside and theyand non- would be offer higher pay and this might less likely to will get wet whichfinancial. non-financial not be possible as it would raise take could make them(K) as Palesh costs so Palesh might have to unnecessary feel miserable and wants to consider less costly motivation days off work. more likely to take keep costs methods such as team working (AN) days off or leave low. (APP) where the team can decide how the job which could they will complete the necessary result in a bad tasks. This would fit in with reputation for CW. Palesh’s cost concerns. (EVAL – (ANAN) justified)

Question 3

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 4

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

Accepted Answer

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

Question 5

Planet Internet (PI) PI is a public limited company. It is an internet service provider. The business provides fast internet connections to…

Accepted Answer

2(a)(i) Define the term ‘objective’ (line 8). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 The stated specific/measurable/achievable/realistic/time-based * target\s (1) * only one needed that the business wants to achieve (1) in the future *** If the student shows understanding and a purpose of the objective then 2 marks *** Exemplar Mark Rationale A specific target a business wants to 2 Both elements (minimum) achieve A specific business target 1 One element only What a business wants to achieve in 1 One element (achieve and the future achievable are different) 2(a)(ii) Explain the term ‘secondary market research’ (line 12). 3 Award one mark for each point of explanation: Rationale Marks C* Example or some other way of showing good understanding 1 B Understanding of secondary/that already exists 1 A Understanding of collection of data 1 * Has to include at least one of points A or B Secondary marketing research (book research) finds data that already exists. It has already been collected by someone else for another purpose. Sources of secondary data can come from competitors, census, sales data etc. ARA Exemplar Mark Rationale Collection of information/data that 3 A and B plus a basic example already exists e.g. off the internet Data that already exists, such as sales 2 B and C only no understanding of data collection Data that already exists 1 B only Sales data/internet 0 No A or B 2(b)(i) Refer to Table 2. Calculate the total value of the internet service market in country X. 3 Rationale Marks Correct answer with or without correct working or $ or BN 3 Incorrect attempt using correct figures 2 Calculation of rest of market share (i.e. 22%) OR 1 Implied knowledge of total market value (i.e. 31.2bn) No creditable content 0 Formula Individual market share values (added up) = total market value They know and apply the formula through the use of figures but missed 22% Content Total value of industry = 100% of market share PI = 31% TB = 32% WS = 15% Therefore other = 22% (100%–78%) 78% of the market = $31.2bn $31.2bn = 0.4bn 78% $0.4bn × 22% = $8.8bn $31.2bn + $8.8bn = $40bn Answer = $40bn (3) Answer Marks Rationale $40 bn/40bn/40 (no units or $) 3 Correct answer 0.4*22 = $8.8bn 2 One mistake (+ 31.2) 31.2/78% = 0.4bn 1 Incorrect attempt, two errors (× 22% + 31.2bn) 31.2bn (with working) 1 Implied knowledge of formula 31 + 32 + 15 = 22% (missing) 1 Worked out the missing percentage of mkt 0.4 bn 0 Wrong answer – no working 2(b)(ii) Explain one suitable way, other than market share, to measure the size of PI. 3 Level Knowledge and Application Marks 2b (APP Explanation of one suitable way to measure the size of IP 3 +APP) 2a (APP) Identification of a suitable way to measure the size of IP 2 1a (K) Identification of one way to measure the size of a business 1 0 No creditable content 0 NB Profit is not an acceptable measure of business size Content • By revenue – PI charges its customers monthly (and we can presume its competitors do too) so this would be a good way to measure the size of the business • By number of customers – The more households who choose PI to provide their internet the bigger the business, since this is the main source of revenue • By coverage – over 95% of the households in country X can access PI’s services. The more coverage the bigger the business. • By market capitalisation – PI is a public limited company so sells shares. Value of the shares (NOT the share price) can be used to suggest how big the business is. ARA Example of how responses should be marked Identification of a way Explanation of a way Explanation of a way in (1 mark) (2 marks) context (3 marks) By revenue As PI charges customers So can compare against monthly competitors By customer numbers As internet provider is their The bigger the number the largest source of business larger the business By coverage Over 95% of households The larger the number the can access PI larger the business By market capitalisation Which shows the value of Which can be compared the PLC against competitors 2(c) Analyse one above the line promotional method and one below the line promotional 8 method which PI could use to gain new customers. Level Knowledge and Marks Analysis (4 marks) Marks Application (4 marks) 2b Shows understanding of 4 Good analysis of one 4 above and below the line method of above and one promotion in context method of below the line promotion in context 2a Shows understanding of 3 Good analysis of one 3 above or below the line method of above or one promotion in context method of below the line promotion in context 1b Shows knowledge of above 2 Limited analysis of one 2 and below the line method of above and one promotion method of below the line promotion 1a Shows knowledge of above 1 Limited analysis of one 1 or below the line promotion method of above or one method of below the line promotion No creditable content 0 Content Above the line methods: • Advertising – market is the whole of country X so although advertising is expensive it may be suitable. • Television advertising • Radio advertising • Newspaper adverting • Social media advertising • ARA 2(c) Below the line methods: • Direct mail – relatively cheap way to target specific areas in country X. PI can target the areas where they have coverage, not waste money on areas without coverage. • Trade shows/roadshows – stalls at shows/markets can be used to ‘sign up’ customers – effective because the service can be personalised to customer needs – employees could be paid on commission keeping costs low • Leaflets – relatively cheap way to target specific areas in country X. PI can target the areas where they have coverage, not waste money on areas without coverage. • Point of sale information – could be placed near computer sales in appropriate shops • Social media – relatively cheap and targets people who like the internet. However, data suggests that households do not change provider, so if they already have the internet they are unlikely to swap. • Putting together a package of existing services ARA Example of a below Examples of Examples of possible the line method (K) application/context (APP) analysis (AN + DEV) Direct mail To the 95% of households they So do not waste money in cover areas without coverage (AN) where they could not fulfill orders (DEV) Trade shows Can offer 3 free months As direct contact can tailor service orders (AN) to meet customer needs (DEV) Leaflets Can highlight offers e.g. 3 Can stimulate interest (AN) months free service and meet the requirements of new customers (DEV) PoS info Placed in computer sales Allows for upselling (AN) which shops can attract new customers (DEV) Example of an Examples of Examples of possible above the line application/context (APP) analysis (AN + DEV) method (K) Advertising Can advertise internet services It might be expensive (AN)but to the whole country e.g. as the service is generic the tv/radio price per customer is low (DEV) Social media People who are interested in But research suggests few new internet deals may follow people switch providers (AN) the company so uptake may be low (DEV)nope, 2(d) Refer to Table 2.1 Evaluate the financial performance of PI compared to its 11 competitors. Knowledge and Application Marks Analysis and Evaluation Marks (4 marks) (7 marks) Justified evaluation based on 7 arguments in context Developed evaluation based on 6 arguments in context An evaluative statement based 5 on arguments in context Shows understanding of two or 4 Developed arguments based on 4 more measures of financial two or more measures of performance in context financial performance in context Shows understanding of one 3 Developed argument based on 3 measure of financial one measure of financial performance in context performance in context Shows knowledge of two or 2 Limited analysis of two more measures of financial measures of financial 2 performance performance Shows knowledge of one 1 Limited analysis of one measure 1 measure of financial of financial performance performance No creditable content 0 Note: Market share is not a correct answer as it is not a financial indicator/measure of financial performance Rationale – Cannot evaluate financial performance based off only one indicator i.e. GPM only Content • GPM of PI is higher that the competitors – suggests that PI is efficient in terms of direct costs (economies of scale) • NPM is lower than all of the other competitors – suggests that PI is inefficient in terms of indirect costs (diseconomies of scale) • Working capital is negative – suggests that PI could struggle to pay short term debts. Does it have enough cash to pay for any promotion? Will IP be able to survive the short term? Will IP need a short-term source of finance? • Current ratio shows that PI does not have enough CA to cover CL – Does it have enough cash to pay for any promotion? Will IP be able to survive the short term? • However, TB seems to be holding too many CA – is this efficient? • Web solutions has much better (twice) NPM than PI – how can this business be so much more efficient? Can PI copy any of its techniques? 2(d) ARA Routes to evaluation • Which firm is best/worst • Which set of financial data is most important • The relative importance of financial performance compared to other areas – i.e. sales performance An example of how an answer could develop and how it should be annotated. K APP AN DEV EVAL Gross profit PI has the This means Which could PI has a good margin margin highest GPM that they mean they which is essential for a have low have more profitable business direct costs efficient production However they may still face liquidation Working Is the only Which may And not have capital one of the mean they enough This depends on three that can struggle money to whether their creditors has a to pay their spend on insist on immediate negative debts marketing payment working capital

Question 6

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 7

Better Bicycles Ltd (BB) BB is a family-owned small business. The firm manufactures bicycles which are supplied to independent retailers. R…

Accepted Answer

Question Answer Marks 1(a)(i) Define the term ‘secondary research’ (line 20). 2 Knowledge and Application Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 Content: Existing data (1) which has already been gathered and organised for another purpose(1) No examples to be credited ARA Exemplar Mark Rationale Using existing data (1) 2 Two separate Collected for another purpose/reason (1) defined points already gathered (1) for another purpose 2 Two separate (1) defined points Gathered by another business 1 One element only Using existing data 1 One element only Second hand research/data 0 Tautological 1(a)(ii) Explain the ‘buffer inventory control method’ of managing inventory 3 (lines 5–6). Knowledge and Application Marks C * E.g. or some other way of showing good 1 understanding; variations in supply, demand and/or production B For unanticipated/unexpected/unplanned situations 1 A Excess stock/safety margin of stock kept 1 No creditable content 0 * use cannot be credited without explanation of the term (A and B) Content: Keeping safety stock, (A) extra stock that is maintained to reduce the risk of a shortfall in components (B) due to uncertainties in supply and demand. (C) Exemplar Mark Rationale a level of excess stock that is 3 A,B and C visible maintained (A) to reduce the risk of a shortfall in components (B) due to uncertainties in supply and demand (C) Safety margin of stock held (A) 3 A,B and C visible when there is uncertainty in demand, supply, or manufacturing output (B) to ensure that the firm can produce enough product for orders (C) Safety margin of stock held (A) 2 A and B only –No when there is uncertainty in demand, example or supply, or manufacturing output (B) understanding a level of extra stock that is maintained 1 A only (A) Stock you don’t need to use 0 Too vague 1(b)(i) Refer to Table 1.1. Calculate the forecast gross profit margin on the 3 retail sale of bicycles. Rationale Marks Correct answer 3 Formula and data used correctly (based on OFR) 2 Attempt (e.g. formula or identifies data) or correctly 1 calculated gross profit ($180) No creditable content 0 e.g. ( Revenue − cost of goods sold ) formula: × 100 (1 mark) Revenue $300 – $120 = $180 $180 (× 100 (2 marks) 300 = 60% (with or without working and % (3 marks) Exemplar answers Answer Mark Rationale 60 (%) 3 Correct answer 0.6 2 1 ,mistake – no × 100 (180/300)*100 2 Correct use of figures (rev-COGS)/rev × 100 1 Formula Gross profit/revenue × 100 1 Correct formula 1(b)(ii) Explain one function of John’s role as an operations manager. 3 Level Knowledge and Application Marks 2 Explanation of an Operations management 3 APP function in context 1b Explanation of a management function 2 K+K 1a Identification of a management function 1 K 0 No creditable content 0 Content • May mention one of Mintzberg’s functions of management (Figurehead, Leader, Liaison Monitor, Disseminator, Spokesperson, Entrepreneur, Disturbance Handler, Resource Allocator, Negotiator) but for context mark must refer to operations. • Operations manager functions such as producing the right amount of a good or service, at the right time, of the right quality and at the right cost to meet customer requirements. ARA Example of how responses should be marked Identification of a Explanation of a Explanation of a function (1 mark) function (+1 mark) function in context (+1 mark) Any one of Mintzbergs motivating the Such as the salaried functions e.g. leader employees sales staff Ensuring stock control To ensure adequate By regulating the / inventory levels levels for production / buffer stock efficiently not too much 1(c) Analyse two methods which could be used to improve the motivation 8 of BB’s sales staff Knowledge and Level Application Marks Analysis (4 marks) Marks (4 marks) Shows understanding Developed analysis of of two motivation two motivational 2b methods could be 4 methods that BB could 4 used for BB’s sales use to motivate its sales staff staff Shows understanding Developed analysis of of one motivation one motivational 2a method could be 3 method that BB could 3 used for BB’s sales use to motivate its sales staff staff Limited analysis of two Shows knowledge of motivational methods 1b two motivation 2 2 that BB could use to methods motivate its sales staff Limited analysis of one Shows knowledge of motivational method 1a one motivation 1 1 that BB could use to method motivate its sales staff 0 No creditable content 0 ARA May mention financial and/non-financial motivators. Content: • Salaried employees so could change to include commission payments • Set sales target with a bonus for meeting target • Offer a profit-sharing scheme • Re-train as sales staff rely on repeat custom so training in attracting new customers • Encourage participation in identifying new outlets especially if go ahead with the new design • Fringe benefits such as a company car to go and meet new customers • Provide more promotion opportunities • May refer to needs such as self-actualisation 1(c) K APP* AN DEV Targets & For the new Which would But may lead to bonus foldable bike/ provide financial mis-selling/ To find new incentives hard sales (ind) bike tactics retailers Commission Based on how Which would And force staff many bikes sold reduce the to look for new safety of a customers salary Retraining To upskill So employees And building a selling skills to would be more wider customer new bike confident base retailers approaching new customers Fringe benefits Provide But may be And reduce company cars expensive 50% gross profit to approach margins new bike retailers *For app, ‘customer’ is too vague, needs reference to ‘bike retailers’ 1(d) Recommend which proposal for increasing revenue the Directors of 11 BB should choose. Justify your recommendation. Knowledge and Analysis and Evaluation Marks Marks Application (4 marks) (7 marks) Justified recommendation 7 based on arguments in context Developed recommendation 6 based on arguments in context An evaluative statement/ recommendation based on 5 arguments in context Understanding of two Argument based on two factors in decision 4 factors of decision making in 4 making in context context Understanding of one Argument based on one factor factor in decision 3 3 of decision making in context making in context Knowledge of two limited analysis of two factors factors of decision 2 2 of decision making by firms making by firms Knowledge of one limited analysis of one factor factor of decision 1 1 of decision making by firms making by firms 1(d) Context must be explicit not just implied based on the 3 proposals – new product/market, stock management and/or motivation of sales employees Context/content: • Moneeb – Change inventory control to JIT, retail sales, improved gross profit margin, utilise spare capacity. Is the location suitable for retail? How easy to re-organise stock system? Implied criticism of stock manager. Requires investment. • Lia – new design of foldable bike/bicycle/cycle, growing niche market, premium prices could lead to higher profit. Risky as not known in that market. Will require marketing campaign – extra costs. Needs more research. Requires investment. • Allow candidates to use Johns contribution as a proposal K APP AN DEV EVAL gross 50% for More Opportunity Should choose profit the folding stock – cost of stock folding bikes margin bike already held (Re- because area of high purpose of expertise and has inventory existing stock) existing sales channels, may not Marketing B2B only – Risky as Have to have enough knowledge no have to complete capital to invest in knowledge start against new shop of from established consumer nothing companies. sales

Question 8

Joe’s Smoothies (JS) Joe graduated with a Business degree. He then spent a year travelling around Asia. He discovered a local drink. This w…

Accepted Answer

2(a)(i) Define the term ‘market segment’ (lines 5–6) 2 Knowledge Marks Reference to groups of potential customers with similar 2 characteristics Reference to groups of potential customers OR similar 1 characteristics No credible content 0 A correct definition could cover the following: • A group of potential customers/a division of the market • That all have similar characteristics/needs and wants Exemplar Rationale Marks A group of potential Two elements covered 2 customers who have similar needs and/or wants A part of the whole market Two elements covered 2 which has similar characteristics Customers with similar A simple statement 1 characteristics Different groups of potential An understanding but too 1 customers vague customers Too vague 0 2(a)(ii) Explain the term ‘start-up capital’ (lines 6–7) 3 Award one mark for each point of explanation Point Knowledge Marks C Example or some other way of showing good 1 understanding – to buy machinery / equipment / raw materials B Understanding of the time frame – initial, needed to 1 create a business A Understanding of capital – money used within a 1 business Note: C mark can only be awarded if A and B marks have already been awarded Exemplar Rationale Marks It is the initial investment All three elements 3 needed to fund a new business, used to buy new machinery or premises Seed money used to invest in All three elements 3 a new business venture, such as licences Money for a new business A and B 2 Seed money A and B 2 Money used in a business A only 1 such as buying raw materials. Money used in a business A only 1 Capital used to start up a Tautology 0 business No identifiable content 0 2(b)(i) Refer to Table 2.1 and Table 2.2. Calculate the break-even level of sales 2 for JS in the summer. Level Rationale Marks 2 Correct answer (with or without working and/or 2 units) 1 Correct formula/understanding of 1 breakeven/correct use of wrong figures 0 mark No credible content 0 Fixed costs Break even = Contribution per unit (selling price − variable costs 10000 Break even = = 2500 units ( 6 − 2 ) Common incorrect answers Answer Rationale Marks 2500 Correct answer (no units) 2 FC/CPU Correct formula 1 1667 No creditable content 0 2(b)(ii) Explain two factors which may influence the demand for Joe’s 4 product. Level Knowledge and Application Marks Explanation of two factors influencing demand in 4 2 (APP) context Explanation of one factor influencing demand in 3 2 (APP) context 1b (KK) Knowledge of two factors affecting demand 2 1a (K) Knowledge of one factor affecting demand 1 0 No creditable content 0 Context is likely to come from: • The weather – smoothies are more likely to be consumed in summer • The ingredients used in the smoothies – local tastes • The price – comparable to competitors/whether the drinks are affordable • The health culture – is it important? ARA 2(c) Analyse two methods of primary market research that Joe could use. 8 Level Knowledge and Marks Marks Analysis application 2 Understanding of 4 Developed analysis 4 two methods of of two appropriate primary market methods of primary research in context research in context Understanding of 3 Developed analysis 3 one method of of one appropriate primary market method of primary research in context research in context 1 Knowledge of two 2 Limited analysis of 2 methods of primary two methods of market research primary research Knowledge of one 1 Limited analysis of 1 method of primary one method of market research primary research 0 No creditable content Annotate the first method in the left hand margin and the second in the right hand margin. If more than two methods are attempted, mark the ones that would give the candidate the highest mark allocation. Note: Quantitative and qualitative are not methods of primary market research Content/context and analysis: • Field research: testing the product on potential customers • Surveys and questionnaires: can gain a wider range of potential customer opinions and feedback • Focus groups: can have justified potential customer feedback ARA Do not reward sampling as a method 2(d) Discuss sources of finance Joe could use to start up his business. 11 Knowledge and Marks Analysis and Marks Application (4 marks) Evaluation (7 marks) Justified evaluation 7 based on arguments in context Developed evaluation 6 based on arguments in context An evaluative statement 5 based on arguments in context 4 Developed argument of 4 Understanding of two two or more external sources of finance in sources of finance in context context Understanding of one 3 Developed argument of 3 source of finance in one external source of context finance in context Knowledge of two 2 Limited analysis of two 2 sources of finance sources of finance Knowledge of one 1 Limited analysis of one 1 source of finance source of finance Annotate the first source in the left hand margin and the second in the right hand margin. If more than two sources are attempted, mark the ones that would give the candidate the highest mark allocation. Contextual analysis likely to come from: • Bank overdraft as the costs are low and likely to be repaid in the short term • Bank loan as the capital investment of $2k may be too high for an overdraft • Government start-up grant as he is setting up a new business and may create jobs Evaluation is likely to come from: • Short and long term ambitions of Joe • Joe’s attitude to risk • Joe’s ability to persuade banks to lend him the start-up capital ARA

Question 9

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 10

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 11

Super Candy (SC) SC is a large public limited company that sells low-sugar candy (sweets) with natural flavourings. The candy is made using…

Accepted Answer

2(a)(i) Define the term ‘flow production’ (line 2). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 Indicative content AO1 Knowledge and understanding • The continuous movement of products through the production process. • When one task is finished, the next task starts immediately. • The creation of a product in a series of stages on a production line. • Identical/standardised products are created on an assembly line. Exemplar Marks Rationale Continuous production for non- 2 Clear flow customised products production Continuous making of products 1 Only one element Continuous line/automated 1 No expansion of a process or standardisation ARA 2(a)(ii) Explain the term ‘psychographic market segmentation’ (line 3). 3 Award one mark for each point of explanation: Rationale Marks *Example or some other way of showing good understanding 1 Understanding of psychographic 1 Understanding of market segmentation 1 *No application without both pieces of knowledge Indicative content AO1 Knowledge and understanding Market segmentation • Selecting the most likely buyers • Select groups of consumers based on similar characteristics Psychographic • Based on their interests, activities and lifestyle choices • Qualitative method of studying consumers based on psychological characteristics and traits • Such as: beliefs, values, lifestyle, social status, opinions and activities • Beyond general demographic data such as age, gender or race AO2 Application Application of an example or some other way of showing good understanding, such as: • a business selling holidays to people based on the sports they enjoy such as golf/cycling holidays • any examples from case allowable Exemplar Marks Rationale Selecting the most likely buyers based on 3 All three elements beliefs and values instead of geographic met factors Selecting the most likely buyers based on 2 No understanding beliefs and values Breaking up/separating the market 1 No psychological ARA 2(b)(i) Refer to Table 2.1. Calculate SC’s revenue (X) for 2020. 3 *Formula can be implied through use of figures Rationale Marks Correct answer with or without correct working or $ or m 3 Calculation of total market revenue 2 Formula* 1 No creditable content 0 Content Market share × total market revenue Total market = $60m × 2.5 = $150m 34% of $150m = $51m SC’s sales revenue = $51m OFR Common incorrect answers Answer Marks Rationale 60m * 0.4 = 20.4m 1 OFR – final; mark only 60m – (60*0.34) = 39.6 0 Incorrect formula and figures 2(b)(ii) Explain one possible disadvantage to SC of using secondary market 3 research. Level Knowledge and Application Marks 2b Explanation of one possible disadvantage of 3 (APP+APP) secondary market research in context 2a (APP) Identification of one possible disadvantage of 2 secondary market research in context 1a (K) Knowledge of a disadvantage of secondary 1 market research 0 No creditable content 0 Note: some disadvantages are unlikely to be able to be contextualised – good answers will have been selective over which disadvantage to use. Indicative content AO1 Knowledge and understanding Knowledge of a possible disadvantage of using secondary market research may include: • may be out of date • may be inaccurate • may not be specific • been compiled by someone else • may be under copyright AO2 Application • May be out of date – this was data from 2019/20 (two years old) – what elements may have changed? • May be inaccurate – was the $60m a ‘normal’ revenue? Published accounts are unlikely to be inaccurate but may have been window dressed • May not be specific – unlikely to be the case in this context as this is their main competitor (market leader), so could be difficult to contextualise • Been compiled by someone else – OK’s published accounts may have been window dressed – is $60m a normal revenue figure or a promotional campaign? • May be under copyright – again unlikely to be contextual since published accounts are in the public domain 2(b)(ii) Example of how responses should be marked. Identification of a way Application Developed application (K – 1 mark) (APP – 2 marks) (APP+APP – 3 marks) Out of date Published accounts Due to window dressing May be out of date Two years old Elements may have changed ARA 2(c) Analyse two primary market research methods that SC could use. 8 Level Knowledge and Marks Analysis (4 marks) Marks Application (4 marks) 2b Shows knowledge of 4 Good analysis of two 4 two primary market primary market research methods in research methods in context context 2a Shows knowledge of 3 Good analysis of one 3 one primary market primary market research method in research method in context context 1b Shows knowledge of 2 Limited analysis of 2 two primary market two primary market research methods research methods 1a Shows knowledge of 1 Limited analysis of 1 one primary market one primary market research method research method 0 No creditable content Content Indicative content AO1 Knowledge and understanding Knowledge of primary market research methods include: • questionnaires (if q’s and surveys in one element, then should be counted as one method) • surveys • focus groups • observation • trial/test marketing AO2 Application • PLC • Low sugar candy • Natural flavourings/flavours • Flow production • Psychographic segmentation • Corporate Social responsibility • Plastic/plastic in packaging • CSR as a new business objective 2(c) AO3 Analysis • Questionnaires and surveys – depend on people being willing to answer and give honest answers • Focus groups – can ask qualitative opinions on factors and discuss potential solutions • Observation – if some customers prefer products which actively promote the reduction in plastic packaging, can focus on these; however, limited scope • Trial/test marketing – see if the sales/revenue are affected by altering factors, which is more likely to be a response than asking questions Examples of how an answer could develop and how it should be annotated. K APP AN DEV Questionnaires Target market, Via ecommerce Depends, e.g. nature and will provide quick however, on the sports results honesty of respondents Focus groups Ask specific To understand And make a questions customer opinion decision on about low whether to sugar candy change business objectives ARA 2(d) Evaluate the benefits to SC of having corporate social responsibility 11 (CSR) as a business objective. Knowledge and Marks Analysis and Evaluation Marks Application (4 marks) (7 marks) Justified evaluation based 7 on argument in context Developed evaluation 6 based on argument in context An evaluative statement 5 based on argument in context Shows understanding of 4 Argument based on two or 4 CSR as a business more benefits of CSR as a objective in context business objective in context Shows understanding of 3 Argument based on one 3 CSR in context benefit of CSR as a business objective in context Shows knowledge of CSR 2 Limited analysis of two or 2 and business objectives more benefits of CSR as a business objective Shows knowledge of CSR 1 Limited analysis of one 1 or business objectives benefit of CSR as a business objective No creditable content Content Indicative content AO1 Knowledge and understanding Knowledge of corporate social responsibility: • triple bottom line • social, environmental and profit objectives Knowledge of business objectives: • SMART • analysing, assessing and understanding where you are now and where you want to be in the future 2(d) AO2 Application Application may include: • PLC • low sugar candy • natural flavourings • flow production • psychographic segmentation • food manufacturing business lost customers • use of plastic packaging • use of Table 2.1 AO3 Analysis Analysis of benefits may include: • increased reputation – customers may choose SC because of its reputation of focusing on CSR increasing revenue from $51m – increases revenue/profits • long term cost savings – CSR may lead to long term cost savings, especially if the loss of plastic leads to a recyclable alternative – which may reduce unit costs (but may increase short term costs) • could lead to growth – SC may be able to increase their market share (currently 43%) – overtake OK as market leader • increased sales – media reports suggest this is becoming a big issue for customers – SC may align with customers’ preferences • decreased price elasticity of demand – customers may be happier to pay higher prices for candy which is more in line with their beliefs, especially parents – increases revenues • better staff retention and employment – may align with employees’ beliefs – may improve motivation and/or retention • easier access to capital – may attract investment from ethical sources due to focus on TBL – may reduce cost of investment in new packaging materials and processes AO4 Evaluation • A recommendation about whether SC should have CSR as a business objective. • A judgement over the relative benefits of CSR as a business objective. • Elements that the recommendation/judgement could depend upon, including cost, competitor actions, customer requirements and purchasing habits, market research. • Weighing up of the relative impacts on SC of CSR as a business objective for SC. 2(d) Examples of how an answer could develop and how it should be annotated. K APP AN DEV EVAL Triple Reducing Improves Increases CSR is very bottom line use of reputation number of beneficial plastic customers As the reduction of plastic is likely to increase profits overall Even though the cost may be high initially SMART Psycho- Customers Increases graphic may be revenues segment- happier to ation pay higher prices for candy which is more in line with their beliefs ARA

Question 12

Priya’s Bookshop (PB) Priya lives in town R which is situated in beautiful countryside with nice walks nearby. Many tourists visit town R. …

Accepted Answer

Question Answer Marks 1(a)(i) Define the term ‘market segmentation’ (line 25). 2 Knowledge Marks A correct definition 2 A partial, vague or unfocused definition 1 No creditable content 0 Note: Do not accept ‘segment’ as a ‘split’ term A correct definition should cover the following:  splits a market into different groups  segmentation could be by age/gender/geographic/demographic or each group has similar characteristics Exemplar Rationale Marks Looks at different groups e.g. Both elements covered 2 by sales value/volume Splits a market into groups, Both elements covered 2 each of which has similar characteristics Splits a market into groups An understanding of 1 segmentation (no expansion) Splits a market by sales Only one element of the flow 1 value identified Segments a market Tautology 0 ARA 1(a)(ii) Explain the difference between cash and profit (line 23). 3 Award one mark for each point of explanation. Point Explanation Marks C* Cash is the revenue a business has after sales 3 while profit is revenue minus expenses B Profit is revenue minus expenses 1 A Cash is the physical flow of money in and out of a 1 business Note: The difference does not need to have clear definitions – implied knowledge is acceptable when in the context of a difference Content could come from:  Cash is the physical flow of money in and out of a business  Cash is the capital used to pay for day-to-day costs  Cash is an example of revenue, ignoring any expenses  Profit is revenue minus expenditure  Profit is the difference between revenue and costs  Profit is calculated at the end of a trading period  Profit is shown on the Income Statement Exemplar Rationale Marks Cash is the revenue a Shows a difference 3 business has after sales while profit is revenue minus expenses Cash is more liquid than Shows a clear difference 3 profits Cash is a current asset, but These are not definitions but 3 profit is on the Income there is a clear difference Statement They appear on different A clear difference 3 accounting statements Cash is the revenue a Both elements correct but a 2 business has after sale. Profit difference not shown is revenue minus expenses Splits a market into groups An understanding of 1 segmentation (no expansion) ARA 1(b)(i) Refer to Table 1.1. Calculate PB’s forecast closing balance in month 3 2 (X). Rationale Marks Correct answer (with or without working or $) 2 Correct formula/identifies correct figures 1 No credible content 0 Content Closing balance = opening balance + inflows – outflows (1) Opening balance –1000 add inflows 11 000 minus outflows 13 000 (1) X = – $3000 (accept –3000, (3000) or –3) (2) Common incorrect answers (2000) No marks no working 3000 No marks No working –1000+11000 1 mark for calculation –13000 = 3000 11000 – 13000 1 mark one mistake (not used opening = –2000 balance) OFR for last stage 1000 + 11000 0 mark Incorrect opening balance and – 13000 = incorrect answer 3000 1(b)(ii) Analyse two benefits to Priya of producing a cash flow forecast. 8 Level Knowledge and Marks Analysis Marks Application (4 marks) (4 marks) 2b Shows 4 Developed 4 understanding of analysis of two two benefits in benefits in context context 2a Shows 4 Developed 3 understanding of analysis of one one benefit in benefit in context context 1 Shows 2 Limited analysis 2 knowledge of two of two benefits benefits Shows 1 Limited analysis 1 knowledge of one of one benefit benefit 0 No creditable content Note: As the business has started trading, using the CFF either before or after starting trading is acceptable. Knowledge of benefits may include:  Anticipate potential shortfalls in cash  Keep track of payments  Understand the impact of future plans  Manage surplus cash  Track whether revenue/spending is on target Application may include:  Buying and selling new and used books  Priya applied for a council grant for entrepreneurs willing to open a bookshop; grant application included a CFF  Any information from Table 1.1  Used to decide promotional methods 1(b)(ii) Analysis of benefits may include:  PB is a new business and having a cash flow forecast will have helped/will help her to receive the grant – which allowed for initial survival  Allows/ed Priya to plan ahead and manage the budget more effectively e.g. the deficit in the first few months – to avoid overdraft fees in months 2 and 3  Many small businesses fail due to a lack of cash flow, so this allows/ed Priya to arrange an overdraft for months 2 and 3  Allows Priya to manage cash flow, e.g. the deficit in months 2 and 3 could be overcome through reductions in cash outflows e.g. marketing. ARA 1(c) Explain two entrepreneurial qualities that Priya has shown. 4 Point Explanation Marks App+App Two entrepreneurial qualities explained in context 4 App One entrepreneurial quality explained in context 3 K+K Two entrepreneurial qualities identified 2 K One entrepreneurial quality identified 1 Content and context could come from:  Motivated – wants to start her own bookshop  self-disciplined – financial discipline by creating a cash flow forecast  risk-taking – has invested $15K of own capital  creative – making appropriate marketing materials for 0 to 15-year-olds  leadership – will manage up to 3 employees  confident – starting own bookshop by risking $15K of own capital  initiative – has applied for a $20K grant Exemplar Mark Rationale She applied for a $20K grant which 4 Two applied shows initiative and is motivated to start qualities explained her own bookshop Priya showed initiative by researching 3 Applied quality and applying for a $20K grant explained Initiative and leadership 2 Two entrepreneurial qualities identified Initiative is taking an opportunity 2 Two generic available to you and risk taking is taking qualities explained a decision which could have negative consequences Initiative is taking an opportunity 1 Generic quality available to you explained 1(d) Recommend suitable promotional methods that Priya could use to 11 raise awareness of PB in town R. Justify your recommendation. Knowledge and Marks Analysis and Marks Application (4 marks) Evaluation (7 marks) Justified judgement(s) 7 that follows on from a discussion based on two promotional methods relevant to PB Recommendation(s) 6 that follows on from a balanced argument relevant to PB A simple 5 recommendation based on a balanced argument relevant to PB Shows knowledge of 4 A balanced argument 4 two promotional based on analysis of methods in context two promotional methods with context Shows knowledge of 4 Argument based on 3 one promotional analysis of one method in context promotional method with context Shows knowledge of 2 Limited analysis of two 2 two promotional promotional methods methods Shows knowledge of 1 Limited analysis of one 1 one promotional promotional method method No creditable content Knowledge may include:  Above and/or below the line promotion with some explanation  BTL examples: direct mail, in-store offers, direct selling, social media, trade shows, catalogues, sponsorship, branding and merchandising and targeted search engine marketing  ATL: examples: radio, television, billboards, magazine and newspapers 1(d) Application may include:  New bookshop  Likely to be lots of competition in ‘booktown’  Any financial information from table 1.1  Using market segmentation  Any market research information from table 1.2 Analysis may include:  BTL is cheaper than ATL and as PB is new and cashflow is restricted/poor – may not be able to survive/pay bills – In-store offers; can offer 15% discount on books which would lead to increased revenue – increased profit  ATL hits a mass audience – but too expensive – Local radio; can advertise to target audience of 16–64 which increases sales of books – raises profile/brand awareness  High competition means tourists are likely to impulse buy based on price so in-store and personal selling – may be useful to provide purchasing incentives so more sales Evaluation may include:  A recommendation for Priya based on arguments in context as to which promotional methods Priya could use  A judgement over which method is/are most suitable  An evaluation on the level of argument  What the judgement/evaluation may depend on: target audience, type of book, price sensitivity, advertising elasticity, competition K APP AN DEV EVAL in store To Which As Priya should use offers persuade increases customers both instore offers tourists to sales may be and social media buy price As social media sensitive can help drive due to traffic and in store competition offers can convert browsers. Social To As it is a To build PB However, it media showcase cheap brand depends on book method and profile whether Priya’s signings easily target audience is updated likely to social media and how diligent she is in updating her profile.

Question 13

Drone Development (DD) DD produces a range of drones, which are unmanned aircraft flown by remote control. These drones are used to help fa…

Accepted Answer

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

Question 14

Direct News (DN) Shila and Lucy own and manage DN, an online publishing business. DN produces a daily online local newspaper called QNews. …

Accepted Answer

2(a)(i) Identify one function of a manager. 1 Indicative content Identification of a function may include: • Planning • Organising • Directing • Controlling • Fayol – Commanding, motivating, co-ordinating and measuring performance / appraisal 2(a)(ii) Explain the term secondary market research. 3 AO1 Knowledge and understanding – 1 mark AO2 Application – 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 Limited application of one relevant point to a business context. the question. 0 marks 0 marks No creditable response. No creditable response. Indicative content AO1 Knowledge and understanding of secondary may include: • Uses data that already exists • Collected by someone else • Can be from another organisation No further marks can be gained without knowledge and understanding AO2 Application to market research Limited application applies knowledge of secondary market research including: • Cheaper than primary research / outdated / not tailored to business OR • Example or some other way of showing good understanding of secondary market research. Developed application + applies knowledge of secondary market research including • Cheaper than primary research / outdated / not tailored to business AND • Example or some other way of showing good understanding of secondary market research. Application can be made to DN or any other scenario / context / business / product. 2(a)(ii) Accept all valid responses. Exemplars and annotations Marks Rationale Information that already exists for other purposes 3 An answer which starts with the knowledge of such as in a newspaper or magazine It saves on secondary, then applies it to market research and research costs . develops the point in a business context. Second-hand research such as magazines, online 3 Again, knowledge of secondary, followed by reports etc. They are not tailored to a specific developed application to market research business but can establish market trends . Market research conducted by others , can be out 2 Clear knowledge of secondary. Limited application to of date and incorrect . market research. Using research someone else has published . It is 1 Both points show knowledge and understanding of second-hand research. secondary but there is no application to market research. Only 1 knowledge mark. Secondary market research is testing your product 0 This is a primary research method. with the public 0 No knowledge / understanding of secondary, without Research from online sources no other marks can be awarded. 2(b)(i) Refer to Table 2.1. Calculate the percentage increase in total revenue of online monthly magazines from 2020 to 3 2022. Indicative content – Responses may include: Revenue 2020 = 50 Revenue 2022 = 150 Change = 150 − 50 = 100 (1) Formula: Can be implied Change / original  100 (1) (150 – 50) / 50  100 (1) = 100 / 50  100 = 200% (3) Accept all valid responses. Exemplars and annotations Marks Answer Rationale 3 Correct answer Working and % sign do not matter 200% Must be three to denote the three marks. 2 Both of the following: To award two marks, there must be • Correct / implied formula • Two and a AND OR Correct calculation of the change in total revenue (100) • One , one and one OR An incorrect answer with one mistake allowing OFR for final stage. For example, (150 – 50) / 150  100 = 100 / 150  100 = 66.67% (accept any figure between 66.6 and 67) – 2 marks, (wrong denominator) 1 One of the following: To award one mark, there must be: • Correct / implied formula One and two OR • Correct calculation of the change in total revenue (100) 0 No creditable content. To award zero marks, there must be 2(b)(ii) Explain one additional piece of market research data DN would find useful before making the decision to produce 3 QLine. AO1 Knowledge and understanding – 1 mark AO2 Application – 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 question. Limited application of one relevant point to a business context. 0 marks 0 marks No creditable response. No creditable response. Indicative content AO1 Knowledge and understanding Knowledge of additional market research may include: • Customer data • Customer feedback • What are forecast trends • What subscription level are customers prepared to pay • Information about competitors • Potential size of the market No further marks can be gained without knowledge and understanding. AO2 Application Limited application , applies knowledge to DN once. Developed application + applies knowledge to DN twice or develops one point • What potential readers want in a magazine • Aimed at 18-30 market, so characteristics / requirements of this market • Other online magazines available, do they charge a subscription fee? • Plans to stop publishing QNews. 2(b)(ii) Accept all valid responses. Exemplars and annotations Mark Rationale DN can use primary research to ask people about 3 Knowledge of an additional piece of market research in the their reading habits and interests because DN specific context of DN by using the information in the case plans to stop publishing QNews it needs to study and develops answer to explain why it is useful. have accurate information about market trends. . Another piece of useful market research would be 3 Although the appears first, it cannot be awarded until the approximately how many 18-30 year olds has been found. However, there is obvious , so you have news subscriptions this will allow them to can go back and award the . anticipate the approximate amount of news subscriptions they may get from people in the targeted demographic . One additional market research data is what 2 Relevant additional data . The context linked to this is topics their targeted group is interested in this reasonable (subscriptions) , but is not developed. would allow DN to have a high revenue from subscriptions . Find out common interests and trends and 1 Knowledge of additional data, the rest of the answer is not identifying their target market using the context so (Not Using the Text). One additional piece of market research DN 0 This is market segmentation not market research so would find useful is to sell their products in a (not Answering the Question) even though there is context niche market so they should segment their without knowledge and understanding no other marks market to 18-30 age group. can be awarded. 2(c) Analyse two reasons why Shila and Lucy will have to change DN’s objectives. 8 Level AO1 Knowledge and AO2 Application – 2 marks AO3 Analysis understanding – 2 marks 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 1–2 marks 1–2 marks • Knowledge of two • Application of two relevant Limited analysis relevant points is used to points to a business • Limited analysis that identifies connections answer the question. context. between causes, impacts and / or • Knowledge of one • Application of one relevant consequences of two points. relevant point is used to point to a business • Limited analysis that identifies connections answer the question. context. 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. Indicative content AO1 Knowledge and understanding – Knowledge of two reasons (max 2 s), may include: • Market conditions • Importance of objectives • Relationship between mission statement, aims, objectives and strategy • SMART objectives • How change influences objectives • Relationship of objectives to budget planning 2(c) No further marks can be gained without knowledge and understanding. AO2 Application – Application of knowledge of a reason for DN to change its objectives (max 2 s), including: Max one for application for the first reason and another for application for the second reason • Employees concerned about the change. • Mission statement change • National revenue data • Not all employees have the right skills • Change from daily news reporting to magazine aimed at a young age group • Impact on local community 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. • Change essential for competition and survival – otherwise firms may make losses / go out of business. • Communicates the direction of the firm to employees – important as a change impacts employees working practices. • Will need to change objectives if want growth – as market conditions change. • Costs of change v benefits Accept all valid responses. Exemplars and annotations AO1 Knowledge AO2 Application AO3 Analysis One reason why Shila and Lucy will have to to provide a community This may mean a more national change DN’s objectives is because of the newspaper for local people readership as opposed to a niche change from its original mission . focus DN may become more Annotations for the first impact should be commercially focused to attract placed in the left-hand margin. advertisers. . Another reason to change objectives is to Who will subscribe to a monthly It is important that DN makes sure retain loyal customers product. that customer expectations are met Annotations for the second impact should and the product maintains quality be placed in the right-hand margin. to ensure they still gain profits 2(d) Evaluate the importance to DN of effective supply chain management. 12 Level AO1 Knowledge and AO2 Application – AO3 Analysis – AO4 Evaluation – understanding – 2 marks 2 marks 2 marks 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 2 marks 2 marks 3–4 marks Developed knowledge of Developed Developed analysis Developed evaluation relevant key term(s) and / or application of that identifies • A developed factor(s) is used to answer relevant point(s) to connections between judgement / conclusion is the question. the business causes, impacts made. context. and / or consequences. • Developed evaluative comments which balance some key arguments. 1 1 mark 1 mark 1 mark 1–2 marks Limited knowledge Limited Limited analysis Limited evaluation of relevant key term(s) application that identifies • A judgement / conclusion is and / or factor(s) is used to of relevant point(s) connections between made with limited supporting answer the question. to the business causes, impacts comment / evidence. context. and / or consequences. • An attempt is made to balance the arguments. 0 0 marks 0 marks 0 marks 0 marks No creditable response. No creditable No creditable response. No creditable response. response. 2(d) Indicative content Knowledge of supply chain (max 2 s), may include: AO1 Knowledge and understanding: • Supply Chain Management understanding • The process of creating content • Managing content • Delivering content to the consumer • Customer expectations • Employee skills • Suitable content • Quality issues • Cost control No further marks can be gained without knowledge and understanding. AO2 Application Limited application applies knowledge of effective supply chain management to DN once. Developed application + applies knowledge of effective supply chain management DN twice. • content accessible on any device at any time / the magazine content should be available on all devices, • Through all internet service providers and easily available to subscribers. • Content suitable for target market (18-30) • Not easily available to non-subscribers • Need to keep costs low • Allow DN to compete in the new market • Difference between local and national market 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. • Do current employees have the right skills – to provide appropriate content? • Can the business survive inefficient management of the supply chain – as costs need to be carefully controlled throughout the chain? • Large variation of formats required – will involve many suppliers of different platforms / devices. • Multiple service providers add additional complexity – which can be challenging to manage. • Need to provide a quality product – which requires careful monitoring throughout the supply chain. • Content should be easy to find – how to ensure that this applies to all platforms / devices. • Employees important part of the supply chain – they have concerns / careful workforce planning required. 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 justified recommendation • Assessment of the decision • Identification of factors critical in the supply chain • How to ensure quality – what to compare to / what is quality content • Is there enough information to implement • Will revenue outweigh costs • Require complex negotiations with multiple platforms – do they have the expertise? • Discussion of further information required. • Other factors more important e.g., marketing Accept all valid responses. 2(d) Exemplars for awarding evaluation L1 (limited L2 (developed supporting L3 (developed supporting evidence with supporting evidence) evidence) context) Effective supply chain Effective supply chain management Effective supply chain management is important to DN management is is important to DN as it needs to as it needs to deliver content that meets customer important to DN deliver content that meets customer expectations. The main premise of their product is to expectations. deliver factual, entertaining and informative news. Supply chain Supply chain management is not as Supply chain management is not as important as management is not as important as marketing because marketing because without awareness and advertising important as marketing. without awareness and advertising there will be a lack of demand. Since Qline will be a there will be a lack of demand. new online monthly magazine DN will need social media accounts to promote this product.

Question 15

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 16

Bear Bears (BB) BB is a business partnership owned by Sade and Chika. BB produces personalised teddy bears (toys) for children. The toys ar…

Accepted Answer

2(a)(i) Identify one method of market segmentation. 1 Indicative content Methods of market segmentation: • geographic • demographic • psychographic/behavioural Only accept these responses 2(a)(ii) Explain the term ‘mass customisation’. 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 mass customisation may include: • A production process where some elements can be changed to meet customer needs. No further marks can be gained without knowledge and understanding AO2 Application Limited application applies knowledge of customisation to mass production, including: • A process to customise whilst producing large amounts of similar products/flow production. OR • Example or some other way of showing good understanding. Developed application + applies knowledge of customisation to mass production, including: • A process to customise whilst producing large amounts of similar products/flow production. AND • Example or some other way of showing good understanding. Accept all valid responses. 2(a)(ii) Exemplar and annotations Mark Rationale Products which are changed based on customer 3 An answer which starts with the knowledge and then preferences , but still produced in large numbers applies it to the mass element with an example. for example T-Shirts with different designs . Mass customisation usually capital intensive 3 APP cannot be awarded without K, but once the K has production by using IT systems to make slightly been awarded you can go back and reward the APP. different products ,on a production line . Production line/assembly line/flow production is all fine for APP. Products can be changed slightly such as a car 2 Knowledge and an example. with different features . Products which can be adapted to meet the differing 1 Simple knowledge of the direct element. needs of customers . Large scale production with capital intensive 0 Although there is some attempt at application, these operations . For example, a T-Shirt with different marks cannot be awarded without knowledge. designs . 2(b)(i) Calculate BB’s fixed costs last month. 3 Indicative content • Formula: break even point  contribution = fixed costs (1) OR total costs – (total) variable costs (1) • Break even point = 4000 – 120 = 3880 units (1) • 3880  $6 = $23 280 (1 OFR applies) Answer = $23 280 (3) Exemplar and annotations 3 marks Correct answer Working and $ do not matter. $23 280 Must be three to denote the three marks. 2 marks Both of the following: To award two marks, there must be • Correct formula • Two and a • Correct calculation of break even point OR (3880). • One , one and one OR An incorrect answer with one mistake allowing OFR for break even point. OR An answer of $24 000 (including working of $6 X 4000 units – or any other appropriate working) 2(b)(i) 1 mark One of the following: To award one mark, there must be: • Correct formula • One and two • Correct calculation of break even point (3880). 0 marks No creditable content. To award zero marks, there must be • One 2(b)(ii) Explain one limitation for BB of using break-even analysis. 3 AO1 Knowledge and understanding AO2 Application 1 mark 2 marks 2 marks Developed application of one relevant point to a business context. 1 mark 1 mark Knowledge of one relevant point is used to answer the Limited application of one relevant point to a business question. context. 0 marks 0 marks No creditable response. No creditable response. Indicative content AO1 Knowledge and understanding Knowledge of a limitation of using break-even analysis , including: • Fixed costs may not be constant – may change in long run • Assumption that output equals sales • Assumption that unit variable costs remain constant at all output levels • Assumption that price will remain constant at all output levels • Only useful for individual (or limited number of) product lines • Does not take into account external changes (social, legal, economic, political, technological) or qualitative data • Only a forecast/estimate. No further marks can be gained without knowledge and understanding 2(b)(ii) AO2 Application Limited application , applies knowledge to BB once. Developed application + applies knowledge to BB twice. Application of a factor may include: • Each bear is sold for $50 with a contribution of $6 • Margin of safety last month was 120 units • Break-even point last month was 3880 (OFR based on Q2bi) • Personalised products – unlikely to have the same variable costs (although piece rate payment may make this possible) • Proposed JIT may make former break-even analysis irrelevant • Information from Table 2.1, such as the quantity and type of materials used. Accept all valid responses. Exemplar and annotations Mark Rationale Break-even analysis assumes that fixed costs do not 3 Knowledge of a limitation with two pieces of context change . BBs fixed costs were $23 280 last applied. month, however this is likely to change if they introduce JIT . BB is considering introducing greater equality , 3 The APP cannot be awarded until there is knowledge, which may increase the costs and the price may need however you can go back and annotate it. to increase from $50 which makes the break even calculations irrelevant . The variable costs of BB may not be constant 2 Knowledge and one piece of context. which could mean that the margin of safety will fall from 120 units . Break even analysis assumes all output produced is 1 Knowledge and no application to the context. sold . 2(b)(ii) Exemplar and annotations Mark Rationale Break even analysis is a way of calculating the 0 Although there is some relevant context, there is no quantity needed to stop making a loss and start knowledge of a limitation, so no marks can be making a profit. This is useful to BB because they can awarded. calculate how many teddy bears need to be sold to cover all of the costs, including the $6 unit contribution. 2(c) Analyse two possible impacts on BB of adopting a just in time (JIT) approach to inventory management. 8 Level AO1 Knowledge and AO2 Application AO3 Analysis understanding 2 marks 4 marks 2 marks 2 3–4 marks Developed analysis • Developed analysis that identifies connections between causes, impacts and/or consequences of two points. • Developed analysis that identifies connections between causes, impacts and/or consequences of one point. 1 1–2 marks 1–2 marks 1–2 marks • Knowledge of two relevant • Application of two relevant Limited analysis points is used to answer the points to a business context. • Limited analysis that identifies question. • Application of one relevant connections between causes, • Knowledge of one relevant point to a business context. impacts and/or consequences point is used to answer the of two points. question. • Limited analysis that identifies connections between causes, impacts and/or consequences of one point. 0 0 marks 0 marks 0 marks No creditable response. No creditable response. No creditable response. Annotate the first impact in the left-hand margin and the second impact in the right-hand margin. 2(c) Indicative content AO1 Knowledge and understanding Impacts of just in time (JIT) (max 2 s), including: • Less space needed • Waste reduction • Shorter lead times • Prevents over-production • Reduces capital tied up in inventory control • May run out of inventory – may require good relationship with supplier • May lead to delays • Requires planning/forecasting • May not be able to respond to changes in demand • May lead to idle resources. No further marks can be gained without knowledge and understanding AO2 Application Max one for application in the first impact and max one for application in the second impact, including; • Personalised product (toys) using mass customisation. • One week lead time to customers. • BB has low margin of safety (120 units last month). • Currently holds a large amount of inventory in raw materials (400kgs) and work in progress (300 un-customised toys). • No finished products being held (probably due to customisation and lead time). • Inventory held in a temperature-controlled warehouse. 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. • Less space needed; reduction in storage costs – no need for warehouse which could reduce the fixed costs – improve margin of safety – increased profitability. However, may increase need for deliveries and variable costs of production. • Waste reduction; lower costs – higher profit margin. • Reduces capital tied up in inventory control; may facilitate sale of warehouse which can free-up capital to be used elsewhere in the business – facilitate expansion. However, the increased costs of more deliveries, supplier relations may increase variable/direct costs significantly. 2(c) Less capital tied up in stock which may improve BB’s working capital position. However, costs may increase. • May run out of inventory; which may increase the lead time for customer order – increase customer dissatisfaction, reduce sales, profits. May lead to BB making a loss since BB is close to break even. • Requires planning/forecasting; to enable BB to run without a stock of raw materials and work in progress. • May lead to idle resources; employees being idle – increased costs, reduced productivity. Accept all valid responses. Exemplar and annotations AO1 Knowledge AO2 Application AO3 Analysis Reduces the need for inventory to be In the temperature-controlled Which means that BB can sell the stored . warehouse . warehouse and use the spare capital to expand production . Could lead to delays in fulfilling Which might make it difficult to get Which might lead to a reduction in customer orders . customers their order within a week sales revenue for BB and reduce . the profitability of the firm . 2(d) Evaluate the most likely impact on BB of increased equality in its stitching department. 12 Level AO1 Knowledge AO2 Application AO3 Analysis AO4 Evaluation and understanding 2 marks 2 marks 6 marks 2 marks 3 5–6 marks Developed evaluation in context • A developed judgement/conclusion is made in the business context. • Developed evaluative comments which balance some key arguments in the business context. 2 2 marks 2 marks 2 marks 3–4 marks Developed Developed Developed analysis Developed evaluation knowledge of application of that identifies • A developed judgement/conclusion relevant key term(s) relevant point(s) to connections is made. and/or factor(s) is the business between causes, • Developed evaluative comments used to answer the context. impacts and/or which balance some key arguments. question. consequences. 1 1 mark 1 mark 1 mark 1–2 marks Limited knowledge Limited application Limited analysis Limited evaluation of relevant key of relevant point(s) that identifies • A judgement/conclusion is made term(s) and/or to the business connections with limited supporting factor(s) is used to context. between causes, comment/evidence. answer the question. impacts and/or • An attempt is made to balance the consequences. arguments. 0 0 marks 0 marks 0 marks 0 marks No creditable No creditable No creditable No creditable response. response. response. response. 2(d) Indicative content AO1 Knowledge and understanding Knowledge of equality (max 2 s), including: • Equality in the workplace means equal job opportunities and fairness for employees and job applicants. • Equality means that a business must not treat people unfairly because of protected characteristics. For example, because of sex, age, race, religion, culture – allow any acceptable protected characteristic. • Equality means having an inclusive and fair working environment. No further marks can be gained without knowledge and understanding AO2 Application Limited application applies knowledge of equality to BB once. Developed application + applies knowledge of equality to BB twice. • Personalised products (toys) using mass customisation – stitching (where David works) department does the customisation. • Employees paid using piece rate. • David is only man in stitching department – possible inequality in recruitment process. • Stitching employees • Lack of male washroom facilities on ground floor. • David given tasks which require heavy lifting. • David asked to fix problems with machines – limits his ability to earn (piece rate). 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. Positive impacts, including: • BB may gain a reputation as a better employer which may improve their recruitment – reduce business costs of recruitment and/or lead to better employees. • Owners may avoid being sued for discrimination in the workplace (unlimited liability) by an employee. • May increase motivation of the current workers which could increase productivity – decrease sales, increase profitability. • May improve the quality of the work which could allow BB to increase prices – increased profitability. 2(d) Negative impacts, including: • Costs of increasing equality, including: – cost of recruiting more men to the stitching department – cost of building a men’s washroom on the ground floor – costs of retraining other employees to fix machines – costs of employing someone / training someone to do the heavy lifting and/or capital expense of equipment to do this. • If BB admit to inequality in the stitching department (by improving it) then they may be open to allegations of discrimination – legal issues, poor reputation, customer reaction. • Possibility that other departments/groups in BB will demand equality. 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 the most likely/important impacts of increased equality in the stitching department. • What the judgement might depend upon, including; the legal rights/responsibilities of businesses in BB’s home country, the legitimacy/accuracy of David’s claims about inequality in the stitching department, the level of equality in the other departments of BB, other HRM/operational issues facing BB. • Weighing up of the relevant impacts of increased equality in the stitching department. Accept all valid responses. Exemplars for awarding evaluation L1 (limited supporting L2 (developed supporting L3 (developed supporting evidence) evidence) evidence with context) A decrease to BB’s public image is A decrease to BB’s public image is A decrease to BB’s public image is the most likely impact. the most likely impact because it the most likely impact because they needs to maintain its revenue which is rely on customised customer orders to essential to survive. maintain its revenue which is essential to survive. 2(d) L1 (limited supporting L2 (developed supporting L3 (developed supporting evidence) evidence) evidence with context) Motivation will have the biggest Motivation will have the biggest Motivation will have the biggest impact impact because the employees will impact because BB uses mass have a big effect on the amount of customisation so the they will have a products that can be produced, big effect on the amount of products limiting the output. produced, limiting the output, The most important impact will be The most important impact will be The most important impact will be lower labour turnover. lower labour turnover because BB’s lower labour turnover because BB’s business model relies on employing business model relies on employing people, some of whom are not happy people in the factory, some of whom at the moment. are not happy at the moment, like David who is the only male in department. All of this may depend upon what the All of this may depend upon whether All of this may depend upon whether owners want. the owners care about happiness of the owners care about happiness of all their employees or just see them all their employees, including David as a cost burden on BB. the only male in department, or just see them as a cost burden on BB. It will be different in the short term, In the short term, equality will have a In the short term, equality will have a compared with the long term. negative impact due to the increased negative impact due to the increased costs incurred by BB, but in the long costs incurred by BB of building a new term it will have a beneficial impact bathroom, but in the long term it will because labour turnover will have a beneficial impact because decrease. labour turnover will decrease. Some stakeholders will see it as a Employees may see it as a positive Employees may see it as a positive positive impact. impact because they are getting equal impact because they are getting equal rights, which might lead to better pay rights, which might lead to David for some and make them feel more getting equal access to a bathroom secure in their job. and not have to do all of the traditionally ‘male’ job roles.

Question 17

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 18

Reliable Car Repairs (RCR) Reliable Car Repairs (RCR) is owned by Freya and her brother Kye as a partnership. The business was set up five …

Accepted Answer

2(a)(i) Identify one method of primary market research. 1 Primary research is the first-hand collection of data by an organisation for its own needs. Award any method that meets this definition. Identification of a primary market research may include: • Questionnaires/surveys/feedback • Focus groups • Interviews • Observations • Consumer trials/samples 2(a)(ii) Explain the term qualitative data. 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 qualitative data may include: • Qualitative data describes customer opinions/qualities/characteristics/subjective. OR • Qualitative data is not measurable in financial or numerical terms. AO2 Application Explanation of qualitative data (max 1 mark), including: • Qualitative data describes customer opinions/qualities/characteristics/subjective. AND • Qualitative data is not measurable in financial or numerical terms. Context applied to qualitative data (max 1 mark), including: • An example of a specific piece of qualitative data • An example of a use of qualitative data • An example of a way of presenting/summarising/analysing 2(a)(ii) Application can be made to RCR or any other scenario/context/business/person. Accept all valid responses. Exemplar and annotations Mark Rationale Qualitative data is not numerical . For example, the owners can 3 Both points covered (K and APP) with an obtain data about customers’ satisfaction with the speed of car example from the context (APP). repairs . Data about customer views and opinions which is not 3 Both points and a generic (but rewardable) measurable for example happiness . example. Not numbers such as opinions . 2 Both points but no further example. Data which can not be measured , such as how much 2 Can not be measured and an example. customers like a chocolate bar . Qualitative data is harder to analyse as it includes information 1 Opinions and characteristics, but only one about customer opinions and characteristics. . point and no context. Data that can be used to make decisions. 0 Too vague. All data can be used to make decisions. No knowledge of qualitative data specifically. 2(b)(i) Refer to Table 2.1 and other information. Calculate the market growth for car repairs in city B between 2023 and 3 2024. Total value of sales in market (2023) = $700 000 (given in text) Formula: New market size (1) Original market size  100 OR The percentage change in the total size of a market (1) OR Total value of sales in market (2024) = (123 165 / 17)  100 = 7245  100 = 724 500 (1) Market growth = 724 500 – 700 000 = 24 500 (1) Answer = $24 500 (3) 2(b)(i) Exemplar and annotations Marks 3 marks Correct answer Working and units do not matter. $24 500 or 24 500 Must be three to denote the three marks. OR 3.5% or 3.5 2 marks ONE of the following: To award two marks, there must be • Correct calculation of 2024 market size • Two and a (724 500) OR OR • One , one and one An incorrect answer with one mistake allowing OFR for final stage. 1 mark One of the following: To award one mark, there must be: • Correct formula • One and two 0 marks No creditable content. To award zero marks, there must be • Three 2(b)(ii) Explain one reason why RCR’s objectives may change over time. 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 a reason why objectives might change may include: • changing internal factors • changing external factors • the achievement of previous objectives. AO2 Application Explanation of a reason why business objectives may change over time (max 1 mark), including: • changing internal factors – the business might have more resources available – a significant number of workers may have left – a new manager employed. • changing external factors – new competitors enter the market – an increase in market size – customer demand changes 2(b)(ii) • the achievement of previous objectives – if a business has survived then it may now try to be profitable Context applied to a reason why RCR’s objectives may change over time (max 1 mark) including: • RCR is a partnership • Business operated for five years • Repair a wide range of cars • Freya carried out primary market research to understand her customer’s needs and wants • Collected qualitative data • Customers like the speed of RCR’s service • RCR’s market share has increased annually over the past five years • RCR has a 17% share of the market • Employ two mechanics • Kye uses a democratic style of management • Experienced mechanics who have worked for the business since it started five years ago • Holds a large quantity of inventory • Each car type needs different parts • Buys parts from two suppliers • Suppliers have supplied RCR since it started five years ago • RCR has an objective of increasing efficiency • Partners thinking of introducing Just in Time (JIT). Accept all valid responses. 2(b)(ii) Exemplar and annotations Mark Rationale Once RCR has achieved its business objectives they will need to 3 Reasonable knowledge of a reason with change . For example RCR may have previously had an two examples of application. objective to have at least a 15% share of the market when it was set up five years ago , but now the business has a 17% share of the market . The business may face more competition so may need to 2 Knowledge of a reason (competition is an change its objective from increasing efficiency . external influence) and some context. New objectives may be needed if internal factors change . 1 The answer is brief, but shows some knowledge of why objectives may change over time Objectives give owners direction when making business decisions 0 There is no knowledge of a reason why objectives may change, so no marks can . be awarded. 2(c) Analyse two advantages to RCR of Kye using a democratic management style. 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. Annotate the first advantage in the left-hand margin and the second in the right-hand marking. 2(c) Indicative content AO1 Knowledge and understanding Democratic management style is where the manager actively involves employees in decision making. Knowledge of advantages of using a democratic management style (max 2 s), may include: • Increased motivation • Low labour turnover • More ideas from workforce • Better ideas from workforce (potentially) • More experiences are considered in decision making • May allows for more efficient problem solving (do not accept ‘quicker’ unless this is explained) AO2 Application Max one for application in one advantage and max two for application in two advantages. • RCR is a partnership • Business operated for five years • Repair a wide range of cars • Freya carried out primary market research to understand her customer’s needs and wants • Collected qualitative data • Customers like the speed of RCR’s service • RCR’s market share has increased annually over the past five years • RCR has a 17% share of the market • Freya and Kye have no experience of repairing cars • Employ two mechanics • Experienced mechanics who have worked for the business since it started five years ago • Holds a large quantity of inventory • Each car type needs different parts • Buys parts from two suppliers • RCR has an objective of increasing efficiency 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. 2(c) Analysis of advantages may include: • RCR’s customers like the speed of service offered. The employees are likely to be more motivated as consulted about decisions. Motivated employees are likely to be more productive and offer a quicker work rate. • Two employees are experienced and worked for RCR since it was launched so contributions are likely to lead to more successful decision making, increasing profitability/customer satisfaction. • Lower recruitment costs/time to train new employees etc. due to the low level of labour turnover. Accept all valid responses. Exemplar and annotations AO1 Knowledge AO2 Application AO3 Analysis Exemplar of an advantage Better decision making as the opinions of the two This could help the mechanics can be business to identify other considered . ways of increasing efficiency which could help it to operate more profitably . 2(d) Evaluate whether RCR should introduce Just in Time (JIT). 12 Level AO1 Knowledge AO2 Application AO3 Analysis AO4 Evaluation and understanding 2 marks 2 marks 6 marks 2 marks 3 5–6 marks Developed evaluation in context • A developed judgement/conclusion is made in the business context. • Developed evaluative comments which balance some key arguments in the business context. 2 2 marks 2 marks 2 marks 3–4 marks Developed Developed Developed analysis Developed evaluation knowledge of application of that identifies • A developed judgement/conclusion is relevant key term(s) relevant point(s) to connections made. and/or factor(s) is the business between causes, • Developed evaluative comments used to answer the context. impacts and/or which balance some key arguments. question. consequences. 1 1 mark 1 mark 1 mark 1–2 marks Limited knowledge Limited application Limited analysis Limited evaluation of relevant key of relevant point(s) that identifies • A judgement/conclusion is made with term(s) and/or to the business connections limited supporting comment/evidence. factor(s) is used to context. between causes, • An attempt is made to balance the answer the question. impacts and/or arguments. consequences. 0 0 marks 0 marks 0 marks 0 marks No creditable No creditable No creditable No creditable response. response. response. response. 2(d) Indicative content AO1 Knowledge and understanding Knowledge of JIT (max 2 s), including: • JIT is an inventory management system • JIT is where inventory is ordered to be delivered at the time that the part is needed by the business. • Less/zero inventory held • JIT is often used when the customer order initiates the ordering of inventory. AO2 Application Limited application applies knowledge of the use of JIT to RCR once. Developed application + applies knowledge of the use of JIT to RCR twice. • RCR is a partnership • Business operated for five years • Repair a wide range of cars • Freya carried out primary market research to understand her customer’s needs and wants • Collected qualitative data • Customers like the speed of RCR’s service • RCR’s market share has increased annually over the past five years • RCR has a 17% share of the market • Freya and Kye have no experience of repairing cars • Employ two mechanics • Kye uses a democratic style of management • Experienced mechanics who have worked for the business since it started five years ago • Holds a large quantity of inventory • Each car type needs different parts • Buys parts from two suppliers • RCR has an objective of increasing efficiency 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. Analysis for the introduction of JIT, including: • Reduces inventory holding costs – increased profitability • May reduce wastage of materials/inventory – reducing total costs • Reduces capital tied up in inventory – which could be spent on extra marketing to increase sales (opportunity cost) • Responsive to changes in demand – reducing costs / increasing efficiency • Improved cash flow – improving RCR’s liquidity/ working capital (opportunity cost) • May improve supplier relationship – reduced prices / increased demand Analysis against the introduction of JIT, including: • Business would be vulnerable to supply chain disruptions – lower sales / poor customer satisfaction • May exacerbate poor supplier relationships – need to find a new/ more reliable supplier. • Increased transportation costs (due to more deliveries) – reduced profitability • Increased inefficiency (if inventory is not delivered on time) – reduced productivity • Less control over supply chain – increased costs • May not be suitable for large fluctuations/ unexpected changes in demand – lower sales/revenue • Requires careful coordination of production process and inventory ordering – increased training costs 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 whether RCR should introduce JIT, with justification. • A judgement that RCR should continue without using JIT (or continue to use Just in Case – JIC). • What the judgement might depend upon, such as, suppliers, geography, objectives, external environment, actions of competitors, short term vs long term etc. • A discussion of the impact of technology (for example electric cars) on RCR’s decision. Accept all valid responses. 2(d) Exemplars for awarding evaluation L1 (limited supporting L2 (developed supporting L3 (developed supporting evidence) evidence) evidence with context) RCR should introduce JIT. RCR should introduce JIT to avoid RCR should introduce JIT to avoid having to have lots of inventory in having to have lots of car components stock. in stock. RCR should not introduce JIT. RCR should not introduce JIT RCR should not introduce JIT because most customers want a because most customers want a speedy repairs. speedy repairs, in 24 hours. Whether RCR should introduce JIT Whether RCR should introduce JIT Whether RCR should introduce JIT depends on the relationship with its depends on the relationship with its depends on the relationship with its suppliers. suppliers because they will need suppliers because they will need regular supplies delivered. regular supplies delivered to achieve its objective of increasing efficiency.

Question 19

Premium Homes (PH) PH owns student rental accommodation in all the major cities in country Y. PH used demographic segmentation in its marke…

Accepted Answer

2(a)(i) Identify one way in which business size can be measured. 1 Indicative content Identification of a method may include: • Capital employed • Market capitalisation • Market share • Revenue (allow sales, sales turnover or turnover, income) • Quantity sold • Value of output • Number of employees • Area/space • Number of outlets • Number of customers Do not allow profit – which is a measure of success or performance, but not size. 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 demographic segmentation. 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 demographic segmentation may include: • The identification of groups of customers with similar or common needs or characteristics within a market • Dividing the market according to factors that describe the population • Specific customer groups / target markets AO2 Application Explanation of demographic segmentation (max 1 mark) including: • Study of population data/trends • Examples of demographic factors, e.g. age, gender, race, social class, income Context applied to demographic segmentation , including (max 1 mark): • A valid example of a business that uses demographic segmentation to plan how it markets its products, e.g. a luxury car manufacturer may use demographic segmentation to target its advertising at high-income individuals or PH targets its student rental accommodation at university students 2(a)(ii) • Used for marketing of different products or services to specific consumer groups • Helps the business to adapt the marketing mix to the needs of the target customer group • Different marketing decisions for different groups Accept all valid responses Application can be made to PH or any other scenario/context/business/person. Exemplar and annotations Mark Rationale Dividing the market into groups according to age 3 The answer starts with application but shows or gender , for example a clothes retailer has knowledge by the reference to age/gender. There is three departments with products for men, women an example of the use of demographic segmentation and children . by a clothes retailer. Identifying groups of customers with similar needs or 2 Clear knowledge. With some application of how characteristics within a market using population data such as age Used for marketing of different products or services 1 A reasonable definition to specific types of customer Segmenting using demographics 0 Tautological 2(b)(i) Refer to lines 6–8. Calculate PH’s labour turnover in 2024. 3 Formula to calculate labour turnover: number of employees leaving in 1 year •  100 (1 mark – formula only) Average number of people employed Use of figures: 45 •  100 (1 mark – use of correct figures) 150 Labour turnover: • 30% (1 mark – correct answer – no % necessary) Exemplar and annotations Marks Answer Rationale 3 marks Correct answer Working and % do not matter. 30% 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 formula • Two and a • Correct identification of figures OR • One , one and one OR An incorrect answer with one mistake allowing OFR for final stage. OR 0.3 (has not completed final stage to multiply by 100) OR A correct answer from an inverted formula (3.3 – OFR) 2(b)(i) Marks Answer Rationale 1 mark One of the following: To award one mark, there must be: • Correct formula • One and two 0 marks No creditable content. To award zero marks, there must be • One 2(b)(ii) Explain one way in which PH could use Maslow’s Hierarchy of Needs 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 a use of a motivational theory (max 1 mark), including: • Change the way that employees are treated/managed/motivated at PH or relevant examples • Make changes to increase motivation to maintain PH’s low labour turnover/retain employees • Understand employee behaviour/employee motivation • Measuring employee needs AO2 Application Explanation of a use of Maslow’s hierarchy of needs (max 1 mark), including: • Explain how motivation affects how employees behave, e.g. an employee doing a repetitive job/working alone may have a high absenteeism rate • Explain the use with reference to one of Maslow’s categories of need, e.g. physiological, safety, love and belonging, esteem and self-actualisation needs • Examples of how PH could change the way that employees are managed/motivated: • Offer more opportunities for internal promotion • Increase employee salaries • Encourage employees to stay in the business • Change working conditions 2(b)(ii) Context applied to PH (max 1 mark), including: • Use of demographic segmentation in its market research • University students would pay a premium price for high specification rental accommodation • Specialist teams focused on sales, maintenance, customer service and finance. • Little opportunity for internal promotion • Low salaries • Offers profit sharing • 150 employees • Low labour turnover • Profit reduced by 75% • In 2024, 45 employees left PH • Increased complaints about maintenance and customer service • Use of data from Fig. 2.1 • Operations Director wants to improve the sustainability of PH’s operations Accept all valid responses. Exemplar and annotations Mark Rationale Managers can understand what motivates 3 Use of Maslow’s hierarchy of needs by managers employees such as ensuring physiological needs , with further explanation with reference to Maslow’s are met for the 150 employees . hierarchy . The third mark is for reference to the context . Helps managers decide how to change their 2 Knowledge of a use and applied to the number of management style so that less than 45 employees. employees leave this year . Identifies the different motivations for human 1 Knowledge of a use with no application behaviour Maslow’s Hierarchy of needs is a motivational theory 0 No use of Maslow’s hierarchy of needs. This answer is the study of understanding what drives a person to is a definition of the theory and does not answer the question work towards a particular goal or outcome . 2(c) Analyse one advantage and one disadvantage to PH of using an overdraft as a source of finance. 8 Level AO1 Knowledge and AO2 Application AO3 Analysis understanding 2 marks 4 marks 2 marks 2 3–4 marks Developed analysis • Developed analysis that identifies connections between causes, impacts and/or consequences of two points. • Developed analysis that identifies connections between causes, impacts and/or consequences of one point. 1 1–2 marks 1–2 marks 1–2 marks • Knowledge of two • Application of two Limited analysis relevant points is used relevant points to a • Limited analysis that identifies connections to answer the business context. between causes, impacts and/or consequences question. • Application of one of two points. • Knowledge of one relevant point to a • Limited analysis that identifies connections relevant point is used business context. between causes, impacts and/or consequences to answer the of one point. question. 0 0 marks 0 marks 0 marks No creditable response. No creditable response. No creditable response. Advantage in the left hand side column, disadvantage in the right hand side column 2(c) Indicative content AO1 Knowledge and understanding Knowledge of one advantage using an overdraft as a source of finance (max 1 mark), including: • Quick – previously agreed / immediately available • Convenient – can use it as required • Flexible • No repayment schedule • No loss of ownership Knowledge of one disadvantage using an overdraft as a source of finance (max 1 mark), including: • High interest rates / fees • Can be recalled at any time • Often low limit available • Can only be used for short-term needs • Must be repaid Note: the advantages/disadvantages have to be true for an overdraft, but not exclusively true to an overdraft (i.e. they may apply to other sources of finance). AO2 Application Application of an advantage or disadvantage to PH , including: • Use of demographic segmentation in its market research • University students would pay a premium price for high specification rental accommodation • Specialist teams focused on sales, maintenance, customer service and finance. • Little opportunity for internal promotion • Low salaries • Offers profit sharing • 150 employees • Low labour turnover • Profit reduced by 75% • In 2024, 45 employees left PH • Increased complaints about maintenance and customer service • Use of data from Fig. 2.1 2(c) • Operations Director wants to improve the sustainability of PH’s operations • Use of data from Fig. 2.1 • Operations Director wants to improve the sustainability of PH’s operations AO3 Analysis Limited analysis of an advantage/disadvantage of using an overdraft – candidate shows one link in the chain of analysis. Developed analysis of an advantage/disadvantage of using an overdraft candidate shows two or more links in the chain of analysis or a two-sided analysis. Analysis may include: • Quick – previously agreed / immediately available; the funds can be used for expansion immediately – leading to increased market share • Convenient – can use it as required; no time is wasted with application – can be used for other activities such as marketing • Flexible; can be used for any type of purchase – to meet the business objectives • No repayment schedule; this will reduce cash outflows – This money can be used to better maintain the properties rented, reducing customer complaints. • High interest rates/fees; higher interest rates may increase costs – this will reduce profits • Can be recalled at any time; the business may need to suddenly repay the money leading to cashflow problems – threatening business survival • Often low limit available; The overdraft limit may be low. This will limit the investments that PH can make – therefore the business will not be able to reduce complaints. • Can only be used for short-term needs; limiting the project that the money can be used for – some objectives may not be met • Must be repaid; increasing cash outflows – less funds available for marketing Accept all valid responses. 2(c) Exemplar and annotations AO1 Knowledge AO2 Application AO3 Analysis Exemplar of an advantage Interest only charged on the For upgrading Ensures short term cost is Annotations for the overdrawn amount accommodation in high- minimal reducing further advantage should be income cities . pressure on profit levels . placed in the left-hand margin. Exemplar of a disadvantage The funds need to be repaid If student accommodation This could lead to a bad Annotations for the not rented out . credit rating if payments disadvantage should be missed which may placed in the right-hand increase cost of future margin. borrowing . 2(d) Evaluate whether Frank’s plan will improve the sustainability of PH’s operations 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 the that identifies • A developed and/or factor(s) is used to business context. connections between judgement/conclusion answer the question. causes, impacts and/or is made. consequences. • Developed evaluative comments which balance some key arguments. 2(d) Level AO1 Knowledge and AO2 Application AO3 Analysis AO4 Evaluation understanding 2 marks 2 marks 6 marks 2 marks 1 1 mark 1 mark 1 mark 1–2 marks Limited knowledge Limited application Limited analysis Limited evaluation of relevant key term(s) of relevant point(s) to the that identifies • A and/or factor(s) is used to business context. connections between judgement/conclusio answer the question. causes, impacts and/or n is made with limited consequences. supporting 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. Indicative content AO1 Knowledge and understanding Knowledge of sustainability of operations (max 1 ), including: • Operating / surviving / remaining in business for the long-term / future / not running out of money / continuity / stable • Efficiency • Productive • Day-to-day running of the business • Keeping customers satisfied • Maintaining profitability – reducing expenses and increasing revenue Note: The question stem asks about operational sustainability. Therefore, operational sustainability must be the focus of the answer, not environmental sustainability. 2(d) AO2 Application Application of an advantage or disadvantage to PB , including: • Use of demographic segmentation in its market research • University students would pay a premium price for high specification rental accommodation • Specialist teams focused on sales, maintenance, customer service and finance. • Little opportunity for internal promotion • Low salaries • Offers profit sharing • 150 employees • Low labour turnover • Profit reduced by 75% • In 2024, 45 employees left PH • Increased complaints about maintenance and customer service • Use of data from Fig. 2.1 AO3 Analysis Limited analysis of whether the plan will improve the sustainability of PH’s operations – candidate shows one link in the chain of analysis. Developed analysis of whether the plan will improve the sustainability of PH’s operations – candidate shows two or more links in the chain of analysis. • Financial stability; reduce short term cash inflow – reduce debt burden and interest payments • Focus on profit; increase profit margins – focus on core values • Increased efficiency of workforce; may lose excellent employees who take knowledge to competitors – lose market share/customer service may reduce further due to losing more experienced employees • Keeping customers satisfied; increased market share – more market power / ability to increase prices • Business continues for the long-term; increased employee satisfaction from greater job security – reduced labour turnover 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 . 2(d) • The impact of the plan depends on the timescales, future aims and objectives and financial liquidity of PH. After downsizing the amount of revenue generated may not meet shareholder expectations • Will demand for premium accommodation increase in the future? What are the demands of students? • Should PH repurpose its accommodation for a different target audience, create a subsidiary brand and grow market share? • Is market share and size the most important measure of success, or is profitability more important? • The extension strategy may generate a short-term boost to sales/market share, but will it be sustained in the long- term? • A judgement on whether the course of action is suitable for PH. Accept all valid responses. Exemplars for awarding evaluation L1 (limited supporting L2 (developed supporting L3 (developed supporting evidence) evidence) evidence with context) Frank’s plan will improve the Frank’s plan will improve the Frank’s plan will improve the sustainability of PH’s operations. sustainability of PH’s operations. sustainability of PH’s operations. Increased labour efficiency will reduce Increased labour efficiency will reduce expenditure on salaries. expenditure on salaries. This will help to reverse the trend of reducing profit levels over the past two years. I don’t think the sustainability of PH’s I don’t think the sustainability of PH’s I don’t think the sustainability of PH’s operations will be improved. operations will be improved. Investing operations will be improved. Investing in new accommodation will cost a lot in new accommodation will cost a lot of money. of money, and PH does not have experienced employees to do the work as they have left.

Question 20

The Research Agency (TRA) TRA is a quaternary sector business. It is the market leader in providing social media data to food manufacturers…

Accepted Answer

Question Answer Marks 1(a)(i) Identify one stage of the transformational process. 1 Responses include: The stages of the transformational process: • Inputs • Adding value / production / manufacturing / operations / process • Outputs Do not accept examples of inputs and outputs 1(a)(ii) Explain the term multinational business. 3 AO1 Knowledge and understanding AO2 Application 1 mark 2 marks 2 marks Developed application of one relevant point to a business context. 1 mark 1 mark Knowledge of one relevant point is used to answer the Limited application of one relevant point to a business question. context. 0 marks 0 marks No creditable response. No creditable response. Responses may include: AO1 Knowledge and understanding Knowledge of a multinational businesses (max 1 mark). Must be knowledge that shows clear distinction between a national and international business including: • Capital in more than one country • Operates in more than one country 1(a)(ii) AO2 Application Limited application applies knowledge of a multinational business to a business context. Developed application + applies knowledge of a multinational business to a business context. • Any exemplification of a multinational business (not just naming a MNC) • A business might have production factories in country F and another country • Can take advantage of lower cost production in low-income countries • Benefits of lower transport costs and better market information about consumer tastes etc • Can bring the business closer to their main markets • Can take advantage of relatively weak government restrictions. • May avoid import restrictions by producing in the local country. • Gain access to natural resources which might not be available in their base country. • Communication links with headquarters may be poor. • Language, legal and culture differences could make communications difficult. • Coordination with other plants in the multinational group will become more difficult. • Skill levels of the local employees may be low, requiring substantial investment in training programmes. Do not expect, but reward • Can take advantage of comparative/absolute advantage in countries • To gain economies of scale Accept all valid responses. 1(a)(ii) Exemplar and annotations Mark Rationale A business with capital in more than one country . For 3 Clear distinction between MN and example, a business that has factories in two countries to take international/national business. advantage of lower production costs abroad . Example of factories in two countries and a benefit. Headquarters in one country, but with operating branches in 3 Knowledge of an MNC and a another . This can allow the business to operate within other reason and a benefit. markets to reduce transportation costs . Own shops in two or more countries so that it can take 2 Distinction shown by shops in more advantage of lower transportation costs . than one country (capital) and understanding of a feature of MN. Operating in different countries by selling goods abroad. 1 A definition, but ‘selling abroad’ is an international business, not a multi-national. A business that sells in other countries. 0 No credit – this is an international business. 1(b)(i) Refer to Fig 1.1 and other information. Calculate the combined total number of potential consumers who would prefer lemon or strawberry flavoured water. Formula: Number of potential customers = number who prefer lemon + number who prefer strawberry (1 – formula may be inferred by correct use of numbers) OR Calculation: 34% of 8000 = 2720 (1) 34% + 28% = 62(%) (1) 28% of 8000 = 2240 (1) 62% of 8000 (1) 2720 + 2240 = 4960 (1 – OFR applies) = 4960 (1) Ans = 4960 (3 marks) 1(b)(i) Examples and annotations Marks Awarded Explanation Annotations 3 marks Correct answer Working and $ do not matter. 4960 Allow one to denote the three marks next to correct answer. 2 marks Two of the following: To award two marks, there must be • Correct formula • Two and a • Correct calculation of number OR who prefer lemon (2720) • One , one and • Correct calculation of number one who prefer strawberry (2240) OR An incorrect answer with one mistake allowing OFR for final stage. 1 mark One of the following: To award one mark, there must be: • Correct formula • One and two • Correct calculation of number who prefer lemon (2720) • Correct calculation of number who prefer strawberry (2240) 0 marks No creditable content. To award zero marks, there must be • One 1(b)(ii) Explain one reason why TRA uses sampling. AO1 Knowledge and understanding AO2 Application 1 mark 2 marks 2 marks Developed application of one relevant point to a business context. 1 mark 1 mark Knowledge of one relevant point is used to answer the Limited application of one relevant point to a business question. context. 0 marks 0 marks No creditable response. No creditable response. Responses may include: AO1 Knowledge and understanding Identification of a reason why a business uses sampling (max 1 mark), including: • Cheaper/low cost • Quicker/less time • More representative AO2 Application Explanation of a reason why a business uses sampling (max 1 mark), including: • Explanation of how this affects market research • More practical, for example than asking the entire population • Opportunity cost 1(b)(ii) Context applied to TRA (max 1 mark), including: • Quaternary sector business • Market is to provide social media data (vast amounts of data) • To food manufacturers in country F (large industry) • TRA is the market leader in country F to provide this data • Market has grown by over 40% over the last year • Sample size is 8000 potential consumers • 65 researchers • All work from home • Use of Fig 1.1 Accept all valid responses. Exemplar and annotations Mark Rationale Cheaper which keeps the cost of market research low by 3 A reason identified, explained and only asking 8000 potential consumers . in context, so all 3 marks. Faster to find out Lemon is the most preferred flavour . 2 A reason identified, but not explained. The context about TRA/DF is fine. Makes it cheap for TRA. 1 Identification of a reason, but no explanation or context. Names are not enough for context. It allows TRA to find out information about the market. This 0 This is a reason to use market means that it can let DF know that Lemon is the most preferred research – not sampling. flavour and DF is likely to be able to sell more products. 1(c) Refer to Fig 1.1 and other information. Analyse two reasons why the data collected for DF may not be reliable. 8 Level AO1 Knowledge and AO2 Application AO3 Analysis understanding 2 marks 4 marks 2 marks 2 3–4 marks Developed analysis • Developed analysis that identifies connections between causes, impacts and/or consequences of two points. • Developed analysis that identifies connections between causes, impacts and/or consequences of one point. 1 1–2 marks 1–2 marks 1–2 marks • Knowledge of two relevant • Application of two relevant Limited analysis points is used to answer the points to a business • Limited analysis that question. context. identifies connections • Knowledge of one relevant • Application of one relevant between causes, impacts point is used to answer the point to a business context. and/or consequences of question. two points. • Limited analysis that identifies connections between causes, impacts and/or consequences of one point. 0 0 marks 0 marks 0 marks No creditable response. No creditable response. No creditable response. Annotate the first reason in the left-hand margin and the second reason in the right-hand margin 1(c) Responses may include: AO1 Knowledge and understanding – reasons why data collected may not be reliable, including: Identification of a reason why market research data may not be reliable , including: • Bias • Sample size • Sample not representative of the market • Wrong/poor questions • Wrong media used • Human error • Poorly defined objectives • Time lag between research and implementation This is not secondary market research, so do not credit answers about why secondary market research may not be reliable. However, answers which suggest the data may have changed (time lag) are acceptable. AO2 Application Application of the reason to DF , including: • TRA is the market leader in providing social media data to food manufacturers in country F • Market has grown by over 40% over the last year • DF specialises in non-alcoholic drinks • DF is a multinational business • TRA sampled 8000 potential customers • Sampled on social media • Asked about favourite fruity flavours • Use of data in Fig 1.1 • TRA employs 65 researchers • All of TRA’s researchers work from home • TRA’s workers have poor motivation • TRA has high labour turnover • Suggestion that some TRA employees are not working very hard. 1(c) AO3 Analysis Limited analysis of a reason why market research data may not be reliable – developed analysis , including: • Bias; may mean that potential customers are persuaded to give a wrong answer leading to launching the wrong product – low sales. • Sample size; not enough people asked which may mean it launches the product with few sales – leading to a loss. • Sample representation; not enough different views sought leading to the wrong product being launched – no profit. • Wrong/poor questions; potential customers may not know what is being asked, leading to the product not being purchased – makes a loss. • Wrong media used; if the customers do not tend to use that medium then the results will not transform into sales – leading to it not making a profit. • Human error; if the results are inaccurate this could lead to the wrong products being launched – ruining the brand image of the business. • Poorly defined objectives; if the reason for the research is unclear this can lead to the questions not representing what the business needs to know – leading to launch of the wrong product and weak sales. Accept all valid responses. Exemplar and annotations AO1 Knowledge AO2 Application AO3 Analysis The wrong questions were Of the 8000 potential Which could lead to DF launching asked , customers , the wrong flavour leading to lower sales . Sampling bias . By only asking young people about So the flavours only appeal to the their favourite fruity flavour , young, which may lead to lower sales of the drink and therefore decrease DF’s profit . 1(d) Evaluate the most effective way for TRA to improve the motivation of the home working employees. 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 Developed analysis Developed evaluation of relevant key term(s) application of that identifies • A developed and/or factor(s) is used relevant point(s) to connections judgement/conclusion is to answer the question. the business between causes, made. context. impacts and/or • Developed evaluative consequences. comments which balance some key arguments. o 1(d) Level AO1 Knowledge and AO2 Application AO3 Analysis AO4 Evaluation understanding 2 marks 2 marks 6 marks 2 marks 1 1 mark 1 mark 1 mark 1–2 marks Limited knowledge Limited application Limited analysis Limited evaluation of relevant key term(s) of relevant point(s) that identifies • A judgement/conclusion and/or factor(s) is used to the business connections is made with limited to answer the question. context. between causes, supporting impacts and/or comment/evidence. consequences. • An attempt is made to balance the arguments. 0 0 marks 0 marks 0 marks 0 marks No creditable response. No creditable No creditable No creditable response. response. response. 1(d) Responses may include: AO1 Knowledge and understanding Knowledge of ways to improve motivation (max 2 marks), including: • Payment (financial) methods: time based, salary, piece rates, commission, bonuses, profit sharing, performance- related pay, fringe benefits • Non-financial motivators: training, opportunities for promotion, development, status, job re-design, team working, empowerment, participation, job enrichment • Use of the main motivation content theories (Taylor, Mayo, Maslow, Herzberg and McClelland) and motivation process theory (Vroom). AO2 Application Application to TRA , including: • TRA is the market leader in providing social media data to food manufacturers in country F • Market has grown by over 40% over the last year • Samples using social media • TRA employs 65 researchers • High speed internet connection • TRA’s workers have poor motivation • TRA has high labour turnover • Suggestion that some TRA employees are not working very hard. • Data from Fig 1.2 – I hate being so isolated – I never get to speak to any other employees. – I have to use my own electricity, and the cost has doubled in the last two years. – I know some employees are not working very hard, but they get paid the same as me. It’s not fair! 1(d) AO3 Analysis Limited analysis of ways to improve motivation – developed analysis , including: • Payment methods: may increase costs – however may make employees work harder for higher pay, leading to improved productivity. • Non-financial methods; may be less cost or free – leading to higher productivity without impacting the costs of the business. • Content theories: likely to improve working conditions for the employees leading to increased productivity – however may have a significant cost increase leading to lower profit. • Process theory: increased productivity for workers who expect increased rewards – however if the employees do not believe the promises, then this may increase costs for no benefit. AO4 Evaluation Limited evaluation of the most effective way to improve motivation – developed – developed in context , including: • Relative importance of motivation to TRA – how important is the productivity of employees – likely to be highly important due to the quaternary nature of the business. • Choice of method depends on; cost of method, likely increases in productivity, finance available, future forecasts in market changes, how skilled the researchers job actually is and what training is involved. • The impact of the chosen motivation method(s) and the impact of poor motivation / high labour turnover. • The extent to which this is a matter of working from home and is inherent in the whole country, as opposed to just TRA employees. • A judgement that other issues may be more important than motivation of the employees. A valid judgement must identify one way to motivate the employees (a ‘depends upon’ may include more than one because it is not a judgement as such). If the candidate gives more than one judgement, only reward the best judgement and put SEEN next to the other(s). Accept all valid responses. 1(d) Exemplars for awarding evaluation Evaluate the most effective way for TRA to improve the motivation of the home working employees. L1 (limited supporting L2 (developed supporting L3 (developed supporting evidence) evidence) evidence with context) Money is the most effective way. Money is the most effective way, Money is the most effective way, because it will allow all of TRA’s because it will allow all of TRA’s employees to fix the issues which employees to fix the issues which they are complaining about. they are complaining about, such as their rising electricity bills. TRA should use teamworking as it TRA should use teamworking as it TRA should use teamworking as it is the best solution. is the best solution because it will is the best solution because it will motivate the employees, without motivate the isolated employees, adding significantly to the costs of without adding significantly to the the business. costs of the business. The most effective way depends on The most effective way depends on The most effective way depends on the type of employees at TRA. the type of employees at TRA. If the type of employees at TRA. If the employees are Theory X, then the employees are more concerned money is more likely to be the best about their electricity bills, then way. However, if they are Theory money is more likely to be the best Y, then teamworking may be better. way. However, if they are more concerned about being isolated, then teamworking may be better.

Question 21

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

Market research — Paper 2 · A Level Business (for first examination in 2016) 9609

Questions24 pages

Mark scheme21 answers

Another paper, or another topic

Questions as text

Q1 · Designer Clothing (DC) DC is a medium sized private limited company 9609/23 May/June 2017

Q2 · Car Wash (CW) CW is a national chain of car wash businesses 9609/21 Oct/Nov 2017

Q3 · Online Travel (OT) OT is a private limited company in country X that sells international… 9609/22 May/June 2018

Q4 · Swimming Pools (SP) SP is a public sector organisation 9609/21 Oct/Nov 2018

Q5 · Planet Internet (PI) PI is a public limited company 9609/21 May/June 2019

Q6 · Quality Fencing (QF) QF is owned by Seojun 9609/22 Oct/Nov 2019

Q7 · Better Bicycles Ltd (BB) BB is a family-owned small business 9609/23 Oct/Nov 2019

Q8 · Joe’s Smoothies (JS) Joe graduated with a Business degree 9609/22 Feb/March 2020

Q9 · The Shop (TS) Thomas worked for 30 years as a manager of a factory 9609/22 May/June 2020

Q10 · Bilal’s Homes (BH) Bilal is a sole trader, who buys and sells apartments for a profit 9609/23 May/June 2021

Q11 · Super Candy (SC) SC is a large public limited company that sells low-sugar candy (sweets)… 9609/23 Oct/Nov 2021

Q12 · Priya’s Bookshop (PB) Priya lives in town R which is situated in beautiful countryside… 9609/21 May/June 2022

Q13 · Drone Development (DD) DD produces a range of drones, which are unmanned aircraft flown… 9609/21 Oct/Nov 2022

Q14 · Direct News (DN) Shila and Lucy own and manage DN, an online publishing business 9609/21 Oct/Nov 2023

Q15 · Gold Theme Park (GT) Gold Park was a mine where gold was extracted until 2012 9609/22 Oct/Nov 2023

Q16 · Bear Bears (BB) BB is a business partnership owned by Sade and Chika 9609/22 Oct/Nov 2023

Q17 · ML Computers (MLC) MLC is a successful private limited company that has been trading for… 9609/22 Feb/March 2024

Q18 · Reliable Car Repairs (RCR) Reliable Car Repairs (RCR) is owned by Freya and her brother… 9609/22 Feb/March 2025

Q19 · Premium Homes (PH) PH owns student rental accommodation in all the major cities in… 9609/21 May/June 2025

Q20 · The Research Agency (TRA) TRA is a quaternary sector business 9609/22 Oct/Nov 2025

Q21 · Popular Drinks (PD) PD is a mass market fizzy drinks manufacturer in country Z 9609/23 Oct/Nov 2025