Business Studies 0450/22 February/March 2022: question paper and mark scheme

Mark scheme

1(a) Explain four methods a business could use to communicate with its 8 employees. Award 1 mark for each relevant method (maximum of four). Award a maximum of 1 additional mark for each explanation. There are no application marks available for this question. Relevant methods might include: • Memo – short written message that can be on paper or emailed • Letter – when more of a formal document is required such as informing an employee of dismissal • Report – a detailed document about a particular issue or problem • Notice/Poster – put on a board so that all employees can read the detailed information on it • Text message – can be quickly sent to employees’ mobile phones and can be reread if necessary • PowerPoint presentation – can give a lot of visual information in a meeting with employees/managers • Meeting with employees/briefing/video conferencing – can give information to many employees at once and feedback is not necessary • Face-to-face conversation - where the manager can discuss an issue with an employee / can be two-way communication with an employee / give instructions to an employee • Telephone/mobile phone call – two-way communication which allows discussion/explanation • Email - can send detailed information which the employees can refer back to in the future • Tannoy/public address (PA) system • Newsletter • Social media For example: Phone call using mobile phone (1) allows discussion of any issues so questions can be answered straight away (1) 1(b) Consider the following three ways the internet could be used to improve 12 the promotion of MH. Which is the best way for Sadiq to choose? Justify your answer. • Improve its existing website. • Advertise using social media. • Email special offers to existing customers. Level Description Marks Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of two or more ways. 3 9–12 Well-justified recommendation. Candidates discussing the three ways in detail, in context and with a well-justified recommendation including why the alternative ways were rejected should be rewarded with the top marks in the band. Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of at least one way. 2 5–8 Judgement with some justification / some evaluation of choice made. Candidates discussing two or more ways in detail and applying them to the case should be rewarded with the top marks in the band. Limited application of knowledge and understanding of relevant business concepts. Limited ability to discuss the ways with little/no explanation. 1 1–4 Simple judgement with limited justification / limited evaluation of choice made. Candidates outlining the three ways in context should be rewarded with the top marks in the band. 0 No Creditable Response 0 1(b) Relevant points might include: Advantages Disadvantages • Makes the hotel • Increased costs of information more paying for a accessible to specialist to carry potential customers out the website searching for a hotel improvements and make them • On-going costs of more likely to book maintenance of the a room website, e.g. • The website now updating room may look more prices attractive as some • Search engines may guests have said not bring up the the current website hotel on the first is boring so more page of a search photographs may unless Sadiq pays attract potential for this and can be Improve its customers to book expensive existing website • Have complete • Relies on people control over the way finding the website / the hotel is shown in may be relatively the adverts unknown • Room prices can be quickly updated • Can include interactive adverts, which are more attractive than static adverts in magazines or newspapers • Website can be used for exclusive offers direct to consumer 1(b) Advantages Disadvantages • Can target specific • Can easily be demographic groups ignored as there are such as higher a lot of adverts on income earners social media • Viral marketing / • Can be expensive share information for MH to pay for with family and pop-ups to ensure friends enables the hotel is seen by recommendations to a large group of be spread quickly people and to a large group • Potential customers of potential may not use social customers who may media and therefore Advertise using want to book a room they will not be social media at the hotel aware of the hotel • Potential customers • Bad reviews can will see an advert for lead to fewer the hotel when they bookings and the go to sites such as bad reviews may be Facebook, which unfair if only a small increases proportion of reviews awareness of the are bad hotel • Social media widely used by consumers – large scale exposure • Cheap way to get • Email may go into information to a lot spam and so be of existing hotel ignored customers • No guarantee the • Emails go direct to email address is existing customers, correct and therefore so it targets tourists will not be seen by who are more likely tourists to return to the hotel • Existing customers Email special • May reach tourists may see this as offers to existing that are in other annoying and get a customers countries and are negative view of the difficult to reach in hotel other ways • Only sent to existing • Directs more traffic customers / some to the website customers may not have email so not targeting new customers / may be less effective 1(b) Justification might include: • Updating the website is the best option to choose as it can include a lot of information about the hotel which the other two alternatives do not. It can include interactive sections that may be more attractive than those in an email or social media advert which are likely to be more limited. • Social media is the best as the advert is more likely to be seen than a website, which has to be searched for and social media will appear Recommendation immediately. Viral marketing means that people using social media can more quickly spread information than the website and emails to thousands of people about the hotel especially if these guests have had a good holiday there. • Using emails is the best one to choose as the alternatives require that people look for the website or stop and read the social media advert and they may ignore it. An email is less likely to be ignored and targets people who have already been a customer and therefore may be more likely to read the email and return to the hotel.

Mark scheme

2(a) Explain one advantage and one disadvantage to Sadiq of delegating 8 tasks to his employees. Award 1 mark for each advantage/disadvantage (maximum of two marks). Award a maximum of 3 additional marks for each explanation of the advantage/disadvantage of delegating tasks – one of which must be applied to this context. Relevant advantages might include: • Would allow Sadiq to give more time to other tasks - more time to make better decisions as not rushed - improves the success of the hotel / less likely to make mistakes • Sadiq could keep more control of the whole business - if he has some time to devote to checking on and communicating with his employees – he will be more aware of what is happening in the business and if anything needs changing • Employees could be more motivated – as feel trusted to do additional tasks / work is more interesting – increases efficiency • May be able to monitor/measure success of employees more easily • Employees may be more productive as their skills are developed Relevant disadvantages might include: • Sadiq could lose some control – as tasks are carried out by employees who may not know what to do – employees may make the wrong decisions • Sadiq may need to train the employees – so that they know how to carry out the delegated tasks – which will increase costs in the short-term • Mistakes may be made by subordinates – this may lead to customer complaints – bad reputation for the business For example: Sadiq may have more time to spend carrying out his tasks (1) such as marketing the hotel (app) so he will be able to concentrate on these tasks and be less likely to make mistakes (1) improving the reputation of the business and potentially increasing sales (1). Application could include: Sadiq works 60 to 90 hours a week; reference to employees listed in the organisational chart in Appendix 1; 40 employees; hotel; sole trader. 2(b) Consider the following three ways Sadiq could achieve a high-quality 12 service at MH. Which is the most effective way? Justify your answer. • Only buying food ingredients from suppliers that guarantee good quality. • The room cleaners made responsible for checking their own work. • Chefs regularly sampling food before it is served to guests. Level Description Marks Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of two or more ways. 3 9–12 Well-justified conclusion. Candidates discussing all three ways in detail, in context and with a well-justified conclusion including why the alternative ways were rejected should be rewarded with the top marks in the band. Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of at least one way. 2 5–8 Judgement with some justification / some evaluation of choice made. Candidates discussing at least two ways in detail and applying them to the case should be rewarded with the top marks in the band. Limited application of knowledge and understanding of relevant business concepts. Limited ability to discuss the ways with little/no explanation. 1 1–4 Simple judgement with limited justification / limited evaluation of choice made. Candidates outlining all three ways in context should be rewarded with the top marks in the band. 0 No creditable response. 0 2(b) Relevant points might include: Advantages Disadvantages • Ensures the meals • Costs of ingredients are of high quality if are likely to be the ingredients are higher and therefore of a good standard menu prices may • Less likely to have to have to rise or throw away poor profits reduced quality food so these • May limit some of costs are reduced the types of Only buying food ingredients used to ingredients from only those that are suppliers that supplied by these guarantee good businesses – quality reduces menu options • May increase costs if need to find new supplier • Quality may be lower for other reasons such as low skill of the chef • Can remove the • The standard may need for a fall as cleaners of supervisor the hotel rooms may • This is a type of not realise the quality assurance standard required and can motivate unless trained – room cleaners at the relies on cleaners hotel as they will being committed to feel trusted the job The room • Should eliminate • Training costs are cleaners made poor quality room likely to rise as the responsible for cleaning and reduce cleaners will require checking their the number of training on how to own work complaints produce the high- quality service required • Cleaners may want higher wages as more responsibility • Efficiency may reduce if take longer to clean the rooms 2(b) Advantages Disadvantages • Should ensure every • Wasteful of time for meal is of a the chefs when they consistent standard could be getting on and no bad meals with cooking the are served. It is a next meals Chefs regularly form of quality • Expensive if the sampling food control meal has to be before it is served • Fewer customer scrapped – better to to guests complaints about the find the problem restaurant leading earlier in the process to recommendations • Identifies the poor- and possibly higher quality meal but sales does not identity where the fault lies Conclusion Justification might include: • Having good quality ingredients is the most important even if the costs are slightly higher as this should ensure the meal is of good quality and will not need to be regularly checked by the chef as they will know it is of good quality without having to check. The room cleaning is less important as it can still be checked by supervisors to ensure they are reasonably clean but poor-quality food in the restaurant will lead to a poor reputation and possibly lost sales. • Having clean rooms is the most important. Hotel guests may not eat at the hotel restaurant, but they will stay in the rooms so if the rooms are not cleaned well, then the hotel will get a bad reputation and will lose guests to competitors. • Chefs regularly sampling meals should ensure that the restaurant will not receive customer complaints and even if slightly lower quality ingredients are purchased then a good chef may still be able to cook a good meal. Hotel guests may spend very little time in their hotel room and therefore the quality of the cleaning may be of less importance to them.

Mark scheme

3(a) Explain four advantages to Sadiq of changing his business to a 8 partnership. Award 1 mark for each relevant advantage (maximum of four). Award a maximum of 1 additional mark for each explanation in context. Relevant advantages might include: • Able to raise more capital from partners – needs $10 000 for each room for redecoration if chooses Option 2 • Responsibilities/decisions can be shared • More ideas from new partners – could offer advice about what new facilities could be provided for hotel guests • Partners can specialise in particular tasks where they have specific skills – such as take over the financial decisions as Sadiq has few financial skills • Other partner can cover if absent or ill – Sadiq could take time off and not work 60–90 hours each week • Share costs and risk For example: Partners can specialise in a particular task (1) because Sadiq currently carries out finance tasks and he is not very skilled at doing this (app). Application could include: Sadiq works 60 to 90 hours a week; reference to employees listed in the organisational chart in Appendix 1; 40 employees; needs $10 000 for each room; redecoration of rooms; hotel guests; wants to increase revenue; sole trader; improve quality of customer service; no savings; improve cash flow. 3(b) Consider the two options for Sadiq to increase MH’s revenue. Which 12 option should he choose? Justify your answer using suitable calculations. Level Description Marks Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of both options. 3 9–12 Well-justified recommendation. Candidates discussing both options in detail, in context and with a well-justified recommendation including why the alternative option was rejected should be rewarded with the top marks in the band. Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of at least one option. 2 5–8 Judgement with some justification / some evaluation of choice made. Candidates discussing at least one option in detail and applying it to the case should be rewarded with the top marks in the band. Limited application of knowledge and understanding of relevant business concepts. Limited ability to discuss the options with little/no explanation. 1 1–4 Simple judgement with limited justification / limited evaluation of choice made. Candidates outlining both options in context should be rewarded with the top marks in the band. 0 No creditable response. 0 3(b) Relevant points might include: Advantages Disadvantages Option 1 • A reduction in price • Revenue per night to $50 could lead to will fall by $500 if no an increase in extra guests come to revenue to $3750 the hotel per night • An increase in • A lower price may revenue of $750 per lead to lower profits night with no for Sadiq if 50% additional capital more guests not cost attracted • Target market • This does not remains unchanged address the so easier to attract complaints about customers as the poor quality of understand this some rooms – so market may not attract 50% more guests • Lower price may give image of lower quality • Increasing the price • High redecoration by 50% will lead to cost of $800 000 in $1500 extra revenue total plus downtime per night if 50 whilst rooms are out rooms remain of action means lost occupied each night revenue in the short • This is $750 higher term than the extra • However, Sadiq may revenue per night need to improve from Option 1 other facilities at the • Higher income hotel as the high- tourists may be income guests may willing to pay for expect more from Option 2 improved room the rest of the hotel • May calculate that as well as the room using projected upgrades – may figures it would take increase costs even 534 nights to recoup more the cost of the • Marketing may need upgrades. to change as it is $800 000/1500 (the new target customer extra income) = 534 MH is less familiar nights. with how to attract them • May lose existing customers 3(b) Recommendation Justification might include: • Option 1 is better as it is less risky as MH would not have to spend $10 000 upgrading each room when there is no guarantee guests will use them. Because Sadiq is already familiar with the requirements of existing customers and with the lower price he may be more successful in attracting the increased number of customers than the new target market for Option 2. • Option 2 is better as it targets a new segment of the market and therefore MH can increase room prices leading to a higher increase in revenue of $750 more per night than Option 1 and no additional guests are needed.

Mark scheme

4(a) Referring to Appendix 2 and other information, explain how the 8 following two new legal controls could affect MH. • Restaurant menus must list all ingredients in the food served. • Single-use plastic bottles cannot be used. Award up to 1 mark for how each legal control could affect MH (maximum of two marks). Award a maximum of 3 additional marks for each explanation of how the legal control affects the business – one of which must be applied to this context. Relevant answers might include: Restaurant menus must list all ingredients in the food served: • Costs may be increased – may need to reprint menus / may now need to source other supplies or ingredients – may need to increase prices • Improved consumer knowledge may increase demand – customer needs are being met/allergies – so more likely to eat at the hotel restaurant which increases revenue • Competitors have access to information about ingredients used in meals Single-use plastic bottles cannot be used: • May need to find alternative products to plastic – glass bottles may be more expensive in the short-term – but in the long term they will be cheaper as they can be recycled • Less litter in surrounding area to MH – as no plastic waste littering the area – improved reputation of the hotel For example: The costs for MH might increase (1) because the hotel restaurant (app) will need new menus and these will have to be printed with the old ones thrown away (1) which may lead to lower profits in the short-term (1). Application could include: 4 chefs will need to change ingredients; waiters and kitchen assistants may need additional training; reference to information in Appendix 2; glass bottles; may get better reviews /so do not get bad reviews. 4(b) Consider the following three ways Sadiq could improve MH’s cash flow. 12 • Arrange a bank loan. • Ask customers to pay a deposit of 20% when they book a room. • Ask for trade credit from food suppliers. Which would be the most effective way for MH to improve its cash flow? Justify your answer. Level Description Marks Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of two or more ways. 3 9–12 Well-justified conclusion. Candidates discussing all three ways in detail, in context and with a well-justified conclusion including why the alternative ways were rejected should be rewarded with the top marks in the band. Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of at least one way. 2 5–8 Judgement with some justification / some evaluation of choice made. Candidates discussing two or more ways in detail and applying it to the case should be rewarded with the top marks in the band. Limited application of knowledge and understanding of relevant business concepts. Limited ability to discuss the ways with little/no explanation. 1 1–4 Simple judgement with limited justification / limited evaluation of choice made. Candidates outlining all three ways in context should be rewarded with the top marks in the band. 0 No creditable response. 0 4(b) Relevant points might include: Advantages Disadvantages • Provides a cash • Interest payable on injection into the bank loan business - provides • Interest and working capital to repayment of the enable the hotel to loan will be an keep trading outflow each month • Provides a large - may make MH’s Arrange a bank cash inflow at one cash flow worse in loan time – possibly the long run removing a • May take time if negative flow in the bank requests cash flow documents to • May be quick to support the arrange and receive application for the the cash inflow loan quite quickly • Improves the cash • May lose some inflows as deposit is tourists who prefer received when the to book and pay no tourist books a deposit room • Existing customers • Helps to reduce the may not return to chance of guests the hotel as not Ask customers cancelling if deposit happy about the to pay a deposit is not refundable, deposit being of 20% when which improves the introduced when they book a cash inflow they have not had room • It is a lower deposit to pay this in the than other hotels in past the local area that charge 30% deposit – so may still attract more guests - improving the cash inflow 4(b) Advantages Disadvantages • Reduces cash • Some suppliers outflows may be unwilling to • Hotel may have offer trade credit so received payment MH may have to for restaurant meals find new suppliers before payment to of ingredients suppliers of • Trade suppliers ingredients is may offer lower Ask for trade required discounts which credit from food would increase suppliers cash outflows in the longer term • It takes time to arrange for trade credit and Sadiq works long hours each week and may not have time Conclusion Justification might include: • Arranging a bank loan is the best method to choose as it will not upset any hotel guests by asking for a deposit which would reduce cash inflows and will not take time for Sadiq to make trade credit agreements. The business has been running successfully and so it is likely the bank will grant the loan. • Asking for a deposit will be best as it will increase the cash inflows and may help to pay for the redecoration instead of Sadiq needing to take on a partner and losing some control or applying for a bank loan and having to pay interest. • Trade credit will be best as it delays the cash outflows. This is the better long-term solution to improve MH’s cash flow as revenue from the restaurant may be obtained before ingredients are paid for and it will not lead to potential loss of customers which the deposit option may do.