Business Studies 0450/12 February/March 2025: question paper and mark scheme

Mark scheme

1(a) Identify two motivators from Herzberg’s theory of motivation. 2 Only award the first two responses given. Award 1 mark for each relevant motivator [max 2]. Points might include: • Achievement • Recognition • Personal growth • Advancement • The work itself Other appropriate responses should be credited. 1(b) Identify two features of a short hierarchical structure. 2 Only award the first two responses given. Award 1 mark for each relevant feature [max 2]. Points might include: • Short(er) chain of command • Wide(r) span of control • Quick(er)/fast(er) communication • Top managers are less remote from employees Other appropriate responses should be credited. 1(c) Outline two advantages to Amir and Carla of operating in a niche 4 To use words from the stem as application, the market. reference must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for each relevant advantage [max 2]. Award 1 mark for each relevant reference to this business [max 2]. The following words are likely to be appropriate for this question: Points might include: • Hotel or related words such as rooms • Can charge higher prices [k] for its luxury service [app] • Luxury • Fewer competitors [k] for the hotel [app] • 5 (employees) • Focus on meeting the needs of customers / can target customers • Expand / new hotel / growth [k] through its 5 employees [app] • Different city • Can survive in markets dominated by larger firms [k] which may • (2) partners/partnership increase the chance of expanding [app] • Builds up specialist skills/knowledge [k] Other appropriate examples can be credited. Other appropriate responses should be credited. 1(d) Explain two sources of finance Amir and Carla could use if they 6 To use words from the stem as application, the decide to expand. reference must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for each relevant source of finance [max 2]. Award 1 mark for each relevant reference to this business [max 2]. The following words are likely to be appropriate Award 1 mark for each relevant explanation [max 2]. for this question: • (New) hotel or related words such as rooms Points might include: • (2) partners/partnership • Retained profits [k] from the hotel [app] as does not need to pay it • Luxury back [an] • Niche market • Bank loans [k] to obtain a large amount of money/varying length of • Different city time to repay/quick to arrange [an] for the luxury service [app] • Market research • Own(er) savings [k] from the 2 partners [app] as may be readily accessible/no interest to pay [an] Other appropriate examples can be credited. • Crowdfunding [k] as no interest to pay [an] Other appropriate responses should be credited. 1(e) Do you think secondary market research is the most appropriate 6 This is a general question so there are no marks method of market research for a business to use when deciding for application. whether it should expand? Justify your answer. Some points can be [k] or [an] but do not accept Award 1 mark for each relevant point [max 2]. the same point twice. Award 1 mark for each relevant explanation [max 2]. Award up to 2 marks for a justified decision as to whether secondary Some points can be written as advantages or market research is the most appropriate method of market research for disadvantages of each method, but only award a business to use when deciding whether it should expand. once. Points might include: For evaluation to be awarded justification will Secondary market research: usually follow on from relevant analysis of points. • Low cost [k] so more funds to spend in other areas of the business [an] • Quick to obtain [k] so may speed up decision-making [an] • Data may be out of date [k] so may not make appropriate decisions [an] • Wide range of data [k] • Data may not be relevant [k] • Data is available for all businesses [k] Primary market research [k] • More in-depth information [an] • Specific / only available to the business [an] • Up to date [an] • May not have the necessary skills to collect data [an] • Expensive [an] • Takes time to collect [an] Other appropriate responses should be credited. 1(e) Justification might include: Secondary market research is cheap [k] so more funds can be invested into other areas of the business [an]. However, the data may be out of date [k] so may make inappropriate decisions [an]. Secondary market research is not the most appropriate method to use because although it is cheap, the wrong decisions about expansion can cost the business even more money in the long run [eval] [eval].

Mark scheme

2(a) Define ‘sole trader’. 2 Award 2 marks for a full definition. Award 1 mark for a partial definition. • A business is owned (and controlled) by one person [2]. • An (unincorporated) business owned by one person [2]. Partial definition, e.g. • One person starts/runs/controls/operates a business [1] 2(b) Identify two ways a government can support business start-ups. 2 Only award the first two responses given. Award 1 mark for each relevant way [max 2]. Points might include: • Providing (low cost) loans / low interest rates • Providing grants • Low-cost rent • Lower tax / tax relief • Providing training • Providing advice / research / marketing data • Providing mentors Other appropriate responses should be credited. 2(c) Outline two ways Rachel could increase sales of her best-selling 4 To use words from the stem as application, the product. reference must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for each relevant way [max 2]. Award 1 mark for each relevant reference to this business [max 2]. The following words are likely to be appropriate for this question: Points might include: • Chocolate (bars) or related words e.g. cocoa • Advertising or examples e.g. use social media [k] to explain quality • Sole trader is important [app] • Competitive market • Improve the existing product / use better quality materials / new • Quality (is important) features / new variations [k] to make its chocolate [app] • Decrease prices / promotional pricing / offer discounts [k] in the Other appropriate examples can be credited. competitive market [app] • Point of sale display [k] by the sole trader [app] • Free samples [k] • Competitions [k] • Offer free gifts [k] • Buy One Get One Free / BOGOF [k] • New/change packaging [k] • Enter a new market [k] • Sell through new outlets [k] Other appropriate responses should be credited. 2(d) Explain two reasons why quality is important to Rachel’s business. 6 To use words from the stem as application, the reference must be appropriate (i.e. make sense) Award 1 mark for each relevant reason [max 2]. in relation to the point being made. Award 1 mark for each relevant reference to this business [max 2]. Award 1 mark for each relevant explanation [max 2]. The following words are likely to be appropriate for this question: Points might include: • Chocolate bars or related words such as • Can charge higher prices [k] which could influence pricing method cocoa, ingredients [app] and increase profit margin [an] • Sole trader • Attract new customers [k] increasing market share [an] in the • Competitive market competitive market [app] • (Decide on) pricing method • Establish a brand image [k] which can increase sales [an] of • New product chocolate bars [app] • Best-selling product • Differentiate product from competitors [k] which could increase market share [an] Other appropriate examples can be credited. • Reduce complaints [k] for the sole trader [app] so reduce returns / cash outflows / less waste [an] Some points can be [k] or [an] but only award • Maintain customer loyalty [k] which can lead to (repeat) sales / once. increase revenue / buy more often [an] • Act as a form of word-of-mouth promotion [k] Other appropriate responses should be credited. 2(e) Do you think price skimming is the best pricing method for a 6 This is a general question so there are no marks business to use when introducing a new product? Justify your for application. answer. To access marks, points must refer to a specific Award 1 mark for each relevant point [max 2]. pricing method. Award 1 mark for each relevant explanation [max 2]. Award up to 2 marks for justified decision as to whether price skimming Advantages or disadvantages of other methods is the best pricing method to use when introducing a new product. can be awarded as [an]. Points might include: Some points can be awarded as [an] for different Price skimming: methods, but only award once. • Gives the image of high quality [k] which may increase reputation [an] • May be quick to recover research/development costs [k] to break even sooner [an] • Increase profit margin [k] • (High price) may encourage competitors to enter the market [k] which can decrease market share [an] • (High price) may decrease demand [k] which may decrease revenue [an] Other pricing methods include: • Penetration pricing [k] as the low price may be more affordable [an] which increases sales [an] • Cost-plus pricing [k] as is simple to use [an] • Competitive pricing [k] so should not lose sales to competition on price alone [an] Other appropriate answers should be credited. 2(e) Justification might include: Price skimming means that it may be quick to recover development costs [k] which means funds can be reinvested back into the business [an]. Whereas using penetration pricing [k] can make the product more affordable [an]. Price skimming is not the best method because the high price might discourage customers from trying the product whereas penetration pricing could generate more sales [eval] and increase market share for the new product [eval].

Mark scheme

3(a) Define 'working capital’. 2 Award 2 marks for a full definition. Award 1 mark for a partial definition. • The money available for a business to pay its day-to-day expenses/short-term debts. [2] • Current assets - current liabilities. [2] Partial definition, e.g. • Funds used to pay inventory/wages/electricity [1] 3(b) Calculate TKJ’s profit margin. Show your working. 2 Award a maximum of one mark if 40% is calculated but is not written as the final answer. Award 2 marks for the correct calculation. Award 1 mark for correct method but wrong answer. % is needed for 2 marks to be awarded. Correct answer: 40% [2] Method: • Profit / revenue × 100 [1] • (400 000 / 1 000 000) × 100 [1] • 40 [1] If correct answer given and no workings shown award 2 marks. 3(c) Identify four benefits to a business of becoming a multinational 4 Only award the first four responses given. company. Award 1 mark for each relevant benefit [max 4]. Points might include: • Increased sales/access to bigger/new markets • Better reputation/image • Lower transport costs • Avoid barriers to trade • Spread risks • Easier access to raw materials • Access to cheaper labour • Take advantage of lower tax rates • Access to government funding/grants Other appropriate responses should be credited. 3(d) Explain two ways TJK could contribute to sustainable 6 To use words from the stem as application, the development. reference must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for each relevant way [max 2]. Award 1 mark for each relevant reference to this business [max 2]. The following words are likely to be appropriate Award 1 mark for each relevant explanation [max 2]. for this question: • Candles Points might include: • Factory • Reduce waste [k] when making candles [app] leading to less • Batch production pollution [an] • Females (aged between 20 and 50 years) • Use fewer resources [k] in the factory [app] so more resources left • $400 000 (profit) for future generations/other uses [an] • $1 million (revenue) • Use environmentally friendly production methods/sustainable materials [k] which could reduce harmful emissions [an] Other appropriate examples can be credited. • Use renewable energy/resources [k] in batch production [app] • Develop environmentally friendly products [k] for females [app] Some points could be [k] or [an] but only award • Buy resources locally [k] reducing their carbon footprint [an] once e.g. less waste. • Recycle [k] which could reduce the amount of waste [an] • Use environmentally friendly/sustainable packaging / avoid use of Less pollution is [an] only. plastic in packaging / biodegradable packaging [k] • Reuse materials [k] so reduce the number of materials needed [an] • Reduce amount/number of materials used [k] Other appropriate responses should be credited. 3(e) Do you think batch production is the best method of production for 6 This is a general question so there are no marks a business to use? Justify your answer. for application. Award 1 mark for each relevant point [max 2]. Some points could be expressed as an Award 1 mark for each relevant explanation [max 2]. advantage or disadvantage of different methods, Award up to 2 marks for a justified decision as to whether batch but only award once. production is the best method of production for a business to use. Some points can be [k] or [an] but only award Points might include: once. Batch production: • Flexible / can easily change from one product to another [k] so can Can accept comparative points e.g. batch respond quickly to changing customer tastes [an] production has higher output than job production • Variety of products can be made [k] which can widen its customer [k]. base/help spread risk [an] • (Variety of tasks) can motivate employees [k] • Machines must be re-set between batches [k] which can reduce output [an] • Warehouse space needed [k] which increases storage costs [an] Other methods include: Flow production [k] • Quick/high output [an] • Economies of scale [an] • Low(er) unit cost [an] so able to charge a lower price [an] • Can operate 24 hours a day [an] • Few(er) employees / high levels of automation [an] • If a machine breaks down the whole production line will stop [an] • High initial cost of machinery [an] • Can lower motivation [an] Job production [k] • Can charge a high price [an] increasing profit margin [an] • Can meet the (exact) requirements of customers [an] • (Often) high quality [an] • Labour intensive [an] which increases (labour) costs [an] 3(e) Other appropriate responses should be credited. Justification might include: Batch production is flexible [k] which means businesses can quickly respond to changes in customer tastes [an]. However, flow production [k] might be better as a high output is produced [an]. Batch production is better because responding to customer tastes means you are likely to have less waste products [eval] whereas using flow could result in very high quantities of unwanted products which increases costs [eval].

Mark scheme

4(a) Identify two services provided by businesses in the tertiary sector. 2 Only award the first two responses. Award 1 mark for each relevant service. [max 2]. Do not award: • Names of businesses. Points might include: • Banking • Retailing • Hotels • Holidays/tourism • Restaurant • Insurance • Accountancy • Advertising • Hairdressing • Entertainment • Transporting • Legal services • Education • Healthcare/medical/hospitals Other appropriate responses should be credited. 4(b) Identify two objectives a social enterprise might have. 2 Only award the first two responses given. Award 1 mark for each relevant objective [max 2]. Points might include: • To make a profit to reinvest back into the business • Social benefit/welfare or examples e.g. to benefit/improve local community/disadvantaged groups in society • To protect the environment/environmental issues Other appropriate responses should be credited. 4(c) Outline two benefits to SEP of having part-time employees. 4 To use words from the stem as application, the reference must be appropriate (i.e. make sense) Award 1 mark for each relevant benefit [max 2]. in relation to the point being made. Award 1 mark for each relevant explanation in context [max 2]. The following words are likely to be appropriate Points might include: for this question: • Cheaper than full-time / reduce labour costs / no need to pay when • Books not working [k] which may help have low prices [app] • Social enterprise • More flexible hours of work [k] when selling books [app] • Tertiary sector • Can ask/more likely to work at busier times [k] for the social • 10 employees enterprise [app] • Libraries/schools • Can/more likely to extend working hours [k] for the tertiary sector business [app] Other appropriate examples can be credited. • Provides a range of skills/experience [k] among the 10 employees [app] • Helps attract well-qualified employees who need flexible hours [k] • Can help keep experienced staff [k] Other appropriate responses should be credited. 4(d) Explain two reasons why training is important to SEP. 6 To use words from the stem as application, the reference must be appropriate (i.e. make sense) Award 1 mark for each relevant reason [max 2]. in relation to the point being made. Award 1 mark for each relevant reference to this business [max 2]. Award 1 mark for each relevant explanation [max 2]. The following words are likely to be appropriate for this question: Points might include: • Books • Increase knowledge/skills/flexibility [k] of the 10 employees [app] • Social enterprise which can increase the quality of the service offered [an] • 10 (employees) • Increase motivation [k] in the social enterprise [app] which can • Part-time (employees) increase productivity/efficiency [an] • Tertiary sector • Better quality (service) / decrease errors [k] when dealing with the • Libraries/schools books [app] which can decrease waste/cost [an] • Increase efficiency [k] of the tertiary sector business [app] which Other appropriate responses can be credited. can lower average/unit cost [an] • Fewer accidents / ensure safe working conditions [k] to avoid legal Some points can be [k] or [an] but do not award action [an] the same point twice. • Able to train others [k] reducing training costs [an] • Help introduce a new process [k] which could lower mistakes [an] • To attract (new/potential) employees [k] Other appropriate responses should be credited. 4(e) Do you think the introduction of a legal minimum wage will always 6 This is a general question so there are no marks have a negative effect on a business? Justify your answer. for application. Award 1 mark for each relevant point [max 2] Award 1 mark for each relevant explanation [max 2]. Award up to 2 marks for a justified decision as to whether the introduction of a legal minimum wage will always have a negative effect on a business. Points might include: • May encourage more people to apply for jobs [k] making it easier to recruit [an] • Business may already pay above minimum wage so would have limited/no effect on costs [k] • Increase motivation [k] increasing productivity/reduce absenteeism/labour turnover [an] • Have to pay more to employees [k] which will increase costs [an] so may have to increase prices [an] • May not be able to afford to pay all workers the higher wage rate [k] so may have to make redundancies [an] • Other workers being paid more than the minimum wage may ask for a wage increase [k] • May have to find other ways to reduce costs [k] which may reduce quality [an] Other appropriate responses should be credited. Justification might include: It may increase motivation [k] increasing productivity [an]. However, it can lead to high costs [k] so prices may have to be increased [an]. The introduction of a minimum wage may not always have a negative effect as it will apply to all businesses so competitors may also have to increase their prices so the business may not lose any competitive advantage [eval]. The increase in productivity could even offset some of the increase in cost [eval].