Business Studies 0450/13 May/June 2022: question paper and mark scheme

Mark scheme

1(a) Define ‘pressure group’. 2 Do not award examples. Award 2 marks for a full definition. Award 1 mark for a partial definition. Groups of people who act together to try to force businesses or governments to adopt certain policies [2] OR Organisation of like-minded people who put pressure on businesses and the government to change their policies to reach a predetermined objective [2] OR A group that campaigns on a range of social causes and tries to influence business behaviour [2] OR People who have a common interest who take action to change / influence business (or government) decisions [2] Partial definition e.g. group formed by people with a common interest [1] 1(b) Identify two features of batch production. 2 Only award the first two responses given. Award 1 mark per feature (max 2). Points might include: Goods produced in sets/groups Machines need to be reset between batches (frequently) Lower unit costs than job production Large amount of work-in-progress Flexibility/variety Machine breakdowns do not seriously affect production Other appropriate responses should also be credited. 1(c) Outline two factors MTD should consider when deciding on the 4 To use words from the stem as application, packaging for its new product. the reference must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for each relevant factor (max 2). The following words are likely to be Award 1 mark for each relevant reference to this business (max 2). appropriate for this question: Soap/cleaning products or related words Points might include: Environmentally friendly Protection/security for product [k] so no leakage of soap [app] Sustainable development Carries / what information it needs to include about product [k] such as 18 months to develop it took 18 months to develop [app] Pressure groups Who selling to / attract target market / customers [k] which can help (Has to decide) method of promotion decide the method of promotion [app] Promotes brand image [k] such as that it is environmentally friendly Other appropriate examples in context can [app] still be credited. Type/quality of materials to use [k] to avoid action from pressure groups [app] Ease of transport [k] Ease of storage/display [k] Whether/how easy it is to use/open [k] Other appropriate responses should also be credited. 1(d) Explain two possible advantages to MTD of using just-in-time 6 To use words from the stem as application, inventory control. the reference must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for identification of each relevant advantage (max 2). The following words are likely to be Award 1 mark for each relevant reference to this business (max 2). appropriate for this question: Soap/cleaning products Award 1 mark for each explanation (max 2) Environmentally friendly Develop new products Points might include: Batch production Less inventory held [k] so less chance of wastage [an] which is Packaging important when trying to contribute to sustainable development [app] Lower insurance costs [k] which will help reduce expenses [an] for this Other appropriate examples in context can cleaning product [app] still be credited. Less warehouse space [k] lower storage costs [an] Improve working capital [k] as less money tied up in inventory [an] which can used for promotion of the new product [app] Improve cash flow [k] as finished product can be produced/sold to order so money will come back to the business more quickly [an] Other appropriate responses should also be credited. 1(e) Do you think using social media is the best way for a business to 6 This is a general question so there are no promote a new product? Justify your answer. marks for application. Award up to 2 marks for identification of relevant points. For evaluation to be awarded justification will usually follow on from relevant analysis of Award up to 2 marks for relevant development of points. points. Award 2 marks for a justified decision as to whether using social media is the best way for a business to promote a new product. Points might include: Social media: Cover wide area / seen by many people [k] leading to additional revenue [an] Low cost method of advertising [k] so fewer cash outflows [an] Easy/quick to update [k] so can spend time on other tasks [an] Can target specific groups [k] No internet access / not everyone uses social media / message ‘lost’ among many messages on social media [k] Lack of control over comments [k] Comments can be altered/hacked/bad reviews [k] could lead to a bad reputation/publicity [an] Takes time to continually post/monitor messages [k] Other methods of promotion could include: Newspaper [k] as can be referred back to (later) [an] Specialist magazines [k] Other appropriate responses should also be credited. 1(e) Justification might include: Using social media means that more people are likely to see [k] which means more potential revenue [an]. However, a unique product may be more suited to a specialist magazine [k] as it directly targets the intended audience [an]. It may depend on the type of product as if it is a new product then social media may be better as the product may not have much awareness yet therefore a wider area of coverage is likely to be of greater importance. [eval] [eval]

Mark scheme

2(a) Define ‘revenue’. 2 Award 2 marks for a full definition. Award 1 mark for a partial definition. Money coming in from selling a product (over a given period of time) [2] OR Amount of money a business earns from the sale of its products [2] Partial definition e.g. Income of the business [1] 2(b) Calculate working capital. Show your working. 2 $ sign not required but units (m) must be included to gain full marks. Correct answer: $60 million or 60m [2] Correct method but incorrect answer: e.g. Current assets – current liabilities [1] OR $300m – $240m [1] If correct answer given, but with no workings shown, award 2 marks. Award one mark if $60 m is written as part of the answer but is not given as the final answer. 2(c) Outline two advantages of TJM being a private limited company. 4 To use words from the stem as application, the reference must be appropriate (i.e. make Award 1 mark for each relevant advantage [max 2]. sense) in relation to the point being made. 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: 450 (shops) Limited liability (for owners) [k] of the 450 shops [app] 20 new or 470 shops Control over who can buy shares [k] for this retailer [app] Food/retailer Can sell shares (to raise capital) [k] for the 20 shops/expansion [app] $500 million (revenue) Separate legal identity/incorporated [k] 400 employees Continuity [k] $200 million (profit) Other appropriate responses should also be credited. Other appropriate examples in context can still be credited. 2(d) Explain two possible reasons why profit might be important to TJM. 6 Note: To use words from the stem as application, the reference must be Award 1 mark for identification of each relevant reason (max 2). appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be Award 1 mark for each relevant explanation (max 2). appropriate for this question: 450 shops Points might include: 20 new or 470 shops/plans to expand Provide an (internal) source of funds [k] for the private limited Food/retailer company [app] so business has full control over how it is spent / no $200m (profit) interest to be pay [an] 400 (new jobs) Reward for risk-taking [k] as owners invested their money in hope of Private limited company making a return on investment [an] Represents return on shareholder investment [k] in this private limited Other appropriate examples in context can company [app] as otherwise they could invest elsewhere [an] still be credited. Measure of success [k] as made a profit of $200m [app] Attract investors/finance [k] Only accept reference to shops as Needed for long-term survival [k] application once unless clearly referring to Can use to pay for unexpected events [k] existing shops and expansion plan. Other appropriate responses should also be credited. 2(e) Do you think an interview is the best way for a large business to select 6 This is a general question so there are no new employees? Justify your answer. marks for application. Award up to 2 marks for identification of relevant points. For evaluation to be awarded justification will usually follow on from relevant analysis of Award up to 2 marks for relevant development of points. points. Award 2 marks for a justified decision as to whether an interview is the best way for a large business to select new employees. Points might include: Interview: Able to use in-depth questions/obtain detailed answers [k] allowing them to understand their qualities/personality [an] Able to read/see body language/facial expressions [k] Time consuming to set up/carry out (multiple interviews) [k] so (Human Resources) manager has less time to focus on other activities [an] Other options include: Skills test [k] shows/proves the person can carry out the required tasks [an] but may not be feasible to perform some activities (as depends on what the job is) [an] Group situation / role play [k] which allows an opportunity to show interpersonal skills such as communication / leadership qualities / whether person interacts well with others [an] but the actions of others may distort process [an] Assessment centre/days [k] Other appropriate answers should also be credited. 2(e) Justification might include: Interviews mean the business can discuss the candidate’s experiences in detail [k] which can allow them to understand their individual qualities [an]. Whereas a group activity [k] offers the opportunity to actually show the individuals’ interpersonal skills such as leadership or team qualities [an]. No, I do not think an interview is always the best way as it depends on the job. A group situation is better method as there may be limited value in appointing someone who is good in a 1-to-1 situation if they cannot work as part of team [eval] and in a large business they are likely to have to work closely with many other people. [eval] [eval]

Mark scheme

3(a) Identify two reasons why businesses need objectives. 2 Only award the first two responses given. Award 1 mark per reason (max 2). Points might include: Provides targets/goals to work towards Way to measure success/judge/assess performance Helps decision-making / allocate resources Other appropriate responses should also be credited. 3(b) Identify two possible reasons why an owner might want their business 2 Only award the first two responses given. to remain small. Award 1 mark per reason (max 2). Points might include: Access/availability/lack of capital (to expand) Personal preference / owners’ choice Size of the market Type of industry / need to maintain close employee / customers relationships Other appropriate responses should also be credited. 3(c) Outline two ways higher taxes might affect Gareth’s business. 4 To use words from the stem as application, the reference must be appropriate (i.e. make Award 1 mark for each relevant way (max 2). sense) in relation to the point being made. 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 Car wash Lower demand/sales [k] for car washing [app] Small business Increased costs / lower profit [k] which may be a problem for a business $6.34 only started one year ago [app] 23% or 77% May have to increase prices [k] so his price may be above the average One year ago of $6.34 [app] Government support May delay any (future) expansion plans [k] Business objectives Other appropriate responses should also be credited. Other appropriate examples in context can still be credited. 3(d) Explain how the data shown in Figure 3.1 and Figure 3.2 could be 6 To use words from the stem as application, useful to Gareth. the reference must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for identification of each relevant point (max 2). The following words are likely to be Award 1 mark for each relevant reference to this business (max 2). appropriate for this question: Small business Award 1 mark for each relevant explanation (max 2). $6.34 23% or 77% Figure 3.1: (Car) wash / washing (cars) Shows large proportion of people owning cars [k] at 77% [app] which can help him calculate the potential size of the market/demand [an] Other appropriate examples in context can Shows potential demand/whether there is sufficient customers [k] for still be credited. car washing [app] which could mean higher revenue [an] Figure 3.2: Shows average price people pay for this service [k] at $6.34 [app] which can help him set prices [an] Help set (suitable)prices [k] at $6.34 [app] allowing him to increase market share/remain competitive [an] Know how much people might be willing to pay [k] Other appropriate responses should also be credited. 3(e) Do you think offering financial help, such as grants, is the best way for 6 This is a general question so there are no a government to support business start-ups? Justify your answer. marks for application. Award up to 2 marks for identification of relevant points. For evaluation to be awarded justification will usually follow on from relevant analysis of Award up to 2 marks for relevant development of points. points. Award 2 marks for a justified decision as to whether offering financial help, such as grants, is the best way for a government to support business start- ups. Points might include: Financial support/grants: Needs funds to buy assets [k] without which it cannot operate [an] Start-up business is likely to have access to fewer sources of finance [k] Other options might include: Information / support / advice / mentors [k] as a new entrepreneur may lack experience (of running a business) [an] so helps them make better decisions / fewer mistakes [an] Interest free / low cost loans [k] which will reduce cash outflows [an] Lower taxes [k] so lower costs [an] Free/low cost training schemes [k] Low rent areas [k] Other appropriate answers should also be credited. Justification might include: A start-up business needs to have enough money to pay creditors [k] as without it could lead to cash flow problems [an]. Another way is to provide a mentor [k] as a new entrepreneur may not have experience of running a business [an]. I think financial help is better due to the limited sources of finance available and banks may be less willing to take the risk of lending money to a start-up business [eval] and without this there is no business [eval].

Mark scheme

4(a) Define ‘external cost’. 2 Do not award examples as these do not define the term. Award 2 marks for a full definition. Award 1 mark for a partial definition. Do not award ‘harms environment’ as this is Costs paid for by the rest of society, other than the business, as a result of too vague. business activity [2] OR The negative impact of a business decision on society [2] OR Costs/disadvantages that fall on third parties that are not directly involved in the production process [2] Partial definition e.g. costs society/third party has to pay [1] 4(b) State two responsibilities of a director. 2 Only award the first two responses given. Award 1 mark per responsibility (max 2). Points might include: Provide strategic direction/guidance Setting targets Legal responsibility (to represent business) Direct and control resources Prepare corporate plan Take decisions that can affect the whole department/company Protect the interests of shareholders (and other stakeholders) Other appropriate responses should also be credited. 4(c) Identify four potential benefits to a country’s economy of a 4 Only award the first four responses given. multinational company locating there. Award 1 mark per benefit (max 4). Points might include: Jobs created Increased/new investment/infrastructure Increased/more exports Fewer imports Taxes paid to government Increased customer choice/quality Improves/increased competition / lower prices Improves country’s reputation Other appropriate responses should also be credited. 4(d) Explain one possible effect on BCZ and one possible effect on its 6 To use words from the stem as application, employees of the new legal controls that will reduce the maximum the reference must be appropriate (i.e. make number of working hours. sense) in relation to the point being made. Award 1 mark for identification of each relevant effect (max 2). The following words are likely to be appropriate for this question: Award 1 mark for each relevant reference to this business (max 2). Cement Factory Award 1 mark for each relevant explanation (max 2). 35 or 45 or 10 hours 12 countries Points might include: External costs Effect on BCZ: Lower output [k] in the factory [app] so fewer sales/less revenue [an] Other appropriate examples in context can May need to recruit more workers [k] to make cement [app] leading to still be credited. an increase in recruitment/training costs [an] May encourage BCZ to become more capital intensive [k] which will reduce the number of workers [an] Lower labour costs (if do not need extra workers) [k] Effect on BCZ’s employees: Lower pay [k] as only able to work 35 hours [app] so lower standard of living [an] Better health / work life balance [k] May have to look for a second/another job [k] Other appropriate responses should also be credited. 4(e) Do you think it is better for a large manufacturer to use quality 6 This is a general question so there are no assurance rather than quality control? Justify your answer. marks for application. Award up to 2 marks for identification of relevant points. For evaluation to be awarded justification will usually follow on from relevant analysis of Award up to 2 marks for relevant development of points. points. Award 2 marks for a justified decision as to whether it is better for a large Advantages of one method can be manufacturer to use quality assurance rather than quality control. presented as disadvantages of the other method but do not award the same point Points might include: twice as mirror answers are not accepted. Quality assurance: Tries to eliminate errors at all stages / errors can be spotted earlier in Do not award answers about process [k] so less money/time spent on rework [an] reputation/sales as [k] as this can apply to Can motivate employees (as have an important role in process) [k] both. leading to higher output / fewer mistakes [an] All workers need training [k] which increases training costs [an] Do not award answers which simply Time to train all workers [k] may reduce output (in short term) [an] discuss why quality is important. Not all workers are interested/able to spot problems [k] Quality control: Need to recruit inspectors to check/test products [k] which will increase recruitment/labour costs [an] Production does not stop (for checks) [k] so ensures some output is available [an] Does not check all products (so customers may still receive poor-quality products) [k] damaging reputation [an] May lead to wasted resources (as only identify problem at end of process) [k] increasing variable costs [an] Does not encourage all workers to be responsible for quality [k] Other appropriate responses should also be credited. 4(e) Justification might include: Quality assurance means errors can be spotted sooner in the process [k] which reduces the cost of rework [an]. However, using quality control means production does not stop for checks [k] meaning that no output is lost when checking quality [an]. Quality assurance is the better method as although training employees will increase costs, especially for a large manufacturer, the lower levels of wastage should offset the additional cost of training. [eval] [eval]