Business Studies 0450/12 May/June 2024: question paper and mark scheme

Mark scheme

1(a) Identify two reasons why a government might support 2 Only award the first two responses given. business start-ups. Award 1 mark per reason (max 2). Points might include: Create jobs/reduce unemployment Increase/contribute to output/GDP Gain more taxes/revenue (for the country) Bring ideas for/provide goods/services/ innovation Increase competition/increase choice/motivate other businesses to start up To benefit society Other appropriate responses should be credited. 1(b) Identify two ways a business can build customer 2 Only award the first two responses given. relationships. Award 1 mark per reason (max 2). Points might include: Offer good quality services/products Provide special offers or discounts to regular customers/loyalty schemes Market research/find out what customers want/ask for feedback Communicate with customers e.g. send newsletters Respond to complaints/offer refunds Provide extra services such as credit/delivery/after sales service Build brand image Other appropriate responses should be credited. 1(c) Outline one benefit and one limitation to Nicky’s 4 To use words from the stem as application, the reference business of operating in a niche market. must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for each relevant benefit/limitation (max 2). Award 1 mark for each relevant reference to this business The following words are likely to be appropriate for this (max 2). question: Entrepreneur Points might include: Start-up/new business Benefits: Building customer relationships Less/low competition [k] for her start-up business [app] (Walking) holidays/tickets Needs of customers can be focused on/help to target Travel business/tourism customers [k] for her holidays [app] Business plan Builds up specialist skills/knowledge [k] which can help Decision-making build customer relationships [app] Government support Can often charge a higher price [k] influencing decision- making [app] Other appropriate examples can be credited. Limitations: Lack of economies of scale [k] which can affect business plan [app] Limited sales/revenue/customers/target market is small [k] for this entrepreneur [app] Does not spread risks/relying on one product [k] Other appropriate responses should be credited. 1(d) Explain one way each of the following sections in the 6 To use words from the stem as application, the reference business plan might be helpful to Nicky. must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for identification of each relevant way (max 2). Award 1 mark for each relevant reference to this business The following words are likely to be appropriate for this (max 2). question: Award 1 mark for each relevant explanation (max 2). • Entrepreneur • Start-up/new business Points might include: • (Walking) holidays/tickets Business objectives: • Travel business/tourism Can act as a goal/target/sense of direction [k] for the • Niche market travel business [app] which she can use to • Government support measure/monitor progress/to provide motivation [an] • Building customer relationships Improved decision-making/planning [k] so fewer errors/chance of failure/increase efficiency/save Other appropriate examples can be credited. cost/saves time/increase sales [an] of the new business [app] K can be awarded for identifying what the section shows or Act as a measure of success [k] so able to check how it can be used. progress [an] to know whether she is a successful entrepreneur [app] Data about the market: Show size of market/can spot trends/gaps [k] so know level of demand [an] in this niche market [app] Show whether/where there is sufficient demand [k] which will affect sales/revenue/location [an] for her walking holidays [app] Information about her target market [k] so decide how to promote the business [an] which can help build customer relationships [app] Information about competitors/level of competition [k] so help decide on a suitable method of pricing [an] Help set prices/make marketing decisions [k] increasing sales [an] Other appropriate responses should be credited. 1(e) Explain two characteristics of a successful 6 This is a general question so there are no marks for entrepreneur. Which characteristic is likely to be the application. most important? Justify your answer. [k] can only be awarded for identifying characteristics. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. [an] is awarded for explaining the characteristic or explaining Award up to 2 marks for a justified decision as to which why it is important. characteristic is likely to be the most important. To access [eval], must discuss two valid characteristics. The Points might include: second [eval] mark must be awarded for a comparison Creative [k] have (new/unique) ideas / make a business between two valid characteristics. stand out from its competitors [an] therefore help gain sales [an] Risk-taker [k] as investment may be lost [an] Perseverance/determination/resilience/self-motivated [k] as will need to be prepared to keep going when faced with problems [an] Effective communicator [k] as may need to convince its suppliers/banks/customers to provide goods/lend/buy products [an] Good decision-maker/manager [k] as changes in market may require action [an] Hard-working [k] as must be ready to do everything themselves [an] Independent [k] as be able to work without any help [an] Optimistic [k] so always think they will succeed [an] Self-confident [k] so convince people/banks to invest [an] Innovative [k] able to put ideas into practice in new/different ways [an] (Multi-)skilled [k] may not need to recruit employees for specific roles [an] Other appropriate responses should be credited. 1(e) Justification might include: Creative [k] as ideas can make a business stand out from competitors [an]. A risk-taker [k] as investment may be lost [an]. A risk-taker is likely to be most important because if they do not take risks, they may miss out on the opportunity to make sales [eval] and therefore may never know whether the new idea could be successful or not [eval].

Mark scheme

2(a) Define ‘tertiary sector’. 2 1st mark is for understanding it provides services. Award 2 marks for a full definition. Award 1 mark for a partial 2nd mark for reference to whom services are provided. definition. Provides services to consumers/other sectors of industry [2] OR Firms that supply a service to consumers/other businesses [2] Partial definition e.g. business that provides services [1] OR service sector business [1] 2(b) Calculate GTB’s Return on Capital Employed (ROCE). 2 Answer must be shown as a percentage (%) to gain both Show your working. marks. Award 2 marks for the correct answer. Award only 1 mark if 20% is written as part of the answer but is not given as the final answer. Award 1 mark for correct method but incorrect answer. Correct answer: 20% [2] Correct method but incorrect answer e.g. Profit/capital employed × 100 [1] OR 150 000 / 750 000 × 100 [1] OR 20 [1] If correct answer given with no working shown, award 2 marks. 2(c) Outline two ways GTB could improve its profit margin. 4 To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point Award 1 mark for each relevant way (max 2). 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: Café Increase price [k] of the food [app] Selling food/drinks or examples such as coffee Lower/control fixed costs (or examples such as lower 5 (cafes) rent) [k] of its cafes [app] 25% (profit margin) Lower/control variable costs (or examples) [k] which $ 600 000 (revenue) could help increase the profit margin of 25% [app] $ 150 000 (profit) $ 750 000 (capital employed) Other appropriate responses should be credited. Social media for promotion Other appropriate examples can be credited. 2(d) Explain two advantages to GTB of using social media as 6 To use words from the stem as application, the reference its method of promotion. 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 appropriate for this Award 1 mark for each relevant reference to this business question: (max 2). Café Award 1 mark for each relevant explanation (max 2). Selling food/drinks or examples such as coffee • 5 (cafés) Points might include: • 25% (profit margin) Can target specific groups of customers [k] which could • Improve profit margin help encourage brand loyalty [an] at each of the 5 • $ 600 000 (revenue) locations [app] • $ 150 000 (profit) Low-cost [k] so fewer cash outflows/lower expenses [an] • $ 750 000 (capital employed) which could help improve the profit margin of 25% [app] • Tertiary sector Cover wide area/seen by many people [k] increasing sales/revenue/attract customers [an] for the cafe [app] Other appropriate examples can be credited. Quick to update [k] so can spend time on other tasks [an] such as analysing the financial statements [app] Advantages must be to the business not the customer. Can reach groups that are difficult to reach any other way [k] Other appropriate responses should be credited. 2(e) Do you think banks are the main external users of the 6 This is a general question so there are no marks for accounts of a business? Justify your answer. application. Award up to 2 marks for identification of relevant points. Some points can be [k] or [an] but do not award the same Award up to 2 marks for relevant development of points. point twice. Award up to 2 marks for a justified decision as to whether banks are the main external users of the accounts of a [K] can be awarded for identifying what information the user business. is looking for, or how they would use the accounts. Points might include: Some points can be awarded for different external users but Banks: only award once. Whether to give a bank loan [k] to see if a business can repay [an] Whether a business can repay loans/overdraft [k] as this will influence the terms/interest rate/period of the loan [an] To help decide the interest rate to set [k] to reflect the level of risk [an] To decide the amount to lend [k] Check interest payments can/are being made [k] Other users might include: Government [k]: Want to check the profit [an] / to know the correct amount of tax has been paid/will be paid [an] Suppliers/Trade payables [k]: Assess/shows liquidity position [an] to know whether the business is likely to be able to repay them [an] See level of debt [an] Other appropriate responses should be credited. 2(e) Justification might include: Banks will use the accounts to check whether a business can repay loans [k] as this is likely to influence the interest rate offered [an]. Suppliers [k] will want to know the liquidity position of a business [an]. Banks are likely to be the main external users of accounts because banks often lend large sums of money [eval], whereas suppliers may be less interested in the accounts if orders are small [eval].

Mark scheme

3(a) Define ‘laissez-faire leadership style’. 2 For both marks need the idea that it links to decision making – and it is the employees/workers who make them. Award 2 marks for a full definition. Award 1 mark for a partial definition. Makes the broad objectives of the business known to employees, but then they are left to make their own decisions and organise their own work [2] OR A style of leadership that supports employees in achieving targets at the same time as allowing them the freedom to decide how to meet the targets [2] Partial definition e.g. managers do not tell workers what to do/how to organise work [1] 3(b) Identify two roles of a manager. 2 Only award the first two responses given. Award 1 mark per role (max 2). Accept any tasks that managers are likely to do. Points might include: Do not award: Planning Managing activities on own e.g. managing finance Controlling Organising Leading/commanding/directing/give instructions/tasks Coordinating Motivating/inspiring others Decision-making/solve problems Communicating/give feedback Delegating Other appropriate responses should be credited. 3(c) Outline one external cost and one external benefit 4 To use words from the stem as application, the reference RBG’s business activities might create. must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for each relevant external cost/benefit (max 2). The following words are likely to be appropriate for this Award 1 mark for each relevant reference to this business question: (max 2). • Oil • 6 countries Points might include: • Pressure groups External costs: • 2000 employees Loss of space/land [k] from its operations in 6 countries • 60 managers [app] • IT based methods Pollution/waste or examples such as gas emissions [k] which is why it must respond to pressure groups [app] Other appropriate examples can be credited. Congestion/traffic [k] Deplete/exploit natural/non-renewable resources [k] Use of energy [k] External benefits: Employment opportunities/lower unemployment [k] as may recruit more than 2000 employees [app] Taxes will be paid to governments [k] from extracting oil [app] Improved infrastructure/better transport systems [k] Other appropriate responses should be credited. 3(d) Explain two methods of IT based communication RBG 6 To use words from the stem as application, the reference might use with its employees. must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for identification of each relevant method (max 2). The following words are likely to be appropriate for this Award 1 mark for each relevant reference to this business question: (max 2). • Oil Award 1 mark for each relevant explanation (max 2). • 6 countries • 2000 employees Points might include: • 60 managers Email [k] written record [an] for all 2000 employees • Laissez-faire [app] Text messages/SMS/DM [k] saves time/quick [an] for Other appropriate examples can be credited. the 60 managers [app] Website/social media or examples e.g. Can award the following as [an] for different methods but Facebook/X/Twitter [k] seen by many people at once only award once: [an] in the 6 countries [app] Low cost Video conferencing or examples e.g. Zoom/Teams/ Quick online meeting [k] as can see body language [an] Send to many people at once Phone/mobile (call) [k] at the oil company [app] as able Send large amounts of information/able to send to get feedback/allows for two-way communication [an] attachments Written record/can refer to later Other appropriate responses should be credited. Able to get (instant) feedback Do not have to travel 3(e) Explain two ways a pressure group might try to 6 This is a general question so there are no marks for influence business decisions. Which way do you think application. is likely to be the most effective? Justify your answer. Some points of analysis can be used for different ways but Award up to 2 marks for identification of relevant points. do not award the same development twice. Award up to 2 marks for relevant development of points. Award up to 2 marks for a justified decision as to which is To access [eval], must discuss two valid ways. the most effective way for a pressure group to try to influence business decisions. Points might include: (Customer) boycotts/encourage customers not to buy [k] leading to fewer sales [an] and possibly less revenue [an] Raise/increase awareness or examples such as cause negative publicity / publish information / write to newspaper / publicity stunts [k] which could damage the business’ reputation [an] Lobbying (politicians)/send letters to government [k] which could lead to changes in the law / which could take time [an] Demonstrations/protests [k] which could lead to fewer people willing to invest in the business [an] Arrange petitions [k] Take legal action [k] but may increase costs [an] Other appropriate responses should be credited. Justification might include: A pressure group could organise boycotts [k] leading to fewer sales [an]. It could lobby politicians [k] which could influence government decisions [an]. A boycott is the most effective way because fewer sales could mean less revenue which directly affects the business [eval], whereas lobbying may not achieve anything other than raising awareness [eval].

Mark scheme

4(a) Define ‘import quota’. 2 To award both marks the answer must include the idea of limit on number/quantity of goods and the idea of Award 2 marks for a full definition. Award 1 mark for a partial imported/into the country. definition. Do not award: Physical limit on the number/amount of goods that can be answers which confuse the term with a tariff. imported/allowed into a country [2] OR Restriction on the quantity of a product than can be imported [2] Partial definition e.g. limit on number/quantity of goods [1] OR limit on imports [1] 4(b) Identify two benefits to a business of lower rates of 2 Only award the first two responses given. taxation. Award 1 mark per benefit (max 2). Points might include: • May encourage investment/growth • Increase sales/revenue/income • Lower costs/less cash outflow/lower expenses/cheaper raw materials/cheaper imports • More (retained) profit • Higher profit margin Other appropriate responses should be credited. 4(c) Identify four legal controls over employment. Only award the first four responses given. Award 1 mark per legal control (max 4). Allow examples of discrimination only once. Points might include: Do not award: Ethical points such as fair pay. Unfair dismissal Discrimination/equal opportunities (Health and) safety/working conditions/working environment Minimum wage Contract of employment or examples such as sickness policy / holiday entitlement / notice period / rate of pay/salary / pension entitlement Redundancy Working hours/provide breaks Legal working age/child labour Other appropriate responses should be credited. 4(d) Explain one reason why DLT needs to consider each of 6 To use words from the stem as application, the reference the following factors when deciding where to relocate in must be appropriate (i.e. make sense) in relation to the point country X: being made. Award 1 mark for identification of each relevant reason (max The following words are likely to be appropriate for this 2). question: Award 1 mark for each relevant reference to this business Cups/plates (max 2). Flow production Award 1 mark for each relevant explanation (max 2). (30%) exported Factory Points might include: 75 employees Suppliers: Increased demand (for its products) Distance [k] if closer to the factory [app] may reduce transport costs/may be able to get resources quicker Other appropriate examples can be credited. [an] May need to change supplier/can they still use current supplier [k] leading to delays [an] so cannot meet increase in demand [app] Quality/range of materials [k] could damage its reputation [an] of its cups/plates [app] Cost [k] which could lower its profit margin [an] Suitability of land: May need a large area/space [k] otherwise this could limit production/so able to expand [an] for its exports [app] Access to power/water/electricity [k] as using flow production [app] so need continuous supply to operate 24 hours a day [an] Cost of land/rent [k] as may increase fixed costs [an] Links to transport/accessible [k] to ensure deliveries can be made on time [an] Environmental impact [k] Government influence or examples such as taxes [k] Other appropriate responses should be credited 4(e) Do you think the advantages for a manufacturing This is a general question so there are no marks for business of using flow production are greater than the application. disadvantages? Justify your answer. Analysis: Award up to 2 marks for identification of relevant points. Some [an] can be used for different points but only Award up to 2 marks for relevant development of points. award once. Award up to 2 marks for a justified decision as to whether [An] of economies of scale [k] must be lowers the advantages to a manufacturing business of using flow unit/average costs, and not simply lowers costs. production are greater than the disadvantages. Lower cost can be [an] but only award once unless clearly specify two different costs e.g. labour and Points might include: training costs. Advantages: Benefit from economies of scale [k] lowering To access [eval] must discuss a valid advantage and a valid unit/average costs [an] disadvantage. Capital intensive [k] so can lower the labour/wage costs [an] Output can be produced 24 hours a day/continuous [k] Workers can specialise/little training may be needed [k] Disadvantages: Inflexible/difficult to change/cannot customise products [k] so may not meet customer needs [an] Demotivate employees [k] raises absenteeism/labour turnover [an] If one machine breaks down the whole production line will stop [k] so delays output [an] Requires high level of raw materials/inventory [k] increasing storage space/cost [an] Other appropriate responses should be credited. 4(e) Justification might include: One advantage is economies of scale [k] which lowers unit costs [an]. This method is inflexible [k] so the business may not meet customer needs [an]. The advantages are greater, as the lower unit costs could result in lower prices [eval] which can increase demand. If the product has high sales this could reduce the need for flexibility [eval].