Business Studies 0450/11 May/June 2025: question paper and mark scheme

Mark scheme

1(a) Define ‘business partnership’. 2 For two marks need the idea of owned/formed and it involves at least two people. Award 2 marks for a full definition. Award 1 mark for a partial definition. • Two (or more) people agree to (jointly) own the business [2] • A business formed by two (or more) people who will usually share responsibility for the day to day running of the business [2] • An unincorporated business that has more than one owner [2] Partial definition e.g. • business run by two or more people [1] 1(b) Identify two ways a government can support business 2 Only award the first two responses given. start-ups. Award 1 mark for each way (max 2). Points might include: • Grants/subsidies • (Low interest) loans • Low-cost/rent-free premises • Provide training • Tax relief/lower tax/tax holiday • Advice/help with research • Help promote/advertise the business • Provide mentors Other appropriate responses should be credited. 1(c) Outline two ways an economic boom might affect 4 To use words from the stem as application, the reference Brendan’s business. 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 The following words are likely to be appropriate for this (max 2). question: • (Successful) entrepreneur Points might include: • Start-up/new business • High level of demand/sales/revenue [k] for flowers [app] • Flower(s) or examples • May be difficult to find employees [k] for the shop [app] • Shop • He can increase his prices [k] which will increase added • Government support value [app] • Increase added value • Higher costs / wages might increase [k] so may need • (Business) partnership more government support [app] • Pricing method • High business confidence [k] for this entrepreneur [app] • Increased competition [k] Other appropriate examples can be credited. • Harder to access materials [k] • Harder to find a location [k] Other appropriate responses should be credited. 1(d) Explain two ways Brendan could increase added value 6 To use words from the stem as application, the reference for his business. 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). • Start-up/new business • Flower(s) or examples Points might include: • Shop • Set high prices [k] which widens the gap between the • Government support cost and price [an] for the flowers [app] • Brother • Lower (input) costs [k] by buying cheaper materials [an] • (Business) partnership for this new business [app] • Pricing method • Branding/marketing/packaging [k] to give the idea of • (Successful) entrepreneur higher quality [an] • Unique design/products [k] making it more desirable Other appropriate examples can be credited. than similar products [an] which could influence its pricing method [app] Analysis can be awarded for: • Improve convenience [k] so products are immediately • explaining the reason why price or costs may be available [an] in the shop [app] higher/lower • (Improve) quality/service [k] • how the way increases the added value. Other appropriate responses should be credited. Some points can be awarded as [k] or [an] but only award once. Do not award the same point of analysis twice. 1(e) Explain two pricing methods a new business might use. 6 This is a general question so there are no marks for Which is likely to be the best method to use? Justify application. your answer. Candidates must name the method to access the knowledge Award up to 2 marks for identification of relevant points. marks. Award up to 2 marks for relevant development of points. Award up to 2 marks for a justified decision as to which is Analysis can be awarded for explaining the method or the best pricing method for a new business to use. advantages/disadvantages Points might include: Some points can be awarded as advantages or • Cost-plus [k] by adding a percentage onto the costs of disadvantages of different methods but only award the same production [an] it is easy to calculate [an] point once. • Penetration pricing [k] setting a lower price than competitors [an] could attract customers [an] To access evaluation must discuss two relevant methods. • Competitive pricing [k] setting a price similar/just below competitors [an] which may not cover costs [an] Accept but do not expect: • Price skimming [k] allows the business to recover • Dynamic pricing [k] development costs quicker [an] may lead to low sales • Psychological pricing [k] [an] • Promotional pricing [k] Other appropriate responses should be credited. Justification might include: Cost-plus pricing [k] is easy to calculate [an]. Price skimming [k] allows the business to recover development costs quickly [an]. Cost-plus pricing is the best method as the business will make profit on each item sold [eval] whereas with price skimming they may not attract customers to their new business [eval].

Mark scheme

2(a) Identify one way each of the following changes in 2 Only award the first two responses given. country X’s exchange rate might affect businesses which import materials. Do not award answers about the effect on exports. Award 1 mark for each way (max 2). Points might include: • Depreciation: Imports dearer/more expensive • Appreciation: Imports cheaper 2(b) Identify two reasons why consumer spending patterns 2 Only award the first two responses given. might change. Award 1 mark for each reason (max 2). Points might include changes in: • Price of product • Price of competitors products/increased competition • Incomes/wages/unemployment/business cycle or examples • Population size/structure/life stage of consumers • Taste/fashion/preferences • Advertising/promotion • Technology • Taxation • Interest rates • Exchange rates • Weather/season Other appropriate responses should be credited. 2(c) Outline two reasons why maintaining quality is 4 To use words from the stem as application, the reference important for NSL. must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for each relevant reason (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: • Food or related words such as ingredients, breakfast Points might include: cereal, bread • Develop strong brand image / generate good publicity / • Manufacture better reputation [k] for its food [app] • (Consumer) spending patterns change • Keep customer loyalty/remain competitive [k] which may • Factory help as spending patterns change [app] • Exchange rates • Can charge high/premium prices [k] which may help • (15% of raw) materials are imported cover any effect of exchange rates [app] • Lean production • Lower costs/less wastage [k] at the factory [app] • Fewer customer complaints/returns [k] Other appropriate examples can be credited. • Attract new customers/increase sales [k] • To meet legal requirements [k] such as food standards [app] • It adds value [k] Other appropriate responses should be credited. 2(d) Explain two benefits to NSL of using lean production. 6 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 identification of each relevant benefit (max being made. 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). • Food or related words such as ingredients, breakfast cereal, bread Points might include: • Manufacture • Fewer mistakes/errors [k] so less rework / lower repair • (Consumer) spending patterns change costs / may improve reputation [an] as maintaining • Factory quality is important [app] • Exchange rates • Less inventory held [k] of imported materials [app] • (15% of raw) materials are imported lowering storage costs/amount of working capital [an] • Maintaining quality • Cut out some processes [k] when making the food [app] which speeds up production / increase productivity [an] Other appropriate examples can be credited. • Increase motivation [k] leading to lower absenteeism / reduce labour turnover [an] at the factory [app] Some points can be awarded as [k] or [an] but only award • Less waste of time/ materials OR improved efficiency the same point once e.g. waste, productivity, lower cost [k]quicker/increased output [an] • Lower (unit) costs [k] improving competitiveness [an] Other appropriate responses should be credited. 2(e) Explain two methods of market research a business 6 This is a general question so there are no marks for could use to help make business decisions. Which is application. likely to be the best method for a manufacturing business to use? Justify your answer. Candidates must identify the method of market research to access the knowledge marks not just state Award up to 2 marks for identification of relevant points. primary/secondary. Award up to 2 marks for relevant development of points. Award up to 2 marks for a justified decision as to which is Analysis can refer to an advantage/disadvantage of method. the best method of market research for a manufacturing business to use to make business decisions. Some development can be used for more point, but only award once. Points might include: • Government sources/statistics [k] provide information from a wide number of people [an] • Using internet/online sources [k] which is free / low cost / immediately available [an] • Information from trade associations/journals [k] as specifically about the industry [an] • Market research agency reports [k] can often be expensive/provide detailed information [an] • Questionnaire [k] as provides up-to-date information / specific to the business [an] • Interviews [k] to obtain in depth details/opinions [an] • Survey [k] can reach out to more/large number of people [an] • Focus group [k] as it provides detailed information / allows for follow-up questions [an] • Test marketing [k] so the cost of any problem is limited to a smaller number of products [an] • Observation [k] low cost [an] • Newspapers/magazines [k] Other appropriate responses should be credited. 2(e) Justification might include: Government statistics [k] provide information from a wide number of people [an]. A focus group [k] can provide detailed information about consumer tastes [an]. Government statistics are better because they are based on wide samples whereas a focus group is based on a few existing customers so it may not identify what is happening in the market overall so the business may not produce the right product. [eval] [eval]

Mark scheme

3(a) Define ‘dismissal’. 2 For two marks need to recognise the employee is being told to leave and why. Award 2 marks for a full definition. Award 1 mark for a partial definition. Do not award on own: • Lose job • When employment is ended against the will of the • Let go employee, usually for not working in accordance with the employment contract [2] Accept fired/sacked as alternative to employment ended or • Termination by the employer because the employee has against their will broken company rules or not performing work to the required standard [2] • Employee is told to leave the business because of poor performance/behaviour [2] Partial definition e.g. • when someone/employee is told to leave a business [1] • lose job/let go because of bad behaviour [1] 3(b) Calculate the value of X and Y. 2 Y must be shown as a negative number. This could be using brackets/minus sign. Award 1 mark for each correct calculation. X: 500 000 or (500 000) or 500 [1] Y: (40 000) or (40) or – 40 [1] 3(c) Identify four reasons why a cash flow forecast might be 4 Only award the first four responses given. useful to a business. Award 1 mark for each relevant reason (max 4). Points might include: • Help support a loan application / attract investors • Can identify (possible causes of) cash flow problems • Help (financial) planning / budgeting / manage cash flow better / help avoid cash flow problems or insolvency • Identify how much a business might need to borrow/size of overdraft • Identify whether the business will be holding too much cash that could be put to better use • Helps with decision making / decide if expansion is possible Other appropriate responses should be credited. 3(d) Explain two advantages of LFK training its employees. 6 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 identification of each relevant advantage being made. (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). • Coal • Mining/mines Points might include: • 135 (employees) • To motivate employees [k] to reduce absenteeism / • Dismissal lower labour turnover [an] of its 135 employees [app] • New supervisor • Help retain/keep/attract employees / lower labour • External recruitment turnover [k] • Use of data from Table 3.1. • To increase skills/knowledge [k] more workers are suitable for promotion [an] so may not need to use Other appropriate examples can be credited. external recruitment [app] • Reduce mistakes/errors / better quality [k] Advantages can refer to the business or employees. • Reduce number of accidents [k] increasing workers` safety [an] Some points can be awarded as [k] or [an] but only award • Increase efficiency/productivity/reduced waste [k] which once e.g. reduce mistakes, accidents, efficiency, waste can help reduce (average) cost [an] which can reduce its cash outflows of $600 000 [app] The following are AN only: • Increase output [k] • reduce costs • Can improve competitiveness [k] of the mine [app] • better reputation • Improve customer service [k] • increase sales • Management training can help improve business decisions [k] Other appropriate responses should be credited. 3(e) Do you think the advantages of external recruitment for 6 This is a general question so there are no marks for a business are greater than the disadvantages? Justify application. your answer. Award only once: Award up to 2 marks for identification of relevant points. Advantage avoids upsetting employees Award up to 2 marks for relevant development of points. or Award up to 2 marks for a justified decision as to whether Disadvantage demotivates existing employees the advantages of external recruitment for a business are greater than the disadvantages. Points might include: Advantages: • Brings new skills/ideas [k] improving productivity / efficiency [an] • Wider choice of applicants [k] increases possibility of finding the best person for the job [an] • Can bring valuable knowledge/experience of competition [k] so might gain a competitive advantage [an] • Avoids creating a vacancy which will need to be filled [k] • Avoids risk of upsetting employees when someone internal is promoted [k] which could demotivate/cause others to leave [an] Disadvantages: • Higher recruitment costs [k] increasing cash outflows [an] • No knowledge of how business works / current operations [k] so may need (induction) training [an] • More time spent / takes longer to fill vacancy [k] which could be used for other purposes [an] Other appropriate responses should be credited. 3(e) Justification might include: External recruitment can bring in new skills [k] improving productivity [an]. However, the new employee will not know how business works [k] so might need induction training [an]. External recruitment is better because the new ideas could lead to lower costs in the long term, [eval] which can more than cover the extra cost of any induction training needed [eval].

Mark scheme

4(a) Identify two methods of external growth a business 2 Only award the first two responses given. might use. Can award below if no specific example given Award 1 mark for each method (max 2). • Merger • Takeover/acquisition Points might include: • Vertical integration • Horizontal integration • Forward integration • Backward integration • Conglomerate/diversification • Joint venture Other appropriate responses should be credited. 4(b) Identify two reasons for globalisation. 2 Only award the first two responses given. Award 1 mark for each reason (max 2). Points might include: • Free trade agreements / economic trading blocs / reduction in trade barriers • Improved/cheaper transport/travel links • Improved communication networks/technology • Emerging/new markets are quickly expanding/rapid economic growth/rising income • Governments allow companies from other countries to set up operations in own country Other appropriate responses should be credited. 4(c) Outline two ways PKN could contribute to sustainable 4 To use words from the stem as application, the reference development. 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 The following words are likely to be appropriate for this (max 2). question: • Glass Points might include: • Factory/factories • Use renewable energy [k] in each of the 30 countries • Manufacturer [app] • 30 countries • Use energy efficient/environmentally friendly methods • 27 000 employees [k] to make glass [app] • Globalisation • Use fewer resources/reduce output [k] in its • Expand/external growth factory/factories [app] • Source of finance • Recycle waste [k] • Diseconomies of scale • Use/develop new environmentally friendly products [k] • Avoid/reduce use of chemicals (that produce toxic Other appropriate examples can be credited. waste) [k] • Use packaging made of recycled material [k] • Use packaging that can be recycled/reused [k] • Avoid unnecessary travel [k] • Use local supplier [k] • Replant trees [k] • Switching to environmentally friendly transport or examples [k] Other appropriate responses should be credited. 4(d) Explain two diseconomies of scale which might affect 6 To use words from the stem as application, the reference PKN as it grows. must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for identification of each relevant diseconomy (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). • Glass Award 1 mark for each relevant explanation (max 2). • Factory/Factories • Manufacturer Points might include: • 30 countries • Low morale/motivation/lack of loyalty [k] leading to • 27 000 employees higher labour turnover / more workers leaving [an] • Globalisation among its 27 000 employees [app] • Sustainable development • Poor communication [k] leading to mistakes [an] when • Source of finance making glass [app] • Weak/lack of co-ordination [k] leading to the wrong Other appropriate examples can be credited. decisions [an] at the factory [app] • Lack of control [k] leading to higher average costs [an] Some analysis points can be used for any diseconomy but only award once e.g. higher average/unit costs. Other appropriate responses should be credited. 4(e) Do you think the advantages of using retained profits to 6 This is a general question so there are no marks for fund business expansion are greater than the application. disadvantages? Justify your answer. Some analysis could apply to more than one point, but only Award up to 2 marks for identification of relevant points. award once. Award up to 2 marks for relevant development of points. Award up to 2 marks for a justified decision as to whether the advantages of using retained profits to fund business expansion are greater than the disadvantages. Points might include: Advantages: • No need to repay [k] so does not increase level of debt/liabilities [an] • No interest to pay [k] so no additional cash outflows/expenses [an] • Easy/quick to obtain [k] Disadvantages: • Takes time to generate sufficient funds [k] which could delay the expansion [an] • May not have sufficient/any funds [k] so must limit the size of expansion [an] • (Keep more profit in the business) reduces payment/reward to owners [k] which may deter further investment [an] Other appropriate responses should be credited. 4(e) Justification might include: An advantage is there is no interest to pay [k] so no additional cash outflows [an]. However, it may take time to generate these funds [k] delaying expansion [an]. The disadvantages are greater because expansion is likely to need a large amount of finance which the business may not have [eval]. Delay could mean the opportunity is missed [eval].