Business Studies 0450/13 May/June 2025: question paper and mark scheme

Mark scheme

1(a) Identify two roles of packaging. 2 Only award first two responses given. Award 1 mark per role (max 2). Points might include: • Carry information about product / meet legal requirements • Protect the product • Promote brand image / name / (brand) reputation • Help advertise / attract customers • Add value • Ease of transport • Easy / convenient to open / use • Ease of storage / display • Suitable for product to fit in / contain the product Other appropriate responses should be credited. 1(b) Identify two stages (other than development) of the 2 Only award the first two responses given. product life cycle. Candidates must name and not simply describe the stage. Award 1 mark per stage (max 2). Two from: • Introduction • Growth • Maturity • Decline 1(c) Outline two factors MDZ’s Marketing Director should 4 To use words from the stem as application, the reference consider when deciding the price of the new product. must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for each relevant factor (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: • Chocolate (bars) Points might include: • Ingredients or related words such as sugar, cocoa • Brand image [k] as wants to act in an ethical way [app] • Ethical • Cost of production or examples i.e. cost of • 300 employees materials/labour [k] as have 30 employees [app] • Stakeholder groups • Competition / price of competitors’ products [k] for • Sales promotion chocolate [app] • Packaging • Whether product is unique / availability of substitutes [k] • (Suppliers from) local area • Size of market / niche market / mass market / target market / who selling to / level of demand / price Other appropriate examples can be credited. elasticity of demand [k] • Business objective [k] • Profit margin / added value [k] • Quality [k] • Government or legal controls / tax [k] Other appropriate responses should be credited. 1(d) Explain one way MDZ could act in an ethical way with 6 To use words from the stem as application, the reference each of the following stakeholder groups: must be appropriate (i.e. make sense) in relation to the point Employees being made. Suppliers The following words are likely to be appropriate for this Award 1 mark for identification of each relevant way (max 2). question: Award 1 mark for each relevant reference to this business • Chocolate (bars) (max 2). • Ingredients or related words such as sugar, cocoa Award 1 mark for each relevant explanation (max 2). • (Developing a) new product • Packaging Points might include: • Sales promotion Employees: • Pricing method • Pay fair wages/pay [k] to its 300 employees [app] to • Local area maintain their standard of living [an] • 300 employees • Ensure fair working conditions [k] when making the new product [app] so they do not leave / become demotivated Other appropriate examples can be credited. [an] • Avoid use of child labour / not produce products in Analysis should focus on the effect on the stakeholder, not sweat shops [k] on the business. Suppliers: • To be paid on time [k] for the ingredients [app] to help prevent cash flow problems for them [an] • Pay fair price [k] to protect the suppliers’ profit margin [an] as products purchased in the local area [app] Other appropriate responses should be credited. 1(e) Explain two possible methods of sales promotion a This is a general question so there are no marks for business could use for a new product. Which is likely to application. be the best method to use? Justify your answer. Some analysis can be awarded for different methods but Award up to 2 marks for identification of relevant points. only award once. Award up to 2 marks for relevant development of points. Award up to 2 marks for a justified decision as to which is Max 3 marks where candidate only discusses one method. the best method of sales promotion for a business to use for a new product. Points might include: • Free samples [k] encourage customers to try the product [an] but there is a cost of providing samples [an] • Point of sale displays / demonstrations [k] which raises awareness [an] • Buy One Get One Free (BOGOF) / special offers / discounts [k] which makes the product more affordable [an] • Loyalty schemes [k] so customers want to buy it more often [an] leading to repeat business [an] • (Free) gifts [k] customers will tend to buy more products to gain more gifts [an] • Competitions [k] people will buy more for a chance to win a prize [an] • After sales service [k] Other appropriate responses should be credited. 1(e) Justification might include: It can offer free samples [k] to encourage customers to try the product [an]. Another method is Buy One Get One Free (BOGOF) [k] which makes the product more affordable [an]. BOGOF is the best method because it helps generate some revenue whereas with free samples there is no guarantee people will buy anything [eval] so the business may have to find another way to help cover the development costs of a new product [eval].

Mark scheme

2(a) Identify two ways to measure the size of a business. 2 Only award the first two answers given. Award 1 mark per way (max 2). Points might include: • (Value of) capital employed • Value of output / sales OR revenue • Number of customers / sales / volume / amount of output • (Number of) employees Other appropriate responses should be credited. 2(b) Calculate X and Y. 2 X must be shown as a negative number i.e. brackets / minus sign. Award 1 mark for each correct calculation. $ sign and 000’s not required as could write in table. X: $(15 000) or (15) or −15 [1] Y: $90 000 or 90 [1] 2(c) Outline two reasons (other than finance) why 4 To use words from the stem as application, the reference Jonathon’s business is likely to remain small. 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: • Sole trader Points might include: • Shop • Owner’s objectives / not want the responsibility for • Office equipment or examples e.g. printers managing a larger business / to keep control of the • Cash flow is important business [k] as a sole trader [app] • Correct use of data from Table 2.1. • Low demand / (small) size of market [k] in the shop [app] Other appropriate examples can be credited. • A few large businesses control the market / market domination [k] for office equipment [app] • Lacks knowledge / skills / experience (to expand) [k] such as how to manage cash flow [app] • Wants to maintain close relationship with its customers / provide a personal service [k] • To remain flexible / able to respond quickly to changes in consumer tastes [k] • Type of industry / market / product / service [k] Other appropriate responses should be credited. 2(d) Explain two reasons why Jonathon’s business might 6 To use words from the stem as application, the reference have a cash flow problem. must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for identification of each relevant reason (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). • Sole trader Award 1 mark for each relevant explanation (max 2). • Shop • Office equipment or examples including printers Points might include: • Remain small • Correct use of data from Table 2.1 • Allow customers too long to pay / customers are slow to • 4 weeks (for customers to pay) pay / customer does not pay on time / high level of credit sales [k] as customers have 4 weeks to pay [app] Other appropriate examples can be credited. which delays cash inflows [an] • No trade credit / suppliers want payment straightaway / paying suppliers too quickly [k] for the office equipment [app] which increases cash outflows [an] • Poor (financial) planning / unexpected costs [k] as operates as a sole trader [app] which leads to additional cash outflows [an] • Holding too much inventory [k] • Growing too quickly / overtrading [k] • Seasonal / low(er) demand / sales [k] Other appropriate responses should be credited. 2(e) Do you think the advantages of operating as a sole This is a general question so there are no marks for trader business are greater than the disadvantages? application. Justify your answer. Award up to 2 marks for identification of relevant points. 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 operating as a sole trader business are greater than the disadvantages. Points might include: Advantages: • Keeps all the profit [k] so has an incentive to work hard [an] • Makes all the decisions / no need to consult with anyone / complete control / own boss [k] so can take decisions more quickly / so less/no chance of disagreements [an] • Freedom to choose own holidays / when work [k] so can choose time off when the business is less busy so does not miss out on sales [an] • Can keep (financial) information private / no need to produce annual accounts [k] so competitors cannot use this information [an] • Has close contact with customers / able to offer a more personal service [k] which can help encourage customer loyalty [an] • Few legal regulations [k] 2(e) Disadvantages: • Unlimited liability [k] so may lose personal assets to repay business debts [an] • Limited sources of finance [k] which could create cash flow problems / difficult to fund expansion [an] • No one to cover if owner is ill [k] so business may lose sales [an] • Only has own skills [k] so less able to compete / may not be able to do all jobs properly [an] • Must work long hours / difficult to take holidays / high workload [k] which could lead to mistakes [an] • No one to share risks / losses with [k] • Has all the responsibility / no one to help with decision- making [k] • No separate legal identity [k] • No continuity [k] Other appropriate responses should be credited. Justification might include: One advantage is there is no need to consult with anyone [k] so decisions can be taken more quickly [an]. A disadvantage is unlimited liability [k] so personal assets are at risk if unable to repay business debts [an]. The advantages are greater because being able to act quickly could mean they can gain from opportunities which otherwise they might miss [eval] and this could generate sufficient revenue to repay its debts anyway [eval].

Mark scheme

3(a) Define ‘external benefits’. 2 References to business activity is [+1] only. Award 2 marks for a full definition. Award 1 mark for a partial definition. • Gains to the rest of society other than the business as a result of business activity [2] Partial definition e.g. • Gains to the rest of society / third party [1] 3(b) Identify two ways legal controls over location might 2 Only award the first two responses given. affect a business. Award 1 mark per way (max 2). Points might include: • Affect where they can/cannot locate • Affect how they produce or examples e.g. change production methods, change / restrict (raw) materials used • Affect when / hours can operate • Increased costs Other appropriate responses should be credited. 3(c) Outline two advantages to GAE of introducing new To use words from the stem as application, the reference technology. 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 The following words are likely to be appropriate for this (max 2). question: • Steel Points might include: • Multinational company • Motivate employees [k] as have 2400 workers [app] • Factory/factories • Fewer employees needed [k] in the 4 countries [app] • 4 countries • Increases productivity / efficiency / quicker (rate of) • 2400 employees production [k] in its factories [app] • Inventory is important • Improved quality / consistent quality / less waste / fewer • External benefits mistakes [k] when making steel [app] • Increase output [k] for this multinational company [app] Other appropriate examples can be credited. • Can work 24/7 / no need to have breaks in production [k] Allow ‘lower cost’ once, unless two clearly specific different • Help design / make new products [k] costs. • Improved communication [k] Other appropriate responses should be credited. 3(d) Explain two reasons why holding inventory might be 6 To use words from the stem as application, the reference important for GAE. must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for identification of each relevant reason (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). • Steel Award 1 mark for each relevant explanation (max 2). • Multinational company • Factory/factories Points might include: • 4 countries • To benefit from economies of scale / discounts for bulk • 2400 employees buying / to benefit from special offers / *gain supplier • New technology discounts [k] reducing average / unit cost [an] for this • External benefits multinational company [app] • Legal controls over location • To maintain / not delay production / provide backup Other appropriate examples can be credited. materials in case of breakdowns [k] at the factories [app] so can meet orders / demand (on time) [an] Some points can be [k] or [an] but only award once. • To protect against delays from suppliers / shortage of materials [k] which otherwise could delay production Some [an] can be used for different points but only award [an] in the 4 countries [app] once. • To meet / satisfy demand / customer orders [k] of steel [app] which can increase revenue [an] • To meet sudden order / unexpected changes in demand [k] helping maintain its reputation [an] • To meet seasonal changes in demand [k] Other appropriate responses should be credited. 3(e) Explain two benefits to a business of being a 6 This is a general question so there are no marks for multinational company. Which benefit is likely to be the application. most important? Justify your answer. Some points can be [k] or [an] but only award once. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. The following are [an] only: Award up to 2 marks for a justified decision as to which • Increase market share benefit of being a multinational company is likely to be the • Provide competitive advantage most important. Points might include: • Spreading risk [k] so a fall in sales / revenue in one country can be offset by an increase in sales / revenue in another country [an] • Access new / wider markets / sales / customers [k] increasing revenue / (global) market share [an] • Improve brand image / reputation [k] to help increase / maintain customers AND/OR could allow them to set higher prices / provide competitive advantage [an] • Economies of scale [k] lowering average/unit costs [an] • Cheaper / access (better quality) raw materials [k] reducing transport costs [an] OR access better quality / wider range of raw materials [k] allowing the business to produce new products [an] • Access to cheap labour [k] which can lower costs / increase profit margin [an] OR Access to skilled labour [k] which could increase efficiency [an] • Avoid import quotas [k] so no/fewer limits on the number of products the business can import into a country [an] 3(e) • Avoid import tariffs [k] so does not make products more 6 expensive [an] • Reduced tax liability / benefit from favourable / lower tax rates [k] • Access government support/grants [k] Other appropriate responses should also be credited. Justification might include: One benefit is spreading risk [k] so a fall in sales in one country can be offset by sales in another country [an]. It also allows for easier access to raw materials [k] reducing transport costs [an]. Access to raw materials is likely to be the most important benefit because this could reduce production costs leading to lower prices helping the business remain competitive [eval] and ensuring the extra sales are achievable [eval].

Mark scheme

4(a) Identify two objectives (other than growth) a business 2 Only award the first two responses given. might have. Accept increase sales where no specific examples given Award 1 mark per objective (max 2). (i.e. value and volume). Points might include: • Survival/break-even • Make a profit • Increase/gain market share • Increase / maintain number of sales / customers • Increase / gain revenue / value of sales • Improve/create business image • Increase return to shareholders / return on capital employed • Be socially / ethically / environmentally responsible Other appropriate responses should be credited. 4(b) Identify two advantages to a business of using external 4 Only award the first two responses given. sources of finance. Award 1 mark per advantage (max 2). Points might include: • Able to raise funds quicker / quickly • May be able to raise full / large(r) amount of finance • Can use internal sources / profit for other purposes • Provider may offer advice/support Other appropriate responses should be credited. 4(c) Using Herzberg’s theory, state whether each of the 6 Only award the first response given for each answer. following would be classed as a hygiene factor or as a motivator: Award 1 mark per correct answer (max 4). Working conditions: hygiene Wages: hygiene Opportunities for promotion: motivator Relationship with supervisor: hygiene 4(d) Explain two methods of internal communication HYT 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). • Travel business Award 1 mark for each relevant explanation (max 2). • Sells holidays • (460) shops/stores Points might include: • 4000 (employees) • Meetings/team briefings [k] about its growth objective • Full-time (employees) [app] as can get (instant) feedback / ask / answer • Takeover questions [an] • Objective is growth • Email [k] which can be sent to multiple people (at the • External sources of finance same time) [an] to its 4000 employees [app] • Phone/mobile calls [k] to one of its 460 shops [app] as Other appropriate examples can be credited. allows for discussion / explanation / immediate feedback [an] Some analysis can be used for different methods but only • Letter [k] as a written record [an] award the same point once. • Text / SMS / WhatsApp / WeChat [k] as can be sent quickly [an] • Posters / noticeboards / notices [k] as they can be placed in various locations (for employees to read) [an] • Video conference / Zoom / Teams / Google Meet / FaceTime [k] • Social media or examples e.g. Facebook, TikTok [k] • Internal newspapers / newsletter / magazine [k] Other appropriate responses should be credited. 4(e) Do you think the benefits to a business of having full- This is a general question so there are no marks for time employees are greater than the limitations? Justify application. your answer. Points must relate to the business and not the employees. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Expensive/high cost can be [k] or [an]. Award up to 2 marks for a justified decision as to whether the benefits of having full-time employees for a business are The following are [an] only: greater than the limitations. • More output • Lower training/recruitment cost Points might include: • More/less productive Benefits: • More familiar with business / consistent service / quality Accept points about cost once, unless clearly explained. [k] which helps build / maintain customer relationships / better reputation / more productive [an] • Workers likely to be loyal / committed / less likely to leave [k] reducing (recruitment) costs [an] • Easy to communicate / update [k] leading to fewer errors [an] • Fewer employees to train / recruit [k] saving time / cost [an] Limitations: • May not be willing / want to increase hours / not want to work overtime [k] so may be difficult to meet demand [an] • Must pay whether (sufficient) work for them to do or not [k] increasing labour costs [an] • May miss out on potential employees who cannot work full-time [k] 4(e) Other appropriate responses should be credited. Justification might include: Full-time employees can provide a consistent service [k] which helps maintain customer relationships [an]. However, they may not be willing to increase hours [k] so it may be difficult to meet demand [an]. The benefits are greater because maintaining customer relationships is more likely to lead to additional sales even if they must wait slightly longer to receive the goods [eval] [eval].