Business Studies 0450/11 October/November 2022: question paper and mark scheme

Mark scheme

1(a) Define ‘on-the-job training’. 2 Do not award answers which clearly relate to induction. Award 2 marks for a full definition. Award 1 mark for a partial definition. Accept: Watching a more experienced Training at the place of work, watching or following an experienced worker doing the job [2] employee [2] OR Training at the place of work–usually the person does the actual job while an experienced employee observes and guides him or her, making corrections as required [2] Partial definition e.g. training while you are working [1] 1(b) Calculate total variable cost per month. Show your working. 2 Award only 1 mark if $960 000 is written as part of the answer but is not given as Correct answer: $960 000 [2] the final answer. Method e.g. Variable cost per unit times output [1] $ sign not required. OR $80 × 12 000 [1] If correct answer given with no working shown award 2 marks. 1(c) Identify four factors a business should consider when deciding which 4 Only award the first four responses method of production to use. given. Award 1 mark for each relevant factor. Award ‘size of business’ [BOD] Points might include: • Amount of capital available / costs (of machinery/production) • Demand / size of the market / how much they are likely to sell / output needed • Nature / type / variety of goods produced • Amount of suitable space / storage • Access to (suitable/skilled) labour / amount of labour needed Other appropriate responses should also be credited. 1(d) Explain one advantage and one disadvantage to SSG of using quality 6 Note: To use words from the stem as control. application, the reference must be appropriate (i.e. make sense) in relation Award 1 mark for identification of each relevant advantage/disadvantage to the point being made. (max 2). The following words are likely to be Award 1 mark for each relevant reference made to this business (max 2). appropriate for this question: • (Mobile/cell) phones Award 1 mark for each relevant explanation (max 2). • 130 employees • On-the-job training Points might include: • $80 • 12 000 Advantage: • $300 000 • Tries / may eliminate errors before customers receive the product [k] • Maturity / extension strategy improving the reputation [an] of its phones [app] • Batch production • All workers do not need to be trained for quality control [k] reducing costs [an] of its 130 employees [app] Other appropriate examples in context • Production is not slowed [k] can still be credited. Disadvantage: • Inspectors / someone needs to be employed to check the product [k] increasing labour costs [an] • Faulty products must be scrapped [k] therefore variable cost is higher [an] than $80 per unit [app] • Does not identify where / why the fault has occurred [k] so vulnerable to repeating the errors • There is less reason for employees to help ensure quality [k] leading to more faults in products [an] Other appropriate responses should also be credited. 1(e) Do you think adding new features to a product is the best extension 6 This is a general question so there are strategy for a manufacturing business to use? Justify your answer. no marks for application. Award up to 2 marks for identification of relevant points. Some points could be awarded for different options or as [k] / [an], but do Award up to 2 marks for relevant development of points. not award the same point twice. Award 2 marks for justified decision as to whether adding new features is For evaluation to be awarded justification the best extension strategy for a large manufacturer to use. will usually follow on from relevant analysis of points. Points might include: • Product appears more appealing [k] attracting new / more customers or USP [k] attracting customers away from sales [an] increasing revenue [an] competitors [an] • High cost of development / market research [k] which the business may not be able to afford [an] • Customers may dislike changes [k] reducing sales [an] • Adds value to product [k] therefore can charge a higher price [an] Other strategies might include: • Finding new markets [k] widening customer base [an] • Adapt / change the packaging [k] improving the appeal [an] but existing customers may not recognise the product [an] • Increase advertising / marketing / promotion [k] remind customers that the product still exists [an] • Sell through additional outlets [k] Other appropriate responses should also be credited. Justification might include: Adding new features involves high development costs [k] which the business may not be able to afford [an]. Finding new markets [k] could increase sales revenue [an]. There is a risk that customers may not like the new features [eval] so it’s safer and cheaper to try to find new markets. [eval]

Mark scheme

2(a) Define ‘opportunity cost’. 2 Award 2 marks for a full definition. Award 1 mark for a partial definition. The next best alternative foregone / given up [2] OR The benefit that could have been gained from an alternative use of the same resource [2] OR A benefit, profit, or value that a firm gives up in order to achieve something else [2] Partial definition e.g. what you must give up / forgo [1] 2(b) Identify two limitations of using the number of employees to measure 2 Only award the first two responses given. the size of a business. Award 1 mark per limitation. Points could include: • Does not account for capital intensive business / depends on method of production used • Could have many part-time employees • May give a different indicator of size to other measures used. Other appropriate responses should also be credited. 2(c) Outline how having limited liability might benefit DNG’s shareholders. 4 Note 1: Candidates can outline one benefit in detail or outline two separate Award up to 2 marks for relevant points (max 2). benefits. Award up to 2 marks for each relevant reference to this business (max 2). Note 2: Answers must refer to the owners / shareholders and not the • Shareholders risk is limited to the amount invested [k] in this electricity business itself. business [app] • Protects personal assets [k] in case the business decision to contribute To use words from the stem as to sustainable development does not work [app] application, the reference must be • Encourages (potential/existing) shareholders to invest [k] appropriate (i.e. make sense) in relation to the point being made. Other appropriate responses should also be credited. The following words are likely to be Shareholders risk is limited (to the amount invested) [k] in the electricity appropriate for this question: company [app] protecting their personal assets [k] in case the decision to • Electricity stop using coal does not work [app] • (Stop using) coal • 16 million (customers) • 6500 (employees) • Pressure groups • Opportunity cost Other appropriate examples in context can still be credited. 2(d) Explain two ways a pressure group might influence DNG’s decisions. 6 Note: Can award responses which refer to strikes as TU may use to influence pay Award 1 mark for identification of each relevant way (max 2). or working conditions. Award 1 mark for each relevant reference made to this business (max 2). To use words from the stem as application, the reference must be Award 1 mark for each relevant explanation (max 2). appropriate (i.e. make sense) in relation to the point being made. Points might include: • Create (negative) publicity / publish information / write to newspaper [k] The following words are likely to be about the impact of using coal [app] damaging its reputation [an] appropriate for this question: • Organise customer boycotts [k] of its 16 million customers [app] leading • Electricity to fewer sales / less revenue [an] • Coal • Demonstrations / protests [k] about electricity production [app] which • 16 million (customers) could reduce investment in the business [an] • 6500 (employees) • Petition / send letters to government [k] against this limited company • Opportunity cost [app] • Limited company / shareholders • Lobbying [k] • Take legal action [k] Other appropriate examples in context can still be credited. Other appropriate responses should also be credited. 2(e) Explain two methods of internal communication a large business could 6 This is a general question so there are use to share important information with its employees. Justify which no marks for application. method should be used. Some points could be awarded for Award up to 2 marks for identification of relevant points. different options, but do not award the same point twice. Award up to 2 marks for relevant development of points. For evaluation to be awarded justification Award 2 marks for justified decision as to which of the two methods will usually follow on from relevant discussed is the best method of communication for a large business to use analysis of points. to convey important information to its employees. Note: Do not award types of Points might include: communication such as written, verbal, • Meeting / briefing / video conference [k] workers receive the message at electronic. the same time [an] but workers will not be working so output may fall [an] • Email [k] message can be sent to multiple people at the same time [an] but people may not be able to access the internet [an] • Phones [k] allows for immediate feedback [an] • Text / SMS [k] contains only very limited information [an] • Posters / noticeboards [k] • Announcements [k] • Internal newspapers [k] • Social media such as Whatsapp [k] • Letter [k] Other appropriate responses should also be credited. Justification might include: Email [k] would allow the business to send the same message to multiple people [an]. A meeting [k] will allow employees to ask questions to confirm their understanding of the important information [an]. Email is better as it may not be possible to get all employees in a large business together at the same time [eval]. Whereas with an email all employees receive information which they can refer back to later. [eval]

Mark scheme

3(a) Define ‘non-current assets’. 2 Do not award Assets owned for one year as this is TV. Award 2 marks for a full definition. Award 1 mark for a partial definition. Do not award examples. Resources owned by a business which will be used for a period longer than one year [2] OR Items owned by a business for more than one year [2] Partial definition e.g. items owned by the business [1] Items in the business for more than one year [1] 3(b) State two elements of the marketing mix. 2 Only award the first two responses given. Award 1 mark per element. Two from: Price, product, place, and promotion 3(c) Outline two ways CPK might be affected by an increase in taxation. 4 Note: To use words from the stem as application, the reference must be Award 1 mark for each relevant way. appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for each relevant reference to this business. The following words are likely to be Points might include: appropriate for this question: • Less profit [k] to help improve the sports clubs [app] • Sports club or examples such as • Decreased demand [k] at the 5 locations [app] activities / gym / yoga class • May have to increase prices [k] affecting its marketing mix [app] • 5 (locations) • Can increase expenses / cost of buying materials [k] • 60 (employees) • Marketing mix Other appropriate responses should also be credited. • 10% / 12% Other appropriate examples in context can still be credited. 3(d) Explain one possible effect on CPK of the change in each of the 6 Award decrease/fallen as [k] OR [app] following ratios as shown in Table 3.1: but not both. Award 1 mark for identification of each relevant effect (max 2). Do not award reasons for change as knowledge or analysis as this does not Award 1 mark for each relevant reference made to this business (max 2). answer the question. Award 1 mark for each relevant explanation (max 2) Note: To use words from the stem as application, the reference must be Points might include: appropriate (i.e. make sense) in relation to the point being made. Current ratio: Decreased / fallen / worsened / deteriorated [k] or [app] The following words are likely to be appropriate for all responses on this Analysis could be awarded for: question: • May need to reduce creditors / trade payables [k] to avoid cashflow • 2% / 12% or 10% problems [an] in the sports clubs [app] • 0.3 / 1.6 / 1.3 • May need to improve cash by selling more products or sell unwanted • Sports club or examples such as non-current assets gym / yoga class • May have problems paying its short-term liabilities / less liquidity / less • 5 (clubs) cash available • May make it harder to obtain finance Other appropriate examples in context • Suppliers may be less willing to provide goods (on credit) can still be credited. Profit margin: Decreased / fallen / worsened / deteriorated [k] or [app] Analysis could be awarded for: • May need to increase prices [k] to improve profit margin [an] in the 5 clubs [app] • Need to look for ways to increase added value • May look for ways to lower variable costs / expenses Other appropriate responses should also be credited. 3(e) Do you think job enrichment is a better way for a business to motivate 6 its employees than profit sharing? Justify your answer. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award 2 marks for justified decision as to whether job enrichment is a better way for a business to motivate its employees than profit sharing. Points might include: Job enrichment: • Business able to make most / full use of employee’s skills [k] which can help increase labour flexibility [an] • Training may be needed [k] which can increase expenses [an] • Workers gain more job satisfaction/ feel recognised/valued [k] • Not all workers are able / want to do more complex work [k] leading to mistakes/ waste [an] • Not easy to add extra tasks to some jobs [k] • Time consuming to redesign tasks [k] • May create conflict between employees (as may not be possible to offer opportunities to all) [k] Profit sharing: • Money is a major motivator for many employees [k] • Can help build team spirit / sense of belonging / common goal [k] • Not everyone is motivated by money [k] • If business makes low/ no profit, then there is little/ nothing to share [k] which could decrease motivation [an] Other appropriate responses should also be credited 3(e) Justification might include: Job enrichment can help the business make the most use of employee’s skills [k] increasing productivity [an]. A business making no profit, has nothing to share [k] which could decrease rather than increase motivation [an]. I think job enrichment is better as making the job more interesting is more likely to motivate employees every day. [eval]. Profit-sharing is at the end of the year, and therefore is likely to have less impact on daily effort. [eval]

Mark scheme

4(a) Define ‘recession’. 2 Do not award features of a period of recession. Award 2 marks for a full definition. Award 1 mark for a partial definition. When there is a period of falling gross domestic product / GDP [2] OR a sustained (over a period of time) reduction in GDP / national income / output [2] Partial definition e.g.–fall in output / fall in GDP [1] 4(b) Identify two ways of segmenting a market. 2 Only award the first two responses given. Award 1 mark per way. Award : Points might include: • Demographic–if age / gender / socio- • Age economic group / social status/ethnic • Gender group not awarded • Socio-economic group / social status / class • Psychographic if lifestyle, • Geographical / region / location personality, and attitudes not • Lifestyle awarded • Ethnic group • Family characteristics • Education • Occupation • Use of product Other appropriate responses should also be credited. 4(c) Outline two reasons why having enough working capital might be 4 Note: To use words from the stem as important for Beena’s business. application, the reference must be appropriate (i.e. make sense) in relation Award 1 mark for each relevant reason. to the point being made. Award 1 mark for each relevant reference to this business. The following words are likely to be appropriate for this question: Points might include: • Hairdressing or related words such • To pay for (day-to-day) expenses / short-term debts [k] of her as haircut or shampoo hairdressing business [app] • Start-up / new business • Evidence to support loan applications [k] if she decides to take the • Recession franchise [app] • Franchise • Use in an emergency / pay for unexpected expenses [k] in case she • $800 needs more than $800 [app] • Market research • To ensure the business has a good credit reputation [k] especially as • (Market) segment her business is a start-up [app] • Ensures the business can take advantage of discount on bulk Other appropriate examples in context purchases [k] can still be credited. Other appropriate responses should also be credited. 4(d) Explain two possible advantages to Beena of buying a franchise. 6 Note: To use words from the stem as application, the reference must be Award 1 mark for identification of each relevant advantage (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: • Hairdressing or related words such Points might include: as haircut or shampoo • Established brand / well-known brand [k] therefore no need to spend on • Start-up / new business advertising [an] • Recession • Reduces risk of failure [k] especially after a recession [app] • $800 • Training / advice offered by franchisor [k] which saves costs [an] which • Market research is important for a start-up business [app] • (Market) segment • Attracts customers [k] helping to ensure / increase revenue [an] for her • Working capital hairdressing business [app] • Easier to obtain finance / bank more willing to lend [k] which may be Other appropriate examples in context necessary with savings of $800 [app] can still be credited. • Franchisor pays for advertising [k] • Stock control and accounting systems often provided by franchisor [k] Note: [k] Points may sometimes be which can help make business more efficient [an] and improve her awarded [an] working capital [app] • All supplies are obtained from a central source / the franchisor [k] which can help ensure quality [an] • Fewer decisions to be made (than an independent business) [k] Other appropriate responses should also be credited. 4(e) Do you think it is always better for a start-up business to use primary 6 This is a general question so there are market research, rather than secondary market research, when making no marks for application. decisions? Justify your answer. Some points could be awarded for Award up to 2 marks for identification of relevant points. different options, but do not award the same point twice. Award up to 2 marks for relevant development of points. For evaluation to be awarded justification Award 2 marks for justified decision as to whether it is always better for a will usually follow on from relevant start-up business to use primary market research rather than secondary analysis of points. market research when making decisions. Note: Do not accept mirror arguments Points might include: such as primary research is up to date and secondary research maybe Primary market research: outdated. • Relevant / up to date data gathered [k] so should help you find out what you want to know [an] • High cost / time to collect information [k] which a new business might not be able to afford [an] • Only available to own business [k] • May find it difficult to find people that represent target market / population [k] Secondary market research: • May not be relevant / outdated [k] which can lead to wrong decisions [an] • Readily available [k] • Cheap [k] • Can collect wide range of information [k] Justification might include: Primary research collects business specific data [k] helping to find out what you want to know [an]. Secondary research is cheaper than primary to collect [k] which could help reduce costs [an]. As this is a start-up business finance may be limited therefore secondary research may be better for them. [eval]. However the information must be from a reliable source. [eval]