Business Studies 0450/12 October/November 2022: question paper and mark scheme

Mark scheme

1(a) Define ‘market share’. 2 Award 2 marks for a full definition. Award 1 mark for a partial definition. Percentage of total market sales held by one brand/business [2] OR The revenue of a business expressed as percentage of total market revenue [2] OR Percentage of total sales that a firm achieves in a market [2] OR Business sales / total market sales × 100 [2] Partial definition e.g. share of all sales made [1] OR Percentage of customers/sales a business has [1] 1(b) Define ‘statement of financial position’. 2 Award 2 marks for a full definition. Award 1 mark for a partial definition. Shows the value of a business’ assets and liabilities at a particular point in time [2] OR An accounting statement that records assets, liabilities, and owners’ equity/capital of a business at a particular date [2] Partial definition e.g. shows assets and liabilities (of a business) [1] OR What a business owns and owes [1] 1(c) Outline two ways EQR could increase added value. 4 To use words from the stem as application the reference must be Award 1 mark for each relevant way (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 Points might include: appropriate for this question: • Increase prices [k] at its cafes [app] • Cafes • Reduce material/variable costs [k] of coffee [app] • 150 (locations) • Branding/change packaging [k] which can also help when selling its • Coffee/drinks or examples e.g. franchises [app] beans • Excellent/better service [k] • Franchise • Additional product features/improve design [k] • Ethical • Convenience [k] • 6% (market share) • $85 000 Other appropriate responses should also be credited. Other appropriate examples in context can still be credited. 1(d) Explain two advantages to EQR of selling franchises as a way to grow its 6 To use words from the stem as business. application the reference must be appropriate (i.e. make sense) in relation Award 1 mark for identification of each relevant advantage (max 2). to the point being made. Award 1 mark for each relevant reference to this business (max 2). Award 1 mark for each relevant explanation (max 2). The following words are likely to be appropriate for this question: Points might include: • Cafes • Franchise fee must be paid / licence has to be bought [k] for a cafe [app] • 150 (locations) providing funds for investment [an] • Coffee/drinks or examples e.g. • Can expand at a faster rate [k] which can help increase its market share beans [an] above 6% [app] • Ethical • Receives royalties / share of (franchisee) profit [k] as well as the $85 000 • 6% (market share) [app] • $85 000 • Not/franchisees responsible for day-to-day management [k] so have time to focus on other issues [an] such as increasing added value [app] Other appropriate examples in context • Increase brand awareness [k] of it being ethical [app] increasing sales [an] can still be credited. Other appropriate responses should also be credited. 1(e) Do you think a business being ethical will always lead to lower profits? 6 This is a general question so there are Justify your answer. no marks for application. Award up to 2 marks for identification of relevant points. For evaluation to be awarded Award up to 2 marks for relevant development of points. justification will usually follow on from Award up to 2 marks for a justified decision as to whether a business being relevant analysis of points. ethical will always lead to lower profits. Some points can be [k] or [an] but only Points might include: award once. • Enhance reputation/brand image [k] helps attract customers [an] • Customers may pay higher prices [k] increasing revenue / which could help cover the costs [an] • Can help motivate employees [k] increasing productivity / reduces absenteeism / lowers labour turnover [an] • Can increase costs [k] leading to higher prices [an] which may lead to fewer customers / sales [an] • May not be sufficient materials / difficult to find ethical suppliers [k] reducing output [an] • Ethical suppliers may have higher prices / unethical suppliers may be cheaper [k] Other appropriate responses should also be credited. Justification might include: Some customers may be prepared to pay extra for ethical products [k] this can help offset the increase costs of trying to be ethical [k] so overall profit margin may not change [an] and the better reputation gained could result in additional sales [an]. Therefore, being ethical can benefit a business as in the long term this may increase revenue [eval] which could result in higher profit overall [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] OR Income of the business from the sale of goods or services [2] OR Price × quantity sold [2] Partial definition e.g. income of the business [1] 2(b) Calculate Kemala’s profit margin. Show your working. 2 Award only 1 mark if 15% is written as part of the answer but is not given as Correct answer = 15% [2] the final answer. Correct method but incorrect answer e.g. profit / revenue x 100 [1] OR 72 / 480 × For both marks answer must include 100 [1] %. If correct answer given with no working shown award 2 marks. 2(c) Outline two reasons why cash is important for Kemala’s business. 4 To use words from the stem as application the reference must be Award 1 mark for each relevant reason (max 2). appropriate (i.e. make sense) in relation Award 1 mark for each relevant reference to this business (max 2). to the point being made. Points might include: The following words are likely to be • Pay wages/employees [k] who make the beauty products [app] appropriate for this question: • Pay suppliers/trade payables [k] to maintain high-quality [app] • Beauty products/hand cream • Pay expenses/heating/rent/advertising [k] such as in specialist magazines • High-quality [app] • $480 000 • Repay (short term) debts [k] • $192 000 • For use in an emergency [k] • $72 000 • Specialist/beauty magazine Other appropriate responses should also be credited. • Started her business Other appropriate examples in context can still be credited. 2(d) Explain two possible reasons why demand for Kemala’s best-selling 6 To use words from the stem as product is price inelastic. application the reference must be appropriate (i.e. make sense) in relation Award 1 mark for identification of each relevant point (max 2). to the point being made. Award 1 mark for each relevant reference to this business (max 2). Award 1 mark for each relevant explanation (max 2). The following words are likely to be appropriate for this question: Points might include: • Beauty products/hand • Unique/no (close) substitutes [k] as its high-quality [app] so an increase in cream/skincare price is likely to result in a lower percentage change in demand [an] • High-quality • Considered a necessity/need [k] so customers likely to remain brand loyal • $480 000 (even if the price increases) [an] for the hand cream [app] • $72 000 • Low proportion of income spent on product [k] so customers would still buy (if the price increased) [an] increasing revenue above $480 000 [app] Other appropriate examples in context can still be credited. Other appropriate responses should also be credited. 2(e) Do you think advertising in specialist magazines is the best way for a 6 This is a general question so there are business to promote high-quality products? Justify your answer. no marks for application. Award up to 2 marks for identification of relevant points . For evaluation to be awarded Award up to 2 marks for relevant development of points. justification will usually follow on from Award up to 2 marks for a justified decision as to whether advertising in relevant analysis of points. specialist magazines is the best way for a business to promote high-quality products. Some points could be awarded for different options, and some could be Points might include: presented as either [k] or [an] but only Specialist magazines award once. • Attract specific customers/target market [k] increasing sales [an] • Able to use colour/pictures [k] which can help attract attention [an] • Can keep for future reference [k] • Not everyone reads/buys specialist magazines [k] Other possible methods include: • Social media/Facebook/Twitter [k] as large potential market / cover wide area / seen by many people [an] • Newspapers [k] not everyone reads them [an] so can restrict target market/ lead to fewer sales [an] • Leaflets [k] but people may throw them away/seen as litter [an] Other appropriate responses should also be credited. Justification might include: A disadvantage of specialist magazines is that it is likely to be seen by a small number of people [k] which can reduce its potential sales [an]. I think social media [k] is a better option as customers can still be targeted but also it allows the business to cover many people [an]. This would allow them to build a bigger customer base [eval] to maximise potential revenue [eval].

Mark scheme

3(a) Identify two reasons why effective internal communication is important for 2 Only award the first two responses a business. given. Award 1 mark per reason (max 2). Points might include: • Fewer mistakes / less waste (of resources) • Improve efficiency / better productivity / increase output • Improve co-ordination (between departments) • Enable faster/better decision-making • Better collaboration better between workers/manager • Improve motivation / job satisfaction Other appropriate responses should also be credited. 3(b) Define ‘organisational structure’. 2 Award 2 marks for a full definition. Award 1 mark for a partial definition. Refers to the levels of management and division of responsibility within an organisation [2] OR The formal, internal framework of a business that shows how it is managed and organised [2] Partial definition e.g. shows who reports to who [1] 3(c) State four factors a business should consider when deciding which 4 Only award the first four responses employees to make redundant. given. Award 1 mark per factor (max 4). Points might include: • Importance of role being performed / whether job still needed • Performance / experience / skills / flexibility / qualities / qualifications • Length of time worked for business / redundancy costs • Attitude / behaviour / attendance / disciplinary record • Wages/salary paid • Which departments need to lose/retain workers • Whether anyone offers/volunteers to leave job Other appropriate responses should also be credited. 3(d) Explain two advantages to DBG of its managers using a democratic 6 To use words from the stem as leadership style. application the reference must be appropriate (i.e. make sense) in relation Award 1 mark for identification of each relevant advantage (max 2). to the point being made. Award 1 mark for each relevant reference to this business (max 2). Award 1 mark for each relevant explanation (max 2). The following words are likely to be appropriate for this question: Points might include: • Construction / hospitals, roads, or • Employees could be motivated [k] leading to increase in output/productivity schools [an] when constructing [app] • 2000 (employees) • Helps keep employee loyalty / lower labour turnover [k] leading to lower • Organisational structure recruitment costs [an] for a business of 2000 employees [app] • Redundant • Workers may have more experience/understanding of problems [k] leading to better decisions [an] Other appropriate examples in context • More ideas / better communication [k] can still be credited. Other appropriate responses should also be credited. 3(e) Do you think all businesses benefit from an increase in government 6 This is a general question so there are spending? Justify your answer. no marks for application. Award up to 2 marks for identification of relevant points. For evaluation to be awarded Award up to 2 marks for relevant development of points. justification will usually follow on from Award up to 2 marks for a justified decision as to whether all businesses benefit relevant analysis of points. from an increase in government spending. Some points can be [k] or [an] but only Points might include: award once. • Increase in demand/sales [k] leading to higher revenue [an] • Can create jobs [k] so able to maintain/increase output [an] but may be difficult for some businesses to recruit skilled workers [an] • May have to pay higher taxes (to pay for spending) [k] which increases costs [an] which could delay investment [an] • Obtain grants/subsidies [k] generating additional funds for the business to spend [an] • Can encourage business start-ups [k] increasing competition [an] Other appropriate responses should also be credited. Justification might include: An increase in government spending could increase sales [k]. However, it could increase taxes [k] which increases costs leading to higher prices [an]. Overall, I think all businesses can benefit. For example, if the government decides to build new roads, construction businesses are likely to benefit the most as can receive an increase revenue from the extra sales, but other businesses still benefit from better transport links which can helps all businesses send or receive goods on time. [eval] [eval].

Mark scheme

4(a) Define ‘globalisation’. 2 Award 2 marks for a full definition. Award 1 mark for a partial definition. Increase in worldwide trade and movement of people and capital between countries [2] OR Increasing trend for businesses to trade across international boundaries and for people to live/travel to countries that are not their own [2] OR The process by which countries are connected with each other because of the trade of goods and services [2] Partial definition e.g. (increase in) trade of goods and service [1] 4(b) Identify two examples of fixed costs. 2 Only award the first two responses given. Award 1 mark per example (max 2). Points might include: • Rent/rates • Electricity / gas / heating and lighting / water • Insurance • Loan repayments/interest payments • Storage costs • Marketing costs • Salaries Other appropriate responses should also be credited. 4(c) Outline, with reference to TYA, the difference between a limited company 2 To use words from the stem as and an unincorporated business. application the reference must be appropriate (i.e. make sense) in relation Award 1 mark for a relevant point (max 1). to the point being made. Award 1 mark for outlining the difference between the two types of business organisation (max 1). The following words are likely to be Award 1 mark for each relevant reference to this business (max 2). appropriate for this question: • Factory Points might include: • 600 (employees) • A limited company has separate legal identity [k] so assets such as the • 300 000 factory [app] and the 600 cars [app] are owned by the business rather than • Cars the individual, whereas the owners and the business are the same for an • High fixed costs unincorporated business [k] • Improve efficiency • An unincorporated business has unlimited liability [k] whereas the risk for • Relocate shareholders/owners of a limited company is limited to the amount invested • Globalisation [k] in the car business [app] so they may be less concerned about the high fixed costs [app] Other appropriate examples in context • A limited company can sell shares [k] whereas for an unincorporated can still be credited. business it can be difficult to raise a large amount of finance [k] • A limited company has continuity [k] Other appropriate responses should also be credited. 4(d) Explain two methods TYA could use to increase efficiency. 6 To use words from the stem as application the reference must be Award 1 mark for identification of each relevant method (max 2). appropriate (i.e. make sense) in relation Award 1 mark for each relevant reference to this business (max 2). to the point being made. Award 1 mark for each relevant explanation (max 2). The following words are likely to be Points might include: appropriate for this question: • Increase in capital intensity / automation / introduce new technology [k] • Factory increasing output / faster production [an] of cars [app] • 600 (employees) • Training [k] its 600 employees [app] so they can work faster / make fewer • 300 000 (units) mistakes / better quality [an] • Cars • Introduce just-in-time inventory control [k] to reduce amount of space • High fixed costs needed [an] in the factory [app] • Kaizen [k] helps reduce waste (of resources) [an] may help lower high fixed Other appropriate examples in context costs [app] can still be credited. • Improve layout of machines [k] so saves time moving between areas [an] • Improve motivation or examples e.g. bonuses [k] • Cell production [k] • Improve quality / quality assurance [k] Other appropriate responses should also be credited. 4(e) Do you think legal controls are the most important factor for a 6 This is a general question so there are manufacturing business to consider when deciding which country to no marks for application. locate its operations in? Justify your answer. For evaluation to be awarded Award up to 2 marks for identification of relevant points. justification will usually follow on from Award up to 2 marks for relevant development of points. relevant analysis of points. Award up to 2 marks for a justified decision as to whether legal controls are the most important factor for a manufacturing business to consider when deciding Some points could be awarded for which country to locate its operations in. different options, and some could be presented as either [k] or [an] but do Points might include: not award the same point twice. Legal controls: • May restrict/not able to locate in certain places [k] so no output [an] • Business may have to change its production methods [k] which would increase costs [an] • May restrict amount of goods they can export/import [k] reducing potential sales [an] Other location factors discussed could include: • Access to suppliers / cheaper sources of materials [k] would increase transport costs [an] decreasing profit margin [an] • Access to/cost of labour [k] which could lower variable costs [an] • Access to/cost of land [k] as may need a large space [an] increasing fixed costs [an] • Access to transport networks / access to power [k] as poor transport links could delay deliveries / so production may be delayed/stopped [an] • Availability of government grants/subsidies [k] Other appropriate responses should also be credited. 4(e) Justification might include: Legal controls could mean the business may not be able to locate in certain places [k] which means no output [an]. Another factor is access to labour [k] helping lower variable costs [an]. However, legal controls are likely to be most important as the law will stop the factory being built whereas there are ways to overcome problems caused by access to employees [eval] which may increase costs but will still ensure that production can take place. [eval]