Business Studies 0450/13 October/November 2022: question paper and mark scheme

Mark scheme

1(a) Define ‘primary sector’. 2 Do not award examples. Award 2 marks for a full definition. Award 1 mark for a partial definition. Businesses/firms whose business activity involves the extraction of raw materials [2] OR Extracts and uses the natural resources of the earth to produce raw materials used by other businesses [2] Partial definition e.g. involves natural resources [1] OR Generates/produces raw materials [1] 1(b) Calculate the value of NFF’s current liabilities. Show your working. 2 Award 1 mark where $80 000 is shown as part of the answer but is not given as Award 2 marks for a correct answer. the final answer. Award 1 mark for correct method but incorrect answer. Correct answer: $80 000 or 80 000 [2] Correct method e.g. Trade payables + overdraft [1] OR $60 000 + $20 000 [1] 1(c) Outline two internal sources of finance NFF might use. 4 To use words from the stem as application the reference must be Award 1 mark for each internal source of finance (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: • (Retained) profit [k] from the fishing business [app] • Fish/seafood/fishing • Sale of (existing) non-current/fixed assets [k] as has 6 boats [app] • 6 boats • Owner’s savings / sell own assets [k] to help reduce the high level of • $50 000 (trade receivables) debt [app] • $60 000 (trade payables) • Sale of current assets / inventories / reduce inventory levels [k] • $200 000 (bank loan) / high level of • Ask customers to pay more quickly [k] debt Other appropriate responses should also be credited. Other appropriate examples in context can still be credited. 1(d) Explain two possible problems for NFF of having a high level of debt. 6 To use words from the stem as application the reference must be Award 1 mark for identification of each relevant problem (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: • Fish/seafood Points might include: • 6 fishing boats • Difficult to arrange (additional) finance [k] may be difficult to expand [an] • 36 employees so may not contribute to sustainable development [app] • $200 000 (bank loan) • Amount / high level of interest [k] especially as already have $200 000 in • $20 000 (overdraft) bank loans [app] increasing expenses / cash outflows [an] • $50 000 (trade receivables) • May struggle / cannot meet repayments [k] leading to liquidity problems • $60 000 (trade payables) [an] • Sustainable development • Increase financial risk [k] when buying boats [app] so bank may not be willing to lend extra funds [an] Other appropriate examples in context can still be credited. Other appropriate responses should also be credited. Some points could be awarded as [k] or [an] but do not award the same point twice. 1(e) Explain two ways a business in the primary sector might contribute to 6 This is a general question so there are sustainable development. Which do you think is the best way? Justify no marks for application. your answer. Some points could be [k] or [an] or can Award up to 2 marks for identification of relevant ways. be used as development for more than one way but do not award the same point Award up to 2 marks for relevant development of points. twice. Award 2 marks for a justified decision as to which is the best way for a business in the primary sector to contribute to sustainable development. Points might include: • Reduce / limit the number of raw materials extracted / harvested [k] so more left for future use [an] but could reduce potential sales [an] • Buy energy efficient machinery / electric vehicles [k] but high initial cost [an] which the business might not be able to afford [an] • Use renewable energy [k] as this will conserves finite (limited) resources [an] • Recycle [k] which helps reduce number of materials needed / less waste [an] • Reuse materials [k] • Replant trees / restore land to nature after use [k] Other appropriate answers should also be credited. Justification might include: Businesses could reduce the number of raw materials extracted [k] so more left for future use [an]. Alternatively, it could use electric vehicles [k] but these are expensive to buy [an]. I think electric vehicles are better because harvesting less could be difficult for sectors such as farming who need to provide sufficient food to meet people’s basic needs [eval]. Whereas changing to electric vehicles can still mean fewer finite resources are gathered but helping the current population survive. [eval]

Mark scheme

2(a) Define ‘limited company’. 2 Features of a limited company - max 1 mark. Award 2 marks for a full definition. Award 1 mark for a partial definition. A business which has a separate legal identity/status to its owners [2] Partial definition e.g. a business that can sell shares [1] OR Benefit from limited liability [1] 2(b) Outline two reasons why having objectives might be important for a 2 Only award the first two responses given. business. Award 1 mark per reason (max 2). Points might include: • A clear target / aim / purpose to work towards / guides the business in the right direction • Help provide focus for decision making • Helps motivate employees • Allows measurement of success / can judge performance / track progress Other appropriate responses should also be credited. 2(c) Outline two opportunities of globalisation for GBR. 4 To use words from the stem as application the reference must be Award 1 mark for each relevant opportunity (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 potential sales / access to more markets [k] which could help it • Shoes achieve its profit objective [app] • 18 000 pairs per week • Increase brand awareness [k] as does not currently export [app] • 450 employees • Spread risk [k] when making its shoes [app] • Limited company • Access to cheaper labour [k] as currently has 450 employees [app] • Does not export • Access to cheaper materials [k] to make 18 000 pairs (per week) [app] • Objective is profit Other appropriate responses should also be credited. Other appropriate examples in context can still be credited. 2(d) Explain how one objective for each of the following stakeholder 6 To use words from the stem as groups might conflict with GBR’s objective to increase profit. application the reference must be appropriate (i.e. make sense) in relation Award 1 mark for identification of each relevant objective (max 2). to the point 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: Award 1 mark for each relevant explanation (max 2). • Shoes • 18 000 pairs per week Employees: • 450 employees • May want higher / high pay [k] for its 450 employees [app] which could • Limited company lead to higher costs [an] • Does not export • May want job security [k] especially with globalisation [app] but GBR • Globalisation might want to make some redundant [an] • Safe working conditions [k] Other appropriate examples in context • Job satisfaction / motivation / training / promotion [k] can still be credited. Suppliers: • Might want to charge higher prices [k] for materials for the shoes [app] whereas GBR might want to use its power to reduce prices (to increase profit margin) [an] • Increased / regular number of orders [k] but GBR might want to reduce orders [an] • Receive prompt payment for goods supplied [k] but this could increase cash outflows / lead to liquidity problems [an] • To be treated fairly [k] Other appropriate responses should also be credited. 2(e) Do you think the size of the market is the most important factor for a 6 This is a general question so there are business to consider when deciding on a method of production? no marks for application. Justify your answer. Some analysis could be used as Award up to 2 marks for identification of relevant points. development for more than one point but do not award the same point twice as Award up to 2 marks for relevant development of points. this is repetition. Award 2 marks for a justified decision as to whether the size of the market is the most important factor for a business to consider when deciding on a method of production. Points might include: Size of the market: • If high level of demand needs to be able to produce a lot [k] otherwise risk losing sales [an] Other factors include: • Capital available / cost [k] as business might not be able to afford machinery needed for some methods [an] • Type / variety / nature of product [k] as if the product is unique then do not need to produce on large scale [an] • Availability of suitable employees [k] • Factory space / storage space available [k] Other appropriate responses should also be credited. Justification might include: The size of market is important because if demand is low then fewer products need to be made [k] so large-scale production may result in excess output [an]. However, I think type of product [k] is more important because if the product is unique then do not need to produce on large scale [an]. Then the business has limited choice about the method it can use [eval] and if the business cannot produce a product that meets customer needs, the size of market doesn’t really matter. [eval]

Mark scheme

3(a) Identify two reasons why people work. 2 Only award the first two responses given. Award 1 mark per reason (max 2). Points might include: • To earn money / pay for basic needs • Job satisfaction / feeling you have done a good job • Safety / security or examples such as knowing job is safe • Social or examples such as feel part of a group • Esteem / recognition / status • Opportunity to reach your potential / challenge yourself to do new things / learn new skills / gain experience • Help others / society Other appropriate responses should also be credited. 3(b) Define ‘trade union’. 2 Award 2 marks for a full definition. Award 1 mark for a partial definition. Group of workers who join together to ensure their interests are protected [2] OR Organisation that represents the workers and fights for improvements to pay and conditions [2] Partial definition e.g. group of people who act together to protect their rights [1] 3(c) Identify the four stages of the business cycle. 4 Only award the first four responses given. Award 1 mark per stage (max 4). Can award the following alternatives to • Recession 'slump' - downturn or depression. • Slump • Growth • Boom 3(d) Explain one benefit and one limitation for MDL of using induction 6 To use words from the stem as training. application the reference must be appropriate (i.e. make sense) in relation Award 1 mark for identification of a relevant benefit/limitation (max 2). to the point 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: Award 1 mark for each relevant explanation (max 2). • Hotel • 160 rooms Points might include: • 20 employees • Business cycle Benefits: • Trade union (membership is • Helps new employees understand / familiarise with the encouraged) work / workplace / job role [k] so can help maintain standards [an] in the hotel [app] Other appropriate examples in context • May be a legal requirement [k] so must offer to avoid any fines [an] and can still be credited. possible action by the trade union [app] • Less likely to make mistakes [k] which can help protect the business reputation [an] Limitations: • Employees are not working but are still being paid [k] which increases costs [an] of the 20 employees [app] • Delays when employees start their job [k] so may not be able to operate at full capacity [an] of 160 rooms [app] • Increased costs [k] Other appropriate responses should also be credited. 3(e) Explain two stages of the recruitment and selection process that 6 This is a general question so there are businesses use. Which stage do you think is more important? Justify no marks for application. your answer. The focus of the answer should focus on Award up to 2 marks for identification of relevant points. the business and not employees. Award up to 2 marks for relevant development of points. Award 2 marks for a justified decision as to which stage of the recruitment and selection process is more important. Points might include: • Job analysis [k] helps work out whether need to recruit someone / tasks and duties can be given to someone else [an] • Job description [k] provides a clear idea of what job involves [an] so can help avoid applications from people who cannot do the job [an] • Person / job specification [k] identifies qualifications / skills / experience needed [an] • Advertising the vacancy [k] which raises awareness of the job [an] increasing the number of potential applicants [an] • Shortlisting / screening [k] allows business to reduce the number of candidates who will be interviewed [an] • Interview [k] allows you to find out more about the candidate (in terms of abilities / skills) [an] but this may be time consuming [an] Other appropriate responses should also be credited. Justification might include: A job description [k] is helpful as it sets out the roles and responsibilities of job [an]. Another stage is advertising the vacancy [k] which helps make people aware about the jobs [an]. I think the job description is more important because without knowing what you want the person to do, the business is unlikely to know if it has found a suitable candidate [eval]. This means that the money spent on advertising may not be cost effective. [eval]

Mark scheme

4(a) Define ‘niche market’. 2 Award two marks for a full definition. Award one mark for a partial definition. A small, usually specialised, segment of a much larger market [2] Partial definition e.g. small part / segment of a (large) market [1] OR Part of the market with specific needs / characteristics [1] 4(b) Identify two impacts of legal controls on marketing strategy. 2 Award 1 mark per impact (max 2). Points might include: • Cannot make misleading / false claims in advertisements / adverts may have to be changed or withdrawn / influence where / when / who it can be advertised • Increase costs / time spent on marketing • May have to change what is written on packaging / ensure product description is accurate on packaging / make sure information promotion / packaging is not misleading • Cannot sell underweight goods • Cannot charge less than minimum price set / cannot charge more than maximum price set / cannot fix prices (with competitors) Other appropriate responses should also be credited. 4(c) Outline two reasons why having a good brand image might be 4 To use words from the stem as important for Caleb’s business. application the reference must be appropriate (i.e. make sense) in relation Award 1 mark for each relevant reason (max 2). to the point 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: • Furniture or examples such as • Increase sales / customers [k] of his handmade product [app] tables/chairs • To differentiate the product (from competitors) [k] when using • Handmade ecommerce [app] • Ecommerce • Helps promote / aids recognition [k] of his furniture [app] • Legal controls over marketing • Create / maintain customer loyalty / customers will keep buying its • Location decision products rather than competitors [k] which could be important for this • New / start-up business start-up business [app] • Niche market • Can charge higher price [k] helpful as it’s a niche market [app] Other appropriate examples in context Other appropriate responses should also be credited. can still be credited. 4(d) Explain two threats to Caleb's business of using e-commerce to sell 6 To use words from the stem as his products. application the reference must be appropriate (i.e. make sense) in relation Award 2 marks for identification of each relevant threat (max 2). to the point being made. Award 2 marks for each relevant reference to this business (max 2). The following words are likely to be appropriate for this question: Award 2 marks for each relevant explanation (max 2). • (Handmade) furniture or examples such as tables/chairs Points might include: • Legal controls over marketing • More competition / difficult to stand out from competition [k] especially • Location decision as it’s a new business [app] leading to less revenue [an] • New business / start-up • No passing trade [k] so could mean fewer sales [an] which could • Niche market influence Caleb's location decision [app] • Brand loyalty (is important) • Not everyone has access to the internet [k] which reduces its target • Entrepreneur market [an] for this niche market product [app] • Cost to design / maintain website [k] increasing cash outflows [an] Other appropriate examples in context • Lack of personal service / no face-to-face contact with customers [k] can still be credited. which might make it difficult to develop brand loyalty [app] which could damage its reputation [an] • Need to pay for pop-ups to advertise on popular sites / feature at top of search engine listings [k] • Risk of hackers / fraud [k] Other appropriate responses should also be credited. 4(e) Explain two factors a service business should consider when deciding 6 This is a general question so there are on a suitable location. Which factor do you think is more important? no marks for application. Justify your answer. Some points of analysis could apply to Award up to 2 marks for identification of relevant points. several points but only award once. Award up to 2 marks for relevant development of points. Award 2 marks for a justified decision as to which is the most important factor for a service sector business to consider when deciding on a suitable location. Points might include: • Availability of suitable premises / cost of site [k] as high rent will increase (fixed) costs [an] which business might not be able to afford [an] • Access to customers / demand / sales [k] to increase revenue [an] • Government influence / grants / legal controls [k] which may influence or restrict where / how the business can operate [an] • Competitors [k] where there are many competitors it could mean high footfall [an] • Access to employees [k] as might need trained workers to offer good level of service / may not be suitable workers nearby [an] Other appropriate responses should also be credited. Justification might include: The cost of rent [k] is important as high rent will increase fixed costs [an] which the business may not be able to afford [an]. Another factor is access to customers [k]. Overall, I think customers is likely to be more important as a business has limited influence over the cost of rent whereas it can influence its sales [eval]. If it locates where there are many customers, the business has a better chance to gain enough revenue to pay its rent even if this is higher than in quieter locations. [eval]