Business Studies 0450/13 October/November 2023: question paper and mark scheme

Mark scheme

1(a) Identify two benefits to a business of specialisation. 2 Only award the first two responses given. Award 1 mark per benefit (max 2). Points might include: • Increases output • Quicker production / increases productivity / higher efficiency • Lower unit cost / economies of scale • Workers become expert/more skilled / employees focus on what they are good at • Improves accuracy / better quality / fewer mistakes / reduces waste • Helps improve competitiveness Other appropriate responses should be credited. 1(b) Identify two ways a business can grow. 2 Only award the first two responses given. Award 1 mark per way (max 2). Points might include: • Takeover • Merger • Develop new products • Enter new markets • Increasing sales (of existing products) / open more locations • Franchising Other appropriate responses should be credited. 1(c) Outline one possible advantage and one possible disadvantage of DBR being a 4 To use words from the stem as public limited company. application, the reference must be appropriate (i.e. make sense) in Award 1 mark for each relevant advantage / disadvantage (max 2). 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 appropriate for this question: Points might include: • Mining business / mine • Diamonds Advantages: • 8 (mines) • Can raise large amounts of finance [k] so can continue to grow [app] • Grown quickly / continue to • Can sell shares to general public / no restrictions on buying, transferring / selling grow shares [k] of this mining business [app] • $600 million (profit) • May be able to borrow at low rates of interest [k] • Large (business) • High status / seen as more creditworthy to suppliers [k] • Limited liability (for shareholders) [k] Other appropriate examples can • Incorporated business / separate legal identity [k] be credited. • Continuity [k] Disadvantages: • Many regulations / has to publish its accounts [k] so everyone knows its profit was $600 million [app] • High cost / lengthy process to sell shares [k] • Risk of takeover / original owners may lose control (if too many shares are issued) [k] Other appropriate responses should also be credited. 1(d) Explain two diseconomies of scale DBR might experience. 6 To use words from the stem as application, the reference must be Award 1 mark for identification of each relevant diseconomy of scale (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 Award 1 mark for each relevant explanation (max 2). be appropriate for this question: • Mining business / mine Points might include: • Diamonds • Low motivation / lack of commitment [k] for its 3000 employees [app] leading to • 8 (mines) higher labour turnover / more workers leaving [an] • 3000 (employees) • Poor communication [k] between the mines [app] leading to mistakes being made/ • Grown quickly / continue to inefficiency [an] grow • Weak / lack of co-ordination [k] leading to the wrong decisions [an] reducing the • $600 million profit of $600 million [app] • Specialisation • Lack of control [k] leading to higher average costs [an] • Public limited company • Large (business) Other appropriate responses should be credited. Other appropriate examples can be credited. 1(e) Explain two ways the size of a primary sector business can be measured. Which 6 This is a general question so do you think is the best way? Justify your answer. there are no marks for application. Award up to 2 marks for identification of relevant issues. For evaluation to be awarded Award up to 2 marks for relevant development of points. justification will usually follow on Award 2 marks for justified decision as to which is the best way to measure the size of from relevant analysis of points. a primary sector business. Some points could be awarded for Points might include: different options, but do not award Number of employees [k] the same point twice. • Simple / easy to calculate [an] • May use a lot of machinery / capital intensive [an] • May have many part-time employees [an] so business may look larger than it is / difficult to compare [an] Value of sales [k] • Easy / quick to access data [an] • Some business may sell seasonal products [an] • If sell high value items, may not reflect size of business [an] Value of output [k] • Can be easy to compare across similar businesses [an] • If sell high value items, may not reflect size of business [an] Value of capital employed [k] • May have a lot of expensive machinery / capital which makes business look bigger than it is [an] Other appropriate responses should be credited. Justification might include: One way is value of output [k] as easy to compare across similar businesses [an]. Another is number of employees [k] which is simple to calculate [an]. Value of output is likely to be a better way because many primary sector businesses may use a lot of machinery which means it has fewer employees [eval] so any comparison of employees is likely to be misleading [eval].

Mark scheme

2(a) Define ‘current liabilities’. 2 Award 2 marks for a full definition. Award 1 mark for a partial definition. Short-term debts owed by a business, repaid in less than one year [2] OR Debts of a business which it expects to pay before the date of the next statement of financial position [2] Partial definition e.g. money owed by a business [1] 2(b) Calculate NPZ’s return on capital employed (ROCE). Show your working. 2 Award max 1 mark if 20% is written as part of the answer but is Award 2 marks for the correct answer. Award 1 mark for correct method but incorrect not given as the final answer. answer. Answer must be shown as a Correct answer: 20% [2] percentage % to gain both marks. Correct method but incorrect answer e.g. profit / capital employed × 100 [1] OR 60 000 / 300 000 × 100 [1] If correct answer given with no working shown, award 2 marks. 2(c) Outline two possible benefits to NPZ of having well-motivated employees. 4 To use words from the stem as application, the reference must be Award 1 mark for each relevant benefit (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 Points might include: be appropriate for this question: • Increased productivity/efficiency [k] of the 35 employees [app] • Restaurant or related words • Increase output [k] of pizzas [app] • Pizza or related words such • Reduced absenteeism [k] among the part-time employees [app] as food • Lower labour turnover [k] so business can focus on ways to increase profit [app] • 35 employees • Willing to accept changes / new methods of working [k] in the restaurant [app] • Part-time • Improves quality [k] • Ways to increase profit • $600 000 (revenue) Other appropriate responses should be credited. • $240 000 (gross profit) • $60 000 (profit) • $300 000 (capital employed) • 20% (ROCE) Other appropriate examples can be credited. 2(d) Explain two methods NPZ could use to improve employee motivation. 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 to the point being made. Award 1 mark for each relevant reference to this business (max 2). The following words are likely to Award 1 mark for each relevant explanation (max 2). be appropriate for this question: • Restaurant or related words Points might include: • Pizza or related words such • Increased wages / salary / rate of pay [k] as the revenue is $600 000 [app] so as food workers are better able to meet their basic needs [an] • 35 employees • Praise [k] to meet esteem needs [an] of the 35 employees [app] • Part-time • Offer training [k] so employees feel more valued / important [an] to the restaurant • Ways to increase profit [app] • $600 000 (revenue) • Employee of the month / recognition [k] so workers feel their hard work is • $240 000 (gross profit) acknowledged [an] • $60 000 (profit) • Job enrichment [k] as gives employees tasks which require more skills / • $300 000 (capital employed) responsibilities [an] • 20% (ROCE) • Introduce job rotation [k] so employees are not bored doing the same thing / work is more varied [an] Other appropriate examples can • Bonus [k] so workers have an incentive to work harder to get bonus [an] be credited. • Profit-sharing [k] so employees have an interest in the success of the business [an] • Offer fringe benefits (or examples – discounts on products) [k] • Team working [k] would provide support / sense of belonging [an] • Opportunity for promotion [k] which could lead to higher pay [an] Other appropriate responses should be credited. 2(e) Do you think reducing variable costs is the best way for a business to improve 6 This is a general question so profit? Justify your answer. there are no marks for application. Award up to 2 marks for identification of relevant issues. For evaluation to be awarded Award up to 2 marks for relevant development of points. justification will usually follow on Award 2 marks for justified decision as to whether reducing variable costs is the best from relevant analysis of points. way for a business to improve profit. Some points could be awarded for Points might include: different options, but do not award • No need to increase prices [k] as this could result in fewer sales [an] the same point twice. • Would reduce break-even output [k] • Increase (gross) profit margin [k] • Cheaper materials may lower quality [k] damaging reputation [an] Other ways might include: Increasing prices [k] • May increase revenue [an] • May improve brand image [an] • Lead to lower customers / could make them less competitive [an] Increase number of sales / quantities sold [k] • May increase costs of advertising [an] • Competitors may respond with own promotion [an] Lowering fixed costs (or examples such as lower rent) [k] • Reduces break-even output [an] • Unlikely to be able to change fixed costs quickly [an] • Other appropriate responses should also be credited. Justification might include: It could buy cheaper materials to lower variable costs [k] but this could mean poorer quality goods [an]. It could increase the quantity sold [k] but this might increase its promotion costs [an]. Increasing the quantity sold is a better method because the reputation of the business is protected so existing customers should remain loyal [eval] and the additional revenue should hopefully cover the extra cost [eval].

Mark scheme

3(a) Define ‘brand image’. 2 Award 2 marks for a full definition. Award 1 mark for a partial definition. Identity / logo / unique name of a product that distinguishes it from other brands [2] OR The general impression / perception / reputation of a product held by consumers [2] Partial definition e.g. identity given to a product [1] OR something that distinguishes a product from its competitors [1] OR how the product is seen / perceived by others / public [1] Other appropriate responses should be credited. 3(b) Identify one benefit and one limitation for a business of developing new 2 Only award the first response products. given for benefit/limitation. Award 1 mark per benefit/limitation (max 1 for each). Points might include: Benefits: • Increase sales / revenue / customers • Spread risk / diversification • Enter new markets • Help expand into existing markets / increase market share • Improve competitive advantage / Unique selling point (USP) • Improve brand image / better reputation • Maintain customer loyalty Limitations: • Cost of market research • Cost of research and development (R&D) • Cost of producing / testing trial products • Cost of new machinery • May need to recruit / cost of additional employees / specialists • Cost of launching / promoting / advertising new product in market Other appropriate responses should be credited. 3(c) Outline two possible reasons why BKS might respond to environmental 4 To use words from the stem as pressures. application, the reference must be appropriate (i.e. make sense) in Award 1 mark for each relevant reason (max 2). 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 appropriate for this question: Points might include: • Brand image • Avoid pressure group action / boycotts [k] which may damage brand image [app] • Food • Protect reputation / brand image [k] of its food [app] • Developing new products • Respond to changing customer demands [k] by developing new products [app] • (Sell to) retailers • Attract / maintain sales [k] to (large) retailers [app] • Product life cycle • Differentiate from competitors [k] Other appropriate examples can Other appropriate responses should also be credited. be credited. 3(d) Explain how BKS’s marketing decisions about promotion might be affected if a 6 To use words from the stem as product is in the following stages of the product life cycle. application, the reference must be appropriate (i.e. make sense) in Award 1 mark for identification of each relevant effect (max 2). 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 appropriate for this question: Award 1 mark for each relevant explanation (max 2). • Brand image • Food Points might include: • (Developing) new products • (Sell to large) retailers Introduction stage: • Environmental pressures • High level of promotion (spending) [k] to attract / inform customers [an] about the new foods [app] Other appropriate examples can • (Advertise) to persuade / attract / inform customers [k] about its new products be credited. [app] to gain sales [an] Do not award: Maturity stage: Examples of advertising / • Low / less promotion (spending) [k] as product is well-known / want to spend promotion budget on other things [an] such as responding to environmental pressures [app] • May be used to remind customers [k] so keep buying its products / remain loyal / have constant sales [an] Other appropriate responses should be credited. 3(e) Do you think selling direct to retailers is the best channel of distribution for a 6 This is a general question so manufacturer to use? Justify your answer. there are no marks for application. Award up to 2 marks for identification of relevant issues. For evaluation to be awarded justification will usually follow on Award up to 2 marks for relevant development of points. from relevant analysis of points. Award 2 marks for justified decision as to whether selling direct to retailers is the best Some points could be awarded for channel of distribution for a manufacturer to use. different options, but do not award the same point twice. Points might include: • Can sell in large quantities / wide distribution / access to more customers [k] Do not award: leading to higher potential revenue [an] Benefits to customers • Retailers can help promote / advertise products [k] which raises awareness / increase sales [an] • Can hold less inventory [k] lowering storage costs [an] • No direct contact with customers [k] so may lack up-to-date information about current trends / difficult to build customer relationships [an] • Retailers takes some of the profit [k] lowers profit margin [an] Wholesalers [k] • Bulk buy / buy in large amounts [an] • Save storage space [an] lowering storage costs [an] • Price may be higher [k] as wholesaler adds mark-up [an] / fewer sales [an] Sell direct to customers [k] • Can sell at lower price [an] leading to more sales [an] • Higher profit / no need to pay middleman [an] • May have to employ extra employees to manage high number of orders [k] which increases costs [an] Agent [k] • Has local market knowledge [an] Other appropriate responses should be credited. 3(e) Justification might include: Retailers offer a wide distribution [k] which can help increase potential sales [an]. Selling direct to customers [k] would mean the business could keep all the profit [an]. I think selling to retailers is better as the high sales will increase the total revenue [eval] which will offset the lower profit margin. [eval]

Mark scheme

4(a) Define ‘import quota’. 2 Do not award answers which confuse the term with a tariff. Award 2 marks for a full definition. Award 1 mark for a partial definition. Physical limit on the number / amount of goods that can be imported / allowed into a country [2] OR Restriction on the quantity of a product than can be imported [2] Partial definition e.g. limit on number of goods [1] OR limit on imports [1] 4(b) Identify two advantages to a country of having lower levels of unemployment. 2 Only award the first two responses given. Award 1 mark per advantage (max 2). Points might include: • Increase in incomes / high(er) standard of living • Low(er) payments for benefits / less government spending • Increased tax receipts • Economic growth / higher GDP / increased demand / sales Other appropriate responses should be credited. 4(c) Identify four possible drawbacks for a country of having a multinational 4 Only award the first four company located there. responses given. Award 1 mark per drawback (max 4). Points might include: • (Increased) competition • May offer low wages / poor working conditions / may only create unskilled jobs / exploitation of labour • Use up scarce resources • Environmental issues / damage / pollution • Repatriation / send profits back to home country • Often try to avoid / reduce amount of tax paid • Power to influence government decisions / local economy Other appropriate responses should be credited. 4(d) Explain two factors FXN should consider when deciding on a suitable location 6 To use words from the stem as for the new factory. application, the reference must be appropriate (i.e. make sense) in Award 1 mark for identification of each relevant factor (max 2). 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 appropriate for this question: Award 1 mark for each relevant explanation (max 2). • Multinational company • 1200 jobs Points might include: • (Mobile) phones • Rent [k] increasing fixed costs [an] when making phones [app] • Lower level of unemployment • Available / amount of space [k] as likely to need a large area [an] • Recruitment process • Availability / access to employees [k] as 1200 jobs [app] to make sure quality / • Import quotas efficiency is maintained [an] • Availability of / distance to raw materials / suppliers [k] to avoid import quotas Other appropriate examples can [app] which could increase transport costs [an] still be credited. • Access to water / power / utilities [k] so production does not stop [an] • Government influence / legal controls / access to grants [k] which would reduce Some points can be [k] or [an] but costs [an] for this multinational company [app] only award once. • Environmental impact [k] which could damage brand image [an] • Transport / communication links [k] Do not award factory as application as stated in question. Other appropriate responses should be credited. 4(e) Do you think a recruitment website, which advertises jobs, is the best method 6 This is a general question so for a business to use when recruiting a large number of employees? there are no marks for application. Justify your answer. For evaluation to be awarded Award up to 2 marks for identification of relevant issues. justification will usually follow on from relevant analysis of points. Award up to 2 marks for relevant development of points. Some points could be awarded for Award 2 marks for a justified decision as to whether a recruitment website, which different options, but do not award advertises jobs, is the best method for a business to use when recruiting a large the same point twice. number of employees. Points might include: Recruitment website: • As many / most people use the internet to look for jobs [k] so able to attract a wider pool of candidates [an] • Some people do not have access to the internet [k] • Advert could easily be missed (as many different websites) [k] Other methods might include: Newspapers [k] • Seen by many people / wide exposure [an] • Most people do not read newspapers [an] so possible candidates might not see the advert [an] • Only shown for a limited amount of time [an] • Must pay to advertise [an] which increases expenses [an] Recruitment agency [k] • Have expert knowledge / only send suitable people / do work for business [an] saving time on interviewing [an] • Charge a high fee [an] which increases expenses [an] Other appropriate responses should be credited. 4(e) Justification might include: A recruitment website is good as many people will look online for jobs [k] helping to attract a wider pool of candidates [an]. A recruitment agency [k] is good as it has expert knowledge [an]. A recruitment agency is better when recruiting a large number of employees because it can use its knowledge to only send suitable candidates [eval] so the business does not waste time interviewing a large number of unsuitable people [eval].