Business Studies 0450/11 October/November 2024: question paper and mark scheme

Mark scheme

1(a) Identify two benefits to a business of using flow 2 Only award the first two responses given. production. Do not award: Award 1 mark per benefit (max 2). Vague comments such as saves time, cheaper, quicker, faster on their own. Points might include: • High output / large number of products made • (Purchasing) economies of scale / discounts for bulk buying / low average/unit costs • Lower labour cost / less workers needed • Increased efficiency/productivity / goods are produced quickly • No need to move goods from one part of the factory to another • Consistent/standardised quality. Other appropriate responses should be credited. 1(b) Identify two reasons why people work. 2 Only award the first two responses given. Award 1 mark per reason (max 2). Do not award: Vague answers such as relieve boredom, something to do, Points might include: like what they do. • (Earn) money/wage/salary/improve standard of living • Job satisfaction / feel as if you have done a good job • Safety/security for example job security • Social or examples such as feel part of a group/company • Esteem/recognition/status/feel important/valued • Opportunity to reach potential / challenge self to do new things • Help people/provide a service to community/others. Other appropriate responses should be credited. 1(c) Outline one advantage of RSL using each of the 4 To use words from the stem as application, the reference following methods of internal communication. must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for identification of each relevant advantage (max 2). The following words are likely to be appropriate for this Award 1 mark for each relevant reference made to this question: business (max 2). • Paint • 10 million litres Points might include: • Flow production Email: • Relocate (to another country) • A lot of information/detail/documents can be shared [k] • 80/86 employees with the 80 employees [app] • 6 managers • Can send information/message to multiple people at the • Factory same time [k] about the paint [app] • Manufacturer • Keep a copy (to refer to) [k] • Different leadership styles. • Can communicate with people in a different location [k] • Low cost/cheap [k] Other appropriate examples can be credited. • Can check if the message has been read [k] Award only once in the answer: Telephone calls: Low cost/cheap [k] • Quick [k] if there is a problem using flow production Fast/quick [k] [app] • Opportunity for (instant) questions/discussion/decisions [k] with one of the 6 managers [app] • Feedback (straightaway) [k] Other appropriate responses should also be credited. 1(d) Explain two leadership styles RSL’s managers might 6 To use words from the stem as application, the reference use. must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for each relevant leadership style (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: Award 1 mark for each relevant explanation (max 2). • Paint • 10 million litres Points might include: • Flow production • Autocratic [k] when the manager instructs/ tells workers • Relocate (to another country) what to do [an] when using flow production [app] • 80/86 employees • Democratic [k] when one of its 6 managers [app] asks • 6 managers employees for their ideas/opinions before making a • Email decision [an] • Telephone calls • Laissez-faire [k] when the managers leave it up to the • Factory employees to make decisions/decide what to do [an] • Manufacturer when making paint [app] Other appropriate examples can be credited. Other appropriate responses should be credited. 1(e) Explain two factors a manufacturing business should 6 This is a general question so there are no marks for consider when relocating its operations to another application. country. Which factor is likely to be the most important? Justify your answer. Some analysis could be used for different points, but only award once. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Accept costs [k] once if there is no specific reason for the Award up to 2 marks for a justified decision as to which costs given. factor is likely to be the most important for a manufacturing business when relocating its operations to another country. Points might include: • Access to raw materials [k] as without materials it can delay/stop production [an] so not able to meet orders [an] • Labour issues e.g. cost/access to suitable/skilled/enough employees [k] as lower wage rates could help lower labour costs [an] increasing its profit margin [an] • Land issues e.g. availability/cost of suitable land [k] which could increase/lower fixed costs [an] • Trade restrictions such as tariffs/quotas [k] as quotas could limit the amount of goods allowed into a country [an] • Availability of government grants / rates of taxation [k] which could reduce the amount of finance needed [an] • Legal controls [k] as this could stop/determine where the business can operate [an] • Infrastructure (accept only once) e.g. access to utilities, communications [k] as without suitable power it would be difficult to operate (efficiently) [an] • Available market/demand for the product/level of competition [k] which may reduce transport costs [an] • Language/cultural problems [k] 1(e) Other appropriate responses should be credited. Justification might include: Access to raw materials [k] without materials there may be delays in production [an]. Another factor is employees [k] as a lack of skills could lead to lower quality products [an]. Access to raw materials is the most important because without materials there is nothing to sell, lowering potential revenue [eval]. However, a business could train employees to produce quality products [eval].

Mark scheme

2(a) Define ‘entrepreneur’. 2 Do not award: Answers such as managing a business or answers which Award 2 marks for a full definition. Award 1 mark for a partial identify the skills of an entrepreneur on its own. definition. A person who organises, operates and takes the risk for a new business venture [2] OR An individual who takes the (financial) risk of starting a new business [2] OR A person who combines factors of production to start a business [2] OR An individual who takes the risk by combining factors of production [2] Partial definition e.g. a person who starts/sets up a business [1] 2(b) Define ‘business plan’. 2 Award 2 marks for a full definition. Award 1 mark for a partial definition. A document containing the business aims/objectives and important details about the operations, finance and owners of a business. [2] OR A detailed written document outlining the purpose and aim of a business which is often used to persuade lenders or investors to finance a business proposal. [2] OR States aims and/or objectives and show how business plans to achieve them. [2] Partial definition e.g. a document stating the aims of the business [1] OR A document containing details about the operations, finance and owners of a business.[1] 2(c) Outline one advantage and one disadvantage to Mitchell 4 To use words from the stem as application, the reference of using microfinance as a source of finance. must be appropriate (make sense) in relation to the point being made. Award 1 mark for each relevant advantage/disadvantage (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). • Business plan – can be used as [k] or [app] • but not both Points might include: • New/start-up business Advantages: • Books • Do not need a good credit record/history [k] for this • Ecommerce retailer [app] • Entrepreneur • Less paperwork/no business plan required [k] for this • Retailer new entrepreneur [app] • No need to provide security/collateral [k] which can help Other appropriate examples should be credited. as it is a start-up business [app] Disadvantages: • Only for a small amount [k] so cannot buy many books [app] • Usually high interest rates (as low/poor credit rating) [k] Other appropriate responses should be credited. 2(d) Explain how the market research data in Chart 1 and 6 To use words from the stem as application, the reference Chart 2 in Fig. 2.1 could help Mitchell when making must be appropriate (i.e. make sense) in relation to the point decisions. being made. Award 1 mark for identification of how the data in each chart The following words are likely to be appropriate for this can be used when making decisions (max 2). question: Award 1 mark for each relevant reference to this business • Allow book/books once as application. (max 2). Chart 1: Award 1 mark for each relevant explanation (max 2). • 27%/Older people • 35%/Children Points might include: • 20%/adults Chart 1: • 18%/students • Decide the target market [k] as children read the most Chart 2: [app] which could help increase sales/revenue [an] • Audio /10 million • Decide where to advertise [k] to attract most customers • Paperback/50 million [an] • Hardback/15 million • Other 20 million Chart 2: • Decide which type to sell [k] as only 15 million Other appropriate examples can be credited. hardbacks are sold [app] which could help reduce the amount of unsold inventory [an] Do not award: • To decide how many of each type of book he will sell [k] Answers which simply state what chart shows e.g. therefore he must have more of these in stock [an] ‘Type of books are sold’ as this is repetition. Other appropriate responses should be credited. 2(e) Do you think the opportunities of ecommerce for a new 6 This is a general question so there are no marks for business are greater than the threats? Justify your application. answer. Lower costs may be [k] or [an] but allow only once. 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 opportunities of ecommerce for a new business are greater than the threats. Points might include: Opportunities: • More potential customers/sales/widen market [k] which can increase market share [an] • No/fewer shops needed [k] so less rent/lower fixed costs [an] which increases its profit margin [an] • Fewer employees needed [k] lower labour/wage costs [an] • Easy to update [k] Threats: • Increased competition [k] so may have to spend more on advertising / have to set lower prices [an] • Potential customers do not trust online business / risk of fraud/hacking [k] therefore they are less likely to purchase [an] • Not everyone has access to the internet [k] which could reduce potential customer base [an] • Lack of personal service/no face-to-face contact [k] so difficult to maintain customer loyalty [an] • Increased costs of postage/distribution [k] which could lead to higher prices [an] • Cost to set up/maintain website [k] which business might not be able to afford [an] 2(e) Other appropriate responses should also be credited. Justification might include: One opportunity is more potential customers [k] increasing market share [an]. However, there may be increased competition [k] increasing promotional costs [an]. The opportunity is greater because more customers could increase revenue which is likely to cover the additional costs [eval] increasing the chances of a new business being successful. [eval]

Mark scheme

3(a) Define ‘capital employed’. 2 Accept correct calculations for 2 marks: • Non-current assets + working capital Award two marks for a full definition. Award one mark for a • Long term liabilities plus equity partial definition. • Total assets – current liabilities (Shareholders/owners) equity plus non-current liabilities and is the total long-term capital invested in the business [2] OR Value of all long-term finance invested in a business [2] OR Represents how much money has been invested in the business to pay for all assets [2] Partial definition e.g. finance/money invested in a business [1] 3(b) Calculate JTA’s return on capital employed (ROCE). 2 Only award 1 mark if 12.5% is written as part of the answer Show your working. but is not given as the final answer. Award 2 marks for a correct answer. Award 1 mark for correct method but incorrect answer. Correct answer: 12.5% [2] Method: Profit ÷ capital employed × 100 [1] OR 100 ÷ 800 × 100 [1] If correct answer given with no working shown award 2 marks. 3(c) Outline two benefits to JTA of selling in a mass market. 4 To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point Award 1 mark for each relevant benefit (max 2). 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: • Holidays • High number of customers/sales [k] from its 44 shops • $900m (revenue) [app] • $100m (profit) • Spread risk [k] when selling holidays [app] • 44 shops • Economies of scale/examples of economies of scale [k] • Public limited company which could help increase its profit of $100m [app] • 200 employees • Opportunities for growth [k] for this public limited • (Finance director is considering) increase to profit company [app] Other appropriate examples can be credited. Other appropriate responses should be credited. 3(d) Explain one advantage and one disadvantage of JTA 6 To use words from the stem as application, the reference being a public limited company. must be appropriate (i.e. make sense) in relation to the point being made. Award 1 mark for identification of each relevant advantage/disadvantage (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). • Holidays Award 1 mark for each relevant explanation (max 2). • Mass market • $900m (revenue) Points might include: • $100m (profit) Advantages: • $800m (capital employed) • Able to raise more/large amount of finance [k] to fund • 44 shops growth [an] in this mass market [app] • 200 employees • No restrictions on buying/selling shares / can sell shares • (Finance director is considering) increase to profit to general public [k] so can raise more/large amounts of finance [an] Other appropriate examples can be credited. • Limited liability (for shareholders) [k] as personal assets do not have to sold if the business cannot pay its debts Some points can be [k] or [an] but only award once. [an] • Incorporated/separate legal identity [k] • Continuity [k] so the business will not have to close down on the death on any owner [an] Disadvantages: • Risk of takeover [k] of the holiday business [app] which could change the direction/objectives of the business [an] • Many legal formalities to follow [k] which increases costs [an] • Have to publish accounts [k] which takes time away from other activities [an] • Business information can be seen by competitors [k] therefore they can copy ideas / find ways to compete with you [an] 3(d) • Shareholders expect dividends [k] which can decrease the amount of retained profit / increase cash outflows [an] Other appropriate responses should be credited. 3(e) Do you think increasing prices is the best way for a 6 This is a general question so there are no marks for business to increase its profit? Justify your answer. application. Award up to 2 marks for identification of relevant points. Some analysis can be used for different points, but only Award up to 2 marks for relevant development of points. award once. Award up to 2 marks for a justified decision as to whether increasing price is the best way for a business to increase its Allow lower costs only once as either [k] or [an] profit. Allow lower sales/higher sales as [an] only once. Points might include: Increasing prices: Customers may switch to competitors maybe [k] or [an] but • Increases revenue (if sell the same amount of products) allow only once. [k] • Higher prices may suggest better quality [k] therefore customers will be willing to pay the higher prices. [an] • Fewer customers [k] because customers may switch to competitors [an] reducing their market share [an] • Increase profit margin [k] Alternatives to increasing prices: • Buy cheaper raw materials [k] which may lower quality [an] leading to fewer sales [an] • Improve packaging/quality of product [k] increasing the number of sales [an] • Target new markets/develop new products [k] which could increase advertising costs [an] • Lower rent/expenses or other examples [k] lowering fixed costs [an] Other appropriate responses should be credited. 3(e) Justification might include: Increasing prices could increase revenue [k] if sales stay the same [an]. Reducing the cost of raw materials could increase the profit margin [k] but lower the quality [an]. Increasing prices is a better way to increase profit because lower quality products could damage their reputation [eval] and higher prices if linked to quality may attract more customers [eval]

Mark scheme

4(a) Define ‘external costs’. 2 Do not award examples. Award 2 marks for a full definition. Award 1 mark for a partial definition. Costs paid for by (the rest of) society, other than the business, as a result of business activity [2] OR Costs paid for by (the rest of) society as a result of business actions [2] OR Costs/disadvantages that fall on third parties that is not directly involved in the production process [2] OR Negative effect on a third party/society due to business actions [2] Partial definition e.g. costs that society/third party must pay [1] OR Costs incurred by people who do not take part in the production process [1] 4(b) Identify one objective each of the following stakeholder 2 Only award first response given for each stakeholder group. groups might have: Award 1 mark per objective (max 2). Points might include: Employees: • Increased pay/wages/fair wages/regular pay • Better/safe working conditions • Access to training • Job security • Have contract of employment • Work provides motivation / opportunities for promotion / improved status / job satisfaction Customers: • Safe/reliable products • Value for money/reasonable prices • Well-designed/good quality products • Reliable/good service Other appropriate responses should be credited. 4(c) Identify four ways a pressure group might try to 4 Only award the first four responses given. influence business decisions. Award 1 mark per way (max 4). Points might include: • (Organise) customer boycotts • Raise awareness or examples such as cause negative publicity / publish information / write to newspaper • Lobby/send letters to government • Demonstrations/protests • Arrange petitions • Legal action Other appropriate responses should be credited. 4(d) Explain one possible benefit and one possible drawback 6 To use words from the stem as application, the reference to a country of having FSW (a multinational company) must be appropriate (i.e. make sense) in relation to the point operating there. being made. Award 1 mark for identification of each relevant The following words are likely to be appropriate for this benefit/drawback (max 2). question: Award 1 mark for each relevant reference to this business • Steel or related words e.g. iron (max 2). • Construction industry Award 1 mark for each relevant explanation (max 2). • Manufacturer • Quality assurance/quality production Points might include: • (6) countries Benefits: • 500/3000 workers • Creates jobs/provides income [k] for those making the • Stakeholder groups steel [app] improving living standards [an] • External costs • Orders for local suppliers [k] from its 6 factories [app] • Pressure groups increasing local incomes/GDP [an] • Technical knowhow increased [k] which could help Other appropriate examples can be credited. improve production methods/efficiency/output [an] such as new ways to maintain quality [app] • Companies pay taxes [k] increasing government income / government able to provide more services to society [an] • Improve international reputation of country [k] which can attract other businesses to a country [an] • Increased investment/infrastructure development in a country [k] • Introduces new products to the country [k] Drawbacks: • Competition for local businesses [k] leading to lower demand/prices [an] for construction businesses [app] 4(d) • Uses limited resources [k] which may upset pressure groups [app] as there is less available for other local businesses [an] • Profits are often repatriated [k] limiting the country’s growth [an] • Jobs created may be unskilled [k] • Creates pollution [k]when producing steel [app] Other appropriate responses should be credited. 4(e) Do you think quality assurance is the best way for a 6 This is a general question so there are no marks for business to achieve quality production? Justify your application. answer. Some points can be presented as an advantage or a Award up to 2 marks for identification of relevant points. disadvantage of different methods but do not award the Award up to 2 marks for relevant development of points. same point twice. Award up to 2 marks for a justified decision as to whether quality assurance is the best way for a business to achieve Quality assurance: Accept – reduces wastage as either [k] quality production. or [an] but only once. Points might include: Quality assurance: • Errors are spotted earlier in process [k], so less money/time spent on rework [an] • Increased motivation of employees [k] leading to higher output [an] • Need to train all workers [k] which increases training costs [an] • Time taken to train all workers [k] who may ask for higher wages [an] • Slows down production/time consuming [k] therefore productivity will fall [an] • Not all workers might be interested/able to spot problems [k] Quality control [k] • Does not stop production while checking [an] so some output is made [an] • Not all workers need to be trained [an] which can help reduce fixed costs [an] • Need to recruit quality inspectors [an] increasing labour cost [an] • Does not find out how/where fault occurred [an] • Products will need to be scrapped/reworked [an] 4(e) • Does not encourage all workers to be responsible for quality [an] • Does not improve quality as only reduces chance of selling poor quality products [an] • Not possible to check all products [an] damaging reputation [an] Other appropriate responses should be credited. Justification might include: Quality assurance allows for errors to be spotted earlier in the process [k], so less time is spent on rework [an]. An advantage of quality control [k] is not everyone needs to be trained to check quality [an]. Quality assurance is the best way because the extra training provided is also likely to motivate employees leading to fewer mistakes anyway, and this should hopefully cover the additional cost of training. [eval] [eval].