Business 9609/12 May/June 2019: question paper and mark scheme

Mark scheme

1(a) Define the term ‘supply’. 2 The quantity of a product / service that businesses are prepared to supply / produce (1). Raw materials sold to a business / coming out of a business / offer / deliver to the market (1). Quantity available to purchase (1). To supply at a given price / has a positive relationship with price (1). To supply at a given time / place (1). Sound definition – 2 of the factors listed above. (2 marks) Partial definition – 1 of the factors listed above. (1 mark) No creditable content. (0 marks) 1(b) Briefly explain two non-price factors which could increase the demand 3 for a product or service. Answers could include: • Increase in consumer income. • There is limited supply. • Consumer confidence in the product / brand image. • Changes in population size and structure. • Changes in consumers’ fashion and tastes. • Degree and type of product marketing / advertising. • Availability of substitute products. • Seasonal variations. • Convenience / accessibility of the place. Sound explanation of two non-price factors which could increase the demand for a product or service. (3 marks) Sound explanation of one non-price factor or partial explanation of two non- price factors which could increase the demand for a product or service. (2 marks) Partial explanation of one non-price factor which could increase the demand for a product or service or a list of two. (1 mark) No creditable content. (0 marks)

Mark scheme

2(a) Define the term ‘business leadership’. 2 Motivating / inspiring staff (1). To achieve objectives / goals / aims (1). Directing an organisation (1). Having a vision for a business / organisation (1). Having a strategy for a business (1). • Definitions that simply refer to management functions such as control, coordination, resource allocation should not be awarded marks. • If, however, such an answer includes the activity motivation then this should be regarded as a partial answer and be awarded 1 mark. • Listing types of leadership should not be awarded marks. Sound definition – 2 of the factors listed above. (2 marks) Partial definition – 1 of the factors listed above. (1 mark) No creditable content. (0 marks) 2(b) Briefly explain two styles of business leadership. 3 Autocratic / authoritarian: all decisions taken at the top of the organisation, or by the leader. Democratic: employees encouraged to participate in decisions. Laissez-faire: ‘hands off’ approach, opposite of autocratic, most decisions left to employees. Paternalistic: leader may listen and consult but will take decisions as ‘they know best’. • A sound answer may be one that (a) defines a style of leadership as above and then (b) briefly explains some aspect of that style such as impact on employees, impact on quality of decisions, speed of decisions, resulting empowerment, increased delegation. Such an answer should be awarded 2 marks (for each style). • A partial answer is one that perhaps gives a single definitional sentence with no additional explanation. Such an answer should be awarded 1 mark (for each style). Sound explanation of two styles of business leadership. (3 marks) Sound explanation of one style of business leadership or partial explanation of two. (2 marks) Partial explanation of one style of business leadership or a list of two. (1 mark) No creditable content. (0 marks)

Mark scheme

3 Explain how the interests of two stakeholder groups could affect the 5 decisions of a business. Answers could include: • Define stakeholders – people or groups who have an interest in / relationship with a business. • Different stakeholders in a typical business – employees – management – shareholders – customers – suppliers – local economy – local / national government – pressure groups. • Business decisions of interest to stakeholders include: profit distribution – expansion – diversification – supplier policy – degree of social responsibility – operating methods – remuneration and motivating policies. • Different stakeholders will have views on such business decisions that may lead to conflict among the stakeholders or between some stakeholders, e.g. shareholders vs. employees with regard to profit distribution – so decisions could be changed or overruled or supported with or without conflict. Effective explanation of two stakeholder groups and how their interests could affect the decisions of a business. (4–5 marks) Explanation of two stakeholder groups and how their interests could affect a business. (3 marks) Explanation of one stakeholder group and how their interests could affect a business. (2 marks) Descriptive information about stakeholders / business decisions. (1 mark) No creditable content. (0 marks)

Mark scheme

4(a) Define the term ‘job production’. 2 Production of a one-off / unique product or service (1) specially designed by / for a customer (1). One product made at a time (1). Labour intensive production process (1). Requiring a highly skilled work force (1). A method of production (1). A relevant example such as a piece of jewellery (1). Sound definition – 2 of the factors listed above. (2 marks) Partial definition – 1 of the factors listed above. (1 mark) No creditable content. (0 marks) 4(b) Briefly explain why a business might choose flow production as a 3 method of operation. Answers could include: • Producing items in a continually moving process might be the best production for the business, e.g. in production of identical standardised cars on an assembly line. • Can make use of high technology methods – robot arms. • Can mass produce items to a consistent standard. • Offers economies of scale and low costs for a one-size-fits-all product – possible price reductions and increased sales can result. • Can produce different content products on the same production line (e.g. Coke, Sprite). • The market demands high volume, capital is available, unskilled workforce available might suggest a choice of flow production. Sound explanation of the advantages of flow production which cause a business to choose this method of operation. (3 marks) Partial / limited explanation of the advantages of flow production which cause a business to choose this method of operation. (2 marks) Explanation / reference to flow production. (1 mark) No creditable content. (0 marks)

Mark scheme

5(a) Analyse the advantages of crowd funding as a source of finance for 8 small businesses. Level Description Marks 4 Good analysis of the advantages of crowd funding 7–8 as a source of finance for small businesses. 3 Some analysis of the advantages of crowd funding 5–6 as a source of finance for small businesses. 2 Some application of the advantages of crowd 3–4 funding as a source of finance for small businesses. 1 Limited understanding of crowd funding / source of 1–2 finance / small businesses. 0 No creditable content. 0 Answers could include: • Small businesses typically have significant problems in raising funds. • The practice of funding a project / venture by raising monetary contributions from a large number of people, typically via the internet. • Access to cheap(er) money for small and medium sized businesses. • May not have to pay interest or be repaid. (However, in some instances crowd funding may have interest and repayment.) • No need to sell an equity stake in the business. • Fast and flexible source of finance. • Allows many more speculative projects to be funded. • Supports business expansion. • Acts as a marketing / brand tool. • May give feedback and advice to project fund seeker. • Entrepreneurs do not have to risk own money for a new venture. 5(b) ‘Financial measures are the most important indicators of business 12 performance.’ Discuss this view. Level Description Marks 4 Effective evaluation of the view that financial 9–12 measures are the most important indicators of business performance. 3 Limited evaluation of the view that financial 7–8 measures are the most important indicators of business performance. 2 Analysis and some application of the view that 3–6 financial or non-financial measures are important indicators of business performance. 1 Understanding of financial / non-financial measures 1–2 / business performance. 0 No creditable content 0 Answers could include: • In recent years, there have been moves towards supplementing financial measures of performance such as financial results data and ratio analysis. Nevertheless, quantitative measures of business performance are important and strong answers may well outline the value of financial measures before discussing the case for including the qualitative performance measures. • Financial measures could include the following: profit, cash flow, break even, liquidity (current ratio, acid test ratio), profitability (gross profit margin, net profit margin and return on capital employed). Reference may also be made to income statements and statements of financial position. • Recognition of the limitations of financial data and often too little emphasis on the qualitative drivers of performance, such as innovation, quality, employee relations, intangible assets. • Advantages of non-financial methods of performance measurement: – drivers to success are often intangible assets – customer loyalty – innovation, management capability, employee relations, brand value – may well compose a significant proportion of the value of a business. • Non-financial measures are more closely linked to long-term strategy of a business – the progress made towards reducing competition, increasing customer loyalty – while traditional measures are more short term. • Evaluative answers may just focus on the value and advantages of financial / quantitative measures and assess their performance. • Non-financial measures can be better indicators of the long term / future financial performance – R&D decisions made now may well produce longer term benefits – traditional measures do not capture this.

Mark scheme

6 Discuss the likely impact on the marketing mix of a bank that decides 20 to make increasing use of the Internet to provide its services. Level Description Marks 5 Effective evaluation of the likely impact on the 17–20 marketing mix of a bank that decides to make increasing use of the Internet to provide its services. 4 Limited evaluation and good analysis of the likely 13–16 impact on the marketing mix of a bank that decides to make increasing use of the Internet to provide its services. 3 Analysis of the likely impact on the marketing mix of 11–12 a bank that decides to make increasing use of the Internet to provide its services. 2 Limited analysis, with application, of the likely 5–10 impact on the marketing mix of a business that decides to make increasing use of the internet to provide its services. 1 Understanding of the marketing mix / 4P’s / 4 C’s / 1–4 Internet / banking. 0 No creditable content. 0 Answers could include: • Some description of the 4 P’s / 4 C’s. • Recognition of this change of emphasis to a focus on internet banking – a change of direction. • Impact on the 4 P’s / 4 C’s might refer to: – Product / Customer – revised product – on-line banking – a new offer – personal control of banking for customers a more comprehensive product – access to instant review of banking position – a full range of services such as payment of bills to arranging credit and insurance at the click of a mouse. – Place / Convenience – opportunity to manage your account wherever you are – on laptop – tablet – phone – impact on traditional ‘high street’ locations – traditional bank staff to lose jobs. – Price / Cost – potential reduction in location costs – although internet banking is very competitive. – Promotion / Communication – significant change here – opportunity to sell many more bank-related services – messages directed to individual customers – immediate and focussed. • Evaluative answers will recognise new opportunities and challenges to banks as they make increasing use of the internet and the requirement to relate the 4 P’s / 4 C’s to this new environment. • Comment may be made as to which of the 4 P’s / 4 C’s may be more affected by the use of the internet.

Mark scheme

7(a) Analyse the impact of social enterprises on the development of a 8 country. Level Description Marks 4 Good analysis of the impact of social enterprises on 7–8 the development of a country. 3 Some analysis of the impact of social enterprises 5–6 on the development of a country. 2 Some application of the impact of social enterprises 3–4 on the development of a country. 1 Limited understanding of social enterprises 1–2 0 No creditable content. 0 Answers could include: • Recognition of the purpose and objectives of social enterprises – businesses with mainly social objectives that reinvest profit into social benefit activities. • Commercial businesses that aim to make a surplus in socially responsible ways and distribute any profit to society – business principles with social objectives – economic – social – environmental objectives – triple bottom line businesses. • Social enterprises enrich the types of business units in a country – provide services that PLCs and other businesses cannot or do not want to provide – so important in developing a variety of business responses and objectives. • Examples of impact of social enterprises: – Provide finance for emerging entrepreneurial projects; allow small businesses to be set up; provide finance for environmental improvement; fill a gap when NGOs and charities run out of funds; supplement key infrastructure systems. • This can be very important in stimulating the economy and giving a different emphasis to business objectives and opportunities. 7(b) ‘The purchase of an internationally recognised fast food franchise 12 guarantees business success.’ Discuss this view. Level Description Marks 4 Effective evaluation of the statement that ‘the 9–12 purchase of an internationally recognised fast food franchise guarantees business success.’ 3 Limited evaluation of the statement that ‘the 7–8 purchase of an internationally recognised fast food franchise guarantees business success.’ 2 Analysis and some application of the view that the 3–6 purchase of a franchise guarantees business success. 1 Understanding of franchises / business success. 1–2 0 No creditable content. 0 Answers could include: • An understanding of the advantages of engaging in business activity via a franchise. • Advantages of using the name and logo of a successful business offers such opportunities as: – More chance of business success when using an established brand and product. – National / international promotion is available, often at nil or limited cost. – Training and advice offered by franchiser. – Location of business protected. – Supplies of food guaranteed in terms of quality and consistency. • However, is a franchisee guaranteed success? • There are significant costs to pay before ‘profit’ is achieved. • The business still needs to be effectively and efficiently managed – e.g. quality of serving and food production employees – is there managerial capability – what happens if the franchise business suffers as a result of recession in particular companies – or reputation suffers – or customer tastes change? • It also depends on what is meant by ‘business success’ – short-term – long-term – profits – expansion? • Discussion of points referred to in bullet points 6 and 7 offer opportunities for candidates to make evaluative comments on the provocative statement at the head of this question. • Effective evaluation is likely to be evidenced by a consideration / discussion of the extent to which business success is likely to be guaranteed by a fast food franchise and of other factors which are associated with business success.