Business 9609/11 May/June 2021: question paper and mark scheme

Mark scheme

1(a) Define the term ‘laissez-faire leadership’. 2 • a relaxed / hands-off / laid-back approach (1) • less control / authority / supervision by managers (1) • employees trusted to take decisions (1) • employees have authority to initiate and complete projects / delegation (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) Explain two disadvantages to employees of autocratic leadership. 3 Answers could include: • The strict supervision might be demotivating. • A lack of ideas from the employees; they do not feel valued or trusted. • One-way communication; the ideas of employees are not heard. • A lack of motivation / job satisfaction / morale. • Less chance for employees to ask questions. • Less chance/opportunity for employee creativity. • Lack of trust between managers and employees. • Decisions only taken by hierarchy, do not reflect the business as a whole. • Accept any other valid response. Sound explanation of two disadvantages to employees of autocratic leadership. (3 marks) Sound explanation of one disadvantage to employees of autocratic leadership or a partial explanation of two disadvantages. (2 marks) Partial explanation of one disadvantage to employees of autocratic leadership or a list of two disadvantages. (1 mark) No creditable content (0 mark)

Mark scheme

2(a) Define the term ‘market segmentation’. 2 • an approach to marketing (1) • identifies different sub-groups within a market (1) • targeting different products to each market segment / type of customer (1) • segmentation might be due to age / social factors / income levels / geographic / sociological factors. (1) • customers with similar needs/characteristics (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) 2(b) Explain two benefits to a business of market segmentation. 3 Answers could include: • better able to target potential customers. • target only segments that have high demand to maximise profits. • marketing costs can be lowered due to more specific targeting. • marketing personalised to maintain brand loyalty. • different strategies can be used for different segments. • products/services can be designed/developed to satisfy very specific needs of a group of consumers. • businesses can possibly use price discrimination by charging different prices to different sub-groups/segments. • Accept any other valid response. Sound explanation of two benefits to a business of market segmentation. (3 marks) Sound explanation of one benefit to a business of market segmentation or a partial explanation of two benefits. (2 marks) Partial explanation of one benefit to a business of market segmentation or a list of two benefits. (1 mark) No creditable content (0 marks)

Mark scheme

3 Explain the advantages to a manufacturing business of using sale and 5 leaseback of non-current assets as a source of finance. Answers could include: • Where a business sells an asset in order to raise finance and leases the same asset back from the new owner. • The business will have an inflow of money which could be large if the non-current asset is, for example, a building. This can be used to fund projects or equipment. • The business will still have access to and use of the asset after the sale, therefore the sale should not cause any disruption to the operation of the business. • The payment of regular lease payments can allow for ease of budgeting for a business. • The maintenance of the asset is usually taken over by the new owner, therefore reducing ongoing maintenance costs for the business when it leases the asset back. • Accept any other valid response. Effective explanation of the advantages to a manufacturing business of using sale and leaseback of non-current assets as a source of finance. (4–5 marks) Limited explanation of the advantages to a manufacturing business of using sale and leaseback of non-current assets as a source of finance. (2–3 marks) Explanation of sale and leaseback. (1 mark) No creditable content (0 marks)

Mark scheme

4(a) Define the term ‘inventory reorder level’. 2 • trigger amount / pre-set level of inventory (1) • where / at which point a business would place a new order for inventory (1) • allows time for new inventory to arrive before current stock runs out (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) Explain two advantages to a business of holding buffer inventory. 3 Answers could include: • Allows a business to meet increases in demand. • It prevents shortages in the case of a late delivery or disruption of production of work in progress. • It allows a business to take advantage of bulk buying discounts that can significantly reduce the costs of inventory. • Reduces the effect of price fluctuations. • Accept any other valid response. Sound explanation of two advantages to a business of holding buffer inventory. (3 marks) Sound explanation of one advantage to a business or partial explanation of two advantages. (2 marks) Partial explanation of one advantage to a business of holding buffer inventory or a list of two. (1 mark) No creditable content. (0 marks)

Mark scheme

5(a) Analyse the role of small businesses in a country’s economy. 8 Level Description Marks 4 Good analysis of the role of small businesses in a 7–8 country’s economy. 3 Limited analysis of the role of small businesses in a 5–6 country’s economy. 2 Application of the role of small businesses in a country’s 3–4 economy. 1 Knowledge and understanding of the role of small 1–2 businesses. 0 No creditable content. 0 Answers could include: Knowledge and Understanding 2 marks • Clear understanding of the role of small businesses Application 2 marks • Reference to the role of small businesses in an economy Analysis 4 marks Small businesses: • contribute to the economic growth of the country • can react quickly to changes in the economy • are numerous in most countries • might employ a small number of people individually, but collectively create a lot of jobs • might provide goods/services that larger businesses do not e.g. personal services such as hairdressers, plumbers, electricians, car maintenance • sometimes grow into larger businesses and contribute even more to the economy • are located all over the country and not in one location like many larger businesses • will pay tax to the government which can then be used for e.g. improved infrastructure or education etc. • often service the needs of larger businesses • offer specialised products/services • might increase competition – perhaps leading to improved quality, lower prices. • Accept any other valid response. 5(b) Discuss the importance to an expanding business of effectively 12 communicating its objectives to its workforce. Level Description Marks Effective evaluation of the importance to an expanding 4 business of effectively communicating its objectives to its 9–12 workforce. Limited evaluation of the importance to a business of 3 7–8 communicating its objectives to its workforce. Analysis and application of communicating business 2 3–6 objectives to the workforce. Knowledge and understanding of communication / 1 1–2 business objectives / workforce. 0 No creditable content. 0 Answers could include: Knowledge and Understanding 2 marks • Clear understanding of communication • Clear understanding of business objectives • Clear understanding of workforce Application 2 marks • Reference to communication with a workforce • Reference to business objectives Analysis 2 marks • Business objectives: the aims or targets which a business sets that it will strive to achieve in the future. • Objectives can be broken down into divisional, departmental or individual targets, but they all work towards the overall objective of a business. • Communicating will aid the co-ordination of activities. • For communication to be effective the objectives must be understood. Managers must make sure that each employee understands what is required of them in order to meet the overall objectives. • Employees who do not know or understand what the business is trying to achieve are less likely to work towards that goal. • The workforce includes some levels of management – if they are not clear about the business objectives then their guidance to employees might lack the required focus. • Large/expanding business – many employees – can be difficult to communicate with large numbers of people. Some people might not get the information. • For large businesses, perhaps with many departments or different geographical locations it is essential that all parts of the business know exactly what they need to achieve and by what time in order for the business to succeed in meeting its objectives. 5(b) Evaluation 6 marks • A candidate should make a judgement as to the importance to an expanding business of effectively communicating its objectives to its workforce. • These judgements may be made at any point as well as in a concluding section. • The context is an expanding business. • Issues are identified that could make effective communication difficult and/or vital. • Attempt made to assess the importance of communication, not other problems of an expanding business. • Accept any other valid response.

Mark scheme

6 ‘An accurate cash flow forecast is the most important financial 20 document for a clothing retailer when planning to enter a new market.’ Discuss the extent to which you agree with this view. Level Description Marks 5 Effective evaluation of the extent to which an accurate 17–20 cash flow forecast is the most important financial document for a clothing retailer when planning to enter a new market. 4 Limited evaluation of the extent to which an accurate cash 15–16 flow forecast is the most important financial document for a business when planning to enter a new market. 3 Good analysis of whether an accurate cash flow forecast 11–14 is an important financial document for a business when planning to enter a new market. 2 Limited analysis with application of whether a cash flow 5–10 forecast is an important financial document for a business. 1 Knowledge and understanding of cash flow forecasts / 1–4 financial documents / entering a new market. 0 No creditable content. 0 Answers could include: Knowledge and Understanding 4 marks • Clear understanding of cash flow forecasts • Clear understanding of financial documents • Clear understanding of entering a new market Application 4 marks • Reference to the importance of cash flow forecasts • Reference to the use of financial documents • Reference to a business planning to enter a new market Analysis 6 marks • Cash flow forecast is a prediction of cash inflows and outflows that the business knows will occur in the future and those that it can reasonably expect to occur. • It is a prediction of things that have not yet happened. • Other financial documents include income statement, etc. Most other financial documents are historic i.e. they record revenue, expenditures and asset values from a previous time period. 6 • Cash flow forecasts are produced – - to predict any known or anticipated expenses with entering the new market e.g. advertising costs, staffing costs, transport costs - to plan for any expected changes in cash flows such as seasonal changes depending on the type of clothing sold by this business. - to set targets for the new market. Success of the move into a new market can be judged/measured by comparing the predictions in the cash flow forecast with what actually happened, to learn for the future. - to allow the business to undertake What if analysis of possible outcomes from this venture. - Arguments for the other financial documents: - The business is likely to need to know its working capital, retained earnings, profit margins etc. All of which are taken from the income statement. - A potential lender might want to see all financial documents to determine the financial strength of the business overall and not just the viability of the new market venture. Evaluation 6 marks • A candidate should make a judgement as to the extent to which an accurate cash flow forecast is the most important financial document for a clothing retailer when planning to enter a new market. • These judgements may be made at any point as well as in a concluding section. • The context is a clothing retailer. • Are other financial documents as/more important than a CFF? • Does the business need an injection of finance to allow them to move into a new market? • All financial documents have a purpose/usefulness. It is likely that all financial documents will be important in making such a move, but the cash flow forecast will give some idea of the cash flow outcomes of the new market but not the overall profitability. It might depend on what the new market is: is it a new geographical market, a new market in terms of demographic e.g. from clothing for children to adult clothes; from clothing for women to clothing for men. • A lot could depend on how different the new market is from the one the business currently operates in. • Accept any other valid response.

Mark scheme

7(a) Analyse the benefits to a business of focusing on staff morale and 8 welfare. Level Description Marks 4 Good analysis of the benefits to a business of focusing on 7–8 staff morale and welfare. 3 Limited analysis of the benefits to a business of focusing 5–6 on staff morale and/or welfare. 2 Application of the benefits to a business of focusing on 3–4 staff morale and/or welfare. 1 Knowledge and understanding of staff morale/welfare. 1–2 0 No creditable content. 0 Answers could include: Knowledge and Understanding 2 marks • Clear understanding of staff morale • Clear understanding of staff welfare Application 2 marks • Reference to staff morale and/or welfare in a business Analysis 4 marks • Staff morale refers to the level of confidence and enthusiasm that employees feel towards their place of work employers. • Welfare refers to the health and happiness of employees. • A business that takes steps to ensure that staff morale is as high as possible and that the welfare of employees is important to it, is likely to benefit from having a more highly motivated workforce. • When employees feel that their needs are important to their employers, they have increased enthusiasm for work / loyalty to the business and therefore a willingness to work hard for the business. • Employees might be more willing to suggest improvements to the workplace if they feel that their contribution is valued. • An employee who receives help and advice when needed is likely to be a more productive employee. A problem outside work can contribute to poor performance in the workplace. A business that helps to remove that external problem is likely to benefit. • Less labour turnover and reduction in time and money involved in recruitment and selection of new employees. • Less risk of damaged/poor reputation of the business. • A business focusing on staff morale and welfare is likely to make sure that all health and safety guidelines are followed therefore making employees feel safe in the workplace. Employees will also feel that their safety is important to their employers. 7(a) • Staff morale can also be affected by employers paying attention to equality and diversity; all of which leads to employees having confidence that they will be treated fairly, regardless of gender, race, religion etc. This can make a business attractive to potential employees. 7(b) Discuss whether the ideas of David McClelland could help managers of 12 a hospital to satisfy the human needs of its employees. Level Description Marks 4 Effective evaluation of whether the ideas of David 9–12 McClelland could help managers of a hospital to satisfy the human needs of its employees. 3 Limited evaluation of whether the ideas of David 7–8 McClelland could help managers of a business to satisfy the human needs of its employees. 2 Analysis and application of how a business could use the 3–6 ideas of David McClelland to satisfy the human needs of its employees. 1 Understanding of David McClelland’s ideas / managers / 1–2 human needs / employees. 0 No creditable content. 0 Answers could include: Knowledge and Understanding 2 marks • Clear understanding of the ideas of David McClelland • Clear understanding of managers • Clear understanding of human needs • Clear understanding of employees Application 2 marks • Reference to the use of McClelland’s ideas • Reference to satisfying human needs Analysis 2 marks • Human needs: to be able to feed and clothe oneself; to have shelter (somewhere to live); to have some level of social interaction. Some people also desire social acceptance or respect of their peers/colleagues. • McClelland identified three key motivational factors: Achievement, Affiliation and Authority. • Achievement: some employees need to feel that their contribution to the hospital is recognised and appreciated. Workers who feel that they are fulfilling their potential within a hospital are more likely to feel comfortable and support the hospital. By recognising the achievements of employees and possibly rewarding them, their need for acceptance could be met. • Affiliation: meeting the needs of employees to feel a part of the hospital can be achieved by using focus groups to discuss ways of best dealing with any potential problems. Employees who feel involved are likely to have a more positive view of the hospital, while at the same time, working as part of a group can be meeting their need for social interaction. 7(b) • Authority/Power: Some employees need to feel that they have some input/impact on their work practices. If they are given some input into e.g. how changes will be implemented, then they feel some level of authority over the way the hospital is operating and adapting, perhaps in how patients are cared for. If they can be involved in a decision-making process, employees need for authority can be met as well as their human need of recognition and respect. Evaluation 6 marks • A candidate should make a judgement as to whether the ideas of David McClelland could help managers of a hospital to satisfy the human needs of its employees. • These judgements may be made at any point as well as in a concluding section. • The context is a hospital. • The extent to which the ideas of McClelland can meet the human needs of employees should be judged. • It can depend on the current approach used by managers in a hospital and the extent to which the employees are involved in discussion about any changes or issues facing the hospital. • McClelland’s three factors can meet the human needs of employees, but it requires a level of involvement and trust on the part of the hospital managers. • Accept any other valid response.