Business 9609/14 May/June 2021: question paper and mark scheme

Mark scheme

1(a) Define the term ‘market research’. 2 • process of collecting and/or analysing data (1) • researching customers/competitors/products/market(s) (1) • collecting primary and secondary data (1) • identifying aspects of the market to aid decision-making (1) • identifying customer needs (1) • using research methods such as surveys, interviews, internet, product testing, government publications (1) • example – when setting up a new business (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 reasons why a business might use secondary market 3 research data. Answers could include: • Secondary market research data is already compiled and organised • Information is often valuable and well researched • There is extensive data available especially on the internet • It is likely to be cost effective and is sometimes free • Often it is very accurate and thorough and worth paying for • Gives detail of market share, product markets etc • Very useful for assessing new product markets • Can be used as a basis for more specific primary research • Can help identify gaps, costs and for forming ideas • Accept any other valid response. Sound explanation of two reasons why a business might use secondary market research data. (3 marks) Sound explanation of one reason why a business might use secondary market research data or partial explanation of two reasons. (2 marks) Partial explanation of one reason why a business might use secondary market research data or a list of two reasons. (1 mark) No creditable content (0 marks)

Mark scheme

2(a) Define the term ‘economies of scale’. 2 • reduction in costs of production (1) • resulting from an increase in the scale of operations (1) • internal and external economies of scale (1) • the inverse relation between the quantity produced and the per unit fixed costs (1) • correct diagram showing economies of scale (2) 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 possible causes of diseconomies of scale. 3 Answers could include: • Goods produced at increased per unit costs – long run average costs rise with increased production • Poor communication in a (large) business – lack of efficient flows of information – time lags • Lack of cooperation-alienation in a large business • Workers bored and demotivated in a large business • Lack of control in a large business • Poor management • Lack of coordination of departments and divisions in a large business • Accept any other valid response. Some candidates may describe diseconomies under a classification of internal diseconomies such as technical, product, financial, marketing. And/or external diseconomies such as strains on infrastructure, pollution, higher factor prices. These are valid responses – with explanation. Sound explanation of two possible causes of diseconomies of scale. (3 marks) Sound explanation of one possible cause of diseconomies of scale or partial explanation of two possible causes. (2 marks) Partial explanation of one possible cause of diseconomies of scale or a list of two possible causes. (1 mark) No creditable content (0 marks)

Mark scheme

3 Explain the benefits to a business of workforce planning. 5 Answers could include: • Defined as the analysis and forecasting of the numbers and skills of employees that will be required by a business to achieve its objectives in the future • Most businesses have a range of differently skilled employees, each playing a key role • Important to have effective methods of calculating future staffing needs to consider movement of staff, retirement etc • Need to plan ahead to recruit and retain an appropriate workforce • Need to consider changing conditions of service and implications of sickness, absenteeism and quality of work-life balance • Changing nature/shortage of specialist skills • Accept any other valid response Effective explanation of the benefits to a business of workforce planning. (4–5 marks) Limited explanation of the benefits to a business of workforce planning. (2–3 marks) Explanation of workforce planning. (1 mark) No creditable content (0 marks)

Mark scheme

4(a) Define the term ‘strategy’. 2 • Decision / plan of action / long-term plan (1) • A plan/method designed to achieve (overall) business aim / goals (1) • Giving a business vision and direction (1) • For the whole business (1) • E.g. such as pricing/marketing strategy (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 stages of business decision-making. 3 Answers could include: • Consideration of objectives • Identification/analysis of problems • Involve stakeholders in decision-making • Collection of information and ideas • Analysis of information and ideas • Formulation of alternative courses of action • Choice of alternative courses of action – make a decision • Implementation and communication of a decision • Evaluation of the results of the decision • Accept any other valid response Sound explanation of two stages of business decision-making. (3 marks) Sound explanation of one stage of business decision-making or partial explanation of two stages. (2 marks) Partial explanation of one stage of business decision-making or a list of two stages. (1 mark) No creditable content (0 marks)

Mark scheme

5(a) Analyse why it is considered important for a business to have human 8 resource (HR) policies on diversity and equality. Level Description Marks 4 Good analysis of why it is considered important for 7–8 a business to have human resource (HR) policies on diversity and/or equality 3 Limited analysis of why it is considered important 5–6 for a business to have human resource (HR) policies on diversity / equality 2 Application of why it is considered important for a 3–4 business to have human resource (HR) policies on diversity / equality 1 Knowledge and understanding of human resource 1–2 (policies) / diversity / equality 0 No creditable content. 0 Answers could include: Knowledge and Understanding 2 marks • Clear understanding of human resource (policies). • Clear understanding of diversity. • Clear understanding of equality. Application 2 marks • Reference to the use of human resource (policies). • Reference to diversity and equality in a business. Analysis 4 marks • Equality – breaking down barriers, eliminating discrimination, ensuring equal opportunity and access for all groups in the business • Aim to outlaw discrimination on grounds of gender, marital status, sexual orientation, race, colour, nationality, religion, age, disability, political beliefs • Diversity – celebrating differences and valuing all people • Any person with visible and invisible differences valued and respected. • There are increasing levels of legal requirements relating to equality and diversity. These will vary between countries and regions • Distinctive policies also developed to reflect the different values of business and embedded in employee working practices 5(a) • Such policies regarded as essential for workforce efficiency and effectiveness • The aim is to produce an inclusive organisation and a distinctive culture that enhances the work experience • Aim is to counter the negative effect of discrimination and produce a richer more tolerant working environment • It is about promoting fairness • There is a difference between the ‘compliance’ approach to these policies and the more enlightened proactive approach of other business organisations. • Accept any other valid response. 5(b) Discuss the importance for a hospital of ensuring a ‘work-life balance’ 12 for its employees. Level Description Marks 4 Effective evaluation of the importance for a hospital 9–12 of ensuring a ‘work-life balance’ for its employees. 3 Limited evaluation of the importance for a business 7–8 of ensuring a ‘work-life balance’ for its employees. 2 Analysis and application of the importance for a 3–6 business of ensuring a ‘work-life balance’ for its employees. 1 Knowledge and understanding of work-life balance 1–2 0 No creditable content 0 Answers could include: Knowledge and Understanding 2 marks • Clear understanding of work-life balance Application 2 marks • Reference to work-life balance in a business. Analysis 2 marks • WLB is about creating and maintaining supportive and healthy work environments that enable employees to have a balance between work and other aspects of life – family, friends, community, and personal growth • A focus on WLB should lessen the danger of over-worked employees, which could lead to poor quality of service provision and poor business reputation • Could reduce employee stress and burn out and conflict between work and family • Reduce negative effects of work life conflict – health risks – smoking - drinking – weight gain – depression • Cost implications of over-worked employees – absenteeism, reduced commitment and underperformance • Duty of care role of HRM • WLB programmes seen as a business investment 5(b) Evaluation 6 marks • A candidate should make a judgement as to the importance for a hospital of ensuring a ‘work-life’ balance for its employees • These judgements may be made at any point as well as in a concluding section • How critical is WLB to the health and welfare of those who work in a hospital? • How critical is WLB to the safety and welfare of hospital patients? • Reference may be made to particular pressures on some staff in hospitals • Are hospitals any different to other business organisations? • Should WLB be of any greater significance in a hospital? • Accept any other valid response.

Mark scheme

6 Discuss the limitations of using cost information to monitor and 20 improve the performance of a group of luxury hotels. Level Description Marks 5 Effective evaluation of the limitations of using cost 17–20 information to monitor and improve the performance of a group of luxury hotels. 4 Limited evaluation of the limitations of using cost 15–16 information to monitor and improve the performance of a business. 3 Good analysis of the limitations of using cost 11–14 information to monitor and improve the performance of a business. 2 Limited analysis with application of the limitations of 5–10 using cost information to monitor and improve the performance of a business. 1 Knowledge and understanding of cost information / 1–4 business performance / luxury hotels. 0 No creditable content. 0 Answers could include: Knowledge and Understanding 4 marks • Clear understanding of cost information. • Clear understanding of business performance. • Clear understanding of luxury hotels. Application 4 marks • Reference to improving the performance of luxury hotels Analysis 6 marks • Different types of cost information available within business financial documents • The importance of this cost information in relation to typical business situations/decisions • The relevance of cost information to analysing current cost situations and business trends • The specific application of cost scenarios to business decision areas such as product pricing, resource costs and payments, planned profit margins and levels • Leads to consideration of key performance questions such as cost effectiveness, opportunity costs and the type and effectiveness of management cost control measures 6 • Benchmarking with industrial levels • The role of cost control measures in the management of luxury hotels • The role of performance management for luxury hotels • How important is cost control and the use of cost information in the management of luxury hotels? Evaluation 6 marks • A candidate should make a judgement as to the limitations of using cost information to monitor and improve the performance of a group of luxury hotels • These judgements may be made at any point as well as in a concluding section • The context is a group of luxury hotels. • To what extent are luxury hotels likely to be subject to cost control measures? • To what extent is the performance of luxury hotels likely to be concerned with the cost of the service provision? • If factors other than cost are important then surely cost information control is of limited significance in attempts to monitor and improve the performance of luxury hotels. • Are factors such as product quality, customer care, and personal management service more important? • Accept any other valid response.

Mark scheme

7(a) Analyse how a business might use price elasticity of demand when making pricing decisions. Level Description Marks 4 Good analysis of how a business might use price 7–8 elasticity of demand when making pricing decisions 3 Limited analysis of how a business might use price 5–6 elasticity of demand when making pricing decisions 2 Application of how a business might use price 3–4 elasticity of demand when making pricing decisions 1 Knowledge and understanding of price elasticity of 1–2 demand / pricing decisions 0 No creditable content. 0 Answers could include: Knowledge and Understanding 2 marks • Clear understanding of price elasticity of demand (PED). • Clear understanding of pricing decisions. Application 2 marks • Reference to use of PED • Reference to pricing decisions Analysis 4 marks • PED measures the response of customer demand for a product as its price changes • Setting the price for a product is one of the most important of business decisions • PED is a useful concept to use when fixing/changing a price • PED indicates the sensitivity of demand for a product at different price points • PED gives an indication of the price point that maximises revenue • Reducing the price of a product with an elastic demand can lead to an increase in revenue (used in price penetration strategies) • Increasing the price of a product with an inelastic demand can lead to an increase in revenue (used in price skimming strategies) • Can be used for a price discrimination strategy where there are different segments of the market with different elasticities • However, it is not as simple as might at first appear - the data on elasticity may not be accurate - it is not easy to predict consumer behaviour • Other factors need to be considered in pricing decisions • Revenue maximisation may not lead to profit maximisation – costs need to be considered as well as price • Share of market to secure economies of scale and market dominance may be more important than revenue maximisation • Accept any other valid response. 7(b) Discuss the importance to a car manufacturer of using the marketing 12 mix to increase its market share. Level Description Marks 4 Effective evaluation of the importance to a car 9–12 manufacturer of using the marketing mix to increase its market share. 3 Limited evaluation of the importance to a business 7–8 of using the marketing mix to increase its market share. 2 Analysis and application of how a business could 3–6 use the marketing mix to increase market share. 1 Knowledge and understanding of the marketing 1–2 mix / market share. 0 No creditable content. 0 Answers could include: Knowledge and Understanding 2 marks • Clear understanding of the marketing mix • Clear understanding of market share Application 2 marks • Reference to a car manufacturer Analysis 2 marks • The marketing mix as a framework/process for identifying, anticipating, and satisfying customer requirements, profitably • A tool of analysis and planning that focuses on the key variables/elements in designing a marketing strategy to achieve organisational objectives such as increasing market share • Product – higher quality car design, reliability, engineering claims? • Price – a different pricing strategy? • Place – appropriate retail outlets / online sales? • Promotion – relevant and impactive promotion • A more balanced marketing mix? Or particular focus on specific elements • Additional/alternative issues that need to be addressed • Too much emphasis on the marketing mix? 7(b) Evaluation 6 marks • A candidate should make a judgement as to the importance to a car manufacturer of using the marketing mix to increase market share • These judgements may be made at any point as well as in a concluding section • The context is a car manufacturer. • Issues to consider other than the marketing mix might include production issues, people issues • The business might have become too product or organisation focused • The 4C’s might be more relevant to the challenges facing the business • Accept any other valid response.