Business 9609/11 May/June 2022: question paper and mark scheme

Mark scheme

1(a) Define the term ‘social enterprise’. 2 A business with mainly social objectives (1) such as environmental or social projects (1) A business which reinvests profits into the business (1) A business that reinvests profits to benefit society/community (1) rather than maximise returns to owners (1) A business that focuses on triple bottom line or corporate social responsibility (1) Often described as not-for-profit businesses/organisations (1) such as charities (1) Clear definition of 2 of the factors listed above 2 marks Partial definition of 1 of the factors listed above 1 mark No creditable content 0 marks 1(b) Explain two advantages to a business of being a social enterprise. 3 Answers could include: A social enterprise might attract more customers just because of its aim of benefitting the community The business might be seen as more ethical than other businesses which again can increase demand for its product/service People might be willing to pay a higher price because the business regards people and the planet as more important than profit Employees might be easier to recruit as people seek to work in social enterprises Employees might be easier to retain leading to lower labour turnover Employees are committed and motivated by the values and aspirations of a social enterprise Government support/grants/subsidies might be available unlike in businesses with purely a profit motive Accept any other valid response Clear explanation of two advantages to a business of being a social enterprise 3 marks Clear explanation of one advantage or a partial explanation of two advantages to a business of being a social enterprise 2 marks Partial explanation of one advantage to a business of being a social enterprise or a list of two advantages 1 mark No creditable content 0 marks

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2(a) Define the term ‘emotional intelligence’. 2 The extent to which managers are aware of and understand their own emotions and feelings (1) and the feelings and emotions of others (1) Reference to Goleman’s 4 competencies (1) Clear definition of 2 of the factors listed above 2 marks Partial definition of 1 of the factors listed above 1 mark No creditable content 0 marks 2(b) Explain two benefits to a business of autocratic leadership. 3 Answers could include: Employees know clearly that they are expected to follow orders There is close supervision of employees so fewer mistakes Quicker decision-making. Less time spent/wasted consulting employees before decisions are made Productivity may improve due to no time wasted on discussion Less conflict due to no discussion Clear communication channel from the owner/leader (clear who gives instructions and who follows them) Non-participating employees are more focused More experienced/qualified/skilled leaders take decisions Accept any other valid response. Clear explanation of two benefits to a business of autocratic leadership. 3 marks Clear explanation of one benefit to a business of autocratic leadership or a partial explanation of two benefits of autocratic leadership. 2 marks Partial explanation of one benefit to a business of autocratic leadership or a list of two benefits 1 mark No creditable content 0 marks

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3 Explain how price elasticity of demand influences the pricing decisions 5 of a business. Answers could include: Price elasticity of demand measures the response of demand to any change in the price of a product. Behaviour will depend on whether the PED of products is elastic or inelastic Price elastic – a business wishing to increase market share can reduce price knowing that demand for its products will increase by a greater percentage than the percentage decrease in price. This achieves an increase in total revenue Price inelastic – if an increase in profit is a business aim, a business might decide to increase the price of its products knowing that the percentage fall in demand will be lower than the percentage increase in price = increase in total revenue. If a business wants to increase market share, a decrease in price would possibly not be as effective as for a price elastic product – the percentage increase in demand for price elastic products would be smaller than the percentage decrease in price = reduced revenue and only a small increase in demand PED will influence the establishment by a business of an ideal price for a product in the marketing mix The way in which PED might influence businesses can depend on the objectives of the business A business that wishes to maximise its revenue might behave differently to a business that wishes to maximise sales to gain market share Accept any other valid response. Effective explanation of how the price elasticity of demand influences the pricing decisions of a business 4–5 marks Limited explanation of how the price elasticity of demand influences the pricing decisions of a business 2–3 marks Descriptive information of price elasticity of demand/pricing decisions 1 mark No creditable content 0 marks

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4(a) Define the term ‘Computer Aided Manufacture’ (CAM). 2 Do not award marks for answers which repeat the words in the question (e.g. manufacturing using computers). The use of technology/software/robots/machines (1) to create/produce/manufacture/improve products and/or production process (1) Clear 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 disadvantages to a business of introducing CAM. 3 Answers could include: The cost of the initial software and equipment can be extremely high High maintenance costs Likelihood of breakdowns disrupting production Initial design fault in CAM could lead to waste in the manufacturing process The wage costs of highly skilled employees are likely to be higher than those previously employed therefore increasing the labour costs The systems often require highly skilled workers who require training The hiring of highly skilled employees can be difficult if the specific technology is very new to an industry The current workforce might not possess the necessary skills causing them to be made redundant leading to redundancy payments An increase in the use of computers and robots might cause an increase in local unemployment leading to negative feelings toward the business Accept any other valid response. Clear explanation of two disadvantages to a business of introducing CAM 3 marks Clear explanation of one disadvantage to a business of introducing CAM or a partial explanation of two disadvantages 2 marks Partial explanation of one disadvantage to a business of introducing CAM or a list of two disadvantages 1 mark No creditable content 0 marks

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5(a) Analyse the benefits to a business of focusing on the 4Cs when 8 planning to increase its market share. Level Description Marks 4 Good analysis of the benefits to a business of 7–8 focusing on the 4Cs when planning to increase its market share 3 Limited analysis of the benefits to a business of 5–6 focusing on the 4Cs when planning to increase its market share 2 Application of the benefits to a business of focusing 3–4 on the 4Cs 1 Knowledge and understanding of the 4Cs/market 1–2 share 0 No creditable content 0 Answers could include: Knowledge and understanding 2 marks Understanding that the 4Cs are cost to customer; convenience to customer; communication with customer and customer solution Understanding of market share Application 2 marks Reference to any business situation which requires an understanding of customer needs/wants. Reference to understanding what customers are willing to pay for Analysis 4 marks Businesses gain information/feedback from customers that can lead to improvements in what is offered in future. It is vital that a business understands what its customers expect from the products it sells. Businesses succeed when they offer what the customer wants to buy rather than what the business prefers to sell Costs can be reduced by buying items to sell that meet the demanded of customers. Losses on unsold products can be avoided Greater loyalty can be gained from customers if they feel that a business listens to them and their views. Communication with customers is essential if a perceived relationship between the customer and a business is to be achieved Communication with customers is even more essential if a retail business specialises in selling expensive or bespoke goods Easier for customers to obtain the goods if, for example, they are sold online / in convenience stores Understanding its customers can enable a suitable price to be set ensuring that it is seen as appropriate to the products sold and to the income level of known customers Accept any other valid response. 5(b) Discuss the usefulness of secondary market research to a business 12 planning to launch a new luxury perfume. Level Description Marks 4 Effective evaluation of the usefulness of secondary 9–12 market research to a business planning to launch a new luxury perfume 3 Limited evaluation of the usefulness of secondary 7–8 market research to a business planning to launch a new luxury perfume 2 Analysis and application of the usefulness of 3–6 secondary market research to a business 1 Knowledge and understanding of secondary market 1–2 research/product launch/luxury perfume 0 No creditable content 0 Answers could include: Knowledge and understanding 2 marks Understanding of secondary market research Understanding of product launch Understanding of luxury perfume Application 2 marks Reference to stages of product launch Reference to brand names / image in the perfume market Analysis 2 marks The collected data might not be directly relevant to perfume or specifically to the type of perfume being offered by this business The data has, by definition, been collected for another purpose and might not be relevant to this business proposal The business needs to know how old the market research information is The business might not be planning to offer the same type of perfume to its new market or wishes to discover the needs/wants/preferences of its new market, in which case secondary market research is likely to be of little use. 5(b) Evaluation 6 marks Any judgements/conclusions can be made at any point in the essay not just in a concluding section. A judgement may be made using arguments such as: The type of market research used might be dictated by how much finance the business has available to spend How much research is needed to establish how different this luxury perfume is to others on the market If this business is aiming at a specific luxury market segment, then existing secondary research might be less relevant Not all businesses lack finance therefore this business might not be constrained by finance and might decide that secondary market research lacks direct relevance to this proposed launch so more expensive primary research may be used However, existing information can still help to focus further research thereby saving time and allowing primary research to be much more focused and therefore more useful This business may need to turn to primary research and/or combine secondary and primary research Accept any other valid response.

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6 ‘Non-financial motivators are the most effective way of improving 20 employee motivation in a house building business.’ Discuss the extent to which you agree with this view. Level Description Marks 5 Effective evaluation of the extent to which non- 17–20 financial motivators are the most effective way of improving employee motivation in a house building business 4 Limited evaluation of the extent to which non- 15–16 financial motivators are the most effective way of improving employee motivation in a house building business 3 Good analysis of the extent to which non- 11–14 financial/financial motivators are the most effective way of improving employee motivation in a house building business 2 Limited analysis of non-financial/financial motivators 5–10 as a way of improving employee motivation 1 Knowledge and understanding of non- 1–4 financial/financial motivators/employee motivation. 0 No creditable content 0 Answers could include: Knowledge and understanding 4 marks Understanding of non-financial motivators Understanding of financial motivators Understanding of employee motivation Application 4 marks Reference to changes in employee motivation resulting from non- financial/financial measures Clear link between a non-financial/financial motivator and its possible effect Reference to examples of employee roles that might be undertaken in a house building business 6 Analysis 6 marks Candidates might use specific examples of non-financial/financial motivators and make the link to how they might improve the performance of employees Team working can meet the social needs of employees (Maslow) and lead to higher productivity Empowerment can satisfy the need for recognition and the need to be valued in an organisation. This recognition that the employee is trusted and given some decision-making power or control over the work to be completed can raise the motivation level of employees and cause them to work even harder. Target setting: meeting or exceeding targets gives employees a feeling of job satisfaction and achievement. However, this method is often linked to bonus payments Job rotation helps to reduce boredom if the tasks are not complicated and are very repetitive. Bored workers may lack motivation and can have a negative impact on the morale of other employees. Bonus payments for meeting deadlines High wages for skilled employees (Taylor – economic man) Evaluation 6 marks Any judgements/conclusions can be made at any point in the essay not just in a concluding section. A judgement may be made using the following arguments: Not all employees will be motivated by the same approach/method Non-financial motivators are more likely to be successful when the employees are earning at least enough money to satisfy their basic needs Lower paid construction workers are more likely to look for financial incentives to motivate them Higher paid construction managers may want to fulfil their esteem needs / seek recognition / empowerment from their employer Whether or not non-financial motivators are the most effective can depend on the level of security felt by employees. Employees on short- term contracts might be more focussed on financial reward Accept any other valid response.

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7(a) Analyse the benefits to a business of using break-even analysis. 8 Level Description Marks 4 Good analysis of the benefits to a business of using 7–8 break-even analysis 3 Limited analysis of the benefits to a business of 5–6 using break-even analysis 2 Application of the benefits of using break-even 3–4 analysis 1 Knowledge and understanding of break-even 1–2 analysis 0 No creditable content 0 Answers could include: Knowledge and understanding 2 marks Understanding of the concept of break-even analysis and how it is used Application 2 marks The use of break-even analysis in a business context. Analysis 4 marks Break-even analysis is thought to be easy to calculate and understand. However, figures are based on what is known to have happened in the past and what can reasonably be expected to happen in the future which is not always accurate A break-even chart indicates the margin of safety. If the margin of safety is too low a business might reconsider its product(s) Analysis of the break-even level of output and the link to total variable and fixed costs and total revenues The level of output for a desired level of profit can be determined Break-even analysis can give a business an idea of whether or not the product is likely to be successful by analysing the costs involved and likely revenues A business might see that if a certain level of profit is to be achieved, costs might have to be reduced to make it possible A change in price might also be indicated. If the desired profit is not achieved, then the price of the product might have to be increased Break-even analysis can be used in business plans to support loan applications Assists decision-making e.g. location, inventory, suppliers, employees (any choice of resources which affect costs) Accept any other valid response. 7(b) Discuss the most appropriate source of finance for a private limited 12 company to purchase an additional factory. Level Description Marks 4 Effective evaluation of the most appropriate source 9–12 of finance for a private limited company to purchase an additional factory 3 Limited evaluation of the most appropriate source of 7–8 finance for a private limited company to purchase an additional factory 2 Analysis and application of the sources of finance 3–6 available to a private limited company to purchase an additional factory 1 Knowledge and understanding of sources of 1–2 finance/private limited company/factory 0 No creditable content 0 Answers could include: Knowledge and understanding 2 marks Understanding of sources of finance Understanding of private limited company Understanding of factory Application 2 marks Sources of finance relevant to a private limited company Sources of finance relevant to the purchase of an additional factory Analysis 2 marks Non-relevant sources of finance might be discussed but these can only be credited if the candidate explains why they are not appropriate for this type of business. Bank loan: long term loans can be used given that the purchase of a factory usually requires large amounts of finance and the money is repaid over a longer period. A short-term loan is unlikely to be used but could be justified in certain circumstances Mortgage: the usual source of finance for the purchase of a factory (building), given the size of the finance required and the long repayment period Issue additional shares to existing shareholders Invite additional shareholders to join the company to raise the additional finance required 7(b) Conversion to a public limited company: this takes a considerable amount of time and money to implement Government grants: for business expansion for example, especially if this might increase employment levels in areas of high unemployment. Grants are not repaid so do not have any interest charged Government loans: offered at lower rates of interest than private lenders (banks) which reduces the amount of repayment required by businesses Business angels / venture capital: investors might be willing to lend money to this business Crowdfunding from multiple online contributions/investments Accept any other valid sources of finance. Evaluation 6 marks Any judgements/conclusions can be made at any point in the essay not just in a concluding section. The following arguments may be used to justify/reject certain sources: The source might be heavily dependent on the actual amount required. Is the factory large or small? Do they need the money quickly? How important is it to retain the current ownership situation? Conversion to a plc, business angels / venture capital or increasing the number of shareholders all lead to dilution of the current ownership It may depend on the resources the business currently has It may depend on how stable the economy is at the time The choice of source of finance might depend on the number of loans already taken by the business. High loan repayments, or non-payment in the past, might prevent consideration of a further loan by a bank Many sources involve interest payments and the amount of this could be an issue – is the rate variable? Are interest rates rising or falling? How affordable is the interest payment? Support might be given for mainly one specific source of finance rather than a range, however comparisons must be made to the appropriateness of that one source compared to the other sources. Accept any other valid response.