Business 9609/32 May/June 2024: question paper and mark scheme

Mark scheme

1 Analyse two advantages to SF of using flexible employment contracts. 8 Level AO1 Knowledge and AO2 Application AO3 Analysis understanding 2 marks 4 marks 2 marks 2 3–4 marks Developed analysis Developed analysis that identifies connections between causes, impacts and/or consequences of two points. Developed analysis that identifies connections between causes, impacts and/or consequences of one point. 1 1–2 marks 1–2 marks 1–2 marks Knowledge of two relevant Application of two relevant Limited analysis points is used to answer the points to a business context. Limited analysis that identifies question. Application of one relevant connections between causes, Knowledge of one relevant point to a business context. impacts and/or consequences point is used to answer the of two points. question. Limited analysis that identifies connections between causes, impacts and/or consequences of one point. 0 0 marks 0 marks 0 marks No creditable response. No creditable response. No creditable response. 1 Note: Only reward advantages. If more than two advantages are referred to, reward the best two. L2AN (3 marks) is possible for just one point made. All annotation ( ) should be in the left margin. Indicative content AO1 Knowledge and understanding Definition of relevant terms (max K 1 mark) Flexible contracts include making use of temporary, part-time and zero-hour contracts rather than permanent full-time contracts. – Temporary contracts offered for fixed period. – Part-time contracts; employees contracted to work for less hours than full-time. – Zero-hour contracts; no guaranteed minimum number of hours. – It can allow employees to work at home/pick the hours they work. Knowledge of benefits (max K 2 marks) Benefits include: – Can reduce fixed costs. – Adjusting labour costs flexibly. – More employees available to cover sickness. – SF can check efficiency of employees before offering full-time contracts. – Motivating for employees because can pick their own hours/allows employees to work at home. AO2 Application Limited application, applies knowledge to SF once. Developed application, + applies knowledge to SF twice. Max one for application for the first advantage and max one for application for the second advantage. Seasonal nature of farming. At harvest time more demand for labour on the farms to harvest crops. Competitive markets that SF operates in. There is seasonal demand for Sosoy Ice Cream so there is a need to vary production. SF employs peripheral employees on temporary or zero-hour contracts linked to seasonal production. 1 AO3 Analysis Limited analysis – candidate shows one link in the chain of analysis. Developed analysis – candidate shows two or more links in the chain of analysis. Temporary contracts enable SF to respond flexibly to changing labour needs over time reducing costs for the business . Reducing costs will enable SF to set competitive prices which can attract customers and therefore increase market share . SF will be able to call in workers when needed if other employees are sick or on maternity leave thus ensuring that production is not disrupted . Zero-hour contracts enables SF to increase production quickly in response to unexpected changes in demand meeting customer needs more efficiently and boosting sales which may result in an increase in profit . Motivating for employees because they can pick their own hours/allow employees to work at home this would lead to lower employee turnover which would reduce costs for SF. Accept all valid responses.

Mark scheme

2 Analyse two problems SF may experience when implementing total quality management (TQM). 8 Level AO1 Knowledge and AO2 Application AO3 Analysis understanding 2 marks 4 marks 2 marks 2 3–4 marks Developed analysis Developed analysis that identifies connections between causes, impacts and/or consequences of two points. Developed analysis that identifies connections between causes, impacts and/or consequences of one point. 1 1–2 marks 1–2 marks 1–2 marks Knowledge of two relevant Application of two relevant Limited analysis points is used to answer the points to a business context. Limited analysis that identifies question. Application of one relevant connections between causes, Knowledge of one relevant point to a business context. impacts and/or consequences point is used to answer the of two points. question. Limited analysis that identifies connections between causes, impacts and/or consequences of one point. 0 0 marks 0 marks 0 marks No creditable response. No creditable response. No creditable response. 2 Note: Only reward problems/disadvantages. If more than two problems are referred to, reward the best two. L2AN (3 marks) is possible for just one point made. All annotation ( ) should be in the left margin. Indicative content AO1 Knowledge and understanding Definition of relevant terms (max K 1 mark) TQM is a method of quality assurance that aims to involve all employees in quality improvements. Encourages workers to get it right first time and to achieve zero defects. Knowledge of problems when implementing TQM (max K 2 marks) Problems may include: – Cost of training for employees. – Resistance from employees. – Short term negative impacts on productivity and or quality as changes are embedded. – Lack of managerial skills of motivation, delegation of decision making, teamwork, communication and coordination. – Requires a change in culture within the business. – Impact of making quality inspectors redundant. – Time consuming – with a reason e.g. training staff, changing culture, change policies, employees checking work. – Nature of the product – TQM on ice cream – how to implement quality checks? AO2 Application Limited application, applies knowledge to SF once. Developed application, + applies knowledge to SF twice. Max one for application for the first problem and max one for application for the second problem. SF’s use of flexible contracts including part-time, temporary and zero-hours. Temporary workers employed at harvest time for short period. Current approach focuses on detection of quality problems rather than prevention. Factory operating close to capacity. Limited training given to peripheral employees. Unskilled workers – more training required. 2 AO3 Analysis Limited analysis – candidate shows one link in the chain of analysis. Developed analysis – candidate shows two or more links in the chain of analysis. Difficult to change culture of business as many employees are on flexible contracts and may therefore lack commitment to the business . Cost of training will be relatively high as workers on temporary contracts not in the business for long. Each new group of temporary workers at harvest time each year will need training, increasing costs . No need for quality inspectors so may need to make redundancies adding to costs of implementation and causing concerns over job security which could reduce productivity . In short-term may result in increase in defective products as adjusting to TQM approach takes time. This could result in short-term customer dissatisfaction and impact sales negatively and therefore reducing profit . Accept all valid responses.

Mark scheme

3(a) Refer to Table 1.1. Calculate for quarter 1, 2023, the seasonal variation. 1 Seasonal variation = 16 – 23.75 = – 7.75 OR – 7750 OR (7.75) (1) Note: No mark for 7.75 OR 7750. 3(b) Refer to Table 1.1. Calculate for quarter 2, 2023, the centred quarterly moving average. 3 Note Answer Mark Correct answer 25 OR 25 000 3 Correct method but no correct final answer 98+102 = 200 2 OR OR Calculation of 8 period moving total 98 000 + 102 000 = 200 000 OR 200 / 8 OR 200 000 / 8 Note: 200 OR 200 000 written on its own is 0 marks Accurate method must be shown Calculation of one or more correct 4 period 20 + 16 + 27 + 35 = 98 OR/AND 16 + 27 + 35 + 24 = 102 1 moving totals OR 4 period MA = 8 period moving total / 8 OR OR 102 / 4 = 25.5 Knowledge of correct method Zero marks No creditable response 0 For example, just provides incorrect 4 period moving total For anything other than the full mark answer there should be relevant working. 3(c) Evaluate the usefulness to SF of sales forecasting. 12 Level AO1 Knowledge and AO2 Application AO3 Analysis AO4 Evaluation understanding 2 marks 2 marks 6 marks 2 marks 3 5–6 marks Developed evaluation in context A developed judgement/conclusion is made in the business context. Developed evaluative comments which balance some key arguments in the business context. 2 2 marks 2 marks 2 marks 3–4 marks Developed knowledge Developed application Developed analysis Developed evaluation of relevant key term(s) of relevant point(s) to that identifies A developed and/or factor(s) is used the business context. connections judgement/conclusion is to answer the question. between causes, made. impacts and/or Developed evaluative consequences. comments which balance some key arguments. 1 1 mark 1 mark 1 mark 1–2 marks Limited knowledge Limited application Limited analysis Limited evaluation of relevant key term(s) of relevant point(s) to that identifies A judgement/conclusion is and/or factor(s) is used the business context. connections made with limited supporting to answer the question. between causes, comment/evidence. impacts and/or An attempt is made to consequences. balance the arguments. 3(c) 0 0 marks 0 marks 0 marks 0 marks No creditable response. No creditable response. No creditable No creditable response. response. All annotation ( ) should be in the left margin. Indicative content AO1 Knowledge and understanding Limited knowledge will be demonstrated through knowledge of sales forecasting or knowledge of the usefulness or limitations of sales forecasting to SF. Developed knowledge + will be demonstrated through knowledge of sales forecasting and knowledge of the usefulness or limitations of sales forecasting to SF. Sales forecasting involves making a prediction of future sales. Time series analysis is a method of forecasting based on extrapolation from past data. Benefits of sales forecasting include: – Contribution to workforce planning – Planning purchase of resources – Greater accuracy in cash flow forecasting – Aids operational decisions such as need to increase capacity – Aids decisions about pricing Drawbacks of sales forecasting include: – Inaccuracy – Dynamic market – Doesn’t take into account qualitative factors – Past can’t predict the future – Moving averages are based on past data AO2 Application Limited application, applies knowledge to SF once. Developed application, + applies knowledge to SF twice. Reference to current capacity utilisation of over 90%. Need for forecast of sales if start to export to country D. Role of market reports and market research in forecasting. 3(c) Identifying likely demand for tofu and Sosoy Ice Cream. Identifying employees needed in factory and decision about employment contracts to use. Inability to control the weather. AO3 Analysis Limited analysis – candidate shows one link in the chain of analysis. Developed analysis – candidate shows two or more links in the chain of analysis. Helps ensure efficient use of labour and machinery helping to control costs of production and therefore increase profit . Contributes to creating cash flow forecast which will help ensure that SF has sufficient finance in place to deal with future needs . Sales forecasts for entering country D will help evaluate whether break-even can be achieved and therefore whether exports are likely to be successful . Because the market is dynamic it could lead to misallocation of resources such as having too many peripheral employees in the factory which would lead to increased costs . AO4 Evaluation Limited evaluation – limited supported judgement and/or a weak attempt at evaluative comment. Developed evaluation – supported judgement and/or reasonable evaluative comment. Developed evaluation in context – supported judgement in context and/or reasonable evaluative comment in context. Using 4 period moving average fits the data well as there are clear seasonal variations ensuring that the technique is more likely to give reliable results. Unexpected changes in the external environment such as entry of a new competitor will result in the predictions being incorrect and therefore less useful in making the best decisions. TSA relies on future events behaving as in the past so may not be reliable as markets are dynamic. May be advisable to introduce an element of probability to the forecasts – what if analysis? The longer the time frame the less useful the forecast is because there are more likely to be external events that impact the forecast. Using simple moving averages and a line of best fit may be too simplistic. Usefulness is limited if managers don’t use the sales forecast to make decisions. Should be used in conjunction with qualitative data and current market data to improve usefulness. Accept all valid responses.

Mark scheme

4(a) Refer to Table 1.2. Calculate the accounting rate of return (ARR) of automating production. 4 Note Answer Mark Calculation of ARR 0.4 / 1.75 × 100 = 22.86(%) OR 22.9 OR 23 4 Working and % not required Correct rounding must be applied Calculation of average profit 0.4 OR $0.4 m 3 and and average investment 1.75 OR $1.75 m OR An incorrect answer with one mistake 0.9 / 1.75 x 100 = 51.43% allowing OFR for final stage Not subtracted capital cost e.g. 22.83 OR Incorrect rounding 0.4 / 1.25 × 100 = 32% OR Subtracted residual value rather than adding (OFR) Calculation of average profit 2.4 / 6 = 0.4 OR $0.4 m 2 OR Calculation of profit and average $2.4m AND $1.75 m investment OR $2.4m AND ARR = Average profit / average investment X Calculation of profit and statement of 100 ARR equation OR $1.75m AND ARR = Average profit / average investment × Calculation of average investment 100 and statement of ARR equation OR 0.9 AND AND ARR = Average profit / average investment 0.9 and statement of ARR equation × 100 4(a) Note Answer Mark Calculation of profit (0.3 + 0.5 + 0.8 + 1.0 + 1.1 + 1.7) – 3.0 = 2.4 OR $2.4 m 1 OR (3.0 + 0.5) / 2 = 1.75 OR $1.75 m Calculation of average investment OR ARR = Average profit / average investment × 100 ARR equation OR 5.4 / 6 = 0.9 Attempt to calculate mean yearly profit without deducting capital cost Zero marks No creditable content 0 Note: No mark for non-syllabus equation: Average profit/capital cost × 100 4(b) Evaluate whether SF should invest in automating production. 12 Level AO1 Knowledge and AO2 Application AO3 Analysis AO4 Evaluation understanding 2 marks 2 marks 6 marks 2 marks 3 5–6 marks Developed evaluation in context A developed judgement/conclusion is made in the business context. Developed evaluative comments which balance some key arguments in the business context. 2 2 marks 2 marks 2 marks 3–4 marks Developed knowledge Developed application Developed analysis Developed evaluation of relevant key term(s) of relevant point(s) to that identifies A developed and/or factor(s) is used the business context. connections judgement/conclusion is to answer the question. between causes, made. impacts and/or Developed evaluative consequences. comments which balance some key arguments. 1 1 mark 1 mark 1 mark 1–2 marks Limited knowledge Limited application Limited analysis Limited evaluation of relevant key term(s) of relevant point(s) to that identifies A judgement/conclusion is and/or factor(s) is used the business context. connections made with limited supporting to answer the question. between causes, comment/evidence. impacts and/or An attempt is made to consequences. balance the arguments. 4(b) 0 0 marks 0 marks 0 marks 0 marks No creditable response. No creditable response. No creditable No creditable response. response. Indicative content AO1 Knowledge and understanding Limited knowledge will be demonstrated through knowledge of one factor in the decision. Developed knowledge + will be demonstrated through knowledge of two or more factors in the decision. Automation will reduce the relative number of employees. Other factors in decision: – Cost – Availability of finance – Impact on employees – ARR – Payback results and NPV – Control over quality – Benefits/limitations of alternatives such as outsourcing – Production may/should increase – Less mistakes made AO2 Application Limited application, applies knowledge to SF once. Developed application, + applies knowledge to SF twice. Use of results to investment appraisal OFR/case study information. ARR is above criterion rate of 20%. Payback is 4 years and 4 months (4.36 years). Allow within 5 years. Allow 132.7 days. Sales forecast data shows clear upward sales trend of ice cream. Capacity utilisation is 90%. Plans to export to country D. Possible impact of joining free trade area. 4(b) AO3 Analysis Limited analysis – candidate shows one link in the chain of analysis. Developed analysis – candidate shows two or more links in the chain of analysis. Reduction in number of employees will reduce unit labour costs of production . This will help reduce unit costs and could result in a higher profit margin or a lower selling price leading to increased sales . Outsourcing could reduce control over quality and increase chance of poor-quality food reaching customers and consumers resulting in dissatisfaction and therefore a loss of sales . Joining free trade area in January 2025 may lead to increased exports increasing pressure on capacity therefore SF need to increase capacity to meet expected demand . The capital investment cost required for automating would mean sacrificing alternative investment decisions . AO4 Evaluation Limited evaluation – limited supported judgement and/or a weak attempt at evaluative comment. Developed evaluation – supported judgement and/or reasonable evaluative comment. Developed evaluation in context – supported judgement in context and/or reasonable evaluative comment in context. Elements that the evaluation/judgement might depend on: – Accuracy of the data over 6 years. – Significance of retaining control over quality for food products. – Depends on whether the increase in demand is long-term. – Reaction of employees and consideration of duty to them. – Availability of finance. – How long will it take to implement? – Impact on quality. – Availability of appropriately trained/skilled labour. Accept all valid responses.

Mark scheme

5 Evaluate the impact on SF of country B becoming a member of the NFTA international trading agreement. 12 Level AO1 Knowledge and AO2 Application AO3 Analysis AO4 Evaluation understanding 2 marks 2 marks 6 marks 2 marks 3 5–6 marks Developed evaluation in context A developed judgement/conclusion is made in the business context. Developed evaluative comments which balance some key arguments in the business context. 2 2 marks 2 marks 2 marks 3–4 marks Developed knowledge Developed application Developed analysis Developed evaluation of relevant key term(s) of relevant point(s) to that identifies A developed and/or factor(s) is used the business context. connections judgement/conclusion is to answer the question. between causes, made. impacts and/or Developed evaluative consequences. comments which balance some key arguments. 1 1 mark 1 mark 1 mark 1–2 marks Limited knowledge Limited application Limited analysis Limited evaluation of relevant key term(s) of relevant point(s) to that identifies A judgement/conclusion is and/or factor(s) is used the business context. connections made with limited supporting to answer the question. between causes, comment/evidence. impacts and/or An attempt is made to consequences. balance the arguments. 5 0 0 marks 0 marks 0 marks 0 marks No creditable response. No creditable response. No creditable No creditable response. response. Indicative content AO1 Knowledge and understanding Limited knowledge will be demonstrated through knowledge of international trading agreements or knowledge of how the international trading agreement could impact SF. Developed knowledge + will be demonstrated through knowledge of international trading agreements and knowledge of how the international trading agreement could impact SF. Free trade area removes tariffs and quotas between member states but allows country B to set tariffs against non- member states. Reduce cost of trading between countries. Increased competition. Reduce import costs. Increased potential ability to export products. AO2 Application Limited application, applies knowledge to SF once. Developed application, + applies knowledge to SF twice. Reduce cost of fertiliser imports from country D. A member of the NFTA is one of the largest producers of soya in the world. High income of NFTA member states. Membership will facilitate exports of Sosoy Ice Cream. Country B currently has tariffs on agricultural commodities and processed food products. SF’s manufactured products are likely to be income elastic. 5 AO3 Analysis Limited analysis – candidate shows one link in the chain of analysis. Developed analysis – candidate shows two or more links in the chain of analysis. Removal of tariffs will reduce the cost of importing fertiliser and therefore reduce the costs of producing soya and maize . Therefore, potential increase in profit margins or can reduce prices to increase sales . Free trade will increase competition from member states of NFTA which may result in lower sales for SF and reduce revenue and profit . Increase in consumer incomes due to free trade will increase demand for food products that SF sells . As member states are high income countries free trade should enable SF to take advantage of likely demand for its food products and can increase exports . AO4 Evaluation Limited evaluation – limited supported judgement and/or a weak attempt at evaluative comment. Developed evaluation – supported judgement and/or reasonable evaluative comment. Developed evaluation in context – supported judgement in context and/or reasonable evaluative comment in context. Elements that the evaluation/judgement might depend on: – Impact on costs depends on proportion of imported inputs used in the production process. – Increased competition in the soya market likely to have significant impact as the product is undifferentiated so SF will have to reduce the price of its soya beans sold to manufacturers of soymeal and soy oil. – Export success of SF manufactured foods will depend on brand loyalty that exists in country D and other member states. Supported identification of most important factor or consequence. Accept all valid responses.