Business 9609/13 October/November 2020: question paper and mark scheme

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1(a) Define the term ‘market research’. 2 • the process of collecting data about customers / products / markets / competition (1) • analysing such data (1) • identifying aspects of a market to aid decision making (1) • identifying customer needs / demand of customers (1) • before a product is made (1) • collecting primary and/or secondary data (1) • using research methods such as surveys, interviews, internet records, government publications, product testing (1) Sound 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 using primary (field) market 3 research data. Answers could include: • primary research is first-hand data directly related to the requirements of a business • it is up to date which enables current trends to be identified and so more useful than secondary data • a business has direct control over what and how data is collected and can select an appropriate method • the data is confidential and can be hidden from competitors • facilitates the targeting of specific groups / collecting of specific information providing more insights than secondary data • a focussed approach can save time and resources • more likely to discover customer needs / perceptions / reactions • it is quality controlled so can remove bias • Accept any other valid response. Sound explanation of two advantages of primary research data. (3 marks) Sound explanation of one or partial explanation of two advantages of primary research data. (2 marks) Partial explanation of one advantage, or a list of two advantages. (1 mark) No creditable content. (0 marks)

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2(a) Define the term ‘liquidity ratio’. 2 • it is a financial ratio (1) • assesses the short-term financial strength of a business (1) • ability to pay its short-term debts (1) • measures the liquidity of business assets (1) • a good liquidity ratio is greater than 1 (1) • formula given for either current ratio or acid test ratio (2) Current assets Current assets − inventory CR = ATR = Current liabilities Current liabilities Sound 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 limitations of using accounting ratios. 3 Answers may include: • may give a misleading picture of business performance if not combined with other data • ratio results on their own are of limited value – need to be viewed over a period (trend) or compared with results from similar businesses • need for caution when comparisons made with other businesses – there may be different ways of valuing assets – may be window dressing • poor results only identify and highlight a potential business problem – still need to analyse problems and devise solutions • only represent quantitative measures of performance – other qualitative measures may be just as important • Accept any other valid response. Sound explanation of two limitations of using accounting ratios (3 marks) Sound explanation of one limitation of using accounting ratios or partial explanation of two limitations (2 marks) Partial explanation of one limitation of using accounting ratios or a list of two limitations (1 mark) No creditable content (0 marks)

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3 Explain why emotional intelligence is an important quality of an 5 effective business leader. Explanations may include: • a definition of EI – the ability of leaders/managers to understand their own emotions and those of the people they work with to achieve improved performance • Coleman’s competencies – self-awareness – self-management – social awareness – social skills • what do leaders do – motivate employees – provide a vision for the successful achievement of goals/objectives • intellectual ability alone said to be insufficient – EI is needed to empower employees • a leader with EI more likely to succeed than a cold, clinical IQ leader / manager • long-term business effectiveness requires leaders with IQ and EI. • Accept any other valid response. Effective explanation of why emotional intelligence is an important quality of an effective business leader (4–5 marks) Limited explanation of why emotional intelligence is an important quality of an effective business leader (2–3 marks) Explanation of emotional intelligence / business leadership (1 mark) No creditable content (0 marks)

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4(a) Define the term ‘intellectual capital’. 2 • the intangible capital of a business (1) • that includes human capital such as the expertise and skills of employees (1) • the wisdom / ideas / creativity / expertise / skills within a business (1) • structural capital such as information systems and data systems (1) • relational capital such as brands, networks, distribution channels, links with suppliers and consumers (1) Sound 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) 4(b) Explain two functions of an operations management department. 3 Answers could include: • to design, create, produce goods and services for an organisation and its customers so that they are quality products • to direct and control the transformation process – so that it is efficient and effective and adds value • to procure appropriate inputs in a cost-effective way • to effectively manage an appropriate inventory level • to focus on quality, speed of response, flexibility, type and cost of the production process • achieve an effective labour / capital production mix • to incorporate and forecast the latest technological approaches into the production process • Accept any other valid response. Sound explanation of two functions of an operations management department (3 marks) Sound explanation of one function of an operations management department or partial explanation of two functions. (2 marks) Partial explanation of one function of an operations management department or a list of two functions. (1 mark) No creditable content (0 marks)

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5(a) Analyse the benefits to a business of introducing computer aided 8 design (CAD). Level Description Marks 4 Good analysis of the benefits to a business of 7–8 introducing computer aided design (CAD). 3 Limited analysis of the benefits to a business of 5–6 introducing computer aided design (CAD). 2 Application of the benefits to a business of 3–4 introducing computer aided design (CAD). 1 Knowledge and understanding of CAD 1–2 0 No creditable content 0 Answers could include: Knowledge and Understanding 2 marks • clear understanding of CAD Application 2 marks • reference to the benefits CAD could bring to a business Analysis 4 marks • produces 2D or 3D models – allows identification of a variety of designs • fast and accurate drawings produced • simple to use • gives good visualisation of final product and its parts • used by architects, engineers, artists, drafters • used to create simulated environments for clients • CAD systems can be linked to CAM machines to produce objects straight from drawings • leads to lower product development costs • leads to faster time to market • potentially improved product quality • greater accuracy – fewer errors • data can be used for other applications and shared easily between departments via email • Accept any other valid response. 5(b) Discuss the view that it is more important for a manufacturer of 12 bicycles to be effective than it is to be efficient. Level Description Marks 4 Effective evaluation of the view that it is more 9–12 important for a manufacturer of bicycles to be effective than it is to be efficient. 3 Limited evaluation of the view that it is more important 7–8 for a manufacturer of bicycles to be effective than it is to be efficient. 2 Analysis and application of the view that it is more 3–6 important for a manufacturer of bicycles to be effective than it is to be efficient. 1 Knowledge and understanding of the concepts of 1–2 effectiveness / efficiency. 0 No creditable content 0 Answers may include: Knowledge and Understanding 2 marks • clear understanding of business effectiveness • clear understanding of business efficiency Application 2 marks • reference to the concepts of effectiveness and efficiency to a manufacturer of bicycles Analysis 2 marks • initial definition of effectiveness – achieving objectives such as meeting customer needs (‘doing the right thing’) and hence, gaining market share – sales – revenue – profit • initial definition of efficiency (‘doing the thing right’) – inputs and outputs – cost effective – productivity – bicycles at least cost – potentially attractive to the market and at a competitive price to rivals • it is possible for a business to be efficient but ineffective – low cost bicycles that do not meet customer demands • the design process of bicycles needs to be attuned to market demands • market intelligence needs to identify design trends and stylistic fashions and product response needs to be fast • CAM and CAD can assist to make a business efficient and effective • the production process needs to be innovative and flexible • efficiency can come at the expense of effectiveness • efficiency can, however, support profitability and drive growth and produce a sustainable business 5(b) Evaluation 6 marks A candidate may make a judgement/conclusion as to the view that it is more important for a manufacturer of bicycles to be effective than it is to be efficient. These judgements/conclusions may be made at any point in the essay as well as in a concluding section. Evidence is presented and analysed. • a business needs to be both efficient and effective – satisfy customer demands at a profit – not produce what the customer wants at a loss or produce what the customer does not want • a business needs to reach a balance between efficiency and effectiveness – there may well be a trade-off at different times in the product life cycle. • Accept any other valid response.

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6 ‘Limited investment in employee training and development in a 20 primary sector business will lead to poor business performance.’ Discuss the extent to which you agree with this view. Level Description Marks 5 Effective evaluation of the extent to which you agree 17–20 with the view that ‘Limited investment in employee training and development in a primary sector business will lead to poor business performance.’ 4 Limited evaluation of the extent to which you agree 15–16 with the view that ‘Limited investment in employee training and development in a primary sector business will lead to poor business performance.’ 3 Good analysis of the extent to which you agree with 11–14 the view that ‘Limited investment in employee training and development in a primary sector business will lead to poor business performance.’ 2 Limited analysis, with application, of the view that 5–10 ‘Limited investment in employee training and development in a primary sector business will lead to poor business performance.’ 1 Knowledge and understanding of employee training 1–4 and development / primary sector business / business performance 0 No creditable content 0 Answers may include: Knowledge and Understanding 4 marks • clear understanding of employee training and development • clear understanding of primary sector business Application 4 marks • reference to the potential impact of limited investment in training and development • reference to the performance of a primary sector business 6 Analysis 6 marks • limiting investment in training is often seen by businesses as an attractive way of reducing expenditure – a ‘soft’ target • there seems to be no immediate impact on front line provision of goods or services (an ‘intangible’ activity) • training often seen as an expense rather than as an investment • what is the purpose and value of employee training? • arguments against limiting investment in training include the following - untrained staff will not use resources efficiently - ‘if you believe that training is expensive it is because you do not know what ignorance costs’ - training helps prevent errors / corrects mistakes - employees will work smarter if trained and developed - it is an important intangible motivator - more skilled, adaptable productive workforce; is produced - employee commitment increased - retention rates improved / labour turnover reduced / training and re- training is cheaper than hiring new employees - often a statistical link between training and productivity, self-esteem of employees - short-term gain – long-term loss • is training a cost or an investment? • limited investment on training and development may mean that the advantages listed above are not experienced and so business performance suffers. Evaluation 6 marks Note: Judgements/conclusions may be made at any point in the essay as well as in a concluding section. Evaluation marks can be awarded even when the supporting Analysis and Application content is not strong in an answer. • a judgement/conclusion is made in respect of the potential impact of limited investment in employee training and development on business performance in any industry including a primary sector business • primary sector businesses include mining, forestry, fisheries, agriculture, quarrying • might the performance of these businesses be poor if training and development is limited • these businesses need skilled workers as much as other businesses • increasingly, more skilled workers needed in these businesses – jobs become more specialised, technological / professional / scientific skills now required in the dynamic environments of primary sector businesses. • So primary sector businesses are no different to other sector businesses in respect of the potential effect of limited investment in training and development? Accept any other valid response.

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7(a) Analyse why mission statements are important to many businesses. 8 Level Description Marks 4 Good analysis of why mission statements are 7–8 important to many businesses. 3 Limited analysis of why mission statements are 5–6 important to many businesses. 2 Application of why mission statements are important 3–4 to many businesses. 1 Knowledge and understanding of mission 1–2 statements. 0 No creditable content 0 Answers may include: Knowledge and Understanding 2 marks • Clear understanding of mission statements Application 2 marks • Reference to the importance of mission statements in business situations Analysis 4 marks • mission statements highlight and explain the core values, aims and organisational purpose to internal and external stakeholders • provide a strategic backcloth to operational objectives • often contain moral value judgements that encourage distinctive ethical behaviour • motivate employees with an organisational sense of purpose as they associate with the core principles expressed • inform and interest external stakeholders • act as a benchmark for measuring performance • it is argued that mission statements have severe limitations such as allegations of blandness, generality, ambiguity, often considered to lead to meaningless public relations / promotion exercises, rather than purposeful management devices • often poorly communicated and treated as cynical faddish statements by employees • Accept any other valid response. 7(b) Discuss why the shareholders of a public limited company might not 12 support corporate social responsibility (CSR) as a business objective. Level Description Marks 4 Effective evaluation of why the shareholders of a 9–12 public limited company might not support corporate social responsibility (CSR) as a business objective. 3 Limited evaluation of why the shareholders of a 7–8 public limited company might not support corporate social responsibility (CSR) as a business objective. 2 Analysis and application of why the shareholders of 3–6 a public limited company might not support corporate social responsibility (CSR) as a business objective. 1 Knowledge and understanding of shareholders / 1–2 public limited companies / CSR / business objectives. 0 No creditable content. 0 Answers may include: Knowledge and Understanding 2 marks • clear understanding of shareholders of a public limited company (plc) • clear understanding of corporate social responsibility (CSR) Application 2 marks • reference to the shareholders of a plc and their support for CSR Analysis 2 marks • recognition that shareholders are just one of a number of business stakeholders • some stakeholders may see CSR as an urgent/important corporate objective • shareholders may well prefer objectives that lead to more profit (and hence dividends) in the short term • shareholders may well believe that it is the business of businesses to make profits, not to do social good • shareholders may believe ethical activity is sufficient – or compliance with legislation – not CSR Evaluation 6 marks Note Evaluation marks can be awarded even when the supporting Analysis and Application content is not strong in an answer, 7(b) If you consider an answer deserves to be placed in Level 2 based on Analysis and Application, you should initially determine what that mark should be. If you also identify rewardable Evaluation in that Level 2 answer you should add the appropriate number of Evaluation mark(s) using the information set out below. • Add up to 2 Evaluation marks for some limited general evaluative comment • Add 3 to 6 Evaluation marks for some developed contextual evaluative comment. • a judgement/conclusion may be presented as to why shareholders may not support CSR • there may well be different kinds / types of shareholders in a plc and all may not be opposed to CSR • shareholder views may well be shaped/influenced by the economic/political market environment and/or by the views/influence of other stakeholders, such as the government, managers, local environment. • there may be a number of reasons, why shareholders may not support CSR as a business objective – the bottom-line motive may be the prime reason • some judgemental comments may be made on the implications of shareholders taking the short-term view rather than a longer-term perspective where long term reputational advantages could increase bottom line returns • Accept any other valid response.