Business 9609/23 October/November 2020: question paper and mark scheme
Cambridge AS & A Level Business (9609), Paper 2 Data Response, October/November 2020. Read both free below, or download them. Done the paper? Get it marked by AI against this mark scheme.
Aashna’s Pies (AP)
AP produces and sells high quality pies. Aashna set up AP five years ago when she spotted a gap in the market. AP is a private limited company and Aashna is the majority shareholder. All of the pies use the AP branding which is growing in popularity.
AP owns a factory where all the pies are produced. Pies are packaged and sold individually.
The range of pies produced by AP is shown in Table 1.1. 5
Table 1.1: AP’s product portfolio
Name of pie Filling Price Annual change in Stage on the per pie sales quantity product life
(2018 to 2019) cycle
Meaty Marvel Chicken and lamb $2.80 +3% Maturity 10
Vegetarian Victory Broccoli, cheese $2.50 –10% Decline and carrot
Fishy Fortunes Cod, prawns and $3.00 +20% Growth cheese
The pastry case of each pie is exactly the same no matter what filling is used. All of AP’s 15 pastry is made using flow production. However each filling is made by specialist workers who use batch production.
Aashna is concerned about the sales of Vegetarian Victory pies and she is considering stopping production of this pie. However, the Operations Director has pointed out that AP might lose its economies of scale if the business reduces the total number of pies produced. 20
The Marketing Director would like Aashna to read his report about developing products in the future. He has done some market research (see Fig. 1.1).
• The price elasticity of demand for AP’s pies is price inelastic
• Some consumers are worried about possible health risks of eating too much meat
• The average family eats three pies per meal and chooses pies for a meal once 25 every two weeks
• The pies have a short ‘best before’ date – they must be eaten within two days of purchase
• The average family has one member who does not eat meat.
Fig. 1.1: Market research to aid developing products in the future 30
(a) (i) Define the term ‘shareholder’ (line 3). [2]
(ii) Explain what is meant by the term ‘flow production’ (line 16). [3]
(b) (i) The total quantity of sales for Vegetarian Victory pies in 2018 was 5000 pies.
Refer to Table 1.1. Calculate the total revenue gained from Vegetarian Victory pies in
2019. [3]
(ii) Explain one way in which AP could use product portfolio analysis. [3]
(c) Analyse two economies of scale that AP might lose if the business reduces the total number of pies produced. [8]
(d) Recommend how AP could develop its products in the future. Justify your recommendation.
[11]
Mark scheme
1(a)(i) Define the term ‘shareholder’ (line 3). 2
Knowledge Marks
A correct definition 2
A partial, vague or unfocused definition 1
No creditable content 0
Content
A correct definition should include the following elements (allow one mark
for each element):
• Owns part/a percentage
• …of a company/limited liability business
Exemplar Mark Rationale
Owns a part of a limited 2 All elements met
company
Owns a percentage of a limited 2 All elements met
liability business
Owner of a limited company 1 Needs ‘PART’ owner
Has share in/invests capital in 1 Shares is taut/all business
a company structures require investment
Control and ownership are not 0 Do not award for control
the same thing
1(a)(ii) Explain what is meant by the term ‘flow production’ (line 16). 3
Award one mark for each point of explanation:
Rationale Marks
C Example or some other way of showing good 1
understanding
B An understanding of it being a production process 1
A An understanding of flow 1
C based on A OR B
Content
Flow – a large number of standardised products / constantly produced
Production process – the fact it is a process.
1(b)(i) Refer to Table 1.1. Calculate the total revenue gained from Vegetarian 3
Victory pies in 2019.
Rationale Marks
Correct answer with or without correct working or $ 3
Formula (can be implied) and correct calculation of 2019 3
sales
Formula (can be implied) or correct calculation of 2019 1
sales
No creditable content 0
Note: any relevant figure multiplied by the price implies the correct formula
(i.e.5000 x $2.50)
Content
TR = Price × quantity
5000 – 10% = 4500
4500 × $2.50 = $11 250
Answer = $11 250
OFR
Common answers
Answer Mark Rationale
11 250 3 Correct answer – does not need $
(–) $1250 with 2 Worked out –10%, used the correct
calculations formula but wrong final answer
1250 with no 0 Wrong answer
calculations
1(b)(ii) Explain one way in which AP could use product portfolio analysis. 3
Level Knowledge and Application Marks
2b Explanation of a way AP could use product 3
portfolio analysis in context
2a Explanation of a way a business could use 2
product portfolio analysis
1 Identification of a way a business could use 1
product portfolio analysis
0 No creditable content 0
Content
• To identify when to discontinue products – VV is in decline
• To identify when to market products – FF is growing
• To identify when to develop new products – what happens when FF
reaches maturity?
• To identify when to extend the PLC of products – MM or VV
Examples
Identification of Explanation Possible context
a use
Identify stage of Shows how well Such as meaty marvel in
product life cycle the product is maturity
doing
Identify which So can plan a E.g. meaty marvel
product is mature replacement
1(c) Analyse two economies of scale that AP might lose if the business 8
reduces the total number of pies produced.
Knowledge and
Analysis
Level Application Marks Marks
(4 marks)
(4 marks)
2b Shows 4 Good analysis of 4
understanding of losing two (or more)
two (or more) economies of scale in
economies of scale context
in context
2a Shows 3 Good analysis of 3
understanding of losing one economy
one economy of of scale in context
scale in context
1b Shows knowledge of 2 Limited analysis of 2
two (or more) two (or more)
economies of scale economies of scale
1a Shows knowledge of 1 Limited analysis of 1
one economy of one economy of scale
scale
0 No creditable content
Content
• Technical – capital intensive mass production
• Specialisation/managerial – specialist workers make the fillings
• Marketing – AP brand is growing in popularity
• Purchasing – AP can bulk buy certain ingredients – pastry is shared
across all pies and cheese is also used in FF
• Financial – AP brand may make it easier/cheaper to fund any new
product development/expansion
Allow external economies of scale.
1(c)
Example of an Examples of Examples of possible
economy of application/context analysis (AN + DEV)
scale (K) (APP)
Specialisation Each filling e.g. VV Lose knowledge of flavour
made by specialists profiles which may change
the taste and lose custom
Purchasing Vegetables for Miss out on bulk buy deals
Vegetarian Victory which increases the
variable costs of the pie
1(d) Recommend how AP could develop its products in the future. Justify 11
your recommendation.
Knowledge and Marks Analysis and Evaluation Marks
Application (4 marks) (7 marks)
Justified recommendation 7
based on argument(s) in
context
Developed recommendation 6
based on argument(s) in
context
An evaluative
statement/recommendation
5
based on argument(s) in
context
Shows understanding 4 Two or more arguments
of two or more based on how AP could
4
elements of product develop its products in the
development in context future
Shows understanding 3 One argument based on how
of one element of AP could develop its products
3
product development in in the future
context
Shows two or more Limited analysis of two or
pieces of knowledge of 2 more impacts of product 2
product development development on a business
Shows one piece of Limited analysis of one
knowledge of product 1 impact of product 1
development development on a business
No creditable content 0
1(d) Content
• Reduce the meat in the MM to meet concerns over health risks.
• Pies could be sold into sets of three pies to suit families.
• Pies could be sold in variety packs so that it suits a family’s tastes and
those who do not eat meat.
• Could the pies be developed to have a longer ‘best before’ date or
frozen to allow for a longer shelf life?
• The price could be increased to allow for the development of a new
product or to fund the redevelopment of an existing product.
• The data suggests that the MM should be redeveloped to extend the
PLC – could it have less meat to meet health concerns?
• VV could be redeveloped now that it is in decline, to increase sales – or
a new vegetarian product could be developed to replace the VV –
importance of non-meat alternatives.
Examples
K APP AN DEV EVAL
Longer Short BB Could be Improve Most
shelf life date – eat stored for transport important
within 2 longer economies of element is to
days scale increase shelf
life
Increase As Attract new Increase as this
number of consumers customer revenue/profits reduces
vegetarian worried base wastage /
pies about increases
health range of
risks of outlets,
meat which leads to
increased
total sales
Braid Runner (BR)
Lewis is a hairdresser. He rents a small shop which he uses as a hairdressers called Braid
Runner (BR). Lewis is a sole trader and he set up BR 25 years ago.
BR is the smallest of all the hairdressers in city Y. Lewis works on his own. He has repeat customers who have been using BR for many years. However, there are many large franchises in city Y which offer a much cheaper haircut than BR. 5
Lewis is considering increasing the price of a haircut and he has outlined the costs and revenue of the business in Table 2.1.
Table 2.1: Costs and revenue of BR
Variable costs per customer $3.50
Fixed costs per week $675 10
Price $8
Lewis would like to employ another hairdresser so that he can work fewer hours in BR. The new employee would have to be able to work in BR on their own. They would be responsible for taking bookings, dealing with customers and some financial transactions. Lewis has drawn up a person specification (see Fig. 2.1) that will be placed on a job website. 15
Characteristic Essential Desirable
Qualifications • Hairdressing qualification • A-Levels or high school standards in Mathematics and Business
Physical • Must be between 18 and • Female 20
30 years old
Experience • None required • Experience of dealing with customers/consumers
• Experience of working alone
Personal qualities • Able to work in a team • Friendly 25
• Good communication
Fig. 2.1: Person specification created by Lewis
(a) (i) Define the term ‘price’ (line 6). [2]
(ii) Explain the term ‘franchises’ (line 5). [3]
(b) (i) Refer to Table 2.1. Calculate the break-even quantity of haircuts in a week. [3]
(ii) Explain one possible limitation for Lewis of using break-even analysis. [3]
(c) Analyse one advantage and one disadvantage for Lewis of operating as a small business.
[8]
(d) Refer to Fig 2.1 and any other relevant information. Evaluate the usefulness of the person specification when recruiting another hairdresser. [11]
Mark scheme
2(a)(i) Define the term ‘price’ (line 6). 2
Knowledge Marks
A correct definition 2
A partial, vague or unfocused definition 1
No creditable content 0
Content
A correct definition should include the following elements (allow one mark
for each element):
• The amount of money for a product or service
• charged to a customer
Exemplar Marks
Amount paid by a customer 2
Amount of money to consume 2
Value to the customer 2
Amount charged by a business to the customer 2
What the customer pays 1
Amount charged by a business 1
2(a)(ii) Explain the term ‘franchises’ (line 5). 3
Award one mark for each point of explanation:
An element of explanation of franchises: Up to 2 further
• May pay a royalty marks
• Can be restrictive
• May pay an initial fee
• May pay advertising costs
• Likely to increase sales
• Examples
Understanding of the use of logo, products etc. from 1 mark
an established business
Content
Where a business sells the rights to use its logo, products, ideas, etc… to
another business.
A business which has bought the rights to use another businesses’ logo
etc…
Exemplar Mark Rationale
Pay to use the logo, products. May have 3 Three points
to pay royalties but is likely to increase
sales
Pay to use the logo, products. May have 2 Only one development
to pay royalties
Where a business sells the rights to use 1 Main understanding
its logo, products, ideas, etc… only
May have to pay royalties but is likely to 0 No understanding of
increase sales the use of logos etc
2(b)(i) Refer to Table 2.1. Calculate the break-even quantity of haircuts in a 3
week.
Rationale Mark
Correct answer with or without correct working or ‘haircuts’ 3
Correct formula (may be implied) and correct calculation of 2
contribution
Correct formula or correct calculation of contribution 1
No creditable content 0
Content:
Fixed costs
Formula:
Price − selling price (contribution)
$675
(1)
$8 − $3.50
$675
$4.50 (contribution)
Answer = 150 (haircuts)
OFR
Common incorrect answers
Answer Mark Rationale
150 3 Correct answer – does not need units
formula 1 Basic understanding
2(b)(ii) Explain one possible limitation for Lewis of using break-even analysis 3
Level Knowledge and Application Marks
2b Explanation of one limitation of using break-even 3
analysis in context
2a Explanation of one limitation of using break-even 2
analysis
1a Identification of one limitation of using break-even 1
analysis
0 No creditable content 0
Content
• Variable costs ($3.50) may change – especially with a new hairdresser
starting
• Fixed costs per week ($675) may change
• Lewis may need to change the price ($8) especially with competition in
the city
• It assumes every haircut is the same price, but Lewis may charge less
for children, OAPs etc.
OFR (from Q2(b)(i))
Identification of Explanation Possible context
a limitation
Only a prediction So does not take E.g. may increase from
unexpected debts into £3.50 if new hairdresser
consideration starts
Only an estimate Fixed costs may From $675
change
Assumes all But may vary with E.g. may charge less for
services charged discounts OAP haircuts
same price
2(c) Analyse one advantage and one disadvantage for Lewis of operating 8
as a small business.
Level Knowledge Marks Analysis (4 marks) Marks
and
Application
(4 marks)
2 Shows 3–4 Good analysis of one 4
understanding disadvantage and one
of small advantage of being a small
business in business in context
context
Good analysis of one 3
disadvantage or one
advantage of being a small
business in context
Shows 1–2 Limited analysis of one 2
knowledge of disadvantage and one
1 small business advantage of being a small
business
Limited analysis of one 1
disadvantage or one
advantage of being a small
business
0 No creditable content
Content
Advantages:
• Easier to organise – Lewis is the only employee (at the moment), only
one set of bookings etc.
• Flexibility – Lewis can quickly and easily respond to marketing form the
franchises – they however are unlikely to be able to respond as quickly.
• Personalised customer service – Lewis has many repeat customers –
this suggests he has a good relationship which is probably lacking in a
bigger business.
Disadvantages:
• Access to finance – Lewis may struggle to obtain finance because he
on his own and may have limited assets. Shop is rented.
• Larger franchises may be able to gain economies of scale which will not
be available to Lewis – they are able to charge lower prices and
undercut Lewis.
• Limited funds to compete against the competition – they are likely to be
able to afford above the line promotion methods whereas Lewis is
unlikely to be able to access these.
2(c)
Example of Examples of Examples of possible
knowledge (K) application/context analysis (AN + DEV)
(APP)
Unlimited liability Sole trader So personal possessions
are at risk and could lose
his house
Easy to organise There is only one Does not have to create
employee (himself) rotas which reduces time
taken for paperwork
2(d) Refer to Fig 2.1 and any other relevant information. Evaluate the 11
usefulness of the person specification when recruiting another
hairdresser.
Knowledge and
Analysis and Evaluation
Application (4 Marks Marks
(7 marks)
marks)
Justified evaluation based
7
on argument in context
Developed evaluation based
6
on argument in context
An evaluative statement
based on argument in 5
context
Shows understanding Argument based on two
of two aspects of a 4 aspects of a person
4
person specification in specification in context
context
Shows understanding Argument based on one
of one aspect of a 3 aspect of a person
3
person specification in specification in context
context
Shows knowledge of Limited analysis of two
two aspects of a 2 aspects of a person 2
person specification specification
Shows knowledge of Limited analysis of one
one aspect of a 1 aspect of a person 1
person specification specification
No creditable content
Content
Lewis needs an employee to work on their own, be responsible for
bookings, deal with customers and do some financial transactions.
• Hairdressing qualification makes sense and would be a good way to
differentiate between those who might be able to do the job and those
who cannot however is a formal qualification needed if the experience is
in place?
• A-Levels (or high school standards) in Mathematics and Business
seems a high level of qualification for what Lewis needs. May restrict
the number of applicants.
• It may be illegal to set an age limit – why does the employee need to be
between 18 and 30 years old? May restrict applicants and Lewis may
end up fined.
2(d) • Specifying a female may be illegal. Why would a female make a better
hairdresser? Is it to compliment Lewis (who may specialise in men’s
hair) in which case the person specification may be poorly written (need
someone who specialises in women’s hair)
• No experience, as essential, seems unlikely – Lewis needs them to
work on their own – the desirable column should be essential to get
what he wants and not waste his time sifting through applications which
are unsuitable (for trainees).
• Why is ability to work in a team essential when the person will be
working on their own?
• Good communication makes sense and should help Lewis to maintain
his loyal customers.
• What does friendly mean – why is it desirable? Is this linked to
customer service – could be more specific.
Examples of how an answer could develop and how it should be annotated.
K APP AN DEV EVAL
Provides a list E.g. Limits Saves The PS are
of essential hairdressing applicants interviewing useful
and desirable qualification to those time because they
who can do limit the
the job number of
candidates
May be Between May lead to Which and any
illegal/ 18–30 a fine reduces illegal/wrong
discriminatory profits elements can
be easily
changed
to ensure only
quality
applicants
apply
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Business 9609/23 for October/November 2020 is out of 60 marks, with 1 hour 30 minutes to answer it.
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