Business 9609/12 October/November 2021: question paper and mark scheme

Mark scheme

1(a) Define the term ‘entrepreneur’. 2 • person who sets up a business (1) • risk taker (1) • involves financial risk/invests own capital (1) • combines factors of production (1) • in order to make a profit (1) Sound definition – two of the points listed above. 2 Partial definition – one of the points listed above. 1 No creditable content. 0 1(b) Explain two qualities of a successful entrepreneur. 3 Answers could include: • ability to identify and develop innovative business proposals/ projects/solve problems • willingness to take risks • be persistent and determined/bounce back, even with failure • self-confident – energetic and driven • self-motivated and multi-skilled • ability to lead, inspire and motivate others • good communicator/persuasive • visionary • creative • passionate, resolute, optimistic • future centric • Accept any other valid response. Sound explanation of two qualities of a successful entrepreneur. 3 Sound explanation of one quality or partial explanation of two qualities. 2 Partial explanation of one quality or a list of two. 1 No creditable content. 0

Mark scheme

2(a) Define the term ‘overdraft’. 2 • bank agrees to lend up to a set amount of money (1) • when an account reaches zero/as and when needed (1) • a short-term extension of credit (1) • a flexible borrowing facility (1) • source of finance/current liability/interest charged/no need for collateral (1) Sound definition – two of the points listed above. 2 Partial definition – one of the points listed above. 1 No creditable content. 0 2(b) Explain two reasons why a business might use an overdraft. 3 Answers could include: • allows short-term funding for businesses to make payments to improve working capital, e.g. day-to-day expenses • use overdrafts to facilitate cash flow management, e.g. payment to suppliers • enables the handling of emergency cash flow events • more convenient to arrange/less paperwork • a business might use an overdraft facility as an alternative to factoring • may use an overdraft as an alternative to a loan – only borrow what is needed at a particular time • Accept any other valid response. Do not accept ‘start up’ or ‘growth/expansion’ or ‘capital/machinery’ for the use of an overdraft. Sound explanation of two reasons for a business using an overdraft. 3 Sound explanation of one reason or partial explanation of two reasons. 2 Partial explanation of one reason or a list of two reasons. 1 No creditable content. 0

Mark scheme

3 Explain why businesses invest in the training and development of 5 employees. Answers could include: • T&D is seen as an important investment in the support and maintenance of employee skills and abilities • specific T&D may be identified – e.g. induction training/new skills training/re-deployment • can lead to higher productivity and increased motivation • can lead to employee loyalty and lower labour turnover • can lead to employer becoming the employer of choice • can mean lower recruitment and selection costs • can lead to higher customer service – a USP – competitive advantage • more important in some businesses than others • Accept any other valid response. Effective explanation of reasons for investment in training and development. 4–5 Limited explanation of reasons for investment in training and development. 2–3 Understanding of training and development. 1 No creditable content. 0

Mark scheme

4(a) Define the term ‘scale of operation’. 2 • the maximum output that a business can achieve (1) • using available inputs/resources (1) • can increase in the long-term only by using more resources (1) • size of business (1) • level/amount of output (1) Sound definition – two of the points listed above. 2 Partial definition – one of the points listed above. 1 No creditable content. 0 4(b) Explain two factors that could influence the scale of operation of a 3 business. Answers could include: • aims and objectives of the owners – keep small or expand • capital available to invest in larger-scale operations • the strength of demand in the market in which the business operates • the size of the existing business • the number of competitors – effect on market share potential • the opportunities for economies of scale may determine the scale of operations – some businesses may need to have a large-scale operation • availability and impact of machines/automation • number of employees • efficiency and motivation/productivity of labour • availability and amount of raw materials • depends on the market being targeted, i.e. mass/niche • external factors, e.g. recession, inflation • Accept any other valid response. Sound explanation of two factors that could influence the scale of operation of a business. 3 Sound explanation of one factor or partial explanation of two factors. 2 Partial explanation of one factor or a list of two factors. 1 No creditable content. 0

Mark scheme

5(a) Analyse how marketing could be used to add value to a product. 8 Level 4 – Good analysis of how marketing could be used to add value to a product. 7–8 Level 3 – Some analysis of how marketing could be used to add value to a product. 5–6 Level 2 – Some explanation/application of how marketing could be used to add value to a product. 3–4 Level 1 – Understanding of marketing/value added. 1–2 Level 0 – No creditable content. 0 Answers could include: Knowledge and understanding • Clear understanding of marketing • Clear understanding of added value Application • Reference to a relevant business context, e.g. marketing activities Analysis • The concept of creating/adding value – the difference between the selling price of a product and the cost of the inputs – acquire and retain customers • Effective marketing can contribute to adding value • Use of high-quality packaging to differentiate the product from competitors, e.g. cosmetics, high quality confectionary • Create an exclusive retail environment to persuade consumers to pay higher prices – perfume sales, expensive hairdressers • Create a premium brand perception that customers will prefer to buy at a premium price, e.g. clothing, soft drinks, even though quality is no different to a ‘no brand’ product • Create a USP to differentiate it from the competition and then heavily promote it • Provide expert advice and information alongside the product that is more valuable than the competition • Provide exceptional service/speed of service and delivery • Increase convenience of purchasing, e.g. opportunities with internet shopping/quality of web page • Offer discounts and preferential terms to regular customers • Focus on customer perceptions and customer satisfaction • Accept any other valid response. 5(b) Discuss the view that the setting of effective marketing objectives is 12 the most important factor for the successful launch of a new women’s football (soccer) team. Level 4 – Effective evaluation of the view that the setting of effective marketing objectives is the most important factor for the successful launch of a new women’s football (soccer) team. 9–12 Level 3 – Limited evaluation of the view that the setting of effective marketing objectives is the most important factor for the successful launch of a new women’s football (soccer) team. 7–8 Level 2 – Analysis and some application of the view that the setting of effective marketing objectives is an important factor for the successful launch of a new business. 3–6 Level 1 – Understanding of marketing objective/new business. 1–2 Level 0 – No creditable content. 0 Answers could include: Knowledge and understanding • Clear understanding of marketing objectives • Clear understanding of product launch Application • Reference to the business context of launching a new product Analysis • A new venture – a new business – a launch of a new business – what are the critical factors for success? • Marketing is likely to be important in the launch of a new business and marketing issues/options could include use of the 4Ps marketing mix: • Product – focus on the distinctiveness of the product – a new local women’s football team? – convince locality of the appeal of the product – an opportunity to join a national league • Price – consider an initial pricing strategy – penetration pricing of a new product • Place – consider initial share with popular local men’s football team • Promotion – segment the market, use of local sponsorship, celebrity promotion • Effective marketing objectives are likely to be important 5(b) Evaluation A candidate may make a judgement/conclusion as to the view that the setting of effective marketing objectives is the most important factor for the successful launch of a new women’s football (soccer) team. These judgements/conclusions may be made at any point in the essay as well as in a concluding section. • Evaluative comment on the weight of evidence/arguments for and against the proposition • Are there more important factors that need to be considered alongside effective marketing such as: • Availability of finances/resources to sustain a new venture such as a women’s soccer team • Quality of women footballers in the team • Quality of the management of the team and the venture • Quality of market activity already carried out, such as market research relating to anticipated customer support, appropriateness of chosen playing location • Accept any other valid response.

Mark scheme

6 ‘In a hospital, managers using a democratic style are more likely to be 20 successful than managers using an autocratic style.’ Discuss the extent to which you agree with this view. Level 5 – Effective evaluation of the extent to which the candidate agrees with the view that in a hospital, managers using a democratic style are more likely to be successful than managers using an autocratic style. 17–20 Level 4 – Limited evaluation of the extent to which the candidate agrees with the view that in a hospital, managers using a democratic style are more likely to be successful than managers using an autocratic style. 15–16 Level 3 – Analysis of the view that in a hospital, managers using a democratic style are more likely to be successful than managers using an autocratic style. 11–14 Level 2 – Limited analysis, with application, of the view that managers using a democratic style are more likely to be successful than managers using an autocratic style. 5–10 Level 1 – Understanding of autocratic style/democratic style managers. 1–4 Level 0 – No creditable content. 0 Answers could include: Knowledge and understanding • Clear understanding of autocratic and democratic styles of management Application • Reference to the business context of managing a hospital 6 Analysis • Explanation and analysis of the characteristics of democratic style and autocratic style managers • Democratic management assumes participation – two-way communication – employees encouraged and given freedom to suggest and question decisions characteristic of democratic management – advantages/disadvantages • In a hospital, the care of patients involves teamwork between different professions • It requires exchange of information, co-operation and exchange of ideas to diagnose and treat • Given this scenario, democratic management might be said to be the most appropriate and potentially most successful • However, in a hospital, critical/crisis situations may occur which require instant decision-making, urgent action, which is more suited to autocratic action and behaviour – life and death situations on a ward and in an operating theatre • Also, in a hospital there are many different workers and roles – support staff might require and expect styles of management not associated with participative decision-making – hospital porters may respond to management styles other than democratic Evaluation A candidate may make a judgement/conclusion as to the extent to which they agree with the view that in a hospital, managers using a democratic style are more likely to be successful than managers using an autocratic style. These judgements/conclusions may be made at any point in the essay as well as in a concluding section. • Attempt to make a judgement in respect of the proposition in the question • Evaluative comment as evidence/argument for and against the proposition is assessed • A judgement is made that the view expressed in the question is perhaps over-simplistic in terms of all the employees in a hospital – in terms of all situations • A judgement is made that a democratic style of management may not always lead to successful decisions and results • A judgement is made that it is insufficient to consider only autocratic and democratic styles and that consideration should be given to laissez- faire and paternalistic styles • Accept any other valid response.

Mark scheme

7(a) Analyse the advantages for a business of debt factoring. 8 Level 4 – Good analysis of the advantages of debt factoring for a business. 7–8 Level 3 – Some analysis of the advantages of debt factoring for a business. 5–6 Level 2 – Some explanation/application of the advantages of debt factoring for a business. 3–4 Level 1 – Understanding of debt factoring. 1–2 Level 0 – No creditable content. 0 Important note: some candidates may interpret the question as being the advantages for a debt factoring business of providing the debt factoring service. This is a valid interpretation and this mark scheme should be applied to such answers. Answers could include: Knowledge and understanding • Clear understanding of debt factoring Application • Reference to a relevant business context, e.g. a business using debt factoring Analysis • The selling of invoices to a third party at a discounted price in order to bypass often long waiting times for payment, although it reduces overall profit for businesses – usually between 1%–3% of the invoice value is charged • Especially popular with small businesses in that it provides instant access to working capital, but less control over sales and less relationship with customers Advantages • Greatest advantage is that it can improve cash flow – discounted cash value of invoices instantly released • Can use this cash to operate the business and re-invest in the business • Good cash flow is vital as it is the key to day-to-day operations and growth – can take on more work and complete more jobs, gain more revenue • Saves time in managing and chasing up invoices, frees up management time and this contributes to overall efficiency • Debt factoring can lead to accelerated growth and eventual building up of funds that means debt factoring is no longer required • Accept any other valid response. 7(b) Discuss the most important factors for a venture capitalist to consider 12 when deciding whether to provide growth capital for a computer games retailer. Level 4 – Effective evaluation of the most important factors that a venture capitalist should consider when deciding whether to provide growth capital for a computer games retailer. 9–12 Level 3 – Limited evaluation of the most important factors that a venture capitalist should consider when deciding whether to provide growth capital for a computer games retailer. 7–8 Level 2 – Analysis and some application of the important factors that a venture capitalist should consider when deciding whether to provide growth capital for a business. 3–6 Level 1 – Understanding of venture capital/capitalists. 1–2 Level 0 – No creditable content. 0 Answers could include: Knowledge and understanding • Clear understanding of venture capitalists Application • Reference to the business context of venture capital investment Analysis • Venture capitalists provide risk capital for business start-ups or expansion for established businesses that find it difficult to gain finance from other sources • The critical factors for investment in an existing computer games retailer or any business include the following: • The character, reliability, honesty of the business owner • The capacity of the business owner to develop the business and take it to a new level • The extent to which a standout/unique/innovative way of marketing/ selling is proposed • What benefits that might result for the local community • The long-term sustainability of the business • The financial outlook for the business • How attractive the market opportunity is Evaluation A candidate may make a judgement/conclusion as to the most important factors for a venture capitalist to consider when deciding whether to provide growth capital for a computer games retailer. 7(b) These judgements/conclusions may be made at any point in the essay as well as in a concluding section. • An attempt to make a judgement/draw a conclusion about the most important factors • Evaluative comments that weigh up evidence/argument in relation to the most important factors: • Venture capitalists want to minimise risk over the above factors – and the highest risk tends to be the quality of the management of a computer games retailer • Application of these factors and risks to a computer games retailer – degree of competition – imbalance between technological and design expertise and the ability to operate and manage a business • Accept any other valid response.