Business 9609/11 October/November 2022: question paper and mark scheme

Mark scheme

1(a) Define the term ‘emotional intelligence’. 2 • The ability to understand/manage/recognise/control OWN emotions/feelings (1) • The ability to understand the emotions/feelings of OTHERS (1) Correct definition – 2 of the factors listed above. (2 marks) Partial definition – 1 of the factors listed above. (1 mark) No creditable content. (0 mark) 1(b) Explain two of Goleman’s emotional intelligence competencies. 3 Note: exact names are not required for partial explanation. Answers could include: • Self-awareness – knowing own feeling, realistic view of our own strengths and weaknesses • Self-management – self-control, recovering quickly from stress • Social awareness – being aware of / considering other people’s feelings, understanding different social situations • Social skills – persuading, negotiating, communicating, handling emotions in relationships to influence decisions and understanding/handling different social situations • Accept any other valid response Correct explanation of two of Goleman’s EI competencies. (3 marks) Correct explanation of one or partial explanation of two of Goleman’s El competencies. (2 marks) Partial explanation of one or a list of two of Goleman’s EI competencies. (1 mark) No creditable content. (0 mark)

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2(a) Define the term ‘opportunity cost’. 2 • Choice/decision to give up an alternative / next best option (1) • The cost/value/benefit of the option given up (1) OR • An example which illustrates both of the above bullet points is worth 2 marks (2) Correct definition – 2 of the factors listed above. (2 marks) Partial definition – 1 of the factors listed above. (1 mark) No creditable content. (0 mark) 2(b) Explain two reasons why a new business might fail. 3 Answers could include: • The quality of entrepreneurial, management/leadership skills • The level of financing – capital and working capital • The quality of cash flow management • The correct choice of elements in the marketing mix • The relevance and quality of product sold (USP) • The efficiency and effectiveness of business functions • Poor business planning • Poor record keeping • The level of competition • The quality of internal and external communication • Failure to respond to changing external factors • Accept any other valid response Correct explanation of two reasons why a new business might fail. (3 marks) Correct explanation of one reason or partial explanation of two reasons why a new business might fail. (2 marks) Partial explanation of one reason or a list of two reasons. (1 mark) No creditable content. (0 mark)

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3 Explain the internal sources of finance a business could use to 5 support its growth and development. Note: Do not accept shares as an internal source of finance. Note: The award of 5 marks is reserved for answers which are explicitly linked to growth and development. Answers could include: • Internal sources of finance are those sources generated internally by a business • The main internal sources: retained profits, sale of assets, sale and leaseback of assets, leasing assets out to other businesses, reducing working capital • Money/reserves of the owner/partners • Retained profits – the profit left after paying taxes and dividends to shareholders – business has control over this finance, no dilution of control, no interest payments – the product of past success. These can be very significant sources of funds for expansion • Sale of assets – assets are sold to generate cash – long-term assets such as land, buildings and machinery, that are no longer needed, or assets can be sold and leased back to the business to generate expansion capital • Working capital – speed up the cycle of account receivables/factoring and inventory or lengthen the cycle of account payables will reduce the working capital requirement – risky can lead to liquidity issues • Internal sources attractive – cost-effective but not all businesses may have the capability to generate sufficient growth capital and many businesses may still have to use more expensive external sources • Accept any other valid response Effective explanation of the internal sources of finance a business could use to support its growth and development. (4–5 marks) Explanation of the internal sources of finance a business could use. (2–3 marks) Descriptive information of internal sources of finance/business growth and/or development. (1 mark) No creditable content. (0 mark)

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4(a) Define the term ‘efficiency’. 2 • Maximisation of outputs/items produced (1) • Minimisation of inputs / making best use of resources (1) OR • Producing products at the highest ratio of output to input (2) Correct definition – 2 of the factors listed above. (2 marks) Partial definition – 1 of the factors listed above. (1 mark) No creditable content. (0 mark) 4(b) Explain two ways a business might increase the efficiency of its 3 manufacturing operations. Answers could include: • Change the ratio of labour/capital-intensive operations – more effective productive machines • Better training for employees / skilled workers • More effective management/motivation of employees • Focus on controlling and reducing waste • Bulk buying – get economies of scale • Minimising the cost of inputs / raw materials • Process innovation • Effective internal communication • Get smarter machine tools • Invest in effective maintenance – reduce downtime • Regularly evaluate current workflow • Better inventory management/control • Using lean production • Accept any other valid response Correct explanation of two ways a business might increase the efficiency of its manufacturing operations. (3 marks) Correct explanation of one way or partial explanation of two ways a business might increase the efficiency of its manufacturing operations. (2 marks) Partial explanation of one way or a list of two ways. (1 mark) No creditable content. (0 mark)

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5(a) Analyse how marketing can add value to a product. 8 Level Description Marks 4 Good analysis of how marketing can add value to a 7–8 product. 3 Limited analysis of how marketing can add value to a 5–6 product. 2 Application of how marketing can add value to a 3–4 product. 1 Knowledge and understanding of adding 1–2 value/marketing. 0 No creditable content. 0 Answers could include: Knowledge and Understanding 2 marks • Understanding of added value • Understanding of marketing Application 2 marks • Reference to business activity (including marketing) that creates and adds value Analysis 4 marks • Marketing adds value by establishing a difference between the selling price of a product and the costs of making it • Marketing defines the distinctiveness of a product – develops a brand with important messages and imagery – develops trust and loyalty • Promotes the benefits of a product and assists the understanding of the product offer • Effective marketing gives a market position – a position that other products do not have – competitive edge – creates a USP • May produce effective alliances with other products • So effective marketing creates value for customers leading to repeat customers, brand loyalty and competitive advantage • Features that increase the value of the product e.g. packaging, loyalty rewards, quality • Accept any other valid response 5(b) Discuss the view that the marketing objectives of a hotel will only be 12 achieved with a close working relationship between the marketing, finance and human resource departments of the business. Level Description Marks 4 Effective evaluation of the view that the marketing 9–12 objectives of a hotel will not be achieved without a close working relationship between the marketing, finance and human resource departments of the business. 3 Limited evaluation of the view that the marketing 7–8 objectives of a business will not be achieved without a close working relationship between the marketing, finance and human resource departments of the business. 2 Analysis and application of why different departments 3–6 in a business should have a close working relationship. 1 Knowledge and understanding of marketing 1–2 objectives/marketing department/finance department/human resource department. 0 No creditable content. 0 5(b) Answers could include: Knowledge and Understanding 2 marks • Understanding of marketing objectives • Understanding of marketing department/finance/human resource departments Application 2 marks • Reference to the relevance of a close working relationship between the different business departments of marketing, finance, and HR • Reference to the context of a hotel Analysis 2 marks • Marketing objectives of a hotel might include: – to create a distinctive hotel experience for all guests – to accomplish growth targets within time and budget – expand existing markets and identify and pursue new markets for products and services • A hotel marketing department will develop a marketing plan and strategy relevant to its core objectives with a focus on its value proposition, promotion of its brand, attract new market sectors etc. • These marketing strategies and plans will be supported by distinctive marketing activities such as distinctive messaging using high quality brochures and advertising brand productivity and reinforcing activities • Effective and distinctive use of the marketing mix – examples of how marketing expertise can produce methods, plans, strategies that can support strong clear marketing objectives • Marketing activities need to be co-ordinated with other departmental activities • Close working relationships are vital, – a hotel finance department will need to ensure that the necessary capital is available for a marketing budget that includes substantial promotional activity • A hotel finance department will rely on the sales forecast of the marketing department to construct cash flow forecasts • Human resources will rely on sales forecasts to devise a workforce plan to support any new marketing strategy that might require more staff to sales • Human resource department will need to focus recruitment and selection policy in such a way to support the distinctive customer offer that is being marketed 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: • How important is this close working relationship between these three departments? • What is likely to happen if this co-ordination is weak? • What if ‘silo management’ prevails and there is no corporate synergy or co-operation? • What might this say about the quality of leaders/senior managers in a hotel? • Accept any other valid response

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6 ‘The best way to improve the quality of teaching in a school is to use 20 Herzberg’s two-factor theory of motivation’. Discuss the extent to which you agree with this view. Level Description Marks 5 Effective evaluation of the view that the best way to 17–20 improve the quality of teaching in a school is to use Herzberg’s two-factor theory of motivation. 4 Limited evaluation of the view that the best way to 15–16 improve the quality of employee performance in a business is to use Herzberg’s two-factor theory of motivation. 3 Good analysis of the view that a way to improve the 11–14 quality of employee performance in a business is to use Herzberg’s two-factor theory of motivation. 2 Limited analysis with application of how the use of 5–10 Herzberg’s two-factor/other theories of motivation can improve employee performance in a business. 1 Knowledge and understanding of Herzberg’s two- 1–4 factor theory of motivation/teaching in a school. 0 No creditable content. 0 6 Answers could include: Knowledge and Understanding 4 marks • Understanding of motivation • Understanding of Herzberg’s two-factor theory of motivation • Understanding of teaching in a school Application 4 marks • Reference to the use of Herzberg’s two-factor theory of motivation to improving performance of teachers in a school or employees of a business Analysis 6 marks • The role of motivation/motivation theory in improving employee performance • Herzberg’s two-factor theory of employee motivation – hygiene factors (extrinsic factors) – pay, working conditions, status, factors that can cause dissatisfaction and need to be addressed and managed; motivating factors (intrinsic factors) – aspects that can lead to positive satisfaction in work – achievement, recognition, responsibility, meaningful work advancement • Implications/impact of adopting the two-factor theory for managers and employees • The link between Herzberg and other motivational theorists – Maslow, Mayo, McClelland, Vroom • The approach of the needs/content motivation theories 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: • The context is the quality of teaching in a school • Is Herzberg’s theory ‘the best way’ to improve the quality of teaching? • Is a focus on better motivation the answer to increase the quality of teaching? • Can there be ‘other factors’ that might lead to higher quality teaching, such as more effective recruitment/more finance available to purchase fixed assets such as computers or up-to-date textbooks or school visits to support classroom learning? • Some comment, for or against the view, is expected as evidence of evaluative thought and comment • Accept any other valid response

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7(a) Analyse the benefits to a business of using a cash flow forecast. 8 Level Description Marks 4 Good analysis of the benefits to a business of using a 7–8 cash flow forecast. 3 Limited analysis of the benefits to a business of using 5–6 a cash flow forecast. 2 Application of the benefits to a business of using a 3–4 cash flow forecast. 1 Knowledge and understanding of a cash flow forecast. 1–2 0 No creditable content. 0 Answers could include: Knowledge and Understanding 2 marks • Understanding of a cash flow forecast Application 2 marks • Reference to use of a cash flow forecast in a business context Analysis 4 marks • The benefits to any business of projecting cash flow – predicting cash shortages and surpluses, identify and compare expenses and income for different periods, estimate the effect of business change on the cash flow • Proof to lenders of the ability to repay on time • Indication of when adjustments may need to be made • Seeing upcoming cash gaps can allow plans to be put in place to avoid them • The ability to manage surplus cash effectively • Allows the tracking of spending and revenue targets and so increase the accuracy of future budgeting • Makes sure that a business can afford to pay suppliers and employees • Business can and often do run out of cash and move into insolvency • Especially important for a new business where risk and uncertainty may be more acute – where business planning is vital – one late payment can lead to cash in the bank falling very quickly • Accept any other valid response 7(b) Discuss the view that the most important factor in the success of a 12 restaurant is the availability of accurate cost information. Level Description Marks 4 Effective evaluation of the view that the most 9–12 important factor in the success of a restaurant is the availability of accurate cost information. 3 Limited evaluation of the view that the most important 7–8 factor in the success of a business is the availability of accurate cost information. 2 Analysis and application of the factors which affect the 3–6 success of a business. 1 Knowledge and understanding of cost 1–2 information/business success/restaurant business. 0 No creditable content. 0 7(b) Answers could include: Knowledge and Understanding 2 marks • Understanding of cost information • Understanding of business success • Understanding of a restaurant business Application 2 marks • Reference to accurate cost information • Reference to the use/relevance of accurate cost information for a restaurant business • Reference to how success is recognised/measured/affected Analysis 2 marks • Analysis of the factors which affect the success of a business e.g. competition, quality of food, marketing, accurate cost information • Accurate cost information as an important factor affecting the success of any business: – a critical aspect of business decision-making – the calculation of production costs – cost, revenue and profit and loss as factors in determining the success of a business – cost accounting assists profit analysis – which costs are contributing to profit making – can monitor increasing costs – helps identify break-even points – allows control of overall costs – affects decisions on pricing policy • Accurate cost information may be vital for a restaurant – around 25% of new restaurants fail within a year • The impact of financial control issues on restaurant decision-making, creating financial discipline (with accurate cost information) 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: • To what extent do other factors contribute more to the success of a restaurant, – passion for the restaurant offer, quality and distinctiveness of the menu, location, degree of competition, positiveness of social media reviews, reliability of supplies, quality of staff, cleanliness, sanitation etc. • It may depend on the stage of business – a new start-up business will use different factors to measure success than a well-established restaurant • Starting a restaurant can be very expensive, spending may be more than anticipated, revenue may be less than planned, loss through theft, health and safety regulations • Financial issues and cost control likely to be critical factors – but they may be neglected due to the focus on other factors, such as ownership and passion for creating a unique service • Accept any other valid response