Business 9609/13 October/November 2023: question paper and mark scheme

Mark scheme

1(a) Define the term organic growth. 2 Indicative content Responses may include: AO1 Knowledge and understanding Clear understanding (2 marks) • Organic growth is the growth of a business through internal processes, relying on its own resources without using external Partial understanding (1 mark) • Organic growth is internal growth Accept all valid responses. 1(b) Explain one reason a business may choose to remain small 3 Indicative content Responses may include: AO1 Knowledge and understanding Reasons why a business may remain small include: • Personal choice of business owner • Unwilling to take risks of growth • Lack of finance • Unable/unwilling to meet costs of growth • Unwilling to lose control • Concern for quality • Lack ambition • Unwilling to accept increases management responsibility • Determined to remain flexible • Committed to the small business model • Lack of demand • Form better relationships with employees/customers. 1(b) AO2 Application • The lifestyle choice of business owners – to maintain a healthy work–life balance • Small business owners may not know how to expand – unwilling to take risks and compete in more markets • Lack of investment capital – unwilling to increase borrowing • Reluctant to engage in more marketing activities – cannot afford the costs • Unwilling to give up control of the business – expansion may reduce control and satisfaction • Fear of losing control over the quality of product/service – personal hands–on service may be the USP of the business • Desire to keep overheads (fixed costs) to a minimum – lack ambition to explore growth • Avoid the regulatory burdens associated with large business – content to keep the business processes simple • Maintain a high level of flexibility and adaptability to dynamic markets – sees the agility of a small business as an asset • Lower revenue than large business but profit margins may be higher – the small business model is effective Accept all valid responses.

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2(a) Define the term curriculum vitae. 2 Indicative content Responses may include: AO1 Knowledge and understanding Clear understanding (2 marks) • A curriculum vitae (CV) is a document of a person’s education, qualifications, and previous occupations/experience Partial understanding (1 mark) • A CV is a record of a person’s achievements/used for a job application. Accept all valid responses. 2(b) Explain one benefit to an employee of having an employment contract. 3 Indicative content Responses may include: AO1 Knowledge and understanding • Employees know exactly what is required of them as employees • Rights and responsibilities are clearly set out • Pay and benefits are made explicit • Protection from arbitrary action by employers • Provides certainty AO2 Application • Employees have a clear statement of what is required of them in a period of employment—there is no ambiguity –the employment status of an employee is clear • Provides job security to an employee • A clear statement of conditions of employment – that an employer must honour – employee has written protection of rights • Gives clarity about remuneration and benefits – protects employees at times of conflict and disputes with employers • Benefits relating to sick pay, redundancy, and hours of work are among the basic rights set out in the contract – these and other basic rights protected from actions of rogue employers • Prevents unauthorised deductions by the employer – employee protected from arbitrary employer action • Contract provides consistency and stability for an employee – consultation is normally required before any changes can be made in the contract Accept all valid responses.

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3(a) Define the term venture capital. 2 Indicative content Responses may include: AO1 Knowledge and understanding Clear understanding (2 marks) • Venture capital is investment funding/risk capital provided by venture capitalists/venture capital companies/external source of finance/given for share of ownership Partial understanding (1 mark) • Capital provided to start/grow/expand a business Accept all valid responses. 3(b) Explain one disadvantage of using trade credit as a source of finance. 3 Indicative content Responses may include: AO1 Knowledge and understanding • Unable to take advantage of discounts for early payment • Can affect relationships with suppliers • Can result in losing suppliers • Conditions of trade credit may be prohibitive • May lead to a business losing control of working capital AO2 Application • Trade credit – may mean the loss of early payment discount – there may be financial consequences • Can lead to fees/penalties for late payment • If the trade credit agreement is not adhered to – it can spoil relationships with suppliers and change the terms of an agreement • Failure to comply with the conditions – could lead to the loss of a valuable supplier • For new/small businesses, the trade credit may be hard to get – and/repayment conditions may be restrictive • ‘Free money’ can turn into ‘expensive debt – may prevent a business establishing appropriate cash control and a healthy working capital • Trade credit does not provide any additional finance – only cashflow advantages Accept all valid responses.

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4 Analyse ONE impact on a business’ marketing decisions of using 5 product portfolio analysis. Indicative content Responses may include: AO1 Knowledge and understanding • Impact may include: • Reduce/increase the marketing budget on less/more profitable products • Important market intelligence produced • Market condition of products revealed • Important indicators of future business performance presented – need for new products. Need for extension strategies • May suggest a new marketing mix approach • Develop new products • Expand into new markets AO2 Application • Product portfolio analysis may provide information to the marketing department that suggests the need for a change or revision of the marketing strategy for the department – and subsequently for the business • It may well suggest a change in priorities within the approach to the marketing mix – possible switch away from extension strategies to new product development initiatives • Suggest a review of pricing policy, promotion policy. AO3 Analysis • Product portfolio analysis can reveal the need to make new marketing decisions – evidence of some products that require drastic action if they are to continue to be revenue earning • Provide evidence of failing products that need to be removed – and be replaced • Provides evidence of the need to strengthen the product portfolio analysis approach – it may be under resourced and unable to match the changes in a dynamic market environment • Suggests that previous marketing decisions are no longer appropriate – some products could and should benefit with more online and social media investment • Portfolio analysis might reveal the need to adjust the pricing strategy for a group of products – change to penetration pricing • Portfolio analysis might reinforce the need for marketing decisions and an integrated marketing strategy – that makes changes across the marketing mix rather than just in the product element, in order to bring about a change in the marketing focus of the business Accept all valid responses.

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5(a) Analyse two qualities an intrapreneur should possess to be successful. 8 Indicative content Responses may include: AO1 Knowledge and understanding Intrapreneur is an employee tasked with developing an innovative idea or project within a business Someone who behaves like an entrepreneur within a business but does not face the same risks or reap the same rewards Qualities of an intrapreneur include: • Innovator • Risk taker • Creative thinker • Problem solver • Project leader–matrix organisation • Lateral thinker • Politically astute/networker • Ability to communicate ideas • Ability to convince others to accept ideas • Determination/perseverance AO2 Application • Innovator and risk taker – challenges the status quo • Creative thinker – thinks new and big ideas • Problem solver – enjoys seeking new solutions • Passionate and hard working – inspires/motivates others • Lateral and holistic thinker – thinks outside of the box • Politically adept – forms coalitions/multi–functional teams AO3 Analysis • Intrapreneur acquires knowledge of the internal and external business environment – uses it to remove opposition and blocks to innovation and change • Uses knowledge and experience to set out a vision for an idea/project – challenges the current way of doing things • Sees problems as opportunities – willing to take risks and make mistakes • Inspires others to think as an intrapreneur/entrepreneur – sets an example of energy, enthusiasm • Builds and leads cross–functional teams – more ideas and perceptions contributed • Skilled in internal politics – ignores or overcomes opposition – seeks and gets support from senior management—builds coalitions • Always seeking ways to refresh business activity – seeks transformational change not marginal change Accept all valid responses. 5(b) `Ethics should significantly influence the marketing activities of all retail 12 clothing businesses`. Evaluate this view. Indicative content Responses may include: AO1 Knowledge and understanding • Ethics is an approach to business activity that incorporates a set of moral principles including a clear understanding of what is right and what is wrong, and a clear commitment to keep to that distinction in all business decisions and all business behaviour • Marketing activities are those that aim to bring customers and business together so that customers are attracted to purchase products and so contribute to the revenue and profits of the business. marketing activities include all those from market research to the packaging of a product – over all elements of the marketing mix • Retail clothing business will use marketing activities to persuade the customer to purchase their brands and will mount campaigns to inform and convince customers of the value of the retail offer 5(b) AO2 Application • Marketing activities associated with retail clothing businesses exemplifies many moral dilemmas that may confront a business – provoke controversy that affects the reputation of a business • Employee exploitation of clothing retail suppliers’ employees – child labour leads to demands for more ethical conduct • Poor employment standards in overseas factories that supply clothing retailers – calls for the business to stop marketing the products • More general marketing dilemmas may also affect retail clothing businesses – more ethical marketing practices may be considered and required • Market research raises ethical concerns – methods that invade privacy– leave out groups of consumers • Advertising and promotion – sexual innuendo, • Direct marketing – unsolicited approaches • Predatory pricing – to drive competitors out AO3 Analysis • Compliance to legal and regulatory codes and/or acceptance of voluntary ethical codes of business behaviour – the potential commitment of business – not just compliance to a minimum set of regulations • A commitment to ethical marketing in a mission and values statement – a reputational tactic or a real commitment to act ethically? • Marketing activities such as pricing can resist too aggressive strategies – avoid predatory pricing • A business may resist producing and marketing poor quality products – a deliberate planned obsolescence policy to put certain customers under pressure to replace Marketing department and associated marketing decisions may conflict with other stakeholder aspirations – may be dismissive of absolute ethical approaches – may ignore or minimise concerns about dubious advertising and promotion tactics 5(b) AO4 Evaluation Developed evaluation Developed / Supported 6 marks in context: judgement in context Developed evaluation Developed/Reasonable 5 marks in context: evaluative comments in context Developed evaluation Developed / Supported 4 marks not in context: judgement without context Developed evaluation Developed/Reasonable 3 marks not in context: evaluative comments without context Limited evaluation not Limited supported 2 marks in context: judgement Limited evaluation not An attempt to balance 1 mark in context: the arguments / Weak attempt at evaluative comments 5(b) A judgement/conclusion is made of the view that the activities of all retail clothing businesses should be significantly influenced by ethics Such judgements/conclusions may be made at any point in the essay and not just in a concluding section • Judgement made that retail clothing businesses do have some striking moral dilemmas in terms of producers and suppliers of raw materials and finished clothing products from overseas and are a special case with many moral dilemmas and commercial conflicts. • Concludes that it appears that some retailers turn a blind eye to such issues • Conclusion may be given that ethical objectives do not always lead to ethical business decision–making – is a call for bottom line businesses to make ethical decisions– an idealistic theoretical concept unsupported by business reality • Judgement may be made that ethical objectives are merely a sign of corporate window dressing • Suggestion/judgement may be made that many businesses still practice ethically questionable activities within the law • The question may be asked if total ethical market decision–making can be compatible with commercial business success? • The question may be asked if there will always be some businesses that stop short of illegal activities but continue to engage in what many consider to be unethical business activities? Accept all valid responses

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6(a) Analyse two ways in which operations contributes to added value in a 8 business. Indicative content Responses may include: AO1 Knowledge and understanding • Operations is the harvesting of value from the assets owned by a business – the concept can refer to the production and transformation process in a business or in a broader sense to all the operations in a business • Added value is the difference between the price of a finished good and the cost of the inputs in making it – added value – can be achieved in different ways – building a car in an innovative way or building the brand of a business The ways operations contributes to added value in a business include: • To satisfy customers • Produce quality goods • Ensure production process is efficient • Ensure supply chain is efficient • Ensure all functional business areas contribute AO2 Application • The goal of operations is to add value – essentially be strengthening the relationship between the organisation and its customers – the aim of all the functional areas in a business • Main aim is to ensure the business produces quality products that can satisfy the needs of customers on a regular basis–the production process is involved as is marketing and human resources • Production process in a manufacturing business – converting raw materials into a cell phone • Marketing operations – promote the quality of a product and the customer prepared to pay the price • Human resources – the right employees are hired, trained, and equipped to add value with front line superb service in a service business 6(a) AO3 Analysis • Manufacturing business adds value through its production process – raw materials into finished products – sources quality materials from suppliers – new cars come off the production line assembled by robots • Production takes copper, plastic, lithium – converts into smart phones – software specialists increase functionality with up– grades • Marketing operations – promote the business reputation for quality and establish a USP to differentiate and add value • Marketing operations – improve the supply chain to deliver excellent delivery systems to attract customers • Inventory operations – focus on appropriate order and storage system to make the transformation system more efficient • Lean management/right first time efficiency systems – used to reduce waste and add value Accept all valid responses 6(b) ‘Supply Chain Management has the most significant impact on the 12 effectiveness of a hospital’. Evaluate this view. Indicative content Responses may include: AO1 Knowledge and understanding • Supply chain management is the flow of goods and services between businesses and locations including the movement and storage of raw materials • Supply chain management concerned with handling the entire production flow of a good or service from raw material components to final product delivery to the customer • Effectiveness is the ability of a business to achieve its objectives – to deliver a desired result • Hospital is in the business of treating sick patients – it combines skilled staff with high technology equipment to make sick people more healthy 6(b) AO2 Application The effectiveness of a hospital is impacted by many factors • Human resource management is important – hospitals are essentially labour intensive organisations • Human resources consist of a variety of staff specialisms – including nurses, doctors, cleaners, and porters • Technology – operating theatres need high tech equipment to provide surgeons with appropriate facilities • Management/administration – needs to be competent so that the path from initial examination to discharge is efficient • External ambulance services – need to be connected to the mainstream hospital activities • Supply chain management – focus on components/raw material delivery to patient delivered home • Supply chain management – the logistics system impacts on the work of hospitals 6(b) AO3 Analysis • Supply chain management – essentially concerned with logistics and purchasing inventory – aim is to minimise shortages and to keep costs down – essential to all businesses • Supply chain management –– the connected network of all individuals, organisations, resources, activities associated with the operations of a business – there are many places along the supply chains where value can be added or lost • Supply chain management involved in the procurement of raw materials, the processing into finished goods and services, and the distribution to the customer – a potentially all–embracing management function – impact on organisational efficiency and effectiveness • Supply chain management is relevant not only for tangible products but also for services – focus is more on developing relationships, exchanging information, communication flows – the focus is on people rather than physical products • Supply chain management is relevant to service businesses – particularly in the case of logistics – at the start and end of the flow of operational activity AO4 Evaluation Developed evaluation Developed / Supported 6 marks in context: judgement in context Developed evaluation Developed/Reasonable 5 marks in context: evaluative comments in context Developed evaluation Developed / Supported 4 marks not in context: judgement without context Developed evaluation Developed/Reasonable 3 marks not in context: evaluative comments without context Limited evaluation not Limited supported 2 marks in context: judgement Limited evaluation not An attempt to balance 1 mark in context: the arguments / Weak attempt at evaluative comments 6(b) A judgement/conclusion given as to the importance of supply chain management as an operational factor to a hospital Such judgements/conclusions may be made at any point in the essay, not just in a concluding section • Judgement can be made that supply chain management is important to a service organisation such as a hospital and is not restricted to manufacturing • It can be concluded that there are aspects of supply chain management that are very relevant to hospitals– the shortage of personal protective equipment and medical equipment at times of health emergencies dramatically illustrates the dependence of hospitals on an efficient supply chain • It can be concluded that some basic hospital activities are very dependent on efficient supply chain planning and management – such as instruments – drugs – ambulance transfers • The question could be asked – is supply chain management in its infancy in the service sector or is it increasingly being recognised as a critical factor in the effective management of service organisations such as hospitals • Judgement may be made that while supply chain management is important to the effective functioning of a hospital there may be more important operational factors such as recruitment/training, budgeting, financial planning – and that it may depend on the situation of a hospital at a particular point of time – is it financially healthy, is there a critical shortage of nurses, does operational technology need updating? Accept all valid responses.