Business 9609/12 October/November 2024: question paper and mark scheme

Mark scheme

1(a) Define the term external stakeholders 2 Indicative content Responses may include: AO1 Knowledge and understanding Clear understanding of the term external stakeholders is worth 2 marks. • Those outside of (who do not work for) an organisation/business … but have an interest in or are affected by that business. Accept examples such as suppliers, customers, the community if they are given to explain externality (2) Partial understanding of the term external stakeholders is worth 1 mark. • Stakeholders who are outside of the business (1) Accept all valid responses. 1(b) Explain one way the aims of employees may impact on the decisions of a business. 3 Indicative content Responses may include: AO1 Knowledge and understanding 1 mark for identifying one way the aims of employees may impact a business. • Employees are a significant group of internal stakeholders with an interest in how a business should operate and may have aims that impact on a business … accept general impact on a business as well as or instead of impact on business decisions. • Pressure human resources to produce supportive working conditions (via trade unions – threat to withdraw labour) • Seek wage/salary increases, profit share opportunities • Seek strong health/safety conditions • Seek regular training and development • Seek participation in decisions • May also be determined to be productive/hardworking leading to a positive impact on a business • May seek self-actualisation at work 1(b) AO2 Application 2 marks for developed application/explanation of the way given 1 mark for limited application/explanation of the way given The ways the aims of employees may impact on business should include examples of how a business might respond to the aims of employees. • Business may have to accept increases costs to meet employee aims/demands • May need to postpone/abandon growth policies • May need to increase prices to cover increased costs • May need to increase resource allocation to employee stakeholder group • May need to reduce focus on dividends and profit retention • May respond positively if employee aims are aligned with business aims. Accept all valid responses.

Mark scheme

2(a) Define the term full costing 2 Indicative content Responses may include: AO1 Knowledge and understanding Clear understanding of the term full costing is worth 2 marks. • The method of costing in which all fixed and variable costs … are allocated/applied to products, product prices or cost centres of a business (2) – reference must be made to both aspects of this definition for the award of 2 marks - reference to only one aspect of this definition is a partial definition and should be awarded only 1 mark. Partial understanding of the term full costing is worth 1 mark. • The inclusion of fixed and variable costs (1) Accept all valid responses. 2(b) Explain one limitation of contribution costing. 3 Indicative content Responses may include: AO1 Knowledge and understanding 1 mark for identifying one limitation of contribution costing • Contribution costing allocates only direct costs to cost/profit centres • Segregation of fixed and variable costs often difficult and imprecise • Long term profitability is correctly calculated only using a full-cost basis • Not an appropriate method for price determination • It oversimplifies cost behaviour • Gives misleading impression of business performance • Difficult to allocate across a multi-product business • May not reflect economic reality • May prevent new product development • Calculation of contribution cost can be difficult • Only an internal tool 2(b) AO2 Application 2 marks for developed application/explanation of one limitation of contribution costing 1 mark for limited application/explanation of one limitation of contribution costing • Ignores overhead costs and so delays/distorts the calculation of profit or loss • Takes no account that some products/divisions may have much higher fixed costs than others • May distort economic reality – especially when inventory changes • May lead to a business continuing to produce a product long after it should have stopped production (makes a contribution) but delays a new product that could make a better contribution • Inappropriate pricing may lead to reduced sales/profitability • Gives misleading picture of business performance – overstates profit • The segregation of costs can be difficult – cannot be done with precision – marginal costs cannot be represented as a straight line • Internal use only – does not align with financial reporting regulations. Accept all valid responses.

Mark scheme

3(a) Define the term dynamic pricing 2 Indicative content Responses may include: AO1 Knowledge and understanding Clear understanding of the term dynamic pricing is worth 2 marks. • The practice of varying the price of a product … in response to demand and supply (market changes) and/or ability to pay (2) – reference must be made to both aspects of this definition for the award of 2 marks – reference to only 1 aspect of this definition is a partial definition and should be awarded only 1 mark. Partial understanding of the term dynamic pricing is worth 1 mark. • Regular product price changes (1) • Based on demand (1) • Based on ability to pay (1) Accept all valid responses. 3(b) Explain one reason why a business might use price discrimination. 3 Indicative content AO1 Knowledge and understanding 1 mark for identifying one reason why a business might use price discrimination. Note: Do not award a mark for a definition of what price discrimination is – award a mark only for a reason why a business might use price discrimination. • Allows a business to take advantage of market position • Allows a business to exploit segmented markets • Allows a business to stimulate customer demand • Allows a business to maximise sales, revenue, profit AO2 Application 2 marks for developed application/explanation of one reason 1 mark for limited application/explanation of one reason • If conditions allow it can enable a business to maximise profits/sales when market segments are kept apart • It allows a business to set the highest price that the customer is willing to pay in each market segment based on their ability to pay. • By selling at a high price in some markets a business can maintain its share of sales in more competitive markets a lower price might be used. • A business using price discrimination can entice customers to purchase larger quantities of products/services • Price discrimination can be used to motivate otherwise uninterested customers to purchase products/services Accept all valid responses.

Mark scheme

4 Analyse one way employee development could be used by a business to encourage intrapreneurship. 5 Note: No marks should be given if a relevant ‘way’ is not given somewhere in the answer. Do not award marks for a correct definition of either ‘employee development’ or ‘intrapreneurship’ unless the terms are used to explain and analyse ways in which intrapreneurship is encouraged. Indicative content Responses may include: AO1 Knowledge and understanding 1 mark for identifying one way employee development could be used by a business to encourage intrapreneurship • Train employees to provide more/enhanced skills • Delegate to provide manager and leadership opportunities • Use motivational theorists e.g. Maslow • Support employee self-actualisation needs • Support teamwork/job enrichment opportunities to increase confidence • Provide the time and resources to innovate and think ‘outside the box’ • Develop flexible work patterns • Provide incentives for creative ideas/proposals • Free up time for experiments and projects 4 AO2 Application 2 marks for developed application/explanation of the chosen way 1 mark for limited application/explanation of the chosen way • Business recognises that, with enhanced and new skills, employees can make a greater contribution to business performance • Business recognises that improved intrapreneurial skills can lead to competitive advantage and USP – and likely to be few businesses that allocate resources in such a way AO3 Analysis 2 marks for developed analysis of the chosen one way 1 mark for limited analysis of the chosen one way • Invest in training will develop a culture of experimentation – new skills – new confidence • Delegation will give confidence to innovate and develop new ideas • Support employees who will be risk-takers and who ‘tread their own path’ • Allow employees to devote a % of their work time to individual projects • Encourage prospective intrapreneurs to examine and analyse organisational bottlenecks – operate as internal consultants • Encourage autonomy and independence – recognise and reward employees that show an entrepreneurial spirit • Use employees to disrupt the business – support those that break the rules • Empower employees with tools and resources they need – give permission to innovate and break away from standard processes – encourage innovation and creativity • Develop and support intrapreneurial skill sets and lenses within the workforce – buy in through external recruitment if necessary and appropriate. Accept all valid responses.

Mark scheme

5(a) Analyse two reasons why a business should measure labour productivity. 8 There are 8 marks in total for Q5(a) – 4 marks for each of the two reasons given: 1 mark for 1 mark for 2 marks for Indicative content Responses may include: AO1 Knowledge and understanding 1 mark for giving one reason • Labour productivity is real economic output per labour hour • It is an important indicator of current/future business performance • It is an important indicator of efficiency/inefficiency … what is going well/what might need changing • It allows a business to make comparisons • It allows a business to regularly analyse the factors that affect productivity levels/motivation levels • It suggests regular appraisals of resource allocation e.g. capital/labour investment 5(a) AO2 Application 1 mark for application of one reason • Labour productivity is an important determinant of business performance • Measurement of labour productivity gives a business information relating to any need to change/improve the productivity of its workforce • Measurement allows comparisons to be made between current and past labour productivity and with competitor levels of labour productivity AO3 Analysis – 2 marks for developed analysis of one reason L2 1 mark for limited analysis of one reason L1 • Business needs to understand the strength or weakness of its current level of labour productivity – how past decisions have impacted on labour productivity • Business needs to understand why and how changes in labour productivity are needed – what level of improvement is needed • If labour productivity is seen to be declining change, options can be considered – invest in more capital equipment – automation, computerisation, robotics – more investment in employee training and skills – review production process etc. • Labour costs are often a significant proportion of production costs and the productive use of labour is closely linked to business efficiency and profitability – non-measurement of labour productivity implies there is little management control or accountability of business performance – ‘what gets measured gets done’. Accept all valid responses. 5(b) Evaluate whether the sustainability of operations is the most important operating factor in a large retail 12 distribution business. There are 12 marks for Q5(b): 2 marks for 2 marks for 2 marks for 6 marks for Indicative content Note: While the term business sustainability is understood by many to be concerned primarily with environmental and social issues such as waste and carbon emissions, some candidates may present an alternative understanding of the term business sustainability. This alternative understanding has a focus on the need for a business to survive long term as a viable operating business having concern for issues such as sustainable employment, and the sustainability of providing appropriate goods and services. If this alternative understanding and interpretation of sustainability clearly relates to the question it should be seen as an acceptable response and marks awarded according to the strengths of the AO1, AO2, AO3, and AO4 skills presented. 5(b) Responses may include: AO1 Knowledge and understanding 2 marks for developed knowledge L2 1 mark for limited knowledge L1 • Sustainable operations are those that deliver financial value with the imperative to take account of societal and environmental impact for the benefit of all stakeholders • Sustainable operations seek to use practices and meet existing needs without placing future resources at risk and compromising the ability to meet future needs • Operating factor – any part of the operational process that affects the operational performance of a business. • Distribution warehouse – the storage of products, the sorting and filling of customer orders and the delivery of products to customers. AO2 Application 2 marks for developed application L2 1 mark for limited application L1 • Sustainable operations such as sustainable packaging for items sold and made ready for delivery • Low carbon delivery methods – electric vans • Sustainable delivery flow methods/models • Sustainable inventory holding methods • Low energy consumption strategies in distribution warehouses • Types/e.g. of large scale retailers which use retail distribution centres 5(b) AO3 Analysis 2 marks for developed analysis L2 1 mark for limited analysis L1 • Improving the sustainability of operations of a business can involve – an audit of energy usage, of water usage, of waste/materials management • Improving the sustainability of operations of a distribution warehouse can involve an audit of distribution fleet energy usage/inventory flow and order management • Operational sustainability can involve – upgrade of heating and cooling systems, more energy efficient lighting, fuel efficient transport/vehicles • Improving operational efficiency involves – cost effective streamlining of base operations with a focus on resource utilisation • Improving operational efficiency can be sought and achieved through – minimising waste in operations, • Operational efficiency can be improved with – producing and managing enough inventory to meet demand with as little excess inventory as possible 5(b) AO4 Evaluation 6 marks for evaluation Developed/Supported judgement in context 6 marks L3 Developed/Reasonable evaluative comments in context 5 marks L3 Developed/Supported judgement without context 4 marks L2 Developed/Reasonable evaluative comments without context 3 marks L2 Limited supported judgement 2 marks L1 An attempt to balance the arguments/Weak attempt at evaluative comments 1 mark L1 A judgement/decision of the importance of improving the sustainability of operations is made. Such judgements/decisions may be made at any point in the essay, not just in a concluding section • A judgement might be made that operational sustainability and operational efficiency are very much the same – the search for cost reduction and the measures to secure those cost reductions can be similar, e.g. waste reduction, energy reduction, efficient resource usage • A judgement might be made that operational efficiency improvement is a much more limited activity than sustainability improvement • A judgement may be made that the aims of a commercial business should be cost reduction and profit enhancement, not objectives concerned with environmental and societal benefits • A judgement might be made that improving the sustainability of operations requires more substantial changes in business behaviour – a focus on the long-term rather than the short-term – the deliberate pursuit of ecological balance through the non-depletion of natural resources Accept all valid responses.

Mark scheme

6(a) Analyse two benefits to a business of customer relationship marketing. 8 There are 8 marks in total for Q6(a) – 4 marks for each benefit given: 1 mark for 1 mark for 2 marks for Indicative content Responses may include: AO1 Knowledge and understanding 1 mark for giving one benefit • Establishes successful customer relationships that produce and maintain customer loyalty • CRM attracts and retain customers • Improves brand image • An effective method of promotion/advertising • An effective way of increasing customer base • Provides important and detailed information on customers • Provides a potentially profitable interface with most important customers • Reduces customer dissatisfaction and complaints 6(a) AO2 Application 1 mark for application of one benefit • CRM puts the customer at the centre of all marketing decisions to keep existing customers and gain new ones • CRM gains as much information as possible about the income, buying habits, and product preference of customers • CRM seeks to build a successful interface with customers and so deal with customers efficiently and effectively AO3 Analysis 2 marks for developed analysis of one benefit L2 1 mark for limited analysis of one benefit L1 • Improve customer relationships – gathers data to facilitate targeted marketing and support • Deepens the business relationship with customers – allows business to stay connected to customers and potentially increase profits • Facilitates more effective marketing campaigns – makes forecasting simpler and more accurate – the whole customer journey from enquiry to sale is documented • Supports a strategy to learn more about customer needs and behaviours – and so deal with customers more efficiently – determine which customers are more profitable and those that are not profitable • Improves customer relationships where sales may be slipping or where there is poor customer service – invest in live chat, video chat etc • Assists sales team to analyse and prioritise existing sales – identify and seize sales opportunities – cross-selling • Reduces costs of marketing – better targeted customer information (in the cloud, for example) reduces the costs of manual and paper administrative work Accept all valid responses. 6(b) ‘Market research is essential for effective product development in a hotel’. Evaluate this view. 12 There are 12 marks for Q6(b): 2 marks for 2 marks for 2 marks for 6 marks for Indicative content Responses may include: AO1 Knowledge and understanding 2 marks for developed knowledge L2 1 mark for limited knowledge L1 • Market research is action designed to gather information about consumer needs and preferences that helps to determine the viability of a product or service • Market research information can help a business to understand what customers want and their perceptions of existing products and services – strengths and weaknesses • Product development supports business survival and growth where there are changing customer demands and behaviours, and strong competition • Products are designed to be more attractive to existing customers and to attract new customers • Market research produces relevant information for product development 6(b) • Indicates gaps that can be filled through product development • Informs the business of competitor threats • Informs the business of performing and non-performing products and services • Informs the business of customer expectations/requirements and what changes may take place AO2 Application 2 marks for developed application L2 1 mark for limited application L1 Market research and new products may be required due to the following reasons: • Hotel rooms may be tired, dated, too small • Hotel may lack pools, gyms, entertainment • Hotel food may be poor/indifferent • Customer services may be poor – little personal service – few remedies for faults – TV/showers not working • Hotel amenities may be out of date – refurbishment needed to meet modern needs AO3 Analysis 2 marks for developed analysis L2 1 mark for limited analysis L1 Market research may be needed to address the following: • Develop a better understanding of customer concerns/dissatisfaction – encourage on-line reviews and feedback • Improve customer satisfaction by rewarding loyal guests and personalise the customer experience • Modernise and improve hotel services such a free internet, offer more sustainable services – recyclable materials, water conservation, simplify the booking and make checkout simple and speedy • Special offers for long stay, out of season stays – price reductions, enhanced food options, upgrade room • Recruit new leadership and management – to create new ideas and products, improved customer satisfaction • Improve quality of hotel services – new local suppliers of quality food – higher quality bed linen • Introduce new themed ‘fun’ nights – attract a new clientele • Invest more resources into marketing – exploit the brand – outflank competitor activities – market new offers Market research and product development will likely underpin and support most of the activities outlined above 6(b) AO4 Evaluation 6 marks for evaluation Developed/Supported judgement in context 6 marks L3 Developed/Reasonable evaluative comments in context 5 marks L3 Developed/Supported judgement without context 4 marks L2 Developed/Reasonable evaluative comments without context 3 marks L2 Limited supported judgement 2 marks L1 An attempt to balance the arguments/Weak attempt at evaluative comments 1 mark L1 A judgement/decision regarding the importance of market research and new product development is made. Such judgements/decisions can be made at any point in the essay and not just in a concluding section • A judgement/decision might be made that, if customer satisfaction (or lack of it) is the cause of poor hotel performance, then market research is vital and important in order to determine what changes need to be made • It may be decided that market research must come before development of products or services. Research and Development is the correct order • The judgement is made that market research is the critical tool to enable a business to know what existing and new customers need and want – and without effective market research competitive advantage cannot be achieved • It may be decided that effective hotel managers and leaders need to concentrate on new ideas and products quickly rather than wait for market research results • A judgement might be made that attempts to improve hotels requires both effective market research and product development • A judgement could be made that there are other factors that need to be considered, other than market research e.g. the quality of financial management and control, the quality of HRM, or the operational efficiency of food production and cleaning operations 6(b) Accept all valid responses.