Business 9609/13 October/November 2025: question paper and mark scheme

Mark scheme

1(a) Define the term market growth. 2 Indicative content Responses may include: AO1 Knowledge and understanding CLEAR UNDERSTANDING (2 marks) • The (percentage) increase in the size of a market over a period of time / using metrics such as number of customers, units sold, or revenue (2) • Increase in size of market over a period of time (2) Clear understanding of the term market growth is worth 2 marks. This is indicated by 2 ticks . PARTIAL UNDERSTANDING (1 mark) • Change in the size of a market (1) Partial understanding of the term market growth is worth 1 mark. This is indicated by 1 tick . Accept all valid responses. 1(b) Explain one pricing method. 3 Indicative content Responses may include: AO1 Knowledge and understanding - 1 mark for identifying ONE pricing method. • competitive • penetration • skimming • price discrimination • dynamic • cost-based • psychological AO2 Application 2 marks for a DEVELOPED application / explanation of ONE pricing method. 1 mark for a LIMITED application / explanation of ONE pricing method. • price is similar to competitors to avoid damaging / expensive levels of competition between businesses OR price set below competitors in markets where it is easy for customers to compare prices of different businesses • setting a relatively low price to enter a market, attract customers and gain market share quickly, price may rise later • setting a high price for a new product when it is unique or highly differentiated / has low price elasticity of demand / price is reduced over time • charging different prices for the same product at different times or to different customers to increase demand and/or revenue • selling at a price which changes according to the level of demand and the customer’s ability to pay • setting a price which covers all the costs of producing/supplying the product plus an additional amount to give profit • takes account of the psychological effect of a price on customers e.g. just below a price level ($9.99 not $10) or a high price for luxury goods Accept all valid responses.

Mark scheme

2(a) Define the term employee morale. 2 Indicative content Responses may include: AO1 Knowledge and understanding CLEAR UNDERSTANDING (2 marks) • An employee’s level of satisfaction towards their job / enjoyment in their work / desire to work / enthusiasm to work / committed to work / sense of health and emotional wellbeing / level of motivation at work / positive mindset / attitude at work (2) Clear understanding of the term employee morale is worth 2 marks. This is indicated by 2 ticks . PARTIAL UNDERSTANDING (1 mark) • How an employee feels about the workplace (1) • Having values (1) Partial understanding of the term employee morale is worth 1 mark. This is indicated by 1 tick . Accept all valid responses. 2(b) Explain one method of paying employees. 3 Indicative content Responses may include: AO1 Knowledge and understanding 1 mark for identifying ONE method of paying employees. • time based • salary • piece rates • commission • bonuses • profit sharing • performance-related pay • fringe benefits AO2 Application 2 marks for DEVELOPED application/explanation of ONE method of paying employees. 1 mark for LIMITED application/explanation of ONE method of paying employees. • employees are paid an agreed amount for each hour they work; the longer they are at work, the more they get paid • an agreed annual amount divided into equal monthly payments; does not depend on hours worked or items produced • employees are paid a set amount for each product they produce; the more they produce, the more they earn • payment based on quantity (or value) of each item sold to encourage sales staff to persuade customers to buy • addition to basic pay, based on individual or team performance in contributing to agreed targets • employees receive some part of the profit made by the business, in addition to their regular pay • paid to employees who meet or exceed targets agreed during appraisal • perks or extras that are not cash payments but are of financial benefit to the employee e.g. use of company car, health insurance Accept all valid responses.

Mark scheme

3(a) Define the term hostile takeover. 2 Indicative content Responses may include: AO1 Knowledge and understanding CLEAR UNDERSTANDING (2 marks) • Buying another business against the company’s wishes/consent (2) Clear understanding of the term hostile takeover is worth 2 marks. This is indicated by 2 ticks . PARTIAL UNDERSTANDING (1 mark) • taking control of another business (1) Partial understanding of the term hostile takeover is worth 1 mark. This is indicated by 1 tick . Accept all valid responses. 3(b) Explain one importance to a business of having objectives. 3 Indicative content Responses may include: AO1 Knowledge and understanding - 1 mark for identifying ONE importance to a business of having objectives • set out what the business wants to achieve / gives direction • gives a clear sense of direction to all in the business / improves decision making • sets out clearly what the business wants to achieve • provide a focus for all decisions • motivated employees know exactly what is expected of them • these objectives allow work to be defined, measured, and monitored • measures business performance • increases efficiency / enables better resource allocation AO2 Application 2 marks for DEVELOPED application/explanation of ONE importance to a business of having objectives 1 mark for LIMITED application/explanation of ONE importance to a business of having objectives • when the objective is clear there can be a plan on how to achieve it • all relevant parts of the business can be co-ordinated to work towards the same objective • employees can be given achievable individual targets which help motivate them to meet the objectives • SMART objectives can be assessed in several ways to check that progress towards achieving them is going to plan Accept all valid responses.

Mark scheme

4 Analyse one impact on a business of outsourcing. 5 Note: no marks can be awarded if a relevant impact on a business of outsourcing has not been identified Indicative content Responses may include: AO1 Knowledge and understanding 1 mark for identifying ONE impact on a business of outsourcing • Increases business capacity • Improves business flexibility • Allows focus on core business skills • Allows a business to access specialist expertise • could solve capacity problems • could reduce business costs • could add to costs • could reduce profit • could lead to a demotivated workforce / impact on employee morale • could lead to control issues /quality control problems • lower quality of product • customer satisfaction decreases 4 AO2 Application 2 marks for a DEVELOPED application/explanation of ONE impact on a business of outsourcing 1 mark for LIMITED application/explanation of ONE impact on a business of outsourcing • take on extra work / respond to increased demand quickly • concentrate / focus on its own strengths / let experienced/specialist business take on other tasks e.g. marketing, accounting • use own resources / workforce more productively • motivation may decrease / job insecurity / redundancy • profits may increase due to saved costs but reduce by paying the other business • errors in lower quality outsourcing may affect quality and customer loyalty • knowledge and processes are available to other businesses AO3 Analysis 2 marks for DEVELOPED analysis of ONE impact on a business of outsourcing 1 mark for LIMITED analysis of ONE impact on a business of outsourcing • increase output, more sales, more revenue, potential for profit, increased market share, competitive advantage • more efficient to focus on core strengths e.g. school on teaching and learning not catering or maintenance. Outsource to specialist catering firms to get economies of scale and better service • free up space, equipment and staff within the business to be better used on key activities, so more productive overall • employees may be positively or negatively affected. Could concentrate on tasks which they are good at or could feel demotivated due to job insecurity. Will affect HR activities • effect on costs and profits could be beneficial or detrimental, but business should benefit overall even if final profits are less than previously • no in-house quality assurance/visiting team may need to be set up, associated costs • customers may stop purchasing and move to competitors so reducing market share • security risk especially involving IT and innovative techniques, business ideas may be stolen • any impact must be logically developed as a consequence to the business Accept all valid responses.

Mark scheme

5(a) Analyse two limitations for a business of sampling during market research. 8 Indicative content Responses may include: AO1 Knowledge and understanding 1 mark for identifying ONE limitation for a business of sampling during market research • sampling methods used may not be appropriate for a given situation • researchers may be inexperienced/incompetent • sample size too small • sample may not be representative of the population • may be very time-consuming • may be very expensive • questions asked may be ambiguous or biased • Customer responses may not be honest AO2 Application 1 mark for application / explanation of ONE limitation for a business of sampling during market research • sample may not have been chosen correctly for a particular situation • efficient sampling / choice of correct method • may not be suitable for niche markets (already small) • not everyone in the target population is questioned • random, stratified and quota sampling must be chosen appropriately • biased responses due to dishonesty / ignorance / biased questions / lack of understanding by respondents • not all sampling techniques are truly random • researchers will require payment 5(a) AO3 Analysis Up to 2 marks for analysis of ONE limitation 2 marks for DEVELOPED analysis of ONE limitation for a business of sampling during market research (L2 AN) or 1 mark for LIMITED analysis of ONE limitation for a business of sampling during market research (L1 AN) • the business cannot be totally confident in the results as they may not be 100% reliable • results and decisions based on a badly chosen sample may damage the business • if employees are not experienced in sampling, the results of the research will be biased and unreliable • a trained employee may require higher pay, or an external agency may need paying to carry out the sampling • opportunity cost of paying for specialised sampling as part of market research • good knowledge of the target population is needed to decide which method of sampling is appropriate based on ease of research, reliability, time available, representation etc Accept all valid responses. 5(b) Evaluate the view that new product development is the most important activity for the success of a toy 12 manufacturer. Indicative content Responses may include: AO1 Knowledge and understanding 2 marks for DEVELOPED knowledge and understanding (L2 K) 1 mark for LIMITED knowledge and understanding (L1 K) • new product development - ideation to market-stages of idea to design to market research to testing to marketing etc • business success - achieve business goals through financial performance profits and growth - customer satisfaction - meeting needs and building customer loyalty - operational efficiency - efficient processes and innovation and stakeholder impact - positive long term social and environmental contribution • making toys that are engaging, durable, sturdy, entertaining, safe, AO2 Application 2 marks for DEVELOPED application (L2 APP) 1 mark for LIMITED application (L1 APP) • toy manufacturer – children, brands, types of toys, soft fabric, plastic, educational • Barbie, Hot Wheels, Matchbox • Mattel global manufacturer, Lego, Fisher Price AO3 Analysis 2 marks for DEVELOPED analysis (L2 AN) 1 mark for LIMITED analysis (L1 AN) • advantages and disadvantages of new product development – very competitive market; gives competitive advantage; meets ever changing needs of children; high cost; innovation; market research; consumer interest • use of Boston Matrix information – toys currently in their product portfolio • stage of the product lifecycle of current products – cost of new product development 5(b) AO4 Evaluation Up to 6 marks for EVALUATION - USE THE FOLLOWING TABLE: Developed / Supported judgement in context 6 marks Developed / Reasonable evaluative comments in context 5 marks Developed / Supported judgement without context 4 marks Developed / Reasonable evaluative comments without context 3 marks Limited supported judgement 2 marks An attempt to balance the arguments / Weak attempt at evaluative comments 1 mark A judgement / conclusion is made as to whether new product development is more important than extension strategies for a toy manufacturer. These judgements / conclusions may be made at any point in the essay, not only in a concluding section. • toy manufacturing is a competitive market with many large and established manufacturers, but there are also niche markets • is the toy manufacturer trying to compete in the mass market or in a niche market? Might this affect how much money is available to fund product development? • how affordable is product development for the manufacturer? Is it new to the market and focussed on survival rather than growth, market share and production of a range of different toys? • is it possible for operations to produce additional products? • if the business is small, it may be labour intensive, and production of a new product may take time and slow down production of current toys. Can the business allow this to happen? • is there consumer demand for new products? Can the business afford to carry out the appropriate market research to find out? 5(b) • would it be better to focus on promoting toys to retailers, adults and children in different ways to create maximum demand for the product portfolio that it already has (extension strategy)? • is spending more money on promotion more appropriate in a mass market where brand might be established? • in a niche market might spending more money to develop a new product with a distinct USP be more suitable to build on reputation for quality? • are extension strategies better as an alternative to new product development? • is it possible for new markets to be targeted rather than focussing on new product development for the existing market? Accept all valid responses.

Mark scheme

6(a) Analyse two uses of cost information for a business. 8 Indicative content Responses may include: AO1 Knowledge and understanding 1 mark for identifying ONE use (K) • provides vital information for effective decision-making- such as cash flow management • cost information can be used to monitor business performance - identifying which products are most profitable • can be used to reduce costs - take out high-cost centres • role in selecting price strategy - cost based pricing • calculating profits • constructing break-even • setting budgets • financial reporting • choosing suitable location • choosing appropriate method of production 6(a) AO2 Application 1 mark for application of ONE use (APP) • decision-making – start-up; expand; cost reduction • measurement of performance – profit / loss; comparisons • setting prices - cost plus pricing, contribution pricing • whether to accept special orders – additional cost of order • supports review of how areas of business contribute to overall business performance • may be used as evidence to support business rationalisation AO3 Analysis - up to 2 marks for analysis of each use 2 marks for DEVELOPED analysis of each use (L2 AN) 1 mark for LIMITED analysis of each use (L1 AN) • decision-making – can produce break even, budgets, cashflow forecasts, variances accurately and make informed decisions • measurement of performance – knowing revenue minus total costs (fixed and variable) means profit or loss can be calculated • identify cost centres – allocate costs to different departments / products and monitor • comparing costs with previous years, predictions, competitors or different parts of the business is vital to assess and improve performance – more profitable / competitive • cutting costs increases profits as long as revenue stays the same • prices must cover all costs of the business to make a profit • special orders – contribution of one product Accept all valid responses. 6(b) ‘A large bank loan is the most appropriate source of finance for the expansion of a furniture retailer.’ 12 Evaluate this view. Indicative content Responses may include: AO1 Knowledge and understanding - 2 marks for DEVELOPED knowledge and understanding (L2 K) 1 mark for LIMITED knowledge & understanding (L1 K) • sources of finance – internal and / or external – retained profit; share capital; debentures; venture capital; bank overdraft; leasing; hire purchase; bank loan; mortgage; debt factoring; trade credit; crowd funding; government grant • types of expansion - buying new premises / extending current premises; employing more staff; increasing product range; buying outlets in different areas • furniture manufacture – type of retailer – mass market or bespoke selling physically or online and / or online AO2 Application - 2 marks for DEVELOPED application (L2 APP) - 1 mark for LIMITED application (L1 APP) • furniture retailers – a range from high end to self -assembly • furniture retailer needs a show room to exhibit the furniture • sofas, beds, tables, and chairs, home décor items • Ikea, Lazy Boy, DFS, John Lewis, Furniture World, Furniture Village – accept local examples AO3 Analysis - 2 marks for DEVELOPED analysis (L2 AN) - 1 mark for LIMITED analysis (L1 AN) • strengths and weaknesses of relevant sources of finance – availability, interest payments, amount required, short or long term, investor confidence, loss of control, input of new ideas, • consideration of internal and / or external finance, long term and / or short term • some types of finance may not be available / suitable / enough for expansion – crowdfunding, venture capital, micro- finance, overdraft, debt-factoring, trade credit • consideration of different types of expansion and what finance method may be appropriate e.g. mortgage for buildings or land, leasing or hire purchase for buying new tills, shelving (is a retailer, not a manufacturer), becoming a plc for large scale expansion of an already recognised business 6(b) AO4 Evaluation – Up to 6 marks for EVALUATION - USE THE FOLLOWING TABLE: Developed / Supported judgement in context 6 marks Developed / Reasonable evaluative comments in context 5 marks Developed / Supported judgement without context 4 marks Developed / Reasonable evaluative comments without context 3 marks Limited supported judgement 2 marks An attempt to balance the arguments / Weak attempt at evaluative 1 mark comments A judgement / conclusion is made as to whether a large bank loan is the most appropriate source of finance for the expansion of a furniture retailer. These judgements / conclusions may be made at any point in the essay, not only in a concluding section. Appropriateness of finance may depend on: • the type / extent of expansion being undertaken • size and type of business ownership • the amount of retained earnings, non-current liabilities, need to retain control of the business and make decisions, interest rate levels and stability, opinions of current shareholders • government grant may only be possible if expansion benefits the area and / or meets governments objectives and criteria. • could be more appropriate to use a variety of sources to finance the full amount, rather than just a large bank loan Accept all valid responses. NOTE: The marks for 5(b) and 6(b) are recorded in the following way. The marks are entered in the mark input column on the right-hand side of the screen The K marks are entered in the 5b / 6b AO1 box The APP marks are entered in the 5b / 6b AO2 box The AN marks are entered in the 5b / 6b AO3 box The EVAL marks are entered in the 5b / 6b AO4 box