0450/13

0450BUSINESSSTUDIES

Paper1(ShortAnswer/StructuredResponse),umrawmark100

CAMBRIDGEINTERNATIONALEXAMINATIONS

InternationalGeneral ofSecondaryEducation

MARKSCHEMEfortheOctober/November2013series

Thismarkschemeispublishedasanaidtoteachersandcandidates,toindicatetherequirementsoftheexamination.ItshowsthebasisonwhichExaminerswereinstructedtoawardmarks.ItdoesnotindicatethedetailsofthediscussionsthattookceatanExaminers’meetingbeforemarkingbegan,whichwouldhaveconsideredtheacceptabilityofalternativeanswers.

MarkschemesshouldbereadinconjunctionwiththequestionpaperandthePrincipalExaminerReportforTeachers.

Cambridgewillnotenterintodiscussionsaboutthesemarkschemes.

CambridgeispublishingthemarkschemesfortheOctober/November2013seriesformostIGCSE,GCEAdvancedLevelandAdvancedSubsidiaryLevelcomponentsandsomeOrdinaryLevelcomponents.

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(a)IdentifytwopossiblereasonswhythedirectorswantHomerighttogrow. [2]

Knowledge[2×1]:awardonemarkperreason

Reasonsinclude:

Economiesofscale

Opportunitytoincreaseprofits

Objectiveofabusiness

Ensuressurvival/protectionfromriskoftakeover

Measureofsuccess

Increasemarketshare

Identifytwowaysofmeasuringthesuccessofabusiness. [2]

Knowledge[2×1]onemarkperway

Pointsinclude:

Increaseinmarketshare

Salesvalueorvolume

HighROCEORprofitmargin

Marketleader

Meetobjectivesofowners

Goodreputation

Growth

Highshareprice

Survival

Note:Measuresofsizesuchasoutput,numberofemployeesorcapitalshouldnotbecreditedasthisisnotthequestion.

IdentifyandexintwopossibleproblemsforHomerightofsellingitsproductsinforeignmarketsforthefirsttime. [4]

Knowledge[2×1]–award1markperproblem

Application[2×1]–award1markforeachrelevantexnationi.e.showhowthesefactorsactuallycreateproblemsforabusinesslikeHomeright

Lackofknowledgeofcustomerneeds/tastes[k]soproducewrongstyleofchairs[app]

Problemsofestablishedcompetitors[k]customersmightbebrandloyaltoothermanufacturers[app]

Lackofdistributionchannels[k]sonotabletosupplycustomersontime[an]

IfHomerightscurrencyappreciates[K]itwillmaketheirproductsmoreexpensive[app]

Languageproblems[k]somightbemistakesoverorders[app]

Legalrestrictionse.g.bans,complexpaperwork[k]sonotabletosellcertainproductsinsomecountries[app]

Problemsofentrye.g.quotas[k]willrestrictthenumbersofproductsthatHomerightcansell[app]

Donotaccepttaxesonownasimpliesinternaltocountry

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IdentifyandexintwoproblemstoHomeright’smanagementthatrapidgrowthcouldcause. [6]

Knowledge[2×1]–award1markforeachproblemidentified[max2]

Application/ysis[2×2]–awardupto2marksforeachrelevantexnationi.e.showhowthepointsidentifiedactuallycreateaproblemforthemanagementofHomeright

Pointsmightinclude:

Organisationalissuese.g.lackofmanagerialexperience[k]especiallyastheyhavealreadyfounditdifficulttomanagethespeedofgrowth[app]socouldleadtopoordecisionstaken[an]

Communicationproblems[k]aslikelytohavemoreemployeestoinstruct[an]soexistingmethodsofcommunicationmightnotbeeffective[an]

Labourissuese.g.abletohireenoughskilledworkers[k]asmoregrowthisnned[app]theywillneedtoproduceevenmorechairs[an]

Supplychangeproblems–canrskeepupwithorders[k]asproductrangedoubled[app]theywilllotsofextramaterials[an]

Logisticalissues–distributionproblems[k]asenteroverseasmarkets[app]theymaybeunabletogetensureproductsgettocustomersontime[an]

Financial–workingcapital/overtrading[k]

Qualitymaysufferinrushtomeetdemand[k]whichcoulddamagereputation[an]leadingtofewersales[an]

Operationalissuese.g.capacitytomeetdemand[k]asfactorymightbetoosmalltoholdallmaterials/finishedstock[an]

DoyouthinkthattheprofitsofHomerightwillcontinuetoincreaseifthegrowsinthefuture?Justifyyouranswer. [6]

Knowledge/application[2×1]identificationofrelevantissues

ysis[2]–exinhoworwhyissueneedstobeconsideredbyHomeright

Evaluation[2]–reasonedjudgmentmadeastowhetherprofitswillcontinuetoincreaseifthegrows

Pointsmightinclude:

Increasedsales[k]whichifcostsremainthesameshouldleadtohigherprofits[an]

Willcustomerslikethenewproductrange[k]ifnotsaleswillnotrise[an]

Greatercosts/diseconomiesofscale[k]asgrownrapidly[app]theymightnotbeabletocontrolthem[an]

Growthmightbringincreasedeconomiesofscale[k]leadingtoloweraveragecosts[an]

Istheirscopeforfurthergrowthinthemarket[k]asnewcompetitorsmightenter[an]soHomeright’ssalesmightnotcontinuetoincrease[an]

Developedanswer:

Growthofabusinesswillresultinincreasedsalesrevenue[k].Assumingmarginsareconstantthismustresultinhigherprofits[an].Howeverrapidgrowthintermsofnewproductsmightmeannewsalesarenoteasilygenerated[k]andcostsincreaseproportionallyfaster[an].Soprofitsmightnotrise[eval]andcertainlyprofitabilitymightnotincrease[eval].

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(a)Whatismeantby‘fixedcosts’? [2]

Clearunderstanding[2]e.g.coststhatdonotchange[1]asthelevelofactivitychanges[+1].Someunderstanding[1]e.g.coststhatstaythesame

Note:Mustlinkanswertolevelofactivity/outputtogainfullmarks.

Whatismeantby‘workingcapital’? [2]

Clearunderstanding[2]e.g.howmuchliquidassetsabusinesshastofinanceitseverydaycosts[2]ORformulae.g.currentassetsminuscurrentliabilities[2]

Someunderstanding[1]e.g.moneyforeverydayexpensesORfundsusedtobuystock.

IdentifyandexintwoproblemsforFabian’sbusinessofholdingalotofstock. [4]

Knowledge[2×1]–award1markperproblem

Application[2×1]–award1markforeachrelevantexnationi.e.howorwhysuchpointsrepresentaproblemforthebusiness.

Pointsmightinclude:

Increasedinsurancecosts[k]asmoreitemsneedtobeprotected[app]

Increasedstorageandhandlingcosts[k]increasesbusinespenses[app]

Cashflow/liquidityproblems[k]asmoneyheldasstock[app]

Additionalstorage/handlingcosts[k]asneedmorespace[app]

Additionalsecuritycosts[k]asvaluablepartsneedtobekeptsafe[app]

Riskofobsolescence/wastage[k]becauseofnewfashion/tasteindesign[app]

Riskofdamage[k]asneedtobestoredwhichcouldincreasecosts[app]

Donotacceptanyanswerthatcouldnotberelatedtothistypeofbusiness,e.g.sellbydates.

IdentifyandexinthreemethodsofpromotionthatFabiancouldusetoincreasesales. [6]

Knowledge/application[3×1]–award1markperappropriatemethod

ysis[3×1]–award1markforeachrelevantexnationi.e.showhowthemethodsworktohelppromotethebusinesstoincreasesales

Pointsinclude:

leaflets/posters/billboards[k]toraiseawarenessofthebusiness[an]

advertisementsinnewspapersORevision(onlyacceptonce)toincreasecustomerawareness[an]

BOGOF/specialoffers[k]e.g.buyfootballbootsget1ballattractcustomerstobuyasgetmorewhenbuycertainproduct[an]

Promotionalpricing(mustindicateshorttermpricecuts)[k]toencouragecustomerstotrytheirproducts[an]

Sponsorship/publicrelations[k]improvestheimageofthebusiness[an]

disys[k]asattractsattentionofcustomers[an]

Gifts[k]increasestheattractivenessoftheproduct[an]

Tradeshows/events[k]reachingawidertargetmarket[an]

Competitions[k]peoplewillbuythesportsequipmentfromFabiantohaveachanceofwinningtheprizes[an]

Internet/socialmedia[k]asitcanbetargetedatcertaincustomergroups[an]

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DoyouthinkthatreducingtheproductrangewillbenefitFabian’sbusiness?Justifyyouranswer. [6]

Knowledge/application[2×1]–award1markforeachrelevantissueidentified

ysis[2]–awardupto2marksforrelevantdevelopment

Evaluation[2]–reasonedjudgementmadeastowhetherreducingtheproductrangewillbenefitthebusiness

Pointsfornarrowerrangeinclude:

Increasestockturnover[k]reduceschanceofproductsgoingoutoffashion/season[an]

Attractmorecustomerslookingforspecialistproducts[k]asproductstailoredtospecificrequirements[an]

Lowerstockholdingcostse.g.rentcostsdecreased[k]aslessspaceneededtostoreproducts[an]

Howeverthechangemight:

Losecustomers[k]asdon’thavetheproductstheyneed[an]

Lackofdemandforareasofspecialisation[k]ifonesport esunpopularleftwithunsellablegoods[an]

Developedanswer:

Fabianwillhaveasmallertargetmarket[k]whichcouldmeanfewersales[an]ashedoesn’tstocktheproductsthatcustomerswant[an].Howeverhecannowspecialise[k]sohecanofferabetterservicetohischosencustomers[an].Ithinkthisistoobigabigrisk[eval]asthecustomersheisfocusingonmightnotspendenoughtomakeupforallthepotentialcustomershehasnowlost[eval].

(a)Whatismeantby‘economicboom’? [2]

Clearunderstanding[2]e.g.highlevelofeconomicactivityassociatedwithariseinGDPSomeunderstanding[1]e.g.identifiesoneormorefeatureofeconomicboom

Featuresmightincludelowunemployment,risinginflation,resourceshortages,highlevelsofdisposable eandhighlevelsofconsumerandbusinessconfidence.

Identifytwofactorsthatmayinfluencewageratesinabusiness. [2]

Knowledge[2×1]onemarkperfactor

Factorsinclude:

Abilitytopay

Competitionforlabour

Strengthoftradeunions

ernmentregulationse.g.minimumwage

Skills/typeofwork

Levelofunemployment/supplyoflabour

Identifyandexintwoproblemstoabusinesscausedbyhighinterestrates. [4]

Knowledge[2×1]–award1markperproblem

ysis[2×1]–award1markforeachrelevantexnationi.e.howorwhyitcreatesaproblemforbusinesses

Pointsinclude:

Increasedcostsofborrowing[k]e.g.somighthavehigherexpenses/reducedprofitsorhavetodelay/stopcapitalexpenditure[an]

Reduceddemandforproducts[k]e.g.ascustomerswillbeunwillingtotakeoutloanstobuyhighpricedproducts[an]

Demandforhigherwages[k]asworkersmightfacelowerdisposable es[an]

Identifyandexintwowaysinwhichdecisionsinabusinessmightbeaffectedbyariseintaxes. [6]

Knowledge[2×1]–award1markforeachwayidentified(howeffectbusiness)[max2]

ysis[2×2]–award1markforthedecision[1]andafurthermarkforshowingtheimpactofthatdecisiononthebusiness[+1]

Pointsmightinclude:

Highertaxeswillreducesales[k].Hencebusinespansiondecisionsmaybedelayed[an]sobusiness eslesscompetitive/losemarketshare[an].

Ifhighertaxesfallonprofitsthenbusinesseswillhavelessretainedprofit[k].Thismeansthatbusinesswillneedtofindalternativesourcesoffinance[an]whichmightbemoreexpensive[an]

Increaseinindirecttaxeswillincreaseprices[k]sobusinessmightchosetoabsorbsomeorallofthetax[an]andthiswillreduceprofitmargins[an]

Increaseinindirecttaxeswillincreasebusinesscosts[k]sohavetolookforcheaperalternatives[an]whiightlowerqualityofproductsproduced[an]

Doyouthinkthatallbusinesseswillbesuccessfulwhenacountryhasaneconomicboom?Justifyyouranswer. [6]

Knowledge[2×1]–identificationofrelevantissues

ysis[2]–awardupto2marksforrelevantdevelopment

Evaluation[2]–reasonedjudgementmadeastowhetherALLbusinesseswillbesuccessfulinaboom

Pointsmightinclude:

Businesssalesshouldrise[k]soprofitsshouldincrease[an]

Greatercompetitionasmorebusinessessetup[k]socanbehardertocompete[an]

Ifsellnecessities/basicgoodsmayseeverylittleincreaseinsales[k]asconsumersarealreadybuyingthetytheyneed[an]andrsofbasicgoodsmightactuallyseeafallinsalesasconsumersswitchtobetterqualitysubstitutes[an]

Developedanswer:

Aneconomicboommeansthatbusinessactivityislikelytobehigh[k].Generallysalesofbusinesseswillberisingandprofitswillbegettinglarger[an].Howeverabusinessneedstoproducetherightproducttomeetcustomerneeds[k].Ifabusinessfailstodothisthenitwillfail[an]eveniftheeconomicclimateisfavourable[eval].Itismorelikelythatbusinesseswillbesuccessfulinaboombutitisnotinevitable[eval].

(a)Whatismeantby‘batchproduction’? [2]

Clearunderstanding[2]e.g.productsaremadeingroups/setsofitemsofacertainamountORidentifiestwodistinctivefeaturesofbatchproduction

Someunderstanding[1]identifiesonedistinctfeatureofbatche.g.madein(small)groups.Donotaccept‘batch’aspartofanswerasstatedinquestion.

IdentifytwobenefitstoDefoeofbuyingrawmaterialsinsmallties. [2]

Application[2×1]onemarkperbenefit

Benefitsinclude:

Businesstiesuplesscash

increasedflexibilityaschangescanbemade

lowerholdingcostsintermsofspaceandinsurance

lessriskofdamage/obsolete

IdentifyandexintwoappropriatesourcesoffinancethatDefoecouldusetoinvestincapitalintensivemethodsofproduction. [4]

Knowledge[2×1]–award1markpersource(mustbelongterm)

Application[2×1]–award1markforeachrelevantexnationi.e.showwhythesesourcesareappropriate

Pointsmightinclude:

Retainedprofit[k]noneedtorepayornointerest[app]

longtermloans/debentures[k]canstructurepaymentsoverlongtime[app]

newissuedcapital[k]whichcanraisefullamountORnoneedtorepay

leasing[k]nolargeinitialoutlay[an]

IdentifyandexinthreebenefitstoDefoeofusingcapitalintensivemethods. [6]

Knowledge[3×1]–award1markforeachbenefitidentified[max2]

Application[3×1]–award1markforeachrelevantexnation(i.e.showhoworwhythesepointsgeneratebenefitsforthebusiness)

Pointsinclude:

Higherlevelsofoutput[k]soabletomeetmoreorders[an]

Lowerunitproductioncosts[k]asbenefitfromtechnicaleconomiesofscale[an]

Betterquality[k]soabletochargehigherpricesforproducts[an]

Uniformityofproducts[k]aslesserrorsaremade[an]

Improvesproductivity[k]whichcanhelpreduceaveragecosts[an]

Waytoreducelabourcosts[k]solowertotalcostsforbusiness[an]

Fasterproduction[k]asmachinescanmakemoreinlesstime[an]

Machinesareabletohandlemorecomplexwork[k]soabletodevelopbetter/moreadvancedproducts[an]

Note:advantagesmustclearlyrelatetobusinessnotemployees

WouldtheemployeesofDefoebenefitfromthechangetocapitalintensivemethodsofproduction?Justifyyouranswer. [6]

Knowledge/application[2×1]–award1markforeachrelevantissueidentified

ysis[2]–awardupto2marksforrelevantdevelopmenti.e.howorwhythesepointsimpactontheemployees

Evaluation[2]–reasonedjudgementmadeastowhetherDefoe’semployeeswillbenefitfromthechangetocapitalintensivemethods

Pointsmightinclude:

Greaterjobsecurityforthosewithjobs[k]ifprofitincreasesasdirectorshope[an]

Needforre-training[k]whichcouldcreatepromotionopportunities[an]

Fearofchange/fearofredundancyasmachinesrecejobs[k]coulddecreasemotivation[an]

Deskilling[k]soworkers eboredduetorepetitivenatureofjob[an]

Implicationsforpaye.g.lowerwages[k]solowerlivingstandards[an]

Opportunitiestolearnnewskills[k]whichcouldimprovechancesforself-improvementorpromotion[an]

Saferconditionsasuptodatetechnology[k]solessriskofinjury[an]

Worklesstiring[k]asmachinesdotheheavywork[an]

Donotacceptpointssuchas‘moreefficient’unlessclearlylinkbenefittoemployees.

Developedanswer:

Someworkersmightlosetheirjobs[k]leadingtolowerlivingstandards[an].Workerswhoremainmight edemotivated[k]astheworktheydo esmorerepetitive[an].Butothersmightbenefitastheyhavethechancetolearnnewskills[k]orevengainmoreresponsibility[k].Thosewhogettheseopportunitieswillclearlybenefit[eval]butasmachinesareusuallyintroducedtoreducethelabour,Ithinkmoreworkersarelikelytobeworseoffthangain[eval]

(a)Whatismeantby‘ merce’? [2]

Clearunderstanding[2]e.g.processofbuyingandselling[+1]overtheInternet[1]

Someunderstanding[1]e.g.doneoverinternet

Whatismeantby‘marketingmix’?

Clearunderstanding[2]e.g.blendofprice,promotion,productandce,designedtoattractcustomers.

Someunderstanding[1]e.g.identifiesfourelementsofthemarketingmix

IdentifyandexintwopossiblereasonswhyBarts’saleshavefalleninrecentyears.

[4]

Knowledge[2×1]–award1markperreason

Application[3×1]–award1markforeachrelevantexnationi.e.developpointincontextofBarts

Reasonsmightinclude:

Increasedcompetitionfromnewbooksellers[k]socustomerschoosetobuyelsewhere[app]

Changedbuyinghabitsofcustomers[k]lesspeoplevisitshopsastheybuyonline[app]

Fallinthedemandforbooks[k]aspeopleswitchtoe-readers[an]

Poormanagement[k]asBarts’marketingmixmightnothaveadjustedinresponsetomarketchanges[app]

IdentifyandexinthreepricingmethodsBartscoulduseifitsellsbooksthroughitsown