A2as Bus Revised Support 1935

Specimen Papers and Mark Schemes for Business Studies
For first AS Examination in 2009 For first A2 Examination in 2010 Subject Code: 3210
Contents
Specimen Papers Assessment Unit AS 1 Assessment Unit AS 2 Assessment Unit A2 1 Assessment Unit A2 2 Mark Schemes Assessment Unit AS 1 Assessment Unit AS 2 Assessment Unit A2 1 Assessment Unit A2 2 1 3 9 13 17 23 25 39 55 61
Subject Code QAN QAN
3210 500/2458/9 500/2357/3
A CCEA Publication 2007
Further copies of this publication may be downloaded from www.ccea.org.uk
Specimen Papers
ADVANCED SUBSIDIARY (AS) General Certificate of Education 2009
Business Studies Assessment Unit AS 1 assessing The Competitive Business

SPECIMEN PAPER
TIME 1 hour 30 minutes INSTRUCTIONS TO CANDIDATES Write your Centre Number and Candidate Number on the answer booklet provided. Answer all questions. INFORMATION FOR CANDIDATES The total mark for this paper is 80. Quality of written communication will be assessed in Question 1 parts (c), (d) and (e) and Question 2 parts (d) and (e). Figures in brackets down the right-hand side of pages indicate the marks awarded to each question or part question. ADVICE TO CANDIDATES You are advised to take account of the marks for each question or part question.
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Study the information below and answer the questions that follow. The Toyota Yaris
2000
2006
On 11 December 2006 at 6:00 pm, the millionth Yaris rolled off the assembly line at Toyota Motor Manufacturing France (TMMF). Since the start of production in January 2001, production at TMMF has increased steadily, supporting the growing sales success of Yaris, one of Toyota Motor Europes core models, designed and built in Europe for Europeans. Since the launch of its first generation model, Yaris has been a success story for Toyota in Europe. Named Car of the Year 2000, acknowledged as the safest car in its segment by Euro NCAP, the first generation Yaris was delivered to more than 1.4 million customers in Europe between 1999 and 2005. The new generation Yaris already proves to be an even bigger hit, with 2006 sales expected to reach 250,000 units. The new Yaris offers an even more advanced package, including high levels of interior space and versatility, use of advanced technology, comfort, performance and safety Yaris has obtained a 5-stars Euro NCAP rating (a record 35 points for adult protection).
www.toyota.co.uk
(a) Outline what is meant by the product life cycle. (b) Identify and describe the stage of the life cycle that the Toyota Yaris might be at. (c) Modern businesses put great emphasis on the quality of their products. Explain two ways by which Toyota could measure the quality of their products. (d) Discuss the effect on Toyota of changing four elements of the marketing mix with the development of the new generation of the Yaris. (e) Toyota will have carried out extensive market research in advance of redesigning the Yaris. Evaluate the different methods of market research that the company could have used to determine the wants and needs of customers.
[4] [4] [8] [12]
[13]
Study the information below and answer the questions that follow.
The Mattress Doctor

Former accountant Bryan Walters and his business partner Bruce King were looking at various business options. Bruces wife suffered from asthma and in their research they came across businesses in Germany and the US which cleaned mattresses to try to get rid of dust mites and ease the symptoms. The more we looked at it we found that no-one was doing it in the UK, says Bryan. Together they set up a business The Mattress Doctor to exploit this opportunity. There are estimated to be two million mites in the average mattress, responsible for various breathing complaints and allergies. Bryan and Bruce developed special equipment that loosens the mites and sucks them out. A hygienic spray then delays their return. It takes about 40 minutes to treat a double mattress and costs from 50 depending on the size and location. Business was doing well and Bryan and Bruce started to think about growing it. Franchising seemed to be the obvious route. A Mattress Doctor franchise costs from about 8,000. Theres also a monthly charge of 250 to cover repair and replacement of equipment and continued support. Each person who takes a franchise receives training in mattress cleaning, training in running the business, the equipment they need to clean mattresses, strategies for finding customers and backup from Bryan and Bruce. In the first year, Mattress Doctor already has 24 UK franchises. We would like to get up to 100 franchises in the next three years, Bryan says.
BBC News at bbc.co.uk/news http://news.bbc.co.uk/go/pr/fr-/1/hi/programmes/working_lunch/3567555.stm published: 2004/03/26
(a) Explain what is meant by the Unique Selling Proposition of The Mattress Doctor. (b) Explain two disadvantages to Bryan and Bruce of setting up a business partnership. (c) Analyse how a business such as The Mattress Doctor might achieve and maintain competitive advantage. (d) Evaluate franchising as a method of growth for The Mattress Doctor. (e) Bryan and Bruce believe that the price elasticity of demand for their product is approximately 3. Evaluate the usefulness of price elasticity of demand to a firm such as The Mattress Doctor.
[4] [4] [8] [11]
[12]
Business Studies Assessment Unit AS 2 assessing Managing Business Resources

SPECIMEN PAPER
TIME 1 hour 30 minutes INSTRUCTIONS TO CANDIDATES Write your Centre Number and Candidate Number on the answer booklet provided. Answer all questions. INFORMATION FOR CANDIDATES The total mark for this paper is 80. Quality of written communication will be assessed in Question 1 parts (d) and (e) and Question 2 parts (d) and (e). Figures in brackets down the right-hand side of pages indicate the marks awarded to each question or part question. ADVICE TO CANDIDATES You are advised to take account of the marks for each question or part question.
Study the information below and answer the questions that follow:
Motivation: Itchy feet at work?

New research has prompted a warning to bosses to take steps now to improve employee motivation and safeguard productivity. The research surveyed more than 1,600 UK employees. It also found that almost half of employees in Northern Ireland are either unhappy or feeling unsure about their current job. Itchy feet may be the result of this discontentment 31 per cent of staff say they expect to spend less than two years in their job, and less than half plan on staying for more than three years in their current role. The research also found that the top tell-tale signs of colleagues who are job hunting include having urgent appointments, a lax approach to working hours, increased use of mobile phones and booking holidays at short notice. Ruth Spellman, chief executive of Investors in People, said: Its clear that the days of collecting a gold watch for loyal service are long gone todays employees are restless and demand more from their employers and, if they dont get it, they simply pack up their desk and move on. The key reasons for people leaving their jobs are: Opportunities for career progression/promotion. (28 per cent) New challenge. (33 per cent) Better pay/benefits elsewhere. (39 per cent) Lack of recognition for your contribution. (20 per cent).
Adapted from Investors in People, press release 28/10/2005
Motivation within a business is also affected by changes in its organisational structure. In recent years many firms have delayered and adopted a flatter structure. This has often meant more decentralised decision making, a greater span of control for managers and more employee empowerment. Budgeting can also influence the commitment of staff, as a realistic budget can be an effective tool in the control of the organisation and its finances. However a poor one can have serious implications for the morale of the workers it relates to. It is important that employers consider the effects such changes may have on their staff and implement ways to maintain a high level of motivation.
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(a)
Describe the following terms highlighted in the case study above. (i) (ii) Decentralisation; and span of control. [4]
(b)
Calculate the missing variance and the budgeted and actual figures below. Extract from the Profit and Loss Account for ABC Ltd for the year ended 2008 Budgeted (000) Sales Costs Profit 120 60 60 Actual (000) 100 ? ? Variance (000) ? 20 (A) ? [4]
(c) (d) (e)
Identify and analyse possible causes of the variances and their impact on ABC Ltd.
[8]
Discuss the implications for a firm which decides to remove layers of management. [12] The days of collecting a gold watch for long service are long gone.... Using motivation theory, evaluate whether employers need to use a variety of methods to motivate employees. [13]
Please turn over for the next question.
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Study the information below and answer the questions that follow.
Breakeven and Sources of Finance

Snug Rugs Ltd has been manufacturing carpets and rugs in Lisburn for fifty years. The company has been successful in building up a small but loyal customer base in Great Britain but would like to expand into new markets. This is mainly because existing customers are increasingly willing to buy carpets from abroad because they are cheaper. John McGarry, the Managing Director of Snug Rugs Ltd is concerned that two of the machines involved in the manufacturing process are prone to break down and halt production. The machines are also old, slow and inefficient and John has come to the conclusion that they need to be replaced. John has asked Fiona Nance, the company accountant, to provide an estimate of the likely costs and revenues if two new machines were to be leased rather than purchased outright. She has spent a great deal of time researching the cost of the two machines to assist with the decision of whether to buy or lease the new machines. The machines are expected to cost 110,000 per annum to lease and associated staff costs are expected to come to 52,000 per annum. Fiona has also worked out that maintenance of the machines would cost 1000 per batch of rugs manufactured and other miscellaneous costs would be 600 per batch. Fiona expects that the machines will be able to produce 12 batches of rugs per month, with a maximum capacity of 14. On average the firm charges 3100 per batch. Show all your working in questions (a)-(d): (a) (b) (c) Calculate the break-even level of output (in batches) for the two new machines. Calculate the monthly profit made from the two new machines. A local competitor has approached Snug Rugs Ltd and offered a 1 year contract to produce 13 batches of rugs per month for a total annual cost of 380,400. Explain the arguments for and against accepting this contract. [4] [4]
[8]
There could be problems if Snug Rugs Ltd expands into new markets. It is likely that new workers will have to be employed to cope with increased demand. John is also concerned that the quality of training within the company is not what it should be and he is worried that this might affect the success of future expansion. (d) (e) Describe and evaluate different training methods which a firm such as Snug Rugs Ltd might use. Describe and evaluate the different methods the firm could use to recruit managers to the business. [11] [12]
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ADVANCED General Certificate of Education 2010
Business Studies Assessment Unit A2 1 assessing Making Business Decisions

SPECIMEN PAPER
TIME 2 hours INSTRUCTIONS TO CANDIDATES Write your Candidate Number and Centre Number on the answer booklet provided. Answer all questions. INFORMATION FOR CANDIDATES The total mark for this paper is 80. Quality of written communication will be assessed in Questions 5 and 6. Figures in brackets down the right-hand side of pages indicate the marks awarded to each question or part question. ADVICE TO CANDIDATES You are advised to take account of the marks for each question or part question.
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Cadbury Schweppes is a major international company that manufacturers, markets and sells confectionery and soft drinks. With origins stretching back over 200 years, Cadbury Schweppes brands are enjoyed in almost every nation in the world. They include Cadbury Dairy Milk, Bassetts and 7UP. The company employs around 50,000 people. Its mission statement is shown below: Our Core Purpose is: Working Together to Create Brands People Love
Financial Statements and Reporting

Limited companies are required by law to produce Financial Statements. These statements must be published and made available to shareholders as part of a company report. Cadbury Schweppes aims to produce clear financial statements that give a valuable insight into the companys strategy and performance. Two of the main Financial Statements are: 1 2 The Profit and Loss Account; and Balance Sheet.
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Simplified versions of the Profit and Loss Account and Balance Sheet for 2004 are shown below. Profit and Loss Account Cadbury Schweppes 2004 1 2 Sales Revenue Less cost of sales Gross Profit Less other expenses Other costs Net Profit before interest and tax 3 Plus non trading income Net Profit with extra income Before interest and tax 4 5 6 Less net finance costs (interest) Less taxation Profit for the year 6738 (5668) 1070 (154) 916 21 937 (205) 732 (185) 547
Balance Sheet Cadbury Schweppes as at 31.12.04 1 2 3 Fixed Assets add Current Assets less Current Liabilities Net Current Assets Total Assets 4 5 6 Less long term liabilities Net Assets Financed by Shareholders Capital (5187) 2300 2300 2240 2393 (153) 7487 7640
Source:Adapted from www.tt100.biz and www.cadburyschweppes.com
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Unit A2 1: Making Business Decisions Candidates must answer all questions. Questions 1 to 4 are based on the Cadbury Schweppes stimulus material. 1 Calculate a b the Current Ratio; and Return on Capital Employed (ROCE); for Cadbury Schweppes as at 31st Dec 2004. [2] [2] [7] [15] [15] [19] [20]
2 3 4 5 6
Explain two methods by which Cadbury Schweppes might improve its liquidity position. Calculate the Gearing Ratio for Cadbury Schweppes as at 31st Dec 2004. Is it desirable for Cadbury Schweppes to maintain this ratio at this level? Ratio Analysis provides historical data about a business. To what extent can existing ratios be used to forecast the future performance for Cadbury Schweppes? To what extent is it essential for a company such as Cadbury Schweppes to have a mission statement? Evaluate strategies that a company such as Cadbury Schweppes could use to deal with conflicting stakeholder objectives.
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Business Studies Assessment Unit A2 2 assessing The Changing Business Environment

SPECIMEN PAPER
TIME 2 hours INSTRUCTIONS TO CANDIDATES Write your Centre Number and Candidate Number on the answer booklet provided. Answer the one question. INFORMATION FOR CANDIDATES The total mark for this paper is 80. Quality of written communication will be assessed throughout the paper. Figures in brackets down the right-hand side of pages indicate the marks awarded to each question or part question. ADVICE TO CANDIDATES You are advised to take account of the marks for each question or part question.
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Study the information below and answer the question that follows.
Shirtex Ltd
Source 1: Extracts from the company website Shirtex Ltd was founded in 1970 by Tom Henderson. The business has remained a private limited company under the control of the Henderson family. The Managing Director is Mark Henderson, a grandson of the founder. Shirtex Ltd has established itself as a highly reputable shirt manufacturer, supplying many well-known national retailers with high quality garments at competitive prices. Our product range also includes a premium brand, Line 1, which is distributed only through the most exclusive fashion shops. Most of our garments are sold in stores throughout the UK and Ireland. Although we import many of the raw materials used in production we do have a policy of using local suppliers whenever possible. The company has re-invested profits steadily over the years. Our factory, located on the outskirts of Belfast, is one of the most modern in Western Europe and currently employs a workforce of 400. We take pride in the fact that a high percentage of our highly skilled employees have been with us for many years. This is partly due to the excellent conditions of employment that we offer and the family culture that we try to nurture in the factory. In recent years we have, in common with other Northern Ireland companies, been under increasing pressure from foreign competition. Profit margins in the industry have been eroded to such an extent that several of our local competitors have been forced out of business, the latest being Desmond & Sons.
Source 2: Financial information relating to Shirtex Ltd Sales Net Profit ROCE Current Ratio 2003 300m 22m 5.2% 1.8 : 1 2004 283m 14m 2.3% 1.6 : 1 2005 274m 4m 0.4% 1.6 : 1
Information from Final Accounts of Shirtex Ltd, 2006 Cost of Sales Gross Profit Expenses Current Liabilities Current Assets Capital Employed 206m 21m 19m 47m 61m 890m
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Source 3: Extracts from www.news.bbc.co.uk Major jobs loss blow

BBC News at bbc.co.uk/news http://news.bbc.co.uk/1/hi/northern_ireland/30049999/stm Tuesday 6 May 2004
Almost 500 jobs are set to go with the closure of three textiles factories in Northern Ireland. Desmond & Sons said it was to shut down plants at Omagh in County Tyrone, Swatragh in County Londonderry and Irvinestown in County Fermanagh. Desmonds, who employs almost 2,000 people in the province, makes clothes for Marks & Spencer. The announcement comes just four months after the firm announced that more than 300 jobs were to go at another two plants. On Tuesday, the company said it was undertaking a further planned reduction in its production capacity. This would lead to the loss of 482 jobs, said a spokesman. In a statement, the company said: We recognise that this will come as a deep shock to all our employees following only a few months after we ended production in Springtown and Dungiven. However, despite the great efforts of all our staff, we have been experiencing operating losses at the three factories and must take action to stay competitive. Consumer demand for clothes at value-for-money prices and pressures on margins coupled with increased insurance, energy and social costs, mean that it is no longer possible to sustain large scale manufacturing operations in this country. Our competitors have long since ceased to do so. In order to compete for future orders the vast bulk of production will have to be fulfilled in our overseas factories.
Another setback
BBC News at bbc.co.uk/news published: 2004/05/07
In relation to the recent announcement by Desmond & Sons concerning the factory closure in Swatragh. A local politician said that the closure of the plant was another setback for the area. The employees and their families will now be very worried at being left without work, he said. The retail business in the town, together with bars and restaurants, will also be hit as a result of this.
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Source 4: Newspaper articles relating to globalisation of textile industry Profit warnings:

Belfast Telegraph 24/05/2006
Marks & Spencer has issued two profit warnings in recent months and has been accelerating the shift away from its traditional buy local policy in favour of sourcing from lower-cost overseas suppliers. We've identified suppliers who can help us to deliver on both price and quality who are leaders in their field, said an M&S spokeswoman.
Textile Developments
BBC News at bbc.co.uk/news http://news.bbc.co.uk/1/hi/business/4194474.stm Monday 5 September 2005
The global textile industry has been changing rapidly since the beginning of 2005 after a quota system* which limited worldwide clothing sales for 30 years was scrapped. The move part of a global drive towards free trade has resulted in a huge increase in Chinese clothing exports, with sales of certain items to the EU rising by up to 500%. Chinas huge manpower and industrial capacity means it is able to produce large volumes of cheap clothing at much lower prices than producers in Europe. Europes retailers are on the opposite side of the fence to its clothing manufacturers who are worried about job losses resulting from cheap Chinese competition. They point to figures showing a 30% decline in T-shirt production in Portugal and a 12% fall in Greece since January. Retailers are delighted with the cheap imports. Some governments including France, Spain and Italy have taken the producers side, others including Germany, the Netherlands and Sweden have supported the retailers. * a quota is a limit on the amount of goods that can be imported into a country. Growth of China
BBC News at bbc.co.uk/news http://news.bb.co.uk/1/hi/business/4176096.stm Tuesday 23 August 2005
The European Commission is caught between its manufacturers who want to keep China out, and its retailers who need China's low costs to survive in the razor-thin margins of the fashion business. Officials from Brussels plan to visit China in an attempt to ease the situation. However, the official line from Beijing is that few other countries can compete with its low costs or the scale of its production. European manufacturers, they say, are only postponing the inevitable. China now accounts for about 17% of global textile sales, but some experts believe this could rise to 50%.
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Source 5: Background to Report Shirtex Ltd was recently pressurised by one of its largest customers, ABC stores a national clothing chain, to reduce the prices on the most popular shirt styles by up to 8%. The management team considered that this was impossible in the current business climate. ABC stores responded by cutting its orders by 50%, claiming that it was able to buy these garments abroad. Although Shirtex Ltd produces superior quality shirts, this fact was not enough to win back the order. At a crisis meeting of the Shirtex Ltd directors, it was agreed that the company needed to act fast in order to survive. Mark Henderson, the Managing Director undertook to investigate the possibility of relocating the factory abroad. Some hastily prepared calculations from the Finance Manager gave Mark an idea of what this might involve. It was estimated that the approximate cost of building a new plant in India would be 180m. Yearly running costs for the first five years of operation and the expected sales revenues generated are shown below. Year 1 Year 2 Year 3 Year 4 Year 5 Yearly running costs 30m 30m 20m 20m 20m Expected sales revenue 50m 80m 130m 160m 80m
Revenues might be expected to fall dramatically after five years without further capital injections to cover depreciation of plant. Question 1 You are a consultant employed by Shirtex Ltd. You have been asked to prepare a formal report entitled Relocation abroad the way forward? The aim of the report is to examine the problems currently faced by Shirtex Ltd, analyse the options open to the company and evaluate whether a decision to relocate the factory abroad would be in the best interests of the shareholders and stakeholders. Your report should be in an appropriate format and should include recommendations to the management team of Shirtex Ltd. (You may find it useful to address the following areas in your report; SWOT analysis, the financial implications of relocating/not relocating, the social responsibilities of Shirtex, the impact on company culture of relocating and the impact on corporate image of relocating.) [80]
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Mark Schemes
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Business Studies Assessment Unit AS 1 The Competitive Business

SPECIMEN PAPER
MARK SCHEME
25
(a)
The product life cycle shows the different stages in the life of a product and the level of sales that can be expected at each stage. Stages include development/introduction, growth, maturity, saturation and decline. Candidates should explain at least four of these stages and should use a diagram for illustration. AO1 Knowledge and Understanding 2 marks AO2 Application 2 marks 2 marks Candidate applies knowledge effectively.
Level 2
2 marks Candidate demonstrates good understanding of product life cycle. 1 mark Candidate demonstrates some understanding of product life cycle. 0 marks Candidate demonstrates no understanding of product life cycle.
Level 1
1 mark Candidate attempts to apply knowledge.
Level 0
0 marks Candidate does not attempt to apply knowledge.
[4] (b) The Toyota Yaris has been on the market since 2000. Maturity, saturation, decline or relaunch would all be acceptable responses. It is equally valid for candidates to consider the Yaris car or each version of the car as a product. AO1 Knowledge and Understanding 2 marks Level 2 AO2 Application 2 marks
2 marks 2 marks Candidate demonstrates good Candidate applies knowledge effectively. understanding of the chosen stage of the product life cycle. 1 mark Candidate demonstrates some understanding of the chosen stage of the product life cycle. 0 marks Candidate demonstrates no understanding of the chosen stage of the product of life cycle. 1 mark Candidate attempts to apply knowledge.
Level 1
Level 0
0 marks Candidate does not attempt to apply knowledge.
[4]
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(c)
There are a number of ways that a business can measure the quality of its product/service. These include: reliability there are few complaints/returns meaning lower reworking costs for the business; cost effectiveness although some products cost more to manufacture because of the higher quality materials, these materials often mean the products are more durable and incur lower costs for the manufacturer over the life of the product; performance the product is able to outperform competitors. For example, if the Yaris has a better safety or fuel economy rating than its rivals; and customer satisfaction if customers are delighted by their purchase this is an indication that the quality goes beyond their expectations. AO1 Knowledge and Understanding 2 marks 2 marks Candidate demonstrates good understanding of the measures of quality. AO2 Application 2 marks 2 marks Candidate applies knowledge effectively. AO3 Analysis 4 marks 4-3 marks Good analysis of measures of quality.
Level 2 Candidate makes good use of specialist vocabulary when it is appropriate. 1 mark Candidate demonstrates some understanding of the measures of quality. Level 1 Candidate makes some use of specialist vocabulary when it is appropriate. 0 marks Candidate demonstrates no understanding of the measures of quality. 0 marks 0 marks Candidate does not attempt No analysis of measures of to apply knowledge. quality. 1 mark 2-1 marks Candidate attempts to apply Limited analysis of knowledge. measures of quality.
Level 0
[8] (d) Candidates should consider four elements of the 7Ps of the marketing mix. As part of their discussion, they should consider both positive and negative aspects and come to a final judgement. Price as the new Yaris offers more features, Toyota will have to charge a higher price to cover the cost. However, customers are likely to be willing to pay more for these added benefits.
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Product the new model has a fresh look and is likely to encourage people to change their car. Promotion Toyota will want to inform customers of the benefits of the new car. This is likely to involve significant expenditure. People Toyotas sales teams will have to be trained in the new features of the Yaris so that they can inform customers of its benefits. This will be expensive but should result in a better quality service for customers. Physical environment It is likely that new signage will be placed in showrooms to attract the attention of customers. Product changing the Yaris will result in the old model immediately losing value. This means that Toyota will gain less revenue from its sales than might otherwise have been the case. Process AO1 Knowledge and Understanding 3 marks AO2 Application 2 marks AO3 Analysis 3 marks 3 marks Very good analysis of arguments. 2-3 marks Candidate demonstrates good understanding of the elements of the marketing mix. Candidate makes good use of specialist vocabulary when appropriate. 1 mark Candidate demonstrates some understanding of the elements of the marketing mix. Candidate makes some use of specialist vocabulary when appropriate. 0 marks Candidate does not demonstrate any understanding of the marketing mix. 0 marks 0 marks Candidate does not attempt No analysis of arguments. to apply knowledge 1 mark 1 mark Candidate attempts to apply Limited analysis of knowledge. arguments. 2 marks Candidate applies knowledge effectively. 2 marks Good analysis of arguments.
Level 3
Level 2
Level 1
Level 0
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AO4 Evaluation 4 marks 4 marks Candidate gives a full evaluation of the arguments presented and comes to a final judgement. Candidate demonstrates good spelling, punctuation and grammar. The meaning of the text is clear. The candidate has consistently used a form and style of writing appropriate to the purpose of the question. Answer is organised in a clear and coherent manner. 3-2 marks Candidate gives a satisfactory evaluation of the arguments presented and comes to a final judgement. Candidate demonstrates satisfactory spelling, punctuation and grammar. The meaning of the text is clear most of the time. The candidate demonstrates a satisfactory level of writing, form and style appropriate to the purpose of the question. The answer is organised in a satisfactory manner. 1 mark Candidate attempts some evaluation of the arguments presented. The candidate makes limited use of spelling, punctuation and grammar. The meaning of the text is not always clear. The candidate demonstrates a limited form and style appropriate to the question. The organisation of the answer is limited. 0 marks Candidate makes no attempt to evaluate the arguments presented. [12] (e) Toyota is likely to use a range of market research methods before designing the new Yaris. Candidates should discuss the advantages and disadvantages of these methods and come to a final judgement about which method(s) is most suitable. Methods include: questionnaires; interviews; observation; focus groups; consumer panels; surveys; test markets; and loyalty cards.
Level 3
Level 2
Level 1
Level 0
29
AO1 Knowledge and Understanding 3 marks 3 marks Candidate demonstrates excellent understanding of the methods of market research. Candidate makes excellent use of specialist vocabulary when appropriate. 2 marks Candidate demonstrates good understanding of the methods of market research. Candidate makes good use of specialist vocabulary when appropriate. 1 mark Candidate demonstrates some understanding of the methods of market research. Candidate makes some use of specialist vocabulary when appropriate.
AO2 Application 2 marks
AO3 Analysis 4 marks 4 marks Very good analysis of arguments.
Level 3
2 marks Candidate applies knowledge effectively.
3 marks Good analysis of arguments.
Level 2
1 mark 1 mark Candidate attempts to apply Limited analysis of knowledge. arguments.
Level 1
Level 0
0 marks 0 marks 0 marks Candidate demonstrates no Candidate does not attempt Candidate does not analyse understanding of the to apply knowledge. the arguments. methods of market research.
30
AO4 Evaluation 4 marks 4 marks Candidate gives a full evaluation of the arguments presented and comes to a final judgement. Candidate demonstrates good spelling, punctuation and grammar. The meaning of the text is clear. The candidate has consistently used a form and style of writing appropriate to the purpose of the question. Answer is organised in a clear and coherent manner. 3-2 marks Candidate gives a satisfactory evaluation of the arguments presented and comes to a final judgement. Candidate demonstrates satisfactory spelling, punctuation and grammar. The meaning of the text is clear most of the time. The candidate demonstrates a satisfactory level of writing, form and style appropriate to the purpose of the question. The answer is organised in a satisfactory manner. 1 mark Candidate attempts some evaluation of the arguments presented. The candidate makes limited use of spelling, punctuation and grammar. The meaning of the text is not always clear. The candidate demonstrates a limited form and style appropriate to the question. The organisation of the answer is limited. 0 marks Candidate makes no attempt to evaluate the arguments presented.
Level 3
Level 2
Level 1
Level 0
[13]
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(a) The unique selling proposition of a product refers to that aspect which sets it apart from its competitors and which is most likely to make customers buy it. The unique selling proposition of The Mattress Doctor is that the firm is able to remove dust mites and spray the mattress to prevent them returning. AO1 Knowledge and Understanding 2 marks Level 2 2 marks Candidate demonstrates good understanding of USP. 1 mark Candidate demonstrates some understanding of USP. 0 marks Candidate demonstrates no understanding of USP. AO2 Application 2 marks 2 marks Candidate makes good application to the firm. 1 mark Candidate attempts to make application to the firm. 0 marks Candidate does not attempt to make application to the firm. [4] (b) There are a number of disadvantages to Bryan and Bruce of setting up a business partnership. These include: A limited amount of capital can be raised; Usually unlimited liability; Decisions taken by one partner are binding on all the others; May be disagreements/arguments over responsibilities; Lack of continuity if a partner leaves or dies. AO1 Knowledge and Understanding 2 marks Level 2 2 marks Candidate demonstrates good understanding of the disadvantages of a partnership. 1 mark Candidate demonstrates some understanding of the disadvantages of a partnership. 0 marks Candidate demonstrates no understanding of the disadvantage of a partnership. AO2 Application 2 marks 2 marks Candidate makes good application to the firm. 1 mark Candidate attempts to make application to the firm. 0 marks Candidate does not attempt to make application to the firm.
Level 1
Level 0
Level 1
Level 0
[4] 32
(c) Competitive advantage involves an aspect of a firm's behaviour or performance which gives it an edge over its rivals. The Mattress Doctor has achieved competitive advantage by differentiation, since its service is unique at the moment. There are a number of things that could be done to preserve this differentiation. These include: Promoting the services of The Mattress Doctor so that the uniqueness of the service is more widely recognised; Using price to reflect this unique service; Research and development of new techniques and equipment to clean mattresses; Providing a high quality of service.
Alternatively, competitive advantage may be preserved by achieving cost advantage over new competitors. This might be possible by: Achieving economies of scale; Getting all functional areas of the business to concentrate on cost cutting; Providing a no-frills service to customers without compromising quality.
Another source of competitive advantage is through focus, where a business concentrates on identifying and meeting the needs of a particular market segment. It will then try to use either a differentiation or cost cutting approach within that segment. The Mattress Doctor may segment its customers according to geography, income, allergy, etc. AO1 Knowledge and Understanding 2 marks Level 2 2 marks Candidate demonstrates good understanding of competitive advantage. 1 mark Candidate demonstrates some understanding of competitive advantage. 0 marks Candidate demonstrates no understanding of competitive advantage. AO2 Application 2 marks 2 marks Candidate applies knowledge effectively. AO3 Analysis 4 marks 4-3 marks Good analysis of ways to maintain competitive advantage.
Level 1
1 mark 2-1 marks Candidate attempts to apply Limited analysis of ways to knowledge. maintain competitive advantage. 0 marks 0 marks Candidate does not attempt No analysis of ways to to apply knowledge. maintain competitive advantage. [8]
Level 0
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(d) There are a number of advantages to using franchising as a method of growth for The Mattress Doctor. These include: Can cover a large geographical area quickly; Reliable source of revenue from franchisee payments; Can choose franchisees with appropriate skills and abilities; Can maintain strong corporate identity in the market; Risks are spread for the franchisor; Franchisees can be very highly motivated to succeed; Process can be replicated internationally.
However, there are disadvantages associated with this method of growth. These include: Danger of expanding too fast/losing control of the process; A few poor franchisees can spoil the reputation of the entire business; Sharing of profits that could all have come into the business; Partners would still have unlimited liability. AO1 Knowledge and Understanding 3 marks Level 3 3 marks Candidate demonstrates good understanding of the advantages of franchising. Candidate makes good use of specialist vocabulary when appropriate. 1 mark Candidate demonstrates some understanding of the advantages of franchising. Candidate makes some use of specialist vocabulary when appropriate. 34 1 mark Limited analysis of arguments. 1 mark Candidate applies knowledge effectively. AO2 Application 1 mark AO3 Analysis 3 marks 3 marks Very good analysis of arguments. 2 marks Good analysis of arguments.
Level 2
Level 1
AO1 Knowledge and Understanding 3 marks Level 0 0 marks Candidate demonstrates no understanding of the advantage of franchising.
AO2 Application 1 mark 0 marks Candidate does not apply knowledge effectively.
AO3 Analysis 3 marks 0 marks No analysis of arguments.
AO4 Evaluation 4 marks 4 marks Candidate gives a full evaluation of the arguments presented and comes to a final judgement. Candidate demonstrates good spelling, punctuation and grammar. The meaning of the text is clear. The candidate has consistently used a form and style of writing appropriate to the purpose of the question. Answer is organised in a clear and coherent manner. 3-2 marks Candidate gives a satisfactory evaluation of the arguments presented and comes to a final judgement. Candidate demonstrates satisfactory spelling, punctuation and grammar. The meaning of the text is clear most of the time. The candidate demonstrates a satisfactory level of writing, form and style appropriate to the purpose of the question. The answer is organised in a satisfactory manner. 1 mark Candidate attempts some evaluation of the arguments presented. The candidate makes limited use of spelling, punctuation and grammar. The meaning of the text is not always clear. The candidate demonstrates a limited form and style appropriate to the question. The organisation of the answer is limited. 0 marks Candidate does not attempt to evaluate the arguments presented. [11] (e) Price Elasticity of Demand measures the responsiveness of demand to a change in the price of a product. It is measured by the formula: PED = percentage change in quantity demanded percentage change in price Elastic demand (where the result of the above formula is greater than 1) occurs where demand is sensitive and responsive to a change in price. 35
Level 3
Level 2
Level 1
Level 0
The benefits of knowing the PED include: the firm will know the effect of a change in price on total revenue and be able to set their price to maximise revenue; the firm will know whether to pass to customers any increases in cost; and the firm will be confident that a reduction in price will enable it to increase sales of its product/service. (e.g. to get rid of stock) However: it is very difficult to accurately determine the price elasticity of a product/service; and price elasticity can change over time for many reasons, e.g. due to changes in competitors' products. AO1 Knowledge and Understanding 3 marks Level 3 2-3 marks Candidate demonstrates good understanding of PED. Candidate makes good use of specialist vocabulary when appropriate. 2 marks Candidate applies knowledge effectively. AO2 Application 2 marks AO3 Analysis 3 marks 3 marks Very good analysis of arguments. 2 marks Good analysis of arguments.
Level 2
Level 1
1 mark 1 mark 1 mark Candidate demonstrates Candidate attempts to apply Limited analysis of some understanding of knowledge. arguments. PED. Candidate makes some use of specialist vocabulary when appropriate. 0 marks Candidate demonstrates no understanding of PED. 0 marks 0 marks Candidate does not attempt No analysis of arguments. to apply knowledge. AO4 Evaluation 4 marks 4 marks Candidate gives a full evaluation of the arguments presented and comes to a final judgement. Candidate demonstrates good spelling, punctuation and grammar. The meaning of the text is clear. The candidate has consistently used a form and style of writing appropriate to the purpose of the question. Answer is organised in a clear and coherent manner.
Level 0
Level 3
36
Level 2
3-2 marks Candidate gives a satisfactory evaluation of the arguments presented and comes to a final judgement. Candidate demonstrates satisfactory spelling, punctuation and grammar. The meaning of the text is clear most of the time. The candidate demonstrates a satisfactory level of writing, form and style appropriate to the purpose of the question. The answer is organised in a satisfactory manner. 1 mark Candidate attempts some evaluation of the arguments presented. The candidate makes limited use of spelling, punctuation and grammar. The meaning of the text is not always clear. The candidate demonstrates a limited form and style appropriate to the question. The organisation of the answer is limited. 0 marks Candidate makes no attempt to evaluate the arguments presented.
Level 1
Level 0
[12]
37
38
Business Studies Assessment Unit AS 2 Managing Business Resources

SPECIMEN PAPER
MARK SCHEME
39
(a) Candidates should clearly describe the terms highlighted in the case study. Candidates may relate the description to the case study to illustrate their understanding. (i) (ii) Decentralisation delegating power, decision making to employees lower down the chain of command. Span of control the number of subordinates a manager has line authority over. AO1 Knowledge and Understanding 2 marks Level 2 2 marks Candidate demonstrates good understanding of decentralisation and span of control. 1 mark Candidate demonstrates some understanding of decentralisation and span of control. 0 marks Candidate demonstrates no understanding of decentralisation and span of control. AO2 Application 2 marks 2 marks Candidate makes good application of the terms. 1 mark Candidate attempts to make some application of the terms. 0 marks No attempt at application.
Level 1
Level 0
[4] (b) Calculate the missing variance and the budgeted and actual figures below. Extract from the Profit and Loss Account for ABC Ltd for the year ended 2008 Budgeted (000) Sales Costs Profit 120 60 60 Actual (000) 100 80 20 Variance (000) 20 (A) 20 (A) 40 (A) AO2 Application 2 marks 2 marks Candidate applies knowledge effectively. 1 mark Candidate attempts to apply knowledge. 0 marks Candidate makes no attempt to apply knowledge [4] 40
AO1 Knowledge and Understanding 2 marks Level 2 2 marks Candidate demonstrates good understanding of variances. 1 mark Candidate demonstrates some understanding of variances. 0 marks Candidate demonstrates no understanding of variances
Level 1
Level 0
(c)
The sales variance might have been caused either by selling less items or by selling the budgeted volume at a lower price. This will mean lower sales revenue for the firm and could affect the profitability and liquidity of the business. The costs variance might have been caused by unexpected rises in certain costs, e.g. Wages or raw materials. This again could affect the profitability and liquidity of the business and might indicate a lack of financial control in the business. The profit variance is lower than expected because of the adverse variances in sales and costs. This may affect the firms ability to pay shareholders or reinvest as much into the business as they would like. AO1 Knowledge and Understanding 2 marks AO2 Application 2 marks AO3 Analysis 4 marks 4-3 marks Good analysis of the possible causes of variances and their impact on ABC Ltd.
Level 2
2 marks 2 marks Candidate demonstrates Candidate applies good understanding of knowledge effectively. possible causes of variance and their impact on ABC Ltd. 1 mark Candidate demonstrates some understanding of possible causes of variance and their impact on ABC Ltd. 0 marks Candidate demonstrates no understanding of possible causes of variance and their impact on ABC Ltd.
Level 1
1 mark 2-1 marks Candidate attempts to apply Limited analysis of the knowledge. possible causes of variances and their impact on ABC Ltd. 0 marks 0 marks Candidate does not attempt No analysis of the possible to apply knowledge. causes of variances and their impact on ABC Ltd.
Level 0
[8] (d) Delayering or removing layers of management in a firm has major effects on a firm. Candidates should discuss both positive and negative implications and come to a final judgement which is consistent with the points discussed. Positive Implications: The organisation should be able to respond more quickly to changes in its environment. Communication should be improved as there are fewer layers that information has to pass through. There will be substantial cost savings in terms of salaries paid to the employees made redundant. As the organisation is now flatter, spans of control are likely to be wider. Being responsible for a larger number of people can be motivating.
41
Negative Implications: Tasks carried out by managers who have been made redundant will have to be done by others. People may resent this unless they are rewarded for this extra responsibility. The delayering process may have an unsettling effect on employees left behind as they may feel that their job is under threat. There may be substantial redundancy payments required. Highly experienced and capable people may be lost as a result of delayering. This might affect the quality of decisions made by the organisation. AO1 Knowledge and Understanding 3 marks 3 marks Candidate demonstrates excellent understanding of delayering. 3 marks Candidate demonstrates good understanding of delayering. Level 2 Candidate makes good use of specialist vocabulary when it is appropriate. 1 mark Candidate demonstrates some understanding of delayering. Level 1 Candidate makes some use of specialist vocabulary when it is appropriate. 0 marks Candidate demonstrates no understanding of delayering. 0 marks 0 marks Candidate does not attempt No analysis of implications. to apply knowledge. 1 mark 1 mark Candidate attempts to apply Limited analysis of knowledge. implications. 3 marks Candidate applies knowledge effectively. 2 marks Good analysis of implications. AO2 Application 3 marks AO3 Analysis 2 marks
Level 3
Level 0
42
AO4 Evaluation 4 marks 4 marks Candidate gives a full evaluation of the arguments presented and comes to a final judgement. Candidate demonstrates good spelling, punctuation and grammar. The meaning of the text is clear. The candidate has consistently used a form and style of writing appropriate to the purpose of the question. Answer is organised in a clear and coherent manner. 3-2 marks Candidate gives a satisfactory evaluation of the arguments presented and comes to a final judgement. Candidate demonstrates satisfactory spelling, punctuation and grammar. The meaning of the text is clear most of the time. The candidate demonstrates a satisfactory level of writing, form and style appropriate to the purpose of the question. The answer is organised in a satisfactory manner. 1 mark Candidate attempts some evaluation of the arguments presented. The candidate makes limited use of spelling, punctuation and grammar. The meaning of the text is not always clear. The candidate demonstrates a limited form and style appropriate to the question. The organisation of the answer is limited. 0 marks Candidate makes no attempt to evaluate the arguments presented. [12] (e) Candidates should provide arguments for and against using a variety of methods to motivate employees. They should demonstrate knowledge and understanding of motivational theory by making reference to at least two theorists and be able to apply them using examples. Candidates should make a final judgement which is consistent with the points discussed. Reasons why a firm would wish to use a variety of methods: Different people are motivated by different things and therefore employers need to provide a range of incentives to motivate employees and raise their performance. One individual might be motivated by different things at different times in their lives. It may not be possible to provide the same incentive to many employees (e.g. promotion, where only one person is successful). Consequently there is a need to provide other ways in which employees can be motivated. According to Maslow, workers would be at different stages in the hierarchy of needs. Therefore, to provide for physiological needs, the firm might only need to consider pay as a motivator. However to cater for those with esteem needs the firm might wish to use employee empowerment to gain the esteem of colleagues and management.
Level 3
Level 2
Level 1
Level 0
43
Herzberg advocated the use of both hygiene factors to prevent dissatisfaction and motivators to make workers more productive. For example, good working conditions are needed to prevent workers being dissatisfied but motivators like job enrichment are needed to give workers a sense of achievement.
Reasons why a firm might wish to use only a limited number of methods: It is much more expensive to provide a range of methods (although in the long run this might be paid for in improved productivity). It can be difficult to ascertain what motivates individuals. Therefore the firm might be reluctant to use a range of methods which are not guaranteed to work. Apart from cost, employing a variety of motivational methods will mean additional people will be required to implement the changes and to organise team meetings, job rotation etc. These people could be employed elsewhere. Bringing in a range of methods into a business would require much planning to ensure change is managed effectively. FW Taylor advocated that workers were motivated by money. If this is the case then employers should focus on using effective piece rate and bonus schemes to improve performance. AO1 Knowledge and Understanding 3 marks 3 marks Candidate demonstrates excellent understanding of motivation theory. Level 3 Candidate makes excellent use of specialist vocabulary when it is appropriate. 2 marks Candidate demonstrates good understanding of motivation theory. Level 2 Candidate makes good use of specialist vocabulary when it is appropriate. 1 mark Candidate demonstrates some understanding of motivation theory. Level 1 Candidate makes some use of specialist vocabulary when it is appropriate. 44 1 mark 1 mark Candidate attempts to apply Limited analysis of knowledge. arguments. 2 marks Candidate applies knowledge effectively. 2-3 marks Good analysis of arguments. AO2 Application 2 marks AO3 Analysis 4 marks 4 marks Excellent analysis of arguments.
AO1 Knowledge and Understanding 3 marks Level 0 0 marks Candidate demonstrates no understanding of motivation theory.
AO3 Analysis 4 marks
0 marks 0 marks Candidate does not attempt No analysis of arguments. to apply knowledge.
AO4 Evaluation 4 marks 4 marks Candidate gives a full evaluation of the arguments presented and comes to a final judgement. Candidate demonstrates good spelling, punctuation and grammar. The meaning of the text is clear. The candidate has consistently used a form and style of writing appropriate to the purpose of the question. Answer is organised in a clear and coherent manner. 3-2 marks Candidate gives a satisfactory evaluation of the arguments presented and comes to a final judgement. Candidate demonstrates satisfactory spelling, punctuation and grammar. The meaning of the text is clear most of the time. The candidate demonstrates a satisfactory level of writing, form and style appropriate to the purpose of the question. The answer is organised in a satisfactory manner. 1 mark Candidate attempts some evaluation of the arguments presented. The candidate makes limited use of spelling, punctuation and grammar. The meaning of the text is not always clear. The candidate demonstrates a limited form and style appropriate to the question. The organisation of the answer is limited. 0 marks Candidate does not attempt any evaluation of the arguments presented. [13] 2 (a) Candidates should calculate the breakeven point using contribution as below or deriving it from the formula Total Revenue = Total Cost. Breakeven Point = Fixed Cost Variable Cost Selling Price [1]
Level 3
Level 2
Level 1
Level 0
162000 3100 1600
[1]
45
162000 1500
= 108 (1 mark) batches per annum (1 mark)

NB. If candidate misses one of the stages above but still calculates the correct final answer, 3 marks should be awarded.
Correct answer only 2 marks

AO1 Knowledge and Understanding 2 marks AO2 Application 2 marks 2 marks Candidate makes good application to the firm.
[4]
Level 2
2 marks Candidate demonstrates good understanding of breakeven. 1 mark Candidate demonstrates some understanding of breakeven. 0 marks Candidate demonstrates no understanding of breakeven.
Level 1
1 mark Candidate attempts to make application to the firm. 0 marks Candidate makes no attempt to make application to the firm.
Level 0
[4]
46
(b)
Candidates should calculate the total revenue and total cost and derive the figure of total profit from that. Total Revenue = Price per batch no of batches = 3100 12 = 37 200 Fixed Cost = 100 000 + 52 000 = 162000 per annum = 162000 = 13500 12 Variable Cost = (1000 + 600) no of batches = 1600 12 = 19200 Total Cost = Fixed Cost + Variable Cost = 13500 + 19200 = 32700 Profit = Total Revenue Total Cost = 37200 32700 = 4500 per month
[1]
[1]
[1]
[1]
NB If candidate does not state the formulae in words or misses some of the stages above but still calculates the correct final answer, the full 4 marks should be awarded.
Correct answer only 2 marks

AO1 Knowledge and Understanding 2 marks 2 marks Candidate demonstrates good understanding of the calculations to obtain profit. 1 mark Candidate demonstrates some understanding of the calculations to obtain profit. 0 marks Candidate demonstrates no understanding of the calculations to obtain profit. AO2 Application 2 marks
[4]
Level 2
2 marks Candidate makes good application to the firm.
Level 1
1 mark Candidate attempts to make application to the firm.
Level 0
0 marks Candidate makes no attempt to make application to the firm.
[4]
47
(c)
Candidates should calculate the profit from contracting out production to the competitor and then compare it with the answers given in a, b and c above. They should also explain two or three qualitative issues relating to contracting out this explanation must consider at least one advantage and one disadvantage. A final judgement is not required. Total revenue from accepting the order Total cost = 380400 Profit = = 483600 - 380400 = 103200 per annum 8600 per month (1 mark for either monthly or annual figure) 3100 13 12 batches = 483600
The profit from accepting the offer from the competitor is better than that generated by the expected production and on the basis of profit the company should accept it. [2] Other factors in favour of Snug Rugs using the competitor:
No need to research the purchase of the new machines. The firm is free to concentrate and deploy their resources on other activities. There is no need to worry about financing the new machines.
Other factors against using the competitor:
No guarantee of timely delivery as Snug Rugs Ltd is not in control of production Quality assurance it may be that the competitor firm will not be as attentive to the quality of the rugs. Surplus stock subcontracting results in an extra 10 batches being produced each month. There is no guarantee of selling these batches and so there are issues regarding storage and developing a strategy to increase sales. If the firm was to make and sell 130 batches instead of 120, the profit would actually be 33 000 and would be more profitable than contracting out. If demand falls, the firm may still be obligated to buy the 130 batches. Using their own machines, they could reduce their production as necessary. The competitor firm will gain additional information on Snug Rugs Ltds products and processes.
If two issues are discussed, then each must be examined in depth the consequences or mitigating factors should be considered. If three reasons are presented, then there should be a brief consideration of each. [6]
48
AO1 Knowledge and Understanding 2 marks 2 marks Candidate demonstrates good understanding of competitive advantage. 1 mark Candidate demonstrates some understanding of competitive advantage. 0 marks Candidate demonstrates no understanding of competitive advantage.
AO2 Application 2 marks 2 marks Candidate applies knowledge effectively.
AO3 Analysis 4 marks 4-3 marks Good analysis of ways to maintain competitive advantage.
Level 2
Level 1
1 mark 2-1 marks Candidate attempts to apply Limited analysis of ways to knowledge. maintain competitive advantage. 0 marks 0 marks Candidate does not attempt No analysis of ways to to apply knowledge. maintain competitive advantage.
Level 0
[8]
(d)
Candidates should describe and evaluate different training methods. They should then provide a reasoned final judgement. Methods include:
Sitting next to Nellie this involves sitting beside the worker as they do the job. This means the trainee can see exactly what is required as part of the job, but the worker may be more concerned with their work than with training. Coaching new employees are taken through a task step by step and given help by the person coaching them. The trainee actually gets to do the job but the training is only as good as the ability of the coach. Induction training Training which a new employee undergoes when he/she joins a firm, it is designed to make the trainee comfortable. It is expensive but vital to help a new recruit settle in to the firm. External training courses trainees leave the workplace to be trained by an external organisation. This means the training can proceed without work-related interruptions but the trainee is being paid but actually being of immediate economic benefit to the company. Mentoring a more experienced employee is paired with a trainee and is expected to help the latter with any work-related issue. Again this means the experienced employee may be less productive as his/her attention is diverted to the employee. However, it means the trainee would be more likely to seek help.
49
AO1 Knowledge and Understanding 3 marks 3 marks Candidate demonstrates excellent understanding of training methods.
AO3 Analysis 2 marks
Level 3 Candidate makes excellent use of specialist vocabulary when it is appropriate.

2 marks Candidate demonstrates good understanding of training methods. 2 marks Candidate applies knowledge effectively. 2 marks Good analysis of arguments.
Level 2 Candidate makes good use of specialist vocabulary when it is appropriate.

1 mark Candidate demonstrates some understanding of training methods. 1 mark 1 mark Candidate attempts to apply Limited analysis of knowledge. arguments.
Level 1 Candidate makes some use of specialist vocabulary when it is appropriate.

0 marks Candidate demonstrates no knowledge of training methods. 0 marks No attempt to apply knowledge. 0 marks No analysis of arguments.
Level 0
50
AO4 Evaluation 4 marks 4 marks Candidate gives a full evaluation of the arguments presented and comes to a final judgement. Candidate demonstrates good spelling, punctuation and grammar. The meaning of the text is clear. The candidate has consistently used a form and style of writing appropriate to the purpose of the question. Answer is organised in a clear and coherent manner. 3-2 marks Candidate gives a satisfactory evaluation of the arguments presented and comes to a final judgement. Candidate demonstrates satisfactory spelling, punctuation and grammar. The meaning of the text is clear most of the time. The candidate demonstrates a satisfactory level of writing, form and style appropriate to the purpose of the question. The answer is organised in a satisfactory manner. 1 mark Candidate attempts some evaluation of the arguments presented. The candidate makes limited use of spelling, punctuation and grammar. The meaning of the text is not always clear. The candidate demonstrates a limited form and style appropriate to the question. The organisation of the answer is limited. 0 marks Candidate does not attempt any evaluation of the arguments presented.
Level 3
Level 2
Level 1
Level 0
[11]
(e)
Methods of recruitment which could be used include:
Application forms all applicants can be easily compared but there may be some information that an applicant would like to give but isnt able to because of the design of the form. Interviews this gives an insight into the communication skills and personality of the person but doesnt allow the interviewer to see the applicant actually carry out the job. Head-hunting this allows the recruiting firm to have someone with suitable qualities enter the pool of applicants. However, it can be very costly. Aptitude tests designed to measure the applicants capabilities for thinking and reasoning. This is useful if certain reasoning skills are needed for the job but applicants may lie in order to give the right answer.
51
IQ tests these measure how intelligent a person is, giving additional information which might be important. However, they give no indication about how well the applicant would fit in with their colleagues. Role play applicants are given a scenario which they might face in the job and asked to act out how they would respond. This gives some indication about the persons suitability but the persons performance may be affected by nerves. Assessment of role plays can be difficult and expensive.
AO1 Knowledge and Understanding 3 marks 3 marks Candidate demonstrates excellent understanding of methods of recruitment. AO2 Application 2 marks AO3 Analysis 3 marks 3 marks Very good analysis of arguments.
Level 3 Candidate makes excellent use of specialist vocabulary when it is appropriate.

2 marks Candidate demonstrates good understanding of methods of recruitment. 2 marks Candidate applies knowledge effectively. 2 marks Good analysis of arguments.
Level 2 Candidate makes good use of specialist vocabulary when it is appropriate.

1 mark Candidate demonstrates some understanding of methods of recruitment. 1 mark 1 mark Candidate attempts to apply Limited analysis of knowledge. arguments.
Level 1 Candidate makes some use of specialist vocabulary when it is appropriate.

0 marks Candidate demonstrates no understanding of methods of recruitment. 0 marks 0 marks Candidate does not attempt No analysis of arguments. to apply knowledge.
Level 0
52
AO4 Evaluation 4 marks 4 marks Candidate gives a full evaluation of the arguments presented and comes to a final judgement. Candidate demonstrates good spelling, punctuation and grammar. The meaning of the text is clear. The candidate has consistently used a form and style of writing appropriate to the purpose of the question. Answer is organised in a clear and coherent manner. 3-2 marks Candidate gives a satisfactory evaluation of the arguments presented and comes to a final judgement. Candidate demonstrates satisfactory spelling, punctuation and grammar. The meaning of the text is clear most of the time. The candidate demonstrates a satisfactory level of writing, form and style appropriate to the purpose of the question. The answer is organised in a satisfactory manner. 1 mark Candidate attempts some evaluation of the arguments presented. The candidate makes limited use of spelling, punctuation and grammar. The meaning of the text is not always clear. The candidate demonstrates a limited form and style appropriate to the question. The organisation of the answer is limited. 0 marks Candidate makes no attempt to evaluate the arguments presented.
Level 3
Level 2
Level 1
Level 0
[12]
53
54
Business Studies Assessment Unit A2 1 Making Business Decisions

SPECIMEN PAPER
MARK SCHEME
55
1 (a)
Content 1 mark correct formula. 0 marks no understanding. Current Ratio = Current Assets/Current Liabilities 2240/2393 = 0.936 to 1
Application 1 mark correct calculation. 0 marks incorrect calculation.
[2]
(b)
Content 1 mark correct formula. 0 marks no understanding. Return on Capital Employed = Net Profit/Capital Employed 100 547/7487 100= 7.3%
Application 1 mark correct calculation. 0 marks incorrect calculation.
[2]
Content 2 marks two relevant methods. 1 mark one relevant method. 0 marks no relevant method.
Application 2 marks fully applied to context. 1 mark limited application to context. 0 marks no application.
Analysis 2-3 marks good analysis. 1 mark limited analysis. 0 marks no analysis.
Relevant answers may include: Sale and leaseback. Boost sales/cash and credit sales. Reduce outgoings.
3
[7] Analysis Evaluation 5-6 marks sound evaluation/ mature judgement. 3-4 marks good evaluation.
Content
Application
2 marks two relevant methods. 1 mark one relevant method. 0 marks
2-3 marks fully applied to context. 1 mark limited application to context. 0 marks
3-4 marks good analysis.
1-2 marks 1-2 marks limited analysis. limited evaluation. 0 marks 0 marks
56
[15]
Gearing Ratio = Long-term loans/Capital Employed 100 5187/7487 100 = 69.3% Answers may include: Company is highly geared, i.e. Result is greater than 50% This may cause problems with repayments particularly if interest rates were to go up. The borrowing may be ok if money is used to fund attractive investment. Many companies have no problems with a similar gearing ratio.
4
Content
Application
Analysis
2 marks two relevant methods. 1 mark one relevant method. 0 marks
2-3 marks fully applied to context. 1 mark limited application to context. 0 marks
3-4 marks good analysis.
Evaluation 5-6 marks sound evaluation/ mature judgement. 3-4 marks good evaluation.
1-2 marks 1-2 marks limited analysis. limited evaluation. 0 marks 0 marks
Answers may include: Good starting point. Consistent results from past are more useful. Quantitative approach better than qualitative. Reliability of accounts/numbers. Window dressing. External factors not considered.
5 Skill and Marks Description for essay question
[15]
Knowledge and Understanding Level 3 3-4 Mature knowledge/understanding of relevant factors. Candidate makes good use of specialist terms. Level 2 2 Good understanding/explanation of relevant factor(s). Candidate makes satisfactory use of specialist terms. Level 1 1 Limited understanding of relevant factor(s). Candidate makes limited use of specialist terms. Level 0 0 No understanding. Candidate makes no use of specialist terms.
[4]
57
Application Level 3 Level 2 Level 1 Level 0 Analysis Level 3 Level 2 Level 1 Level 0
3-4 2 1 0 4-5 2-3 1 0
Mature application to context. Reasonable application to context. Limited application to context. No application. Mature analysis, factors well developed. Reasonable analysis of relevant factor(s). Limited analysis of relevant factor(s). No analysis.
[4]
[5]
Evaluation/judgement Level 3 5-6 Mature judgement/evaluation with strong support. Candidate demonstrates good spelling, punctuation and grammar. The meaning of the text is clear. The candidate has consistently used a form and style of writing appropriate to the purpose of the question. Answer is organised in a clear and coherent manner. Level 2 3-4 Judgement/evaluation with good support. Candidate demonstrates satisfactory spelling, punctuation and grammar. The meaning of the text is clear most of the time. The candidate demonstrates a satisfactory level of writing, form and style appropriate to the purpose of the question. The answer is organised in a satisfactory manner. Level 1 1-2 Judgement/evaluation little support. Candidate attempts some evaluation of the arguments presented. The candidate makes limited use of spelling, punctuation and grammar. The meaning of the text is not always clear. The candidate demonstrates a limited form and style appropriate to the question. The organisation of the answer is limited. Level 0 0 No judgement/evaluation A mission statement sets out what an organization is trying to achieve, i.e. the reason why it exists. It gives everyone a sense of common purpose so that all actions are geared towards the same end. It makes decision making easier by enabling options to be compared against the mission statement. It gives stakeholders a sense of direction and belonging, so motivates and inspires them. It serves as a basis for organizational objectives and targets.
[6]
58
It can be effective in setting/changing organisational culture. Useful where the organisation is large/diverse as is the case of Cadbury Schweppes. However it is frequently too vague/unrealistic to have any public relations exercise. It may be ignored by senior management, causing workers to become cynical. In this way it may even be devisive. The benefits are difficult to quantify. Candidates are likely to reach a final judgement that, while mission statements certainly can contribute to the success of an organization, there are other important drives of success. The extent to which a mission statement is essential is questionable. [19]
6
Knowledge and Understanding Level 3 3-4 Mature knowledge (understanding of relevant factors). Candidate makes good use of specialist terms. Level 2 2 Good understanding/explanation of relevant factor(s). Candidate makes satisfactory use of specialist terms. Level 1 1 Limited understanding of relevant factor(s). Candidate makes limited use of specialist terms. Level 0 0 No understanding. Candidate makes no use of specialist terms. Application Level 3 Level 2 Level 1 Level 0 Analysis Level 3 Level 2 Level 1 Level 0 Evaluation Level 3 4-5 2-3 1 0 4-5 2-3 1 0 5-6 Mature application to context. Reasonable application to context. Limited application to context. No application. Mature analysis, factors well developed. Reasonable analysis of relevant factor(s). Limited analysis of relevant factor(s). No analysis.
[4]
[5]
[5]
[6] Mature judgement/evaluation with strong support. Candidate demonstrates good spelling, punctuation and grammar. The meaning of the text is clear. The candidate has consistently used a form and style of writing appropriate to the purpose of the question. Answer is organised in a clear and coherent manner. Judgement/evaluation with good support. Candidate demonstrates satisfactory spelling, punctuation and grammar. The meaning of the text is clear most of the time. The candidate demonstrates a satisfactory level of writing, form and style appropriate to the purpose of the question. The answer is organised in a satisfactory manner.
59
Level 2
3-4
Level 1
12
Level 0
Judgement/evaluation with little support. The candidate makes limited use of spelling, punctuation and grammar. The meaning of the text is not always clear. The candidate demonstrates a limited form and style appropriate to the question. The organisation of the answer is limited. No judgement/evaluation.
Business objectives
Profit maximisation. Survival. Growth. Image and social responsibility.
Likely judgement
A firms responsibilities to stakeholders can conflict with its responsibilities to shareholders. Examples of conflicting objectives that students may use: If Cadburys tried to help the local community, this would take funds away from shareholders, but it would build good relations with the local community. If a firm pays employees better profits may fall for a short while, but the firm will benefit from a more motivated and committed workforce. By trying to satisfy different stakeholder objects, a firm can generate more profit, for example if extra rewards were given to employees at out of profits, in the short term this might mean that the reward to shareholders would be reduced. But in the longer term it may lead to more rewards for everyone. Better work = improved customer loyalty = less marketing spend to achieve the same sales volume. Building better relations with suppliers the firm can produce better quality goods leading to more orders for both parties.
However: May not be possible to meet the objectives of all stakeholders. Firms must decide on the extent to which they take different stakeholder objectives into account. Given limited resources to other obligations managers must decide on their partners. [20]
60
Business Studies Assessment Unit A2 2 The Changing Business Environment

SPECIMEN PAPER
MARK SCHEME
61
AO1: Demonstrate knowledge and understanding of concepts and issues relating to the report. Level 0 Level 1 [0] [1]-[4]
No knowledge and understanding Little knowledge and understanding of theories, procedures and concepts relevant to the report is displayed, including use of correct format. Candidate makes limited use of specialist terms. Some knowledge and understanding of theories, procedures and concepts relevant to the report is displayed, including use of correct format. Candidate makes satisfactory use of specialist terms when appropriate. Good knowledge and understanding of theories, procedures and concepts relevant to the report is displayed, including use of correct format. Candidate makes good use of specialist terms when appropriate. Excellent knowledge and understanding of theories, procedures and concepts relevant to the report is displayed, including use of correct format. Candidate makes excellent use of specialist terms when appropriate.
Level 2
[5]-[8]
Level 3
[9]-[12]
Level 4
[13]-[16]
Candidates cannot achieve the top band if the report is not in an appropriate format. Report format should be:
Title: Relocation abroad the way forward? Aim The aim of the report is to examine the problems currently faced by Shirtex Ltd, analyse the options open to the company and evaluate whether a decision to relocate the factory abroad would be in the best interests of the shareholders and stakeholders. Introduction should set the scene by briefly describing the current market situation relating to Shirtex Ltd and explain how the report intends to achieve its aims. Analysis and discussion of findings should examine the problems faced by Shirtex Ltd and identify and analyse the strategic options open to the company by discussing the advantages and disadvantages of each. Conclusions/Evaluation The report should reach a conclusion on whether Shirtex Ltd should relocate the factory abroad and justify the conclusion reached using evidence from the case study. Recommendations The report should make recommendations to the management team of Shirtex Ltd.
Knowledge and understanding demonstrated in this report might include; business and stakeholder objectives, SWOT/PEST analysis, globalisation, business strategy, product quality, liquidity, business culture, profitability, financial rations, investment appraisal business location, supply chains, economies of scale and corporate image.
62
AO2: Apply knowledge and understanding to problems and issues relating to the report. Level 0 Level 1 [0] [1]-[6]
No evidence that knowledge and initial understanding has been applied. Little evidence that knowledge and critical understanding has been applied and all or most of the information relevant to the report has been selected. The candidate makes limited use of spelling, punctuation and grammar. The meaning of the text is not always clear. The candidate demonstrates a limited form and style appropriate to the question. The organisation of the answer is limited. Some evidence that knowledge and critical understanding has been applied and all or most of the information relevant to the report has been selected. Candidate demonstrates satisfactory spelling, punctuation and grammar. The meaning of the text is clear most of the time. The candidate demonstrates a satisfactory level of writing, form and style appropriate to the purpose of the question. The answer is organised in a satisfactory manner. Good evidence that knowledge and critical understanding has been applied and all or most of the information relevant to the report has been selected. Candidate demonstrates good spelling, punctuation and grammar. The meaning of the text is clear. The candidate has consistently used a form and style of writing appropriate to the purpose of the question. Answer is organised in a clear and coherent manner. Comprehensive evidence that excellent knowledge and critical understanding has been applied and all or most of the information relevant to the report has been selected. Candidate demonstrates excellent spelling, punctuation and grammar. The meaning of the text is clear. The candidate has consistently used a form and style of writing appropriate to the purpose of the question. Answer is organised in a clear and coherent manner.
Level 2
[7]-[11]
Level 3
[12]-[16]
Level 4
[17]-[21]
Candidates should draw on information presented in the case study. They must apply their knowledge and understanding to select that information relevant in order to effectively assess the problems faced by Shirtex Ltd and analyse and evaluate the strategic options open to the company. They must also apply their knowledge and understanding to consider recommendations for the management of Shirtex Ltd. Information selected might include evidence relating to the size and history of the company, the worsening liquidity and profitability situation, the high costs of the business relative to competition from abroad, pressure from retailers, skill and loyalty of the workforce and concerns over product quality.
63
AO3: Analyse problems, issues and situations relating to the report. Level 0 Level 1 [0] [1]-[5]
No analysis of the problems, issues and situations. Little analysis of the problems, issues and situations relevant to the report. The candidate makes limited use of spelling, punctuation and grammar. The meaning of the text is not always clear. The candidate demonstrates a limited form and style appropriate to the question. The organisation of the answer is limited. Some analysis of the problems, issues and situations relevant to the report. Candidate demonstrates satisfactory spelling, punctuation and grammar. The meaning of the text is clear most of the time. The candidate demonstrates a satisfactory level of writing, form and style appropriate to the purpose of the question. The answer is organised in a satisfactory manner. Good analysis of the problems, issues and situations relevant to the report. Candidate demonstrates good spelling, punctuation and grammar. The meaning of the text is clear. The candidate has consistently used a form and style of writing appropriate to the purpose of the question. Answer is organised in a clear and coherent manner. Comprehensive analysis of the problems, issues and situations relevant to the report. Candidate demonstrates good spelling, punctuation and grammar. The meaning of the text is clear. The candidate has consistently used a form and style of writing appropriate to the purpose of the question. Answer is organised in a clear and coherent manner. The candidate makes excellent use of spelling, punctuation and grammar. The meaning of the text is not always clear. The candidate demonstrates a limited form and style appropriate to the question. The organisation of the answer is limited.
Level 2
[6]-[10]
Level 3
[11]-[15]
Level 4
[16]-[19]
Candidates must analyse the selected information in order to gain a full awareness of the extent of the problems currently faced by Shirtex Ltd. They should proceed to discuss the advantages and disadvantages of relocating abroad. Information selected and analysed should include: Arguments in favour of relocation abroad cheaper labour and materials abroad, retailers demanding cheaper prices from Shirtex Ltd due to increased competition from abroad, other businesses in same sector already closing and the decline in profitability and liquidity of Shirtex Ltd, demonstrated by worsening financial ratios. The positive findings from Payback (31/4 years) and ARR (13.3%) may also be stated. Arguments against relocation abroad customers are mostly UK based, possible loss of product quality, impact on company culture corporate image tarnished, possibly less skilled/loyal workforce abroad leading to downturn in product quality, effect on local economy and workers of factory
64
closure, loss of supply chain jobs in Northern Ireland and the possibility of finding new market segments or new products.
AO4: Evaluate, distinguish between and assess appropriateness of fact and opinion, and judge information from a variety of sources. Level 0 Level 1 [0] [1]-[6]
No evaluation of the evidence. Little evaluation of all the evidence to arrive at reasoned and valid conclusions. The candidate makes limited use of spelling, punctuation and grammar. The meaning of the text is not always clear. The candidate demonstrates a limited form and style appropriate to the question. The organisation of the answer is limited. Some evaluation of all the evidence to arrive at reasoned and valid conclusions. Candidate demonstrates satisfactory spelling, punctuation and grammar. The meaning of the text is clear most of the time. The candidate demonstrates a satisfactory level of writing, form and style appropriate to the purpose of the question. The answer is organised in a satisfactory manner. Good evaluation of all the evidence to arrive at reasoned and valid conclusions. Candidate demonstrates good spelling, punctuation and grammar. The meaning of the text is clear. The candidate has consistently used a form and style of writing appropriate to the purpose of the question. Answer is organised in a clear and coherent manner. Comprehensive evaluation of all the evidence to arrive at reasoned and valid conclusions. Candidate demonstrates excellent spelling, punctuation and grammar. The meaning of the text is clear. The candidate has consistently used a form and style of writing appropriate to the purpose of the question. Answer is organised in a clear and coherent manner.
Level 2
[7]-[12]
Level 3
[13]-[18]
Level 4
[19]-[24]
Candidates should draw conclusions, based on their analysis of the issues, regarding whether Shirtex Ltd should relocate abroad. They must use different sources from the case study and be able to show that they know the difference between fact and opinions. In the evaluation they must show both the positive and negative sides of options considered and they must make a final judgement regarding which option management should follow. The final judgement is likely to be that Shirtex Ltd needs to switch production abroad, perhaps to India. In reaching this judgement candidates should recognise the conflict of interest between the shareholders and the stakeholders of Shirtex Ltd. Candidates should also make realistic recommendations for the attention of the management of Shirtex Ltd. [80]
65

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Specimen Papers and Mark Schemes for Business Studies

Subject Code QAN QAN

3210 500/2458/9 500/2357/3

A CCEA Publication 2007

Further copies of this publication may be downloaded from www.ccea.org.uk

ADVANCED SUBSIDIARY (AS) General Certificate of Education 2009

Business Studies Assessment Unit AS 1 assessing The Competitive Business

[4] [4] [8] [12]

The Mattress Doctor

[4] [4] [8] [11]

ADVANCED SUBSIDIARY (AS) General Certificate of Education 2009

Business Studies Assessment Unit AS 2 assessing Managing Business Resources

Motivation: Itchy feet at work?

Adapted from Investors in People, press release 28/10/2005

(c) (d) (e)

Please turn over for the next question.

Breakeven and Sources of Finance

ADVANCED General Certificate of Education 2010

Business Studies Assessment Unit A2 1 assessing Making Business Decisions

Financial Statements and Reporting

Source:Adapted from www.tt100.biz and www.cadburyschweppes.com

ADVANCED General Certificate of Education 2010

Business Studies Assessment Unit A2 2 assessing The Changing Business Environment

Source 3: Extracts from www.news.bbc.co.uk Major jobs loss blow

BBC News at bbc.co.uk/news published: 2004/05/07

Source 4: Newspaper articles relating to globalisation of textile industry Profit warnings:

BBC News at bbc.co.uk/news http://news.bbc.co.uk/1/hi/business/4194474.stm Monday 5 September 2005

ADVANCED SUBSIDIARY (AS) General Certificate of Education 2009

Business Studies Assessment Unit AS 1 The Competitive Business

1 mark Candidate attempts to apply knowledge.

0 marks Candidate does not attempt to apply knowledge.

0 marks Candidate does not attempt to apply knowledge.

AO2 Application 2 marks

AO3 Analysis 4 marks 4 marks Very good analysis of arguments.

2 marks Candidate applies knowledge effectively.

3 marks Good analysis of arguments.

1 mark 1 mark Candidate attempts to apply Limited analysis of knowledge. arguments.

AO3 Analysis 3 marks 0 marks No analysis of arguments.

ADVANCED SUBSIDIARY (AS) General Certificate of Education 2009

Business Studies Assessment Unit AS 2 Managing Business Resources

AO2 Application 2 marks

AO3 Analysis 4 marks

162000 3100 1600

= 108 (1 mark) batches per annum (1 mark)

Correct answer only 2 marks

Correct answer only 2 marks

2 marks Candidate makes good application to the firm.

1 mark Candidate attempts to make application to the firm.

0 marks Candidate makes no attempt to make application to the firm.

Other factors against using the competitor:

AO2 Application 2 marks 2 marks Candidate applies knowledge effectively.

AO2 Application 2 marks

AO3 Analysis 2 marks

Level 3 Candidate makes excellent use of specialist vocabulary when it is appropriate.

Level 2 Candidate makes good use of specialist vocabulary when it is appropriate.

Level 1 Candidate makes some use of specialist vocabulary when it is appropriate.

Methods of recruitment which could be used include:

Level 3 Candidate makes excellent use of specialist vocabulary when it is appropriate.

Level 2 Candidate makes good use of specialist vocabulary when it is appropriate.

Level 1 Candidate makes some use of specialist vocabulary when it is appropriate.

ADVANCED General Certificate of Education 2010

Business Studies Assessment Unit A2 1 Making Business Decisions

Application 1 mark correct calculation. 0 marks incorrect calculation.