Cambridge International Examinations

Cambridge International Advanced Subsidiary and Advanced Level

BUSINESS 9609/22
Paper 2 Data Response March 2017
MARK SCHEME
Maximum Mark: 60

Published

This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the
examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the
details of the discussions that took place at an Examiners’ meeting before marking began, which would have
considered the acceptability of alternative answers.

Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for
Teachers.

Cambridge will not enter into discussions about these mark schemes.

Cambridge is publishing the mark schemes for the March 2017 series for most Cambridge IGCSE®,
Cambridge International A and AS Level components and some Cambridge O Level components.

® IGCSE is a registered trademark.

This document consists of 11 printed pages.

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Question Answer Marks

1(a)(i) Define the term ‘partnership’ (line 1). 2

Knowledge Marks
A correct definition 2
A partial, vague or unfocused definition 1
No creditable content 0
Note: A correct definition must distinguish between a partnership and any
other form of business ownership.

Content
A business formed by two or more people with shared responsibilities
and shared capital investment. Unlimited liability, no continuity. Often
partnerships will have a partnership agreement to separate out
investment and responsibilities.

Exemplar Mark Rationale

A partnership has two or more owners 2 A correct definition
with unlimited liability.
An unincorporated business with more 2 A correct definition
than one owner.
A business formed by two or more 1 This could be
people with shared responsibilities confused with a
and shared capital investment private limited
company
An unincorporated business with 1 This could be
unlimited liability and no continuity. confused with a sole
trader

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Question Answer Marks

1(a)(ii) Briefly explain the term ‘crowd funding’ (line 16). 3

Award one mark for each point of explanation:

C Example of some other way of showing good 1 mark
understanding, i.e. rewards, returns etc.
B Each contributing a (relatively small) amount or from 1 mark
each individual
A Large number of people 1 mark
Note: No credit for stating that crowd funding is a source of finance, as
this is stated in the data.

Content
Crowd funding is the practice of funding a project or venture by raising
monetary contributions from a large number of people, typically via the
internet. Typically made up of the business who is looking for funding, the
people who may wish to fund the business and an intermediary
organisation/agent who link the two together.

There are different types of crowd funding, such as debt crowd funding
and equity crowd funding where the rewards may be advance products
or services, visits to the factor, interest or shares/equity in the business.

1(b)(i) Refer to Table 1. Calculate the break-even level of production with 3

CAM.

Mark Rationale
3 marks Correct calculation of break-even level of production with
CAM (with or without working)
2 marks Attempt with correct use of figures
1 mark Correct formula
0 marks No creditable content

Content
FC
Formula: or TR=TC (1)
Contribution (1)

Contribution = $2.50 – $1.00 = $1.50 (1)

15 000
= 10 000 (1)
1.50

Answer = 10 000 (3)

Correct answer with no working should be awarded 3 marks.
OFR

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Question Answer Marks

1(b)(ii) Explain one benefit to GI of using break-even analysis 3

Level Knowledge and Application Marks

2b Explanation of a benefit of using break-even 3
(APP analysis in context
+APP)
2a Identification of a benefit of using break-even 2
(APP) analysis in context
1 (K) Shows understanding of the use of break-even 1
analysis
0 No creditable content 0
Correct use of an incorrect answer to 1(b)(i) should be fully rewarded
(own figure rule – OFR)
No credit for knowledge of BE or formula – already awarded in previous
question.

Content
Answers may include:

• decisions over how many to make/sell

• to plan production
• to monitor costs
• to model pricing options
• to target/forecast a profit level
• to target/forecast a margin of safety.

Context may include:

• BE is higher with CAM
• probably due to extra machinery
• however output is significantly higher
• as is the profit margin
• batch production
• expansion throughout country
• quality ice cream – not about quantity.

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Question Answer Marks

1(c) Analyse two possible disadvantages to GI of introducing CAM to 8

produce ice cream.

Knowledge
and Analysis
Level Marks Marks
Application (4 marks)
(4 marks)
Good analysis of two (or
more) disadvantages of
4 4
Shows introducing/using CAM in
understanding context
2
of CAM in Good analysis of one
context disadvantage of
3 3
introducing/using CAM in
context
Limited analysis of two (or
more) disadvantages of 2
Shows introducing/using CAM
1 knowledge of 1–2
CAM Limited analysis of one
disadvantage of 1
introducing/using CAM
0 No creditable content
A non-contextual answer can only be awarded a maximum of 2 + 2 = 4

Content
Answers could include:

• Possible loss of quality in the production of the ice cream – could

lead to poor customer satisfaction (GI makes and sells high quality
ice cream).
• Possible loss of perceived quality as the business loses it's
'handmade' badge.
• Cost of introducing the technology ($10 000 extra FC costs per
month).
• Damage to the relationship with the five skilled workers.
• Loss of skills (GI employs five skilled workers).
• Reliability of the machinery (GI do not have the money to repair it –
as seen in their need to raise $50 000 form venture capitalists).
• Need for training/retraining as the employees are already trained in
handmaking ice-cream.

ARA

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Question Answer Marks

1(d) Recommend which of the two venture capital offers Tom and Amy 11
should accept. Justify your answer.

Knowledge and Analysis and Evaluation

Marks Marks
Application (4 marks) (7 marks)
A justified
recommendation, for Tom
and Amy, which venture
7
capital offer they should
accept based on a
balanced argument.
A recommendation, for
Tom and Amy, which
venture capital offer they 6
should accept based on a
balanced argument.
A balanced argument
based on one or both
5
venture capital offers with
evaluative comments
Shows understanding 3–4 Two sided argument(s)
of one or both venture based on one or both 4
capital offers venture capital offers
One sided argument
based on one venture 3
capital offer
Shows knowledge of Limited analysis of venture
1–2 1–2
venture capital capital
Justification can come from looking at the advantages and/or
disadvantages of BOTH offers, or from the advantages and
disadvantages of the recommended offer.

Answers could include:

Offer 1
• Loss of control – 51% equity given away – are Tom and Amy willing
to give up so much?
• Ease of distribution – should allow easier national expansion
• Marketing knowledge and expertise – again should allow easier
expansion
Offer 2
• Lower equity stake required – Tom and Amy would keep overall
control of the business
• Use of CAM will reduce costs of expansion – may further lower BE
point and increase profit margin
• Experience of Rebecca in project management and ops man – very
important for expansion.

ARA

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Question Answer Marks

2(a)(i) Define the term ‘profit margin’ (line 5). 2

Knowledge Marks
A correct definition 2
A partial, vague or unfocused definition 1
No creditable content 0

Content

Measure of the profitability (not profit) of a business. Calculated by

finding the profit for the year as a percentage of revenue. Proportion of
revenue that is profit for the year.

2(a)(ii) Briefly explain the term ‘above the line promotion’ (line 12). 3

Award one mark for each point of explanation:

C Example or some other way of showing good 1 mark
understanding
B Through a media 1 mark
A Communication/advertising/creating awareness to 1 mark
consumers/customers

Content

Above The Line promotion is the use of media to promote a business and
reach out to the target consumers.
These include conventional media, television and radio advertising, print
as well as internet. This is communication that is targeted to a wider
spread of audience, and is not specific to individual consumers.

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Question Answer Marks

2(b)(i) Refer to Table 2. Calculate the price elasticity of demand for a 3

change in price from $8 to $6 per hour.

Mark Rationale
3 marks Correct answer with or without working
2 marks Attempt with correct use of figures
1 mark Formula
0 marks No creditable content

Formula:
% Change in QD
% Change in P

% change in QD 5/50*100 = 10%

% change in P 2/8*100 = 25%

Answer = (–)0.4

Note: Minus sign not required.

Common incorrect answers

Answer Mark Rationale
25% 2 Formula wrong way round
= 2.5
10%
10% 2 Obvious (implied) knowledge of
25% formula but no attempt to calculate
answer (or the attempt is wrong)
10% 2 As above
= Inelastic
25%
5 1 Candidate missed the % out of the
= 2.5 formula (twice)
2
10% and/or 25% 1 No formula or attempt to put %
changes in a formula
Inelastic 1 Some understanding but no
calculation
Change in QD 0 Formula is wrong – no %
Change in P
2.5 0 No working

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Question Answer Marks

2(b)(ii) Explain one way in which CT could make use of price elasticity of 4
demand calculations.

Level Knowledge and Application Marks

2b Explanation of a way PED could be used in 3
(APPAPP) context
2a (APP) Identification of a way PED could be used in 2
context
1a (K) Shows understanding of the use of PED 1
0 No creditable content 0
Correct use of an incorrect answer to 1(b)(i) should be fully rewarded
(own figure rule –OFR).
No credit for knowledge of PED or formula – already awarded in previous
question.

Content
Answers could include:
• Can see that cleaning services are price inelastic (OFR).
• CT should not reduce their price – they should increase their price
back to the original level (or increase it further).
• Price is obviously not the most important factor when customers
purchase cleaning services.
• PED can be used to calculate revenue based on price changes.

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Question Answer Marks

2(c) Analyse one advantage and one disadvantage to CT of being an 8

employee-owned business.

Knowledge
and
Level Marks Analysis (4 marks) Marks
Application
(4 marks)
Good analysis of one (or
more) advantage(s) AND
one (or more)
4
Shows disadvantage(s) of being
understanding an employee-owned
of employee business in context
2 3–4
owned Good analysis of one (or
businesses in more) advantage(s) OR
context one (or more)
3
disadvantage(s) of being
an employee-owned
business in context
Limited analysis of one (or
more) advantage(s) AND
one (or more)
2
disadvantage(s) of being
Shows an employee-owned
knowledge of business
1 employee 1–2
owned Limited analysis of one (or
businesses more) advantage(s) OR
one (or more)
1
disadvantage(s) of being
an employee-owned
business

Answers could include:

Context:
• equal ownership
• different skills in cleaning
• each owner may have different personal contacts – cleaning homes
• each owner may have different business contacts to expand into the
industrial market.

Advantages:
• working together to solve problems
• economies of scale
• motivation from being owners/sharing profits.

Disadvantages:
• disagreements – who is in control?
• if there is a manager do they have authority
• do the workers have the management skills?
• could be a lack of capital investment
• could lead to slow decision making.

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Question Answer Marks

2(d) Discuss how CT's marketing mix might need to change to target 11
customers in the industrial market.

Knowledge and Marks Analysis and Evaluation Marks

Application (4 marks) (7 marks)
Justified evaluation that
follows on from a
balanced argument of 7
change(s) to the marketing
mix in context
Evaluation that follows on
from a balanced
argument of change(s) to 6
the marketing mix in
context
A balanced argument
based on change(s) to the 5
marketing mix in context
Shows understanding Argument based on
of the marketing mix in 3–4 change(s) to the marketing 3–4
context mix in context
Limited analysis of how
Shows knowledge of the marketing mix might
1–2 1–2
the marketing mix change/be changed

No creditable content

Content:
Answers could include:
• Product – the businesses will expect evening/night-time cleaning –
will CT have employees who are willing to do this? Will they expect
higher remuneration for anti-social hours? However the essence the
service on offer is the same.
• Price – need to find out how sensitive the industrial market is to
price? Likely to be more price elastic due to being a cost of business.
Therefore CT may find themselves in a more competitive market and
need to charge lower prices/have lower margin.
• May need to move towards below the line promotion – above the line
likely to be expensive to target industrial market (except trade
magazines). May need to employ sales people to target businesses
directly.
• Industrial customers are unlikely to come to them (i.e. phone or book
on internet) so CT will need to be more proactive in finding
customers.

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