Question Analyse the advantages to AWG of using Mark

Number e-commerce to sell its products.

Indicative content
1 (a) AO2 = 3 marks AO3 = 3 marks

AO2
• AWG sells its shirts on-line to customers
based in other countries
• AWG uses a website to advertise its baby
clothes to attract new customers
AO3
• This helps create recognition of the
business internationally allowing AWG to
increase its sales revenue.
• This helps to reduce the costs for AWG as
selling online is less expensive than
opening stores in other countries.
(6)

Level Mark Descriptor

0 No Rewardable material.
Level 1 1-2 • Limited application of knowledge and
understanding of business concepts and
issues to the business context. (AO2)
• Attempts to deconstruct business
information and/or issues, finding
limited connections between points.
(AO3)
Level 2 3-4 • Sound application of knowledge and
understanding of business concepts and
issues to the business context although
there may be some inconsistencies.
(AO2)
• Deconstructs business information
and/or issues, finding interconnected
points with chains of reasoning,
although there may be some logical
inconsistencies. (AO3)
Level 3 5-6 • Detailed application of knowledge and
understanding of business concepts and
issues to the business context
throughout. (AO2)
• Deconstructs business information
and/or issues, finding detailed
interconnected points with logical chains
of reasoning. (AO3)
Question It is considering two options: Mark
Number Option 1: use venture capital to open new stores
Option 2: start offering franchises.

Indicative content
1 (b) AO2 = 3 marks AO3 = 3 marks
AO4 = 3 marks

AO2
• Option 1 – A venture capitalist may
provide the funds to build the new stores
to sell the jumpers
• Option 2 – A franchisee will pay AWG a
fee for the right to sell its baby clothes

AO3
• Option 1 – As well as providing the funds
the venture capitalist may also have
knowledge of the needs of Icelandic
customers
• Option 2 – This method would allow AWG
to increase its revenue from fees paid by
the franchisee

AO4
• Option 1 – However, the venture
capitalist may want to take some control
of the business and interfere with the
decision making and objectives of the
business
• Option 2 – However, AWG are reliant on
the franchisee running the business well
and not causing bad publicity for AWG
which might impact its brands reputation
(9)
Level Mark Descriptor
0 No Rewardable material.
Level 1 1-3 • Limited application of knowledge and
understanding of business concepts and
issues to the business context. (AO2)
• Attempts to deconstruct business
information and/or issues, finding
limited connections between points.
(AO3)
• Makes a judgement, providing a simple
justification based on limited evaluation
of business information and issues
relevant to the choice made. (AO4)
Level 2 4-6 • Sound application of knowledge and
understanding of business concepts and
issues to the business context although
there may be some inconsistencies.
(AO2)
• Deconstructs business information
and/or issues, finding interconnected
points with chains of reasoning,
although there may be some logical
inconsistencies. (AO3)
• Makes a judgement, providing a
justification based on sound evaluation
of business information and issues
relevant to the choice made. (AO4)
Level 3 7-9 • Detailed application of knowledge and
understanding of business concepts and
issues to the business context
throughout. (AO2)
• Deconstructs business information
and/or issues, finding detailed
interconnected points with logical chains
of reasoning. (AO3)
• Makes a judgement, providing a clear
justification based on a thorough
evaluation of business information and
issues relevant to the choice made.
(AO4)
Question Analyse the impact on AWG of a depreciation of Mark
Number the ISK.

Indicative content
1 (c) AO2 = 3 marks AO3 = 3 marks

AO2
• Exchange rates will affect the price that
AWG will pay for importing the wool and
other materials they buy to make the
clothing
• The cost of the jumpers bought by
customers in other countries will be
impacted by a change in the exchange
rate
AO3
• A depreciating krona could lead to an
increase in the cost of material purchased
by AWG and may result in an increase in
the price of the clothing
• A depreciating krona may lead to an
increase in demand from overseas
customers who benefit from the change in
the exchange rate (6)
Level Mark Descriptor
0 No Rewardable material.
Level 1 1-2 • Limited application of knowledge and
understanding of business concepts and
issues to the business context. (AO2)
• Attempts to deconstruct business
information and/or issues, finding
limited connections between points.
(AO3)
Level 2 3-4 • Sound application of knowledge and
understanding of business concepts and
issues to the business context although
there may be some inconsistencies.
(AO2)
• Deconstructs business information
and/or issues, finding interconnected
points with chains of reasoning,
although there may be some logical
inconsistencies. (AO3)
Level 3 5-6 • Detailed application of knowledge and
understanding of business concepts and
issues to the business context
throughout. (AO2)
• Deconstructs business information
and/or issues, finding detailed
interconnected points with logical chains
of reasoning. (AO3)
Question Option 1: competition pricing Mark
Number Option 2: cost plus pricing
Justify which one of these two options AWG
should choose.

Indicative content
1 (d) AO2 = 3 marks AO3 = 3 marks
AO4 = 3 marks

AO2
• Option 1 – Competition pricing would
see AWG selling clothing at similar prices
to other clothing retailers
• Option 2 – Cost plus pricing would mean
AWG would calculate the costs of making
the jumpers and then add a markup for
profit
AO3
• Option 1 – This may increase the chance
of selling the clothes as younger
customers are likely to compare the
prices of clothing especially if their
income is low
• Option 2 – AWG can guarantee that they
would make a profit on each item sold

AO4
• Option 1 – However, as AWG use
sustainable materials in its jumpers, the
manufacturing cost of the clothing may
be high, which means selling at a
competitive price may not be feasible
• Option 2 – However, cost plus pricing
does not account for what the customer is
willing to pay, and AWG could be losing
out on possible increased revenue/profits

(9)
Question Analyse how this could affect its business. Mark
Number
Indicative content
1 (e) AO2 – 3 marks AO3 – 3 marks

AO2

• Employees in the clothing workshop will be

able to discuss different manufacturing
techniques/designs for the jumpers
• A major advantage of Kaizen is efficiency.
Kaizen may help to improve the quality of
FKLOGU clothing.
HQ¶V

AO3
• This helps create innovative ideas for AWG
which will help them to stand out from
other competitors selling clothing
• This may result in attracting more
customers who are seeking sustainable
and long-lasting items of clothing.

(6)
Level Mark Descriptor
0 No Rewardable material.
Level 1 1-2 • Limited application of knowledge and
understanding of business concepts and
issues to the business context. (AO2)
• Attempts to deconstruct business
information and/or issues, finding
limited connections between points.
(AO3)
Level 2 3-4 • Sound application of knowledge and
understanding of business concepts and
issues to the business context although
there may be some inconsistencies.
(AO2)
• Deconstructs business information
and/or issues, finding interconnected
points with chains of reasoning,
although there may be some logical
inconsistencies. (AO3)
Level 3 5-6 • Detailed application of knowledge and
understanding of business concepts and
issues to the business context
throughout. (AO2)
• Deconstructs business information
and/or issues, finding detailed
interconnected points with logical chains
of reasoning. (AO3)
Question Evaluate the impact on AWG of having these Mark
Number social objectives when planning to grow the
business. You should use the information
provided as well as your own knowledge of
business.
Indicative content

1 (f) AO1 = 3 marks AO2 = 3 marks

AO3 = 3 marks AO4 = 3 marks

AO1
• Social objectives aim to benefit society
• Social objectives focus on ethical factors
other than profit
AO2
• AWG encourage families to re-use clothing
made from natural materials and reduce
waste in society
• In the workshops at AWG waste is kept to
a minimum and spare material is used to
make hats and scarves
AO3
• This may enable AWG to meet the needs
and wants of customers who care about
the environment and are seeking a
sustainable range of clothing
• Minimising waste may enable AWG to
reduce its costs and pass on the cost
savings to its customers to encourage
more sales
AO4
• However, it may be more costly to use
natural material which may result in a
high price for the jumpers and dresses.
This may discourage some people from
buying the clothes resulting in slow growth
for the business
• However, many people in society may not
be concerned about social objectives and
the environment. They may be more
concerned about current fashion which
may lead to a decrease in sales revenue
for AWG.
(12)
Level Mark Descriptor
0 No Rewardable material.
Level 1 1-4
• Demonstrates elements of knowledge
and understanding of business concepts
and issues, with limited business
terminology used. (AO1)
• Limited application of knowledge and
understanding of business concepts and
issues to the business context. (AO2)
• Attempts to deconstruct business
information and/or issues, finding
limited connections between points.
(AO3)
• Makes a judgement, providing a simple
justification based on limited evaluation
of business information and issues
relevant to the choice made. (AO4)
Level 2 5-8 • Demonstrates mostly accurate
knowledge and understanding of
business concepts and issues including
appropriate use of business terminology
in places. (AO1)
• Sound application of knowledge and
understanding of business concepts and
issues to the business context although
there may be some inconsistencies.
(AO2)
• Deconstructs business information
and/or issues, finding interconnected
points with chains of reasoning,
although there may be some logical
inconsistencies. (AO3)
• Makes a judgement, providing a
justification based on sound evaluation
of business information and issues
relevant to the choice made. (AO4)
Level 3 9 - 12 • Demonstrates accurate knowledge and
understanding of business concepts and
issues throughout, including appropriate
use of business terminology. (AO1)
• Detailed application of knowledge and
understanding of business concepts and
issues to the business context
throughout. (AO2)
• Deconstructs business information
and/or issues, finding detailed
interconnected points with logical chains
of reasoning. (AO3)
• Makes a judgement, providing a clear
justification based on a thorough
evaluation of business information and
issues relevant to the choice made.
(AO4)
Question Analyse the importance of branding for Irsi Mark
Number Chocolatier.
Indicative content
2 (a) AO2 = 3 marks AO3 = 3 marks

AO2
• As a business that started in 1989 it has
been able to develop and maintain a
strong image for its chocolates and sweets
• Branding against local competing
chocolate shops helps Irsi Chocolatier
stand out
AO3
• This is important as the brand helps create
recognition of the business allowing Irsi
Chocolatier to continue as a long-standing
business
• As the brand becomes stronger a higher
price for the products can be charged and
new products being introduced have a
higher success rate due to its current
branding (6)
Question Irsi Chocolatier is considering using: Mark
Number Option 1: batch production
Option 2: job production.

Justify which one of these two options Irsi

Chocolatier should choose.

Indicative content
2 (b) AO2 = 3 marks AO3 = 3 marks
AO4 = 3 marks

AO2
• Option 1 – batch production would allow
different flavours and shapes of chocolate
lollipops to be made
• Option 2 – Job production allows Irsi
Chocolatier to give customers the option
of personalised chocolate lollipops

AO3
• Option 1 – This method will allow Irsi
Chocolatier to make a certain number of
one type of lollipop and then switch to
another to give customers a range in
lollipops as it does with the chocolates
• Option 2 – This method would give a
consistent approach to its customers of
personalised products

AO4
• Option 1 – However, it could be more
costly depending on the demand for
different shapes and flavours
• Option 2 – However, lollipops are only
small items so customers may not want to
wait for them to be personalised and may
prefer to buy off the shelf to make the
transaction quicker (9)
Question Analyse the limitations for Irsi Chocolatier of Mark
Number using break-even charts to decide whether it
should sell the new product.
Indicative content
2(c) AO2 = 3 marks AO3 = 3 marks

AO2
• Break-even charts make the assumption
that all of the new chocolate lollipops will
be sold
• The chart shows the costs for the
chocolate lollipops as a straight line not
taking into account other costs that may
occur along the way

AO3
• This could lead to false data as it does not
take into account any wasted or damaged
stock not sold
• This could lead to overspending if Irsi
Chocolatier have not taken into account
other costs or if customers do not like the
new product (6)
Question Irsi Chocolatier is considering two options: Mark
Number Option 1: train the new employee on-the-job
Option 2: train the new employee off-the-job.
Justify which one of these two options Irsi
Chocolatier should choose.
Indicative content
2 (d) AO2 = 3 marks AO3 = 3 marks
AO4 = 3 marks

AO2
• Option 1 – Offering on-the-job training
allows the new employee to see current
chocolate making techniques
• Option 2 – Offering off-the-job training
allows the new employee to learn new
techniques of producing chocolates from
lecturers at a college

AO3
• Option 1 – This may increase the levels
of production as the employee will be
producing whilst training allowing Irsi
Chocolatier to meet the increased
demand
• Option 2 – Therefore the new employee
could bring new ideas into the business
making it more efficient producing more
in less time

AO4

• Option 1 – However, as Irsi Chocolatier

only has 3 employees there may not be
someone who can dedicate the time to
train the new employee to the standard
required
• Option 2 – However, this can be costly
as the employee will have to attend an
external course rather than learn on the
job (9)
Question Analyse the importance of place to Irsi Mark
Number Chocolatier.
Indicative content
2 (e) AO2 – 3 marks AO3 – 3 marks

AO2
• They are located in a busy area with other
competitors nearby and want to make
sure customers are drawn to them over
the other chocolate shops in the area so
will not want to move the location of the
physical shop
• As a small business with only 3
employees, it may want to consider its
online place as well as its physical
chocolate shop to remain competitive

AO3
• With the business having started in 1989 it
is important to have the shop in the same
location so locals and tourists come back
year after year if they have enjoyed the
chocolates they have bought from the
shop
• With it offering a local delivery service and
the market changing Irsi Chocolatier may
put some importance on improving their
online presence to allow customers to buy
from the website as well as find
information about its products (6)
Question Evaluate the impact of Irsi Chocolatier using Mark
Number financial methods of motivation on its employees.
You should use the information provided as well
as your own knowledge of business.
Indicative content
2 (f) AO1 = 3 marks AO2 = 3 marks
AO3 = 3 marks AO4 = 3 marks

AO1
• A bonus can be given to employees
• A promotion could be awarded to an
employee
AO2
• This can motivate the employees is they
meet their targets of making and selling a
certain amount of chocolate each month
• Irsi Chocolatier could promote the hardest
working employee in the chocolate shop

AO3
• This may push employees to work harder
and produce/sell more products in order to
meet their targets therefore increasing the
revenue for Irsi Chocolatier
• This will motivate the employee as they
will be given additional responsibilities
with a potential pay increase making them
more loyal to the business as they are
being promoted for their work

AO4
• However, if the same employee keeps
getting the bonus each month, then this
may demotivate the rest of the employees
if they feel they do not have a chance at
getting the bonus leading to a decrease in
productivity
• However, this would only be for one
employee as the business only currently
has three so the other two may end up
feeling demotivated and unrecognised
possibly leading to an increase in staff
turnover and creating a recruitment issue
for Irsi Chocolatier (12)
Question Analyse the importance to Aude Anglaret of Mark
Number motivating her employees.
Indicative content
3 (a) AO2 = 3 marks AO3 = 3 marks

AO2
• If the florists are motivated, they could
produce more bunches of flowers for sale
to customers
• The florists are more likely to stay in the
flower shop if they are paid more
AO3
• Increased productivity could lead to
greater outputs and more sales
• Employees who stay will reduce the cost of
recruitment and training of new
employees (6)

Question Aude Rose is considering two options. Mark

Number Option 1: sponsor a local event such as a flower
show
Option 2: advertise, using leaflets around Paris.
Justify which one of these two options Aude Rose
should choose.
Indicative content
3 (b) AO2 = 3 marks AO3 = 3
marks AO4 = 3 marks

AO2
• Option 1 – The event will increase the
awareness of her flower shop
• Option 2 – Leaflets can be handed out to
passing tourists to draw them to the
flower shop

AO3
• Option 1 – If the flower show is a
success, potential customers will have a
positive opinion of Aude Rose
• Option 2 – The leaflet can include more
information such as shop opening hours
and the range of flowers being sold

AO4
• Option 1 – However, these events can be
expensive to sponsor so whilst sales may
increase there is no guarantee profits will
increase
• Option 2 – However, this would mean
that someone would have to take time out
of the shop to hand out the leaflets or
increase costs by paying someone to hand
them out (9)
Question Analyse the impact on Aude Rose of using its Mark
Number retained profits for this proposed development.
Indicative content
3 c) AO2 = 3 marks AO3 = 3 marks

AO2
• By using retained profit Aude Rose can
buy the flowers straight away
• Retained profit can only be used to buy a
wider range of flowers if it exists

AO3
• This source of finance does not need to be
paid back so any profit made from the
new flowers can go back into the flower
shop business
• There is no guarantee that Aude Rose will
have enough profit to buy this new range
of flowers so may have to wait to
accumulate more retained profits (6)

Question Aude Rose is considering two options: Mark

Number Option 1: hand out questionnaires to customers
that visit the shop
Option 2: using the internet to research new
trends.
Justify which one of these two options Aude
Rose should choose.
Indicative content
3 (d) AO2 = 3 marks AO3 = 3 marks
AO4 = 3 marks

AO2
• Option 1 – By using questionnaires Aude
Rose could get feedback straight away
from customers when buying flowers in
the shop
• Option 2 – Aude Rose can view a large
selection of flower-based websites

AO3
• Option 1 – The feedback might give the
business more information about what
the customers want from the flower shop
and changes as trends develop
• Option 2 – It will be less time consuming
as it can find the exact information it is
looking for and compare it to the types of
flowers it currently offers

AO4

• Option 1 – However, customers may not

know about the new trends so cannot
give any constructive feedback on the
purpose of the research being conducted
• Option 2 – However, whilst this research
can give information about up-and-
coming trends it gives no specific
information on the demand for the new
trends by its existing customers so could
be a waste of time (9)
Question Analyse factors that Aude Rose might consider Mark
Number when measuring the success of its business.
Indicative content
3 (e) AO2 – 3 marks AO3 – 3 marks

AO2
• Aude Rose have grown by opening a larger
shop in the centre of Paris
• By moving to the centre of Paris it has
made possible an increase in the number
of people buying its flowers

AO3
• By moving to a larger shop in a better
location Aude Rose has shown success by
being able to pay the higher rent
• This shows success of the business as
there is a demand for its flowers and they
are willing to increase the risk to the
business by investing in a wider range of
flowers

(6)
Question Evaluate the usefulness of financial documents to Mark
Number help Aude Rose when deciding to open a second
shop. You should use the information provided
as well as your own knowledge of business.
Indicative content
3 (f) AO1 = 3 marks AO2 = 3 marks
AO3 = 3 marks AO4 = 3 marks

AO1
• The statement of comprehensive income
can show the profit or loss the business
has made by the end of its financial year
• The figures can show how capable the
business is of expanding
AO2
• This can help the business to see how
profitable the flower shop currently is
• This could draw in potential investors who
are interested in the success of the flower
shop

AO3
• This document will be useful to show Aude
Rose how much profit it has to be able to
put towards the expansion or inform a
bank of how much it needs to lend
• The financial documents will outline the
current position of the business and could
include a cash flow forecast projecting net
cash flow in the future

AO4
• However, there are other factors that need
to be considered such as figures from
previous years as well as the affordability
to run the new shop
• However, other factors need to be taken
into consideration such as the location of
the competition which could make it
difficult for the second flower shop to
survive as a new business to that
particular area. (12)
Question Analyse the likely impact of external factors on business Mark
Number decisions made by TBTS.
Indicative content
4 (a) AO2 = 3 marks AO3 = 3 marks

AO2
• Social factors can help TBTS as changes in society
shows customers might be demanding more
environmentally friendly toys
• Technological advances could increase the cost of
buying or the price of a range of toys
AO3
• This will make TBTS more competitive and bring more
customers into the toy shops as they are acting in a
responsible way for the environment whilst selling
high quality goods
• If the technology in toys increases rapidly then TBTS
could be left with unwanted stock as customers buy
the newer toys (6)
Question TBTS is considering two options: Mark
Number Option 1: using retained profits
Option 2: getting a bank loan
Justify which one of these two options TBTS should choose
Indicative content
4(b) AO2 = 3 marks AO3 = 3 marks
AO4 = 3 marks

AO2
• Option 1 – By using retained profits TBTS can buy the
toys immediately to sell in its toy shops

• Option 2 – TBTS will have to wait for a decision to be

made by the bank before being able to buy the toys
from new suppliers

AO3
• Option 1 – This method does not need to be paid back
so any profits made from the introduction of new toys
will go back into the business
• Option 2 – TBTS may have more finance from a bank
loan and can therefore buy a wider range of toys

AO4
• Option 1 – However, TBTS can only use retained
profits if they have any in the first place as it can take
some time to build up profits to use in investing in
new products.
• Option 2 – However, interest has to be paid back to
the bank so this adds an additional cost to the
business but can be paid back over a long period of
time so TBTS can budget for this. (9)

Question Analyse the importance of TBTS motivating its employees. Mark

Number Indicative content
4(c) AO2 = 3 marks AO3 = 3 marks

AO2
• If TBTS has motivated employees it can better meet
the needs of customers who want to buy toys
• If TBTS does not have motivated employees it could
lead to lower sales of its toys

AO3
• The employees will be happier working there and will
be more willing to answer any customer queries
• Less motivated employees can lead to a reduction in
productivity making it harder for TBTS to achieve any
goals they may have
(6)
Question TBTS is considering two options: Mark
Number Option 1: hand out questionnaires to customers that visit
the shops
Option 2: hold focus group meetings with parents and their
children.
Justify which one of these two options TBTS should choose.
Indicative content
4 (d) AO2 = 3 marks AO3 = 3 marks
AO4 = 3 marks

AO2
• Option 1 – By using questionnaires TBTS can get
feedback directly from customers who buy the toys
on behalf of children
• Option 2 – TBTS can use the focus groups to observe
children playing with the new range of toys

AO3
• Option 1 – TBTS can get detailed feedback from the
customers to see what elements are important to
them when they make a decision to buy a particular
toy
• Option 2 – Employees from TBTS can recall how the
children play with the toys and their reaction

AO4

• Option 1 – However, as TBTS have shops in busy

locations like airports people may not have the time
to fill in the questionnaires or may rush it therefore
not giving them accurate feedback to help them with
the launch of the new range of toys
• Option 2 – However, the responses from the children
may not be valid as they are in a new setting and may
find other things more interesting than the toys but
this does not mean they would not play with the toys
at home

(9)
Question Analyse the usefulness to TBTS of the acid test ratio. Mark
Number Indicative content
4 (e) AO2 – 3 marks AO3 – 3 marks

AO2
• TBTS can find it useful to use these ratios as they can
see it increases from 0.75 in 2018 to 0.88 in 2020
• TBTS can use it to see that they may need to take out
any short-term finance for new projects such as the
range of new toys for 4-year-olds

AO3
• This can help TBTS see if they have enough cash to
cover any short-term debts to creditors such suppliers
of toys and help them to keep a good relationship with
the suppliers by paying on time.
• The ratios show they need to be cautious as each year
the acid test ratio is below 1

(6)
Question Evaluate the importance of good internal and external Mark
Number communication to TBTS. You should use the information
provided as well as your own knowledge of business.
Indicative content
4 (f)
AO1 = 3 marks AO2 = 3 marks
AO3 = 3 marks AO4 = 3 marks

AO1
• Internal communication can be between owners and
employees.
• External communication can be between owners and
various stakeholders such as suppliers and customers.
AO2
• TBTS need to make sure all employees are aware of
the toys it sells and the aims of the business.
• TBTS can use various external methods to
communicate with its suppliers of toys and wooden
materials.
AO3
• It can create better relationships leading to lower staff
turnover and making them feel more valued and part
of a team.
• Good communication with its suppliers could lead to
improved relationship between TBTS and its suppliers
as it keeps them up to date with its business activity.
AO4
• However, communication has to be good for all
employees or some may feel left out leading to
animosity between the employees.
• However, if the communication is poor the
relationship would not work and TBTS could find that it
loses suppliers. (12)
Question Analyse the likely impact on productivity if Can Culleretes Mark
Number launch this app.
Indicative content
5 (a) AO2 = 3 marks AO3 = 3 marks

AO2
• The app means waiters do not have to take orders at
the customer’s table
• As soon as customers place the order the kitchen will
receive the order immediately
AO3
• This will reduce the cost to the business so the waiter
can spend more time doing other tasks rather than
taking orders
• This will increase productivity as it will make for a
more efficient ordering system for the restaurant (6)

Question Can Culleretes is looking to improve its revenue and is Mark

Number considering two options.
Option 1: increase advertising
Option 2: opening for breakfast.
Indicative content
5 b) AO2 = 3 marks AO3 = 3 marks
AO4 = 3 marks

AO2
• Option 1 – An increase in advertising can reach new
customers and tourists visiting Barcelona
• Option 2 – By opening for breakfast Montserrat and
Alicia can attract existing and new customers

AO3
• Option 1 – This method can improve its revenue by
drawing in new customers who may not have heard
the restaurant before
• Option 2 – This method may make the restaurant
stand out as it is offering something it has not done
before in its long history

AO4
• Option 1 – However, it depends on the method of
advertising as it can be expensive so although revenue
may improve it will be a cost for the business
• Option 2 – However, as it is only a small restaurant
they may need to employ more staff as well but this
could lead to an increase in costs (9)
 Question Mark
Number
Indicative content
5 (c) AO2 = 3 marks AO3 = 3 marks

AO2
•

AO3
•

(6)

Question Can Culleretes is considering two options: Mark

Number Option 1: offer the new chef with a permanent contract
Option 2: offer the new chef a temporary contract.
Justify which one of these two options Can Culleretes should
choose.
Indicative content
5 (d) AO2 = 3 marks AO3 = 3 marks
AO4 = 3 marks

AO2
• Option 1 – By offering a permanent contract the chef
will be more committed to the restaurant long term.
• Option 2 – By offering a temporary contract they can
wait to see if the desserts are popular or not before
hiring on a permanent basis.

AO3
• Option 1 – This may increase the levels of motivation
of the chef leading to the high-quality production of
the desserts.
• Option 2 – Therefore if the new desserts are not
popular they are not committed to keeping the chef.

AO4

• Option 1 – However, as Can Culleretes is a family run

business they may be cautious of having someone
come into the business on a permanent basis
especially if the new desserts do not meet customer
expectations.
• Option 2 – However, a skilled dessert chef may not
like the uncertainty of a temporary contract and may
choose to work elsewhere.

(9)

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Question Analyse the importance of Can Culleretes responding to Mark
Number changes in its market.
Indicative content
5 (e) AO2 – 3 marks AO3 – 3 marks

AO2
• Montserrat and Alicia need to keep up with changing
customer tastes if they want to remain competitive
• As the second oldest restaurant in Spain it may place
no importance in responding to changes in the market

AO3
• They are located in a busy area and want to make sure
customers are drawn to them over the other
restaurants in the area
• Despite the market changing customers are drawn to
Can Culleretes because of it being a family run
business and its long history so may see no need to
change if it is successful enough as it is

(6)
Question Evaluate the impact of using venture capital as a source of Mark
Number finance to fund the opening of Can Culleretes. You should use
the information provided as well as your own knowledge of
business.
Indicative content
5 (f) AO1 = 3 marks AO2 = 3 marks
AO3 = 3 marks AO4 = 3 marks

AO1
• Venture capital is when investors give a business
money in exchange for a share of the profits.
• Venture capital is an external source of finance often
used for opening new businesses.
AO2
• Investors may have the skills in the food industry to
ensure Can Café is a success.
• Investors could have some ideas that the family does
not like such as the opening hours of the café.

AO3
• By using this source of finance Can Café will have
enough money to set up without having to pay back
any interest helping the business to have more chance
of it being a success from the start.
• If the investors are too involved in setting up the
business it may lose the historical story behind the
original business leading to customers staying away
from the café.

AO4
• However, the family will have to pay the investors a
share of the profits which may upset the other family
members as they are the ones working hard to set up
Can Café but the investors get the rewards.
• However, if the owners had an agreement to pay the
investors back and then take back full ownership it
could ensure the success of both business as well as
keeping them in the family in the long term. (12)
Question Indicative content
Number Mark
6 (a) AO2 = 3 marks AO3 = 3 marks

AO2
• Lower interest rates could lead to an
increase in the demand for the popular
Liberty Art Jam sessions.
• The cost of borrowing comes down so
Artify Studio could pay less on any loans
they take out.

AO3
• Artify Studio may need to put on
additional sessions to cater for the
increase in demand, this will lead to an
increase in costs but as sales increase this
can cover this cost.
• This will enable Artify Studio to have more
funds available to increase advertising and
bring in more customers. (6)
Question Indicative content Mark
Number
6 (b) AO2 = 3 marks AO3 = 3 marks
AO4 = 3 marks

AO2
• Option 1 – this would increase the
awareness of Artify Studio to those in the
Kampong Glam area.

• Option 2 –this can allow a business to

become known to a wider market of
artists.

AO3
• Option 1 – They could use this as an
opportunity to advertise the different
services they offer to local artists.

• Option 2 – They can approach artists from

all over the country to find out what the
needs of those artists are and consider
what they can do to meet those needs.

AO4
• Option 1 – However, sponsorship can cost
the business a lot depending on the size of
the art show and this could be a cost that
the business cannot afford.

• Option 2 – However, it would mean taking

time out of the business and it may not
bring in new customers or improve its
image if the exhibition was poorly
attended. (9)

Question Indicative content Mark

Number
6 (c) AO2 = 3 marks AO3 = 3 marks

AO2
• Artify Studio can see how it is performing
and can calculate the gross profit margin
of 31.49%.
• Artify Studio could can use this
information to assess the direction that
the art studio will take in the future.

AO3
• This calculation helps them to see the
sales they are making are currently
sufficiently covering costs of running their
services and selling their products.
• This helps Artify Studio to judge how
much profit they are making against the
cost of running their business and if any
changes need to be made to make the
business more profitable.
(6)
Question Indicative content Mark
Number
6 (d) AO2 = 3 marks AO3 = 3 marks
AO4 = 3 marks

AO2
• Option 1 – Crowdfunding could be a quick
way to raise the finance needed for new
art sets.
• Option 2 – Tay Hui Jae could invest his
own retained profits which have been
earned from previous years to purchase
the new art sets.

AO3
• Option 1 – Investors do not need to be
given any financial reward in return for
their money but could instead be offered
access to the art services Artify Studio
offer.
• Option 2 – This may provide the business
will the short-term finance it needs to get
the painting sets together.
AO4

• Option 1 – However, Artify Studio is only

a small business so may not have enough
presence to gain the funding needed and
if they don’t meet the target they set
then they may end up with nothing.
• Option 2 – However, there is no
guarantee these painting sets will sell as
customers may prefer for their children to
take part in the art sessions in the studio
making the venture unsuccessful.
(9)
Question Indicative content Mark
Number
6 (e) AO2 – 3 marks AO3 – 3 marks

AO2
• Artify Studio can use the existing
employees at its Kampong Glam studio to
train the new employees.
• This gives Tay Hui Jae the chance to see if
the new employees are skilled enough to
work in the art studio.

AO3
• The new employees can see the work
carried out in the art studio and what
would be expected of them when the
second studio opens up.
• This gives Tay Hui Jae the chance to see if
the new employees require further training
which could be off the job.
(6)

Question Indicative content Mark

Number
6 (f) AO1 = 3 marks AO2 = 3 marks
AO3 = 3 marks AO4 = 3 marks

AO1
• The availability of skilled labour.
• The availability of materials available.

AO2
• Artify Studio will need to find employees
with art-based skills to work at the studio.
• Artify Studio will need art supplies for its
art courses.

AO3
• Finding labour that is already skilled will
help Artify Studio to progress and expand
the range of art-based courses it offers.
• The art supplies will allow all of the
current courses to be offered at the new
art studio so there is consistency between
the studios.

AO4
• However, if no skilled labour is available
then the impact on the second art studio
may be negative as it may not be able to
run courses without skilled employees.
• However, as they are relocating to a small
mining town then they may find it difficult
to source the art materials in such a
remote area and therefore may not be
able to offer its full range of services. (12)
 Question Analyse the importance of marketing to NOF Mark
Number
Indicative content
7 (a) AO2 = 3 marks AO3 = 3 marks

AO2
• Result from marketing would enable NOF to
adapt its overnight accommodation to what the
customers want.
• Marketing can be used to make customers
aware of its organic honey.

AO3
• This may lead to increased bookings for the
overnight accommodation.
• Sales of organic honey may increase. (6)

Question NOF is considering two options to introduce the product Mark

Number into the market:
Option 1: offering a low introductory price for three
months
Option 2: selling at the same price as competitors.
Justify which one of these two options NOF should
choose.

Indicative content
7 (b) AO2 = 3 marks AO3 = 3 marks
AO4 = 3 marks

AO2
• Option 1 – By offering an introductory price
could entice shoppers in the farm shop to try
the popcorn.

• Option 2 – Customers might recognise the

farm’s name so will buy the popcorn when
comparing to its competition.

AO3
• Option 1 – This could lead to an increase in
sales due to the low price and will increase
revenue.

• Option 2 – NOF could see an increase in

customers as it is a local brand that people trust
so are more willing to buy a new product that it
launches.

AO4
• Option 1 – However, the profit on each bag of
popcorn will be low even though sales may
increase so in the short-term profits might
suffer.

• Option 2 – However, as they do not have an

established brand of popcorn customers may
choose to buy a more popular branded popcorn
they know. (9)
Question Analyse how useful break-even calculations can be for Mark
Number NOF when deciding whether to include ice cream in its
product range

Indicative content
7 (c) AO2 = 3 marks AO3 = 3 marks

AO2
• NOF can see that it will need to sell 55 ice
creams each day to break even.
• NOF can use this information to decide if it can
sell 55 tubs a day, 365 days a year.

AO3
• It will help NOF to see at what point it starts
making a profit and can ask ‘what if’ questions
to see what impact it has on the break-even
point.
• This might stop NOF from making ice creams as
it may not be able to sell 55 tubs all year round.
(6)

Question To do this NOF is considering two options: Mark

Number Option 1: handing out questionnaires at local retailers
Option 2: using the internet to research other farms.
Justify which one of these two options NOF should choose.

Indicative content
7 (d) AO2 = 3 marks AO3 = 3 marks
AO4 = 3 marks

AO2
• Option 1 – Questionnaires will let NOF approach
potential customers face to face to see what will
attract them to visit the farm.
• Option 2 – NOF can view a large selection of
websites to look at other farms and gather
information.

AO3
• Option 1 – NOF can ask specific questions which will
give it detailed feedback that it can use to help
attract more customers to its farm.
• Option 2 – It will be less time consuming/costly as it
can see what other farms offer already and compare
it to its own to see if it can improve based on this
information.

AO4

• Option 1 – However, NOF may not get all of the

information it requires or people may not want to fill
in the questionnaires whilst they are shopping so it
might not be very helpful/limited feedback.
• Option 2 – However, NOF may end up spending a
lot of time looking at feedback or outdated
information which will not be very useful for it and it
is not gaining specific feedback on its own farm.
(9)
Question Analyse the benefits to NOF of using personal savings to Mark
Number expand its product range

Indicative content
7 (e) AO2 – 3 marks AO3 – 3 marks

AO2
• NOF can start making ice cream immediately as
they have the money.
• Amanda and Ken will not have to pay any money
back to their bank.

AO3
• By using personal savings NOF does not have to
go through a lengthy process of taking out a
loan.
• As there is no loan there is no need to be
concerned about monthly repayments/interest
and any profit gained can be used to put back (6)
into the business.

Question Evaluate the factors that NOF might consider when Mark
Number measuring the success of its farm shop. You should use
the information provided as well as your own
knowledge of business

Indicative content
7(f) AO1 = 3 marks AO2 = 3 marks
AO3 = 3 marks AO4 = 3 marks

AO1
• The profit produced by the farm shop
• The growth of its product range.

AO2
• NOF will be able to see how much profit the
farm shop is making compared to the overnight
accommodation.
• NOF is looking at expanding its product range
which shows it is currently successful in the
products it already sells.

AO3
• By comparing how much profit is made in the
farm shop then NOF can spend money
improving the areas that need developing.
• This shows success of the business as there is a
demand for the products it produces and it is
willing to take a risk by expanding that range.

AO4
• However, an increase in profit is dependent
upon many other factors outside the control of
NOF such as the weather as this could impact
heavily on how much the farm is producing or
how many people want to come and visit the
farm shop.
• However, there is no guarantee that this growth
will be a success at a time when supermarkets
sell the same products cheaper than NOF and
other farms can afford to do.
(12)
Question Indicative content Mark
Number
8 (a) AO2 = 3 marks AO3 = 3 marks

AO2
• TADS is located in a wealthy area near to people with
more disposable income.
• TADS needs to be far away from competitors in the
music school industry.

AO3
• It is important to be located close to the target market
as parents may not want to travel far for the lessons
for their children.
• As the service provided is specialised it is best to be far
away from other drumming schools as not everyone
will want to play them. (6)

Question Indicative content Mark

Number
8 (b) AO2 = 3 marks AO3 = 3 marks
AO4 = 3 marks

AO2
• Option 1 – By using commission TADS would encourage
its teachers to find new pupils who want to learn music.
• Option 2 – Increasing the hourly rate would encourage
music teachers to work for longer hours.

AO3
• Option 1 – By recruiting more pupils teachers will be
paid a commission on top of their hourly rate for
teaching.
• Option 2 – Teachers are more likely to remain with TADS
as they believe they are being paid well for the work
they do.

AO4
• Option 1 – However, the commission is a one-off
payment and once paid the teachers would only receive
their hourly rate, which may not be sufficient to continue
to be employed by TADS.
• Option 2 – However, if TADS cannot increase the number
of pupils it may not be able to retain all of the teachers it
currently employs. (9)
Question Indicative content Mark
Number
8 (c) AO2 = 3 marks AO3 = 3 marks

A02
• If TADS has sufficient cash it can pay its electricity bills
for the music studio.
• If TADS runs out of cash it means it cannot pay its
music teachers.

A03
• If TADS cannot afford to pay its bills, then the
electricity would be cut and no lessons could take
place.
• If TADS can no longer pay its teachers, it cannot offer
any music lessons.

(6)

Question Indicative content Mark

Number
8 (d) AO2 = 3 marks AO3 = 3 marks AO4 = 3 marks

AO2
• Option 1 – Teaching other musical instruments will
bring in new music students and revenue.
• Option 2 – By offering online lessons more students
will be able to take drum lessons and therefore
increase revenue.

AO3
• Option 1 – This would increase its target market due
to the wider range of musical instruments being
offered leading to an increase in revenue.
• Option 2 – This would increase revenue as more
students can be taught at the same time in different
locations around the country and the world.

AO4
• Option 1 – However, although this may lead to more
revenue for the business it would need to find and
pay additional teachers to provide this service.
• Option 2 – However, there could be technical issues
that might lead to lessons being interrupted and not
delivered, giving TADS a bad reputation.

(9)
Question Indicative content Mark
Number
8 (e) AO2 = 3 marks AO3 = 3

marks A02
• TADS could use sales promotions such as coupons in
the local newspaper that Ollie writes a column for.
• TADS could go to music festivals to showcase the
skills of its students.

A03
• Coupons in the newspaper may lead to local readers
using them thus increasing the number of students.
• By doing this spectators will see the skills that have
been taught and be encouraged to learn to play a
new musical instrument.

(6)
Question Indicative content Mark
Number
8 (f) AO1 = 3 marks AO2 = 3 marks
AO3 = 3 marks AO4 = 3 marks

A01
• A private limited company is a suitable type of
ownership for small and medium-sized businesses.
• In a private limited company, the shareholders can
only lose the money they invest.

A02
• As a one-man business becoming a private limited
company means Ollie could raise more funds from
family and friends.
• TADS will have a separate legal identity meaning the
business could carry on if anything happened to
Ollie.

A03
• If TADS opts for a private limited company then Ollie
can control who the other owners will be allowing
him to choose people who have an interest in music
and can invest in the business.
• Having Ltd status means that Ollie’s personal
possessions are protected as are those of his
shareholders. The benefit of this is that the risk for
shareholders is reduced.

A04
• However, Ollie may not get a lot of interest so cannot
raise large amounts of money and this can slow
down his expansion plans. He may find it easier to
opt for another source of finance such as a bank
loan rather than change the legal ownership of the
business, so he does not lose any control of the
business.
• However, becoming a Ltd will involve an increase in
paperwork and some information will have to be
shared publicly and this could be of some interest to

Ollie’s competitors. (12)