MARK SCHEME AQA A Level Business Mark Scheme Paper 1 Business 1
Section A Total for this section: 15 marks (1 mark for each correct answer) Question Number Answer 1 D 2 B 3 A 4 A 5 D 6 C 7 B 8 C Question Number Answer 9 D 10 B 11 C 12 B 13 D 14 C 15 A Section B Total for this section: 15 marks (1 mark for each correct answer) 16 A business is considering whether to invest in a new computer system or recruit more software engineers. It has constructed a decision tree to decide which option to choose. Calculate the net gain of investing in the computer system compared to recruiting software engineers. Using these calculations, advise the business which one of the two options it should choose. Show your workings. (4 marks) Marks for this : AO1 = 2 and AO2 = 2 h demonstrate knowledge and understanding of decision trees (A01) h be applied to the context of the given data (A02) Net gain of investing in the computer system: h (0.7 x 15m) + (0.3 x 4m) 10 = 1.7m Net gain of recruiting software engineers: h (0.8 x 10m) + (0.2 x 2m) 5 = 3.4m Recruiting software engineers should be the chosen option Page 2 AQA A Level Business Mark Scheme
17.1 Based on the data in Table 2, calculate the payback period for this investment project. Show your workings. (4 marks) Marks for this : AO1 = 2 and AO2 = 2 h demonstrate knowledge and understanding of payback (A01) h be applied to the context of the given data (A02) Year Net return Cumulative return 1 0.5 (2.5) Payback = 3 years and 0.25/2 x 12 = 1.5 months 2 1.0 (1.5) 3 1.25 (0.25) 4 2.0 1.75 17.2 Based on the data in Table 2, calculate the average rate of return for this investment project. Show your workings. (4 marks) Marks for this : AO1 = 2 and AO2 = 2 h demonstrate knowledge and understanding of average rate of return (A01) h be applied to the context of the given data (A02) Total return = 4.75 3 = 1.75 Annual return = 1.75/4 = 0.44 Average rate of return = 0.44/3 x 100 = 14.67% 18 Explain how a soft drinks business could use Carroll s Social Responsibility pyramid to improve its public image. (5 marks) Level The candidate will typically: Marks 3 Provide a response that is well explained using knowledge and understanding and is applied to the context 2 Provide a reasonable explanation using knowledge and understanding with some application to the context 1 Demonstrate some knowledge and understanding but the explanation is limited and lacking application to context 4-5 marks 2-3 marks 1 mark AQA A Level Business Mark Scheme Page 3
h demonstrate knowledge and understanding of relevant issues such as Carroll s social responsibility pyramid and public image (A01) h be applied to the context of a soft drinks business (A02) Areas for discussion include: Carroll s Social Responsibility pyramid shows the different stages a business has to go through in order to be considered a socially responsible business: Possible ways a soft drinks business could use Carroll s Social Responsibility pyramid: h Economic responsibilities - ensure the business is well run financially to ensure long term viability for all of its stakeholders h Legal responsibilities ensuring the business obeys all the legal requirements e.g correct labelling, meeting government low sugar guidelines, not advertising to children h Ethical responsibilities going beyond legal requirements when dealing with stakeholders e.g. paying above the living wage h Philanthropic responsibilities contributing to wider society by supporting charities, sponsoring health awareness campaigns e.g. preventing child obesity 19 A business that sells wearable fitness activity monitors is launching a new activity watch. Analyse how it could use market research to improve the chances of this product being a success. (9 marks) Marks for this : A01 = 2, A02 = 3 and A03 = 4 h demonstrate knowledge and understanding of relevant issues such as market research and product (A01) h be applied to the context of launching a new product (A02) h analyse how market research could improve the success of a product launch (A03) Level The candidate will typically demonstrate: Marks 3 2 A good response overall that focuses on many of the demands of the h demonstrates a depth and range of knowledge and understanding of issues in the h demonstrates analysis which is well developed and is applied effectively to the context A reasonable response overall that focuses on some of the demands of the h demonstrates a limited knowledge and understanding of a range of issues in the or a good knowledge and understanding of relatively few issues in the h demonstrates analysis with little development and with mainly descriptive application to the context 7-9 marks 4-6 marks Page 4 AQA A Level Business Mark Scheme
Level 1 The candidate will typically demonstrate: A limited response overall with little focus on the demands of the h demonstrates a limited range and depth of knowledge and understanding of issues in the h demonstrates analysis with little development and with mainly descriptive application to the context Marks 1-3 marks Areas for discussion include: Market research is the process of gathering information about consumers buying habits and attitudes to current and future products: Possible ways that market research could improve the chances of the product being a success: h To identify what features consumers would like the watch to have therefore allowing the business to design watches that closely meet customers needs h Marketing can be targeted more accurately to specific market segments reducing the opportunity cost of marketing h To identify what price consumers would be prepared to pay allowing the business to set the best price for the watch h To identify how the product compares to rival activity watches which would allow the business to design unique features giving the watch a USP 20 A travel agent that currently sells holidays through its high street shops is considering moving into e-commerce. Analyse how a human resource plan would be an important element of this strategy. (9 marks) Marks for this : A01 = 2, A02 = 3 and A03 = 4 h demonstrate knowledge and understanding of relevant issues such as e-commerce and human resource planning (A01) h be applied to the context of a travel agent moving into e-commerce (A02) h analyse how a human resource plan would be important when moving into e-commerce (A03) Level 3 The candidate will typically demonstrate: A good response overall that focuses on many of the demands of the h demonstrates a depth and range of knowledge and understanding of issues in the h demonstrates analysis which is well developed and is applied effectively to the context Marks 7-9 marks AQA A Level Business Mark Scheme Page 5
Level The candidate will typically demonstrate: Marks 2 1 A reasonable response overall that focuses on some of the demands of the h demonstrates a limited knowledge and understanding of a range of issues in the or a good knowledge and understanding of relatively few issues in the h demonstrates analysis which is developed and is applied to the context A limited response overall with little focus on the demands of the h demonstrates a limited range and depth of knowledge and understanding of issues in the h demonstrates analysis with little development and with mainly descriptive application to the context 4-6 marks 1-3 marks Areas for discussion include: A human resource plan is a process that identifies current and future human resource needs for an organisation to achieve its goals: Possible ways that a human resource plan would be an important element of an e-commerce strategy: h Identifies the number of employees required e.g moving into e-commerce could reduce the need for high street shops and consequently fewer numbers of staffs h Identifies the type of skills required e.g. web design, software engineers, digital marketing which would be crucial to ensure the successful implementation of an e-commerce strategy h Assesses the level of relevant skills possessed by the current workforce h Identifies recruitment, training and redeployment needs therefore ensuring that the travel agent has the right mix of employees Page 6 AQA A Level Business Mark Scheme
Section C and D Total for these two sections: 2 25 = 50 marks Marking grid for 25-mark s Level The candidate will typically demonstrate: Marks 5 4 3 An excellent response overall that is fully focused on the key demands of the h demonstrates a depth and range of knowledge and understanding that is precise and well selected in relation to issues in the h demonstrates analysis throughout which is well developed, is applied effectively to the context and considers a balanced range of the issues in the h makes judgements or provides solutions which are built effectively on analysis, show balance and have a clear focus on the as whole throughout A good response overall that focuses on many of the demands of the h demonstrates a depth and range of knowledge and understanding of issues in the h demonstrates analysis which is well developed, applied effectively to the context and considers a range of issues in the h makes judgements or provides solutions which are built on analysis, show balance and address the as a whole A reasonable response overall that focuses on some of the demands of the h demonstrates a limited range and depth of knowledge and understanding of issues in the h demonstrates analysis which is developed, applied to the context and considers some of the issues in the h makes judgements or provides solutions which are built on analysis, but lack balance and are not fully focused on the as a whole 21-25 marks 16-20 marks 11-15 marks AQA A Level Business Mark Scheme Page 7
Level 2 The candidate will typically demonstrate: A limited response overall with little focus on the demands of the h demonstrates a limited range and depth of knowledge and understanding of issues in the h demonstrates analysis with little development, mainly descriptive application to the context and considers a limited number of issues in the h makes judgements or proposes solutions which have limited links to analysis or limited focus on the as a whole. 6-10 marks Marks 1 A weak response overall lacking focus on the demands of the h demonstrates isolated or imprecise knowledge and understanding h demonstrates undeveloped analysis with descriptive application to the context and lacking focus on the h makes judgements or proposes solutions based on assertions 1-5 marks Section C 21 Economic factors are the most important external factor influencing the costs and demand of a business. To what extent do you agree? (25 marks) Marks for this : AO1 = 5, AO2 = 4, AO3 = 6 and AO4 = 10 h demonstrate knowledge and understanding of relevant issues such as economic factors, costs and demand (AO1) h be applied to the external environment (AO2) h analyse the possible impact of economic factors on the cost and demand of a business (AO3) h evaluate qualitative information to make an informed judgement on the extent to which economic factors are the most important influence on a business (AO4) Reasons why economic factors are the most important factor: h Interest rates will affect the cost of borrowing, particularly for highly geared firms h Interest rates will also affect the exchange rate which will determine the cost of imports and the price of exports h Interest rates will also affect consumer demand, particularly for income elastic products Page 8 AQA A Level Business Mark Scheme
h Taxation has a direct effect upon costs e.g. excise duties on fuel, as well as the price of goods to consumers through VAT h Inflation has a direct effect upon business costs and may force firms to increase their prices, leading to a fall in demand h Different stages of the business cycle e.g. boom and recession, will have a direct effect upon costs and demand Reasons why economic factors are not the most important factor: h Political government policies through legislation, trade sanctions h Social changes in consumer tastes will affect demand h Environmental firms face increased costs from the need to take more care of the environment, businesses with a good environmental record could enjoy increased demand h Technological developments could initially increase costs, but lead to long term efficiencies. New products could create increased demand Overall: h Economic factors can have a significant influence on the costs and demand of a business h Economic factors could have a positive influence on the costs of demand or a negative influence on the costs and demand of a business, for example, a reduction in interest rates could reduce a business s costs as well as the costs of consumers h Other elements of the external environment may have a more significant influence on the costs and demand of a business, for example, an increase in the minimum wage may have a bigger influence on the costs of a business than an increase in interest rates h The relative importance of economic factors on the costs and demand of a business will depend on a number of factors such as the type of product, the market that the business operates in, the price and income elasticity of the businesses product as well as how effectively a business can anticipate and respond to economic factors 22 To what extent are financial ratios valuable when assessing the performance of a public limited company? Justify your answer. (25 marks) Marks for this : AO1 = 5, AO2 = 4, AO3 = 6 and AO4 = 10 h demonstrate knowledge and understanding of relevant issues such as a public limited company and financial ratios (AO1). h be applied to a public limited company (AO2). h analyse the value of ratio analysis when assessing business performance (AO3). h evaluate the relative value of financial rations when assessing the performance of a public limited company (AO4) Reasons why financial ratios are valuable: h Public limited companies need to file their accounts with companies house so that the public has access to them h Ratio analysis can allow investors to make a more informed decision as to whether or not to invest in that particular public limited company AQA A Level Business Mark Scheme Page 9
h Existing shareholders can make a judgement as to the efficiency of the business based on ratio analysis and can then decide whether or not they still want to invest in the business h Enables comparisons to be made with previous years as well as other public limited companies, for example, competitors h Enables the plc to compare itself with industry standards h Financial reporting standards should ensure that the data used for ratio analysis for public limited companies is based upon the same principles h Ratios provide useful indicators related to profitability, liquidity, gearing and financial efficiency which can then be used to improve key aspects of the business Limitations of financial ratios: h There are other methods of assessing business performance which may be of more value when assessing the business performance of a public limited company than simply using ratio analysis, for example, Kaplan and Norton s balanced scorecard and/ or Elkington s triple bottom and line h Marketing, human resources and operational data can also be used to assess business performance h There has been evidence in the past to suggest that some public companies use techniques to make their accounts look more favourable which could limit the use of financial ratios as a technique for assessing business performance h External factors have a significant effect upon performance, which ratios may not account for h Ratios are often based upon historical data, indicating past not current performance and may therefore not be a true indicator or future/ long-term performance Overall: h Ratios are valuable in allowing public limited companies and stakeholders of the business to assess the performance of the business, for example, making a judgement as to its efficiency h Accuracy and reliability of the accounts will affect the value of ratio analysis as a method of assessing business performance h They are used to assess performance alongside non-financial indicators such as the businesses performance in relation to corporate social responsibility h The recognition that they act as valuable indicators of performance, but further investigation of the reasons for the figures needs to be undertaken Page 10 AQA A Level Business Mark Scheme
Section D 23 In recent years, many Western companies have adopted a strategy of market development by focusing on selling their products to consumers in international markets. To what extent do you think a strategy of market development will inevitably lead to business success? Justify your answer. (25 marks) Marks for this : AO1 = 5, AO2 = 4, AO3 = 6 and AO4 = 10 h demonstrate knowledge and understanding of relevant issues such as market development and international markets (AO1) h be applied to businesses selling products in international markets (AO2) h analyse the reasons why (or why not) market development may lead to success (AO3) h evaluate the extent to which market development will inevitability lead to business success (AO4) Reasons why market development may lead to success: h Market development involves selling existing products to new markets h Opportunities to sell to a much bigger international markets e.g. China and India have huge populations h Increased sales revenue and opportunity to generate increased profits h Increased demand could create economies of scale h Opportunity to develop a global reputation by targeting international markets h Some international markets may have greater rates of economic growth than domestic markets Reasons why market development may not lead to success: h Increased risk resulting from selling to a new market h Different language and culture may require changes in the product and the way it is marketed h Infrastructure in some international markets may not be so well developed, resulting in distribution difficulties h Different rules and regulations plus increased bureaucracy may increase costs and make it more difficult to enter emerging markets h Exchange rate fluctuations may affect the price of exported products Overall: h Selling products in international markets can allow businesses to increase sales revenue whilst also lowering their costs via economies of scale h Success of a market development strategy will depend on the international market chosen, the method of entering the international market, the degree of market research into the new market and also how competitive the product is compared to both domestic and international rivals h Emphasis on ing the word inevitable AQA A Level Business Mark Scheme Page 11
24 As a result of the growth in e-commerce, to what extent do you agree that distribution is now the most important element of the marketing mix for a retailer? Justify your answer. (25 marks) Marks for this : AO1 = 5, AO2 = 4, AO3 = 6 and AO4 = 10 h demonstrate knowledge and understanding of relevant issues such as distribution, e-commerce and the marketing mix (AO1) h be applied to a retail context (AO2) h analyse the reasons why (or why not) distribution may or may not be the most important element of the marketing mix (AO3) h evaluate the extent to which market distribution is the most important element (AO4) Reasons why distribution is the most important element of the marketing mix: h Ensuring fast and efficient delivery could be an important USP as customers may choose which retailer they shop with depending on how efficient the retailers delivery is h Consumers increasingly expect the convenience of having products delivered to their home or the availability of click and collect services h Sophisticated warehouse and logistics systems are integral for any successful retailer offering e-commerce h Many e-commerce retailers do not have physical shops/ retail outlets, as a result distribution is crucial for enabling customers to receive and return goods easily Reasons why distribution is not the most important element of the marketing mix: h The actual product must meet customer s expectations h The competitive prices that retailers are able to offer is often an important factor for consumers h Process is crucial when shopping via e-commerce. How easy it is to navigate the e-commerce platform and make a purchase can be a deciding factor when shopping online h E-commerce requires effective digital marketing to promote products as well as a valuable market research tool Overall: h A recognition that it now has become increasingly important to focus on distribution especially for retailers that do not have retail outlets h The extent to which distribution is the most important element of the marketing mix is dependent upon the type of product and market h Ease of shopping i.e. process is also extremely important when shopping online h An appreciation that an effective marketing mix requires all elements contributing and being inter dependent Page 12 AQA A Level Business Mark Scheme