Unit 19 and 12 Markers
Unit 19 and 12 Markers
Unit 19 and 12 Markers
Q1.
More families are choosing to stay in the UK for their holidays. Sunny Rooms’ owners
want to attract some of the wealthier visitors to Cornwall who would have normally gone
abroad. They are considering two options to achieve this:
Recommend to the owners of Sunny Rooms which option would be better for them.
Use the text above to support your answer.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Page 1 of 23
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
(Total 9 marks)
Q2.
Bambino Parties
Sonya has been running Bambino Parties for two years. Last year she made a
profit of £8 000 and now wants to increase the number of parties by 20%.
A friend recently started to work for Sonya on a part time basis. She designs
backgrounds for parties and these have proved very popular. Her friend has
asked if she can become a partner in Bambino Parties. She is willing to invest
£3000 into the business in return for 50% of the profits and will work full time to
help expand the business.
When Sonya takes a booking for a party she asks for a 10% deposit and then
receives the rest of the agreed price after the party. Her suppliers, people who
provide venues, catering, and birthday cakes, expect to be paid in advance.
She is worried about the effect this will have on cash flow.
Sonya has produced a cash flow forecast.
Balance brought
(1 300) (4 400) (400) (1 000)
forward
Balance carried
(4 400) (400) (1 000) 2 700
forward
Sonya wants to have a website designed to promote her business, this will cost £4 800.
She is considering the following two options to pay for the website:
Page 2 of 23
• A bank loan for £4 800 to be repaid over 2 years
• Take her friend on as a partner.
Recommend which is the better option for Sonya to take. Give reasons for your advice.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
(Total 9 marks)
Q3.
Page 3 of 23
owners are keen to merge with Hey Presto. Christine is unsure if merging is the
best way for Hey Presto to expand. She believes that continuing to buy new
vans each year from Hey Presto’s profits might be a better idea.
Christine would also like to make the business more environmentally friendly.
She is considering replacing several diesel vehicles with electric vans, which
are more expensive to buy, but are cheaper to run and are less polluting.
• continuing to buy new vans from the profits the business makes
• merging with its competitor, Fast Track Ltd.
Advise Hey Presto on which of these two methods of expanding the business would be
more suitable for the business. Use the text above to support your answer.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
(Total 9 marks)
Q4.
Tasty Snacks
Page 4 of 23
Jenny is studying for her A-levels. At the same time, she enjoys working part
time in a local café in the village where she lives. She has noticed that the
prices charged to customers in the café seem to be much higher than the actual
costs of making the meals and drinks. She is sure that the owners must be
making a good profit. Jenny is now considering whether she should carry on
with her studies or whether she should just leave school and set up her own
café.
Jenny could set up the café in the village where she lives which is in a tourist
area. She is also considering a busier but more expensive location such as the
shopping centre in the town near to where she goes to school.
A recent advert has caught her attention. It is advertising ‘Franchise
opportunities with well known fast food brands’. She would need at least £5000
to take up one of these opportunities. Jenny is unsure whether to set up the
café as a sole trader or as a franchise.
Jenny is unsure where the best place would be to locate her café. She is considering two
locations:
Advise Jenny which is likely to be the best option. Give reasons for your advice.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Page 5 of 23
_______________________________________________________________________
_______________________________________________________________________
(Total 9 marks)
Q5.
The demand for PP Ltd’s products has increased and the managers want to open a new
factory. It is considering two possible locations in:
• the UK or
• China.
Advise PP Ltd’s managers on which is likely to be the best option. Give reasons for your
advice.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Page 6 of 23
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
(Total 9 marks)
Q6.
Apple Inc
In 2004 Apple closed all production facilities in the USA to help save costs.
Production was outsourced to China.
In 2013, a newspaper reported that a factory based in China was paying their
workers £1.12 per hour or a salary of £180 per month. They work an average of
10 hours per day. Chinese people queue up for work and say conditions are
better than other factories in the area.
Apple has a code of conduct for these factories. They carry out regular
inspections on working conditions. In 2014 these inspections increased by 40%.
Apple works closely with these factories, and have paid for 60 000 employees
to go on college courses in China.
China is a growing market for Apple accounting for 25% of their sales in 2015.
This is an 84% increase on 2014.
In 2015 Apple made a net profit of $54 000 million.
Analyse the impact on Apple of moving production facilities to China. In your answer you
should consider:
• Ethical considerations
• Financial implications
You must evaluate which area has seen the biggest impact. Use evidence to support your
answer.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Page 7 of 23
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
(Total 12 marks)
Q7.
Thorntons Chocolate
Thorntons’ chocolates are made at its factory in Derbyshire. It employs
experienced and highly skilled chocolate makers to design products and
oversee production. It has approximately 200 stores throughout the UK.
At its store in Derby, Thorntons has successfully introduced job production
where a chocolate maker shows customers how the delicious treats are made.
Unique premium products can be made to order exactly as the customer
requests. The store in Derby was chosen as it has lots of space for the
production equipment. It is located near to the factory and each day a chocolate
Page 8 of 23
maker from there is selected to be sent to the store.
Thorntons offer franchising, called ‘Thorntons In Your Store’. The franchise is
offered to existing business owners, such as card shops, who allocate space to
sell Thorntons’ products. The franchise fee is £1000 for five years with the
buyer paying for the fixtures and fittings needed. Predicted sales are between
£80 000 and £250 000. To support the business owners Thorntons offer training
and help with sales and customer service.
People in the UK like chocolate, but they’re eating less. The value of UK
chocolate sales is growing but the amount of chocolate sold is falling.
Customers are now buying chocolate as a treat. A third of British chocolate
buyers splash out on premium products.
Thorntons want to increase sales and are considering two options in the UK to achieve
this.
• introducing job production in most of its existing stores within the next five years
or
• offering more ‘Thorntons In Your Store’ franchising
Evaluate which of these two options will have the biggest impact on Thorntons’ sales.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Page 9 of 23
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
(Total 12 marks)
Q8.
TradeUp
The demand for some second-hand products, such as mobile phones, changes
quickly. Amelia needs to make sure that her prices are competitive with other
second-hand retailers otherwise she will lose customers.
(£ 000)
Sales revenue 140
Cost of sales 84
Gross profit 56
Amelia has always liked her location in a busy town centre and has never had
any direct competition. This location has provided Amelia with loyal customers
who like the convenience of being able to visit her store when they are in town
shopping. However, another retailer located nearby has announced that it will
start to offer a similar service to TradeUp. Amelia has heard that a unit on an
out-of-town retail park has become available. She has found out that although
the size of the unit at the retail park is bigger than her current location, the rent
would be £825 per month, which is lower than her current payment of £1100 per
month. There is a bus link every hour to the retail park and lots of free parking;
however not all her current employees can drive.
Recommend whether Amelia should relocate her TradeUp store from the town centre to
the retail park.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Page 10 of 23
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
(Total 9 marks)
Page 11 of 23
Mark schemes
Q1.
Areas of possible analysis:
• cost involved in buying two new hotels compared with upgrading the existing
properties
• the short / long term benefits of either / both choices
• whether wealthier guests would accept an upgraded former low-cost hotel
• no longer have one owner to manage each hotel if there are now 6
• staffing implications of extra hotels
• need to improve standard of service in upmarket hotels
• unsure if reluctance to travel abroad will go on for a long time.
Notes:
NB Assume that the response is contextual unless the candidate is writing exclusively
about another business.
AO3 also assesses students’ quality of written communication. When deciding on the AO3
level to be awarded, consider the degree to which the student orders and communicates
his / her ideas.
In addition, and separately, award marks for evaluation using the grid below.
Students are evaluating which business expansion method would be better for Sunny
Rooms Ltd’s owners. The chosen method must be clearly supported to access E2 and not
simply be a reiteration of previously made arguments. An alternative method may be
offered or a combination of the two stated methods, but again this must be justified in
clear terms to be awarded E2 marks.
Page 12 of 23
occasional errors in accepted
conventions of written communication.
Q2.
[AO2 = 3 AO3 = 6]
Indicative content:
Application Analysis/evaluation
Page 13 of 23
the partner’s £3000 investment, how
will they pay for the £1800 left?
They may still need a loan or a large
overdraft so until this is arranged
The £3000 will come into the they won’t be able to go ahead with
business immediately but will expect the website.
a share of the profits
The investment is low compared
50% of last year’s profit would mean with the return she will get at the
Sonya would have to giveher end of the first year. This will cost
partner £4 000. Sonya more than the loan and she
will lose complete control of her
business. However her friend may
leave if she does not make her a
partner.
[9]
Q3.
Possible areas for discussion include:
Organic growth
• simplifies decision making – does not have to take FT’s views into account
• avoids reliance on FT, unknown quantity
• have used this method successfully to date.
Merger
• fast way to grow, especially with new competition
• allows expansion to a new city with established contacts
• cost saving, probably be able to get rid of duplicated support staff.
In addition and separately award marks for evaluation using the grid below
Notes:
AO3 also assesses candidates’ quality of written communication. When deciding on the
AO3 level to be awarded, consider the degree to which the candidate orders and
communicates his/her ideas.
A clear judgement is one that follows logically from the arguments raised elsewhere in the
response. The judgment made is unambiguous and realistic with the candidate having
Page 14 of 23
articulated the reason(s) for this particular choice, rather than leaving it to the examiner to
infer the reason(s).
Judgement is being made on which methods of expanding the business would be more
suitable for Hey Presto.
Q4.
Possible areas for discussion include:
Village location:
• likely to cost less to buy / rent and run
• convenient for Jenny
• tourist area so will get customers
• likely to have less competition.
Note:
Page 15 of 23
AO3 also assesses candidates’ quality of written communication. When deciding on the
AO3 level to be awarded, consider the degree to which the candidate orders and
communicates his / her ideas.
Q5.
Areas for discussion might include the following:
Expanding in UK
• familiar with business / consumer laws
• transport is easier / cheaper to UK / EU customers
• less ‘fear of the unknown’
• no language problems
• removes the worry of fluctuating exchange rates.
Expanding to China
• cheaper costs
• abundant labour force
• less likely to have poor labour relations
• get a foothold in an emerging economy.
Page 16 of 23
0 No valid response. 0
Note:
AO3 also assesses students’ quality of written communication. When deciding on the AO3
level to be awarded, consider the degree to which the student orders and communicates
his / her ideas.
In addition and separately award marks for evaluation using the grid below.
Q6.
[AO1 = 3 AO2 = 3 AO3 = 6]
Page 17 of 23
• Applies knowledge and understanding to the context and AO2
starts to draw together several functional areas of
business.
2 Sound analysis and evaluation of topics in isolation of 4–6
their interdependence based on the context.
• A line of reasoning, with a conclusion that has some AO3
justification.
• One business area is analysed independently. AO3
• Applies some knowledge and understanding to the AO2
context.
1 Basic generic discussion of topics. 1–3
• A basic understanding of business concepts in isolation. AO1
• A basic understanding of one or more business AO1
concepts. AO1
• Partial relevance to the question.
Indicative content:
Finance – production costs Employees paid £1.12 per However Apple brings jobs
wages lower, need to hour or £180 month much to the area and provides
maintain profits. Other lower than other parts of better working conditions
costs higher. the world. than other companies,
60 000 employees been therefore if they withdraw
sent on training courses conditions will get worse
for free. Checks for these workers.
increasing.
Page 18 of 23
Marketing – negative PR The newspaper article has This may reduce sales as
been written with some fewer buyers demand
negative statements about Apple products. However
Apple and the marketing their code of conduct
department will need to suggests that they take
respond to this this seriously and are
funding checks and
initiatives to improve the
situation. Their profit and
sales would not suggest
that this is having an
impact on sales.
Q7.
[AO1 = 3 AO2 = 3 AO3 = 6]
Page 19 of 23
their interdependence based on the context.
• A line of reasoning, with a conclusion that has some
justification.
• One business area is analysed independently.
• Applies some knowledge and understanding to the
context.
Indicative content:
Page 20 of 23
Needs a trained Some stores may not have the
chocolate maker space for the equipment and with
to operate. less skilled chocolate makers the
products may not be to the quality
that customers request or produced
in the time expected. In the long run
this would increase sales but as it is
likely to take at least 5 years may be
too slow for them to achieve their
objective.
Q8.
[AO2 = 3 AO3 = 6]
Indicative content:
Application Analysis/evaluation
Page 21 of 23
Amelia is currently located in a busy Proximity to market is an important
town centre factor of location for Amelia, as a
store like TradeUp should be near
to potential customers and passing
trade. Her current location has
provided Amelia with lots of regular
customers who like the convenient
location of TradeUp. If someone has
a DVD to sell to TradeUp, they are
unlikely to want to travel to an out-
of-town location because it would
probably not be worth it for the
money they will make. People now
have lots of options for buying and
selling goods and if her store is not
in a convenient location then
customers are more likely to use
eBay or Marketplace to trade their
goods.
No direct competition, but another As Amelia has never had any direct
retailer soon to offer a similar competition this means that anyone
buy/exchange service in the local area wanting to buy, sell
or exchange their goods with a high
street retailer would have used
TradeUp. This has given Amelia lots
of regular customers who return to
TradeUp. Although another retailer
is due to offer a similar service,
Amelia is experienced in this market
and if she continues to offer the
same service, they should stay loyal
to her. The new competition may
also have an impact on the buying
and selling prices at Amelia’s
TradeUp store. She might have to
pay more for goods being traded in
and lower her selling prices in order
to remain competitive.
Page 22 of 23
There is a bus link that goes to the
retail park every hour but waiting for
an hour for a bus would
inconvenience customers used to
walking into town to visit TradeUp.
There is also the additional cost of
taking the bus as well as the time
this would take.
Retail unit is much bigger than Amelia could use the extra space to
current store with lower rent redesign her store and make it more
attractive to customers. Having to
pay £275 less rent a month (£3300
per year) would reduce Amelia’s
costs, however it is likely that she
would have to spend any spare
money on marketing to attract
customers to her out-of-town
location as she would have less
passing trade. As rent is a fixed cost
Amelia must pay this no matter how
much revenue she makes, therefore
lower is an important factor to
consider.
Evaluation/Conclusion
• Amelia must consider whether the reduction in rent at the retail park is big enough to
justify losing the convenience of her current location and her regular customers.
• Moving to the bigger store at the retail park would incur other costs for Amelia, such
as buying extra fixtures and fittings and recruitment costs – will she make enough
revenue to cover this?
• Does Amelia need the additional space that the retail store offers? Although the rent
is lower, she will have to spend more on fixtures, fittings and stock to fill the store.
[9]
Page 23 of 23