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1A Answer
C - Introduction
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1B answer
D - Remuneration
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1C answer
Award 1 mark for identification of a drawback, plus 2 further marks for explaining this drawback up to a total of 3 marks.
Between batches, machinery will need to be reset for the next batch (1) therefore causing workers to waste time (1). As a result, the cost of each item produced will increase (1).
Batch production requires stocks of raw materials to be held (1) therefore more cash will be tied up in stock holding (1). Thus, less cash will be available to fund other projects within the business (1).
Accept any other appropriate response. Answers that list more than one drawback with no explanation will be awarded a maximum of 1 mark.
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Between batches, machinery will need to be reset for the next batch (1) therefore causing workers to waste time (1). As a result, the cost of each item produced will increase (1).
Batch production requires stocks of raw materials to be held (1) therefore more cash will be tied up in stock holding (1). Thus, less cash will be available to fund other projects within the business (1).
Accept any other appropriate response. Answers that list more than one drawback with no explanation will be awarded a maximum of 1 mark.
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1d answer
Award 1 mark for identification of a benefit, plus 2 further marks for explaining this benefit up to a total of 3 marks.
Loan capital allows large sums of capital to be accessed immediately (1) which will allow the business to exploit any gaps in the market it may have found (1). Therefore, allowing the business to increase its market share (1).
Loan capital means that new shares do not have to be issued (1) which will result in owners not having to dilute their ownership of the business (1). Therefore, the business is less likely to be at risk of a takeover (1).
Accept any other appropriate response. Answers that list more than one benefit with no explanation will be awarded a maximum of 1 mark.
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Loan capital allows large sums of capital to be accessed immediately (1) which will allow the business to exploit any gaps in the market it may have found (1). Therefore, allowing the business to increase its market share (1).
Loan capital means that new shares do not have to be issued (1) which will result in owners not having to dilute their ownership of the business (1). Therefore, the business is less likely to be at risk of a takeover (1).
Accept any other appropriate response. Answers that list more than one benefit with no explanation will be awarded a maximum of 1 mark.
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2a answer
B, C
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2b answer
B, E
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2c answer
Substitution into correct formula:
((£500 000 ÷ 5) ÷ £50 000) x 100 (1)
Answer: 200% (1)
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((£500 000 ÷ 5) ÷ £50 000) x 100 (1)
Answer: 200% (1)
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2d answer
Award 1 mark for identification of an impact, plus 2 further marks for explaining this impact up to a total of 3 marks.
This will require extra quality control checks (1) therefore workers will need to be trained to spot defects (1). Thus, the cost of producing each item will rise (1).
This could differentiate the business’ products (1) therefore the business could charge a premium price (1). This will result in an increase in sales revenue (1).
Accept any other appropriate response. Answers that list more than one impact with no explanation will be awarded a maximum of 1 mark.
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This will require extra quality control checks (1) therefore workers will need to be trained to spot defects (1). Thus, the cost of producing each item will rise (1).
This could differentiate the business’ products (1) therefore the business could charge a premium price (1). This will result in an increase in sales revenue (1).
Accept any other appropriate response. Answers that list more than one impact with no explanation will be awarded a maximum of 1 mark.
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2e answer
Award 1 mark for identification of a disadvantage, plus 2 further marks for explaining this disadvantage up to a total of 3 marks.
Raw materials may arrive late (1) therefore workers will not be able to produce products (1). As a result, the productivity of the business will fall (1).
The wrong products may be delivered to customers (1). Therefore, the likelihood of repeat purchase will fall (1). This could result in the business facing a fall in future sales (1).
Accept any other appropriate response. Answers that list more than one disadvantage with no explanation will be awarded a maximum of 1 mark.
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Raw materials may arrive late (1) therefore workers will not be able to produce products (1). As a result, the productivity of the business will fall (1).
The wrong products may be delivered to customers (1). Therefore, the likelihood of repeat purchase will fall (1). This could result in the business facing a fall in future sales (1).
Accept any other appropriate response. Answers that list more than one disadvantage with no explanation will be awarded a maximum of 1 mark.
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3a answer
D
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3b answer
Substitution into correct formula:
0.4 x £150 million (1)
Answer: £60 million (1)
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0.4 x £150 million (1)
Answer: £60 million (1)
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3c answer
Award 1 mark for identification of a drawback, plus 2 further marks for explaining this drawback up to a total of 3 marks.
The business will now face an extra tax on its imported raw materials (1). Therefore, the costs of the business will increase (1). As a result, the profitability from importing will fall (1).
This will make it harder for the business to compete with businesses located abroad (1). As a result, the business will struggle to enter new markets (1). This will restrict the growth of the business (1).
Accept any other appropriate response. Answers that list more than one drawback with no explanation will be awarded a maximum of 1 mark.
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The business will now face an extra tax on its imported raw materials (1). Therefore, the costs of the business will increase (1). As a result, the profitability from importing will fall (1).
This will make it harder for the business to compete with businesses located abroad (1). As a result, the business will struggle to enter new markets (1). This will restrict the growth of the business (1).
Accept any other appropriate response. Answers that list more than one drawback with no explanation will be awarded a maximum of 1 mark.
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3d answer
Award 1 mark for identification of a benefit, plus 2 further marks for explaining this benefit up to a total of 3 marks.
This will increase worker motivation (1) because workers will strive to meet their individual targets (1). This will increase worker productivity (1).
Employees will work harder (1) because if they meet their individual targets they may get a bonus (1). As a result, customers are less likely to receive poor customer service (1).
Accept any other appropriate response. Answers that list more than one benefit with no explanation will be awarded a maximum of 1 mark.
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This will increase worker motivation (1) because workers will strive to meet their individual targets (1). This will increase worker productivity (1).
Employees will work harder (1) because if they meet their individual targets they may get a bonus (1). As a result, customers are less likely to receive poor customer service (1).
Accept any other appropriate response. Answers that list more than one benefit with no explanation will be awarded a maximum of 1 mark.
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3e answer
This business will not have a common culture (AO1b).
Workers could potentially lack direction (AO1b).
This means that the workers are less likely to care about their work. This could lead to a fall in the quality of their work, reducing consumer satisfaction (AO3a).
This could lead to lower worker motivation. This could cause a fall in productivity, which would cause the cost per unit to increase (AO3a).
• Demonstrates accurate knowledge and understanding of business concepts and issues throughout, including appropriate use of business terminology (AO1b).
• Deconstructs business information and/or issues, finding detailed interconnected points with logical chains of reasoning (AO3a).
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Workers could potentially lack direction (AO1b).
This means that the workers are less likely to care about their work. This could lead to a fall in the quality of their work, reducing consumer satisfaction (AO3a).
This could lead to lower worker motivation. This could cause a fall in productivity, which would cause the cost per unit to increase (AO3a).
• Demonstrates accurate knowledge and understanding of business concepts and issues throughout, including appropriate use of business terminology (AO1b).
• Deconstructs business information and/or issues, finding detailed interconnected points with logical chains of reasoning (AO3a).
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4a answer
Award up to 2 marks for linked points outlining a suitable impact on Netflix from an increase in competition. Award a maximum of 1 mark if points are not linked.
Netflix may have to reduce its monthly subscription prices (1) in order to prevent subscribers switching to Amazon Prime (1).
Netflix may have to invest even more money in new programmes such as ‘Stranger Things’ (1). This will reduce Netflix’s profitability (1).
Do not accept an impact of increased competition that would not relate to Netflix. For example, they will now have to manufacture new products to become more competitive.
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Netflix may have to reduce its monthly subscription prices (1) in order to prevent subscribers switching to Amazon Prime (1).
Netflix may have to invest even more money in new programmes such as ‘Stranger Things’ (1). This will reduce Netflix’s profitability (1).
Do not accept an impact of increased competition that would not relate to Netflix. For example, they will now have to manufacture new products to become more competitive.
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4b answer
Netflix can now take advantage of lower fixed costs than rivals such as itv1 (AO2).
Netflix will now find it easier to sell its video streaming service in over 190 countries worldwide, since the internet is available in virtually every country (AO2).
Therefore, Netflix will benefit from a lower break even point compared to rival companies (AO3a).
Therefore, Netflix will be able to increase its revenues, since it can now be accessed by a global market of potential subscribers (AO3a).
• 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 (AO3a).
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Netflix will now find it easier to sell its video streaming service in over 190 countries worldwide, since the internet is available in virtually every country (AO2).
Therefore, Netflix will benefit from a lower break even point compared to rival companies (AO3a).
Therefore, Netflix will be able to increase its revenues, since it can now be accessed by a global market of potential subscribers (AO3a).
• 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 (AO3a).
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5a answer
Substitution into correct formula:
$6 779 511 - $4 591 476 (1)
Answer: $2 188 035 (1)
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$6 779 511 - $4 591 476 (1)
Answer: $2 188 035 (1)
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5b answer
Substitution into correct formula:
($402 648 ÷ $5 504 656) x 100 (1)
Answer: 7.31%
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($402 648 ÷ $5 504 656) x 100 (1)
Answer: 7.31%
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5c answer
The increase in price of £1.50 per month could cause consumers to switch to rival providers, such as Amazon Prime (AO2).
By raising the price, each subscriber to the streaming service may generate more gross profit (AO2).
This means Netflix may start to lose sales revenue and market share to its rivals (AO3a).
This may provide Netflix with more retained profit to reinvest in extending its library of programmes (AO3a).
• 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 (AO3a).
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By raising the price, each subscriber to the streaming service may generate more gross profit (AO2).
This means Netflix may start to lose sales revenue and market share to its rivals (AO3a).
This may provide Netflix with more retained profit to reinvest in extending its library of programmes (AO3a).
• 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 (AO3a).
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6a answer
Award 1 mark for stating one benefit to Netflix from producing its ‘own original streaming content’.
May gain more subscribers (1). May gain a competitive advantage over Amazon Prime (1). It may make it harder for new video streaming service providers to enter the market (1).
Accept any other appropriate response. Do not accept benefits that would not be appropriate for Netflix. For example, Netflix will be able to sell more products.
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May gain more subscribers (1). May gain a competitive advantage over Amazon Prime (1). It may make it harder for new video streaming service providers to enter the market (1).
Accept any other appropriate response. Do not accept benefits that would not be appropriate for Netflix. For example, Netflix will be able to sell more products.
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6b answer
Award up to 2 marks for linked points outlining an advantage for Netflix of being a public limited company. Award a maximum of 1 mark if points are not linked.
Netflix can now issue more shares to raise capital, (1) therefore allowing it to fund expansion into China (1).
Netflix now has more credibility with banks (1) therefore it can borrow money more cheaply to fund new and original programmes (1).
Do not accept advantages of being a public limited company that would not relate to Netflix. For example, Netflix is now protected if somebody sues them for injuring themselves.
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Netflix can now issue more shares to raise capital, (1) therefore allowing it to fund expansion into China (1).
Netflix now has more credibility with banks (1) therefore it can borrow money more cheaply to fund new and original programmes (1).
Do not accept advantages of being a public limited company that would not relate to Netflix. For example, Netflix is now protected if somebody sues them for injuring themselves.
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6c answer
Increasing special offers will make Netflix appear better value than rival video streaming providers, such as Amazon Prime (AO2).
This will make the service more attractive to Chinese consumers since they will now be able to stream films and programmes that are focused on China and do not have English as their main language (AO2).
Therefore, Chinese consumers are more likely to start a trial subscription since it will only cost them a small amount of money in the short-term (AO3a).
As a result, Netflix is more likely to have a service that meets customer needs, therefore enabling it to gain sales compared to domestic Chinese rivals (AO3a).
However, without the correct video content, that meets the needs of the Chinese market, the special offers provided will have a limited impact on allowing Netflix to successfully enter the Chinese market (AO3b).
However, there are other factors that are important in allowing Netflix to successfully enter the Chinese market. For instance, even if the product meets Chinese needs, if it is too expensive potential consumers will not choose to subscribe (AO3b).
• 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 (AO3a).
• Makes a judgement, providing a clear justification based on a thorough evaluation of business information and issues relevant to the choice made (AO3b).
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This will make the service more attractive to Chinese consumers since they will now be able to stream films and programmes that are focused on China and do not have English as their main language (AO2).
Therefore, Chinese consumers are more likely to start a trial subscription since it will only cost them a small amount of money in the short-term (AO3a).
As a result, Netflix is more likely to have a service that meets customer needs, therefore enabling it to gain sales compared to domestic Chinese rivals (AO3a).
However, without the correct video content, that meets the needs of the Chinese market, the special offers provided will have a limited impact on allowing Netflix to successfully enter the Chinese market (AO3b).
However, there are other factors that are important in allowing Netflix to successfully enter the Chinese market. For instance, even if the product meets Chinese needs, if it is too expensive potential consumers will not choose to subscribe (AO3b).
• 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 (AO3a).
• Makes a judgement, providing a clear justification based on a thorough evaluation of business information and issues relevant to the choice made (AO3b).
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7a answer
Award 1 mark for a type of social media.
Facebook (1) Instagram (1) Snapchat (1) Twitter (1) Pinterest (1)
Award any other appropriate type of social media that a business could use.
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Facebook (1) Instagram (1) Snapchat (1) Twitter (1) Pinterest (1)
Award any other appropriate type of social media that a business could use.
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7b answer
September
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7c answer
Award up to 2 marks for linked points outlining a reason why Kylie Cosmetics have chosen not to test its products on animals. Award a maximum of 1 mark if points are not linked.
This makes the brand appear more ethical (1) therefore it makes its cosmetics more attractive to teenage girls (1). It reduces the likelihood of negative media attention (1) therefore reducing the chances of a damaging social media campaign that could reduce make-up sales (1).
Do not accept reasons that would not be appropriate for Kylie Cosmetics. For example, to avoid protests from anti-fur protestors.
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This makes the brand appear more ethical (1) therefore it makes its cosmetics more attractive to teenage girls (1). It reduces the likelihood of negative media attention (1) therefore reducing the chances of a damaging social media campaign that could reduce make-up sales (1).
Do not accept reasons that would not be appropriate for Kylie Cosmetics. For example, to avoid protests from anti-fur protestors.
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7d answer
Increasing advertising using social media will allow Kylie Cosmetics to interact with its target market of teenage girls (AO2).
Limited-time product launches mean that girls will be worried that they may not be able to purchase the latest Kylie Jenner lip kit (AO2).
Therefore, girls will be able to access beauty tips and find out the launch dates of Kylie Cosmetics products. Therefore, the target market will be more likely to purchase Kylie Cosmetics products, resulting in higher sales volumes (AO3a).
Therefore, sales volumes will be high since the target market will not want to be disappointed since the products sell out quickly (AO3a).
However, this relies on girls using social media to interact with Kylie Jenner and downloading her app. With so many other companies using social media, this form of advertising may become ineffective and sales may not increase by as much as expected (AO3b).
However, some girls may become frustrated with the brand if they want to purchase the products, but cannot because they are constantly out of stock. Therefore, they may switch to rival make-up providers causing sales to fall (AO3b).
• 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 (AO3a).
• Makes a judgement, providing a clear justification based on a thorough evaluation of business information and issues relevant to the choice made (AO3b).
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Limited-time product launches mean that girls will be worried that they may not be able to purchase the latest Kylie Jenner lip kit (AO2).
Therefore, girls will be able to access beauty tips and find out the launch dates of Kylie Cosmetics products. Therefore, the target market will be more likely to purchase Kylie Cosmetics products, resulting in higher sales volumes (AO3a).
Therefore, sales volumes will be high since the target market will not want to be disappointed since the products sell out quickly (AO3a).
However, this relies on girls using social media to interact with Kylie Jenner and downloading her app. With so many other companies using social media, this form of advertising may become ineffective and sales may not increase by as much as expected (AO3b).
However, some girls may become frustrated with the brand if they want to purchase the products, but cannot because they are constantly out of stock. Therefore, they may switch to rival make-up providers causing sales to fall (AO3b).
• 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 (AO3a).
• Makes a judgement, providing a clear justification based on a thorough evaluation of business information and issues relevant to the choice made (AO3b).
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7e answer
This provides Kylie Cosmetics with a clear set of consumers to focus on (AO1b).
This makes it easier for Kylie Cosmetics to produce products that meet customer needs (AO1b).
Therefore, Kylie can use her app to interact with the target teenage girl market allowing the company to strengthen its brand (AO2). This will allow Kylie Cosmetics to introduce new ranges of make-up such as foundation and mascara that will suit the skin of teenage girls (AO2).
This allows Kylie Cosmetics to charge a premium price, resulting in higher profit margins on each item sold providing a competitive advantage (AO3a).
This will lead to an increase in the volume of products sold by Kylie Cosmetics, leading to increased sales revenues and larger market share, which will increase competitive advantage (AO3a).
However, teenage girls are less likely to repeat purchase since the market for cosmetics is very competitive and tastes and preferences in the teenage market can change rapidly reducing competitive advantage (AO3b).
However, the target market is teenagers who will have a much lower income than other market segments. Therefore, there is a limit as to how many make-up items a teenage girl can afford to purchase. This could reduce competitive advantage compared to a broader focused company such as L’Oreal (AO3b).
• Demonstrates accurate knowledge and understanding of business concepts and issues throughout, including appropriate use of business terminology (AO1b).
• 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 (AO3a).
• Draws a valid and well-reasoned conclusion based on a thorough evaluation of business information and issues (AO3b).
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This makes it easier for Kylie Cosmetics to produce products that meet customer needs (AO1b).
Therefore, Kylie can use her app to interact with the target teenage girl market allowing the company to strengthen its brand (AO2). This will allow Kylie Cosmetics to introduce new ranges of make-up such as foundation and mascara that will suit the skin of teenage girls (AO2).
This allows Kylie Cosmetics to charge a premium price, resulting in higher profit margins on each item sold providing a competitive advantage (AO3a).
This will lead to an increase in the volume of products sold by Kylie Cosmetics, leading to increased sales revenues and larger market share, which will increase competitive advantage (AO3a).
However, teenage girls are less likely to repeat purchase since the market for cosmetics is very competitive and tastes and preferences in the teenage market can change rapidly reducing competitive advantage (AO3b).
However, the target market is teenagers who will have a much lower income than other market segments. Therefore, there is a limit as to how many make-up items a teenage girl can afford to purchase. This could reduce competitive advantage compared to a broader focused company such as L’Oreal (AO3b).
• Demonstrates accurate knowledge and understanding of business concepts and issues throughout, including appropriate use of business terminology (AO1b).
• 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 (AO3a).
• Draws a valid and well-reasoned conclusion based on a thorough evaluation of business information and issues (AO3b).
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