™

Cambridge IGCSE

BUSINESS STUDIES 0450/21

Paper 2 Case Study May/June 2023
INSERT 1 hour 30 minutes

INFORMATION
• This insert contains the case study.
*9557593015-I*

• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.

This document has 4 pages. Any blank pages are indicated.

06_0450_21_2023_1.15
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 2

Vegetable Palace (VP)

VP was started 10 years ago in country Z. It is a public limited company. VP has a chain of 500 fast-food
restaurants that operate across country Z. The VP brand is famous for its vegetarian food, this means
none of its meals contain meat.

VP has a head office in Main City where all the directors and senior managers work. There are many
barriers to communication. Each VP restaurant has a Manager, an Assistant Manager and 50 employees
who cook and serve the meals. Restaurant Managers are often very busy and they are considering
delegating some of their tasks to the Assistant Managers.

The ingredients for the restaurants are ordered in bulk by head office and then distributed from its
warehouse to each of the restaurants. However, some senior managers think that Restaurant Managers
should purchase their own ingredients from local suppliers. This would mean the ingredients would be
fresher and would allow variations in the meals served.

VP wants to expand into another country. It will choose between the two countries shown in Appendix
2. VP will also need to decide how to enter a new market in another country. It has the option of forming
a joint venture with another business or franchising the VP brand. The choice of finance will need to be
considered for the expansion and the amount of finance will depend on the option chosen.

Appendix 1

Advertisement for VP's restaurants

Choose VP for the finest vegetarian meals. Our service is the fastest possible!

You will receive your meal in less than 5 minutes – guaranteed!

Delicious and varied meals for even the biggest of appetites and all at competitive prices.

New meals are being introduced all the time.

There is a VP restaurant near you – we look forward to serving you soon.

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Appendix 2

Summary of the two possible countries that VP could choose to locate its new restaurants.

Country A Country B

Average variable cost Average variable cost

Raw materials
$6 per meal $2 per meal

Low unemployment High unemployment

Labour
$10 per hour for each employee $5 per hour for each employee

Many competitors Few competitors

Market
Average price per meal = $20 Average price per meal = $10

Appendix 3

Email from VP’s Managing Director to VP’s Marketing Director

To: VP’s Marketing Director

From: VP’s Managing Director

Date: 31 March 2023

Re: Economic changes in country Z

Did you see the news this morning that interest rates will be raised from 3% to 5% later today? This will
have several effects on our business in country Z.

The news also said that the exchange rate in country Z has depreciated. We will have to consider how
this will affect our business, especially as we import 30% of our ingredients into country Z.

There are also new legal controls being introduced that mean we have to list all the ingredients used in
each of our meals on the menu. We do reprint menus every time we change the meals, but it is something
to consider.

Speak later today.

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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 06_0450_21_2023_1.15

 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/22

Paper 2 Case Study May/June 2023
INSERT 1 hour 30 minutes

INFORMATION
• This insert contains the case study.
*2035001524-I*

• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.

This document has 4 pages. Any blank pages are indicated.

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 2

Everyone Theatre (ET)

Zane and Zaara are both actors. They plan to start up a theatre in a low-income area of Main City. Zane
and Zaara believe that helping the community is as important as being successful entrepreneurs.

The theatre will be a private sector business and Zane and Zaara have to decide whether to start up as
an unincorporated business (partnership) or as a limited company. Zane is planning to prepare a cash-flow
forecast for the first year. Zaara knows they will need to set business objectives for the theatre and also
decide on a leadership style to use when managing employees. ET will have 24 part-time employees
as shown in the organisational chart in Appendix 1.

Zane and Zaara plan to put on performances in the evenings for local people and tourists. There will be
100 seats in the theatre but not all the seats will be sold if the price is too high. The Marketing Manager,
Zaara, will need to decide which performances to put on, what price to charge and which refreshments
to sell. Zaara will also need to decide between the two possible options for the first performance when
the theatre opens. Information on the two options is shown in Appendix 2.

In the daytime the theatre building will be used by Daycare, a local social enterprise. Daycare takes care
of young children up to the age of 5 so that low-income family members can go out to work. It also
provides education for the children which helps their development and progress before they start school.
Some of Daycare’s objectives are different to those of ET.

Appendix 1

Proposed organisational chart for the theatre

Marketing Manager (Zaara) Finance and Administration

Manager (Zane)

Backstage e.g. Actors Promotion Cleaners Ticket office

costumes and (10) (2) (3) (3)
scenery
(6)

Note: The numbers in brackets are the number of part-time employees who work in each department.

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Appendix 2

Forecast data for the two possible options for ET’s first performance at the theatre

For each performance Option 1 Option 2

Number of actors/employees 7 24

Average wage cost per actor/employee $30 $10

All other costs including scenery, costumes and

$1000 $2000
promotion

Forecast revenue assuming all 100 seats are sold $1000 $2500

Appendix 3

Email from Zane to Zaara

To: Zaara

From: Zane

Date: 1 April 2023

We want to support the local community and we need to make decisions about the following.

Should we:

• Pay fair wages even though they may be higher than those paid by competing theatres?
• Only buy costumes produced in the local community?
• Purchase all refreshments from suppliers that do not pollute the environment?

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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 06_0450_22_2023_1.14

 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/23

Paper 2 Case Study May/June 2023
INSERT 1 hour 30 minutes

INFORMATION
• This insert contains the case study.
*3747335787-I*

• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.

This document has 4 pages. Any blank pages are indicated.

06_0450_23_2023_1.13
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 2

Regency Rugs (RR)

RR manufactures rugs made from wool. It only sells its products in country Z. Many of RR’s competitors
are multinational companies. RR is a private limited company which has been operating for 5 years and
has a reputation for excellent customer service. RR’s directors want the business to expand but are
aware that this can have problems as well as benefits.

RR produces machine manufactured rugs in its factory. These rugs are standardised and have a similar
design so they are quick to produce. They are sold at a low price.

RR’s Operations Manager wants to increase the productivity of the workers in the factory. This could
be achieved by introducing new technology or by increasing employee training. The cost of both options
will need to be considered.

RR’s directors are considering expanding by selling its rugs in new markets in other countries. The
Managing Director thinks that using ecommerce will be the best way to achieve this expansion. A website
would need to be created to enable the business to take orders for their rugs and to receive payments
from customers. RR will need to communicate the expansion plans to its employees.

The Marketing Manager knows that RR needs to identify a suitable method of promotion for its rugs
when it enters the new markets. Market research has been carried out to help identify the best method
of promotion to use. An extract from this research can be found in Appendix 1.

Appendix 1

Extract from the market research results for the new markets in other countries

90
80
70
% of population

60

50
40
30
20

10
0
watch TV watch sport drive a car

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Appendix 2

Organisational chart for RR

Managing Director

Finance Director Operations Director Marketing Director Human Resources

Director

Financial Factory Manager Sales Manager Administration officer

Assistants
(2)
Factory Supervisors Salesperson
(3) (3)

Production employees
(30)

Appendix 3

Extract from RR’s income statement

2021 2022

Revenue $25m $32m

Cost of Sales $10m $16m

Expenses $10m $8m

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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 06_0450_23_2023_1.13

Cambridge IGCSE™

BUSINESS STUDIES 0450/11

Paper 1 Short Answer/Data Response May/June 2023
MARK SCHEME
Maximum Mark: 80

Published

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

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

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the May/June 2023 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 23 printed pages.

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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers. They should be applied alongside the
specific content of the mark scheme or generic level descriptors for a question. Each question paper and mark scheme will also comply with these
marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

 the specific content of the mark scheme or the generic level descriptors for the question
 the specific skills defined in the mark scheme or in the generic level descriptors for the question
 the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

 marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit is given for valid answers which go beyond
the scope of the syllabus and mark scheme, referring to your Team Leader as appropriate
 marks are awarded when candidates clearly demonstrate what they know and can do
 marks are not deducted for errors
 marks are not deducted for omissions
 answers should only be judged on the quality of spelling, punctuation and grammar when these features are specifically assessed by the
question as indicated by the mark scheme. The meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed instructions or in the application of generic level
descriptors.

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GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question (however; the use of the full mark range may
be limited according to the quality of the candidate responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should not be awarded with grade thresholds or
grade descriptors in mind.

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Social Science-Specific Marking Principles
(for point-based marking)

1 Components using point-based marking:

 Point marking is often used to reward knowledge, understanding and application of skills. We give credit where the candidate’s answer
shows relevant knowledge, understanding and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly convey the same meaning (unless the mark
scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they are correct
c DO credit answers where candidates give more than one correct answer in one prompt/numbered/scaffolded space where extended
writing is required rather than list-type answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required. (Check for evidence it is understood and not used
wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already credited unless the language itself is being tested.
This applies equally to ‘mirror statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of syllabus terms must allow for clear and
unambiguous separation from other syllabus terms with which they may be confused (e.g. Corrasion/Corrosion)

2 Presentation of mark scheme:

 Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
 Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
 Content in the answer column in brackets is for examiner information/context to clarify the marking but is not required to earn the mark
(except Accounting syllabuses where they indicate negative numbers).

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3 Calculation questions:
 The mark scheme will show the steps in the most likely correct method(s), the mark for each step, the correct answer(s) and the mark
for each answer
 If working/explanation is considered essential for full credit, this will be indicated in the question paper and in the mark scheme. In all
other instances, the correct answer to a calculation should be given full credit, even if no supporting working is shown.
 Where the candidate uses a valid method which is not covered by the mark scheme, award equivalent marks for reaching equivalent
stages.
 Where an answer makes use of a candidate’s own incorrect figure from previous working, the ‘own figure rule’ applies: full marks will be
given if a correct and complete method is used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

4 Annotation:
 For point marking, ticks can be used to indicate correct answers and crosses can be used to indicate wrong answers. There is no direct
relationship between ticks and marks. Ticks have no defined meaning for levels of response marking.
 For levels of response marking, the level awarded should be annotated on the script.
 Other annotations will be used by examiners as agreed during standardisation, and the meaning will be understood by all examiners
who marked that paper.

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0450/7115/0986 Business Studies - Paper 1 Annotations

Annotation Description Use

Tick Tick Indicates a point which is relevant and rewardable.

X Cross Indicates a point which is inaccurate/irrelevant and not rewardable.

BOD Benefit of doubt Used when the benefit of the doubt is given in order to reward a response.

TV Too vague Used when parts of the answer are considered to be too vague.

REP Repetition Indicates where content has been repeated.

NAQ Not answered Used when the answer or parts of the answer are not answering the question asked.
question

K Knowledge Indicates knowledge and understanding of the concepts and issues relating to the question.

APP Application Indicates appropriate reference to the information in the stem.

AN Analysis Indicates where the answer has demonstrated analysis.

EVAL Evaluation Indicates where the answer has demonstrated evaluation (part (e) questions only).

OFR Own figure rule If a mistake is made in a calculation, and the incorrect figure that results from the mistake is used for
subsequent calculations.

SEEN Noted but no Indicates that content has been recognised but not rewarded.
credit given

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Question Answer Marks Notes

1(a) Define ‘specialisation’. 2

Award 2 marks for a full definition. Award 1 mark for the

partial definition.

When people/businesses/countries concentrate on what

they are best at [2]
OR
Focusing an individual or group on one particular skill or
process that they are suited to or for which they possess the
correct skills [2]
OR
Way in which work is divided so each worker concentrates
on a specific task [1] so they become expert at it [1]

Partial definition, e.g. Workers do only one job [1] Other

appropriate responses should also be credited.

1(b) Identify two methods of production. 2 Only award the first two responses given.

Award 1 mark per method (max 2). Two from: Do not award answers such as lean production or cell
 Job (production) production.
 Batch (production)
 Flow/mass (production)

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Question Answer Marks Notes

1(c) Outline two advantages to WLT of using quality 4 To use words from the stem as application, the reference
assurance. must be appropriate, (i.e. make sense) in relation to the
point being made.
Award 1 mark for each relevant advantage (max 2).
The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2).  Carpets
 40%/exported
Points might include:  Globalisation
 Reduces faults/errors at all stages of production/fewer  Specialisation
mistakes [k] when making carpets [app]  60 (employees)
 Less waste/less rework (of faulty products) [k] which  Efficiency
could help improve efficiency [app]  Manufactures/production
 Encourages teamwork which may motivate worker [k]
among its 60 employees [app] Other appropriate examples can be credited.
 Fewer customer complaints/fewer customer
returns/replacements [k] Do not award:
 Better brand image/improve/maintain reputation [k]  improve customer satisfaction
 Reduce inspection costs/do not need to hire inspectors [k]  better quality
 Allows business to know at what stage mistakes happen  increase sales
[k]  lower cost on its own
 encourages teamwork/motivation on its own.
Other appropriate responses should also be credited.

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Question Answer Marks Notes

1(d) Explain one opportunity and one threat of globalisation 6 To use words from the stem as application, the reference
for WLT. must be appropriate, (i.e. make sense) in relation to the
point being made.
Award 1 mark for each opportunity/threat (max 2).
The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2). Award one mark for each relevant explanation  Carpets
(max 2).  40%/exported
 Specialisation
Opportunities might include:  60 (employees)
 Increase potential sales/access to more markets [k] as it  Efficiency
exports 40% of its products [app] increasing revenue  Manufactures/production
[an]
 Cheaper raw materials from other countries [k] to Other appropriate examples in context can be credited.
manufacture [app] which can improve the profit margin
[an] Accept sales as either [k] or [an] but not both.
 Labour may be cheaper [k] reducing (labour) costs [an]
 Economies of scale or relevant examples [k]
 Global brands are more recognised/desirable [k]

Threats might include:

 Increased competition [k] leading to a reduction in
market share [an]
 Employees may leave if WLT cannot pay as much as
international competitors [k] so may lose some of its 60
employees [app] increasing recruitment costs [an]
 Over dependent on supplies from other countries [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

1(e) Do you think improving labour skills is the best way for 6 This is a general question so there are no marks for
a manufacturing business to increase efficiency? application.
Justify your answer.
For evaluation to be awarded justification will usually follow
Award up to 2 marks for identification of relevant points. on from relevant analysis of points.
Award up to 2 marks for relevant development of points.
Award up to 2 marks for justified decision as to whether Do not award as [an]:
improving labour skills is the best way for a manufacturing  increased productivity
business to increase efficiency.  profitability
 lower cost
Points might include:  more output

Improving labour skills:

 Able to work faster [k] which will increase output per
worker [an]
 Fewer mistakes are made [k] leading to less
rework/wastage [an]
 Training takes employees time [k] which will lower
output in the short-term [an]
 Increase training costs [k] which will increase unit costs
[an]
 Workers are more versatile/ flexible [k]

Other ways might include:

 Automation/machinery [k] allows operation with fewer
employees [an]
 Lean production/Just-in-time/Kaizen [k] therefore lower
cost per unit [an]
 Improved motivation or methods of motivating, e.g. piece
rate [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

1(e) Justification might include:

Improving labour skills can mean that employees make
fewer mistakes.
[k] leading to less rework [an]. Whereas automation [k]
allows the business to operate with fewer employees [an].
Improving labour skills is the best way, because automation
could lead to redundancies which may demotivate the
remaining employees [eval] and potentially leading to less
output overall [eval].

Question Answer Marks Notes

2(a) Identify two reasons why a business might have cash- 2 Only award first two answers given.
flow problems.

Award 1 mark per reason (max 2). Points might include:

• Too much inventory
• Growing too quickly/overtrading
• Allow customers/ trade receivables too long to pay
• Paying suppliers/ trade payables too quickly
• Seasonal /low demand
• Poor (financial) planning

Other appropriate responses should also be credited.

2(b) Calculate X and Y. 2 $ sign not required.

Award 1 mark for each correct calculation (max 2).

X = $10 000 or 10
Y = $20 000 or 20

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Question Answer Marks Notes

2(c) Identify four examples of a cash inflow. 4 Only award the first four responses given.

Award 1 mark per example (max 4). Points might include: Can award ‘sales’ if the candidate does not identify specific
 (Cash) sales/revenue examples (of cash or credit sales).
 Payments from trade receivables/money from credit
sales Can allow ‘additional income from renting assets’.
 Grants
 Bank loan Allow Debt factoring if seen.
 Sponsorship
 Sale of non-current assets Do not award trade receivables alone.
 Funds from investors/share issue/capital introduced by
owner
 Dividends from shares in other companies
 Interest received from savings/bonds/investments

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(d) Explain one advantage and one disadvantage to LMA of 6 To use words from the stem as application, the reference
becoming a private limited company. must be appropriate, (i.e. make sense) in relation to the
point being made.
Award 1 mark for each relevant advantage/disadvantage
(max 2). Award 1 mark for each relevant reference to this The following words are likely to be appropriate for this
business (max 2). Award 1 mark for each relevant question:
explanation (max 2).  Restaurant
 Partnership
Points might include:  Remain small
Advantages:  20 years ago
 Limited liability [k] so personal assets are not at risk if  Family(-owned)
the business is not able to repay its debts/ only liable
for the amount invested [an] Other appropriate examples in context can be credited.
 Separate legal identity [k] so the owners are not held
responsible for the actions of the business [an] which is
not true for a partnership [app]
 Able to raise finance by selling shares [k] to fund
expansion [an] if the business decides it does not want
to remain small [app]
 Continuity [k]
 Can choose who buys shares [k]

Disadvantages:
 More legal formalities [k] which takes time away from
other activities [an] in the restaurant [app]
 Separation of ownership and control [k] so the owners
may not be involved /agree with business decisions
taken [an] as the directors may not listen to the family
[app]
 Expensive/time consuming to change to this form of
business organisation [k]
 Accounts must be made available [k]
 Dividends may/ be paid [k] reducing retained profit [an]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(e) Explain two reasons why a business might remain 6 This is a general question so there are no marks for
small. Which reason is likely to be most important? application.
Justify your answer.

Award up to 2 marks for identification of relevant points.

Award up to 2 marks for relevant development of points.
Award up to 2 marks for justified decision as to which reason
is likely to be the most important reason why a business
might remain small.

Points might include:

 Access to capital/lack of finance [k] which makes it
difficult to fund expansion/working capital [an]
 Small market [k] so there is not sufficient demand [an]
 Lack of skills/knowledge to expand/larger business
more difficult to manage [k] so more likely to make
mistakes if expand [an]
 Lack of workers [k]
 Type of industry/service industries (offer a personal
service)/specialised products [k] where close contact
maybe needed [an]
 Personal objectives/owner’s objectives or example such
as better communication with customers, keeping
control [k] which might help retain/increase customer
loyalty [an]
 Market dominated/controlled by a few large competitors
[k] so will struggle to attract more customers [an]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(e) Justification might include:

One reason is the size of the market [k] as there may be
insufficient customers [an]. Another reason is lack of finance
[k] making it difficult to fund expansion [an]. The size of
market is a more important reason why a business might
remain small as without customers there is no revenue
[eval], which is likely to reduce the need for finance anyway
[eval].

Question Answer Marks Notes

3(a) Define ‘job description’. 2

Award 2 marks for a full definition. Award 1 marks for a

partial definition.

Outlines the responsibilities and duties to be carried out by

someone employed to do a specific job [2]
OR
A list of the key points about a job, job title, key duties,
responsibilities, and accountabilities [2]
OR
A description of the tasks, role, and responsibilities of a
particular position [2]
OR
What the job entails/explains the job with a list of suitable
content [2]

Partial definition, e.g. What they must do in a job/list of

content [1]

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Question Answer Marks Notes

3(b) Identify two levels from Maslow’s hierarchy of needs. 2 Only award the first two responses given.
Do not award examples such as job security.
Award 1 mark per level (max 2). Two from: Do not award answers such as ‘psychological’ or ‘basic
 Physiological/physical needs’ as too vague.
 Safety/security
 Social/(love and) belonging
 Esteem
 Self-actualisation

3(c) Outline two factors DZD should consider when deciding 4 To use words from the stem as application, the reference
which applicants to recruit. must be appropriate, (i.e. make sense) in relation to the
point being made.
Award 1 mark for identification of each relevant
factor (max 2). The following words are likely to be appropriate for all
Award 1 mark for each relevant reference to this business responses on this question:
(max 2).  Delivery business or examples such as parcels
 60 employees
Points might include:  Large business
 Experience [k] of delivering parcels [app]  (20) vehicles
 Qualifications or relevant examples such as do they  Part-time
have a driving licence [k] to drive the (20) vehicles [app]  Planning to expand
 Skills or examples such as good at communication [k] as  Maslow
will work in a large business [app]  Human resource director
 Whether they match the requirements of business/job or
examples such as physical ability/know the area [k] Other appropriate examples in context can be credited.
willing to work part-time [app]
 Whether they match the culture of the business [k]
 Performance during interview/testing [k]
 Age [K]
 References [K]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

3(d) Explain two sources of finance DZD might use for the 6 To use words from the stem as application, the reference
new vehicles. must be appropriate, (i.e. make sense) in relation to the
point being made.
Award 1 mark for each relevant source of finance (max 2).
Award 1 mark for each relevant reference to this business The following words are likely to be appropriate for this
(max 2). question:
Award 1 mark for each relevant explanation (max 2).  Delivery business or examples such as parcels
 Planning to expand/expansion
Points might include:  Large business
 Bank loan [k] as able to purchase immediately [an] so  20 (vehicles)
there is no delay to the planned expansion [app]
 Retained profit [k] as it's a large business [app] as no Do not award ‘vehicles’ as application as stated in question.
need to repay [an] Other appropriate examples can be credited.
 Leasing [k] of the 20 [app] vehicles as do not need to Do not award short-term options such as overdraft as not
make a large initial payment [an] appropriate in this context.
 Hire purchase [k]
 Grant [k]
 Selling of assets [k]
 Owner’s capital/share issue [k]
 Debenture [k]
 Crowdfunding [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

3(e) Do you think a service business should only employ 6 This is a general question so there are no marks for
part-time workers? Justify your answer. application.

Award up to 2 marks for identification of relevant points. The focus should be on the benefit/cost to the business not
Award up to 2 marks for relevant development of points. the worker.
Award up to 2 marks for justified decision as to whether a
service business should only employ part-time workers.
Do not award points such as part-time workers are likely to
Points might include: be less tired, more motivated, lack skills, do not have a
contract.
Part-time:
 When not working no need to pay wages [k] helping to Do not award answers which confuse part-time with
reduce labour costs [an] temporary/seasonal workers.
 Need to recruit/train more employees [k] taking more
time/money [an]
 Could allow the business to recruit wider range of skills
[k]
 More flexible hours/less likely to take time off for
appointments [k]
 Easier to extend worker hours at busy times [k] or [an]
 Some employees may not be willing/want part-time jobs
[k] so may miss out on possible candidates if not
offered full-time option [an]

Full-time:
 Able to offer consistency of service [k] so could improve
reputation/increase customers [an]
 Workers may be committed to business [k] which could
increase the productivity of the business [an]
 Easier to communicate/update [k]
 Less workers needed [k]

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Question Answer Marks Notes

3(e) Other appropriate responses should also be credited.

Justification might include:

Part-time employees are only paid when they are working [k]
reducing labour costs [an]. However, consistency of service
may fall [k] which could damage the business reputation [an].
A service sector business especially should not have only
part-time employees as service quality is vital for customer
loyalty [eval] and therefore sales. [eval].

Question Answer Marks Notes

4(a) Identify two factors that might affect the accuracy of 2 Only award the first two answers given.
market research.

Award 1 mark per factor (max 2). Points might include:

 Sample size
 Sample chosen/who is asked
 Interviewer experience/interviewer bias
 Wording of the questions
 Who carried out research
 Age of information/when data gathered/information
might be out of date
 People’s actions do not always match what they say
 Anonymity
 Bots or use of AI

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(b) Identify two benefits to a business of using market 2 Only award the first two responses given.
segmentation.

Award 1 mark per benefit (max 2).

Points might include:

 Able to tailor goods to specific needs of segment/know
what to produce
 Identify gaps in the market
 To help decide best place to sell
 Research is simpler
 Help focus spending/make best use of resources
 Help target promotion/advertising
 Help set prices
 Help increase sales/revenue

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(c) Outline two ways NLR might respond to environmental 4 To use words from the stem as application, the reference
pressures. must be appropriate, (i.e. make sense) in relation to the
point being made.
Award 1 mark for identification of each relevant way (max 2).
The following words are likely to be appropriate for this
Award 1 mark for each relevant reference made to this question:
business (max 2). • Skincare or examples such as hand cream
• Packaging
Points might include: • 85% of consumers/customers
 Reduce amount of materials used/wastage [k] when • Product life cycle
making its skincare products [app] • Market research
 Use recycled materials [k] for the packaging [app] • Branded
 Develop environmentally friendly products [k] based on
its market research [app] Other appropriate examples can be credited.
 Buy energy efficient/environmentally friendly
machinery/use renewable energy [k] Do not award environmental pressures as [app] on its own
 Offer different sizes/only make to order/reduce number as stated in question.
of products available [k]
 Alter/reduce transport use [k]
 Promote/support environmentally friendly causes [k]
 Ask customers to reuse containers (when buying from
shops) [k] as 85% of consumers (want the business to
respond to environmental pressures) [app]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(d) Explain how NLR’s pricing decisions might be affected 6 Attract customers/To use words from the stem as
at two different stages of the product life cycle. application, the reference must be appropriate, (i.e. make
sense) in relation to the point being made.
Award 1 mark for each relevant stage of life cycle/pricing
method (max 2). The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2). Award 1 mark for each relevant explanation (max  Skincare or examples such as hand cream
2).  85%
 Market research
Points might include:  Packaging
 During introductory stage [k] the business may set a low  Environmental pressures
price to attract customers [an] to their hand cream [app]  Branded (product)
 At growth stage [k] prices may be lowered due to  Market segmentation
increased competition [an]
 At maturity stage [k] price is likely to be similar to Other appropriate examples in context can be credited.
competitors to retain market share [an] for the branded
products[app]
 During decline stage[k] discounts might be offered to
maintain sales/ sell of remaining inventory [an]
 Skimming pricing [k] can be used at the introductory
stage to recover development costs [an] of new
packaging [app]
 Penetration pricing [k] in some market segments [app]
 Cost plus pricing [k]
 Competitive pricing [k]
 Promotional pricing [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(e) Do you think promoting the brand image is the most 6 This is a general question so there are no marks for
important role of packaging? Justify your answer. application.

Award up to 2 marks for identification of relevant points.

Award up to 2 marks for relevant development of points.
Award up to 2 marks for justified decision as to whether
promoting the brand image is the most important role of
packaging.

Points might include:

 This can help the product attract customers/stand out
against competitor's products [k] which can help
increase/maintain sales [an] leading to higher revenue
[an]
 Protect the product [k] so the product does not get
damaged/can be kept fresh [an] which can help reduce
the amount of wastage [an]
 Ease of storage/transport [k] which could lead to lower
storage/transport costs [an]
 Provide information about the product [k]
 Legal requirements [k] as a business might have to
identify the ingredients to avoid legal action [an]
 Easy to open the container and use the product [k]

Justification might include:

Packaging helps the product stand out against competitor's
products [k] helping increase sales [an]. Protecting the
product is important [k]to keep the product fresh [an] This is
the most important role because damaged goods will not
sell [eval] Therefore, brand image is not the most important
role although customers need to be aware of the product, to
buy. [eval]

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Cambridge IGCSE™

BUSINESS STUDIES 0450/12

Paper 1 Short Answer/Data Response May/June 2023
MARK SCHEME
Maximum Mark: 80

Published

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

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

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the May/June 2023 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 24 printed pages.

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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers. They should be applied alongside the
specific content of the mark scheme or generic level descriptors for a question. Each question paper and mark scheme will also comply with these
marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

 the specific content of the mark scheme or the generic level descriptors for the question
 the specific skills defined in the mark scheme or in the generic level descriptors for the question
 the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

 marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit is given for valid answers which go beyond
the scope of the syllabus and mark scheme, referring to your Team Leader as appropriate
 marks are awarded when candidates clearly demonstrate what they know and can do
 marks are not deducted for errors
 marks are not deducted for omissions
 answers should only be judged on the quality of spelling, punctuation and grammar when these features are specifically assessed by the
question as indicated by the mark scheme. The meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed instructions or in the application of generic level
descriptors.

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GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question (however; the use of the full mark range may
be limited according to the quality of the candidate responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should not be awarded with grade thresholds or
grade descriptors in mind.

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Social Science-Specific Marking Principles
(for point-based marking)

1 Components using point-based marking:

 Point marking is often used to reward knowledge, understanding and application of skills. We give credit where the candidate’s answer
shows relevant knowledge, understanding and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly convey the same meaning (unless the mark
scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they are correct
c DO credit answers where candidates give more than one correct answer in one prompt/numbered/scaffolded space where extended
writing is required rather than list-type answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required. (Check for evidence it is understood and not used
wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already credited unless the language itself is being tested.
This applies equally to ‘mirror statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of syllabus terms must allow for clear and
unambiguous separation from other syllabus terms with which they may be confused (e.g. Corrasion/Corrosion)

2 Presentation of mark scheme:

 Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
 Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
 Content in the answer column in brackets is for examiner information/context to clarify the marking but is not required to earn the mark
(except Accounting syllabuses where they indicate negative numbers).

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3 Calculation questions:
 The mark scheme will show the steps in the most likely correct method(s), the mark for each step, the correct answer(s) and the mark
for each answer
 If working/explanation is considered essential for full credit, this will be indicated in the question paper and in the mark scheme. In all
other instances, the correct answer to a calculation should be given full credit, even if no supporting working is shown.
 Where the candidate uses a valid method which is not covered by the mark scheme, award equivalent marks for reaching equivalent
stages.
 Where an answer makes use of a candidate’s own incorrect figure from previous working, the ‘own figure rule’ applies: full marks will be
given if a correct and complete method is used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

4 Annotation:
 For point marking, ticks can be used to indicate correct answers and crosses can be used to indicate wrong answers. There is no direct
relationship between ticks and marks. Ticks have no defined meaning for levels of response marking.
 For levels of response marking, the level awarded should be annotated on the script.
 Other annotations will be used by examiners as agreed during standardisation, and the meaning will be understood by all examiners
who marked that paper.

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0450/7115/0986 Business Studies – Paper 1 Annotations

Annotation Description Use

Tick Tick Indicates a point which is relevant and rewardable.

X Cross Indicates a point which is inaccurate/irrelevant and not rewardable.

BOD Benefit of doubt Used when the benefit of the doubt is given in order to reward a response.

TV Too vague Used when parts of the answer are considered to be too vague.

REP Repetition Indicates where content has been repeated.

NAQ Not answered Used when the answer or parts of the answer are not answering the question asked.
question

K Knowledge Indicates knowledge and understanding of the concepts and issues relating to the question.

APP Application Indicates appropriate reference to the information in the stem.

AN Analysis Indicates where the answer has demonstrated analysis.

EVAL Evaluation Indicates where the answer has demonstrated evaluation (part (e) questions only).

OFR Own figure rule If a mistake is made in a calculation, and the incorrect figure that results from the mistake is used for
subsequent calculations.

SEEN Noted but no Indicates that content has been recognised but not rewarded.
credit given

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Question Answer Marks Notes

1(a) Identify two reasons why a business might offer training to its 2 Only award the first two responses given.
employees.

Award 1 mark per reason (max 2).

Points might include:

• To introduce a new process/new equipment
• Improve efficiency/productivity
• Increase output
• Reduce mistakes/fewer errors/better quality goods or services
• Improve employee skills
• Increase knowledge
• Improve motivation
• Help reduce labour turnover
• Decrease the chance of accidents
• Familiarise new employees with business/other employees

Other appropriate responses should also be credited.

1(b) Calculate the following values using Fig. 1.1: 2

Award 1 mark for each correct answer.

Break-even output: 500 (watches) [1]

Break-even revenue: $60 000 OR 60 000 [1]

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Question Answer Marks Notes

1(c) Outline two possible effects on FBW’s break-even chart if the prices of 4 To use words from the stem as application,
its products are increased. the reference must be appropriate (i.e.
make sense) in relation to the point being
Award 1 mark for each relevant effect (max 2). made.

Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be
appropriate for this question:
Points might include:  Watches
 Reduce/lower break-even output [k] below 500 units [app]  5 (employees)
 Increase the margin of safety [k] above 100 [app]  Training (every year)
 Increase contribution per unit [k] when using job production [app]  Job production
 Increase revenue [k] from sale of its watches [app]  600 units (sold)
 Reduce break-even revenue [k]  500 (break-even output)
 Increase profit margin [k]  100 (margin of safety)
 Increase (potential) profit/reduce (potential) loss [k]  $4000 (profit at 600 units)
 $60 000 (break even revenue)
Other appropriate responses should also be credited.
Other appropriate examples can be credited.

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Question Answer Marks Notes

1(d) Explain two benefits to FBW of having full-time employees. 6 To use words from the stem as application,
the reference must be appropriate (i.e. make
Award 1 mark for identification of each relevant benefit (max 2). sense) in relation to the point being made.

Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be
appropriate for this question:
Award 1 mark for each relevant explanation (max 2).  Watches
 5 (employees)
Points might include:  (Regular) training
 Workers likely to be more loyal/committed [k] so lower labour  Job production
turnover/lower cost of recruitment [an] for its 5 employees [app]  600 units sold
 Easy to communicate/update [k] when making its watches [app] so could  500 (break-even output)
be more efficient [an]
 Consistent standard of work [k] leading to better reputation [an] which is Other appropriate examples can be
helpful as using job production [app] credited.
 Fewer workers needed [k] so less training required [an]
 Less employees to manage [k] so managers can focus on other issues
[an]
 Employees become more familiar with the business [k]
 Always available/can find when needed [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

1(e) Do you think job production is the best method of production for a 6 This is a general question so there are no
small business to use? Justify your answer. marks for application.

Award up to 2 marks for identification of relevant points. Some points could be written as an advantage
or a disadvantage of each method but only
Award up to 2 marks for relevant development of points. award once.

Award up to 2 marks for a justified decision as to whether job production is Some points can be [k] or [an] but do not
the best method of production for a small business to use. award the same point twice.

Points might include:

Do not award:
Job production: Comparisons between batch and flow e.g.
 Meet exact customer requirements [k] which increases customer batch production not greatly affected by
loyalty/sales [an] machine breakdown, batch is flexible/can
 Unique/high-quality products [k] can charge higher price [an] change production easily as not appropriate
 Products made to order/can take a long time to make [k] so low output for this question.
[an]
 No economies of scale [k] leading to higher average cost [an]
 Skilled labour is needed [k] increases labour/training costs [an]
 Requires a lot of employees/labour intensive [k]

Batch production [k]:

 Some economies of scale [an]
 Able to produce more [an] so unit costs lower [an]
 Can produce range/variety of products [an]
 Demotivated employees [an] increasing labour turnover [an]
 Machines must be reset between batches [an]
 Added cost of moving/storing semi-finished goods [an]
 Warehouse space is needed [an]/increases storage costs [an]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

1(e) Justification might include:

Job production allows a business to produce goods that meet exact
customer demands [k] so able to charge a higher price [an]. However, skilled
labour can cost more [k] which can lead to high labour costs [an]. Overall, I
think job production is not the best method for a business, especially if it is
small as the number of sales may not cover the additional cost of the labour
[eval] so the business is unable to make a profit. [eval]

Question Answer Marks Notes

2(a) Identify two ways a business plan can help a business to reduce risk. 2 Only award the first two answers given.

Award 1 mark per way (max 2).

Points might include:

 Help secure funding/attract investors
 Can show whether/when extra finance needed/help budgeting
 Help set goals/objectives/provide sense of direction
 Help monitor/check/track progress
 Test feasibility of idea/identify demand
 Help set (suitable) prices
 Understand level/type of competition
 Help identify skills/employees needed
 Help allocate resources (appropriately)

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(b) Identify two possible reasons why a business might want to expand. 2 Only award the first two answers given.

Award 1 mark per reason (max 2).

Points might include:

 Increase sales/revenue
 Increase profit
 Widen customer base/target new markets
 Increase market share
 Increase reputation/more prestige/status
 Increase output
 Spread risk/diversify
 Gain economies of scale

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(c) Outline one advantage and one disadvantage to Gloria of using 4 To use words from the stem as application,
telephone calls as a method of communication with her employees. the reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant advantage/disadvantage
(max 2). The following words are likely to be
appropriate on this question:
Award 1 mark for each relevant reference to this business (max 2).  (House) cleaning
 4 employees
Points might include:  Sole trader
 Can help share her workload
Advantages:
 Instant/quick to contact [k] her 4 employees [app] Other appropriate examples can be
 Opportunity to get immediate feedback [k] about cleaning jobs [app] credited.
 Can talk to employees who are anywhere/elsewhere [k]
 Can leave a message/voice note [k]

Disadvantages:
 Technical problems e.g. no internet/signal [k] so will not help reduce her
workload [app]
 No hard copy/nothing to refer to [k]
 Receiver may not answer the phone/might be busy when call [k]
 Not face to face/no body language [k]
 May only be able to speak to one person at a time [k]
 Cannot show data/chart over a phone [k]
 Cost [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(d) Explain two factors Gloria should consider when deciding whether to 6 To use words from the stem as application,
take on a business partner. the reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant factor (max 2).
The following words are likely to be
Award 1 mark for each relevant reference to this business (max 2). appropriate for this question:
 (House) cleaning
Award 1 mark for each relevant explanation (max 2).  Expand/repair service
 4 employees
Points might include:  Effective communication is important
 Have to share responsibilities/management/control [k] of the cleaning  Reduce her workload
business [app] which could lead to conflict [an]  Sole trader
 Offer skills (or examples of) [k] which could lead to business  Market research
opportunities [an] such as the repair service [app]
 May offer experience/expertise/knowledge [k] increasing efficiency [an] Other appropriate examples can be
to help reduce the workload [app] credited.
 Access to finance/capital [k] so can grow faster/upgrade equipment [an]
making it easier to expand [app] Takes time to make decisions is [k] or [an]
 Different objectives/ways of working [k] which could lead to slower but do not award the same point twice.
decision-making/conflict [an]
 Whether want to share decision-making/take longer to make decisions Reduce workload can be [k], [app] or [an]
[k] but may lead to better decisions [an] but only award once.
 Someone to share risk/losses/costs [k]
 Whether wants/have to share any profit [k] compared to staying as a Conflict/argument is [an] only.
sole trader [app]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(e) Explain two methods of primary market research a business could use 6 This is a general question so there are no
to find out the demand for a new product or service. Which would be marks for application.
the best method to use? Justify your answer.
Some points could be written as either
Award up to 2 marks for identification of relevant points. advantages or disadvantages of different
methods but only award once.
Award up to 2 marks for relevant development of points.
Some points can be awarded as [k] or [an]
Award up to 2 marks for a justified decision as to which is the best method of but only award once.
primary market research for a small business to use to find out the demand
for a new product or service.

(Postal) questionnaire/survey [k] – apply to either method:

 Customer opinions/preferences/suggestions can be gathered [an]
 Large amounts of information can be collected [an]
 Detailed information can be gathered [an]
 Allows many people to be asked (the same questions) [an]
 Questions may be poorly worded/difficult to phrase questions
properly/people interpret questions in a different way [an]
 People may not tell the truth/say what they think sounds good [an]
 Customers may not complete/return the questionnaires [an]
 May have to pay someone with the right skills to design the
questionnaire properly [an] which increases the cost [an]

Online survey [k] – additional specific points

 Data can be quickly presented/analysed using IT tools [an]
 Fast/quicker response time (than other forms of survey) [an]
 Cheaper than interviews/postal questionnaire/focus group etc. [an]
 No representative needed to carry it out [an]

(Postal) questionnaire/survey [k] – additional specific points

 Carrying out questionnaire takes time/money [an]
 Analysing results takes time [an]

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Question Answer Marks Notes

2(e) Interview [k]

 Allows for detailed information to be gathered [an]
 Can explain questions [an]
 Interviewer bias possible (if interviewer is not properly trained) [an]
 Expensive [an]
 Time consuming to carry out [an]

Focus group [k]

 Highly detailed responses [an]
 Chance to ask follow-up questions [an]
 Some group members can influence what others say [an] leading to
unreliable results [an]
 Can only ask a few people [an]
 Expensive [an]
 Time consuming [an]

Observation [k]:
• Seeing what people do can be more accurate than what they say [an]
• More expensive (than other methods) [an]
• Test marketing/product trials [k]:
• Cost of any mistake is limited to a small output [an]
• Takes longer for final product to reach main market [an]

Other appropriate responses should also be credited.

Justification might include:

One method is a questionnaire [k] which allows many people to be asked the
same questions [an]. Another option is a focus group [k]. This might be better
because it could provide highly detailed responses [an]. Although fewer
people can be asked, the ability to ask follow-up questions is important
especially when offering a new product [eval] so the extra detail could allow
the business to make more informed decisions increasing the chances of
success [eval].

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Question Answer Marks Notes

3(a) Define ‘import tariff’. 2 First mark for understanding it is a tax.

Idea of from another/into the country is 1
Award 2 marks for a full definition. Award 1 mark for a partial definition. only.

A tax placed on imported goods when they arrive into a country [2]
OR
A specific form of tax imposed on imported goods [2]

Partial definition e.g. type of tax [1] OR tax on imported goods [1]

Other appropriate responses should also be credited.

3(b) Identify two reasons why some markets can become more competitive. 2 Only award the first two answers given.

Award 1 mark per reason (max 2). Do not award:

Factors affecting demand/spending patterns
Points might include: e.g. changes in population, spending on
 Globalisation/free trade advertising, lower prices/actions of
 Internet/ecommerce/social media/developments in technology competitors
 Improvements in transport/infrastructure
 New legal controls/provide grants/removal of tariffs/quotas
 Increase in competitors

Other appropriate responses should also be credited.

3(c) State the four stages of the business cycle. 2 Award the first four responses only.

Award 1 mark per stage (max 4). The order does not matter.

 Recession
 (Economic) growth
 Boom
 Slump/depression

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Question Answer Marks Notes

3(d) Explain one possible effect of the following changes on VVA when 6 To use words from the stem as application,
importing raw materials: the reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant effect [max 2].
The following words are likely to be
Award 1 mark for each relevant reference to this business [max 2]. appropriate for this question:
 School backpacks/bags
Award 1 mark for each relevant explanation [max 2].  45% (raw materials) / 55% locally
 Retailers
Points might include:  Increased level of competition

Introduction of import quotas in country X: Other appropriate examples can be credited.

 Limit/reduce the amount of imports [k] as import 45% of these [app]
which could reduce output/may have to find more (local) suppliers [an] Do not award: Tariff as [app].
 May mean have to find local/alternative suppliers/may not be able to
find suitable suppliers [k] leading to increase time/cost [an]
 Fewer imports possible [k] leading to fewer (potential) sales [an]
 Lower production [k]

Appreciation of country X's exchange rate:

 Imports become cheaper [k] reducing VVA’s costs [an] of its school bags
[app]
 Imports become cheaper [k] so may be able to lower prices [an]
 Lower import price [k] so could increase its profit margin [an]
 Imports become cheaper [k] so can import more [an]
 Can import more (materials) [k] so can increase output [an]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

3(e) Do you think retailers are the best channel of distribution for a 6 This is a general question so there are no
manufacturing business to use? Justify your answer. marks for application.

Award up to 2 marks for identification of relevant points. Points must focus on viewpoint of
manufacturing business.
Award up to 2 marks for relevant development of points.
Some points can be presented as
Award up to 2 marks for a justified decision as to whether using retailers is advantages/disadvantages of different
the best channel of distribution for a manufacturing business to use. channels but only award point once.

Points might include: Some points can be written as [k] or [an] but
only award once.
Retailers:
 Wide distribution/access to customers/sell in different places [k]
increase sales/revenue [an]
 Retailers will carry out/pay for advertising/promotional activities [k] raise
awareness/increase sales [an]
 Can sell in large quantities/higher sales [k]
 Manufacturer can hold less inventory [k] lower storage costs [an]
 Price may be higher [k] leading to fewer sales [an]
 No direct contact with customers [k] so difficult to build/maintain
customer relationship [an]
 Loss of (some) control of marketing mix/promotion/price/product [k]
 Retailer takes some of the profit [k] which reduces profit margin [an]
 Manufacturer must pay delivery costs to the retailers [k]

Other options could include:

Sell direct to customers/direct selling/online/internet/ecommerce open own
shops [k]
 All/more profit goes to manufacturer [an]
 Can sell at a lower price [an] leading to more sales [an]
 Can control all/more of the marketing [an]
 Allows for direct customer contact/feedback/market research [an]
 Increased delivery costs/customers over a wide area/[an]
 May need to employ extra workers (to manage paperwork/pack) [an]

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Question Answer Marks Notes

3(e) Use wholesalers [k]

 Wholesalers will buy in bulk/large amounts [an]
 Saves storage space for manufacturer [an]
 Loss of control over marketing mix [an]
 Takes part of the profit [an]
 Agents (when selling in other countries) [k]
 Have local market knowledge [an]

Other appropriate responses should also be credited.

Justification might include:

Retailers offer a wide distribution [k] which can help increase potential sales
[an]. Selling direct to customers [k] would mean the business could keep all
the profit [an]. I think selling to retailers is better as the high sales will
increase the total revenue [eval] which will offset the lower profit margin.
[eval]

Question Answer Marks Notes

4(a) Define ‘retained profit’. 2

Award 2 marks for a full definition. Award 1 mark for a partial definition.

Profit (left, or) reinvested back into the business, (after all payments have
been made) [2]
OR
Profit (remaining after all expenses, tax and dividends have been paid), which
is ploughed back into the business [2]

Partial definition e.g. profit /money to reinvest [1] OR profit left after dividends /
shareholders paid [1]

Other appropriate responses should be credited.

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Question Answer Marks Notes

4(b) Define ‘current assets’. 2

Award 2 marks for a full definition. Award 1 mark for a partial definition.

Items owned by/belong to business and used within one year [2]
OR
Resources that the business owns and expects to convert into cash before
the date of the next statement of financial position [2]

Partial definition e.g. items in the business for less than one year/12
months/within a financial year [1] OR assets owned

Other appropriate responses should be credited.

4(c) Outline two possible reasons why working capital is important for CPF. 4 To use words from the stem as application,
the reference must be appropriate (i.e. make
Award 1 mark for each relevant reason (max 2). sense) in relation to the point being made.

Award 1 mark for each relevant reference to this business (max 2) The following words are likely to be
appropriate for this question:
Points might include:  (4) shops/retailer/stores
 To pay day-to-day expenses/(short term) debts or examples such as pay  30 (employees)
wages [k] for its 30 employees [app]  Clothes
 To pay for unexpected expenses/emergencies [k] especially as the  Private limited company
business is looking to expand [app]  Plans to expand
 To ensure the business has a good credit reputation [k] for the 4 shops  Retained profit is low
[app]
 Ensures the business can take advantage of special offers/discounts on Other appropriate examples can be credited.
bulk purchases [k] of its clothes [app]
 To cope with seasonal demand [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(d) Explain one way each of the following stakeholder groups might be 6 To use words from the stem as application,
affected by CPF’s plans to expand its business. the reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant way (max 2).
The following words are likely to be
Award 1 mark for each relevant reference to this business (max 2). appropriate for this question:
 (4/new) shops/retailer/stores
Award 1 mark for each relevant explanation (max 2).  30 (employees)
 Clothes
Points might include:  Private limited company
 Low retained profit
Employees:
 Opportunities for promotion [k] for the 30 employees [app] so may be Other appropriate examples can be credited.
able to benefit from higher wages [an]
 Work extra hours [k] at the new shop [app] so gain extra payments/which Some points can be [k] or [an] but only
may lead to mistakes [an] award once.
 Greater variety/different tasks/work to do [k] making the work more
interesting/less boring for them [an]
 More job security [k] increasing motivation [an]
 Employees may have to move location [k] so long time to get to
work/travel costs increase [an]

Suppliers:
 Additional orders/sales/produce more [k] of clothing [app] leading to
additional revenue [an]
 Security/certainty of regular orders [k] so able to plan effectively [an]
 May struggle to meet extra demand [k]
 May have to distribute goods to a new area [k] increasing transport costs
[an]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(e) Do you think it is better for a private limited company to use debt (e.g. 6 This is a general question so there are no
a loan) or equity (issuing more shares) as a source of long-term marks for application.
finance? Justify your answer.
Some points could be written as either
Award up to 2 marks for identification of relevant points. advantages or disadvantages of different
sources but only award once.
Award up to 2 marks for relevant development of points.
Some points can be written as [k] or [an] but
Award up to 2 marks for a justified decision as to whether it is better for a only award a point once.
limited company to use debt (e.g. a loan) or equity (issue shares) as a source
of long-term finance.

Points might include:

Debt:
 May be difficult to raise additional finance [k] if banks/suppliers
concerned about its ability to repay existing loans [an]
 No change of ownership [k] so lenders have no say in decisions [an]
 Can receive all the money at once/at the same time [k]
 Must pay interest [k] which increases costs/cash flow problems [an]
 Need to repay [k]
 Need security [k] which can lose if unable to repay debt [an]

Equity/issue shares:
 No interest/finance costs to pay [k] so no extra cash outflows [an]
 Permanent source of capital/no need to repay [k]
 Can only sell to friends and family/small number of shareholders [k]
which can limit the amount of capital raised [an]
 Dividends expected/paid to shareholders [k] so less retained profit [an]
 Give up some ownership [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(e) Justification might include:

Using debt may be difficult to raise additional finance [k] if banks are
concerned about its ability to repay existing loans [an]. Selling shares
means no interest [k] so no extra cash outflows [an]. Equity is better because
if the business has financial difficulties debt is still expected to be repaid
[eval] which increases the risk of the business failure. [eval]

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Cambridge IGCSE™

BUSINESS STUDIES 0450/13

Paper 1 Short Answer/Data Response May/June 2023
MARK SCHEME
Maximum Mark: 80

Published

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

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

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the May/June 2023 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 24 printed pages.

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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers. They should be applied alongside the
specific content of the mark scheme or generic level descriptors for a question. Each question paper and mark scheme will also comply with these
marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

 the specific content of the mark scheme or the generic level descriptors for the question
 the specific skills defined in the mark scheme or in the generic level descriptors for the question
 the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

 marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit is given for valid answers which go beyond
the scope of the syllabus and mark scheme, referring to your Team Leader as appropriate
 marks are awarded when candidates clearly demonstrate what they know and can do
 marks are not deducted for errors
 marks are not deducted for omissions
 answers should only be judged on the quality of spelling, punctuation and grammar when these features are specifically assessed by the
question as indicated by the mark scheme. The meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed instructions or in the application of generic level
descriptors.

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GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question (however; the use of the full mark range may
be limited according to the quality of the candidate responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should not be awarded with grade thresholds or
grade descriptors in mind.

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Social Science-Specific Marking Principles
(for point-based marking)

1 Components using point-based marking:

 Point marking is often used to reward knowledge, understanding and application of skills. We give credit where the candidate’s answer
shows relevant knowledge, understanding and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly convey the same meaning (unless the mark
scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they are correct
c DO credit answers where candidates give more than one correct answer in one prompt/numbered/scaffolded space where extended
writing is required rather than list-type answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required. (Check for evidence it is understood and not used
wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already credited unless the language itself is being tested.
This applies equally to ‘mirror statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However, spellings of syllabus terms must allow for clear and
unambiguous separation from other syllabus terms with which they may be confused (e.g. Corrasion/Corrosion).

2 Presentation of mark scheme:

 Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
 Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
 Content in the answer column in brackets is for examiner information/context to clarify the marking but is not required to earn the mark
(except Accounting syllabuses where they indicate negative numbers).

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3 Calculation questions:
 The mark scheme will show the steps in the most likely correct method(s), the mark for each step, the correct answer(s) and the mark
for each answer.
 If working/explanation is considered essential for full credit, this will be indicated in the question paper and in the mark scheme. In all
other instances, the correct answer to a calculation should be given full credit, even if no supporting working is shown.
 Where the candidate uses a valid method which is not covered by the mark scheme, award equivalent marks for reaching equivalent
stages.
 Where an answer makes use of a candidate’s own incorrect figure from previous working, the ‘own figure rule’ applies: full marks will be
given if a correct and complete method is used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

4 Annotation:
 For point marking, ticks can be used to indicate correct answers and crosses can be used to indicate wrong answers. There is no direct
relationship between ticks and marks. Ticks have no defined meaning for levels of response marking.
 For levels of response marking, the level awarded should be annotated on the script.
 Other annotations will be used by examiners as agreed during standardisation, and the meaning will be understood by all examiners
who marked that paper.

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0450/7115/0986 Business Studies - Paper 1 Annotations

Annotation Description Use

Tick Tick Indicates a point which is relevant and rewardable.

X Cross Indicates a point which is inaccurate/irrelevant and not rewardable.

BOD Benefit of doubt Used when the benefit of the doubt is given in order to reward a response.

TV Too vague Used when parts of the answer are considered to be too vague.

REP Repetition Indicates where content has been repeated.

NAQ Not answered Used when the answer or parts of the answer are not answering the question asked.
question

K Knowledge Indicates knowledge and understanding of the concepts and issues relating to the question.

APP Application Indicates appropriate reference to the information in the stem.

AN Analysis Indicates where the answer has demonstrated analysis.

EVAL Evaluation Indicates where the answer has demonstrated evaluation (part (e) questions only).

OFR Own figure rule If a mistake is made in a calculation, and the incorrect figure that results from the mistake is used for
subsequent calculations.

SEEN Noted but no Indicates that content has been recognised but not rewarded.
credit given

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Question Answer Marks Notes

1(a) Define ‘mass market’. 2 Do not award:

Alternative words for mass e.g. big/large
Award 2 marks for a full definition. Award 1 mark for a partial definition. market.
Lots of sellers, lots of competitors, lots of
Where there is a very large number of sales of a product [2] products as this simply describes a market.
OR
Selling the same product to the whole market [2]
OR
A large market containing lots of customers buying similar products [2]

Partial definition e.g. lots of customers / lots of sales / lots of buyers [1]

1(b) Calculate X and Y. 2 $ sign is not required.

Award 1 mark for each correct calculation.

X: $60 000 or 60
Y: $80 000 or 80 or (80)

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Question Answer Marks Notes

1(c) Outline two reasons why managing cash flow might be important 4 To use words from the stem as application, the
for TDG. reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant reason (max 2).
The following words are likely to be appropriate
Award 1 mark for each relevant reference to this business (max 2). for this question:
 Bicycles/bikes
Points might include:  Retailer
 To be able to pay wages [k] to its 3 employees [app]  ($10 000) closing balance / cashflow
 Pay suppliers/trade payables [k] for the bikes [app] problem in September
 Pay expenses/heating/rent/advertising [k] to avoid cash flow problem  Customer loyalty
in September [app]  Mass market
 Repay (short-term) debts [k] of the retailer [app]  3 employees
 Predict/plan/prevent cash flow problems [k] such as the $80 000  $80 000 (cash outflow in September) –
shortfall [app] OFR
 Ensure business survival/continue [k]  $40 000(cash inflow in September)
 Cash available for emergency [k]
Other appropriate examples can be credited.
Other appropriate responses should also be credited.
Do not award:
 Invest/expand
 References to profit
 Know how to improve on own [tv]
 Support request for loan/finance

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Question Answer Marks Notes

1(d) Explain two ways TDG could overcome its short-term cash-flow 6 To use words from the stem as application, the
problem in September. reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant way (max 2).
The following words are likely to be appropriate
Award 1 mark for each relevant reference to this business (max 2). for this question:
 Bicycles / bikes
Award 1 mark for each relevant explanation (max 2).  Retailer
 –$10 000 (closing balance)
Points might include:  Customer loyalty
 Delay payments to suppliers [k] for its bicycles [app] keeping cash in  Mass market
the business for longer [an]  3 employees
 Ask/offer discounts so customers to pay quicker / insist on cash  $80 000 (cash outflow – OFR will apply)
sales [k] so business receives cash sooner [an] but may not help  $40 000
maintain customer loyalty [app]
 Overdraft [k] allows the business to have a negative cash balance Other appropriate examples can be credited.
[an] to cover the – $10 000 [app]
 Bank loan [k] to increase cash inflow [an] above $40 000 [app]  Analysis must show impact on cash flow.
 Delay/not purchase / buy cheaper equipment [k] which prevents cash
outflows [an] Do not award:
 Sell (non-current) assets [k] generates cash inflows [an]  Long-term solutions such as 'introduce
more capital / sell shares', retained profit
Other appropriate examples in context can be credited.  Decrease price / advertise on own
 References to raw materials / production

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Question Answer Marks Notes

1(e) Explain two methods a retailer could use to maintain customer 6 This is a general question so there are no
loyalty. Which would be the best method to use? Justify your marks for application.
answer.
For evaluation to be awarded justification will
Award up to 2 marks for identification of relevant points. usually follow on from relevant analysis of
points.
Award up to 2 marks for relevant development of points.
Analysis can be awarded for:
Award up to 2 marks for justified decision as to which is the best method  Explaining how method works
for a retailer to use to maintain customer loyalty.  Negatives of each method

Points might include: Do not award:

 Offer loyalty cards / offer points for every purchase / discount for  Develop / make new products as retailer.
regular/loyal customers [k] so incentive / reward to return [an]  Explanation of customer loyalty for AN.
 Train staff / offer good service/friendly conversations with customer e.g. 'so will keep coming back'. Needs to
[k] which would make them feel welcome [an] say why makes customers keep coming
 Communicate with customers or examples such as through back.
newsletters / social media [k] so they remember your business [an]  Ways to increase sales in general e.g.
 Ask for feedback / carry out market research [k] so know what is advertise / lower prices.
being sold matches customer needs [an]  Customer loyalty as [an] as in question.
 Introduce new / sell high-quality products [k]
 Resolve complaints quickly [k]
 Offer extra services or examples e.g. offer delivery / credit facilities
[k]

Other appropriate responses should also be credited.

Justification might include:

One method is a loyalty card [k] so there is an incentive to return [an]. It

could offer good service [k] so customers feel more welcome [an]. A good
service is better because this may not include any costs which a loyalty
card would [eval] which could help increase profit margin as well as
customer loyalty. [eval]

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Question Answer Marks Notes

2(a) Define ‘quality control’. 2 At end of production is +1 only.

Award 2 marks for a full definition. Award 1 mark for a partial definition. Do not award:
Reasons why quality control is carried out.
Checking of goods at the end of the production process (whether it is the Vague comments such as ensuring quality is
production of the product or a service) [2] good / whether product good enough, meeting
OR customers expectation/standards.
Checking the standard of goods through inspection [2]

Partial definition e.g.

 Checking the work [1]
 Making sure goods are up to standard [1]

2(b) Identify two ways a pressure group might try to influence business 2 Only award the first two responses given.
decisions.
Do not award:
Award 1 mark per way (max 2). Change laws
Spread awareness on own – need how.
Points might include:
 Create negative publicity / publish information about business / write
to newspaper
 Organise customer boycotts
 Organise demonstrations / protests / rally opposition
 Lobby/petition / send letters to government
 Demand interview with company
 Take legal action

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(c) State four benefits to a business of increasing efficiency. 4 Only award the first two responses given.

Award 1 mark for each relevant benefit (max 4). Do not award:
Lower labour turnover/less absenteeism
Points might include: More revenue/sales/profit.
 Reduce average/unit costs
 Fewer mistakes/errors
 Less waste
 Fewer materials needed
 Increase output
 Quicker/faster production
 Reduced inputs needed for the same level of output

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(d) Explain one external cost and one external benefit that may be 6 To use words from the stem as application, the
created by KCL’s business. reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant external cost/benefit
(max 2). The following words are likely to be appropriate
for this question:
Award 1 mark for each relevant reference to this business (max 2).  Paper/newspapers/books
 Wood (or other appropriate examples of
Award 1 mark for each relevant explanation (max 2). raw materials)
 Factory
Points might include:  Increase efficiency
 (Raw materials from) local suppliers
External cost:  Pressure groups
 Pollution/smoke/fumes created [k] from making paper [app] could  High level of inventory
damage health of people in the community [an]
 Congestion [k] caused by deliveries to the factory [app] so longer to Other appropriate examples in context can still
move about / slow down deliveries to other businesses [an] be credited.
 Use up natural resources [k] to obtain the wood [app] meaning fewer
resources available for other uses/future generations [an] Some points can be [k] or [an] but only award
 Destruction/spoil landscape [k] reducing tourism [an] once.

External benefit: Do not award:

 Provide jobs [k] as it uses local suppliers [app] so low(er) rates of Costs/benefit to business
unemployment [an] Uses of paper e.g. books/newspapers
 Help economic growth [k] which can result in additional taxes [an]
 Improved infrastructure/better road links [k] improving access for
local community/businesses [an]
 New production techniques may be introduced [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(e) Explain two factors a manufacturing business should consider 6 This is a general question so there are no
when deciding how much inventory to hold. Which factor is likely to marks for application.
be the most important? Justify your answer.
For evaluation to be awarded justification will
Award up to 2 marks for identification of relevant points. usually follow on from relevant analysis of
points.
Award up to 2 marks for relevant development of points.
Some points can be [k] or [an] but only award
Award up to 2 marks for justified decision as to which is the most once.
important factor for a manufacturing business to consider when deciding
how much inventory to hold. Watch for repetition e.g. high demand, low
demand so high/low inventory.
Points might include:
 Whether product is perishable or not / shelf life [k] to reduce the
amount of wastage [an]
 Level of demand / sales [k] as if high demand needs to hold high
inventory [an]
 Seasons / celebrations/festivals/predictability of demand [k]
 Storage space available [k] could increase storage costs [an]
 Cost of holding inventory [k] as high levels could increase cash
outflows [an]
 Method of production / level of output [k] as flow production may
require high levels of inventory [an]
 Amount of finance available (to buy inventory) [k] as this could cause
cash flow problems / cannot afford to hold large amount [an]
 Delivery / lead time / where products come from / reliability of
supplier [k] so production can continue / meet orders on time [an]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(e) Justification might include:

The amount of space available [k] as a larger warehouse may increase

storage costs [an]. Another factor is delivery time [k] as may need higher
levels of inventory to ensure production can continue [an]. Overall
delivery time is more important because if production stops, any costs
saved on storage may be lost as the business still have to pay its workers
[eval] and the lack of available products could lead to fewer sales. [eval]

Question Answer Marks Notes

3(a) Define ‘span of control’. 2

Award 2 marks for a full definition. Award 1 mark for a partial definition.

Number of subordinates reporting to each supervisor / manager [2]

OR
Number of subordinates / employees working (directly) under a manager
[2]

Partial definition e.g. whom you are responsible for [1] OR who reports to
one manager [1]

3(b) Identify two leadership styles. 2 Only award the first two responses.

Award 1 mark per leadership style (max 2). Do not award:

Descriptions of styles.
Points might include:
 Autocratic
 Democratic
 Laissez-faire

Other appropriate responses should also be credited.

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Question Answer Marks Notes

3(c) Outline two benefits to PCY of encouraging its managers to use 4 To use words from the stem as application, the
delegation. reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for each relevant benefit (max 2).
The following words are likely to be appropriate
Award 1 mark for each relevant reference to this business (max 2). for this question:
 (4) offices
Points might include:  500 (employees)
 Reduce managers’ workload / managers have time to focus on other  Insurance (services)
(important) tasks [k] such as how the business is  Business customers / farms / factories
organised/managed [app]  Leadership style
 Quality of managers’ work improves / managers likely to make fewer  Being ethical
mistakes [k] in the 4 offices [app]  Communication barriers
 Increase employee motivation [k] of its 500 employees [app]  Span of control
 Builds trust / better working relationship between managers and  Planning to change how business is
employees [k] which could influence its leadership style [app] managed / organised
 Way to develop employee skills / increase employee flexibility /
employees may have better knowledge of issue [k] at the insurance Other appropriate examples can be credited.
business [app] To access [k] – must indicate who the point
refers to e.g. reduce workload of manager.
Other appropriate responses should also be credited. Communication barriers is [app] only.

Do not award:
Benefits to employees e.g. feel trusted.

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Question Answer Marks Notes

3(d) Explain two possible reasons why being ethical is important to PCY. 6 To use words from the stem as application, the
reference must be appropriate (i.e. make
Award 1 mark for identification of each relevant reason (max 2). sense) in relation to the point being made.

Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be appropriate
for this question:
Award 1 mark for each relevant explanation (max 2).  4 offices
 500 employees
Points might include:  Insurance (services)
 Increased/retain sales / demand / customers [k] from farms /  Business customers / farms / factories
factories [app] leading to higher revenue [an]  Leadership style
 Build / better reputation / brand image [k] leading to better customer  Communication barriers
loyalty / sales / competitive advantage [an] for its insurance [app]  Span of control
 Help attract / motivate / retain employees [k] improving efficiency /  Delegation
better quality of service / less labour turnover [an] from its 500
employees [an] Other appropriate examples can be credited.
 Investors may be more likely / willing to invest [k] increasing the
amount of capital / funds [an] Some points can be [k] or [an] but only once
e.g. customer loyalty
Other appropriate responses should also be credited.
Do not award:
Comply with laws/less risk of legal as being
ethical is different to legal.
Examples of being unethical
Ways to be ethical.

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Question Answer Marks Notes

3(e) Do you think lack of feedback is the main barrier to effective 6 This is a general question so there are no
communication in a business? Justify your answer. marks for application.
For evaluation to be awarded justification will
Award up to 2 marks for identification of relevant points. usually follow on from relevant analysis of
Award up to 2 marks for relevant development of points. points.
Award up to 2 marks for justified decision as to whether the lack of
feedback is the main barrier to effective communication in a business. Knowledge can be awarded for:
Problems caused by lack of feedback e.g.
Points might include: mistakes, lower efficiency
Identify other communication barriers.
Lack of feedback:
 Do not know whether message has been understood [k] which could Analysis is for:
lead to errors / wrong actions taken [an] Development / impact of barrier on the
 Do not know whether recipient has received [k] which can lead to business.
delays [an]
Points can be written as either advantages /
Other barriers could include: disadvantages of different barrier but only
 Technical problems e.g. no signal/equipment breakdown [k] so award once e.g. not understood.
message cannot be sent / received [an]
 Too much information sent in message [k] which can lead to Some points can be [k] or [an] but only award
mistakes / slow down decision-making [an] once e.g. Understood, mistakes
 Jargon used / language [k] so receiver cannot understand [an] Lower quality is [an] only.
 Noise / distractions [k] so not able to hear the message [an]
 (Wrong) communication method used [k] so people are unable to Do not award:
access / read message [an] Reasons why communicate.
General issues of poor communication e.g. not
 Message has to pass through too many levels / employees [k] so
know what to do / what doing.
message gets distorted / lost [an]
Focus on why feedback is important or
 Send wrong message / send message to the wrong person [k] so the
problems of giving feedback e.g. demotivated.
actual message is never sent / received [an]
 Problems with receiver or examples e.g. receiver may not listen [k]

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Question Answer Marks Notes

3(e) Other appropriate responses should also be credited.

Justification might include:

Without feedback it is difficult to know whether the message has been

understood [k] which could lead to the wrong actions being taken [an].
There may be no internet signal [k] so the message cannot be sent [an].
Overall, the lack of feedback is the most important barrier because they
are more likely to know whether a technical problem has happened,
whereas with a lack of feedback they may not know until an error is made
[eval] damaging the business's reputation. [eval]

Question Answer Marks Notes

4(a) Identify two ways a government might support business start-ups. 2 Only award the first two responses given.

Award 1 mark per way (max 2). Do not award:

Vague answers such as cover costs, provide
Points might include: cash / money / invest / sponsor / incentives
 Offer financial support or examples such as grants / (low-cost) loans
 Provide training
 Provide information / advice / support/mentors
 Provide low-cost / rent-free property / location
 Offer lower tax rates / tax breaks / tax relief
 Encourage universities to make research facilities available
 Organise business fairs.

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(b) Identify two ways a market can be segmented. 2 Only award the first two responses given.

Award 1 mark per way (max 2). Can award:

 Demographic if age / gender / socio-
Points might include: economic group / social status/ethnic
 Age group not awarded
 Gender  Psychographic if lifestyle, personality or
 Socio-economic group / social status / class attitudes not awarded.
 Location / region / geographic
 Interests / lifestyle
 Family characteristics
 Education
 Occupation
 Use of product
 Ethnic group

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(c) Outline two characteristics Meena will need to become a successful 4 To use words from the stem as application, the
entrepreneur. reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for each relevant characteristic (max 2).
Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be appropriate
for this question:
Points might include:  Handmade
 Risk-taking [k] as leaving her job [app]  Jewellery
 Self-motivated / determination / resilience / perseverance [k] for her  Leaving her job /teacher
start-up [app]  Start-up/new business
 Hard-working [k] especially if she decides to be a sole trader [app]  Brother
 Creative [k] as products will be handmade [app]  Sole trader
 Effective communicator [k] as may need to discuss matter with  Partner
partner [app]  Government support
 Self-confident [k]  Market research
 Optimistic/positive [k]  Market segment
 Independent [k]
 Innovator [k] Other appropriate examples can be credited.

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(d) Explain one advantage and one disadvantage to Meena of operating 6 To use words from the stem as application, the
as a sole trader rather than being in a partnership. reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant advantage/disadvantage
(max 2). The following words are likely to be appropriate
Award 1 mark for each relevant reference to this business (max 2). for this question:
Award 1 mark for each relevant explanation (max 2).  Handmade
 Jewellery
Points might include:  Leaving her job /teacher
 Entrepreneur
Advantages:  Government support
 Keep all the profit [k] from the new business [app] so she has an  Market research
incentive to work harder / so she can decide how to invest it [an]  Market segment
 Can make all/quick decision-making [k] even if it's her brother [app]  Brother
so may be more responsive to changes in demand [an]  Business start-up / new business
 Complete control / own boss [k] less chance for disagreement / no
need to consult anyone before making decisions [an] Other appropriate examples can be credited.
 Has freedom to choose own holidays/work hours [k] to gain a better
work/life balance [an]  Conflict/disagreements is [an] only.
Disadvantages: Do not award:
 No one to share workload/responsibility/control with [k] so less time  Features of unincorporated businesses
to specialise on certain activities [an] such as making jewellery [app] such as unlimited liability, no continuity.
 Access to less finance / partner may provide extra finance [k] so as
need to borrow more/less money [an] or may need more government
support [app]
 Fewer ideas/ less knowledge/experience [k] so less able to compete
[an]
 No one to share any risks / potential loss / costs with [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(e) Do you think accessing government sources, such as statistics, is 6 This is a general question so there are no
the best method of market research for a start-up business to use? marks for application.
Justify your answer.
For evaluation to be awarded justification will
Award up to 2 marks for identification of relevant points. Award up to 2 usually follow on from relevant analysis of
marks for relevant development of points. points.
Award up to 2 marks for justified decision as to whether accessing
government sources, such as statistics, is the best method of market Some points can be written as either
research for a start-up business to use. advantage/disadvantage of different methods
but only award once.
Points might include:  For other methods, must identify it, and
Government sources: not simply describe it.
 Free/cheap to collect [k] which can help keep fixed cost low [an]  Out of date ONLY valid for govt. sources.
 Readily available [k] so can make decisions more quickly [an]
 Provides data on a range of topics/shows trends across whole Do not award:
country/market [k] so can make more informed decisions [an]  General comparisons between primary
 May be out-of-date [k] so information may not be relevant to what the and secondary market research e.g. up-to-
business needs to know now [an] date
 Data may not be relevant /not specific to the business [k] leading to  Reasons for carrying out market research
wrong decisions [an] e.g. find out demand/customer needs and
wants.
Other methods might include:  Vague references to more/less accurate.
 Reports from market research agencies [k] but will have to pay for
information [an]
 Questionnaires/surveys [k] as large amounts of information can be
collected [an]
 Focus groups [k] as can provide highly detailed responses [an]
 Interviews [k] but time consuming to carry out [an]
 Online survey [k]
 Observation [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(e) Justification might include:

Government statistics are cheap to collect [k] which can help keep fixed
cost low [an]. Another option is questionnaires [k] which would allow the
business to collect large amounts of information [an]. However,
government statistics are better because a new business may not be
able to afford the cost of having the questionnaire designed properly
[eval] so it may be better to use government statistics are likely to be
accurate enough so can still prove helpful [eval].

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Cambridge IGCSE™

BUSINESS STUDIES 0450/21

Paper 2 Case Study May/June 2023
MARK SCHEME
Maximum Mark: 80

Published

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

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

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the May/June 2023 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 21 printed pages.

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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers.
They should be applied alongside the specific content of the mark scheme or generic level descriptors
for a question. Each question paper and mark scheme will also comply with these marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

 the specific content of the mark scheme or the generic level descriptors for the question
 the specific skills defined in the mark scheme or in the generic level descriptors for the question
 the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

 marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit
is given for valid answers which go beyond the scope of the syllabus and mark scheme,
referring to your Team Leader as appropriate
 marks are awarded when candidates clearly demonstrate what they know and can do
 marks are not deducted for errors
 marks are not deducted for omissions
 answers should only be judged on the quality of spelling, punctuation and grammar when these
features are specifically assessed by the question as indicated by the mark scheme. The
meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed
instructions or in the application of generic level descriptors.

GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question
(however; the use of the full mark range may be limited according to the quality of the candidate
responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should
not be awarded with grade thresholds or grade descriptors in mind.

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Social Science-Specific Marking Principles

(for point-based marking)

1 Components using point-based marking:

 Point marking is often used to reward knowledge, understanding and application of skills.
We give credit where the candidate’s answer shows relevant knowledge, understanding
and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly
convey the same meaning (unless the mark scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they
are correct
c DO credit answers where candidates give more than one correct answer in one
prompt/numbered/scaffolded space where extended writing is required rather than list-type
answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required.
(Check for evidence it is understood and not used wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all
possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already
credited unless the language itself is being tested. This applies equally to ‘mirror
statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of
syllabus terms must allow for clear and unambiguous separation from other syllabus terms
with which they may be confused (e.g. Corrasion/Corrosion)

2 Presentation of mark scheme:

 Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
 Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
 Content in the answer column in brackets is for examiner information/context to clarify the
marking but is not required to earn the mark (except Accounting syllabuses where they
indicate negative numbers).

3 Calculation questions:
 The mark scheme will show the steps in the most likely correct method(s), the mark for
each step, the correct answer(s) and the mark for each answer
 If working/explanation is considered essential for full credit, this will be indicated in the
question paper and in the mark scheme. In all other instances, the correct answer to a
calculation should be given full credit, even if no supporting working is shown.
 Where the candidate uses a valid method which is not covered by the mark scheme,
award equivalent marks for reaching equivalent stages.
 Where an answer makes use of a candidate’s own incorrect figure from previous working,
the ‘own figure rule’ applies: full marks will be given if a correct and complete method is
used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

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4 Annotation:
 For point marking, ticks can be used to indicate correct answers and crosses can be used
to indicate wrong answers. There is no direct relationship between ticks and marks. Ticks
have no defined meaning for levels of response marking.
 For levels of response marking, the level awarded should be annotated on the script.
 Other annotations will be used by examiners as agreed during standardisation, and the
meaning will be understood by all examiners who marked that paper.

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0450/7115/0086 Business Studies – Paper 2 Annotations

Annotation Description Use

Tick Tick Indicates a point which is relevant and rewardable (used in

part (a) questions).

Cross Cross Indicates a point which is inaccurate/irrelevant and not

rewardable.

BOD Benefit of doubt Used when the benefit of the doubt is given in order to
reward a response.

TV Too vague Used when parts of the answer are considered to be too
vague.

REP Repetition Indicates where content has been repeated.

NAQ Not answered Used when the answer or parts of the answer are not
question answering the question asked.

APP Application Indicates appropriate reference to the information in the

context.

OFR Own figure rule If a mistake is made in a calculation, and the incorrect
figure that results from the mistake is used for subsequent
calculations.

SEEN Noted but no credit Indicates that content has been recognised but not
given rewarded.

L1 Level 1 Used in part (b) questions to indicate where a response

includes limited knowledge and understanding.

L2 Level 2 Used in part (b) questions to indicate where a response

has a more detailed discussion and contains some
evidence of justification.

L3 Level 3 Used in part (b) questions to indicate where a response

includes a well-justified recommendation.

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Question Answer Marks

1(a) Explain four barriers to communication for a business. 8

One mark for each barrier (max 4).

Award a maximum of one additional mark for each explanation of the barrier.

There are no application marks available.

Reasons could include:

 Problems with the sender – the language used is not clear/use of jargon
or technical terms so do not understand instructions
 The message is too long/too much detail is included in the message –
so the main meaning of the message may be lost in the detail
 Problems with the medium/method – the wrong medium is used such as
putting an urgent message on a noticeboard so may not be seen
immediately
 Computer failure/internet connection/technology fails – the message
may not be received
 No feedback is given – so the sender is unaware the message has not
been received
 Problems with the receiver – if a meeting is used and it goes on a long
time then the receiver may stop listening
 The channel/chain of command may be too long – too many people
through which the message is sent it may be distorted
 Language differences – hinder understanding of the message

For example: Problems with the sender (1) they may use language that
includes jargon or technical terms so do not understand instructions (1).

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Question Answer Marks

1(b) Consider the following two ways VP can purchase its inventory. Which 12
way should it use? Justify your answer.

 Head Office purchases the inventory for all the restaurants.

 Restaurant Managers purchase their own inventory from local
suppliers.

Level Description Marks

3 Sound application of knowledge and understanding 9–12

of relevant business concepts using appropriate
terminology.
Detailed discussion of both ways. Well-justified
recommendation.
Candidates discussing both ways in detail, in context
and with a well-justified recommendation including
why the alternative way is rejected should be
rewarded with the top marks in the band.

2 Sound application of knowledge and understanding 5–8

of relevant business concepts using appropriate
terminology.
Detailed discussion of at least one way.
Judgement with some justification/some evaluation of
choices made.
Candidates discussing at least one way in detail and
applying it to the case should be rewarded with the
top marks in the band.

1 Limited application of knowledge and understanding 1–4

of relevant business concepts.
Limited ability to discuss the ways with little/no
explanation.
Simple judgement with limited justification/limited
evaluation of choices made.
Candidates outlining both ways in context should be
rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

1(b) Relevant points might include:

 Able to make bulk purchases – discounts

received – lowering variable costs/lower unit
cost of food ingredients - possibly reducing
prices/increasing profit
 Easier to standardise the meals/control
Head office quantity and quality of ingredients in
purchases the different restaurants as all the inventory come
inventory for all the from the same food suppliers - maintains
restaurants reputation for good quality fast food
 Increased transport costs for food ingredients
to be taken to each fast-food restaurant
Warehouse storage is required for inventory
before it is sent out to each restaurant –
increases costs

 Managers can order different ingredients for

meals to meet local tastes – increases
demand/improved competitiveness – increases
revenue
 Local suppliers can deliver more frequently
and quickly – ensures ingredients will be
fresh – improves reputation of the
restaurants
 Managers may feel more motivated/trusted –
Restaurant
if allowed to make some decisions and order
Managers purchase
their own ingredients
their own inventory
 May be unable to meet sudden increase in
from local suppliers
demand for specific meals – if ingredients
are not available – may lose customers as
disappointed – lose reputation/customers do
not return
 Restaurant Managers are very busy - so
may not have the time to order ingredients
 Some ingredients may not be available locally
to each restaurant - limiting the availability of
the full menu in some restaurants

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Question Answer Marks

1(b)
Justification might include:
 All inventory is purchased by head office is
the best way for VP to choose as this will
allow considerable cost savings due to
purchasing economies of scale. This will
allow VP to keep prices low and to be more
competitive with other similar restaurants,
possibly increasing revenue. Ordering only
from local suppliers may make it difficult to
Recommendation meet customer demand as food ingredients
may run out if local suppliers are small.
 Each Restaurant Manager purchases their
own inventory is the best way to choose
because each restaurant can meet local
demand, and this will attract more customers
leading to higher revenue. Also the costs of
storage are lower as smaller quantities can
be purchased so profit from selling fast-food
will be higher.

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Question Answer Marks

2(a) Explain two advantages and two disadvantages of VP’s Restaurant 8

Managers delegating tasks to their Assistant Managers.

One mark for each advantage/disadvantage (max 2 advantages/max 2

disadvantages).

Award a maximum of one additional mark for each explanation of the

advantage/disadvantage in the context of VP.

Advantages could include:

 Restaurant Managers cannot carry out every job themselves/reduce
workload – they can then focus on the most important tasks at the fast-
food restaurant and make better decisions
 Restaurant Managers are less likely to make mistakes – as they can
focus on specific tasks such as marketing new menus
 Gives the Restaurant Managers time to assess employees performance
below them in the hierarchy – they can then identify where employees
need more support/training in developing/cooking new recipes
 May increase motivation/feel more trusted for Assistant Managers –
improved speed of serving fast-food
 Assistant Managers may develop new skills Disadvantages could
include:
 Restaurant Managers could lose some control over subordinates –
mistakes may be made leading to worse reputation if food is served
longer than 5 minutes after ordering
 Restaurant Managers may be reluctant to give up some control – if
Assistant Managers do a good job carrying out the delegated tasks such
as ordering new ingredients for the meals
 The Assistant Manager may not have the skills to carry out the tasks that
have been delegated to them/may need additional training – may lead to
poor decisions being made such as unskilled chefs being employed at
the restaurant
 Assistant Managers may not like having tasks delegated to them/feel
overloaded with work by Restaurant Managers

For example: Restaurant Managers can focus on their most important tasks
(1) which will help them to make better decisions for the fast-food
restaurants (app).

Application could include: fast food; restaurant; vegetarians; meals; public

limited company; food outlets across the country; diners; menus; recipes;
cooking; serving; ingredients; 50 employees; receive a meal in less than 5
minutes; service is the fastest possible.

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Question Answer Marks

2(b) Using Appendix 2 and other information, consider the two countries VP 12
could choose to locate its new restaurants.
Which country should VP choose? Justify your answer.

Level Description Marks

3 Sound application of knowledge and understanding 9–12

of relevant business concepts using appropriate
terminology.
Detailed discussion of both countries Well-justified
recommendation.
Candidates discussing both countries in detail, in
context and with well-justified recommendation
including why the alternative country is rejected
should be rewarded with the top marks in the band.

2 Sound application of knowledge and understanding 5–8

of relevant business concepts using appropriate
terminology.
Detailed discussion of at least one country.
Judgement with some justification / some evaluation
of choices made.
Candidates discussing at least one country in detail
and applying it to the case should be rewarded with
the top marks in the band.

1 Limited application of knowledge and understanding 1–4

of relevant business concepts.
Limited ability to discuss the countries with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining both countries in context should
be rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

2(b) Relevant points might include:

Benefits Drawbacks

 Gross profit is $14,  There are many

and Country B is competitors so
$8 demand may be
 Highest price per lower – may have
meal at $20 – to reduce price to
possibly highest attract customers –
revenue if demand possibly reducing
remains high revenue
 Many competitors  May have to spend
may indicate that more on marketing
there is high as there are many
demand for fast- competitors in the
food restaurants market in order to
enter the new
market abroad –
Country A
increasing costs
 Higher wage costs
at twice the cost of
Country B – may
lead to higher costs
overall
 Harder to recruit
new workers as
unemployment is
low – may have to
offer more fringe
benefits to attract
employees from
their many
competitors

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Question Answer Marks

2(b)
 Lowest variable  Lower gross profit
cost per meal at between price of
$2 rather than $6 $10 and costs of
in country A – $2 = $8, whereas it
makes it easier to is $14 in country A
charge the lowest  Few competitors
price of $10 per may indicate that
meal demand for
 High vegetarian fast-
unemployment food in country B
makes it easier to is low – VP needs
recruit new to spend on market
employees for the research to be sure
restaurants – there is a market in
more likely to country B –
remain with VP as investment could
few alternative be wasted if there
Country B
employment is not a sufficient
opportunities in demand to make
country B – the expansion
lowering successful
recruitment
costs/training costs
in the future
 Lowest wage costs
at $5 per hour –
reducing total
labour costs
 Low price at $10
per meal may
attract many
customers –
possibly increasing
revenue

Justification may include:

 VP should choose country A as it can charge
the highest price of $20 per meal which may
lead to higher revenue and costs are likely to
be lower as variable costs are lower at $6
which gives a higher gross profit, so after
expenses have been paid, it may lead to
Recommendation higher profit. Country B should not be chosen
because it has a lower price per meal and
unemployment is high and there may be
lower demand.
 VP should choose country B as it has the
lowest wage costs, and it will be easy to
recruit new employees as there is high
unemployment there.

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Question Answer Marks

3(a) Explain two possible reasons why VP wants to expand. 8

One mark for each reason (max 2).

Award a maximum of three additional marks for each explanation of the

reason why VP wants to expand, one of which must be in context.

Answers might include:

 To gain higher profits for the owners – as expansion will lead to
increased sales in new markets abroad – leading to increased revenue
 To lower average/unit costs – gain from economies of scale – such as
bulk buying of food ingredients – a discount will be received from bulk
purchases
 To gain a larger share of the market – may produce a stronger brand
image – might result in greater customer loyalty
 To gain more status and prestige for the owners – from the company
being more well known in country Z – may be listed on stock exchanges
in other countries
 To gain access to new markets/diversification – this would
reduce/spread risk
For example: To gain higher profits for the owners (1) because expansion is
likely to increase revenue, (1) as VP will sell its products in more markets
(1). The higher profits should allow the shareholders of VP to be paid higher
dividends (app).

Application could include: fast food; restaurant; vegetarians; meals; food

outlets across the country; diners; shareholders/public limited company;
ingredients.

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Question Answer Marks

3(b) Consider the benefits and limitations of the following two ways VP can 12
enter a new market in another country. Which way should VP choose?
Justify your answer.
• Joint venture
• Franchising

Level Description Marks

3 Sound application of knowledge and understanding of 9–12

relevant business concepts using appropriate
terminology.
Detailed discussion of two ways. Well-justified
conclusion.
Candidates discussing both ways in detail, in context
and with well-justified conclusion including why the
alternative way is rejected should be rewarded with the
top marks in the band.

2 Sound application of knowledge and understanding of 5–8

relevant business concepts using appropriate
terminology.
Detailed discussion of at least one way.
Judgement with some justification / some evaluation of
choices made.
Candidates discussing one or more ways in detail and
applying it to the case should be rewarded with the top
marks in the band.

1 Limited application of knowledge and understanding of 1–4

relevant business concepts.
Limited ability to discuss the ways with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining both ways in context should be
rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

3(b) Relevant points might include:

Advantages Disadvantages

 VP will share the  It will take time and

risks and costs of effort to find the right
setting up the fast- partner to join with in
food chain in the venture – which
another country with may delay the
its partner in the expansion plans
joint venture – this  There may be
may help VP to management
borrow less capital conflicts between
to expand into the the two businesses
other country – leading to
 VP can gain arguments and
important local inefficiency – higher
knowledge about costs
the market – easier  Profits will have to
to focus meals on be shared – may
local tastes – reduce return on
increasing investment from the
demand/sales/reven expansion – may
ue not be agreeable to
Joint venture
 Less likely to the shareholders of
require expensive VP
market research to  The level of
understand the fast- expertise may not
food market – be the same in the
reducing the costs partner business –
of entering the new may make the
market abroad return on
 Lowering the risks investment unfair
of entering the new  The work and
market abroad - resources may not
more likely to be equally shared
understand local between the two
customs and tastes partners in the joint
– adapt fast-food venture – VP may
meals to meet local have to put more
demand work and resources
as it is the main
partner in the
venture

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Question Answer Marks

3(b)
 Saves time on  Poor quality
expanding into the management may
foreign market – as lead to a lowering of
business operating the reputation of the
fast-food VP brand – if the
restaurants will franchisee in the
make the foreign country
investment does not maintain
 Payment from standard of
franchise fees for delivering fast food
using the VP brand in 5 minutes
- fee goes back to  Low level of control
VP which may by VP Directors –
increase profits – over how the
making a return franchise operates
Franchising from the expansion the vegetarian
for low investment fast-food chain
from VP  The franchisee has
 Lower capital information about
requirement - no the food
need to raise ingredients and
finance for the recipes of VP and
expansion – no may use these
need to sell when the franchise
additional shares agreement has
with possible loss of expired – could
control/no bank loan develop a better
required so no need version and become
to pay interest rates a competitor
increasing fixed
costs

Justification may include:

 Forming a joint venture is the best way to
overcome the problems of entering a new fast-
food market in another country which VP is
unfamiliar with as this will enable VP to
understand this new market by gaining
knowledge from this other business. The local
business will be able to advise and guide VP on
the best locations to choose and the best
meals to serve to meet local demand and
Conclusion
successfully enter this market. Franchising
should not be chosen as the franchisee may
provide poor service and lead to a poor brand
image of VP.
 Selling a franchise to businesses in the new
fast-food market in another country will reduce
the investment required for VP to expand. This
will make it cheaper and quicker to expand into
this new market while still receiving revenue
from the fees charged for the franchise.

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Question Answer Marks

4(a) Explain, using an example, one reason why VP might need: 8

 short-term finance
 long-term finance.

One mark for reason for short-term/long-term finance (max 1).

Award a maximum of three additional marks for the explanation of the

reason why VP needs short-term/long-term finance, one of which must be
in context, and one must include an example.

Answers for short-term finance might include:

 To provide working capital for the business – so that day-to-day
expenses can be paid for – an overdraft may be suitable as it is only
used if needed/potentially reducing interest paid
 To prevent cash-flow problem/improve the cash position of the
business – by taking short-term bank loan – this will provide finance for
a short time to overcome the potential shortage of cash and increase
liquidity

For example: To provide working capital for the business (1) so that
day-to-day expenses can be paid for (1). An overdraft may be suitable as it is
only used if needed which potentially reduces the interest to be paid
(1) when buying food ingredients for the restaurants (app).

Answers for long-term finance might include:

 To purchase long-term non-current assets – as these assets are likely to
be very expensive – so a long-term bank loan may be suitable as it is
repaid over a long period of time reducing the amount of monthly
repayments/outflows each month
 To expand the business – which requires a large amount of money in
order to grow – the issue of shares will not incur interest payments
 To update the business – often involves new technology which is
expensive – so payments may need to be spread over a long period of
time such as with a lease

For example: To expand the business (1) as VP is planning to expand in

another country (app) which requires a large amount of money to grow
(1). VP might choose to issue new shares which will not incur interest
payments (1).

Application could include: fast food; restaurant; vegetarians; meals; public

limited company/shareholders; food outlets across the country; diners; 500
restaurants; 25 000 employees; ingredients; expand into another country.

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Question Answer Marks

4(b) Using Appendix 3 and other information, consider how the following 12
three changes in country Z may affect VP. Which change is likely to
have the greatest effect on VP's profits? Justify your answer.
 Increase in interest rates.
 Depreciation of country Z’s exchange rate.
 New legal controls which require all restaurants to list the
ingredients in their meals.

Level Description Marks

3 Sound application of knowledge and 9–12

understanding of relevant business concepts
using appropriate terminology.
Detailed discussion of two or more changes. Well-
justified conclusion.
Candidates discussing all three changes in detail,
in context and with well-justified conclusion
including why the alternative changes are rejected
should be rewarded with the top marks in the
band.

2 Sound application of knowledge and 5–8

understanding of relevant business concepts
using appropriate terminology.
Detailed discussion of at least one change.
Judgement with some justification / some
evaluation of choices made.
Candidates discussing two or more changes in
detail and applying them to the case should be
rewarded with the top marks in the band.

1 Limited application of knowledge and 1–4

understanding of relevant business concepts.
Limited ability to discuss the changes with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining all three changes in context
should be rewarded with the top marks in the
band.

0 No creditable response. 0

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Question Answer Marks

4(b) Relevant points might include:

• Higher fixed costs from interest paid if bank loan

taken out for expansion of the restaurant chain
in another country – likely to lead to lower
profit
• Customers may buy fewer meals due to interest
rates being increased for 3% to 5% to be paid
on borrowing leaving less money to spend
leading to reduced revenue for VP
Increase in
• As VP is a public limited company it is large
interest rates
and may enjoy financial economies of scale –
leading to relatively lower interest rates charged
on bank loans than smaller businesses –
reducing the impact of the interest payable on
the loans
• Increased interest received on any reserves held
by VP – increase income into the business –
leading to an increase in profit

• Imported food ingredients will now cost more –

leading to higher variable costs – possibly lower
profit margin/higher prices
• Increased cost of imported ingredients may lead
to VP changing to purchase from local suppliers
Depreciation of
- however the quality may be lower
country Z
• When VP has expanded to another country
exchange rate
and set up new restaurants profits sent back to
country Z will exchange for a higher amount of
country Z currency – but capital needed for
expansion will exchange at a lower rate – higher
investment needed

• Increased costs of rewriting all menus – time

taken to work out and list all the ingredients in
meals – will need to be repeated every time a
Introduction of new meal is added to the menu – increases
new legal costs both in the short-run and possibly the long-
controls that run – reducing profit
require all • If VP wants to keep the same mark-up on costs
restaurants to – may lead to increased price of meals –– may
provide lead to lower demand/lower sales – reduced
information profit
about the • All restaurants will have the same costs – so
ingredients in competitiveness may not change
their meals • May attract different target market who didn’t
appreciate the ingredients used by VP – as
these are now listed on menus - may increase
sales

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Question Answer Marks

4(b)
Justification may include:
• Increase in interest rates will have the greatest
effect on profit because VP will need to take out
large bank loans to finance the expansion in
another country leading to a large increase in
costs from the interest payable which will reduce
VP profits. Depreciation will have little effect as
ingredients are only a small proportion of costs
and only 30% of ingredients are imported. The
new legal controls will have little effect on profit
as these are a relatively small cost and the
menus are printed regularly anyway when the
Conclusion of
menus change with the new meals.
which is likely
• Depreciation of the exchange rate of country Z
to have the
will have the greatest effect on profit as 30% of
greatest effect
food ingredients are imported. This will lead to
on profits
a large increase in variable costs which will
reduce gross profit and then profit for VP.
• New legal controls that require all restaurants to
provide information about the ingredients in their
meals will have the greatest effect on profit as
menus will have to all be reprinted every time a
new meal is developed. As VP do this regularly to
encourage customers to return so they do not get
bored with the same meals it will result in a
regular increase in costs and therefore a
reduction in profit.

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Cambridge IGCSE™

BUSINESS STUDIES 0450/22

Paper 2 Case Study May/June 2023
MARK SCHEME
Maximum Mark: 80

Published

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

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

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the May/June 2023 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 20 printed pages.

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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers.
They should be applied alongside the specific content of the mark scheme or generic level descriptors
for a question. Each question paper and mark scheme will also comply with these marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

 the specific content of the mark scheme or the generic level descriptors for the question
 the specific skills defined in the mark scheme or in the generic level descriptors for the question
 the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

 marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit
is given for valid answers which go beyond the scope of the syllabus and mark scheme,
referring to your Team Leader as appropriate
 marks are awarded when candidates clearly demonstrate what they know and can do
 marks are not deducted for errors
 marks are not deducted for omissions
 answers should only be judged on the quality of spelling, punctuation and grammar when these
features are specifically assessed by the question as indicated by the mark scheme. The
meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed
instructions or in the application of generic level descriptors.

GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question
(however; the use of the full mark range may be limited according to the quality of the candidate
responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should
not be awarded with grade thresholds or grade descriptors in mind.

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Social Science-Specific Marking Principles

(for point-based marking)

1 Components using point-based marking:

 Point marking is often used to reward knowledge, understanding and application of skills.
We give credit where the candidate’s answer shows relevant knowledge, understanding
and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly
convey the same meaning (unless the mark scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they
are correct
c DO credit answers where candidates give more than one correct answer in one
prompt/numbered/scaffolded space where extended writing is required rather than list-type
answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required.
(Check for evidence it is understood and not used wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all
possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already
credited unless the language itself is being tested. This applies equally to ‘mirror
statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of
syllabus terms must allow for clear and unambiguous separation from other syllabus terms
with which they may be confused (e.g. Corrasion/Corrosion)

2 Presentation of mark scheme:

 Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
 Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
 Content in the answer column in brackets is for examiner information/context to clarify the
marking but is not required to earn the mark (except Accounting syllabuses where they
indicate negative numbers).

3 Calculation questions:
 The mark scheme will show the steps in the most likely correct method(s), the mark for
each step, the correct answer(s) and the mark for each answer
 If working/explanation is considered essential for full credit, this will be indicated in the
question paper and in the mark scheme. In all other instances, the correct answer to a
calculation should be given full credit, even if no supporting working is shown.
 Where the candidate uses a valid method which is not covered by the mark scheme,
award equivalent marks for reaching equivalent stages.
 Where an answer makes use of a candidate’s own incorrect figure from previous working,
the ‘own figure rule’ applies: full marks will be given if a correct and complete method is
used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

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4 Annotation:
 For point marking, ticks can be used to indicate correct answers and crosses can be used
to indicate wrong answers. There is no direct relationship between ticks and marks. Ticks
have no defined meaning for levels of response marking.
 For levels of response marking, the level awarded should be annotated on the script.
 Other annotations will be used by examiners as agreed during standardisation, and the
meaning will be understood by all examiners who marked that paper.

0450/7115/0086 Business Studies – Paper 2 Annotations

Annotation Description Use

Tick Tick Indicates a point which is relevant and rewardable (used in

part (a) questions).

Cross Cross Indicates a point which is inaccurate/irrelevant and not

rewardable.

BOD Benefit of doubt Used when the benefit of the doubt is given in order to
reward a response.

TV Too vague Used when parts of the answer are considered to be too
vague.

REP Repetition Indicates where content has been repeated.

NAQ Not answered question Used when the answer or parts of the answer are not
answering the question asked.

APP Application Indicates appropriate reference to the information in the

context.

OFR Own figure rule If a mistake is made in a calculation, and the incorrect
figure that results from the mistake is used for subsequent
calculations.

SEEN Noted but no credit Indicates that content has been recognised but not
given rewarded.

L1 Level 1 Used in part (b) questions to indicate where a response

includes limited knowledge and understanding.

L2 Level 2 Used in part (b) questions to indicate where a response

has a more detailed discussion and contains some
evidence of justification.

L3 Level 3 Used in part (b) questions to indicate where a response

includes a well-justified recommendation.

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Question Answer Marks

1(a) Explain four characteristics needed for an entrepreneur to be 8

successful.

Award 1 mark for each relevant characteristic (max 4).

Award a maximum of one additional mark for each explanation of a

characteristic of being a successful entrepreneur.

There are no application marks available.

Relevant characteristics might include:

 Self-confident – strong belief in their own ability and ideas
 Creative – find new and different ways to attract customers
 Independent – willing to go with own ideas
 Hard worker/dedicated – prepared to work long hours
 Risk-taker – willing to risk losing own capital/as a sole trader or
partnership willing to risk losing personal assets
 Effective communicator – able to persuade others
 Optimistic – think positively about new ventures and continue if there are
setbacks
 Innovative – able to develop new products to retain customers
 Good at networking – prepared to learn from others
 Self-motivated/Determined/Passionate/Driven
 Results driven
 Strong leadership qualities
 Resilience
 Experience/Knowledge/Multi-skilled

For example: Self-confident (1) as the entrepreneur has a strong belief in their
own ability and ideas to convince others such as banks to lend to them (1)

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Question Answer Marks

1(b) Consider the advantages and disadvantages of starting up ET as either 12

an unincorporated business or as a limited company. Which should
Zane and Zaara choose? Justify your answer.

Level Description Marks

Sound application of knowledge and understanding of

relevant business concepts using appropriate terminology.

Detailed discussion of both options.

3 Well-justified recommendation. 9–12

Candidates discussing both options in detail, in context

and with a well-justified conclusion including why the
alternative option was rejected should be rewarded with
the top marks in the band.

Sound application of knowledge and understanding of

relevant business concepts using appropriate terminology.

Detailed discussion of at least one option.

2 Judgement with some justification / some evaluation of 5–8

choices made.

Candidates discussing at least one option in detail and

applying it to the case should be rewarded with the top
marks in the band.

Limited application of knowledge and understanding of

relevant business concepts.

Limited ability to discuss the options with little/no

explanation.
1 1–4
Simple judgement with limited justification / limited
evaluation of choice made.

Candidates outlining both options in context should be

rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

1(b) Relevant points might include:

Advantages Disadvantages

 Partners are in  Unlimited liability –

complete control of could lose all
the business personal
 Do not have to share possessions
profits with  Limited sources of
shareholders – may capital – if only 2
lead to higher profits partners invest in
each if shared the business as
Unincorporated between fewer limited to their own
business owners capital
 Easy to set up the  Partners are
theatre and will responsible for all
have few legal decisions taken by
requirements to either partner if
operate the business mistakes are made –
– reducing effort and may lead to personal
cost to set up financial losses and
may be equally liable

 Limited liability –  Accounts are not

owners personal private – competing
possessions will not theatres may
be used to pay access the accounts
business debts  Not easy to transfer
 Owners and shares as a private
business are limited company –
separate legal may make it difficult
identities – provides to sell shares to
continuity on the family and friends
death of owners  Legal formalities to
Limited company  Can sell shares to set up – may take
raise capital to set- more time and cost
up the theatre – to than a partnership
family and friends –  Legal formalities to
large amounts of operate the
capital may be company – needs to
raised have accounts
audited and
registered with the
government takes
time and increases
costs

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Question Answer Marks

1(b)
Recommendation Justification may include:
 ET should be an unincorporated business
because it is easy to set up the partnership. Zane
and Zaara will have complete control of the
theatre and keep all the profits. There are not
the legal formalities with a partnership that will
increase costs that there are if ET was a private
limited company.
 ET should be a limited company to gain the
benefits of limited liability. If anything goes
wrong with the theatre, then any liability will only
be for an amount invested in the business, all
Zane and Zaara's personal belongings will be
safe.

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Question Answer Marks

2(a) Explain one business objective for ET and one other objective that a 8
social enterprise like Daycare might have.

One mark for each objective (max of 2).

Award a maximum of 3 additional marks for each explanation of the

objective – one of which must be applied to this context.

Relevant answers might include:

Business objective for ET
 Survival – to not go bankrupt in the first year of operation – to cover
costs
 Profit – to provide a return on investment – for the owners who risked
their own money
 Growth of the business – to possibly increase sales – leading to
increased revenue in the future
 Market share – attract a higher number of customers – possibly leading to
higher revenue

Other objectives for social enterprise, Daycare

 Service to the community/help local people – to create jobs for people in
the local area – support disadvantaged groups in society/make a profit
to put back into local initiatives
 Provide childcare to enable low-income parents/carers to go out to work
– increase their incomes – raising their living standards
 Provide education for the pre-school children of low-income families
 Provides access to education that otherwise would not be provided
 Improves the likelihood of these children being more successful when
they do go to school/may improve their ability to earn higher incomes in
the future/get a better paid job
 To provide funds to reinvest back into the social enterprise – by making
a profit
 To break-even

For example: To provide a service to the community (1) to look after the pre-
school children (app) and support disadvantaged groups in the society that
cannot afford to pay for these services (1) so it will allow parents/guardians
to go to work and improve their family’s income (1)

Application might include: pre-school children; theatre; performances;

actors; pay fair wages; tourists; low-income area; 24 part-time employees;
provides education for children under 5.

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Question Answer Marks

2(b) Using Appendix 2 and other information, consider the two options for 12
the first performance at the theatre. Which is the best option for Zaara
to choose? Justify your answer using suitable calculations.

Level Description Marks

3 Sound application of knowledge and understanding of

relevant business concepts using appropriate terminology.

Detailed discussion of both options.

Well-justified recommendation. 9–12

Candidates discussing both options in detail, in

context and with a well-justified recommendation including
why the alternative option is rejected should be rewarded
with the top marks in the band.

2 Sound application of knowledge and understanding of

relevant business concepts using appropriate terminology.

Detailed discussion of at least one option.

Judgement with some justification / some evaluation of 5–8

choice made.

Candidates discussing at least one option in detail and

applying it to the case should be rewarded with the top
marks in the band.

1 Limited application of knowledge and understanding of

relevant business concepts.

Limited ability to discuss the options with little/no

explanation.
1–4
Simple judgement with limited justification / limited
evaluation of choices made.

Candidates outlining both options in context should be

rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

2(b) Relevant points might include:

Advantages Disadvantages

 Fewer employees  The average wage

are required to put cost is the highest –
on a performance – $20 higher than
reducing total Option 2
variable costs  Makes a loss of
 Costs for scenery $210 for each
and costumes is performance
the lowest of the  Lowest revenue
two options – gained for each
$1000 lower than performance of the
Option 1 Option 2 two options –
 Total cost is the $1000 per
lowest of the two performance
options – at $1210
per performance
 Lowest price per
seat at $10 – so
likely to sell all the
tickets ensuring the
estimated revenue
is received

 Has the lowest • Has the highest

wage cost per number of
employee of the employees per
two options – at performance – 17
$10 per actor more than Option 1
 Makes the highest – highest total
profit per wage costs
performance of the • Highest cost of the
two options – at two options –
Option 2
$260 per $2240 per
performance performance
 Has the highest  Highest price per
revenue of the two person – $25 each
options – at $2500 – may not sell all
– $1500 higher tickets – so
than Option 1 revenue may be
lower than
estimated at $2500

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Question Answer Marks

2(b)
Justification may include:
• ET should choose Option 1 to have in the
theatre as it has the cheapest total cost at
$1210 per performance. As the theatre is
new it should try to keep its costs as low as
possible. Option 2 has much higher costs to
put on the performances and ET may not
have the funds to do this. Also the price per
Recommendation
ticket is higher for the other option and as the
theatre is located in a low-income area of
Main City the theatre may not sell all 100
seats and the estimated revenue may not be
received.
• ET should choose Option 2 for the theatre as
it makes a profit of $260 per performance when
the revenue is $2500.

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Question Answer Marks

3(a) Explain four reasons why it is important that Zane prepares a cash-flow 8
forecast before starting ET.

One mark for each reason (max 4).

Award a maximum of one additional mark for each explanation of the reason
which must be applied to this context.

Relevant answers might include:

 To manage the cash flows in and out of the business – so that Zane and
Zaara will be aware of how much cash they may have available when
operating the theatre
 To ensure there is cash/working capital available to pay for day-to-day
expenses/short term debts – or they may be unable to put on
performances
 To show the bank to gain a bank loan/overdraft – without a loan
performances may be of poor quality if costumes cannot be purchased
 To show if the business is likely to run short of cash – avoid having a
lack of liquidity for the 2 partners or shareholders
 To help plan ahead – to make decisions about which price to charge so
that all 100 seats are sold
 To see whether the business is achieving its financial objectives
 May need to include it in the business plan

For example: To manage the cash flows in and out of the business (1) so
that Zane and Zaara will be aware of how much cash they may have
available to spend at the theatre (app).

Application could include: theatre; performances; 100 seats; costumes; 2

partners/shareholders; pay fair wages; tourists; low-income area; 24 part-
time employees; costumes produced in the local area; refreshments from
suppliers that do not pollute the environment.

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Question Answer Marks

3(b) Consider the following three roles of marketing for ET. Which role will 12
be the most important for ET to be successful? Justify your answer.

 Identifying customer needs

 Satisfying customer needs
 Maintaining customer loyalty

Level Description Marks

Sound application of knowledge and understanding of

relevant business concepts using appropriate
terminology.

Detailed discussion of two or more roles of marketing.

3 Well-justified conclusion. 9–12

Candidates discussing all three roles of marketing in

detail, in context and with a well-justified conclusion
including why the alternative roles of marketing are
rejected should be rewarded with the top marks in the
band.

Sound application of knowledge and understanding of

relevant business concepts using appropriate
terminology.

Detailed discussion of at least one role of marketing.

2 5–8
Judgement with some justification / some evaluation of
choices made.

Candidates discussing two or more roles of marketing

in detail and applying them to the case should be
rewarded with the top marks in the band.

Limited application of knowledge and understanding of

relevant business concepts.

Limited ability to discuss the roles of marketing with

little/no explanation.
1 1–4
Simple judgement with limited justification / limited
evaluation of choices made.

Candidates outlining three roles of marketing in context

should be rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

3(b) Relevant points might include:

 The Marketing Manager needs to find out what types
of performances will be popular with audiences –
this is to ensure that the shows that are planned will
attract enough customers to buy tickets for most of
the seats – increasing/maximising revenue for the
theatre
Identifying
 Find out what price customers are willing to pay for
customer
seats at the theatre for a performance – if too high
needs
a price is charged then many seats may not be
sold – leading to a loss for that performance
 To find out what types of refreshments customers
wish to buy at the interval – this will help to raise
these sales and provide additional revenue for the
theatre

 Ensuring that the performances are what the

audience expects – this improves the reputation of
the theatre – so customers tell their friends about the
Satisfying theatre – increasing sales of seats for
customer performances
needs  If performances are on days which are not
convenient for customers then fewer seats will be
sold – so it ensures the performances are put on
during days that most suit local people and tourists

 Having links with customers to ensure they keep

coming back to the theatre to watch performances –
rather than go to other theatres – as regular visits
to the theatre will maintain its revenue – enabling them
Maintaining
to keep putting on performances/provide liquidity for
customer
the next performance/avoid cash flow problems
loyalty
 Keeping existing customers is preferable to attracting
new ones – as it is often cheaper to market to
existing customers than to find new ones – makes the
theatre’s marketing budget more efficient

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Question Answer Marks

3(b)
Justification may include:
 Identifying customer needs is most important
because if these needs are not understood then the
theatre may plan and pay to put on a performance
that will not attract customers, leading to a loss.
Satisfying customer needs is less important to the
success of the theatre as if the needs have been
identified then it is more likely that these will be met by
the chosen performance. As theatres may keep
attracting new audiences such as tourists then
maintaining customer loyalty may be less important
as long as the different needs of these audiences
have been identified.
Conclusion
 Satisfying customer needs is most important
because if customers are disappointed with the
performance, then they will tell their friends and
family about it and ET will gain a poor reputation.
This may lead to fewer sales of seats for future
performances leading to ET being less successful.
 Maintaining customer loyalty is most important as
without this it will mean the theatre will need to keep
attracting new customers and this is expensive to
research suitable plays and shows that they will want
to see. Marketing costs will therefore be lower if
regular customers keep coming back to watch the
shows.

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Question Answer Marks

4(a) Explain two leadership styles that Zane and Zaara could use when 8
managing ET’s employees.

One mark for each leadership style (max 2).

Award a maximum of 3 additional marks for each leadership style – one of

which must be applied to this context.

Relevant answers might include:

Autocratic
 The manager expects to be in charge and have all orders followed
 Manager keeps themselves separate from the employees
 Manager makes all the decisions and keeps information to themselves
 Communication is one-way/employees having no opportunity to
comment or take part in any decisions about business
 Decision-making is quick

Democratic
 Gets employees involved in decision-making about the business
 Information about future plans for the business shared with employees and
discussed before owners make the final decision
 Communication is both downward and upward allowing the experience of
employees to be considered by the owners – leading to possibly better
decisions being made
 Motivating for employees as they feel more involved in the business –
less likely to leave/reduced labour turnover

Laissez-faire
 Main objectives of the new business are shared with employees but
then they are left to organise their own work and take decisions without any
interference
 Communication can be difficult as the leader has little involvement in the
decisions being made
 Employees can be motivated as they are valued and trusted to take the
decisions
 Employees can be creative with fresh ideas about how to operate the
business

For example: They could use a democratic leadership style (1) where
communication is both downward and upward allowing the experience of
employees to be considered by the owners (1) leading to possibly better
decisions being made (1) about how to operate the theatre (app).

Application could include: theatre; performances; 100 seats; pay fair

wages; tourists; low-income area; 24 part-time employees; provides
education for children under 5; costumes produced in the local area;
refreshments from suppliers that do not pollute the environment.

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Question Answer Marks

4(b) Consider the following three ethical issues for the theatre. Which ethical 12
issue is likely to have the biggest effect on ET? Justify your answer.

• Paying fair wages to employees

• Only buying costumes produced in the local community
• Purchasing all refreshments from suppliers that do not pollute the
environment

Level Description Marks

Sound application of knowledge and understanding of

relevant business concepts using appropriate
terminology.

Detailed discussion of two or more issues.

3 9–12
Well-justified conclusion.

Candidates discussing all three issues in detail, in

context and with a well-justified conclusion including
why the alternative issues are rejected should be
rewarded with the top marks in the band.

Sound application of knowledge and understanding of

relevant business concepts using appropriate
terminology.

Detailed discussion of at least one issue.

2 5–8
Judgement with some justification / some evaluation of
choices made.

Candidates discussing two or more issues in detail and

applying them to the case should be rewarded with the
top marks in the band.

Limited application of knowledge and understanding of

relevant business concepts.

Limited ability to discuss issues with little/no explanation.

1 1–4
Simple judgement with limited justification / limited
evaluation of choices made.

Candidates outlining all three issues in context should

be rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

4(b) Relevant points might include:

 This will provide local people with a
higher income than they might have had
– leads to higher standard of living in
the local area – more likely to sell more
theatre seats – increasing revenue for
the theatre
 Higher wage rates might lead to higher
motivation – improved quality of
Paying fair wages to performances at the theatre
employees  Lower labour turnover – the 24 part-time
employees may be less likely to leave
and work for another theatre –
improved employee loyalty – lower
recruitment costs
 Wage costs are likely to be higher which
may lead to higher prices for theatre
seats – may lead to lower demand –
reducing revenue

 Will attract local people to watch the

theatre performances – increase
revenue from ticket sales
 May receive good publicity – many local
people may encourage family and
friends to support the theatre –
Only buying
increasing revenue
costumes produced
 Provides work for local people –
in the local
important as it is based in a low-
community
income area – raising the standard of
living for people in the local area
 Local people may not have the skills
necessary – limiting the quality of
costumes used and possibly the overall
performance

 May be more expensive than buying from

less ethical suppliers – possibly lowering
the profit margin for each performance
Purchasing
 Reduces the range of refreshments
refreshments from
available – may reduce revenue as
suppliers that do not
choice may be less popular
pollute the
environment  Pressure groups will be less likely to
protest outside the theatre – which
might deter tourists from visiting the
theatre

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Question Answer Marks

4(b)
Justification may include:
 Paying fair wages is likely to have the
biggest effect on ET as this may
increase costs which may lead to higher
prices for the 100 seats so customers
may go to their competitors instead and
reduce revenue. Costumes from the
local community may be of lower quality
but if the performance is good then
people will still buy tickets and revenue
will not be affected. Refreshments only
have a small impact on the theatre as
they are a small proportion of the
overall costs and revenue. So higher
costs and lower revenue due to paying
fair wages is likely to have the biggest
Conclusion
effect on ET.
 Costumes produced locally provides
work for the local community, so ET is
more likely to sell all 100 seats for
each performance as local people
have the income to buy the tickets.
Higher revenue from sales will lead to
the biggest effect on ET.
 Refreshments purchased from ethical
suppliers will lead to a good reputation
for the theatre and hence attract
customers concerned with the
environment so revenue will be higher
as more tickets are sold for each
performance leading to higher profits
for ET.

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Cambridge IGCSE™

BUSINESS STUDIES 0450/23

Paper 2 Case Study May/June 2023
MARK SCHEME
Maximum Mark: 80

Published

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

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

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the May/June 2023 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 19 printed pages.

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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers.
They should be applied alongside the specific content of the mark scheme or generic level descriptors
for a question. Each question paper and mark scheme will also comply with these marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

 the specific content of the mark scheme or the generic level descriptors for the question
 the specific skills defined in the mark scheme or in the generic level descriptors for the question
 the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

 marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit
is given for valid answers which go beyond the scope of the syllabus and mark scheme,
referring to your Team Leader as appropriate
 marks are awarded when candidates clearly demonstrate what they know and can do
 marks are not deducted for errors
 marks are not deducted for omissions
 answers should only be judged on the quality of spelling, punctuation and grammar when these
features are specifically assessed by the question as indicated by the mark scheme. The
meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed
instructions or in the application of generic level descriptors.

GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question
(however; the use of the full mark range may be limited according to the quality of the candidate
responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should
not be awarded with grade thresholds or grade descriptors in mind.

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Social Science-Specific Marking Principles

(for point-based marking)

1 Components using point-based marking:

 Point marking is often used to reward knowledge, understanding and application of skills.
We give credit where the candidate’s answer shows relevant knowledge, understanding
and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly
convey the same meaning (unless the mark scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they
are correct
c DO credit answers where candidates give more than one correct answer in one
prompt/numbered/scaffolded space where extended writing is required rather than list-type
answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required.
(Check for evidence it is understood and not used wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all
possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already
credited unless the language itself is being tested. This applies equally to ‘mirror
statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of
syllabus terms must allow for clear and unambiguous separation from other syllabus terms
with which they may be confused (e.g. Corrasion/Corrosion)

2 Presentation of mark scheme:

 Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
 Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
 Content in the answer column in brackets is for examiner information/context to clarify the
marking but is not required to earn the mark (except Accounting syllabuses where they
indicate negative numbers).

3 Calculation questions:
 The mark scheme will show the steps in the most likely correct method(s), the mark for
each step, the correct answer(s) and the mark for each answer
 If working/explanation is considered essential for full credit, this will be indicated in the
question paper and in the mark scheme. In all other instances, the correct answer to a
calculation should be given full credit, even if no supporting working is shown.
 Where the candidate uses a valid method which is not covered by the mark scheme,
award equivalent marks for reaching equivalent stages.
 Where an answer makes use of a candidate’s own incorrect figure from previous working,
the ‘own figure rule’ applies: full marks will be given if a correct and complete method is
used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

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4 Annotation:
 For point marking, ticks can be used to indicate correct answers and crosses can be used
to indicate wrong answers. There is no direct relationship between ticks and marks. Ticks
have no defined meaning for levels of response marking.
 For levels of response marking, the level awarded should be annotated on the script.
 Other annotations will be used by examiners as agreed during standardisation, and the
meaning will be understood by all examiners who marked that paper.

0450/7115/0086 Business Studies – Paper 2 Annotations

Annotation Description Use

Tick Tick Indicates a point which is relevant and rewardable (used in

part (a) questions).

Cross Cross Indicates a point which is inaccurate/irrelevant and not

rewardable.

BOD Benefit of doubt Used when the benefit of the doubt is given in order to
reward a response.

TV Too vague Used when parts of the answer are considered to be too
vague.

REP Repetition Indicates where content has been repeated.

NAQ Not answered Used when the answer or parts of the answer are not
question answering the question asked.

APP Application Indicates appropriate reference to the information in the

context.

OFR Own figure rule If a mistake is made in a calculation, and the incorrect
figure that results from the mistake is used for subsequent
calculations.

SEEN Noted but no credit Indicates that content has been recognised but not
given rewarded.

L1 Level 1 Used in part (b) questions to indicate where a response

includes limited knowledge and understanding.

L2 Level 2 Used in part (b) questions to indicate where a response

has a more detailed discussion and contains some
evidence of justification.

L3 Level 3 Used in part (b) questions to indicate where a response

includes a well-justified recommendation.

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Question Answer Marks

1(a) Explain four reasons why a business might become a multinational 8

company.

Award one mark for each relevant reason (max 4).

Award a maximum of one additional mark for each explanation of the

reason.

 Produce nearer to the market – reduce transport costs of finished

products
 Avoid barriers to trade – quotas and tariffs will not apply if the business is
not moving goods between countries
 Increase market share – by expanding into different markets a business
can access larger target market
 Government incentives in the country where they are setting up –
receive grants/subsidies which would potentially reduce the costs of
production for a business
 Produce in a country with lower labour/production costs
 Remain competitive if competitor companies are expanding abroad

For example: The cost of production could be reduced if the business needs
to import materials (1). By operating in a different country where the raw
materials are available, variable costs can be reduced (1).

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Question Answer Marks

1(b) Consider the advantages and disadvantages of the following three 12

methods of promotion RR could use in the new markets. Which would
be the most suitable method for RR to use? Justify your answer.

 Television
 Billboards
 Sponsorship of a sports team

Level Description Marks

3 Sound application of knowledge and understanding 9–12

of relevant business concepts using appropriate
terminology.

Detailed discussion of two or more methods.

Well-justified recommendation.

Candidates discussing the three methods in detail, in

context and with a well-justified recommendation,
including why the alternative methods were rejected,
should be rewarded with the top marks in the band.

2 Sound application of knowledge and understanding 5–8

of relevant business concepts using appropriate
terminology.

Detailed discussion of at least one method.

Judgement with some justification / some evaluation

of choices made.

Candidates discussing two or more methods in detail

and applying them to the case should be rewarded
with the top marks in the band.

1 Limited application of knowledge and understanding 1–4

of relevant business concepts.

Limited ability to discuss the methods with little/no

explanation.

Simple judgement with limited justification / limited

evaluation of choices made.

Candidates outlining the three methods in context

should be rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

1(b) Relevant points might include:

Advantages Disadvantages

 The advert will be  Can be more

seen by a large expensive than other
audience – 80% of forms of promotion –
population in the so this could make the
new market watch profit margins fall
television  Many consumers now
 A wider range of (rug) download films/music
Television
patterns can be seen and may not watch
 RR can choose the many television
most appropriate time programmes –
for the advert to be reducing the access to
broadcast so that it is target markets
seen by the target
audience
 They are lower cost  Can be easily missed
than the other two as people pass by –
options and are there especially if on a main
for quite a time – RR road as cars will be
could show many rugs passing quickly
on one image  No detailed
Billboards
 If they are in a busy information can be
place, then many added, customers may
people might pass not see the website
them and be attracted address as they drive
to buy RR’s machine past
manufactured rugs
 It can raise awareness  Actions of the
by linking the brand to sponsored person
a famous sporting could damage RR's
person reputation for
Sponsorship of a  Helps to target the excellent customer
sports team intended market - by service – reducing
targeting events in the sales
new markets  Takes time to find a
suitable team to
sponsor the rugs

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Question Answer Marks

1(b) Justification may include:

 Television is best because it can have a large
reach. RR can also use colour and show many
images of their rugs. It is expensive, but RR made
$8m profit in 2022 so it can afford the expense. A
billboard might not be seen by many people as only
45% drive cars and so not many people would
see them on the roads or pass by them. It might be
very difficult to find a suitable team to sponsor
rugs.
Recommendation
 Billboards would be best because they are large
and can be placed alongside busy roads in the
new markets to allow many people to see them.
Billboards can show a picture of the rugs and the
website address so there does not need to be
lots of writing in different languages. One billboard
design could be used in all the new markets.
 Sponsorship of a sports team would be best as it
can reinforce the brand image of high-quality rugs
by having a suitable team to promote the product.

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Question Answer Marks

2(a) Explain two problems RR might experience as it expands 8

Award one mark for each relevant problem (max 2).

Award a maximum of three additional marks for each explanation – one of

which must be applied to this context.

 Difficult to control – which may result in more mistakes being made

during production – increasing waste
 Poor motivation / lack of commitment – as employees feel alienated this
could reduce productivity
 Weak coordination – it may be more difficult for decisions to be made
between departments to ensure each runs smoothly
 Poor communication – instructions do not get to the right person / get
distorted – so orders may not be completed on time
 Liquidity may reduce – cost of expansion might lead to short-term cash
flow difficulties – RR will need to buy more raw materials to increase
production
 Shortage of finance for investment – RR may have to invest in new
machines to increase production capacity

For example: One problem may be reduced liquidity (1). RR will need to buy
more raw materials such as wool to meet increased demand (app). This will
increase cash outflows (1) so net cash flow will reduce until the products are
sold, and revenue is received. (1)

Application could include: private limited company; rugs ; wool; new markets
in other countries; new technology; machine made rugs; 30 employees;
standard patterns; ecommerce; developing new website; operating for 5
years; excellent customer service.

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Question Answer Marks

2(b) Consider three methods RR could use to communicate the expansion 12

plans to its employees. Which method should RR choose? Justify your
answer.

Level Description Marks

3 Sound application of knowledge and understanding 9–12

of relevant business concepts using appropriate
terminology.

Detailed discussion of two or more methods.

Well-justified recommendation.

Candidates discussing the three methods in detail, in

context and with a well-justified recommendation,
including why the alternative methods were rejected,
should be rewarded with the top marks in the band.

2 Sound application of knowledge and understanding 5–8

of relevant business concepts using appropriate
terminology.

Detailed discussion of at least one method.

Judgement with some justification / some evaluation

of choices made.

Candidates discussing two or more methods in detail

and applying them to the case should be rewarded
with the top marks in the band.

1 Limited application of knowledge and understanding 1–4

of relevant business concepts.

Limited ability to discuss the methods with little/no

explanation.

Simple judgement with limited justification / limited

evaluation of choices made.

Candidates outlining the three methods in context

should be rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

2(b) Relevant points might include:

Advantages Disadvantages

 One-to-one  Can be expensive to

communication phone each
 Allows feedback to employee
ensure each of the  Mobile may be
30 employees switched off / not
understand the heard over the
Telephone /
message noise of the
Mobile
 Message can be machines
passed on quickly  May take time to
 Sender knows the reach the employees
message has been / takes more than
received one attempt to call
them

 Provides a  Can be slow to reach

permanent record production
Letter which can be employees – delay
referred back to could have further
negative impacts

 Seen by many  RR won’t know if all

employees in the the employees have
factory read the notice
Notices /  Comparatively cheap  No personal contact
noticeboard to produce the – no opportunity for
notices employees to ask
questions / one way
communication

 Cheap/fast way to  Do not know if the

communicate with all message has been
employees read – unless attach
 Can be sent to all a read receipt
Email employees at the  There may be poor
same time internet connection /
fail to send message
to production
employees

 Fast to send  Message will fail to

 Send to many send if no network
people at one time coverage
Text (SMS)
 Employee may not
message
have a mobile phone
– will not receive the
message

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Question Answer Marks

2(b)
 Two-way  If an employee is
communication – absent, then they
allows for instant may not get the
feedback message
Face-to-face
 Employees can ask  Can be difficult to
meeting
questions about the arrange for all the
expansion plans to employees to meet
sell rugs in other at same time/place
countries

 Cheap/fast to send  Do not know if all

message production
 Can send to employees have
Social media e.g.
everyone in the group read the message
Facebook group,
at the same time  Not all employees
WhatsApp group
will be on the app
and so may not
receive the message

Justification may include:

 Face-to-face meeting is best because this allows
the 45 employees to ask questions unlike
sending a message on email which is a one-way
method of communication. It allows them to have
personal contact with the Managing Director,
which helps to improve the relationship between
them and the management of RR. Other
methods such as a notice board are very
impersonal and may make them feel like the
Recommendation management of RR don’t really care.
 Email may be a good method of communicating
the expansion plans as RR’s HR manager can
include a diagram of the new structure. The
employees would have more detail about
expansion into new markets in other
countries.
 A text message sent to the employees would
ensure they are told of the future direction of the
rug manufacturing business quickly in a short
message which would be easy to read.

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Question Answer Marks

3(a) Explain one responsibility of each of the following in RR: 8

Award one mark for each relevant responsibility (max 4).

Award one additional mark for each explanation applied in this context.

Directors : Deciding the direction/strategy of the business – expanding into

new markets in other countries

Managers: Planning the resources needed for production – ensuring there is

sufficient wool to manufacture the products

Supervisors: Ensuring that the employees do their job correctly – this would
ensure that they maintain their reputation for excellent customer service

Production employees: To carry out their tasks effectively – to help ensure they
produce rugs with the correct standard patterns

For example: Managers will be responsible for planning the resources

needed in production (1) to ensure there is sufficient wool to manufacture the
rugs (app).

Application could include: private limited business; rugs; wool; new

markets in other countries / expansion into new markets; new technology
required; 30 employees; standard patterns; ecommerce; developing new
website; operating for 5 years; excellent customer service.

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Question Answer Marks

3(b) Consider the advantages and disadvantages of the following two 12

methods RR could use to increase the productivity of its employees.
Which method should RR choose? Justify your answer.

 Introducing new technology

 Increasing training

Level Description Marks

3 Sound application of knowledge and understanding 9–12

of relevant business concepts using appropriate
terminology.

Detailed discussion of both methods.

Well-justified recommendation.

Candidates discussing both methods in detail, in

context and with a well-justified recommendation,
including why the alternative method was rejected,
should be rewarded with the top marks in the band.

2 Sound application of knowledge and understanding 5–8

of relevant business concepts using appropriate
terminology.

Detailed discussion of at least one method.

Judgement with some justification / some evaluation

of choices made.

Candidates discussing at least one method in

detail and applying it to the case should be rewarded
with the top marks in the band.

1 Limited application of knowledge and understanding 1–4

of relevant business concepts.

Limited ability to discuss the methods with little/no

explanation.

Simple judgement with limited justification / limited

evaluation of choices made.

Candidates outlining both methods in context should

be rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

3(b) Relevant points might include:

Advantages Disadvantages

Introducing new  Fewer employees  May lead to

technology may be needed – redundancies –
lowering the wage increased short-term
cost costs due to
 Rugs can be redundancy
produced more payments
quickly/accurately –  Technology needs to
this will enable RR to be
increase output maintained/updated
 Changes in rug or may need to be
patterns can be replaced if RR want
implemented more to keep producing
quickly – the new patterns - this
business can could increase costs
respond to changes  High initial cost for
in consumer the investment
preferences more  Employees who have
quickly – remaining been trained to use
competitive the new technology
may ask for a pay
rise – increasing
labour costs

Increase training  Improved motivation  Employees may

– employees feel leave once trained
more valued as the and work for a
business is investing competitor company
in them – will adapt – the business does
to change more not gain a benefit /
quickly return on their
 Increase skills of the investment in training
30 production  There may be a
employees so short-term reduction
mistakes are in output whilst the
reduced – reducing employees are being
the cost of raw trained - RR may find
materials as there is it difficult to meet
less wastage any increase in
 Employees will demand
become more
flexible – as RR
expands into the
new markets in
other countries
and produces a
wider range of
patterns

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Question Answer Marks

3(b)
Justification may include:
 Introducing new technology is the best way to
increase the productivity of employees as it
increases the level of output in the same amount
of time. This means that RR can meet an
increase in sales more quickly and can produce
the most popular standard designs in larger
quantities. Training existing employees would
not increase productivity as much as they are
likely to be less accurate than the new
Recommendation
technology so RR may lose their reputation for
excellent customer service.
 Increased training is the best way to increase
the productivity of employees because they
would learn more skills and become more
flexible. This would enable RR to produce a
wider range of patterns of rugs to meet the
varied demand in the new markets in other
countries which may be different to the demand
in the existing markets.

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Question Answer Marks

4(a) Explain one opportunity and one threat to RR of using ecommerce. 8

Award one mark for a relevant opportunity/threat (max 2).

Award a maximum of three additional marks for each explanation – one of

which must be applied to this context.

Opportunities Threats

 Increase in demand for  Sales volume may fall – as

the product – due to an customers can more easily
increase in convenience compare competitor
for the customers products/prices so may switch to
 If the website is attractive an alternative producer
and easy to use  It can be expensive to hire a
customers may purchase website designer – good website
more products than they design is needed to ensure it
originally intended attracts consumers and is easy to
 Prices can be changed navigate
easily – reflecting the  Transport costs may be high –
level of demand – individual orders will be shipped to
leading to higher separate addresses and not to a
revenue central shop/location for
 Website can be used to distribution
promote products  No face-to-face contact with
worldwide – may be customers – this is potentially a
cheaper than other forms lost opportunity for market
of marketing research
 Inventory costs could be higher
as more stocks may need to be
kept in a warehouse to ensure
customer orders can be met in
the new markets

For example: Customers can more easily compare competitor prices (1) so
may switch to an alternative manufacturer of rugs (app) leading to sales
volumes falling (1) which may result in a lower market share (1).

Application could include: private limited business; rugs; wool; new

markets in other countries / expansion into new markets; new technology
required; 30 employees; standard patterns; ecommerce; developing new
website; operating for 5 years; excellent customer service.

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Question Answer Marks

4(b) Using Appendix 3 and other information, consider whether RR’s

Managing Director should be concerned about the financial
performance of the business. Justify your answer using suitable
calculations.

Level Description Marks

Sound application of knowledge and understanding of

relevant business concepts using appropriate
terminology.

Detailed discussion of why the MD should/should not be

concerned about the financial performance.
3 9–12
Well-justified recommendation.

Candidates discussing why the MD should/should not

be concerned about the financial performance,
supported by appropriate calculations, in context and with
a well-justified recommendation should be rewarded with
the top marks in the band.

Sound application of knowledge and understanding of

relevant business concepts using appropriate
terminology.

Detailed discussion of one reason / one appropriate

calculation to support why the MD should/should not be
concerned about the financial performance.
2 5–8
Judgement with some justification / some evaluation of
choices made.

Candidates discussing two or more reasons / two

appropriate calculations, in detail and applying them to
the case should be rewarded with the top marks in the
band.

Limited application of knowledge and understanding of

relevant business concepts.

Limited ability to discuss financial performance with

little/no explanation.
1 1–4
Simple judgement with limited justification / limited
evaluation of choices made.

Candidates outlining three financial performance

indicators in context should be rewarded with the top
marks in the band.

0 No creditable response. 0

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Question Answer Marks

4(b) Level 1 responses

 Revenue has increased by $7m from $25m to $32m
 Cost of sales has increased by $6m
 Expenses decreased by $2m
 More wool and other raw materials were needed to increase output to
meet increased demand

Level 2 responses/calculations

2021 2022

Gross Profit $15m $16m

GPM 60% 50%

Profit $5m $8m

Profit margin 20% 25%

 GPM has decreased – suggests that the cost of goods have increased by
a larger proportion than the increase in revenue from selling rugs – the
business is making a lower gross profit per $1 of revenue
 Profit margin has increased – the business is making more profit per $1
of revenue
 The GPM has decreased whilst the profit margin has increased - this would
mean that the cost of sales has increased but that expenses are more
controlled

Conclusion Justification may include:

 The Managing Director should not be concerned as
both the profit and the profit margin from
manufacturing rugs have increased. This could
mean that the expenses have been better controlled.
The extra profit could provide more funds for
reinvestment or higher dividends paid to
shareholders. Although the GPM has fallen the gross
profit has increased by $1m, and revenue has
increased by $7m.
 The Managing Director should be concerned as the
GPM has fallen, which might indicate that the cost of
wool is not being controlled.

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 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/11

*7093880573*

Paper 1 Short Answer and Data Response May/June 2023

1 hour 30 minutes

You must answer on the question paper.

No additional materials are needed.

INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.

INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].

This document has 12 pages. Any blank pages are indicated.

06_0450_11_2023_1.14
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 2

1 WLT manufactures carpets. It exports 40% of its products. Globalisation has created opportunities
and threats for WLT. Its method of production allows WLT to use specialisation. All of its 60
employees understand that quality assurance is important. WLT’s directors are considering the
best way to increase efficiency.

(a) Define ‘specialisation’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(b) Identify two methods of production.

Method 1: ..........................................................................................................................

...........................................................................................................................................

Method 2: ..........................................................................................................................

........................................................................................................................................... [2]

(c) Outline two advantages to WLT of using quality assurance.

Advantage 1: ....................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Advantage 2: ....................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

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 3

(d) Explain one opportunity and one threat of globalisation for WLT.

Opportunity: ......................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Threat: ..............................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Do you think improving labour skills is the best way for a manufacturing business to increase
efficiency? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

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 4

2 LMA is a family-owned restaurant. The business was started 20 years ago and has remained small.
LMA is a partnership. The partners are considering whether LMA should become a private limited
company. The Finance Manager is analysing LMA’s cash-flow forecast. An extract is shown in
Table 2.1.

Table 2.1
Extract from LMA’s cash-flow forecast 2023 ($000)

July August September

Cash inflow 420 300 330

Cash outflow 410 320 360

Net cash flow X (20) (30)

Opening balance 60 70 50

Closing balance 70 50 Y

(a) Identify two reasons why a business might have cash-flow problems.

Reason 1: .........................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

........................................................................................................................................... [2]

(b) Calculate X and Y.

X: ......................................................................................................................................

Y: ...................................................................................................................................... [2]

(c) Identify four examples of a cash inflow.

Example 1: ........................................................................................................................

...........................................................................................................................................

Example 2: ........................................................................................................................

...........................................................................................................................................

Example 3: ........................................................................................................................

...........................................................................................................................................

Example 4: ........................................................................................................................

........................................................................................................................................... [4]

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 5

(d) Explain one advantage and one disadvantage to LMA of becoming a private limited company.

Advantage: .......................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Disadvantage: ...................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Explain two reasons why a business might remain small. Which reason is likely to be most
important? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

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 6

3 DZD is a large parcel delivery business. Many of its employees work part-time. DZD’s directors are
planning to expand the business and have to decide on a suitable source of finance for 20 new
vehicles. DZD will also recruit 60 new employees. The Human Resources Director is preparing a
job description for the new employees. She is considering using Maslow’s hierarchy of needs to
increase the motivation of DZD’s employees.

(a) Define ‘job description’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(b) Identify two levels from Maslow’s hierarchy of needs.

1: .......................................................................................................................................

...........................................................................................................................................

2: .......................................................................................................................................

........................................................................................................................................... [2]

(c) Outline two factors DZD should consider when deciding which applicants to recruit.

Factor 1: ...........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Factor 2: ...........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

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 7

(d) Explain two sources of finance DZD might use for the new vehicles.

Source of finance 1: ..........................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Source of finance 2: ..........................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Do you think a service business should only employ part-time workers? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

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 8

4 NLR manufactures a range of branded skincare products including hand cream. Packaging of the
products is important. Like many businesses, NLR makes use of market segmentation. The Marketing
Director knows the stage of the product life cycle can influence NLR’s pricing decisions. He is
analysing market research data. This shows 85% of consumers expect businesses to respond to
environmental pressures.

(a) Identify two factors that might affect the accuracy of market research.

Factor 1: ...........................................................................................................................

...........................................................................................................................................

Factor 2: ...........................................................................................................................

........................................................................................................................................... [2]

(b) Identify two benefits to a business of using market segmentation.

Benefit 1: ..........................................................................................................................

...........................................................................................................................................

Benefit 2: ..........................................................................................................................

........................................................................................................................................... [2]

(c) Outline two ways NLR might respond to environmental pressures.

Way 1: ...............................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Way 2: ...............................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

© UCLES 2023 06_0450_11_2023_1.14

 9

(d) Explain how NLR’s pricing decisions might be affected at two different stages of the product
life cycle.

1: .......................................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

2: .......................................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Do you think promoting the brand image is the most important role of packaging? Justify your
answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

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 10

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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 06_0450_11_2023_1.14

 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/12

*6006910796*

Paper 1 Short Answer and Data Response May/June 2023

1 hour 30 minutes

You must answer on the question paper.

No additional materials are needed.

INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.

INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].

This document has 12 pages. Any blank pages are indicated.

06_0450_12_2023_1.15
© UCLES 2023 [Turn over
 2

1 FBW manufactures watches using job production. It employs 5 full-time production employees.
Each worker is offered regular training. Last year FBW sold 600 watches. The Managing Director
plans to use break-even analysis to help decide whether to increase the price of its products. FBW’s
current break-even chart is shown in Fig. 1.1.

Break-even chart for FBW’s watches

120 000

100 000
total revenue

total costs
80 000
costs and
revenue $
60 000

40 000

20 000 fixed costs

0
0 100 200 300 400 500 600 700 800
number of watches
Fig. 1.1

(a) Identify two reasons why a business might offer training to its employees.

Reason 1: .........................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

........................................................................................................................................... [2]

(b) Calculate the following values using Fig. 1.1:

Break-even output: ...........................................................................................................

Break-even revenue: ........................................................................................................ [2]

© UCLES 2023 06_0450_12_2023_1.15

 3

(c) Outline two possible effects on FBW’s break-even chart if the prices of its products are
increased.

Effect 1: .............................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Effect 2: .............................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

(d) Explain two benefits to FBW of having full-time employees.

Benefit 1: ..........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Benefit 2: ..........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2023 06_0450_12_2023_1.15 [Turn over

 4

(e) Do you think job production is the best method of production for a small business to use?
Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2023 06_0450_12_2023_1.15

 5

2 Gloria is a sole trader. Her business provides house-cleaning services. Gloria uses telephone calls
to communicate with her 4 employees. She wants to expand the business by offering a repair
service. Gloria plans to carry out some market research. She has been told producing a business
plan can help to reduce risk. Gloria would also like to reduce her workload and is considering taking
on a business partner.

(a) Identify two ways a business plan can help a business to reduce risk.

Way 1: ...............................................................................................................................

...........................................................................................................................................

Way 2: ...............................................................................................................................

........................................................................................................................................... [2]

(b) Identify two possible reasons why a business might want to expand.

Reason 1: .........................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

........................................................................................................................................... [2]

(c) Outline one advantage and one disadvantage to Gloria of using telephone calls as a method
of communication with her employees.

Advantage: .......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Disadvantage: ...................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

© UCLES 2023 06_0450_12_2023_1.15 [Turn over

 6

(d) Explain two factors Gloria should consider when deciding whether to take on a business
partner.

Factor 1: ...........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Factor 2: ...........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Explain two methods of primary market research a business could use to find out the demand
for a new product or service. Which would be the best method to use? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2023 06_0450_12_2023_1.15

 7

3 VVA is a business based in country X. It manufactures school backpacks (bags). VVA uses retailers
as its channel of distribution. The Managing Director knows there are many factors that can affect
demand including the stage of the business cycle and how competitive the market is. VVA imports
45% of its raw materials. The Managing Director is worried that the introduction of import tariffs
and import quotas, as well as an appreciation in country X’s exchange rate, will affect VVA.

(a) Define ‘import tariff’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(b) Identify two reasons why some markets can become more competitive.

Reason 1: .........................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

........................................................................................................................................... [2]

(c) State the four stages of the business cycle.

1: .......................................................................................................................................

...........................................................................................................................................

2: .......................................................................................................................................

...........................................................................................................................................

3: .......................................................................................................................................

...........................................................................................................................................

4: .......................................................................................................................................

........................................................................................................................................... [4]

© UCLES 2023 06_0450_12_2023_1.15 [Turn over

 8

(d) Explain one possible effect of the following changes on VVA when importing raw materials:

Introduction of import quotas in country X: .......................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Appreciation of country X’s exchange rate: ......................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Do you think retailers are the best channel of distribution for a manufacturing business to use?
Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2023 06_0450_12_2023_1.15

 9

4 CPF is a clothing retailer. It is a private limited company. It has 4 shops and 30 employees. The
Finance Director is concerned about the amount of current assets because working capital is
important. The amount of retained profit is also low. CPF’s directors are planning to expand the
business by opening a new shop. A suitable source of long-term finance will need to be identified.
The plan to expand will affect many of CPF’s stakeholder groups.

(a) Define ‘retained profit’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(b) Define ‘current assets’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(c) Outline two possible reasons why working capital is important for CPF.

Reason 1: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

© UCLES 2023 06_0450_12_2023_1.15 [Turn over

 10

(d) Explain one way each of the following stakeholder groups might be affected by CPF’s plans
to expand its business.

Employees: .......................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Suppliers: ..........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Do you think it is better for a private limited company to use debt (e.g. a loan) or equity (issuing
more shares) as a source of long-term finance? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

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 11

BLANK PAGE

© UCLES 2023 06_0450_12_2023_1.15

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BLANK PAGE

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 06_0450_12_2023_1.15

 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/13

*6251666735*

Paper 1 Short Answer and Data Response May/June 2023

1 hour 30 minutes

You must answer on the question paper.

No additional materials are needed.

INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.

INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].

This document has 12 pages. Any blank pages are indicated.

06_0450_13_2023_1.10
© UCLES 2023 [Turn over
 2

1 TDG is a bicycle retailer. It has 3 employees. TDG needs to maintain customer loyalty as the
business sells in a mass market. Simon, the manager, knows managing cash flow is important. He
is analysing TDG’s cash-flow forecast. An extract is shown in Table 1.1. Simon is considering ways
for TDG to overcome its short-term cash-flow problem in September.

Table 1.1
Extract from TDG’s cash-flow forecast 2023 ($000)

July August September

Cash inflow X 50 40

Cash outflow 50 50 Y

Net cash flow 10 0 (40)

Opening balance 20 30 30

Closing balance 30 30 (10)

(a) Define ‘mass market’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(b) Calculate X and Y.

X: ......................................................................................................................................

Y: ...................................................................................................................................... [2]

(c) Outline two reasons why managing cash flow might be important for TDG.

Reason 1: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

© UCLES 2023 06_0450_13_2023_1.10

 3

(d) Explain two ways TDG could overcome its short-term cash-flow problem in September.

Way 1: ...............................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Way 2: ...............................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Explain two methods a retailer could use to maintain customer loyalty. Which would be the
best method to use? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2023 06_0450_13_2023_1.10 [Turn over

 4

2 KCL manufactures paper which is used in the production of newspapers and books. KCL holds a
high level of inventory and buys all its raw materials, including wood, from local suppliers. Quality
control is important. The Operations Director is considering ways to increase efficiency in the factory.
Pressure groups are trying to influence KCL’s decisions to ensure that the business does not create
more external costs than external benefits.

(a) Define ‘quality control’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(b) Identify two ways a pressure group might try to influence business decisions.

Way 1: ...............................................................................................................................

...........................................................................................................................................

Way 2: ...............................................................................................................................

........................................................................................................................................... [2]

(c) State four benefits to a business of increasing efficiency.

Benefit 1: ..........................................................................................................................

...........................................................................................................................................

Benefit 2: ..........................................................................................................................

...........................................................................................................................................

Benefit 3: ..........................................................................................................................

...........................................................................................................................................

Benefit 4: ..........................................................................................................................

........................................................................................................................................... [4]

© UCLES 2023 06_0450_13_2023_1.10

 5

(d) Explain one external cost and one external benefit that may be created by KCL’s business.

External cost: ....................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

External benefit: ................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Explain two factors a manufacturing business should consider when deciding how much
inventory to hold. Which factor is likely to be the most important? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2023 06_0450_13_2023_1.10 [Turn over

 6

3 PCY provides insurance services for businesses such as farms and factories. Being ethical is
important to PCY. The business has 4 offices and 500 employees. Managers use different leadership
styles. The Managing Director is planning to change how PCY is organised and managed. He said:
‘I want to reduce communication barriers within the business. Delegation will be encouraged. The
span of control could change.’

(a) Define ‘span of control’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(b) Identify two leadership styles.

Leadership style 1: ...........................................................................................................

...........................................................................................................................................

Leadership style 2: ...........................................................................................................

........................................................................................................................................... [2]

(c) Outline two benefits to PCY of encouraging its managers to use delegation.

Benefit 1: ..........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Benefit 2: ..........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

© UCLES 2023 06_0450_13_2023_1.10

 7

(d) Explain two possible reasons why being ethical is important to PCY.

Reason 1: .........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Do you think lack of feedback is the main barrier to effective communication in a business?
Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2023 06_0450_13_2023_1.10 [Turn over

 8

4 Meena wants to leave her job as a teacher to become a successful entrepreneur. Her business
will produce handmade jewellery. Meena knows that there is government support for business
start-ups. She plans to use market research to help identify a market segment for her jewellery.
Meena’s brother has offered to become her business partner but she cannot decide whether it
would be better to operate as a sole trader.

(a) Identify two ways a government might support business start-ups.

Way 1: ...............................................................................................................................

...........................................................................................................................................

Way 2: ...............................................................................................................................

........................................................................................................................................... [2]

(b) Identify two ways a market can be segmented.

Way 1: ...............................................................................................................................

...........................................................................................................................................

Way 2: ...............................................................................................................................

........................................................................................................................................... [2]

(c) Outline two characteristics Meena will need to become a successful entrepreneur.

Characteristic 1: ................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Characteristic 2: ................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

© UCLES 2023 06_0450_13_2023_1.10

 9

(d) Explain one advantage and one disadvantage to Meena of operating as a sole trader rather
than being in a partnership.

Advantage: .......................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Disadvantage: ...................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Do you think accessing government sources, such as statistics, is the best method of market
research for a start-up business to use? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

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 10

BLANK PAGE

© UCLES 2023 06_0450_13_2023_1.10

 11

BLANK PAGE

© UCLES 2023 06_0450_13_2023_1.10

 12

BLANK PAGE

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 06_0450_13_2023_1.10

 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/21

*9557593015*

Paper 2 Case Study May/June 2023

1 hour 30 minutes

You must answer on the question paper.

You will need: Insert (enclosed)

INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.

INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.

This document has 12 pages. Any blank pages are indicated.

06_0450_21_2023_1.15
© UCLES 2023 [Turn over
 2

1 (a) Explain four barriers to communication for a business.

Barrier 1: ...........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Barrier 2: ...........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Barrier 3: ...........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Barrier 4: ...........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

© UCLES 2023 06_0450_21_2023_1.15

 3

(b) Consider the following two ways VP can purchase its inventory. Which way should it use?
Justify your answer.

• Head Office purchases the inventory for all the restaurants.

• Restaurant Managers purchase their own inventory from local suppliers.

Head Office purchases the inventory for all the restaurants: ...........................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Restaurant Managers purchase their own inventory from local suppliers: .......................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Recommendation: ............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

© UCLES 2023 06_0450_21_2023_1.15 [Turn over

 4

2 (a) Explain two advantages and two disadvantages of VP’s Restaurant Managers delegating
tasks to their Assistant Managers.

Advantage 1: ....................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Advantage 2: ....................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Disadvantage 1: ................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Disadvantage 2: ................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

© UCLES 2023 06_0450_21_2023_1.15

 5

(b) Using Appendix 2 and other information, consider the two countries VP could choose to locate
its new restaurants. Which country should VP choose? Justify your answer.

Country A: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Country B: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Recommendation: ............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

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 6

3 (a) Explain two possible reasons why VP wants to expand.

Reason 1: .........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

© UCLES 2023 06_0450_21_2023_1.15

 7

(b) Consider the benefits and limitations of the following two ways VP can enter a new market in
another country. Which way should VP choose? Justify your answer.

• Joint venture
• Franchising

Joint venture: ....................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Franchising: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Recommendation: ............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

© UCLES 2023 06_0450_21_2023_1.15 [Turn over

 8

4 (a) Explain, using an example, one reason why VP might need:

• short-term finance
• long-term finance.

Short-term finance: ...........................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Long-term finance: ............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

© UCLES 2023 06_0450_21_2023_1.15

 9

(b) Using Appendix 3 and other information, consider how the following three changes in country
Z may affect VP. Which change is likely to have the greatest effect on VP's profits? Justify
your answer.
• Increase in interest rates.
• Depreciation of country Z’s exchange rate.
• New legal controls which require all restaurants to list the ingredients in their meals.

Increase in interest rates: .................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Depreciation of country Z’s exchange rate: ......................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

New legal controls which require all restaurants to list the ingredients in their meals: .....

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Conclusion: .......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 06_0450_21_2023_1.15

 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/22

*2035001524*

Paper 2 Case Study May/June 2023

1 hour 30 minutes

You must answer on the question paper.

You will need: Insert (enclosed)

INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.

INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.

This document has 12 pages. Any blank pages are indicated.

06_0450_22_2023_1.14
© UCLES 2023 [Turn over
 2

1 (a) Explain four characteristics needed for an entrepreneur to be successful.

Characteristic 1: ................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Characteristic 2: ................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Characteristic 3: ................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Characteristic 4: ................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

© UCLES 2023 06_0450_22_2023_1.14

 3

(b) Consider the advantages and disadvantages of starting up ET as either an unincorporated

business or as a limited company. Which should Zane and Zaara choose? Justify your answer.

Unincorporated business: .................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Limited company: .............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Recommendation: ............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

© UCLES 2023 06_0450_22_2023_1.14 [Turn over

 4

2 (a) Explain one business objective for ET and one other objective that a social enterprise like
Daycare might have.

Business objective for ET: ................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Objective for a social enterprise like Daycare: .................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

© UCLES 2023 06_0450_22_2023_1.14

 5

(b) Using Appendix 2 and other information, consider the two options for the first performance at
the theatre. Which is the best option for Zaara to choose? Justify your answer using suitable
calculations.

Option 1: ...........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Option 2: ...........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Recommendation: ............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

© UCLES 2023 06_0450_22_2023_1.14 [Turn over

 6

3 (a) Explain four reasons why it is important that Zane prepares a cash-flow forecast before starting
ET.

Reason 1: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 3: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 4: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

© UCLES 2023 06_0450_22_2023_1.14

 7

(b) Consider the following three roles of marketing for ET. Which role will be the most important
for ET to be successful? Justify your answer.

• Identifying customer needs

• Satisfying customer needs
• Maintaining customer loyalty

Identifying customer needs: ..............................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Satisfying customer needs: ..............................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Maintaining customer loyalty: ...........................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Conclusion: .......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

© UCLES 2023 06_0450_22_2023_1.14 [Turn over

 8

4 (a) Explain two leadership styles that Zane and Zaara could use when managing ET’s employees.

Leadership style 1: ...........................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Leadership style 2: ...........................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

© UCLES 2023 06_0450_22_2023_1.14

 9

(b) Consider the following three ethical issues for the theatre. Which ethical issue is likely to have
the biggest effect on ET? Justify your answer.

• Paying fair wages to employees

• Only buying costumes produced in the local community
• Purchasing all refreshments from suppliers that do not pollute the environment

Paying fair wages to employees: ......................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Only buying costumes produced in the local community: ................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Purchasing all refreshments from suppliers that do not pollute the environment: ............

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Conclusion: .......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

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© UCLES 2023 06_0450_22_2023_1.14

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© UCLES 2023 06_0450_22_2023_1.14

 12

BLANK PAGE

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 06_0450_22_2023_1.14

 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/23

*3747335787*

Paper 2 Case Study May/June 2023

1 hour 30 minutes

You must answer on the question paper.

You will need: Insert (enclosed)

INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.

INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.

This document has 12 pages. Any blank pages are indicated.

06_0450_23_2023_1.13
© UCLES 2023 [Turn over
 2

1 (a) Explain four reasons why a business might become a multinational company.

Reason 1: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 3: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 4: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

© UCLES 2023 06_0450_23_2023_1.13

 3

(b) Consider the advantages and disadvantages of the following three methods of promotion RR
could use in the new markets. Which would be the most suitable method for RR to use? Justify
your answer.

• Television
• Billboards
• Sponsorship of a sports team

Television: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Billboards: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Sponsorship of a sports team: ..........................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Recommendation: ............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

© UCLES 2023 06_0450_23_2023_1.13 [Turn over

 4

2 (a) Explain two problems RR might experience as it expands.

Problem 1: ........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Problem 2: ........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

© UCLES 2023 06_0450_23_2023_1.13

 5

(b) Consider three methods RR could use to communicate the expansion plans to its employees.
Which method should RR choose? Justify your answer.

Method 1: ..........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Method 2: ..........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Method 3: ..........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Recommendation: ............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

© UCLES 2023 06_0450_23_2023_1.13 [Turn over

 6

3 (a) Explain one responsibility of each of the following in RR:

Directors: ..........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Managers: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Supervisors: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Production employees: .....................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

© UCLES 2023 06_0450_23_2023_1.13

 7

(b) Consider the advantages and disadvantages of the following two methods RR could use to
increase the productivity of its employees. Which method should RR choose? Justify your
answer.

• Introducing new technology

• Increasing training

Introducing new technology: .............................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Increasing training: ...........................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Recommendation: ............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

© UCLES 2023 06_0450_23_2023_1.13 [Turn over

 8

4 (a) Explain one opportunity and one threat to RR of using ecommerce.

Opportunity: ......................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Threat: ..............................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

© UCLES 2023 06_0450_23_2023_1.13

 9

(b) Using Appendix 3 and other information, consider whether RR’s Managing Director should be
concerned about the financial performance of the business. Justify your answer using suitable
calculations.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Conclusion: .......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

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© UCLES 2023 06_0450_23_2023_1.13

 11

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© UCLES 2023 06_0450_23_2023_1.13

 12

BLANK PAGE

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 06_0450_23_2023_1.13

 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2024
Principal Examiner Report for Teachers

BUSINESS STUDIES

Paper 0450/11
Short Answer/Data Response

Key messages

• Definitions of key terms need to be precise.

• Candidates should use distinctly different application and analysis for each point of
knowledge as the same point can only be credited once within a given answer.
• Candidates should also be reminded that there are no application marks in part (e) of each
question.
• Effective evaluation is an area which continues to require development. Evaluation must
include a justified decision that follows on from, but does not simply repeat, the points made
earlier in the answer. The mark scheme for each part (e) question includes an example of
how evaluation may be demonstrated in the answer.

General comments

Candidates found many of the topic areas in the paper challenging. This was particularly true of questions 3
and 4. Candidates had quite limited knowledge of some topics such as how an increase in non-current
liabilities might affect a business, providing a clear definition of a social enterprise, and often confused being
ethical with being environmentally friendly.

A noticeable proportion of candidates lost marks in questions 2(c), 3(c) and 4(c) by not applying their answer
to the business stated in the question stem.

Candidates continue to state as an analytical point that profit will rise or fall following a change in costs or
price. This is not necessarily true as profit depends upon the number of sales as well as costs and price.
Candidate who recognised that it is the profit margin that would alter scored more highly with this sort of
point.

Comments on specific questions

Question 1

(a) Many candidates were aware of the term economies of scale but were not familiar with the term
tested, diseconomies. A mark of one was often awarded for recognising that costs rise as a
business grows without identifying average or unit cost specifically. A number of candidates did not
attempt this question.

(b) The most frequently given correct answers were to set prices or decide if costs required adjusting.
Some candidates misread the question or did not realise that they needed to talk about decisions.
These candidates explained how costs led to a rise or fall in profit which did not answer the
question.

(c) Candidates found this to be one of the most straightforward questions on the paper. Many
candidates gained three or four marks. An error made in weaker responses was to identify the item
bought rather than the cost, for example stating building rather than rent or mortgage payments.

(d) This topic was generally well understood. The strongest answers explained the benefit of being
able to respond quickly to unexpected rises in demand and the disadvantage of paying for extra
storage space. Even the strongest candidates struggled to develop their answers fully to gain both

© 2024
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2024
Principal Examiner Report for Teachers

analysis marks. Candidates who identified the benefit of being able to meet rising demand then
often explained that this would improve customer satisfaction rather than the benefit to FBM of
customer loyalty. Disadvantages were often better explained than advantages. Candidates often
struggled to identify two distinct points of application.

(e) A mark of two was common as candidates were aware that customers purchase items and
employees produce them. The strongest candidates developed these points to show the positive
effects on revenue and brand image. Very few candidates attempted an evaluative conclusion. The
most successful conclusions focused on the ease of replacing workers with machines and the
difficulty of attracting customers.

Question 2

(a) There were many precise definitions of this term. A common error was to confuse span of control
with chain of command or hierarchy. A number of candidates incorrectly stated that this is ‘the level
of control a leader has’, with no reference to the number of people.

(b) Autocratic leadership was well understood by most candidates. Weaker responses focused on the
workers rather than the managers/leaders and stated that workers have no say.

(c) The strongest answers focused on the loyalty of full-time workers and the ease of communication.
Even the strongest candidates struggled to achieve all the marks available as they did not offer two
separate points of application. Many candidates incorrectly thought that full-time workers would be
more productive or focused which is not a defining feature and may not be true.

(d) Candidates were confident in their understanding of this topic. A broad range of points were
correctly made and applied effectively to the information in the stem. The strongest responses
often explained the limitation of the high cost to this business aiming to expand. Weaker candidates
lost analysis marks by explaining the effect on the worker rather than to the business. A common
error was to confuse off-the-job and on-the-job training.

(e) Candidates found this to be the most challenging question on the paper. A mark of one or two was
common amongst even the strongest candidates who identified speed of growth and cost. Very few
candidates were able to develop their points to gain the analysis and evaluation marks. Many
candidates confused growth with recruitment and discussed the benefits of new ideas and skills
which could not be credited.

Question 3

(a) This term was not well understood by the majority of candidates. Often one mark was awarded for
identifying this involves a lot of sales. The weakest candidates confused this with a supermarket or
shopping mall by explaining that it is a place where many different products are available for sale.

(b) Many correct answers lost a mark on this question by not recognising that the total was in millions.

(c) Candidates who understood that short-term finance is used for day-to-day expenses and long-term
finance is used for larger purchases scored highly. A number of candidates misread the question
and provided examples of each type of finance. Another common error was to state that short-term
finance was used to pay short-term debts and long-term finance was used to pay long-term debts.

(d) A number of candidates did not attempt this question. Candidates who did attempt to answer often
struggled to focus on the question set. The strongest answers recognised that higher debt may
lead to banks refusing further loans therefore limiting working capital. The majority of answers
gained knowledge marks only for identifying that interest would be paid and that there is a
requirement to pay back borrowing. A common error was to state that this would cause the
business to increase prices or buy cheaper materials which is not necessarily the case.

(e) This question produced a range of answers. The strongest responses identified that increased
sales would improve revenue and a strong brand image would lead to customer loyalty and
success. Evaluations following from these points often explained the benefits of spreading risk or
economies of scale further improving profitability. Weaker candidates often repeated similar points
such as these companies would have more customers and more sales which could only be

© 2024
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2024
Principal Examiner Report for Teachers

credited once. A common misconception was that a multinational company would have increased
market share rather than a share in a number of different markets.

Question 4

(a) Candidates found the concept of social enterprise challenging to define and some did not attempt
this question. Candidates who did attempt a definition often confused social enterprise with a
business being ethical or environmentally aware. A number of candidates attempted to use the
question stem to construct an answer, for example by incorrectly stating that social enterprise
means purchasing locally.

(b) The strongest candidates recognised that controls over marketing would impact the 4 Ps. A
significant number of candidates misread the question and explained other laws such as the
minimum wage or gave general answers which were too vague to credit such as ‘this will lead to
closure of the business’.

(c) Candidates who recognised that skimming involved a high price often achieved three marks. The
most frequently given correct answers were a high-quality image as an advantage and the
disadvantage of the high price discouraging customers. Some candidates incorrectly stated that
skimming would lead to higher revenue rather than higher revenue per item. A number of
candidates incorrectly thought that skimming is a low or competitive pricing method. Application
was often limited to mention of chocolate bars in both parts of the answer which could only be
credited once.

(d) Candidates found this to be the relatively straightforward questions. Strong answers focused on the
advantage of retailers promoting the product or increased sales and the disadvantage of a lack of
direct contact with consumers or higher costs. Weaker candidates were able to identify a
knowledge point but could not apply this to the business in the stem or explain why this was a
benefit or disadvantage. These candidates often stated that the effect would be a rise or fall in
profit rather than profit margin.

(e) Many candidates confused being ethical with being environmentally friendly. The strongest
answers explained why the costs of a business being ethical might be higher, often due to fair
wages or limited availability of resources. These candidates often then explained how strong
customer loyalty may mean higher demand and a willingness to pay a higher price for such
products. Weaker candidates simply stated that costs would be higher with no explanation. These
answers were too general to be credited.

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 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2024
Principal Examiner Report for Teachers

BUSINESS STUDIES

Paper 0450/12
Short Answer/Data Response

Key messages

• Definitions need to be precise. They do not need to match the coursebook word for word, as long as the
meaning is clear.
• Candidates should be encouraged to use information from the stem to help answer part (c) and part (d)
questions as this provides the basis for application. A different contextual reference is needed for each
point made.
• Candidates cannot gain credit for using the same analysis for both points within the same question.
• Evaluation continues to be a skill that needs improving. Evaluation requires candidates to make a
supported judgement. This should build on the analysis points made and clearly answer the question
set. A decision alone or summary of earlier points is not evaluation. The mark scheme includes an
example of an answer which includes evaluation for each part (e) question.

General comments

Candidates found this to be an accessible paper with most candidates demonstrating good subject
knowledge. However, some candidates did not include relevant application or analysis. Most candidates
struggled to access the evaluation marks.

It is important that candidates read each question carefully to ensure they have the correct focus and are
answering the question set. For example, some candidates misread 3(e) which resulted in low marks for
these candidates on this question.

It is pleasing to see a significant improvement in the number of candidates using application in their answers.
To gain application, candidates need to use the information provided in the stem to support the points made.
Application does not have to be difficult – simply using appropriate references from the scenario to support
the point being made should allow candidates to access these marks. A different point of application is
required for each answer given within the same question.

Analysis involves developing the points made. Some candidates repeated the knowledge point rather than
explaining how or why the initial point was relevant. Others identified new points of knowledge which is
unnecessary.

Evaluation continues to be challenging for most candidates. Many responses still do not include a decision in
part (e). Of those candidates who did attempt an evaluative comment, most were unable to provide reasoned
statements to back up the decision made. Candidates should be encouraged to include a clear decision,
provide a supporting reason for the decision, and then explain why it is better than the alternative discussed.

Comments on specific questions

Question 1

(a) This question was well answered by most candidates with many gaining two marks. A common
mistake was to identify ways a government could support businesses. Other candidates made
statements about ‘helping the economy’ which were too vague. Had they linked this point to GDP, it
could have been awarded.

(b) This question produced a range of responses. Better candidates identified two valid ways with
good service and asking for feedback being typical responses. A common mistake was to repeat

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 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2024
Principal Examiner Report for Teachers

similar points for both answers which could only be awarded once. Other candidates misread the
question so identified ways to increase sales for example by offering lower prices.

(c) Good knowledge of niche markets was evident in most responses with less competition and fewer
customers being typical answers. A common mistake was to make no reference to the context so
many candidates missed the opportunity to access application marks. For example, mentioning
that this was a new business or that the business would offer walking holidays.

(d) This question required candidates to explain the usefulness of two different elements of a business
plan, namely business objectives and data about the market. Some candidates struggled with the
first part as they identified objectives rather than explaining how objectives might be helpful. Most
correct answers recognised objectives could provide a sense of direction or target which could help
make decisions or motivate the entrepreneur. For the second part, data about the market, better
responses explained how understanding customer demand or the level of competition could help
increase revenue or make pricing decisions. A common mistake was repetition. For example, by
repeating the knowledge point instead of offering analysis.

(e) Most candidates were able to identify two characteristics of a successful entrepreneur. Better
responses were able to explain how being creative would lead to new ideas whilst being
hardworking could mean they would have to miss out on holidays and work long hours to help the
business be successful. The best responses did access at least one evaluation mark for comparing
and explaining why one characteristic was likely to be more important than the alternative. Instead
of analysis, weaker responses tended to repeat the knowledge points. Other candidates offered a
decision, but the evaluation simply repeated points made earlier in the answer.

Question 2

(a) Most candidates understood that a tertiary sector business provides services. Better responses
provided a full definition. The most common mistake was to identify examples of individual
businesses including retailers and banks.

(b) Those candidates who understood ROCE tended to gain both marks. A common mistake was to
use the value for revenue instead of profit. Some candidates omitted the % sign which suggests
limited understanding of the concept. Others added or subtracted the numbers together randomly
or used the wrong values.

(c) This question produced a range of answers. Better responses understood that profit margin could
be improved by increasing price, lowering variable costs or lowering fixed costs. Application was
often awarded for appropriate references to food or cafe. Weaker candidates gained the knowledge
marks but there was no attempt at application. The most common mistake was to identify ways to
increase sales. Other candidates confused price with cost, and lost marks unnecessarily.
Candidates need to be careful to use the correct terminology as price and cost are different
concepts.

(d) Most candidates showed excellent knowledge of social media. Better responses were then able to
explain how a wider reach could help increase sales, and how the low cost of social media could
help lower expenses. The best responses linked points to the context of GTB’s cafes. A common
mistake was to suggest social media was quicker or easier, but this was too vague on its own. To
be credited, candidates needed to explain why it was quicker, for example quick to update. Other
candidates had the wrong focus so explained possible advantages to customers rather than to the
business.

(e) Many candidates found this question challenging. Candidates were required to explain how
different external groups, including banks, use the financial accounts of a business. For example,
banks might be interested in the level of profit to decide whether to offer loans. Better responses
also considered how other users, including suppliers or governments, might use the accounts
which was another valid way to access the knowledge and analysis marks. The best responses
then used the comparison between the different external users to decide whether banks were the
main users of accounts. The most common incorrect answer was shareholders. Some misread the
question so discussed why businesses use banks. Other candidates assumed the question was
about sources of finance so wrongly discussed different ways a business could raise finance. It is
important that candidates read the question carefully.

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 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2024
Principal Examiner Report for Teachers

Question 3

(a) The concept of laissez-faire leadership was well understood by most candidates. Some knew that
managers do not tell employees what to do. Better answers recognised that it involved allowing
employees to make decisions. A common mistake was to confuse laissez-faire with democratic
leadership.

(b) Most candidates gained at least one mark for identifying roles such as making decisions or
planning. A common mistake was to repeat the word ‘manage’ which was in the question. Other
candidates repeated similar points for both roles which could only be credited once.

(c) This question produced a ranged of responses. Most candidates showed good knowledge of
external costs, but many struggled to identify an external benefit. A common mistake was to state
they would provide oil, but this simply described the business activity. Some reused ‘oil’ as the
application for both answers. Others wrongly identified costs and benefits to the business.

(d) This question was well answered by most candidates by recognising that emails could be referred
to whilst online meetings allowed for instant feedback. Such responses tended to link their answers
to the context. A common mistake was to explain advantages without identifying a communication
method. Other candidates made no reference to the context. For example, they could have
mentioned that the business had operations in 6 countries or needed to communicate with 2000
employees. Some candidates included disadvantages of each method which was unnecessary.

(e) This question produced a range of responses. Some candidates showed good knowledge of
pressure groups and were able to explain how methods such as boycotts and protests would work
to influence business decisions. The best responses included a supported decision which
explained why one of the named ways was better than the alternative. Weaker responses identified
ways but struggled to develop the points made. Some candidates misread the question so focused
on why a pressure group might want to influence decisions. Others simply repeated the word
‘pressure’ or said it would influence business without identifying how this would be achieved.
Instead of evaluation most candidates repeated points already made.

Question 4

(a) Most candidates understood that an import quota was intended to limit the number of imports.
Better responses were able to provide a precise definition. The most common mistake was to
confuse an import quota with an import tariff.

(b) Most candidates understood that lower tax rates could lower costs or increase profit. A common
mistake was to repeat the question by stating that the business would pay less taxes. Some
candidates confused taxes with interest rates. Others thought lower taxes would result in
employees being paid more wages which is not necessarily true.

(c) Many candidates could identify at least three legal controls with minimum wage, unfair dismissal
and discrimination being typical answers. A common mistake was to identify ethical issues. For
example, fair wages are an ethical consideration not a legal requirement. Some candidates listed
different elements of an employment contract which could only be credited once. Others misread
the question so focused on factors to consider when recruiting employees.

(d) The most common correct answer for suppliers was distance. Better responses then explained how
being close or far away from suppliers could help reduce or increase transport costs respectively.
Application was often awarded for appropriate references to materials needed to make cups or
plates. A common mistake was to define suppliers rather than explain why suppliers might be a
factor that needed to be considered.

For suitability of land many candidates discussed factors such as rent, space and electricity
recognising that high rent would increase fixed costs or that lack of electricity could prevent
production. Mentioning factory or flow production showed good application. Points about access to
customers were not credited as this is not classed as a significant factor for a manufacturer. Other
candidates simply repeated the question saying the land needed to be suitable with no further
development.

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 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2024
Principal Examiner Report for Teachers

(e) Most candidates understood the concept of flow production. This meant candidates often gained
the knowledge marks, but many struggled to develop their points effectively. Without analysis
answers cannot access the evaluation marks. Instead of analysis, many candidates identified
additional knowledge. There were many misconceptions. For example, economies of scale leads to
lower average costs not simply lower costs and high output does not automatically means high
sales. Some responses discussed quality which is a different concept. Candidates also need to
ensure they have the correct focus. For example, the impact on a business of tasks being repetitive
is demotivating for employees. Several candidates confused the concept with batch or job
production. Others discussed whether flow production was better than job or batch which was a
different question.

© 2024
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2024
Principal Examiner Report for Teachers

BUSINESS STUDIES

Paper 0450/13
Short Answer/Data Response

Key messages

• Definitions need to be precise. They do not need to match the coursebook word for word if the meaning
is clear.
• Candidates should use information from the stem to help answer part (c) and part (d) questions as this
provides the basis for application. A different contextual reference is needed for each point made.
• Candidates must try to develop the points made rather than repeating their knowledge. Analysis
requires candidates to show the effect or consequence of the point made.
• Evaluation is a skill that needs improving. Evaluation requires candidates to make a supported
judgement. This should build on the analysis points made and clearly answer the question set. A
decision alone or summary of earlier points is not evaluation. The mark scheme includes an example of
an answer which includes evaluation for each part (e) question.

General comments

The paper produced a wide range of marks. Overall, candidates showed reasonable knowledge of business
concepts, but most found accessing the application, analysis and evaluation marks more challenging.

Parts (a) and (b) of each question were generally well attempted. However, most candidates lacked the
necessary precision in definitions or range of knowledge to access all the marks available.

For most part (c) (excluding 4(c) which only assessed knowledge) and all part (d) questions, candidates
should use information from the stem to link their answers to the scenario to access application marks. A
different reference must be used for each point made within a given question.

Analysis involves developing the points made. For example, an increase in demand could increase revenue.
Many candidates repeated their knowledge point rather than explain how or why their initial point was
relevant. Other candidates identified new points of knowledge which is unnecessary.

Candidates need to develop their evaluative skills. Of those candidates who did attempt an evaluative
comment most were unable to provide a reasoned statement to support their decision. One approach is to
make a choice, provide a reason for this decision, and then explain why it is better than the alternative.

Comments on specific questions

Question 1

(a) Many candidates could identify a non-current asset or a non-current liability. Only the best
candidates were able to identify a relevant example for both parts. Common mistakes included
identifying factors of production or copying the values from Table 1.1.

(b) This question produced a range of responses. Candidates who understood the concept of a current
ratio tended to gain full marks. Many found this question difficult as they did not know the correct
formula. For example, some candidates added all four values from Table 1.1 together or combined
total assets and total liabilities. Others calculated working capital. A significant number of
candidates did not attempt this question.

(c) Good knowledge was evident in most responses. Typical correct answers focused on ways such
as limiting output or having to change the equipment used to help protect the environment. A

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 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2024
Principal Examiner Report for Teachers

common mistake was to repeat the same application for both answers. A common misconception
was to automatically assume the business would have to close.

(d) Many candidates were able to identify factors such as amount required or cost of interest but
struggled to explain why these factors might be important when deciding on a source of finance.
Application was rarely awarded. To access these marks, candidates needed to include appropriate
references from the stem. For example, mentioning that the business uses a lot of technology or
that it harvested wood. A common mistake was to identify sources of finance which was
unnecessary. Other candidates made vague comments about the ability to repay – without making
it clear why this might be an issue that needed to be considered.

(e) Most candidates showed good knowledge of ways to increase added value, namely increasing
price and lowering the cost of materials. Analysis was often limited as candidates tended to discuss
the impact on sales or profit rather than how the chosen way would increase added value. Other
candidates simply stated it would increase added value, without explaining how the chosen way
would help to achieve this. For example, cheaper materials would lower costs while excellent
service could allow the business to increase prices. A common mistake was to reuse the same
analysis twice. Evaluation was limited or not awarded.

Question 2

(a) This question was poorly answered by most candidates. Only better responses were able to
provide a precise definition of profit. A common mistake was a lack of precision as candidates
referred to costs or expenses instead of total costs. Others confused profit with revenue or gross
profit.

(b) This question produced a range of responses. Better candidates identified two relevant reasons
notably age, tastes and income. A common mistake was to focus on why people might no longer
want to visit Alana’s restaurant. Other candidates included economic factors such as inflation which
were too vague.

(c) Most candidates could identify at least one method of primary market research. Better responses
used information from the stem to link their answers to the context. Some candidates did not
attempt to do this so missed the opportunity to gain application marks. Others repeated the same
application for both answers. Another common mistake was to provide vague descriptions rather
than name the method of research. Wrong answers included sampling and taste testing. Other
candidates had the wrong focus so outlined the type of information a business might gather.

(d) This question produced a range of responses. Some candidates correctly identified points such as
increased costs and less demand as effects of an increase in interest rates. Only the best
responses were able to develop these points in context. Instead of analysis some repeated the
knowledge point. Application was rarely awarded. Had candidates linked points such as less
demand to Alana’s restaurant they could have accessed the application marks.

(e) Most candidates found this question challenging. Most marks were gained for identification of
alternative ways to segment a market. Only the best responses were able to develop the points
made to gain analysis marks. Without analysis it is not possible to access the evaluation marks. A
common misconception was to confuse income with revenue. This led to candidates discussing the
importance of revenue or possible pricing methods a business could use to increase revenue.
Other candidates wrongly assumed the question was about business size so discussed different
ways to measure this.

Question 3

(a) This question was well answered by many candidates. Most understood that a public limited
company would sell shares and better responses recognised these shares would be sold to the
public. A common mistake was to assume this type of business was owned by the government.

(b) Most candidates could identify at least one reason for globalisation, with improved communication
and a reduction in trade barriers being typical answers. A common mistake was to identify a similar
point for both reasons. Other candidates used a single word such as technology which could not be
accepted as they needed to show that globalisation was due to an improvement in technology.

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 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2024
Principal Examiner Report for Teachers

(c) Candidates who understood the concept of economies of scale tended to do well on this question.
Better responses linked their answers to the context. For example, recognising purchasing
economies might be gained when buying materials to make paint. Weaker responses struggled to
provide any relevant knowledge. A common mistake was to refer to methods of production. A
significant number of candidates did not attempt this question.

(d) This question was poorly answered by many candidates. Those who gained knowledge marks
understood that flow production was inflexible or demotivating for employees. Better responses
were able to access the application marks for recognising the business made paint, or that it had
50 employees. However, most candidates struggled to develop the points made. A common
mistake was to focus on quality which is a different concept. Other candidates confused flow
production with batch production. Some made vague statements about the process being
expensive without explaining why.

(e) Good knowledge of relocation factors was shown by most candidates. Better responses then
explained why factors such as access to employees and finding a suitable space could increase
recruitment costs and fixed costs, respectively. Instead of analysis, many candidates listed
additional factors. Others made vague statements about costs without naming them. Evaluation
was rarely awarded as candidates tended to summarise points made. Others did not offer a
recommendation about which factor was likely to be the most important.

Question 4

(a) Most candidates could identify at least one advantage with flexibility and lower labour cost being
typical responses. Many wrongly assumed that all part-time employees are likely to be more
skilled, motivated or productive.

(b) This question was poorly answered. Some candidates understood it showed the levels of hierarchy
in an organisation. Most candidates were unable to provide a full definition of the term. A common
mistake was to reorder the words organisation and structure. Other candidates defined different
concepts such as span of control or chain of command.

(c) This question was poorly answered by many candidates. A common mistake was to identify
features of effective communication instead of the benefits of communication being effective. For
example, fewer mistakes are a benefit whereas knowing what to do simply explains why
communication happens.

(d) There were some good answers to this question. Correct responses tended to focus on factors
such as experience which could lead to fewer mistakes or how knowledge could result in less
training being required. Application was often awarded for relevant references to 3 months
experience as a manager or mentioning that he had a degree in business. Instead of analysis
some candidates repeated their knowledge rather than developing the point made.

(e) Good knowledge of reasons why a business might want to grow was evident in most responses.
Better responses developed the points made, including increased sales and economies of scale, to
explain why these reasons were important. A common mistake was to discuss ways a business
might grow rather than why it might want to grow. Evaluation was rare. Where a decision was
made the statement was not supported so could not count as evaluation.

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 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2024
Principal Examiner Report for Teachers

BUSINESS STUDIES

Paper 0450/21
Case Study

Key messages

Candidates should be reminded that throughout this paper they are expected to apply their business
knowledge and understanding to an unseen case study or business scenario. This is apart from one of the
part (a) questions which will be generic. Applying answers to the case will ensure responses are appropriate
for the given situation.

• To do well in this paper, candidates must make clear reference, or application, to the accompanying
case study. Specific marks are allocated throughout the mark scheme in both parts (a) and (b) for
application. In this particular case study candidates were expected to refer to EP, a well-established
private limited company that manufactures high-quality pottery products in Country Y. It is advisable for
candidates to ask themselves about the size of the business, whether it is a service business or
manufacturer, and what type of business organisation it is. This may add to the quality of their answers.
• Candidates should try to give a full explanation of both the positive and negative consequences of a
business decision when this is asked for. Responses require developed reasoning rather than simple
description; listed points generally only gain Level 1 whereas an explanation of a point could move the
answer to Level 2. A few well developed points will achieve higher marks than a long list of simple
statements.
• Several questions on this paper ask candidates to make a justified recommendation or conclusion.
Candidates should be reminded that it is important to offer a decision based on a balanced argument
earlier in the answer. A recommendation or conclusion should justify the option chosen, without full
repetition of the previous analysis, be applied to the case and make reference to why the alternative
option(s) was rejected.

General comments

Candidates had generally been well prepared for this examination and understood what was expected of
them. The context of EP, set up forty years ago, producing pottery including plates, cups and bowls, provided
an accessible scenario for candidates. Those who applied their answers to the context of EP achieved higher
marks. Most of the candidates seemed to have time to complete the paper and attempted all questions.

Candidates must be reminded to take careful note of how many marks are awarded for each question, so
they are clear about the extent of developed explanation that is required for each answer. The question
should be read carefully to ensure answers are appropriate and clearly address the question asked, such as
answering from the point of view of a business rather than its employees. Many candidates showed good
knowledge and understanding of the full range of the syllabus that was assessed, but it was clear that certain
topics were not as well understood. The weakest understanding was of the analysis of company accounts
and sources of business finance.

Overall, the standard was good with some weaker scripts. Candidates often provided answers in context
which enabled access to application marks. However, candidates should make sure that different examples
of application are included in each section of (a) questions (not 3a on this paper). The
conclusion/recommendation should also be applied to the case in (b) questions. A lack of analysis and
evaluation resulted in answers remaining in the lower level mark band. Candidates should aim to consider
the consequences / implications / long-term / short-term / balance issues of their decisions to secure Level 2
or Level 3 marks in the conclusion/recommendation.

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 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2024
Principal Examiner Report for Teachers

Comments on specific questions

Question 1

(a) Most candidates could identify two drawbacks for EP of having a tall organisational structure. Many
responses mentioned that communication might be slower and that senior managers would be
more remote from lower levels in the hierarchy. However, there was a tendency to overlook the
need to apply these points to the context of EP. For example, messages would have to pass
through five levels of the organisation before reaching the 50 production employees working in the
factory. Similarly, the Managing Director would be unlikely to communicate regularly with the 7
marketing employees because there are three levels of management between them. The strongest
responses went on to explain the consequences of slow communication and remote management
so that all the available marks could be awarded.

(b) This question required candidates to consider two ways EP could increase added value. Some
candidates confused the concepts of added value and profit. Discussion about increasing prices for
the pottery was often well presented. EP has a strong reputation for high-quality plates and bowls
so by increasing prices their image might be further improved and many customers would be willing
to pay the higher price. This would increase revenue and add value to EP’s pottery. However, it
would depend on the price and quality of competitors’ pottery. This kind of developed explanation
earned Level 2 reward. Simple statements which mentioned that the prices would increase revenue
earned only Level 1 reward. Consideration of reducing raw material costs focused on the benefit of
sourcing cheaper raw materials from outside country Y. This would reduce the total costs of
production which would add value. However, if the imported materials were poorer quality, it might
mean the pottery would lose EP its good reputation and sales may fall. Customers would choose
other pottery instead. In the recommendation at the end of the response candidates needed to
balance the two options and justify which would be the most appropriate way to increase the added
value to achieve Level 3. Candidates could have reasoned that increasing prices is least likely to
result in falling sales because the reputation of good quality pottery is EP’s unique selling point.
The risk of losing their reputation by switching to cheaper, inferior materials is too great. It would be
more likely to have a negative impact on added value for EP.

Question 2

(a) This question required candidates to explain two advantages and two disadvantages of using
external recruitment to find EP’s new manager. It was noticeable that candidates had stronger
knowledge of the advantages of external recruitment compared to the disadvantages. Stronger
answers pointed out the benefit of introducing new ideas into the business. Others identified the
experience that a new marketing manager might bring to setting up a new website for EP. Making
good use of the context was important here so that application marks could be achieved. The fact
that the process of external recruitment might take longer, and existing employees might feel
demotivated because they were not able to be promoted, were often mentioned as disadvantages.

(b) Many candidates offered simple statements in their response to this question and so limited their
marks to Level 1. The three methods of sales promotion needed to be discussed, and a
recommendation made about which method would best ensure increased sales of pottery. For
example, the option of advertising using social media would allow EP to target specific
demographic groups. This might include higher income earners setting up homes. Social media
could remind potential customers to look for EP pottery in retail outlets when they go to shopping
malls which would increase sales. However, many competitors might also advertise in this way,
and it could be difficult to develop a strong brand awareness. Emailing special offers to existing
customers might build brand loyalty and result in extra sales from customers who already know the
quality of the plates and bowls. However, pottery is not bought very frequently so repeat sales may
not be very likely. Setting up a website has the possibility of presenting potential customers with
detailed product information and even online ordering. The broader market would probably
increase sales, but this would need to off-set against the cost of creating and maintaining an up-to-
date website. To achieve Level 3 in the recommendation, responses needed to make a justified
judgement about which option would be the ideal choice. The best answers avoided repeating
points made earlier in the response and related to why one method of promotion would result in
more sales than the other two options.

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 Cambridge International General Certificate of Secondary Education
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Principal Examiner Report for Teachers

Question 3

(a) This was a generic question, and the available marks were awarded for making a relevant point
with additional explanation. This was the only response where candidates did not need to reference
EP. Candidates were asked to explain why consumer spending patterns for a product might
change. Changes in consumer taste or fashion, or changes in the price of a product were
frequently offered as answers. A change in consumer fashion would lead to consumers seeking to
buy the latest branded product that had been promoted by social influencers, whilst an increase in
the price of a product would encourage consumers to buy a substitute item at a cheaper price.
Some responses discussed spending on all products and referred to macro-economic factors.
However, this was a question making specific reference to changes in spending for a single
product.

(b) Most responses showed sound understanding of improving labour skills and introducing more
automation and technology as ways of increasing efficiency. Candidates who made simple
statements that improving labour skills or introducing technology would make output higher were
awarded Level 1. Offering a more developed explanation, using the context of manufacturing
pottery, could have accessed Level 2. Stronger responses discussed the possibility of training the
50 production workers so that they could work more quickly and produce more pottery in a shorter
time. Employees might feel more valued and motivated to speed up their pace of work to increase
efficiency. A possible negative outcome of the extra training might be that production employees
might leave to work for another pottery manufacturer so the cost of the training would be wasted.
The capital investment need for new technology would be considerable but could have cost
savings if fewer workers were needed in the production process. Fewer errors would be made in
making the plates and non-stop production could be introduced which would greatly increase
efficiency. A supported recommendation of which method would be more likely to increase
efficiency could achieve Level 3.

Question 4

(a) This question required candidates to explain two factors that EP should consider when choosing a
source of finance. There appeared to be sound knowledge of various types of business finance,
such as loans and trade credit, but responses did not always successfully explain the factors that
would influence the decision to choose one method of finance rather than another. Some
responses quite rightly mentioned the importance of identifying how long the finance was needed
for. For example, if EP aims to introduce more automation, they will need to consider long term
finance because this would require raising a large amount of capital. Since EP is a private limited
company, issuing more shares to their friends and family is a possibility, encouraging more
commitment to the business and its future. This would avoid paying large interest charges on
loans. In fact, the capital raised from a share issue would not need to be repaid.

(b) Some candidates found this question quite challenging. Many responses copied data from
Appendix 3 about sales, costs and profit, without any financial analysis. Comparative statements,
such as the total cost for Product A is $210 000 lower than for Product B, achieved Level 1 marks.
Stronger responses used the data in Appendix 3 to calculate gross profit, unit cost and break-even
output or developed reasoning about financial performance based on meaningful interpretation of
the data. Further comparison of data for Product A and Product B for 2023 allowed a judgement to
be made about which product EP should stop making. Demand for Product A is forecast to grow at
only 10 per cent whereas for Product B it is forecast to grow by 20 per cent. The revenue for
Product B will increase at a faster rate so it is likely that the future profit of Product B will be larger
than the $60 000 profit made from Product A. Responses that made clear points and developed
reasoning, making relevant use of the data, were likely to access Level 2. A supported justification
of which product should no longer be produced could have achieved Level 3.

© 2024
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2024
Principal Examiner Report for Teachers

BUSINESS STUDIES

Paper 0450/22
Case Study

Key messages

Candidates should be reminded that throughout this paper they are expected to apply their business
knowledge and understanding to an unseen case study or business scenario. This is apart from one of the
part (a) questions which will be generic. Applying answers to the case will ensure responses are appropriate
for each given situation.

• To do well in this paper, candidates must make clear reference, or application, to the accompanying
case study. Specific marks are allocated throughout the mark scheme in both parts (a) and (b) for
application. In this particular case study, candidates were expected to refer to a large manufacturer of
jewellery set up 25 years ago in country X. It is advisable for candidates to ask themselves about the
size of the business, whether it is a service business or manufacturer, and what type of business
organisation it is. This may add to the quality of their answers.
• Candidates should try to give a full explanation of both positive and negative consequences of a
business decision when this is asked for. Responses require developed reasoning rather than simple
description; listed points generally only gain Level 1 whereas an explanation of a point could move the
answer to Level 2. A few well developed points will achieve higher marks than a long list of simple
statements.
• Several questions on this paper ask candidates to make a justified recommendation or conclusion.
Candidates should be reminded that it is important to offer a decision based on a balanced argument
earlier in the answer. A recommendation or conclusion should justify the option chosen, without full
repetition of the previous analysis, be applied to the case and make reference to why the alternative
option(s) was rejected.

General comments

Candidates had generally been well prepared for this examination and understood what was expected of
them. The context of JJ, a large jewellery manufacturer, provided an accessible scenario for candidates.
Those who applied their answers to the context of JJ achieved higher marks. The majority of candidates
seemed to have time to complete the paper and attempted all questions.

Candidates must be reminded to take careful note of how many marks are awarded for each question, so
they are clear about the extent of developed explanation that is required for each answer. The question
should be read carefully to ensure answers are appropriate and clearly address the question asked, such as
answering from the point of view of the business rather than its employees. Many candidates showed good
knowledge and understanding of the full range of the syllabus that was assessed, but in some cases it was
clear that certain topics were not as well understood. The weakest understanding was of limitations of
employing part-time workers, break-even calculations and the effects of environmental issues on a business.

Overall, the standard was good with some weaker scripts, which was comparable with previous years.
Candidates often provided answers in context which enabled access to application marks. However,
candidates should make sure that different examples of application are included in each section of (a)
questions (not 3a on this paper). The conclusion/recommendation should also be applied to the case in (b)
questions. A lack of analysis and evaluation resulted in answers remaining in the lower level mark band.
Candidates should aim to consider the consequences / implications / long-term / short-term / balance issues
of their decisions to secure Level 2 or Level 3 marks in the conclusion/recommendation.

© 2024
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2024
Principal Examiner Report for Teachers

Comments on specific questions

Question 1

(a) This question proved accessible for the majority of candidates, with many identifying valid reasons,
such as to provide a clear aim or target to work towards, to motivate employees, to assist decision-
making and to obtain finance from investors/banks. When these reasons were stated then the
explanation was generally good. However, some explanations led to the same development for
each reason which reduced the marks that could be gained. Weaker responses focused on
explaining business objectives and how the objectives can be achieved instead of showing
understanding of why the objective is important. Application was most often achieved by identifying
the objectives of the business in the case, which were to expand and to increase profit each year.

(b) The majority of candidates could make simple comparative statements between Product A and
Product B. For example, the selling price of Product B is $70 more than Product A. Better
candidates could calculate gross profit, profit, break-even output and sometimes the margin of
safety. There was confusion between gross profit and profit in some answers and candidates
mislabelled their answers. For example, revenue was called profit or profit was called gross profit.
Another error was to add a $ to the break-even output, not understanding that it should be a
physical amount. Better responses that did calculate break-even output for Product A and Product
B, often went on to discuss profit and not break even in the recommendation, whilst others lacked
the understanding to interpret the break-even results for a sound judgment in the recommendation.
For example, choosing Product A because it had a higher break-even output. Candidates should
be reminded to pay careful attention to the question, so they provide accurate responses that
answer the question in order to achieve the highest marks. In this question candidates were clearly
instructed to use break-even calculations to justify their answer.

Question 2

(a) Candidates generally provided correct benefits for employing part-time workers, such as it is
cheaper to employ part-time workers and they have flexible working hours. However, fewer
candidates achieved the same marks on limitations. Weaker candidates thought that part-time
workers get less work done as employees work fewer hours, part-time workers do not have
contracts, or they could leave anytime. There were many assumptions and personal views included
in answers and where statements were made about limitations there was no explanation as to why
this applied to just part-time employees and not full-time employees as well. A common
misconception was that part time workers give information to competitors; they were less skilled or
would be less motivated. Others mixed up part-time workers and temporary workers such as the
idea that they were easy to get rid of. Application was often missing, or the same application was
repeated, for example that there were 25 part-time employees. Each benefit and limitation needed
to be explained with different examples of application to gain the highest marks.

(b) The majority of candidates gained at least the top of Level 1 with simple statements in context. For
example, the fashion magazine was more expensive but able to reach the target audience, leaflets
were often ignored or thrown away but can reach a wider number of people and were easy to keep
for reference in the future. Point of sale is less effective because only customers who visit the
jewellery shops will see it. However, some candidates confused point of sale with reducing the
price of jewellery. Many candidates listed advantages and disadvantages of these methods but did
not develop them to move into Level 2. Better responses that moved into Level 2 usually went on to
move to Level 3 in the recommendation. Answers were often well applied to the case study by
making reference to jewellery, it being beautiful but not expensive, and 70 per cent sold through
jewellery shops. To earn Level 3 credit in the recommendation, responses needed to make a
justified judgement about which way would be the ideal choice for JJ to promote the new product in
country X. The best answers avoided repeating points made earlier in the response and related to
why one method of promotion would result in more sales than the alternatives.

Question 3

(a) This was a generic question, and the available marks were rewarded for making a relevant point
with additional explanation. This was the only response which did not need to reference JJ.

It was one of the most accessible questions, with popular answers being as a source of finance to
expand, as a reward for risk taking, as an indicator of success, to attract new investors or to use for

© 2024
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2024
Principal Examiner Report for Teachers

profit sharing with employees. However, the common misunderstanding among weaker responses
was that profit is used as working capital to pay for day-to-day expenses. There was some
repetition by giving several examples of the use for retained profit and some confused profit with
cash flow thinking that when profit is high it implied that the business could not experience cash
flow problems.

(b) The majority of candidates identified opportunities and threats to the business of using ecommerce.
The most popular opportunity was the ability to access a wider market that enabled an increase in
sales, whilst the most popular threats included being expensive to set up and maintain the website,
threats of online fraud and hacking, competition and customers not being able to see and feel the
bracelets and rings before buying, so being put off. Some weaker candidates talked about it being
cheaper than having a shop as they had not read the case study carefully. Many statements were
made about opportunities and threats, but these answers often remained in the Level 1 mark band
as the statement was not explained in relation to the business. Hence the best these answers
could achieve is Level 2 in the conclusion. Where a decision about whether the opportunities or
threats would have the most impact was given, candidates did not always justify the choice as to
why that would have the most impact the business. To earn Level 3 credit in the conclusion
answers needed to avoid repeating earlier points.

Question 4

(a) The majority of candidates answered this question well. They identified that the increase in
unemployment would lead to a decrease in demand for more luxury products, such as jewellery, as
people wanted to satisfy their needs first due to lower disposable income. Secondly, the business
could find more employees easily and they would be cheaper to employ as the unemployed would
be willing to accept lower wages, so helping JJ to reduce labour costs. Common errors from
weaker candidates were that JJ may not be able to expand because they would not have enough
employees, there will be low competition, employees will demand higher pay, and the government
will demand more taxes. Some candidates incorrectly assumed that anyone who was unemployed
would be unskilled.

(b) The majority of candidates focused on the effects of the environmental issues themselves rather
than the effects on the business and largely repeated the case study without showing any
understanding of how the two environmental issues might affect JJ. Better candidates recognised
that all manufacturers use coal and so either it meant there was no need for JJ to change or that it
could give them a USP if they changed to solar panels. Many recognised that increased costs for
coal increased costs of production for the business but did not go any further than stating that costs
would increase. Candidates also recognised that transportation costs would increase if the other
mines were used. Pressure group intervention was a common point discussed by candidates for
both issues. Some candidates identified the second issue as the first to be solved as the use of
coal is not a JJ issue alone but something affecting all manufacturers. Others thought that JJ
standing out from other jewellery manufacturers was more important and so by JJ solving the first
issue it would have a competitive advantage. Application was often awarded for referencing the
increasing price of coal, the Government’s 25 per cent grant and for the other gem mines being
further away. Only strong candidates included sufficient analysis earlier in the answer to be able to
move into the Level 3 mark band. The majority of candidates remained in Level 1 or the lower end
of Level 2. Closer attention to the focus of the question would have raised the level that most
answers were in.

© 2024
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2024
Principal Examiner Report for Teachers

BUSINESS STUDIES

Paper 0450/23
Case Study

Key messages

Candidates should be reminded that throughout this paper they are expected to apply their business
knowledge and understanding to an unseen case study or business scenario. This is apart from one of the
part (a) questions which will be generic. Applying answers to the case will ensure responses are appropriate
for the given situation.

• To do well in this paper, candidates must make clear reference, or application, to the accompanying
case study. Specific marks are allocated throughout the mark scheme in both parts (a) and (b) for
application. In this particular case study, candidates were expected to refer to a business that repairs
and recycles furniture. It is advisable for candidates to ask themselves about the size of the business,
what type of product it offers, and what type of business organisation it is. This may add to the quality of
their answers.
• Candidates should try to give a full explanation of both the positive and negative consequences of a
business decision when this is asked for. Responses require developed reasoning rather than simple
description; listed points generally only gain Level 1 in (b) questions whereas an explanation of a point
could move the answer to Level 2. A few well developed points will achieve higher marks than a long list
of simple statements.
• Several questions on this paper ask candidates to make a justified recommendation or conclusion.
Candidates should be reminded that it is important to offer a decision based on a balanced argument
earlier in the answer. A recommendation or conclusion should justify the option chosen, without full
repetition of the previous analysis, be applied to the case and make reference to why the alternative
option(s) was rejected.

General comments

Candidates had generally been quite well prepared for this examination and understood what was expected
of them. The context of RF, a business that repaired and recycled furniture, provided an accessible scenario
for candidates. Those who applied their answers to the context of RF achieved higher marks. Most of the
candidates seemed to have time to complete the paper and attempted all questions.

Candidates must be reminded to take careful note of how many marks are awarded for each question, so
they are clear about the extent of developed explanation that is required for each answer. The question
should be read carefully to ensure answers are appropriate and clearly address the question asked, such as
answering from the point of view of a business rather than its employees. Many candidates showed good
knowledge and understanding of the full range of the syllabus that was assessed, but it was clear that certain
topics were not as well understood. The weakest understanding was of sources of finance, uses of break-
even analysis and the effects of a recession on a business.

Overall, the standard was good with some weaker scripts, which was comparable with previous years.
Candidates often provided answers in context which enabled them to access the application marks.
However, candidates should make sure that different examples of application are included in each section of
(a) questions (not 1a on this paper). The conclusion/recommendation should also be applied to the case in
(b) questions. A lack of analysis and evaluation resulted in answers remaining in the lower level mark band.
Candidates should aim to consider the consequences / implications / long-term / short-term / balance issues
of their decisions to secure Level 2 or Level 3 marks in the conclusion/recommendation.

© 2024
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2024
Principal Examiner Report for Teachers

Comments on specific questions

Question 1

(a) This was a generic question, and the available marks were awarded for making relevant points with
additional explanation. It proved to be an accessible question for the majority of candidates, with
many identifying four appropriate characteristics of an entrepreneur. The most popular
characteristics were hard-working, risk taker, creative, determined, innovative, effective
communicator and self-confident. The explanations of why these characteristics made the
entrepreneur successful were not always accurate, with some candidates just rewording the
characteristics they had identified such as a risk taker who takes risks. Weaker candidates gave
examples which were not characteristics.

(b) Whilst the majority of candidates listed awardable answers such as the 10 per cent discount will
encourage potential customers to try RF’s products and if they like them they may return to make
further purchases. However, offering the discount reduced the revenue received by RF and there
was no guarantee that these customers would return and pay the full price for products in the
future. Some candidates thought that free delivery meant that the customer was purchasing online
and so made comments related to convenience or saving time as they are not going to the
workshop. Another error was giving advantages and disadvantages to the customer and not to RF.
To move the answer to higher levels the recommendation needed to justify the choice of one
method of promotion without repeating earlier points and explain why the alternative method was
seen as less suitable.

Question 2

(a) The majority of candidates were able to provide business objectives and apply them to RF.
However, several candidates stated expansion as the objective, but this business had not even
been set up, so it is not in a position to expand. Weaker candidates simply stated a business
objective without making it clear why it was set by this business, such as to gain profit instead of
explaining that it can be used to reward the entrepreneur for taking risks.

(b) This question was not a well answered. The majority of candidates could explain owners’ savings
but crowdfunding and microfinance were not well understood. Where a candidate did understand
the source there were often just lists of advantages and disadvantages which limited answers to
Level 1. For example, it does not have to be repaid but it may not be enough, rather than giving an
explanation of why these were an advantage and a disadvantage of the source. Also, application
was often not evident, and this resulted in answers gaining less than full marks. Better candidates
had sufficient understanding of at least two of the three sources to enable their answer to move out
of Level 1 or even out of Level 2.

Question 3

(a) Generally this question was not answered well as weaker candidates seemed to lack an
understanding of the purpose of a break-even forecast. The benefits of break-even analysis were
better understood than the limitations. Most candidates could give one benefit, such as it provides
a target or goal to work towards, and many could give one limitation, such as the break-even chart
is drawn assuming all goods are sold at a constant price. However, most of these candidates did
not apply their answers to the business in the case or even use figures from the break-even chart
in Appendix 2. Only better candidates achieved high marks due to their answers being applied.

(b) Candidates generally seemed to find this question accessible, and application was more readily
included in responses. The majority of candidates realised that RF’s sales were likely to go down,
but only better answers developed the explanation in detail as to why this would happen during a
recession. Stronger candidates realised that as RF’s furniture was targeted at low-income families
then sales may actually increase as unemployed people switched to buying cheaper furniture.
Weaker candidates thought that RF would get rid of employees whereas in fact they would find it
easier to recruit them when unemployment was increasing. They did not recognise that RF was a
new business and wanted to recruit employees. Some weaker candidates seemed to address the
question of how the recession may impact employees rather than RF. Only better candidates
moved into Level 3 by justifying which would have the most effect on RF and justifying why the
alternative was rejected, without repeating earlier points.

© 2024
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2024
Principal Examiner Report for Teachers

Question 4

(a) The majority of candidates identified at least one benefit of having a well-motivated workforce. The
most popular benefits were that labour turnover would be lower, productivity/efficiency would
increase, and the quality of goods produced would be higher/fewer mistakes made. Application
was gained by answers making reference to the product being furniture, 9 or 10 employees and
starting up a small business. To gain full marks many answers needed to explain in greater detail
why it was that each was a benefit for the business.

(b) Many candidates gained some credit for listing advantages and disadvantages for each method of
communication and each method seemed to be clearly understood. Weaker candidates often
repeated mirror arguments for texts and telephone calls, for example, a written record can be kept
for future reference/no written record to refer to in the future. Telephone calls was the best
answered of the three methods and candidates assumed this was the use of mobile phones, so
disadvantages often related to a lack of signal which was acceptable. A minority of candidates
assumed that the face-to-face meetings were taking place individually and so discussed things like
taking time to meet with all employees. Better candidates recognised that this was a small business
with only 9 employees, so it may not take so long to telephone employees, or it was not difficult to
arrange meetings, but arranging a meeting everyday could be difficult. The majority of answers
were generic, and this prevented answers moving to the top of whichever level the answer was in.
Only better responses developed the earlier part of the answer to move from Level 2 to Level 3, so
it was rare to see the highest marks.

© 2024
 Grade thresholds – June 2024

Cambridge IGCSE™ Business Studies (0450)

Grade thresholds taken for Syllabus 0450 (Business Studies) in the June 2024 examination.

Minimum raw mark required for grade:

Maximum raw
mark A B C D E F G
available
Component 11 80 36 27 19 16 13 11 9
Component 12 80 49 39 30 24 18 13 8
Component 13 80 37 30 23 19 15 12 9
Component 21 80 39 32 25 21 17 13 9
Component 22 80 38 30 22 19 16 13 10
Component 23 80 40 31 22 19 16 13 10
Component 50 90 67 57 48 40 33 24 15

Grade A* does not exist at the level of an individual component.

The overall thresholds for the different grades were set as follows.

Maximum
Combination of
Option mark after A* A B C D E F G
components
weighting
P1 90 50 77 67 57 48 40 33 24 15
X 160 11, 21 91 75 59 44 37 30 24 18
Y 160 12, 22 105 87 69 52 43 34 26 18
Z 160 13, 23 93 77 61 45 38 31 25 19

Learn more! For more information please visit www.cambridgeinternational.org/igcse or contact Customer
Services on +44 (0)1223 553554 or email [email protected]

© Cambridge University Press & Assessment 2024

 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/21

Paper 2 Case Study May/June 2024
INSERT 1 hour 30 minutes

INFORMATION
• This insert contains the case study.
*3921137726-I*

• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.

This document has 4 pages.

06_0450_21_2024_1.16
© UCLES 2024 [Turn over
 2

Exclusive Pottery (EP)

EP is a private limited company set up 40 years ago in country Y. It manufactures pottery products
including plates, cups and bowls. EP has a reputation for producing high-quality products. The Managing
Director is considering the best way to increase the added value of EP’s products by either increasing
prices or reducing raw material costs. Raw materials are currently purchased locally as imported raw
materials are of a lower-quality.

EP operates in a very competitive market. Many of EP’s competitors sell lower quality products at lower
prices. There are many substitutes for pottery products, including products made from plastic or bamboo.
Consumer spending patterns have been changing in country Y and this has affected EP’s sales.

EP currently advertises its pottery in newspapers and magazines. EP does not have a website and only
sells its products to retail shops in country Y. EP needs a new Marketing Manager and the Managing
Director thinks EP should employ someone from outside the business. The new Marketing Manager will
need to consider which of the following three ways EP could use to increase sales:

• Advertising using social media

• Emailing special offers to existing customers
• Setting up a website

The Managing Director wants to increase efficiency in the factory. She is considering either improving
labour skills or introducing more automation and technology. Both methods will need additional finance.
The Managing Director will consider different factors before choosing which source of finance to use.

Appendix 1

Advertisement for EP

We sell a wide range of plates, cups and bowls which are sold in all good retailers.

EP’s products are all high quality and made using materials from local suppliers.

© UCLES 2024 06_0450_21_2024_1.16

 3

Appendix 2

Organisational chart for EP

Managing Director

Operations Director Marketing Director Finance Director

Production Manager Marketing Manager Finance Manager

Assistant Manager Assistant Manager Assistant Manager

Production supervisors (10) Marketing employees (7) Finance employees (7)

Production employees (50)

Total employees = 84

© UCLES 2024 06_0450_21_2024_1.16 [Turn over

 4

Appendix 3

Email from Managing Director to Operations Director

To: Operations Director

From: Managing Director

Date: 5 March 2024

Re: Which product to stop making

We need to keep our costs low and therefore I suggest we stop making either Product A or Product B.
I have included some data in the table below to help us make the decision.

Demand is forecast to increase in 2024 for both products. Total costs are expected to remain unchanged.

Let me know which product you would choose to stop making and why.

Financial information for Product A and Product B for 2023

Product A Product B

Price per unit $10 $40

Sales volume 20 000 units 10 000 units

Total cost $140 000 $350 000

Profit $60 000 $50 000

Gross profit margin 50% 62.5%

Forecast increase in demand in

10% 20%
2024

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2024 06_0450_21_2024_1.16

 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/22

Paper 2 Case Study May/June 2024
INSERT 1 hour 30 minutes

INFORMATION
• The insert contains the case study.
*2430606254-I*

• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.

This document has 4 pages. Any blank pages are indicated.

06_0450_22_2024_1.10
© UCLES 2024 [Turn over
 2

Jems Jewellery (JJ)

JJ is a large manufacturer of jewellery such as bracelets, earrings and rings. JJ was set up 25 years
ago in country X and is a public limited company. One of JJ’s objectives is for the business to expand
and another objective is to increase profit each year.

JJ manufactures all its jewellery in a factory in country X. All raw materials are purchased from local
suppliers. JJ has 60 full-time and 25 part-time employees to make the jewellery. Most of these employees
are skilled.

JJ’s jewellery is beautiful but not expensive and therefore affordable for many people. The business has
many competitors. JJ currently sells 70% of its products in country X through jewellery shops. The other
30% are sold using ecommerce and sold directly to customers in other countries. Demand for JJ’s
jewellery is continuing to increase.

JJ’s Marketing Manager is planning to launch a new item of jewellery in country X and needs to choose
between two products. Information on these two products is shown in Appendix 1. They will also need
to decide the most effective way to promote the new product in country X.

Appendix 1

Information to calculate break-even for Product A and Product B

Product A Product B

Type of product Bracelet Ring

Fixed cost for each product per week $50 000 $50 000

Selling price per product $50 $120

Variable cost per product $25 $40

Forecast sales per week 2500 750

Appendix 2

Newspaper article from Main City News in country X

After several years of economic growth the government is predicting a change in the economy this year.

Unemployment is forecast to increase from 3% to 6% by the end of the year. Increases in unemployment
are expected to continue for the next two years. Many businesses will be affected by this increase.

© UCLES 2024 06_0450_22_2024_1.10

 3

Appendix 3

Email from Managing Director to Operations Director

To: Operations Director

From: Managing Director

Date: 1 May 2024

Pressure groups have identified two environmental issues when we manufacture our jewellery.

These two environmental issues are:

• We use coal for fuel in our factory which we know contributes to global warming. Other jewellery
manufacturers also use coal. We know the price of coal is increasing and will continue to increase in
the future. However, the government in country X is encouraging businesses to invest in solar panels
and is providing a 25% grant.

• The gem stones used in our jewellery come from local mines. We have been told that the land around
these mines cannot be returned to agricultural use after the mine is closed. However, pressure groups
have told us that we can buy gems from suppliers that use alternative ways of mining which do not
damage the environment. These mines are further away from our factory.

We need to respond to these issues or our sales and profit may be affected.

© UCLES 2024 06_0450_22_2024_1.10

 4

BLANK PAGE

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2024 06_0450_22_2024_1.10

 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/23

Paper 2 Case Study May/June 2024
INSERT 1 hour 30 minutes

INFORMATION
• This insert contains the case study.
*5981200222-I*

• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.

This document has 4 pages. Any blank pages are indicated.

06_0450_23_2024_1.14
© UCLES 2024 [Turn over
 2

Recycled Furniture (RF)

Santhosh is a skilled carpenter. He wants to be an entrepreneur and start up a small business called
RF. Santhosh will repair and recycle furniture which people no longer want, such as tables and chairs.
Santhosh will operate RF as a sole trader.

Santhosh has produced a business plan which includes the business objectives and a forecast break-even
chart for RF’s first month of trading. Santhosh has calculated he will need $5000 start-up capital for new
tools, to rent a workshop and for promotional activities. Santhosh wants to sell the recycled furniture to
RF’s target market of low-income families. It will be important to keep costs low so the furniture can be
sold at a low price.

Santhosh has already employed a Marketing Manager. He will also need to recruit 9 other employees;
3 skilled carpenters and 6 unskilled school leavers. Santhosh and the skilled carpenters will train the
unskilled school leavers to repair and recycle the furniture. At the start of each day Santhosh will
communicate with his employees to ensure they know their daily work tasks. Santhosh knows that having
a well-motivated workforce will be important to RF.

Appendix 1

Email from Santhosh to Marketing Manager

To: Marketing Manager

From: Santhosh

Date: 31 March 2024

I know that we will need to spend some of my start-up capital on promotional activities to raise awareness
of the new business and encourage customers to purchase the recycled furniture. I am considering the
following two methods of promotion:

• 10% discount on a customer’s first purchase of our recycled furniture

• free delivery on all products purchased - transported directly to customers’ homes.

We will need to consider the costs of these methods.

© UCLES 2024 06_0450_23_2024_1.14

 3

Appendix 2

Forecast break-even chart for RF’s first month of trading

200
180 total revenue
160
140
total costs
120
costs and
100
revenue ($)
80
60
fixed costs
40
20
0
0 5 10 15 20
forecast sales (units)

Appendix 3

Extract from Main News

Country goes into a recession

Recent economic data shows that the economy is now in a recession. Unemployment is likely to increase.
However, businesses will find there is a difference in the availability of skilled and unskilled workers.

The recession is also likely to have an effect on the level of sales for many businesses.

© UCLES 2024 06_0450_23_2024_1.14

 4

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© UCLES 2024 06_0450_23_2024_1.14

Cambridge IGCSE™

BUSINESS STUDIES 0450/11

Paper 1 Short Answer/Data Response May/June 2024
MARK SCHEME
Maximum Mark: 80

Published

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

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

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the May/June 2024 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 26 printed pages.

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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers. They should be applied alongside the
specific content of the mark scheme or generic level descriptions for a question. Each question paper and mark scheme will also comply with these
marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

 the specific content of the mark scheme or the generic level descriptors for the question
 the specific skills defined in the mark scheme or in the generic level descriptors for the question
 the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

 marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit is given for valid answers which go beyond
the scope of the syllabus and mark scheme, referring to your Team Leader as appropriate
 marks are awarded when candidates clearly demonstrate what they know and can do
 marks are not deducted for errors
 marks are not deducted for omissions
 answers should only be judged on the quality of spelling, punctuation and grammar when these features are specifically assessed by the
question as indicated by the mark scheme. The meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed instructions or in the application of generic level
descriptors.

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GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question (however; the use of the full mark range may
be limited according to the quality of the candidate responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should not be awarded with grade thresholds or
grade descriptors in mind.

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Social Science-Specific Marking Principles
(for point-based marking)

1 Components using point-based marking:

 Point marking is often used to reward knowledge, understanding and application of skills. We give credit where the candidate’s answer
shows relevant knowledge, understanding and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly convey the same meaning (unless the mark
scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they are correct
c DO credit answers where candidates give more than one correct answer in one prompt/numbered/scaffolded space where extended
writing is required rather than list-type answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required. (Check for evidence it is understood and not used
wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already credited unless the language itself is being tested.
This applies equally to ‘mirror statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of syllabus terms must allow for clear and
unambiguous separation from other syllabus terms with which they may be confused (e.g. Corrasion/Corrosion)

2 Presentation of mark scheme:

 Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
 Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
 Content in the answer column in brackets is for examiner information/context to clarify the marking but is not required to earn the mark
(except Accounting syllabuses where they indicate negative numbers).

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3 Calculation questions:
 The mark scheme will show the steps in the most likely correct method(s), the mark for each step, the correct answer(s) and the mark
for each answer
 If working/explanation is considered essential for full credit, this will be indicated in the question paper and in the mark scheme. In all
other instances, the correct answer to a calculation should be given full credit, even if no supporting working is shown.
 Where the candidate uses a valid method which is not covered by the mark scheme, award equivalent marks for reaching equivalent
stages.
 Where an answer makes use of a candidate’s own incorrect figure from previous working, the ‘own figure rule’ applies: full marks will be
given if a correct and complete method is used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

4 Annotation:
 For point marking, ticks can be used to indicate correct answers and crosses can be used to indicate wrong answers. There is no direct
relationship between ticks and marks. Ticks have no defined meaning for levels of response marking.
 For levels of response marking, the level awarded should be annotated on the script.
 Other annotations will be used by examiners as agreed during standardisation, and the meaning will be understood by all examiners
who marked that paper.

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0450/7115/0986 Business Studies – Paper 1 Annotations

Annotation Description Use

Tick Tick Indicates a point which is relevant and rewardable.

X Cross Indicates a point which is inaccurate/irrelevant and not rewardable.

BOD Benefit of doubt Used when the benefit of the doubt is given in order to reward a response.

TV Too vague Used when parts of the answer are considered to be too vague.

REP Repetition Indicates where content has been repeated.

NAQ Not answered Used when the answer or parts of the answer are not answering the question asked.
question

K Knowledge Indicates knowledge and understanding of the concepts and issues relating to the question.

APP Application Indicates appropriate reference to the information in the stem.

AN Analysis Indicates where the answer has demonstrated analysis.

EVAL Evaluation Indicates where the answer has demonstrated evaluation (part (e) questions only).

OFR Own figure rule If a mistake is made in a calculation, and the incorrect figure that results from the mistake is used for
subsequent calculations.

SEEN Noted but no Indicates that content has been recognised but not rewarded.
credit given

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Question Answer Marks Notes

1(a) Define ‘diseconomies of scale’. 2 For two marks candidates must have the idea that ‘business
grows’ and it ‘increases average/unit costs’.
Award 2 marks for a full definition. Award 1 mark for a partial
definition. Do not award examples as this does not define the term.

Factors that lead to an increase in average costs as a

business grows beyond a certain size [2]
OR
Factors that cause average costs to increase as the scale of
operations increases [2]
OR
The disadvantages of a business growing (too large) that
result in an increase in costs per unit [2]

Partial definition e.g. when costs increase because business

grows [1]
OR increase in average unit cost [1]

1(b) Identify two ways a business can use cost data to help 2 Only award the first two responses given.
make decisions.
Allow ‘carry out break-even analysis’.
Award 1 mark for each relevant way (max 2).

Points might include:

 Setting prices
 Decide whether to stop/continue production/change
production
 Decide on the best location
 Decide if finance is required/set budgets
 Decide which costs need to be reduced/whether to
change suppliers
 Setting objectives

Other appropriate responses should be credited.

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Question Answer Marks Notes

1(c) Identify four fixed costs a business might have. 4 Only award the first four responses given.

Award 1 mark per fixed cost (max 4). Do not award: wages/direct labour costs or power.

Points might include: Allow heating/lighting/electricity/water/utilities once.

 Rent/rates/storage costs
 Insurance
 Advertising
 Salaries
 Interest (on loans)/finance payments
 Cleaning/maintenance

Other appropriate responses should be credited.

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Question Answer Marks Notes

1(d) Explain one advantage and one disadvantage to FBM of 6 To use words from the stem as application, the reference
holding a high level of inventory. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for identification of each relevant reason (max
2). The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2).  Boat (building) or related words
Award 1 mark for each relevant explanation (max 2).  100 employees
 Skilled (workers)
Points might include:  Diseconomies of scale
Advantages:  $5000 (variable cost)
 Maintain production [k] so able to meet orders on time  $600 000 (fixed costs)
[an] of boats [app]  300 (boats)
 Benefit from (purchasing) economies of scale [k] leading  Total cost 2 100 000
to lower average/unit cost [an]
 Able to respond quickly to unexpected order [k] Other appropriate examples can be credited.
increasing customer loyalty [an]
The same analysis can be used for different points but only
Disadvantages: award once.
 Space needed to store products [k] increasing (storage)
costs [an] so costs increase above $600 000 [app]
 Cash/money tied up in inventory [k] leading to cash
flow/liquidity problems [an]
 Risk of damage/waste[k]
 Opportunity cost [k]
 Insurance [k]

Other appropriate responses should be credited.

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Question Answer Marks Notes

1(e) Do you think customers have a more important role in 6 This is a general question so there are no marks for
the success of a business than its employees? Justify application.
your answer.
For evaluation to be awarded justification will usually follow
Award up to 2 marks for identification of relevant points. on from relevant analysis of points.
Award up to 2 marks for relevant development of points.
Award up to 2 marks for a justified decision as to whether
customers have a more important role in the success of a
business than its employees.

Points might include:

Customers:
 Buy the products [k] and if ignores their needs the
business will lose revenue/won’t survive [an]
 Can share opinions to help improve products [k] which
can help increase market share [an]
 Provide recommendations/word of mouth advertising [k]

Employees:
 Make the products [k] otherwise there is nothing to sell
[an]
 Employees can affect quality [k] which could
damage/improve its reputation [an]
 Employees provide customer service [k] which is
important for brand image [an]
 Without sufficient employees the business may not be
able to meet demand [k]
 Workers can be replaced by machines [k]

Other appropriate responses should be credited.

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Question Answer Marks Notes

1(e) Justification might include:

Customers are important, they buy the products [k] which
generates revenue [an]. Employees make the goods [k]
without them, there is nothing to sell [an]. However,
customers are more important as without revenue, the
business cannot cover its costs and survive in long term
[eval]. A business can use automation reducing the
importance of employees [eval].

Question Answer Marks Notes

2(a) Define ‘span of control’. 2

Award 2 marks for a full definition. Award 1 mark for a partial

definition.

(Number of) subordinates working directly under a manager

[2]
OR
(Number of) subordinates reporting to each
supervisor/manager [2]
OR
(Number of) subordinates someone has within their
authority/under their control [2]

Partial definition e.g. (number of) staff that a manager is

responsible for [1]
OR subordinates who work under a manager [1]

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Question Answer Marks Notes

2(b) Define ‘autocratic leadership style’. 2 For two marks the candidates need to show awareness that
the decision making is by a leader or manager not a director
Award 2 marks for a full definition. Award 1 mark for a partial or person in the company.
definition.

Leader/manager makes all the decisions [2]

OR
Where the manager expects to be in charge of the business
and to have their orders followed [2]

Partial definitions e.g. employees are simply told what to do

[1]
OR employees have no say in decisions [1]

2(c) Outline two benefits to ADN of having full-time 4 To use words from the stem as application, the reference
employees. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for each relevant benefit (max 2).
Award 1 mark for each relevant reference to this business The following words are likely to be appropriate for this
(max 2). question:
 Food or related words
Points might include:  5 (locations)
 Shops/retailer
 Consistent service [k] at the 5 shops [app]  300 employees
 Workers likely to be loyal/less likely to leave [k] the food  Tall hierarchical organisational structure
retailer [app]  Narrow span of control
 Easy to communicate with/update [k] the 300 employees  Autocratic leadership style
[app]  Planning to expand/internal growth/external growth
 Need to recruit/train fewer employees [k]
Other appropriate examples can be credited.
Other appropriate responses should be credited.

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Question Answer Marks Notes

2(d) Explain one benefit and one limitation to ADN of using 6 To use words from the stem as application, the reference
off-the-job training. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for identification of each relevant
benefit/limitation (max 2). The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2).  Food or related words
Award 1 mark for each relevant explanation (max 2).  5 (locations)
 Shops/retailer
Points might include:  300 employees
Benefits:  Full-time
 Learn the latest/new methods [k] for use in the 5 shops  Narrow span of control
[app] so business can remain competitive [an]  Autocratic leadership style
 Broad range of skills can be taught [k] to the full-time  Planning to expand / internal growth / external growth
employees [app] so they can be become more efficient
[an] Other appropriate examples can be credited.
 Can learn from experts/specialists [k] which may be
helpful as trying to expand [app]
 Can focus 100% on training [k] therefore make less
mistakes [an]
 Mistakes when learning don’t affect the business [k]
which can protect the reputation [an] of the food retailer
[app]
 Workers do not learn bad habits [k] so mistakes are
avoided [an]
 It does not disrupt work of other employees [k]
 Increased motivation of employees [k]

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Question Answer Marks Notes

2(d) Limitations:
 High cost/expensive [k] as have 300 employees [app]
which increases expenses [an]
 Loss of working time [k] leading to less work done/fewer
sales [an]
 Not necessarily tailored to individual business [k]
 Additional qualifications mean it is easier for the
employee to leave/find another job [k] increasing
time/cost of recruitment [an]

Other appropriate responses should be credited.

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Question Answer Marks Notes

2(e) Do you think it is better for a business to use internal 6 This is a general question so there are no marks for
growth or external growth when planning to expand? application.
Justify your answer.
Advantages of one method can be presented as
Award up to 2 marks for identification of relevant points. disadvantages of the other method but do not award the
Award up to 2 marks for relevant development of points. same point twice as mirror answers are not accepted.
Award up to 2 marks for a justified decision as to whether it
is better for a business to use internal growth or external Do not award general advantages and disadvantages of
growth when planning to expand. growth such as economies of scale as applies to both
methods.
Points might include:
Internal growth: For evaluation to be awarded justification will usually follow
 Easier to control/manage growth [k] which can help on from relevant analysis of points.
avoid diseconomies of scale [an]
 Lower investment may be needed [k] so less need to
borrow (as much) [an]
 Slow method [k] so business may become
uncompetitive/may miss business opportunities [an]
 Less risk [k]

External growth:
 Quick method [k] so able to take advantage of new
market opportunities [an] which can increase revenue
[an]
 Removing a competitor [k] increases market
share/power [an] may be able to set/influence prices [an]
 Large amounts of finance may be required [k] which
increases finance costs [an]

Other appropriate responses should be credited.

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Question Answer Marks Notes

2(e) Justification might include:

One advantage of internal growth is it is easier to control the
rate of growth [k] which can help avoid diseconomies of
scale [an]. However, external growth can be faster [k] so the
business can take advantage of opportunities [an]. Overall
external growth is better as by taking over a competitor market
share can be increased [eval] increasing market power
[eval].

Question Answer Marks Notes

3(a) Define ‘mass market’. 2 For two marks candidates must have the idea of a
‘Large number of sales’ and it is for ‘one product’.
Award 2 marks for a full definition. Award 1 mark for a partial
definition.

Where there are a large number of sales of a product [2]

OR
A large market containing lots of customers buying similar
products [2]

Partial definition e.g. lots of sales/customers [1]

OR lots of buyers [1]
OR market for goods that are produced in large quantities
[1]

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Question Answer Marks Notes

3(b) Calculate IDT’s working capital in 2023. 2 Award only 1 mark if $140 million is written as part of the
answer but is not given as the final answer.
Award 2 marks for correct answer.
Award 1 mark for correct method but incorrect answer. Award max 1 where candidate calculates working capital for
2022 using the correct method i.e. $130 million [1].
Correct answer: $140 million [2]
For 2 marks the answer must have the right units
Correct method e.g. 420 – 280 [1] i.e. million/m in answer.
OR
Current assets – current liabilities [1]

If correct answer given with no working shown award two

marks.

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Question Answer Marks Notes

3(c) Outline one reason why IDT might need the following 4 To use words from the stem as application, the reference
types of finance: must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for each relevant reason (max 2).
Award 1 mark for each relevant reference to this business The following words are likely to be appropriate for this
(max 2). question:
 Multinational company
Points might include:  Clothes or related words such as shirts, trousers
Short-term finance:  Manufacturer
 To pay day-to-day costs/working capital [k] when making  Mass market
clothes [app]  Factory
 Improve cash flow position/liquidity [k] of the  4 countries
multinational company [app]  $140 million (working capital)
 Meet any unexpected emergencies/opportunities [k]  $280 million (current liabilities)
 $400 million (non-current liabilities)
Long-term finance:
 Fund expansion/growth [k] such as the new factory Other appropriate examples can be credited.
[app]
 Purchase non-current assets [k] in one of the 4 countries
[app]
 Develop new products [k]

Other appropriate responses should be credited.

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Question Answer Marks Notes

3(d) Explain two ways an increase in non-current liabilities 6 To use words from the stem as application, the reference
might affect IDT. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for identification of each relevant way (max 2).
Award 1 mark for each relevant reference to this business The following words are likely to be appropriate for this
(max 2). question:
Award 1 mark for each relevant explanation (max 2).  Multinational company
 Clothes or related words such as shirts, trousers
Points might include:  Manufacturer
 Must pay interest [k] on the $400 m [app] which  Mass market
increases expenses/cash outflows [an]  Factory
 Difficult to raise additional finance/more collateral  4 different countries
required [k] as lenders may worry whether the business  Working capital / $140 million
will be able to repay [an] despite being a multinational  $400 million (non-current liabilities)
company [app]  $280 million (current liabilities)
 More difficult to repay loans/more debt to pay back [k]  $420 million (current assets)
increases financial risk [an] for this clothing retailer [app]
Other appropriate examples can be credited.
Other appropriate responses should be credited.

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Question Answer Marks Notes

3(e) Explain two advantages to a business of being a 6 This is a general question so there are no marks for
multinational company. Which advantage do you think is application.
likely to be the most important? Justify your answer.

Award up to 2 marks for identification of relevant points.

Award up to 2 marks for relevant development of points.
Award up to 2 marks for a justified decision as to which is
likely to be the most important advantage to a business of
being a multinational company.

Points might include:

 Increase sales/new customers/access new markets [k]
increasing revenue [an]
 Improve brand image/reputation [k] to help
increase/maintain customer loyalty [an]
 Spreading risk [k] as not reliant on one market for all its
sales/fall in sales in one country can be offset by
increase in another [an]
 Economies of scale [k] leading to lower average/unit
costs [an]
 Easier access to/cheaper raw materials [k] reducing
transport costs [an]
 Lower cost of labour (in some countries) [k] improving
profit margin [an]
 Avoid import quotas/tariffs [k]
 Lower/favourable tax rates/government grants/subsidies
[k]

Other appropriate responses should be credited.

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Question Answer Marks Notes

3(e) Justification might include:

An advantage is access to new markets [k] increasing
revenue [an]. Also easier access to raw materials [k] may
reduce transport costs [an]. Access to raw materials is more
important because lower costs may lead to lower prices
helping the business be more competitive [eval] and improve
their market share [eval].

Question Answer Marks Notes

4(a) Define ‘social enterprise’. 2

Award 2 marks for a full definition. Award 1 mark for a partial

definition.

An organisation that has social objectives as well as an aim

to make a profit to reinvest back into the business [2]
OR
A business with social objectives that reinvests most of its
profits back into the business/into benefiting society at large
[2]
OR
A business that seeks to raise income, which it invests in a
specific social or environmental issue [2]
OR
A business set up to help society/a community rather than
make a profit [2]

Partial definition e.g. a business that aims to help/benefit

society [1]

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Question Answer Marks Notes

4(b) Identify two ways legal controls over marketing might 2 Only award the first two responses given.
affect a business.

Award 1 mark per way (max 2).

Points might include:

 No misleading promotion/advertising
 No price fixing/charging very high prices where there is
little or no competition
 No selling faulty/dangerous goods/certain ingredients
 Ensure products are fit for purpose
 Price reductions must be genuine
 Increased costs to meet the legal controls/pay fines
 Spend longer time ensuring they meet the legal controls
 May need to alter packaging
 Restrictions on advertising certain products to some age
groups/places.

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(c) Outline one advantage and one disadvantage to CFG of 4 To use words from the stem as application, the reference
using skimming as its pricing method. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for each relevant advantage/disadvantage
(max 2). The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2).  Social enterprise
 Cocoa beans
Points might include:  Local farmers
Advantages:  Chocolate (bar)
 Helps establish a high-quality image/customers may  Retailers
think it is a good quality [k] which may also help as want  Ethical
to be ethical [app]  (Developed) a new product
 Can quickly recover research/development costs [k] which  Legal controls over marketing
is important as developed a new product [app]
 Higher revenue per item [k] for its chocolate [app] Other appropriate responses can be credited.
 May have a lower break-even output [k]

Disadvantages:
 High price might discourage (potential) customers [k] for
this social enterprise [app]
 High prices/profitability could encourage competitors to
enter market [k] so may not be able to support local
farmers [app]

Other appropriate responses should be credited.

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Question Answer Marks Notes

4(d) Explain one advantage and one disadvantage to CFG of 6 To use words from the stem as application, the reference
using retailers as its distribution channel for the new must be appropriate (i.e. make sense) in relation to the point
product. being made.

Award 1 mark for identification of each relevant The following words are likely to be appropriate for this
advantage/disadvantage (max 2). question:
Award 1 mark for each relevant reference to this business  Social enterprise
(max 2).  Cocoa beans
Award 1 mark for each relevant explanation (max 2).  (Make) bars of chocolate
 Ethical
Points might include:  (Local) farmers
Advantages:  Legal controls over marketing
 Producers can sell in large quantities to retailers [k]
increasing revenue [an] from its new product [app] Other appropriate responses can be credited.
 Reduced costs (compared to selling direct to
consumers) [k] increasing profit margin [an] in this
social enterprise [app]
 Retailer shares the cost of holding inventory [k] lowering
expenses [an]
 Retailers will promote the product [k] reducing the cost of
promotion/increasing sales [an]
 Access wider range of customers [k]

Disadvantages:
 No direct contact with consumer [k] about its chocolate
bar [app] so may not adapt to changing needs [an]
 Final price (paid by consumer) is often high [k] so may
be uncompetitive [an]
 Retailer takes some of profit away from the producer [k]
 Producer loses some control of marketing mix [k]
 Retailers usually sell competitors’ products as well [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(e) Do you think being ethical will always lead to lower 6 This is a general question so there are no marks for
profit for a business? Justify your answer. application.

Award up to 2 marks for identification of relevant points. Increase cost can be awarded as [k] once where candidates
Award up to 2 marks for relevant development of points. do not refer to specific examples of costs.
Award up to 2 marks for justified decision as to whether
being ethical will always lead to lower profit for a business. Do not credit answers which relate to the costs of being
unethical as this is NAQ.
Points might include:
 Limited/fewer sources of materials [k] leading to less
output [an]
 Higher cost of materials [k] leading to higher variable
costs/cost of goods [an] which lowers gross profit
margin [an]
 Workers may have to be paid more/fair pay [k]
increasing labour costs [an]
 May take time to source ethical supplies [k] which could
delay production [an]
 Good image/reputation [k] so can charge high(er) prices/
lead to customer loyalty [an]
 High(er) demand / increase sales / enter new market /
more customers [k] which could increase revenue [an]
 Help recruit/motivate/retain workers [k] leading to lower
absenteeism/increased productivity [an]
 Investors more likely to invest [k]
 Can help create better supplier relations (by paying a
fair price) [k]
 Less opposition from pressure groups [k]

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Question Answer Marks Notes

4(e) Justification might include:

Being ethical could mean having to pay more to suppliers [k]
increasing variable costs [an]. However, this could improve
the business’s reputation [k] allowing them to increase prices
[an]. Being ethical will not always mean lower profit because
a better reputation is likely to attract more customers [eval],
and the extra revenue gained could cover the costs
increasing profit overall [eval].

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Cambridge IGCSE™

BUSINESS STUDIES 0450/12

Paper 1 Short Answer/Data Response May/June 2024
MARK SCHEME
Maximum Mark: 80

Published

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

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

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the May/June 2024 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 24 printed pages.

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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers. They should be applied alongside the
specific content of the mark scheme or generic level descriptions for a question. Each question paper and mark scheme will also comply with these
marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

 the specific content of the mark scheme or the generic level descriptors for the question
 the specific skills defined in the mark scheme or in the generic level descriptors for the question
 the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

 marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit is given for valid answers which go beyond
the scope of the syllabus and mark scheme, referring to your Team Leader as appropriate
 marks are awarded when candidates clearly demonstrate what they know and can do
 marks are not deducted for errors
 marks are not deducted for omissions
 answers should only be judged on the quality of spelling, punctuation and grammar when these features are specifically assessed by the
question as indicated by the mark scheme. The meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed instructions or in the application of generic level
descriptors.

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GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question (however; the use of the full mark range may
be limited according to the quality of the candidate responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should not be awarded with grade thresholds or
grade descriptors in mind.

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Social Science-Specific Marking Principles
(for point-based marking)

1 Components using point-based marking:

 Point marking is often used to reward knowledge, understanding and application of skills. We give credit where the candidate’s answer
shows relevant knowledge, understanding and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly convey the same meaning (unless the mark
scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they are correct
c DO credit answers where candidates give more than one correct answer in one prompt/numbered/scaffolded space where extended
writing is required rather than list-type answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required. (Check for evidence it is understood and not used
wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already credited unless the language itself is being tested.
This applies equally to ‘mirror statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of syllabus terms must allow for clear and
unambiguous separation from other syllabus terms with which they may be confused (e.g. Corrasion/Corrosion)

2 Presentation of mark scheme:

 Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
 Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
 Content in the answer column in brackets is for examiner information/context to clarify the marking but is not required to earn the mark
(except Accounting syllabuses where they indicate negative numbers).

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3 Calculation questions:
 The mark scheme will show the steps in the most likely correct method(s), the mark for each step, the correct answer(s) and the mark
for each answer
 If working/explanation is considered essential for full credit, this will be indicated in the question paper and in the mark scheme. In all
other instances, the correct answer to a calculation should be given full credit, even if no supporting working is shown.
 Where the candidate uses a valid method which is not covered by the mark scheme, award equivalent marks for reaching equivalent
stages.
 Where an answer makes use of a candidate’s own incorrect figure from previous working, the ‘own figure rule’ applies: full marks will be
given if a correct and complete method is used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

4 Annotation:
 For point marking, ticks can be used to indicate correct answers and crosses can be used to indicate wrong answers. There is no direct
relationship between ticks and marks. Ticks have no defined meaning for levels of response marking.
 For levels of response marking, the level awarded should be annotated on the script.
 Other annotations will be used by examiners as agreed during standardisation, and the meaning will be understood by all examiners
who marked that paper.

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0450/7115/0986 Business Studies – Paper 1 Annotations

Annotation Description Use

Tick Tick Indicates a point which is relevant and rewardable.

X Cross Indicates a point which is inaccurate/irrelevant and not rewardable.

BOD Benefit of Used when the benefit of the doubt is given in order to reward a response.
doubt

TV Too vague Used when parts of the answer are considered to be too vague.

REP Repetition Indicates where content has been repeated.

NAQ Not answered Used when the answer or parts of the answer are not answering the question asked.
question

K Knowledge Indicates knowledge and understanding of the concepts and issues relating to the question.

APP Application Indicates appropriate reference to the information in the stem.

AN Analysis Indicates where the answer has demonstrated analysis.

EVAL Evaluation Indicates where the answer has demonstrated evaluation (part (e) questions only).

OFR Own figure If a mistake is made in a calculation, and the incorrect figure that results from the mistake is used for subsequent
rule calculations.

SEEN Noted but no Indicates that content has been recognised but not rewarded.
credit given

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Question Answer Marks Notes

1(a) Identify two reasons why a government might support 2 Only award the first two responses given.
business start-ups.

Award 1 mark per reason (max 2).

Points might include:

 Create jobs/reduce unemployment
 Increase/contribute to output/GDP
 Gain more taxes/revenue (for the country)
 Bring ideas for/provide goods/services/ innovation
 Increase competition/increase choice/motivate other
businesses to start up
 To benefit society

Other appropriate responses should be credited.

1(b) Identify two ways a business can build customer 2 Only award the first two responses given.
relationships.

Award 1 mark per reason (max 2).

Points might include:

 Offer good quality services/products
 Provide special offers or discounts to regular
customers/loyalty schemes
 Market research/find out what customers want/ask for
feedback
 Communicate with customers e.g. send newsletters
 Respond to complaints/offer refunds
 Provide extra services such as credit/delivery/after sales
service
 Build brand image

Other appropriate responses should be credited.

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Question Answer Marks Notes

1(c) Outline one benefit and one limitation to Nicky’s 4 To use words from the stem as application, the reference
business of operating in a niche market. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for each relevant benefit/limitation (max 2).
Award 1 mark for each relevant reference to this business The following words are likely to be appropriate for this
(max 2). question:
 Entrepreneur
Points might include:  Start-up/new business
Benefits:  Building customer relationships
 Less/low competition [k] for her start-up business [app]  (Walking) holidays/tickets
 Needs of customers can be focused on/help to target  Travel business/tourism
customers [k] for her holidays [app]  Business plan
 Builds up specialist skills/knowledge [k] which can help  Decision-making
build customer relationships [app]  Government support
 Can often charge a higher price [k] influencing decision-
making [app] Other appropriate examples can be credited.

Limitations:
 Lack of economies of scale [k] which can affect
business plan [app]
 Limited sales/revenue/customers/target market is small
[k] for this entrepreneur [app]
 Does not spread risks/relying on one product [k]

Other appropriate responses should be credited.

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Question Answer Marks Notes

1(d) Explain one way each of the following sections in the 6 To use words from the stem as application, the reference
business plan might be helpful to Nicky. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for identification of each relevant way (max 2).
Award 1 mark for each relevant reference to this business The following words are likely to be appropriate for this
(max 2). question:
Award 1 mark for each relevant explanation (max 2). • Entrepreneur
• Start-up/new business
Points might include: • (Walking) holidays/tickets
Business objectives: • Travel business/tourism
 Can act as a goal/target/sense of direction [k] for the • Niche market
travel business [app] which she can use to • Government support
measure/monitor progress/to provide motivation [an] • Building customer relationships
 Improved decision-making/planning [k] so fewer
errors/chance of failure/increase efficiency/save Other appropriate examples can be credited.
cost/saves time/increase sales [an] of the new business
[app] K can be awarded for identifying what the section shows or
 Act as a measure of success [k] so able to check how it can be used.
progress [an] to know whether she is a successful
entrepreneur [app]

Data about the market:

 Show size of market/can spot trends/gaps [k] so know
level of demand [an] in this niche market [app]
 Show whether/where there is sufficient demand [k]
which will affect sales/revenue/location [an] for her
walking holidays [app]
 Information about her target market [k] so decide how
to promote the business [an] which can help build
customer relationships [app]
 Information about competitors/level of competition [k] so
help decide on a suitable method of pricing [an]
 Help set prices/make marketing decisions [k] increasing
sales [an]

Other appropriate responses should be credited.

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Question Answer Marks Notes

1(e) Explain two characteristics of a successful 6 This is a general question so there are no marks for
entrepreneur. Which characteristic is likely to be the application.
most important? Justify your answer.
[k] can only be awarded for identifying characteristics.
Award up to 2 marks for identification of relevant points.
Award up to 2 marks for relevant development of points. [an] is awarded for explaining the characteristic or explaining
Award up to 2 marks for a justified decision as to which why it is important.
characteristic is likely to be the most important.
To access [eval], must discuss two valid characteristics. The
Points might include: second [eval] mark must be awarded for a comparison
 Creative [k] have (new/unique) ideas / make a business between two valid characteristics.
stand out from its competitors [an] therefore help gain
sales [an]
 Risk-taker [k] as investment may be lost [an]
 Perseverance/determination/resilience/self-motivated [k]
as will need to be prepared to keep going when faced
with problems [an]
 Effective communicator [k] as may need to convince its
suppliers/banks/customers to provide goods/lend/buy
products [an]
 Good decision-maker/manager [k] as changes in market
may require action [an]
 Hard-working [k] as must be ready to do everything
themselves [an]
 Independent [k] as be able to work without any help [an]
 Optimistic [k] so always think they will succeed [an]
 Self-confident [k] so convince people/banks to invest
[an]
 Innovative [k] able to put ideas into practice in
new/different ways [an]
 (Multi-)skilled [k] may not need to recruit employees for
specific roles [an]

Other appropriate responses should be credited.

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Question Answer Marks Notes

1(e) Justification might include:

Creative [k] as ideas can make a business stand out from
competitors [an]. A risk-taker [k] as investment may be lost
[an]. A risk-taker is likely to be most important because if
they do not take risks, they may miss out on the opportunity
to make sales [eval] and therefore may never know whether
the new idea could be successful or not [eval].

Question Answer Marks Notes

2(a) Define ‘tertiary sector’. 2 1st mark is for understanding it provides services.

Award 2 marks for a full definition. Award 1 mark for a partial 2nd mark for reference to whom services are provided.
definition.

Provides services to consumers/other sectors of industry [2]

OR
Firms that supply a service to consumers/other businesses
[2]

Partial definition e.g. business that provides services [1]

OR service sector business [1]

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Question Answer Marks Notes

2(b) Calculate GTB’s Return on Capital Employed (ROCE). 2 Answer must be shown as a percentage (%) to gain both
Show your working. marks.

Award 2 marks for the correct answer. Award only 1 mark if 20% is written as part of the answer but
is not given as the final answer.
Award 1 mark for correct method but incorrect answer.

Correct answer: 20% [2]

Correct method but incorrect answer e.g.

Profit/capital employed  100 [1]
OR 150 000 / 750 000  100 [1]
OR 20 [1]

If correct answer given with no working shown, award 2

marks.

2(c) Outline two ways GTB could improve its profit margin. 4 To use words from the stem as application, the reference
must be appropriate (i.e. make sense) in relation to the point
Award 1 mark for each relevant way (max 2). being made.
Award 1 mark for each relevant reference to this business
(max 2). The following words are likely to be appropriate for this
question:
Points might include:  Café
 Increase price [k] of the food [app]  Selling food/drinks or examples such as coffee
 Lower/control fixed costs (or examples such as lower  5 (cafes)
rent) [k] of its cafes [app]  25% (profit margin)
 Lower/control variable costs (or examples) [k] which  $ 600 000 (revenue)
could help increase the profit margin of 25% [app]  $ 150 000 (profit)
 $ 750 000 (capital employed)
Other appropriate responses should be credited.  Social media for promotion

Other appropriate examples can be credited.

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Question Answer Marks Notes

2(d) Explain two advantages to GTB of using social media as 6 To use words from the stem as application, the reference
its method of promotion. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for identification of each relevant advantage
(max 2). The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2).  Café
Award 1 mark for each relevant explanation (max 2).  Selling food/drinks or examples such as coffee
• 5 (cafés)
Points might include: • 25% (profit margin)
 Can target specific groups of customers [k] which could • Improve profit margin
help encourage brand loyalty [an] at each of the 5 • $ 600 000 (revenue)
locations [app] • $ 150 000 (profit)
 Low-cost [k] so fewer cash outflows/lower expenses [an] • $ 750 000 (capital employed)
which could help improve the profit margin of 25% [app] • Tertiary sector
 Cover wide area/seen by many people [k] increasing
sales/revenue/attract customers [an] for the cafe [app] Other appropriate examples can be credited.
 Quick to update [k] so can spend time on other tasks
[an] such as analysing the financial statements [app] Advantages must be to the business not the customer.
 Can reach groups that are difficult to reach any other
way [k]

Other appropriate responses should be credited.

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Question Answer Marks Notes

2(e) Do you think banks are the main external users of the 6 This is a general question so there are no marks for
accounts of a business? Justify your answer. application.

Award up to 2 marks for identification of relevant points. Some points can be [k] or [an] but do not award the same
Award up to 2 marks for relevant development of points. point twice.
Award up to 2 marks for a justified decision as to whether
banks are the main external users of the accounts of a [K] can be awarded for identifying what information the user
business. is looking for, or how they would use the accounts.

Points might include: Some points can be awarded for different external users but
Banks: only award once.
 Whether to give a bank loan [k] to see if a business can
repay [an]
 Whether a business can repay loans/overdraft [k] as this
will influence the terms/interest rate/period of the loan
[an]
 To help decide the interest rate to set [k] to reflect the
level of risk [an]
 To decide the amount to lend [k]
 Check interest payments can/are being made [k]

Other users might include:

Government [k]:
 Want to check the profit [an] / to know the correct
amount of tax has been paid/will be paid [an]

Suppliers/Trade payables [k]:

 Assess/shows liquidity position [an] to know whether the
business is likely to be able to repay them [an]
 See level of debt [an]

Other appropriate responses should be credited.

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Question Answer Marks Notes

2(e) Justification might include:

Banks will use the accounts to check whether a business
can repay loans [k] as this is likely to influence the interest
rate offered [an]. Suppliers [k] will want to know the liquidity
position of a business [an]. Banks are likely to be the main
external users of accounts because banks often lend large
sums of money [eval], whereas suppliers may be less
interested in the accounts if orders are small [eval].

Question Answer Marks Notes

3(a) Define ‘laissez-faire leadership style’. 2 For both marks need the idea that it links to decision making
– and it is the employees/workers who make them.
Award 2 marks for a full definition. Award 1 mark for a partial
definition.

Makes the broad objectives of the business known to

employees, but then they are left to make their own
decisions and organise their own work [2]
OR
A style of leadership that supports employees in achieving
targets at the same time as allowing them the freedom to
decide how to meet the targets [2]

Partial definition e.g. managers do not tell workers what to

do/how to organise work [1]

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Question Answer Marks Notes

3(b) Identify two roles of a manager. 2 Only award the first two responses given.

Award 1 mark per role (max 2). Accept any tasks that managers are likely to do.

Points might include: Do not award:

 Planning  Managing activities on own e.g. managing finance
 Controlling
 Organising
 Leading/commanding/directing/give instructions/tasks
 Coordinating
 Motivating/inspiring others
 Decision-making/solve problems
 Communicating/give feedback
 Delegating

Other appropriate responses should be credited.

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Question Answer Marks Notes

3(c) Outline one external cost and one external benefit 4 To use words from the stem as application, the reference
RBG’s business activities might create. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for each relevant external cost/benefit (max
2). The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2). • Oil
• 6 countries
Points might include: • Pressure groups
External costs: • 2000 employees
 Loss of space/land [k] from its operations in 6 countries • 60 managers
[app] • IT based methods
 Pollution/waste or examples such as gas emissions [k]
which is why it must respond to pressure groups [app] Other appropriate examples can be credited.
 Congestion/traffic [k]
 Deplete/exploit natural/non-renewable resources [k]
 Use of energy [k]

External benefits:
 Employment opportunities/lower unemployment [k] as
may recruit more than 2000 employees [app]
 Taxes will be paid to governments [k] from extracting oil
[app]
 Improved infrastructure/better transport systems [k]

Other appropriate responses should be credited.

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Question Answer Marks Notes

3(d) Explain two methods of IT based communication RBG 6 To use words from the stem as application, the reference
might use with its employees. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for identification of each relevant method
(max 2). The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2). • Oil
Award 1 mark for each relevant explanation (max 2). • 6 countries
• 2000 employees
Points might include: • 60 managers
 Email [k] written record [an] for all 2000 employees • Laissez-faire
[app]
 Text messages/SMS/DM [k] saves time/quick [an] for Other appropriate examples can be credited.
the 60 managers [app]
 Website/social media or examples e.g. Can award the following as [an] for different methods but
Facebook/X/Twitter [k] seen by many people at once only award once:
[an] in the 6 countries [app]  Low cost
 Video conferencing or examples e.g. Zoom/Teams/  Quick
online meeting [k] as can see body language [an]  Send to many people at once
 Phone/mobile (call) [k] at the oil company [app] as able  Send large amounts of information/able to send
to get feedback/allows for two-way communication [an] attachments
 Written record/can refer to later
Other appropriate responses should be credited.  Able to get (instant) feedback
 Do not have to travel

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Question Answer Marks Notes

3(e) Explain two ways a pressure group might try to 6 This is a general question so there are no marks for
influence business decisions. Which way do you think application.
is likely to be the most effective? Justify your answer.
Some points of analysis can be used for different ways but
Award up to 2 marks for identification of relevant points. do not award the same development twice.
Award up to 2 marks for relevant development of points.
Award up to 2 marks for a justified decision as to which is To access [eval], must discuss two valid ways.
the most effective way for a pressure group to try to
influence business decisions.

Points might include:

 (Customer) boycotts/encourage customers not to buy [k]
leading to fewer sales [an] and possibly less revenue
[an]
 Raise/increase awareness or examples such as cause
negative publicity / publish information / write to
newspaper / publicity stunts [k] which could damage the
business’ reputation [an]
 Lobbying (politicians)/send letters to government [k]
which could lead to changes in the law / which could
take time [an]
 Demonstrations/protests [k] which could lead to fewer
people willing to invest in the business [an]
 Arrange petitions [k]
 Take legal action [k] but may increase costs [an]

Other appropriate responses should be credited.

Justification might include:

A pressure group could organise boycotts [k] leading to
fewer sales [an]. It could lobby politicians [k] which could
influence government decisions [an]. A boycott is the most
effective way because fewer sales could mean less revenue
which directly affects the business [eval], whereas lobbying
may not achieve anything other than raising awareness
[eval].

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Question Answer Marks Notes

4(a) Define ‘import quota’. 2 To award both marks the answer must include the idea of
limit on number/quantity of goods and the idea of
Award 2 marks for a full definition. Award 1 mark for a partial imported/into the country.
definition.
Do not award:
Physical limit on the number/amount of goods that can be  answers which confuse the term with a tariff.
imported/allowed into a country [2]
OR
Restriction on the quantity of a product than can be imported
[2]

Partial definition e.g. limit on number/quantity of goods [1]

OR limit on imports [1]

4(b) Identify two benefits to a business of lower rates of 2 Only award the first two responses given.
taxation.

Award 1 mark per benefit (max 2).

Points might include:

• May encourage investment/growth
• Increase sales/revenue/income
• Lower costs/less cash outflow/lower expenses/cheaper
raw materials/cheaper imports
• More (retained) profit
• Higher profit margin

Other appropriate responses should be credited.

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Question Answer Marks Notes

4(c) Identify four legal controls over employment. Only award the first four responses given.

Award 1 mark per legal control (max 4). Allow examples of discrimination only once.

Points might include: Do not award:

 Ethical points such as fair pay.
 Unfair dismissal
 Discrimination/equal opportunities
 (Health and) safety/working conditions/working
environment
 Minimum wage
 Contract of employment or examples such as sickness
policy / holiday entitlement / notice period / rate of
pay/salary / pension entitlement
 Redundancy
 Working hours/provide breaks
 Legal working age/child labour

Other appropriate responses should be credited.

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Question Answer Marks Notes

4(d) Explain one reason why DLT needs to consider each of 6 To use words from the stem as application, the reference
the following factors when deciding where to relocate in must be appropriate (i.e. make sense) in relation to the point
country X: being made.

Award 1 mark for identification of each relevant reason (max The following words are likely to be appropriate for this
2). question:
Award 1 mark for each relevant reference to this business  Cups/plates
(max 2).  Flow production
Award 1 mark for each relevant explanation (max 2).  (30%) exported
 Factory
Points might include:
 75 employees
Suppliers:
 Increased demand (for its products)
 Distance [k] if closer to the factory [app] may reduce
transport costs/may be able to get resources quicker
Other appropriate examples can be credited.
[an]
 May need to change supplier/can they still use current
supplier [k] leading to delays [an] so cannot meet
increase in demand [app]
 Quality/range of materials [k] could damage its
reputation [an] of its cups/plates [app]
 Cost [k] which could lower its profit margin [an]

Suitability of land:
 May need a large area/space [k] otherwise this could
limit production/so able to expand [an] for its exports
[app]
 Access to power/water/electricity [k] as using flow
production [app] so need continuous supply to operate
24 hours a day [an]
 Cost of land/rent [k] as may increase fixed costs [an]
 Links to transport/accessible [k] to ensure deliveries can
be made on time [an]
 Environmental impact [k]
 Government influence or examples such as taxes [k]

Other appropriate responses should be credited

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Question Answer Marks Notes

4(e) Do you think the advantages for a manufacturing This is a general question so there are no marks for
business of using flow production are greater than the application.
disadvantages? Justify your answer.
Analysis:
Award up to 2 marks for identification of relevant points.  Some [an] can be used for different points but only
Award up to 2 marks for relevant development of points. award once.
Award up to 2 marks for a justified decision as to whether  [An] of economies of scale [k] must be lowers
the advantages to a manufacturing business of using flow unit/average costs, and not simply lowers costs.
production are greater than the disadvantages.  Lower cost can be [an] but only award once unless
clearly specify two different costs e.g. labour and
Points might include: training costs.
Advantages:
 Benefit from economies of scale [k] lowering To access [eval] must discuss a valid advantage and a valid
unit/average costs [an] disadvantage.
 Capital intensive [k] so can lower the labour/wage costs
[an]
 Output can be produced 24 hours a day/continuous [k]
 Workers can specialise/little training may be needed [k]

Disadvantages:
 Inflexible/difficult to change/cannot customise products
[k] so may not meet customer needs [an]
 Demotivate employees [k] raises absenteeism/labour
turnover [an]
 If one machine breaks down the whole production line
will stop [k] so delays output [an]
 Requires high level of raw materials/inventory [k]
increasing storage space/cost [an]

Other appropriate responses should be credited.

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Question Answer Marks Notes

4(e) Justification might include:

One advantage is economies of scale [k] which lowers unit
costs [an]. This method is inflexible [k] so the business may
not meet customer needs [an]. The advantages are greater,
as the lower unit costs could result in lower prices [eval]
which can increase demand. If the product has high sales
this could reduce the need for flexibility [eval].

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Cambridge IGCSE™

BUSINESS STUDIES 0450/13

Paper 1 Short Answer/Data Response May/June 2024
MARK SCHEME
Maximum Mark: 80

Published

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

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

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the May/June 2024 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 23 printed pages.

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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers. They should be applied alongside the
specific content of the mark scheme or generic level descriptions for a question. Each question paper and mark scheme will also comply with these
marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

 the specific content of the mark scheme or the generic level descriptors for the question
 the specific skills defined in the mark scheme or in the generic level descriptors for the question
 the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

 marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit is given for valid answers which go beyond
the scope of the syllabus and mark scheme, referring to your Team Leader as appropriate
 marks are awarded when candidates clearly demonstrate what they know and can do
 marks are not deducted for errors
 marks are not deducted for omissions
 answers should only be judged on the quality of spelling, punctuation and grammar when these features are specifically assessed by the
question as indicated by the mark scheme. The meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed instructions or in the application of generic level
descriptors.

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GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question (however; the use of the full mark range may
be limited according to the quality of the candidate responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should not be awarded with grade thresholds or
grade descriptors in mind.

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Social Science-Specific Marking Principles
(for point-based marking)

1 Components using point-based marking:

 Point marking is often used to reward knowledge, understanding and application of skills. We give credit where the candidate’s answer
shows relevant knowledge, understanding and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly convey the same meaning (unless the mark
scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they are correct
c DO credit answers where candidates give more than one correct answer in one prompt/numbered/scaffolded space where extended
writing is required rather than list-type answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required. (Check for evidence it is understood and not used
wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already credited unless the language itself is being tested.
This applies equally to ‘mirror statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of syllabus terms must allow for clear and
unambiguous separation from other syllabus terms with which they may be confused (e.g. Corrasion/Corrosion)

2 Presentation of mark scheme:

 Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
 Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
 Content in the answer column in brackets is for examiner information/context to clarify the marking but is not required to earn the mark
(except Accounting syllabuses where they indicate negative numbers).

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3 Calculation questions:
 The mark scheme will show the steps in the most likely correct method(s), the mark for each step, the correct answer(s) and the mark
for each answer
 If working/explanation is considered essential for full credit, this will be indicated in the question paper and in the mark scheme. In all
other instances, the correct answer to a calculation should be given full credit, even if no supporting working is shown.
 Where the candidate uses a valid method which is not covered by the mark scheme, award equivalent marks for reaching equivalent
stages.
 Where an answer makes use of a candidate’s own incorrect figure from previous working, the ‘own figure rule’ applies: full marks will be
given if a correct and complete method is used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

4 Annotation:
 For point marking, ticks can be used to indicate correct answers and crosses can be used to indicate wrong answers. There is no direct
relationship between ticks and marks. Ticks have no defined meaning for levels of response marking.
 For levels of response marking, the level awarded should be annotated on the script.
 Other annotations will be used by examiners as agreed during standardisation, and the meaning will be understood by all examiners
who marked that paper.

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0450/7115/0986 Business Studies – Paper 1 Annotations

Annotation Description Use

Tick Tick Indicates a point which is relevant and rewardable.

X Cross Indicates a point which is inaccurate/irrelevant and not rewardable.

BOD Benefit of doubt Used when the benefit of the doubt is given in order to reward a response.

TV Too vague Used when parts of the answer are considered to be too vague.

REP Repetition Indicates where content has been repeated.

NAQ Not answered Used when the answer or parts of the answer are not answering the question asked.
question

K Knowledge Indicates knowledge and understanding of the concepts and issues relating to the question.

APP Application Indicates appropriate reference to the information in the stem.

AN Analysis Indicates where the answer has demonstrated analysis.

EVAL Evaluation Indicates where the answer has demonstrated evaluation (part (e) questions only).

OFR Own figure rule If a mistake is made in a calculation, and the incorrect figure that results from the mistake is used for
subsequent calculations.

SEEN Noted but no Indicates that content has been recognised but not rewarded.
credit given

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Question Answer Marks Notes

1(a) Identify one non-current asset and one non-current 2 Only award first response for each type of asset/liability.
liability.

Award one mark for each non-current asset/non-current

liability (max 1 for each).

Points might include:

Non-current assets:
 Land/buildings
 Equipment
 Machinery
 Vehicles
 Fixtures and/or fittings

Non-current liabilities:
 Bank loans

Other appropriate responses should be credited.

1(b) Calculate WFT’s current ratio in 2024. Show your 2 Award only 1 mark if 0.8 is written as part of the answer but
working. is not given as the final answer.

Award 2 marks for correct answer.

Award 1 mark for correct method but incorrect answer.

Correct answer:
 0.8:1 [2]
 0.8 [2]

Correct method e.g.

 120 000 /150 000 [1]
 current assets / current liabilities [1]

If correct answer given with no working shown award two

marks.

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Question Answer Marks Notes

1(c) Outline two ways legal controls over business activity 4 To use words from the stem as application, the reference
affecting the environment might affect WFT. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for each relevant way (max 2).
Award 1 mark for each relevant reference to this business The following words are likely to be appropriate for this
(max 2). question:
 Primary sector
Points might include:  (Harvests) wood/trees/timber
 May have to change where/how dispose of waste [k]  30 employees
from harvesting trees [app]  (Uses a lot of) technology
 Might have to pay fines/buy pollution permits [k] for this  Increase added value
primary sector business [app]  $320 000 (non-current liabilities)
 Might limit use of energy [k] which may matter as the
business uses a lot of technology [app] Other appropriate examples can be credited.
 May have to move/change location/restrict what can do
in a certain area [k] affecting its 30 employees [app]
 May have to limit/reduce amount/output [k]
 May have to change equipment/how operate [k]
 May have to retrain/provide more training its employees
[k]
 Increase costs [k]
 May have to replant/reforest/return land to its former
state [k]

Other appropriate responses should be credited.

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Question Answer Marks Notes

1(d) Explain two factors WFT should consider when deciding 6 To use words from the stem as application, the reference
on a source of finance. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for identification of each relevant factor (max
2). The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2).  Primary sector
Award 1 mark for each relevant explanation (max 2).  (Harvests) wood/trees/timber
 30 employees
Points might include:  (Uses a lot of) technology
 Amount [k] as uses a lot of technology [app] it may need  Increase added value
a large amount which may not be available from internal  $600 000 (non-current assets)
sources [an]  $120 000 (current assets)
 Level of existing loans/debts/borrowing [k] as has non-  $150 000 (current liabilities)
current liabilities of $320 000 [app] so bank may not be  $320 000 (non-current liabilities)
willing to lend [an]
 Size/legal form of business [k] as if this primary sector Other appropriate examples can be credited.
business [app] and is a limited company, it would be
able to issue shares [an]
 Interest/cost of finance [k] as high interest would
increase cash outflows [an]
 Purpose/why it is needed [k]
 Length of time required for [k]
 Credit history [k]

Other appropriate responses should be credited.

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Question Answer Marks Notes

1(e) Explain two ways a business might increase added 6 This is a general question so there are no marks for
value. Which do you think is the best way? Justify your application.
answer.
Some points of analysis could apply to more than one way but
Award up to 2 marks for identification of relevant points. only award once.
Award up to 2 marks for relevant development of points.
Award up to 2 marks for a justified decision as to which is the
best way for a business to increase added value.

Points might include:

 Use cheaper materials/supplier [k] will help lower (input)
costs [an]
 Increase price [k] as this would widen the gap between
(input) cost and price [an]
 Improve the packaging [k] so customers perceive the
product to be worth more [an] so may be prepared to pay
extra [an]
 Excellent customer service [k] so customers may be
prepared to pay a higher price [an]
 Branding/improve brand image/marketing [k]
 Additional product features [k]
 Convenience [k]

Other appropriate responses should also be credited.

Justification might include:

One way is to use cheaper materials [k] as this will help lower
input costs [an]. The business could increase the price [k] as
this would widen the gap between input cost and price [an].
Setting a higher price is better because customers may still
be willing to pay more to maintain good quality [eval]
whereas using cheaper materials is more likely to lower
quality and lower sales [eval].

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Question Answer Marks Notes

2(a) Define ‘profit’ 2 For 2 marks must have the idea of revenue and total/all
costs.
Award 2 marks for a full definition. Award 1 mark for a partial
definition.

Difference between revenue and total costs [2]

OR
The financial gain of a business once all the costs have been
paid using revenue [2]

Partial definition e.g. revenue minus costs [1]

2(b) Identify two reasons why consumer spending patterns 2 Only award the first two responses given.
might change.

Award 1 mark per reason (max 2).

Points might include:

 Technology
 Consumer tastes/fashions/trends
 Income
 Age (profile of population)
 Price of own product
 Price of competitor's products
 Advertising/promotional activities

Other appropriate responses should be credited.

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Question Answer Marks Notes

2(c) Outline two methods of primary market research Alana 4 To use words from the stem as application, the reference
might use. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for each relevant method (max 2).
Award 1 mark for each relevant reference to this business The following words are likely to be appropriate for this
(max 2). question:
 Restaurant such as menus, cooking
Points might include:  Plant/vegetable-based meals or related words such as
 Focus groups [k] from her customers over the past 5 food, cooking
years [app]  City centre
 Observations [k] by her 16 employees [app]  16 employees
 Interviews [k] by asking people in the city centre [app]  Market segment/segmentation
 Surveys [k] about the restaurant [app]  5 years ago
 Questionnaires [k] about her plant-based meals [app]  Consumer spending patterns
 $80 000 (profit)
Other appropriate responses should be credited.
Other appropriate examples can be credited.

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Question Answer Marks Notes

2(d) Explain two possible effects of an increase in interest 6 To use words from the stem as application, the reference
rates on Alana’s business. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for identification of each relevant effect (max
2). The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2).  Restaurant such as menus cooking
Award 1 mark for each relevant explanation (max 2).  Plant/vegetable-based meals or related words such as
food,
Points might include:  City centre
 Cost of borrowing increases [k] for the restaurant [app]  16 employees
so less likely to invest/expand / increase prices [an]  Market segment/segmentation
 Less demand/customers/sales [k] so lower revenue [an]  5 years ago
because of changes in consumer spending patterns [app]  Consumer spending patterns
 May be more difficult to obtain loans/borrow [k] so may  $80 000 (profit)
have to rely on other sources of finance [an] such as her
$80 000 profit [app] Other appropriate examples can be credited.
 May delay/reduce level of investment/expansion [k]
 Other appropriate responses should be credited. Some points could be awarded as [k] or [an] but do not
award the same point twice.

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Question Answer Marks Notes

2(e) Do you think income is the best way for a business to 6 This is a general question so there are no marks for
segment a market? Justify your answer. application.

Award up to 2 marks for identification of relevant points. Some points may be relevant for more than one way, but
Award up to 2 marks for relevant development of points. only award point once.
Award up to 2 marks for a justified decision as to whether
income is the best way for a business to segment a market. Alternative methods of classification are:
 Demographic (age, socio-economic, gender, income,
Points might include: ethnic background, family size)
Income:  Geographic (location/region)
 Can target advertising at particular groups [k] so more  Psychographic (lifestyle, attitudes, personalities)
cost-effective (use of budget) / reducing expenses [an]
 Can target groups with different products [k] which may There can be a mix of classifications, but do not award
lead to more sales/market share [an] overlapping points.
 Can price the product differently for each income groups
[k] which could increase sales/revenue [an]
 Product could be associated as cheap/expensive [k]
which reduces potential market [an]
 Not everyone will like the same things [k]

By region/location [k]
 Able to adapt products/advertising to consider
cultural/social differences [an]
 Can modify language to suit the area [an]
 Helps provide appropriate products that would sell in
specific locations / some products may be demand more in
certain areas than others [an]

Gender [k]
 Allows business to change design to appeal to
men/women [an]
 Could miss out on large potential market as feel the
product is not designed for them [an]
 Expensive to make/stock products to target both
genders [an]

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Question Answer Marks Notes

2(e) Age [k]

 As different age groups may have different product
preferences [an]
 Can target advertising at particular age groups [an]

By use of product [k]

By lifestyle [k]

Other appropriate responses should also be credited.

Justification might include:

Income allows a business to price the product differently for
different income groups [k] so customers will pay based on
what they can afford [an]. It could use gender [k] which
allows the business to change design to appeal to men or
women [an]. Income is likely to be a better way as using
gender could lead to missing out on half of the potential market
[eval]. Whereas, by using income, the business can price its
products based on ability to pay which could lead to a wider
potential market overall [eval].

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Question Answer Marks Notes

3(a) Define ‘public limited company’. 2 For 2 marks need the idea that sell shares and to whom sold
to/by.
Award 2 marks for a full definition. Award 1 mark for a partial
definition.

Businesses owned by shareholders, but it can sell shares to

the public (and their shares are tradeable on the stock
exchange) [2]
OR
A company that sells its shares to the general public
(through a stock exchange) [2]

Partial definition e.g. a business that can sell shares [1]

3(b) Identify two reasons for globalisation. 2 Only award the first two responses given.

Award 1 mark per reason (max 2).

Points might include:

 Increasing number of free trade agreements/reduction
in trade barriers
 Improved/cheaper travel links
 Improved communication networks/technology
 Emerging markets are expanding quickly
 Change in government economic policy/allowing
businesses from other countries to set up operations in
own country

Other appropriate responses should be credited.

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Question Answer Marks Notes

3(c) Outline two economies of scale CQT might benefit from. 4 To use words from the stem as application, the reference
must be appropriate (i.e. make sense) in relation to the point
Award 1 mark for each relevant economy of scale (max 2). being made.
Award 1 mark for each relevant reference to this business
(max 2). The following words are likely to be appropriate for this
question:
Points might include:  Paint
 Purchasing economies [k] when buying from local  Flow production
suppliers [app]  50 (employees/workers)
 Technical [k] especially as using flow production [app]  Local suppliers
 Managerial [k] to help the business take advantage of  Globalisation
globalisation [app]  Relocate its operations
 Marketing [k] to help increase sales of paint [app]
 Financial [k] which may help fund any relocation to other Other appropriate examples can be credited.
countries [app]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

3(d) Explain two limitations for CQT of using flow production. 6 To use words from the stem as application, the reference
must be appropriate (i.e. make sense) in relation to the point
Award 1 mark for identification of each relevant limitation being made.
(max 2).
Award 1 mark for each relevant reference to this business The following words are likely to be appropriate for this
(max 2). question:
Award 1 mark for each relevant explanation (max 2).  Paint
 Economies of scale
Points might include:  50 (employees/workers)
 Inflexible/production line is difficult to change [k] so  Local suppliers
difficult to meet customer demand/needs [an] for paint  Globalisation
[app]  Relocate its factory
 Demotivating [k] for its unskilled 50 employees [app] so  Public limited company
may lower efficiency/output [an]
 High level of raw materials/inventory is held [k] Other appropriate examples can be credited.
increasing storage space/cost [an] for this public limited
company [app] Some points can be [k] or [an] but only award once.
 If one machine breaks down the whole production line
stops [k] which could lower output [an] so may not
benefit from globalisation [app]
 High initial/set up cost [k] which the business may not be
able to afford [an]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

3(e) Explain two factors a business should consider when 6 This is a general question so there are no marks for
deciding whether to relocate its factory to another application.
country. Which factor is likely to be the most important?
Justify your answer.

Award up to 2 marks for identification of relevant points.

Award up to 2 marks for relevant development of points.
Award up to 2 marks for a justified decision as to which factor
is likely to be the most important for a business to consider
when deciding whether to relocate its factory to another
country.

Points might include:

 Access to/able to find (suitable) employees [k]
increasing recruitment/training costs / so may need to
pay higher wages [an]
 Access to/cost of suitable land/rent [k] as may need a
big space/to lower fixed costs [an]
 Access/cost of raw materials / distance from suppliers/
need to find new suppliers [k] as if far away may
increase transport costs [an]
 Different legal controls/standards [k] so may have to
change how/where to operate [an]
 Communication/language problems [k] may lead to
mistakes [an]
 Trade barriers e.g. quotas/tariffs [k]
 Access to government grants/incentives [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

3(e) Justification might include:

One factor is communication problems as people may speak
different languages [k] which could lead to mistakes being
made [an]. A second factor is different legal controls [k] so
may have to change how/where to operate [an]. Legal
controls are most important because a business can hire
translators to overcome communication problems [eval]
whereas a business has limited/no control over the laws of
the country [eval].

Question Answer Marks Notes

4(a) Identify two advantages to a business of having part- 2 Only award the first two responses given.
time employees.

Award 1 mark per advantage (max 2).

Points might include:

 Cheaper than full-time/reduce labour costs/no need to
pay when not working
 More flexible hours of work
 Can ask/more likely to work at busier times
 Can/more likely to extend working hours
 Provides a wider range of skills/experience
 Helps attract well-qualified employees who need flexible
hours
 Helps retain experienced workers

Other appropriate responses should be credited.

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Question Answer Marks Notes

4(b) Define ‘organisational structure’. 2 One mark for idea of positions/levels/hierarchy in the
organisation.
Award 2 marks for a full definition. Award 1 mark for a partial
definition. One mark is for understanding it refers to how it is
managed/organised/responsibilities.
Refers to the levels of management and division of
responsibilities within an organisation [2]
OR
The formal, internal framework of a business that shows how
it is managed and organised [2]

Partial definition e.g. shows levels of management in a

business [1]
OR shows responsibilities of employees [1]

4(c) Identify four reasons why effective internal 4 Only award the first four responses given.
communication is important for a business.
Question requires candidates to identify the benefit of
Award 1 mark per reason (max 4). communicating properly not why communicate.

Points might include:

 Fewer mistakes/less waste/prevent mistakes
 Enable faster/better decision-making
 Improve motivation
 Improve coordination
 Improve efficiency/productivity
 Increase output
 Better collaboration between workers/manager/better
teamwork

Other appropriate responses should be credited.

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Question Answer Marks Notes

4(d) Using Table 4.1, explain two reasons why MTO should 6 To use words from the stem as application, the reference
select applicant A as its new manager. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for identification of each relevant reason (max
2). The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2).  Bank/financial services e.g. provide loans
Award 1 mark for each relevant explanation (max 2).  1 million customers
 2800 employees
Points might include:  70 branches
 Knows what the job involves/experience [k] as has been  3 months experience (as a manager)
a manager for 3 months [app] so less likely to make  18 months (at another business)
mistakes/may need less training [an]  (University) degree in Business
 Has (relevant) qualifications [k] as has got a degree in  Good decision-making skills
Business [app] so should be able to do the job [an]  Growth (as objective)
 Good at decision-making [k] which can help the bank  Narrow span of control
[app] may help improve efficiency [an]
 Tall organisational structure
 May bring in new ideas [k] so may be able to help the
business achieve its objective of growth [app] Other appropriate examples can be credited.
Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(e) Explain two reasons why a business might want to 6 This is a general question so there are no marks for
grow. Which reason is likely to be the most important? application.
Justify your answer.

Award up to 2 marks for identification of relevant points.

Award up to 2 marks for relevant development of points.
Award up to 2 marks for a justified decision as to which
reason (for growth) is likely to be the most important.

 Increase market share [k] so able to set/control prices [an]

which may reduce competition [an]
 Benefit from economies of scale [k] leading to lower
unit/average costs [an] which can increase its profit
margin [an]
 Increase sales [k] which could lead to additional revenue
[an]
 Spread risk [k] so that if no sales in one market, can still
gain revenue from other markets [an]
 Increase profit [k] which can act as a source of
finance/reinvest back into business [an]
 Increased status/reputation [k] could attract customers [an]
 Protect against risk of takeover [k]
 Survival [k]

Other appropriate responses should also be credited.

Justification might include:

One reason is to increase sales [k] which could mean the
business can increase revenue [an]. Another reason is to
benefit from economies of scale [k] which will allow the
business to achieve lower unit costs [an]. Economies of
scale are likely to be the most important because lower unit
costs will also increase the profit margin [eval] whereas the
ability to increase sales may depend on the level of
competition. [eval]

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Cambridge IGCSE™

BUSINESS STUDIES 0450/21

Paper 2 Case Study May/June 2024
MARK SCHEME
Maximum Mark: 80

Published

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

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

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the May/June 2024 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 21 printed pages.

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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers.
They should be applied alongside the specific content of the mark scheme or generic level
descriptions for a question. Each question paper and mark scheme will also comply with these
marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

 the specific content of the mark scheme or the generic level descriptors for the question
 the specific skills defined in the mark scheme or in the generic level descriptors for the question
 the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

 marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit
is given for valid answers which go beyond the scope of the syllabus and mark scheme,
referring to your Team Leader as appropriate
 marks are awarded when candidates clearly demonstrate what they know and can do
 marks are not deducted for errors
 marks are not deducted for omissions
 answers should only be judged on the quality of spelling, punctuation and grammar when these
features are specifically assessed by the question as indicated by the mark scheme. The
meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed
instructions or in the application of generic level descriptors.

GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question
(however; the use of the full mark range may be limited according to the quality of the candidate
responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should
not be awarded with grade thresholds or grade descriptors in mind.

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Social Science-Specific Marking Principles

(for point-based marking)

1 Components using point-based marking:

 Point marking is often used to reward knowledge, understanding and application of skills.
We give credit where the candidate’s answer shows relevant knowledge, understanding
and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly
convey the same meaning (unless the mark scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they
are correct
c DO credit answers where candidates give more than one correct answer in one
prompt/numbered/scaffolded space where extended writing is required rather than list-type
answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required.
(Check for evidence it is understood and not used wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all
possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already
credited unless the language itself is being tested. This applies equally to ‘mirror
statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of
syllabus terms must allow for clear and unambiguous separation from other syllabus terms
with which they may be confused (e.g. Corrasion/Corrosion)

2 Presentation of mark scheme:

 Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
 Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
 Content in the answer column in brackets is for examiner information/context to clarify the
marking but is not required to earn the mark (except Accounting syllabuses where they
indicate negative numbers).

3 Calculation questions:
 The mark scheme will show the steps in the most likely correct method(s), the mark for
each step, the correct answer(s) and the mark for each answer
 If working/explanation is considered essential for full credit, this will be indicated in the
question paper and in the mark scheme. In all other instances, the correct answer to a
calculation should be given full credit, even if no supporting working is shown.
 Where the candidate uses a valid method which is not covered by the mark scheme,
award equivalent marks for reaching equivalent stages.
 Where an answer makes use of a candidate’s own incorrect figure from previous working,
the ‘own figure rule’ applies: full marks will be given if a correct and complete method is
used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

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4 Annotation:
 For point marking, ticks can be used to indicate correct answers and crosses can be used
to indicate wrong answers. There is no direct relationship between ticks and marks. Ticks
have no defined meaning for levels of response marking.
 For levels of response marking, the level awarded should be annotated on the script.
 Other annotations will be used by examiners as agreed during standardisation, and the
meaning will be understood by all examiners who marked that paper.

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0450/7115/0086 Business Studies – Paper 2 Annotations

Annotation Description Use

Tick Tick Indicates a point which is relevant and rewardable (used in

part (a) questions).

Cross Cross Indicates a point which is inaccurate/irrelevant and not

rewardable.

BOD Benefit of doubt Used when the benefit of the doubt is given in order to
reward a response.

TV Too vague Used when parts of the answer are considered to be too
vague.

REP Repetition Indicates where content has been repeated.

NAQ Not answered Used when the answer or parts of the answer are not
question answering the question asked.

APP Application Indicates appropriate reference to the information in the

context.

OFR Own figure rule If a mistake is made in a calculation, and the incorrect
figure that results from the mistake is used for subsequent
calculations.

SEEN Noted but no credit Indicates that content has been recognised but not
given rewarded.

L1 Level 1 Used in part (b) questions to indicate where a response

includes limited knowledge and understanding.

L2 Level 2 Used in part (b) questions to indicate where a response

has a more detailed discussion and contains some
evidence of justification.

L3 Level 3 Used in part (b) questions to indicate where a response

includes a well-justified recommendation.

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Question Answer Marks

1(a) Explain two drawbacks for EP of having a tall organisational structure. 8

Award 1 mark for each drawback (max 2).

Award a maximum of 3 additional marks for each explanation of the drawback

of having a tall organisational structure – one of which must be applied to
this context.

Relevant drawbacks might include:

 Communication is slower – as a long chain of command – takes longer
for messages to pass from senior managers to lowest level employees
 Misunderstandings may occur – as more people for messages to be
passed through – more chance of errors being passed on
 Senior managers are more remote from lower levels in the hierarchy –
these managers are less aware of the views of employees – more likely
for employees to feel demotivated
 Decision making can be slower/weaker – as more levels to discuss
issues and pass on decisions – react to customer changes more slowly
 May have a narrow span of control – which may reduce the opportunities
for delegation – employees feel less trusted with more direct control
 Increasing managerial/supervisor costs – as likely to need more
managers as there are more levels in the hierarchy

For example: Communication is slower (1) as more employees for messages

to be passed through (1) giving more chance of errors in the messages (1)
about the production of pottery (app).

Application could include: pottery; cups; plates; bowls; trading for 40 years;
new Marketing Manager; Managing Director; 84 employees; 6 levels; external
recruitment/recruitment from outside the business; high-quality products; want
to increase efficiency; private limited company; information from Appendix 2.

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Question Answer Marks

1(b) Consider the following two ways EP could use to increase added value. 12
Which way should EP use? Justify your answer.

 Increasing prices
 Reducing raw material costs

Level Description Marks

3 Sound application of knowledge and understanding of 9–12

relevant business concepts using appropriate
terminology.

Detailed discussion of both ways.

Well-justified recommendation.

Candidates discussing both ways in detail, in context

and with a well-justified recommendation including
why the alternative way was rejected should be
rewarded with the top marks in the band.

2 Sound application of knowledge and understanding of 5–8

relevant business concepts using appropriate
terminology.

Detailed discussion of at least one way.

Judgement with some justification/some evaluation of

choice made.

Candidates discussing at least one way in detail and

applying it to the case should be rewarded with the top
marks in the band.

1 Limited application of knowledge and understanding of 1–4

relevant business concepts.

Limited ability to discuss the ways with little/no

explanation.

Simple judgement with limited justification/limited

evaluation of choice made.

Candidates outlining both ways in context should be

rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

1(b) Relevant points might include:

 Improve the quality even more – of the pottery

– then customers will be willing to pay a higher
price – but it depends on the prices charged by
competitors for their pottery products – may
lose sales
 Improve the brand image further – advertise
the pottery – makes the products more well-
known and hence EP may be able to raise
Increasing prices prices as customers like to buy more well-
known branded products
 Provide extra services – such as gift wrap the
cups and plates to give as a gift – customers
will be willing to pay a higher price if the
product is made to appear more attractive in its
packaging
 Higher prices may lead to lower demand for
pottery – possibly reducing revenue

 Buying cheaper raw materials by changing

supplier/buying in bulk to gain a
discount/negotiating cheaper price – but
customers may find the pottery products are
of lower quality – unhappy customers may give
EP a bad reputation – lower sales
 Source cheaper raw materials from imports
Reducing raw
instead of domestic raw materials – input
material costs
costs reduce – but quality may be lower – lose
sales
 Reduce the amount of raw materials in each
pottery item – makes pottery items smaller –
will reduce amount of raw materials needed if
output remains the same – may not be noticed
by customers so no effect

 Increasing prices is the best way to increase

added value because EP has a reputation for
high-quality pottery products and customers
are likely to be willing to pay higher prices.
This is safer than potentially getting a bad
reputation for poor quality products which
might happen if lower quality raw materials are
Recommendation
purchased.
 Reducing input/raw material costs is the best
way to increase added value as customers
may not notice this as long as the quality of the
raw materials is not much lower reducing the
quality of the products such as plates and
bowls.

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Question Answer Marks

2(a) Explain two advantages and two disadvantages of using external 8

recruitment to find EP’s new manager.

Award 1 mark for each relevant advantage/disadvantage (max 2 advantages

and max 2 disadvantages).

Award 1 additional mark for each explanation of the advantage or

disadvantage in context.

Relevant advantages might include:

 There will be new ideas in the business – which may make the business
more competitive with other pottery manufacturers
 There may be no rivalry between the new manager and existing
employees – there will not be jealousy amongst the 7 marketing
employees who did not get the promotion
 The quality of the candidates may be high/more experienced/more skilled
 Wider choice of applicants to choose from
 There will be no new vacancy to replace the internal applicant

Relevant disadvantages might include:

 Recruitment may take longer – as advertisements are needed which may
take time to be read and respond to applicants/interviewing applicants for
the job of Marketing Manager
 The person is not known to the business – risk of employing someone
who does not have the skills and expertise required to understand the
production of products such as cups and bowls
 May be more expensive than internal recruitment
 May be less effective for a time after first being employed – as the new
person will take time to understand the tall organisational structure of EP
 It may be demotivating for existing employees as not able to be promoted

For example: There may be a wider choice of applicants (1) who have more
experience in the production of pottery products (app).

Application could include: pottery; cups; plates; bowls; high-quality products;

private limited company; trading for 40 years; new Marketing Manager;
Managing Director; want sales to increase; plastic or bamboo products;
information from Appendix 2.

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Question Answer Marks

2(b) Consider the following three ways EP could use to increase the sales of 12
its products. Which would be the best way for EP to use? Justify your
answer.

 Advertising using social media

 Emailing special offers to existing customers
 Setting up a website

Level Description Mark

3 Sound application of knowledge and understanding of 9–12

relevant business concepts using appropriate
terminology.

Detailed discussion of two or more ways.

Well-justified recommendation.

Candidates discussing the three ways in detail, in

context and with a well-justified recommendation,
including why the alternative ways were rejected,
should be rewarded with the top marks in the band.

2 Sound application of knowledge and understanding of 5–8

relevant business concepts using appropriate
terminology.

Detailed discussion of at least one way.

Judgement with some justification/some evaluation of

choice made.

Candidates discussing two or more ways in detail and

applying them to the case should be rewarded with the
top marks in the band.

1 Limited application of knowledge and understanding of 1–4

relevant business concepts.

Limited ability to discuss the ways with little/no

explanation.

Simple judgement with limited justification/limited

evaluation of choice made.

Candidates outlining the three ways in context should

be rewarded with the top marks in the band.

0 No Creditable Response 0

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Question Answer Marks

2(b) Relevant points might include:

Advantages Disadvantages

 Can target specific  Can easily be

demographic groups ignored as there
such as higher are a lot of adverts
income earners on social media
 Viral marketing/share  Can be expensive
information with family for EP to pay for
and friends enables pop-ups to ensure
recommendations for its pottery is seen
plates and cups to by a large group of
be spread quickly and people
to a large group of  Potential customers
Advertising using potential customers may not use social
social media  Potential customers media and
will see an advert for therefore they will
the shops to look for not be aware of
EP’s pottery when EP’s products
they go to sites such  Easier to leave bad
as Facebook, which reviews can lead to
increases awareness fewer purchases of
of EP’s products cups and the bad
 Social media widely reviews may be
used by consumers – unfair if only a small
large scale exposure proportion of
reviews are bad

 Low cost/cheaper way  Email may go into

to get information to a spam and so be
lot of existing pottery ignored
customers  No guarantee the
 Emails go direct to email address is
existing customers, correct and
who may be more therefore will not be
likely to purchase seen by all EP’s
EP’s products due to customers
the high-quality  Existing customers
Emailing special
 May be used to direct of plates may see
offers to existing
customers to retailers’ this as annoying
customers
websites – by and get a negative
including links in the view of EP
email  Only sent to
existing
customers/some
customers may not
have email so not
targeting new
customers/may be
less effective

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Question Answer Marks

2(b)
 Makes information  Increased costs of
about EP’s pottery paying for a
more accessible to specialist to set up
potential customers the website/
searching for its improvements
products – makes  Cost of postage
them more likely to and packaging
purchase a set of  On-going costs of
dinner plates maintenance of the
 Have complete control website, e.g.
over the way its updating prices of
pottery is shown in plates
Setting up a the adverts  Search engines
website  Prices can be quickly may not bring up
updated EP’s products on
 Can include the first page of a
interactive search unless EP
adverts/videos, which pays for this which
are more attractive to can be expensive
customers  Relies on people
 Website can be used finding the
for online ordering – website/may be
more accessible for relatively unknown
customers living
further away from
retailers

Justification might include:

 Social media is the best way to choose as the
advert for pottery is more likely to be seen than
on a website, which has to be searched for and
social media will appear immediately. Viral
marketing means that people using social media
can more quickly spread information than the
website and emails to existing people about EP’s
products and may not increase sales as these
customers already have EP pottery.
 Using emails is the best way to choose as an
Recommendation
email is less likely to be ignored and targets
people who have already been a customer and
therefore may be more likely to read the email
and purchase additional products to match their
existing pottery plates.
 Setting up a website is the best way to choose
as it can include a lot of information about EP’s
high-quality products which the other two
alternatives do not. It can include interactive
sections that may be attractive to potential
customers and therefore increase sales.

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Question Answer Marks

3(a) Explain four reasons why consumer spending patterns for a product 8
might change.

Award 1 mark for each reason why consumer spending patterns may have
changed (max 4).

Award a maximum of one additional mark for each explanation of the reason.

There are no application marks for this question.

Relevant reasons might include:

 Changes in consumer tastes and fashions – increased/decreased
demand for the products
 Products no longer meet customer needs – choose to buy alternative
products instead
 Changes in incomes – now/no longer able to afford better quality
products
 The price of a product changes – higher prices usually lead to lower sales
 Changes in the prices of competitors’ products – if competitors’ products
are cheaper then customers will buy from them instead
 Spending on advertising and promotional activities – if effective then is
likely to result in sales increasing for the successfully advertised product
 Changes in the population/age structure of the population – an increase
in the number of older people in the population will increase demand for
products that are popular with them
 New technology means new products become available – this will
increase demand for these products/demand for old technology products
decreases

For example – There are changes in consumer tastes and fashions (1) so if a
product becomes less fashionable then demand for these products will
decrease (1).

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Question Answer Marks

3(b) Consider the following two ways EP could increase efficiency in its 12
factory. Which would be the best way for EP to use? Justify your
answer.

 Improving labour skills

 Introducing more automation and technology

Level Description Marks

3 Sound application of knowledge and understanding of 9–12

relevant business concepts using appropriate
terminology.

Detailed discussion of both ways.

Well-justified recommendation.

Candidates discussing both ways in detail, in context

and with a well-justified recommendation, including
why the alternative way was rejected, should be
rewarded with the top marks in the band.

2 Sound application of knowledge and understanding of 5–8

relevant business concepts using appropriate
terminology.

Detailed discussion of at least one way.

Judgement with some justification/some evaluation of

choices made.

Candidates discussing at least one way in detail and

applying it to the case should be rewarded with the top
marks in the band.

1 Limited application of knowledge and understanding of 1–4

relevant business concepts.

Limited ability to discuss the ways with little/no

explanation.

Simple judgement with limited justification/limited

evaluation of choices made.

Candidates outlining both ways in context should be

rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

3(b) Relevant points might include:

Advantages Disadvantages

Improving labour  Increases motivation  Increases costs

skills of the 50 production from training the
employees – made to 50 production
feel more valued as employees – in
training given to them the short-term
– investment in the may reduce
employees profitability – if
 May enable increase in costs
employees to work is greater than
more quickly – output increase in
of pottery is produced revenue when
in a shorter time the employees
 Output per worker are being trained
increases – increases  Output of cups
productivity – fewer may be reduced
inputs for a given whilst employees
output are being trained
 Employees may – depends on
become more flexible whether it is off-
– could cover for the-job or on-the-
absent colleagues – job training
keeps the factory  Skilled
running employees may
smoothly/fewer be tempted to
interruptions in output leave and work
 Increases skills of for a competitor
employees which that makes high-
decreases waste/ quality products
leads to fewer – then costs of
mistakes training wasted –
it takes time to
recruit new
employees
reducing
efficiency

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Question Answer Marks

3(b)
Advantages Disadvantages

Introducing more  May require fewer full-  May result in

automation and time employees on redundancy
technology the production line – payments –
reduces wage costs increases costs
 Output can be in the short-term
produced more – legal
quickly – reduces unit requirements for
costs – may allow redundancy
prices to be reduced – payments may
price of pottery be high
products may be  Cost of
more competitive – purchasing
increasing sales equipment and
 Changes in pottery maintenance
design may be made costs of the
more quickly – quicker technology may
to react to changes in be high –
customer preferences increases total
costs of making
pottery
products/may
need to be
updated –
increases costs
 Increased
training costs if
employees need
training how to
use the
equipment/may
need to employ
new skilled
workers to
operate the
equipment –
increased
recruitment costs
 Could lead to a
demotivated
workforce - fear
of change to job
roles

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Question Answer Marks

3(b)
Recommendation Justification might include:
 Improving labour skills is the best way to
increase efficiency at EP’s factory. The 50
production employees will learn more skills
which will enable them to produce more output
per worker than previously. This will motivate
the employees to work harder and produce
more output. Automation is very expensive and
unless sales increase EP may find it difficult to
raise sufficient funds for the investment.
 Introducing automation and technology in the
factory to make pottery products such as
plates is the best way to increase efficiency.
Technology will mean fewer production
workers will be needed so saving on wage
costs and greatly increasing output for each
remaining employee in the factory.

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Question Answer Marks

4(a) Explain two factors EP should consider when choosing a source of 8

finance.

Award 1 mark for each factor (max 2).

Award a maximum of 3 additional marks for each explanation of a factor that

affects which source of finance to choose – one of which must be applied
to this context.

Relevant answers might include:

 Legal form of business – EP is a private limited company so share issue
is an option – and new shares can be sold to raise finance
 Amount required – if the finance is required to improve cash flow then it
may not be a very large amount – and it is likely sources such as an
overdraft will provide sufficient funds
 Length of time to repay – if the finance is required for a short length of
time then trade credit might be suitable – as this is repaid to the supplier
within 30/60 days – if needed for long period of time then other sources
may be more suitable
 Existing loans – if the business already has several loans, then this may
not be an option – due to the already high expense of interest payments
on the loans
 Control of the business – the original owners may not want to lose control
and therefore may not choose to sell more shares – so the control and
ownership of the business remains with the original owners
 Purpose for using the finance
 Size of business
 The interest cost involved with some sources of finance – which will
increase costs and lower profit margins

For example: The purpose for using the finance. (1) If the finance is required
for ways to improve efficiency at EP (app) then a source such as a bank loan
could be chosen (1) as this finance can be used to increase efficiency and
then repaid over a longer period of time as unit costs are reduced and
profitability increases (1).

Application could include: pottery; cups; plates; bowls; trading for 40 years;
private limited company; high-quality products; want sales to increase; plastic
or bamboo products; wants to increase efficiency; improving labour skills;
more automation and technology; information from Appendix 2.

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Question Answer Marks

4(b) Using Appendix 3 and other information, consider the following two 12
products EP makes. Which product should EP stop making? Justify
your answer.

 Product A
 Product B

Level Description Marks

3 Sound application of knowledge and understanding of 9–12

relevant business concepts using appropriate
terminology.

Detailed discussion of both products.

Well-justified recommendation.

Candidates discussing both products in detail, in

context and with a well-justified recommendation of
which product to stop making, including why the
alternative product was rejected, should be rewarded
with the top marks in the band.

2 Sound application of knowledge and understanding of 5–8

relevant business concepts using appropriate
terminology.

Detailed discussion of at least one product.

Judgement with some justification/some evaluation of

choices made.

Candidates discussing at least one product in detail

and applying it to the case should be rewarded with
the top marks in the band.

1 Limited application of knowledge and understanding of 1–4

relevant business concepts.

Limited ability to discuss the products with little/no

explanation.

Simple judgement with limited justification/limited

evaluation of choices made.

Candidates outlining both products in context should

be rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

4(b) Relevant points might include:

Advantages Disadvantages

Product A  Sales in volume terms  Price is lower by

are much higher than $30 per product
Product B at $40 per unit
 Total cost is lower  GPM is lower by
than for Product B by 12.5%
$210 000  Sales are
 PM is higher at 30% increasing at the
 Profit is higher at lower rate of 10%
$60 000 but from a per year than for
lower number of sales Product B – so
so the profit margin revenue is not
must be higher likely to increase
 Demand is increasing as much as for
by 10% each year so Product B
future sales are likely
to be higher – may
become even more
profitable in the future
as revenue is likely to
increase and total cost
stays the same

Product B  GPM is higher at  PM is lower at

62.5% 12.5%
 Price per unit is higher  Sales are lower
at $40 per unit – at 10 000 units
leading to higher per year
revenue  Profit in 2023 is
 Revenue is higher at lower by $10 000
$400 000
 Demand is increasing
at double the rate of
Product A each year –
so sales are likely to
increase to 12 000
units leading to higher
revenue of $480 000
in the future

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Question Answer Marks

4(b)
Recommendation Justification might include:
 EP should stop producing Product A because
demand is growing at only 10% per year
whereas demand for Product B is growing at
20% so will increase revenue at a faster rate
hence profit should overtake the $60 000
profit made from Product A.
 EP should stop producing Product B be