™

Cambridge IGCSE

BUSINESS STUDIES 0450/12

*7067409899*

Paper 1 Short Answer and Data Response February/March 2022

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.

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1 CXN manufactures glass bottles using flow production. The business has a number of stakeholder
groups including its 130 employees. CXN has benefitted from globalisation. Its products are exported
to 39 countries. The Managing Director knows that depreciation of an exchange rate can affect
business activity. She thinks all manufacturing businesses should contribute to sustainable
development.

(a) Identify two reasons for globalisation.

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

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

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

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

(b) Define ‘depreciation of an exchange rate‘.

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

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

(c) Outline one possible objective for each of the following stakeholder groups of CXN.

Government: .....................................................................................................................

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Employees: .......................................................................................................................

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(d) Explain one advantage and one disadvantage to CXN of using flow production.

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

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

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

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

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

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

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

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

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

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(e) Do you think using renewable energy is the best way for a manufacturing business to contribute
to sustainable development? Justify your answer.

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2 Nancy wants to be an entrepreneur. She has analysed market research data and decided to start
up a book shop. Nancy has identified a suitable location and prepared a business plan. Nancy is
calculating her total costs. She will use this information to help her complete a break-even chart
as shown in Figure 2.1. Nancy is also considering using e-commerce.

Break-even chart for Nancy’s new business

X
costs and
revenue
$
total costs

break-even current level

output of output
output (units)
Fig. 2.1

(a) Identify X and Y.

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

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

(b) Define ‘total cost’.

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

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

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

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

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(c) Identify four factors a service business should consider when deciding on a suitable location.

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

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

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

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

Factor 3: ...........................................................................................................................

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

Factor 4: ...........................................................................................................................

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

(d) Explain two ways having a business plan could help Nancy.

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

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

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

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

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

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

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

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

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(e) Do you think the threats of e-commerce are greater than the opportunities for a new business?
Justify your answer.

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

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

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

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

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3 D2G is a driving school. Mattan started D2G 3 years ago to teach people to drive a car. As the
business has been successful Mattan plans to buy a new vehicle. He has been analysing D2G’s
income statement. An extract is shown in Table 3.1. Mattan wants to understand the difference
between profit and cash. He also wants to know how an increase in competition and changes in
the business cycle might affect D2G.

Table 3.1
Extract from D2G’s income statement for the year ending 31 December 2021 ($)

Revenue 20 000

Gross profit 12 000

Profit for the year 2000

(a) State two stages of the business cycle.

Stage 1: ............................................................................................................................

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

Stage 2: ............................................................................................................................

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

(b) Calculate D2G’s gross profit margin. Show your working.

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

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

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

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

(c) Outline, with reference to D2G, the difference between profit and cash.

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

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

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(d) Explain two ways D2G might respond to an increase in competition.

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

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

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

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

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

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

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

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

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

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

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

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

(e) Do you think leasing is the best source of finance for a small business to use for a new vehicle?
Justify your answer.

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

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

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

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

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

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

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

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4 WTB is a private limited company. It manufactures breakfast cereals. WTB has 600 production
workers in its factory. Many of its employees are part-time. All employees receive training and
managers use delegation. The Human Resources Director is interested in using motivational theories
to help improve employee motivation. The directors plan to expand the business and are considering
whether to convert WTB into a public limited company.

(a) Define ‘delegation’.

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

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

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

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

(b) Identify two motivational theories.

Theory 1: ..........................................................................................................................

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

Theory 2: ..........................................................................................................................

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

(c) Outline two benefits to WTB of having part-time employees.

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

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

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

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

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

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

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

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(d) Explain two reasons why training might be important to WTB.

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

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

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

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

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

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

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

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

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

(e) Do you think a public limited company is a better form of business organisation for a growing
business than a private limited company? Justify your answer.

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

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

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Cambridge IGCSE

BUSINESS STUDIES 0450/22

Paper 2 Case Study February/March 2022
INSERT 1 hour 30 minutes

INFORMATION
• This insert contains the case study.
*9136086670-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

Mainstreet Hotel (MH)

MH is a hotel owned and managed by Sadiq. He is currently a sole trader but is considering changing
the business to a partnership. The hotel has 80 rooms. On average, 50 of the rooms are occupied
each night. The total revenue from these 50 rooms is $3000 per night.

MH has 40 employees as shown in the organisational chart in Appendix 1. Most of them have
worked for MH for many years. Sadiq works between 60-90 hours a week and currently does not
delegate any management tasks. He is experienced at making marketing decisions but he has few
financial skills. Sadiq communicates with all MH employees every morning to give them their jobs
for that day.

Sadiq wants to improve the quality of customer service in all parts of the hotel. He knows that he
could use quality control or quality assurance. He is considering how he could use these methods
in his hotel.

Sadiq also wants to increase MH’s revenue and is considering the following two options:

Option 1

The price of the rooms could be reduced to $50 per night. He thinks that if the price per room is
reduced MH will have 75 hotel rooms occupied each night. The target market, consumers who
want low-price hotel accommodation, would not change. Many hotel guests return each year to
stay at MH.

Option 2

Redecorate the hotel rooms and upgrade them to a much higher standard. Sadiq thinks that the
price per room could be increased by 50%. The target market would be high-income tourists. He
estimates 50 rooms per night are still likely to be occupied. The estimated cost of upgrading each
hotel room is $10 000.

Appendix 1

Organisational chart for MH

Hotel Owner (Sadiq)

Room cleaning Restaurant Reception Finance

supervisors (2) supervisor (1) supervisor (1) supervisor (1)

Chefs (4) Receptionists (5) Office employees (2)

Room cleaners (10) Serving staff (14)

NB The number in brackets is how many employees are in each role

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Appendix 2

Reviews on MH from a tourist hotel website

Quite good but not perfect 3 out of 5 stars

The restaurant was excellent but my partner cannot eat certain types of food. The menus did not
give a list of the ingredients in the food.

Our room was not cleaned well and the bed was uncomfortable so we didn’t sleep well. However,
the hotel employees were all very friendly and helpful.

Boring website – room ok 2 out of 5 stars

There were very few photographs of the hotel on the website and there was limited information
about the facilities. I was unable to book a restaurant table in advance on the website. The hotel
rooms were basic and prices were slightly high for this standard.

Drinking water in plastic bottles was provided in our room each day. The plastic bottles were thrown
away. I would have preferred glass bottles that can be recycled.

Appendix 3

Email from the Finance Supervisor to Sadiq

To: Sadiq

From: Finance Supervisor

Subject: Improvements to cash flow

I have identified the following three problems:

• We do not have any savings.

• We do not ask for a deposit when hotel rooms are booked. Other hotels in the area require a
30% deposit.
• We do not have trade credit from our food suppliers.

Can we meet to discuss how to improve cash flow?

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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 2022 03_0450_22_2022_1.7

 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/22

*9136086670*

Paper 2 Case Study February/March 2022

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.

03_0450_22_2022_1.7
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 2

1 (a) Explain four methods a business could use to communicate with its employees.

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

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

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

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

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Method 3: ..........................................................................................................................

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Method 4: ..........................................................................................................................

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........................................................................................................................................... [8]

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 3

(b) Consider the following three ways the internet could be used to improve the promotion of MH.
Which is the best way for Sadiq to choose? Justify your answer.

• Improve its existing website.

• Advertise using social media.
• Email special offers to existing customers.

Improve its existing website: .............................................................................................

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

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

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

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

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

Advertise using social media: ...........................................................................................

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

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

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Email special offers to existing customers: .......................................................................

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

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

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

Recommendation: ............................................................................................................

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

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........................................................................................................................................... [12]

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2 (a) Explain one advantage and one disadvantage to Sadiq of delegating tasks to his employees.

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

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

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

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

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

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

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

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

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

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

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

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........................................................................................................................................... [8]

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(b) Consider the following three ways Sadiq could achieve a high-quality service at MH. Which
is the most effective way? Justify your answer.

• Only buying food ingredients from suppliers that guarantee good quality.
• The room cleaners made responsible for checking their own work.
• Chefs regularly sampling food before it is served to guests.

Only buying food ingredients from suppliers that guarantee good quality: .......................

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

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

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

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

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

The room cleaners made responsible for checking their own work: ................................

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

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

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

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

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

Chefs regularly sampling food before it is served to guests: ............................................

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

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

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

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

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

Conclusion: .......................................................................................................................

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........................................................................................................................................... [12]

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3 (a) Explain four advantages to Sadiq of changing his business to a partnership.

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

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

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

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

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

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

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

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Advantage 3: ....................................................................................................................

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Advantage 4: ....................................................................................................................

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........................................................................................................................................... [8]

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(b) Consider the two options for Sadiq to increase MH’s revenue. Which option should he choose?
Justify your answer using suitable calculations.

Option 1: ...........................................................................................................................

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

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

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

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

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

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Option 2: ...........................................................................................................................

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

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Recommendation: ............................................................................................................

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

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4 (a) Refering to Appendix 2 and other information, explain how the following two new legal controls
could affect MH.

• Restaurant menus must list all ingredients in the food served.

• Single-use plastic bottles cannot be used.

Restaurant menus must list all ingredients in the food served: ........................................

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

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

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

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

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

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

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

Single-use plastic bottles cannot be used: .......................................................................

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

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(b) Consider the following three ways Sadiq could improve MH’s cash flow.

• Arrange a bank loan.

• Ask customers to pay a deposit of 20% when they book a room.
• Ask for trade credit from food suppliers.

Which would be the most effective way for MH to improve its cash flow? Justify your answer.

Arrange a bank loan: ........................................................................................................

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

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

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

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

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

Ask customers to pay a deposit of 20% when they book a room: ....................................

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

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

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

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

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

Ask for trade credit from food suppliers: ...........................................................................

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

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

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

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

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

Conclusion: .......................................................................................................................

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

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........................................................................................................................................... [12]

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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 2022 03_0450_22_2022_1.7

Cambridge IGCSE™

BUSINESS STUDIES 0450/12

Paper 1 Short Answer/Data Response February/March 2022
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 February/March 2022 series for most
Cambridge IGCSE™, Cambridge International A and AS Level components and some Cambridge O Level
components.

This document consists of 22 printed pages.

© UCLES 2022 [Turn over

0450/12 Cambridge IGCSE – Mark Scheme FEBRUARY/MARCH 2022
PUBLISHED
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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0450/12 Cambridge IGCSE – Mark Scheme FEBRUARY/MARCH 2022
PUBLISHED
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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0450/12 Cambridge IGCSE – Mark Scheme FEBRUARY/MARCH 2022
PUBLISHED
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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0450/12 Cambridge IGCSE – Mark Scheme FEBRUARY/MARCH 2022
PUBLISHED
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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Question Answer Marks Notes

1(a) Identify two reasons for globalisation. 2 Only award the first two responses given.

Award 1 mark per reason (max 2).

Points might include:

• Free trade agreements / economic trading blocs / reduction in trade
barriers
• Improved/cheaper transport/travel links
• Improved communication networks/technology
• Emerging markets are quickly expanding / rapid economic growth in
developing countries
• Change in government economic policy / allowing foreign company
to set up operations in own country
• Increased labour migration

Other appropriate responses should also be credited.

1(b) Define ‘depreciation of an exchange rate’. 2

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

A currency’s value falls against another currency [2]

OR
The value of the currency goes down with respect to another (currency) [2]
OR
When the value of a currency falls – it buys less of another currency than
before [2]

Partial definition e.g. currency is weaker/falling [1]

OR can buy less with currency [1]

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Question Answer Marks Notes

1(c) Outline one possible objective for each of the following stakeholder 4 To use words from the stem as application the
groups of CXN. reference must be appropriate (i.e. make sense)
in relation to the point being made.
Award 1 mark for each relevant objective (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: • Glass/bottles
Government: • 130 (employees)
• Increase tax (revenue) / paid correct amount of tax [k] from the • (Export to) 39 countries
manufacture of bottles [app] • Flow production
• Provide/increase number of jobs / minimum unemployment benefits • Sustainable development
to pay [k] • Globalisation
• Expect business to stay within the law [k]
Other appropriate examples in context can still
Employees: be credited.
• Increase pay / wages / receive fair wage / regular payments [k] for its
130 employees [app]
• Better/safe working conditions [k] when using flow production [app]
• Access to training/development [k] because the business is trying to
contribute to sustainable development [app]
• Job security [k]
• Have contract of employment [k]
• Work provides motivation / opportunities for promotion [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

1(d) Explain one advantage and one disadvantage to CXN of using flow 6 Note: To use words from the stem as application
production. 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
Award 1 mark for each relevant reference to this business (max2). for this question:
Award 1 mark for each relevant explanation (max 2). • Glass/bottles
• 130 (employees)
Points might include: • 39 countries
Advantages: • Sustainable development
• High output / fast production / increase efficiency [k] of bottles [app] so • Globalisation
able to meet orders (on time) [an]
• Benefit from economies of scale [k] leading to lower average/unit Other appropriate examples in context can still
costs [an] be credited.
• Can produce 24 hours a day / continuous production [k] so able to
produce large output [an] Do not award points such as faster/cheaper on
• Allows for capital intensive methods / fewer employees [k] so only own as too vague.
need 130 employees [app] reducing labour cost [an]

Disadvantages:
• Inflexible (if demand changes) [k] especially as export to 39
countries [app] which could lead to high level of wastage [an]
• Lower motivation (as work may be boring) [k] so employees are less
efficient / lower output / high labour turnover [an]
• If one machine breaks down whole production line stops [k] lose
output / fewer sales [an]
• High set up/machinery costs [k] leading to large cash outflows [an]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

1(e) Do you think using renewable energy is the best way for a 6 This is a general question so there are no marks
manufacturing business to contribute to sustainable development? for application.
Justify your answer.
Some points could be awarded for different
Award up to 2 marks for identification of relevant points. options, but do not award the same point twice.
Award up to 2 marks for relevant development of points.
Award up to 2 marks for a justified decision as to whether using Do not award points such as less pollution,
renewable energy is the best way for a manufacturing business to lower carbon footprint, protect environment as
contribute to sustainable development. likely to apply to all methods.

Points might include:

• No/low energy bill [k] which reduces expenses [an]
• Need to use fewer scarce resources / conserve natural resources /
supply not limited / does not run out [k]
• High set up cost [k] which business might not be able to afford [an]
• Amount of energy can depend on weather conditions / may not be a
reliable source of power [k] which could lead to less output / delays
in production [an]

Other methods might include:

• Develop environmentally friendly production methods [k] reduce
amount of waste [an] leading to lower average costs [an]
• Use fewer resources [k] which can (also) help reduce production
costs [an]
• Develop new environmentally friendly products/packaging [k] which
may help attract new customers/markets [an]
• Recycle waste [k] which helps reduce amount of materials needed
[an]
• Replant trees (where land has been cleared) [k]
• Reuse materials [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

1(e) Justification might include:

Renewable energy might not be reliable source of power [k] which could
lead to delays in production [an]. Another way is to develop new
environmentally friendly products [k]. Whilst this could involve high set
up costs [an], I think it is a better way because the new products could
also help attract new customers which not only helps the manufacturer
recover the initial costs [eval] it can also encourage others to contribute
to sustainable development by using its greener products [eval].

Question Answer Marks Notes

2(a) Identify X and Y. 2

Award 1 mark for each correct answer.

X: (Total) revenue / total value of sales

Y: Margin of safety

2(b) Define ‘total cost’. 2

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

Fixed costs and variable costs (combined) [2]

OR
All the variable and fixed costs of producing the total output [2]
OR
Fixed costs + (total) variable cost [2]

Partial definition e.g. all costs added together [1]

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Question Answer Marks Notes

2(c) Identify four factors a service business should consider when 4 Only award the first four responses given.
deciding on a suitable location.
Do not award access to raw materials as this is
Award 1 mark for each relevant factor (max 4). not appropriate for a service sector business.

Points might include:

• Demand / market potential / number of customers
• Accessibility for customers / parking spaces / transport links
• Availability of suitable/vacant site / size of premises
• Rent/taxes/cost of site
• Near to other businesses/shops/competitors
• Availability/cost of labour
• Security
• Legal controls/government influence
• Infrastructure or examples such as access to electricity/water
• Owner’s personal preference

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(d) Explain two ways having a business plan could help Nancy. 6 To use words from the stem as application the
reference must be appropriate (i.e. make sense)
Award 1 mark for identification of each relevant way (max 2). in relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2).
Award 1 mark for each relevant explanation (max 2). The following words are likely to be appropriate
for this question:
Points might include: • Book (shop)
• Help get a bank loan/finance [k] for her book shop [app] as lender • Market research
can see that the business is able to repay [an] • Break-even chart/margin of safety
• Provide targets / sense of purpose / direction / focus [k] for her new • (Suitable) location
business [app] as can see what she needs to do to achieve her • E-commerce
aims [an] • New/start-up business
• Help decision-making [k] such as whether to use e-commerce [app] • Entrepreneur
so does not waste time/money on the wrong target market/products
[an] Other appropriate examples in context can still
• Act as a checklist/way to monitor progress [k] for this entrepreneur be credited.
[app]
• Help set budgets [k] to help calculate her margin of safety [app]
• Help organise resources / labour requirements / marketing strategy
[k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(e) Do you think the threats of e-commerce are greater than the 6 This is a general question so there are no marks
opportunities for a new business? Justify your answer. for application.

Award up to 2 marks for identification of relevant points. Some points could be awarded for different
Award up to 2 marks for relevant development of points. options, but do not award the same point twice.
Award up to 2 marks for a justified decision as to whether the threats of
e-commerce are greater than the opportunities for a new business. Points must focus on impact on the business
and not customers.
Points might include:
Threats:
• Increased/high competition [k] which could make it harder to calculate
what is a competitive price / may have to set lower price [an]
• Unfamiliarity / customers are less likely to buy from a business they
don’t know [k] lowering revenue [an]
• High cost of design of website (as must be clear/attractive/easy to
use) [k] which the business might not be able to afford [an]
• Technical problems/no power [k] so may lose potential sales [an]

Opportunities:
• Increase potential number of customers / sales / can access
customers around the world [k] increasing its market share [an]
• (Low cost) way to promote/advertise business [k] which can raise
awareness [an]
• Fewer employees needed [k] so lower labour costs [an]
• No/fewer shops [k]

Other appropriate responses should also be credited.

Justification might include:

One threat is increased competition [k] so the business may have to set
lower prices [an]. However, e-commerce can help new businesses as it
could mean a larger potential market [k] leading to higher revenue [an]. I
think there are more opportunities because competition is an issue that
any new business must manage [eval] and the wider market means that
it may still be able to generate sales needed to have a successful start
[eval].

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Question Answer Marks Notes

3(a) State two stages of the business cycle. 2 Only award first two responses given.

Award 1 mark per stage (max 2).

Two from:
• Recession
• Growth
• Boom
• Slump

3(b) Calculate D2G’s gross profit margin. Show your working. 2 Award only 1 mark if 60% is written as part of the
answer but is not given as the final answer.
Award two marks for a correct answer.
Award one mark for correct method but incorrect answer. Must have % to gain 2nd mark.

Correct answer: 60% [2]

Method: gross profit divided by revenue * 100 [1] OR 12 000 / 20 000 *

100 [1]

If correct answer given with no working shown, award 2 marks.

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Question Answer Marks Notes

3(c) Outline, with reference to D2G, the difference between profit and 4 To use words from the stem as application the
cash. reference must be appropriate (i.e. make sense)
in relation to the point being made.
Award 1 mark for relevant knowledge of profit and/or cash (max 1).
Award 1 mark for showing understanding of difference between profit The following words are likely to be appropriate
and cash (max 1). for this question:
Award 1 mark for each relevant reference to this business (max 2). • Driving school / teach people to drive or
related words such as lessons, learners
Points might include: • (New) car/vehicle or related words such as
• Cash is needed to pay day-to-day costs [k] such as fuel for the car petrol/fuel
[app] whereas profit is necessary for the long-term survival [k] of his • $2000 profit
driving school [app] • $12 000 (gross profit)
• Cash may be received beforehand [k] so the profit of $2000 [app] • $20 000 (revenue)
will not increase until later [k] when the driving lessons have taken • 3 years
place [app] • Business cycle
• D2G may offer credit to customers [k] for the driving which is
counted in profit of $2000 [app] but the cash is not yet received [k] Other appropriate examples in context can still
until the lesson takes place [app] be credited.
• Profit is a source of finance [k]
• Profit is a measure of success [k] To award four marks candidates must include a
• Profit is a reward for risk-taking [k] clear reference to the difference between cash
• Cash is necessary to help avoid cash flow problems [k] and profit.

Other appropriate responses should also be credited.

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Question Answer Marks Notes

3(d) Explain two ways D2G might respond to an increase in competition. 6 To use words from the stem as application the
reference must be appropriate (i.e. make sense)
Award 1 mark for identification of each relevant way (max 2). in relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2).
Award 1 mark for each relevant explanation (max 2). The following words are likely to be appropriate
for this question:
Points might include: • Driving school / teach people to drive or
• Decrease prices [k] making it more affordable for customers [an] of related words such as lessons, learners
his driving school [app] • $2000 profit
• Increase advertising [k] which can help raise awareness / attract • (New) car/vehicle or related words such as
customers to use its service (rather than competitors) [an] petrol/fuel
• Improve/maintain customer relationships [k] to help ensure customer • $12 000 (gross profit)
loyalty [an] and maintain its profit of $2000 [app] • $20 000 (revenue)
• Add/develop new products/services [k] to set it apart /stand out from • 3 years
the competition [an]
• Look for new markets [k] which could help widen its customer base Other appropriate examples in context can still
[an] so able to increase its revenue of $20 000 [app] be credited.

Other appropriate responses should also be credited.

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Question Answer Marks Notes

3(e) Do you think leasing is the best source of finance for a small 6 This is a general question so there are no marks
business to use for a new vehicle? Justify your answer. for application.

Award up to 2 marks for identification of relevant points. Some points could be awarded as either an
Award up to 2 marks for relevant development of points. advantage/disadvantage for different options,
Award up to 2 marks for a justified decision as to whether leasing is the but do not award the same point twice as this is
best source of finance for a small business to use for a new vehicle. repetition.

Points might include:

Leasing:
• Business does not have to find a large sum of cash to purchase the
vehicle [k] which can allow the business to obtain/use the vehicle
more quickly [an]
• Care and maintenance are carried out by the leasing company [k]
which can lower expenses [an]
• Total cost is higher than purchasing the vehicles outright [k] which
increases total cash outflow [an]
• Do not own asset [k] so cannot sell the vehicles if not needed any
more / need (more) cash [an]

Other options include:

(Bank) loan [k]
• Can repay over a long period [an]
• Interest payable [an] so will add to costs [an]

Retained profit [k]

• No need to repay [an]
• Immediately available [an]
• May not have sufficient funds [an]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

3(e) Justification might include:

Using leasing means the business does not have to find a large sum of
cash initially [k] so the business can obtain the vehicle more quickly [an].
Another option is a bank loan [k] but this would have interest payable
[an]. I think leasing is the best option especially as a small business may
struggle to convince the bank to provide the necessary finance to buy a
new vehicle [eval]. So, while it may work out to be more expensive at
least the business is able to obtain the (new) vehicle that it needs to
operate [eval].

Question Answer Marks Notes

4(a) Define ‘delegation’. 2

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

Giving a subordinate the authority to perform particular tasks [2]

OR
When a manager gives authority to another employee to complete a
task (although the manager retains the ultimate responsibility for the
completion of the task) [2]

Partial definition e.g. manager gives task to employee [1]

OR subordinate given task to do [1]

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Question Answer Marks Notes

4(b) Identify two motivational theories. 2 Only award the first two responses given.

Award 1 mark per theory (max 2).

Points might include:

• Taylor's (scientific theory)
• Maslow's (Hierarchy of needs)
• Herzberg's (two-factor theory)

Other appropriate responses should also be credited.

4(c) Outline two benefits to WTB of having part-time employees. 4 To use words from the stem as application the
reference must be appropriate (i.e. make sense)
Award 1 mark for each relevant benefit (max 2). 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
Points might include: for this question:
• Reduces labour costs / when not working no need to pay [k] to make • Factory
the (breakfast) cereal [app] • 600 (production workers/employees)
• More flexible in hours of work [k] in the factory [app] • (Breakfast) cereal
• Easier to ask employees just to work at busy times [k] • Private limited company
• Easier to extend operating hours by working evenings/weekends [k] • Public limited company
• Provides a wider range of skills/experiences of the workforce [k] of • Delegation
600 employees [app] • Motivational theories / improve motivation
• Helps keep experienced employees [k] which may be important as • Planning to expand
business is planning to expand [app] • Training
• Can attract well qualified employees who need to have flexible hours
[k] Other appropriate examples in context can still
be credited.
Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(d) Explain two reasons why training might be important to WTB. 6 To use words from the stem as application the
reference must be appropriate (i.e. make sense)
Award 1 mark for identification of each relevant reason (max 2). in relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2).
Award 1 mark for each relevant explanation (max 2). The following words are likely to be appropriate
for this question:
Points might include: • Factory
• Improve efficiency / increased output / faster production [k] which • 600 (production workers/employees)
could help lower (average) cost [an] in the factory [app] • (Breakfast) cereal
• More skilled / flexible employees / workers know what to do [k] so • Private limited company
able to cover absences of others [an] who work part-time [app] • Public limited company
• Fewer mistakes / better quality [k] from its 600 employees [app] • Delegation
which could lower costs of rework [an] • Motivational theories / improve motivation
• Increase motivation [k] which can help reduce labour turnover / • Part-time (employees)
encourage employee loyalty/retention [an] • Planning to expand
• Fewer customer complaints [k] about its cereal [app] increasing
customer loyalty [an] Other appropriate examples in context can still
• Less supervision needed [k] so able to make more use of delegation be credited.
[app] so managers have time to focus on other activities [an]
• Fewer accidents / ensure safe working conditions [k]
• Helps introduce a new process [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(e) Do you think a public limited company is a better form of business 6 This is a general question so there are no marks
organisation for a growing business than a private limited for application.
company? Justify your answer.
Some points could be awarded as either an
Award up to 2 marks for identification of relevant points. advantage/disadvantage of each option, but do
Award up to 2 marks for relevant development of points. not award the same point twice as this is
Award up to 2 marks for a justified decision as to whether a public repetition.
limited company is a better form of business organisation for a growing
business than a private limited company. Do not award the following points if candidate
identifies comparisons to private limited
Points might include: companies as they apply to both forms of
Public limited company: organisation:
• Access to very large amounts of capital [k] which does not need to • Shareholder may expect dividends to be
be repaid [an] paid
• Shares available on the stock exchange / can sell shares to public • Divorce of ownership and control
[k] • Have limited liability
• Cannot control who buys the shares / no restriction on who can buy • Have shareholders
shares [k] which increases the risk of a takeover [an] • Incorporated/separate legal identity
• More legal requirements / controls to follow / must hold an annual • Must issue financial data / accounts
general meeting [k] which increases costs / time-consuming [an] available to public
• Selling shares to the public is expensive [k]

Private limited company:

• Can only sell shares to friends/family [k] which could limit amount of
finance able to raise [an]
• Able to control who buys the shares [k] which can help reduce risk of
takeover [an]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(e) Justification might include:

A public limited company has better access to capital [k] which can help
finance expansion [an]. Whereas a private limited company can control
who buys the shares [k] which can reduce the risk of being taken over
[an]. Becoming a public limited company is better because as the
business is growing having access to more funds is likely to be very
important otherwise it could delay its plans [eval], whereas a private
limited company is restricted to a smaller group of people so may not be
able to raise sufficient funds [eval].

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Cambridge IGCSE™

BUSINESS STUDIES 0450/22

Paper 2 Case Study February/March 2022
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 February/March 2022 series for most
Cambridge IGCSE™, Cambridge International A and AS Level 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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Question Answer Marks

1(a) Explain four methods a business could use to communicate with its 8
employees.

Award 1 mark for each relevant method (maximum of four).

Award a maximum of 1 additional mark for each explanation.

There are no application marks available for this question.

Relevant methods might include:

• Memo – short written message that can be on paper or emailed
• Letter – when more of a formal document is required such as informing
an employee of dismissal
• Report – a detailed document about a particular issue or problem
• Notice/Poster – put on a board so that all employees can read the
detailed information on it
• Text message – can be quickly sent to employees’ mobile phones and
can be reread if necessary
• PowerPoint presentation – can give a lot of visual information in a
meeting with employees/managers
• Meeting with employees/briefing/video conferencing – can give
information to many employees at once and feedback is not necessary
• Face-to-face conversation - where the manager can discuss an issue with
an employee / can be two-way communication with an employee / give
instructions to an employee
• Telephone/mobile phone call – two-way communication which allows
discussion/explanation
• Email - can send detailed information which the employees can refer
back to in the future
• Tannoy/public address (PA) system
• Newsletter
• Social media

For example: Phone call using mobile phone (1) allows discussion of any
issues so questions can be answered straight away (1)

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Question Answer Marks

1(b) Consider the following three ways the internet could be used to improve 12
the promotion of MH. Which is the best way for Sadiq to choose? Justify
your answer.

• Improve its existing website.

• Advertise using social media.
• Email special offers to existing customers.

Level Description Marks

Sound application of knowledge and understanding

of relevant business concepts using appropriate
terminology.

Detailed discussion of two or more ways.

3 9–12
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.

Sound application of knowledge and understanding

of relevant business concepts using appropriate
terminology.

Detailed discussion of at least one way.

2 5–8
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.

Limited application of knowledge and understanding

of relevant business concepts.

Limited ability to discuss the ways with little/no

explanation.
1 1–4
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

1(b) Relevant points might include:

Advantages Disadvantages

• Makes the hotel • Increased costs of

information more paying for a
accessible to specialist to carry
potential customers out the website
searching for a hotel improvements
and make them • On-going costs of
more likely to book maintenance of the
a room website, e.g.
• The website now updating room
may look more prices
attractive as some • Search engines may
guests have said not bring up the
the current website hotel on the first
is boring so more page of a search
photographs may unless Sadiq pays
attract potential for this and can be
Improve its customers to book expensive
existing website • Have complete • Relies on people
control over the way finding the website /
the hotel is shown in may be relatively
the adverts unknown
• Room prices can be
quickly updated
• Can include
interactive adverts,
which are more
attractive than static
adverts in
magazines or
newspapers
• Website can be
used for exclusive
offers direct to
consumer

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Question Answer Marks

1(b)
Advantages Disadvantages

• Can target specific • Can easily be

demographic groups ignored as there are
such as higher a lot of adverts on
income earners social media
• Viral marketing / • Can be expensive
share information for MH to pay for
with family and pop-ups to ensure
friends enables the hotel is seen by
recommendations to a large group of
be spread quickly people
and to a large group • Potential customers
of potential may not use social
customers who may media and therefore
Advertise using
want to book a room they will not be
social media
at the hotel aware of the hotel
• Potential customers • Bad reviews can
will see an advert for lead to fewer
the hotel when they bookings and the
go to sites such as bad reviews may be
Facebook, which unfair if only a small
increases proportion of reviews
awareness of the are bad
hotel
• Social media widely
used by consumers
– large scale
exposure

• Cheap way to get • Email may go into

information to a lot spam and so be
of existing hotel ignored
customers • No guarantee the
• Emails go direct to email address is
existing customers, correct and therefore
so it targets tourists will not be seen by
who are more likely tourists
to return to the hotel • Existing customers
Email special
• May reach tourists may see this as
offers to existing
that are in other annoying and get a
customers
countries and are negative view of the
difficult to reach in hotel
other ways • Only sent to existing
• Directs more traffic customers / some
to the website customers may not
have email so not
targeting new
customers / may be
less effective

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Question Answer Marks

1(b)
Justification might include:
• Updating the website is the best option to
choose as it can include a lot of information
about the hotel which the other two alternatives
do not. It can include interactive sections that
may be more attractive than those in an email or
social media advert which are likely to be more
limited.
• Social media is the best as the advert is more
likely to be seen than a website, which has to be
searched for and social media will appear
Recommendation immediately. Viral marketing means that people
using social media can more quickly spread
information than the website and emails to
thousands of people about the hotel especially if
these guests have had a good holiday there.
• Using emails is the best one to choose as the
alternatives require that people look for the
website or stop and read the social media advert
and they may ignore it. An 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 return to the hotel.

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Question Answer Marks

2(a) Explain one advantage and one disadvantage to Sadiq of delegating 8

tasks to his employees.

Award 1 mark for each advantage/disadvantage (maximum of two marks).

Award a maximum of 3 additional marks for each explanation of the
advantage/disadvantage of delegating tasks – one of which must be
applied to this context.

Relevant advantages might include:

• Would allow Sadiq to give more time to other tasks - more time to make
better decisions as not rushed - improves the success of the hotel / less
likely to make mistakes
• Sadiq could keep more control of the whole business - if he has some
time to devote to checking on and communicating with his employees –
he will be more aware of what is happening in the business and if
anything needs changing
• Employees could be more motivated – as feel trusted to do additional
tasks / work is more interesting – increases efficiency
• May be able to monitor/measure success of employees more easily
• Employees may be more productive as their skills are developed

Relevant disadvantages might include:

• Sadiq could lose some control – as tasks are carried out by employees
who may not know what to do – employees may make the wrong
decisions
• Sadiq may need to train the employees – so that they know how to carry
out the delegated tasks – which will increase costs in the short-term
• Mistakes may be made by subordinates – this may lead to customer
complaints – bad reputation for the business

For example: Sadiq may have more time to spend carrying out his tasks
(1) such as marketing the hotel (app) so he will be able to concentrate on
these tasks and be less likely to make mistakes (1) improving the reputation
of the business and potentially increasing sales (1).

Application could include: Sadiq works 60 to 90 hours a week; reference to

employees listed in the organisational chart in Appendix 1; 40 employees;
hotel; sole trader.

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Question Answer Marks

2(b) Consider the following three ways Sadiq could achieve a high-quality 12
service at MH. Which is the most effective way? Justify your answer.

• Only buying food ingredients from suppliers that guarantee good

quality.
• The room cleaners made responsible for checking their own work.
• Chefs regularly sampling food before it is served to guests.

Level Description Marks

Sound application of knowledge and understanding

of relevant business concepts using appropriate
terminology.

Detailed discussion of two or more ways.

3 9–12
Well-justified conclusion.

Candidates discussing all three ways in detail, in

context and with a well-justified conclusion including
why the alternative ways were 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 way.

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

Candidates discussing at least two ways 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 ways with little/no

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

Candidates outlining all 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

• Ensures the meals • Costs of ingredients

are of high quality if are likely to be
the ingredients are higher and therefore
of a good standard menu prices may
• Less likely to have to have to rise or
throw away poor profits reduced
quality food so these • May limit some of
costs are reduced the types of
Only buying food ingredients used to
ingredients from only those that are
suppliers that supplied by these
guarantee good businesses –
quality reduces menu
options
• May increase costs
if need to find new
supplier
• Quality may be
lower for other
reasons such as low
skill of the chef

• Can remove the • The standard may

need for a fall as cleaners of
supervisor the hotel rooms may
• This is a type of not realise the
quality assurance standard required
and can motivate unless trained –
room cleaners at the relies on cleaners
hotel as they will being committed to
feel trusted the job
The room • Should eliminate • Training costs are
cleaners made poor quality room likely to rise as the
responsible for cleaning and reduce cleaners will require
checking their the number of training on how to
own work complaints produce the high-
quality service
required
• Cleaners may want
higher wages as
more responsibility
• Efficiency may
reduce if take longer
to clean the rooms

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Question Answer Marks

2(b)
Advantages Disadvantages

• Should ensure every • Wasteful of time for

meal is of a the chefs when they
consistent standard could be getting on
and no bad meals with cooking the
are served. It is a next meals
Chefs regularly form of quality • Expensive if the
sampling food control meal has to be
before it is served • Fewer customer scrapped – better to
to guests complaints about the find the problem
restaurant leading earlier in the process
to recommendations • Identifies the poor-
and possibly higher quality meal but
sales does not identity
where the fault lies

Conclusion Justification might include:

• Having good quality ingredients is the most
important even if the costs are slightly higher as
this should ensure the meal is of good quality
and will not need to be regularly checked by the
chef as they will know it is of good quality
without having to check. The room cleaning is
less important as it can still be checked by
supervisors to ensure they are reasonably clean
but poor-quality food in the restaurant will lead
to a poor reputation and possibly lost sales.
• Having clean rooms is the most important. Hotel
guests may not eat at the hotel restaurant, but
they will stay in the rooms so if the rooms are
not cleaned well, then the hotel will get a bad
reputation and will lose guests to competitors.
• Chefs regularly sampling meals should ensure
that the restaurant will not receive customer
complaints and even if slightly lower quality
ingredients are purchased then a good chef may
still be able to cook a good meal. Hotel guests
may spend very little time in their hotel room and
therefore the quality of the cleaning may be of
less importance to them.

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Question Answer Marks

3(a) Explain four advantages to Sadiq of changing his business to a 8

partnership.

Award 1 mark for each relevant advantage (maximum of four).

Award a maximum of 1 additional mark for each explanation in context.

Relevant advantages might include:

• Able to raise more capital from partners – needs $10 000 for each room
for redecoration if chooses Option 2
• Responsibilities/decisions can be shared
• More ideas from new partners – could offer advice about what new
facilities could be provided for hotel guests
• Partners can specialise in particular tasks where they have specific skills
– such as take over the financial decisions as Sadiq has few financial
skills
• Other partner can cover if absent or ill – Sadiq could take time off and not
work 60–90 hours each week
• Share costs and risk

For example: Partners can specialise in a particular task (1) because Sadiq
currently carries out finance tasks and he is not very skilled at doing this
(app).

Application could include: Sadiq works 60 to 90 hours a week; reference to

employees listed in the organisational chart in Appendix 1; 40 employees;
needs $10 000 for each room; redecoration of rooms; hotel guests; wants to
increase revenue; sole trader; improve quality of customer service; no
savings; improve cash flow.

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Question Answer Marks

3(b) Consider the two options for Sadiq to increase MH’s revenue. Which 12
option should he choose? 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 both options.

3 9–12
Well-justified recommendation.

Candidates discussing both options in detail, in

context and with a well-justified recommendation
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 5–8
Judgement with some justification / some evaluation
of 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.

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

3(b) Relevant points might include:

Advantages Disadvantages

Option 1 • A reduction in price • Revenue per night

to $50 could lead to will fall by $500 if no
an increase in extra guests come to
revenue to $3750 the hotel
per night

• An increase in • A lower price may

revenue of $750 per lead to lower profits
night with no for Sadiq if 50%
additional capital more guests not
cost attracted

• Target market • This does not

remains unchanged address the
so easier to attract complaints about
customers as the poor quality of
understand this some rooms – so
market may not attract 50%
more guests
• Lower price may
give image of lower
quality

• Increasing the price • High redecoration

by 50% will lead to cost of $800 000 in
$1500 extra revenue total plus downtime
per night if 50 whilst rooms are out
rooms remain of action means lost
occupied each night revenue in the short
• This is $750 higher term
than the extra • However, Sadiq may
revenue per night need to improve
from Option 1 other facilities at the
• Higher income hotel as the high-
tourists may be income guests may
willing to pay for expect more from
Option 2
improved room the rest of the hotel
• May calculate that as well as the room
using projected upgrades – may
figures it would take increase costs even
534 nights to recoup more
the cost of the • Marketing may need
upgrades. to change as it is
$800 000/1500 (the new target customer
extra income) = 534 MH is less familiar
nights. with how to attract
them
• May lose existing
customers

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Question Answer Marks

3(b)
Recommendation Justification might include:
• Option 1 is better as it is less risky as MH would
not have to spend $10 000 upgrading each
room when there is no guarantee guests will
use them. Because Sadiq is already familiar with
the requirements of existing customers and with
the lower price he may be more successful in
attracting the increased number of customers
than the new target market for Option 2.
• Option 2 is better as it targets a new segment of
the market and therefore MH can increase room
prices leading to a higher increase in revenue of
$750 more per night than Option 1 and no
additional guests are needed.

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Question Answer Marks

4(a) Referring to Appendix 2 and other information, explain how the 8

following two new legal controls could affect MH.

• Restaurant menus must list all ingredients in the food served.

• Single-use plastic bottles cannot be used.

Award up to 1 mark for how each legal control could affect MH (maximum of
two marks).
Award a maximum of 3 additional marks for each explanation of how the
legal control affects the business – one of which must be applied to this
context.

Relevant answers might include:

Restaurant menus must list all ingredients in the food served:
• Costs may be increased – may need to reprint menus / may now need to
source other supplies or ingredients – may need to increase prices
• Improved consumer knowledge may increase demand – customer needs
are being met/allergies – so more likely to eat at the hotel restaurant
which increases revenue
• Competitors have access to information about ingredients used in meals

Single-use plastic bottles cannot be used:

• May need to find alternative products to plastic – glass bottles may be
more expensive in the short-term – but in the long term they will be
cheaper as they can be recycled
• Less litter in surrounding area to MH – as no plastic waste littering the
area – improved reputation of the hotel

For example: The costs for MH might increase (1) because the hotel
restaurant (app) will need new menus and these will have to be printed with
the old ones thrown away (1) which may lead to lower profits in the short-term
(1).

Application could include: 4 chefs will need to change ingredients; waiters

and kitchen assistants may need additional training; reference to information
in Appendix 2; glass bottles; may get better reviews /so do not get bad
reviews.

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Question Answer Marks

4(b) Consider the following three ways Sadiq could improve MH’s cash flow. 12

• Arrange a bank loan.

• Ask customers to pay a deposit of 20% when they book a room.
• Ask for trade credit from food suppliers.

Which would be the most effective way for MH to improve its cash flow?
Justify your answer.

Level Description Marks

Sound application of knowledge and understanding of

relevant business concepts using appropriate
terminology.

Detailed discussion of two or more ways.

3 9–12
Well-justified conclusion.

Candidates discussing all three ways in detail, in

context and with a well-justified conclusion including
why the alternative ways were 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 way.

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

Candidates discussing two or more ways 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 ways with little/no

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

Candidates outlining all 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

4(b) Relevant points might include:

Advantages Disadvantages

• Provides a cash • Interest payable on

injection into the bank loan
business - provides • Interest and
working capital to repayment of the
enable the hotel to loan will be an
keep trading outflow each month
• Provides a large - may make MH’s
Arrange a bank cash inflow at one cash flow worse in
loan time – possibly the long run
removing a • May take time if
negative flow in the bank requests
cash flow documents to
• May be quick to support the
arrange and receive application for the
the cash inflow loan
quite quickly

• Improves the cash • May lose some

inflows as deposit is tourists who prefer
received when the to book and pay no
tourist books a deposit
room • Existing customers
• Helps to reduce the may not return to
chance of guests the hotel as not
Ask customers cancelling if deposit happy about the
to pay a deposit is not refundable, deposit being
of 20% when which improves the introduced when
they book a cash inflow they have not had
room • It is a lower deposit to pay this in the
than other hotels in past
the local area that
charge 30%
deposit – so may
still attract more
guests - improving
the cash inflow

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Question Answer Marks

4(b)
Advantages Disadvantages

• Reduces cash • Some suppliers

outflows may be unwilling to
• Hotel may have offer trade credit so
received payment MH may have to
for restaurant meals find new suppliers
before payment to of ingredients
suppliers of • Trade suppliers
ingredients is may offer lower
Ask for trade
required discounts which
credit from food
would increase
suppliers
cash outflows in the
longer term
• It takes time to
arrange for trade
credit and Sadiq
works long hours
each week and may
not have time

Conclusion Justification might include:

• Arranging a bank loan is the best method to
choose as it will not upset any hotel guests by
asking for a deposit which would reduce cash
inflows and will not take time for Sadiq to make
trade credit agreements. The business has
been running successfully and so it is likely the
bank will grant the loan.
• Asking for a deposit will be best as it will
increase the cash inflows and may help to pay
for the redecoration instead of Sadiq needing
to take on a partner and losing some control or
applying for a bank loan and having to pay
interest.
• Trade credit will be best as it delays the cash
outflows. This is the better long-term solution
to improve MH’s cash flow as revenue from the
restaurant may be obtained before
ingredients are paid for and it will not lead to
potential loss of customers which the deposit
option may do.

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