- Mark Scheme /
Question Answer Marks AO Element Notes Guidance
1 Identify two ways a business can 2 Only award the first two
grow. responses given.
Award 1 mark per way (max 2).
Points might include:
• Takeover
• Merger
• Develop new products
• Enter new markets
• Increasing sales (of existing
products) / open more
locations
• Franchising
Other appropriate responses should
be credited.
- Mark Scheme /
Question Answer Marks AO Element Notes Guidance
2 Identify two ways a government 2 Only award the first two
might support business start-ups. responses given.
Do not award:
Award 1 mark per way (max 2).
Vague answers such as
Points might include: cover costs, providecash
/ money / invest / sponsor
• Offer financial support or
/ incentives
examples such as grants /
(low-cost) loans
• Provide training
• Provide information / advice
/ support/mentors
• Provide low-cost / rent-free
property / location
• Offer lower tax rates / tax
breaks / tax relief
• Encourage universities to
make research facilities
available
• Organise business fairs.
- Mark Scheme /
Question Answer Marks AO Element Notes Guidance
3 Identify two ways a business plan 2 Only award the first two
can help a business to reduce risk. answers given.
Award 1 mark per way (max 2).
Points might include:
• Help secure funding/attract
investors
• Can show whether/when extra
finance needed/help
budgeting
• Help set
goals/objectives/provide sense
of direction
• Help monitor/check/track
progress
• Test feasibility of idea/identify
demand
• Help set (suitable) prices
• Understand level/type of
competition
• Help identify skills/employees
needed
• Help allocate resources
(appropriately)
Other appropriate responses should
also be credited.
- Mark Scheme /
Question Answer Marks AO Element Notes Guidance
4 Identify two possible causes of 2 Only award the first two
business failure. responses given.
Award 1 mark for each relevant
cause (max 2).
Causes may include:
• Poor planning/lack of
objectives
• Cash flow problems / lack of
working capital
• Poor management skills / lack
experience / lack of
knowledge
• Overexpansion / business
expands too quickly
• Lack of demand/sales / (too
much) competition
• Poor marketing
• Economic influences /
changes in business
environment
Other appropriate response should
also be credited.
- Mark Scheme /
Question Answer Marks AO Element Notes Guidance
5 Identify two limitations of using 2 Only award the first two
the number of employees to responses given.
measure the size of a business.
Award 1 mark per limitation.
Points could include:
• Does not account for capital
intensive business / depends
on method of production used
• Could have many part-time
employees
• May give a different indicator
of size to other measures
used.
Other appropriate responses should
also be credited.
- Mark Scheme /
Question Answer Marks AO Element Notes Guidance
6 Define ‘entrepreneur’. 2 For both marks must
have idea of a person
Award 2 marks for a full definition. starting a new business,
Award 1 mark for a partial and that they take a risk
definition. to do this [+1].
A person who takes the risk for a
new business venture [2]
OR
An individual who takes the
financial risk of starting and
managing a new business [2]
Partial definition e.g. person who
starts up a business [1]
- Mark Scheme /
Question Answer Marks AO Element Notes Guidance
7 Identify four reasons why a new 4 Only award the first four
business might be at greater risk points given.
of failure than an established
business.
Award 1 mark for each relevant
reason (max 4).
Points might include:
• Lack of / cannot get finance /
cash flow problems / lack of
liquidity
• Level of competition / lack
customer loyalty / lack of
customers / demand /sales
• Poor planning / no business
plan / lack of objectives
• Lack of (managerial/business)
experience/skills/knowledge
• Inadequate/no market research
• No reputation / low brand
awareness / no brand image
Other appropriate responses should
also be credited.
- Mark Scheme /
Question Answer Marks AO Element Notes Guidance
8 Do you think being a risk-taker 6 This is a general question
is a more important characteristic so there are no marks for
of a successful entrepreneur than application.
being creative? Justify your
For evaluation to be
answer.
awarded justification will
Award up to 2 marks for usually follow on from
identification of relevant points. relevant analysis of
points.
Award up to 2 marks for relevant
development of points.
Award 2 marks for a justified
decision as to whether being a
risk-taker is a more important
characteristic of a successful
entrepreneur than being creative.
Points might include:
Risk-taker:
• A successful entrepreneur
must take risks otherwise there
is no business [k]
• Entrepreneurs take the risk of
investing their own money [k]
this may bring high rewards
[an] however they may fail
and lose their personal
possessions [an]
• Taking risks is a way to learn
[k] if an idea is good or not
[an]
Creative:
- Mark Scheme /
Question Answer Marks AO Element Notes Guidance
• New ideas [k] leading to
increased sales/revenue [an]
• Creativity adds value [k] so
higher prices can be charged
[an].
• Creativity alone does not
guarantee success [k] if
customers do not purchase
[an]
Other appropriate responses should
also be credited.
Justification might include:
Entrepreneurs take the risk of
investing their own money [k] this
may bring high rewards [an]. Being
creative maybe a more important
characteristic as making a business
different to its competitors [k] can
lead to increased sales [an]. In a
competitive market creativity is
especially important because it
helps the business stand out from
competitors. [eval] An entrepreneur
can take risks, but if customers will
not buy, they will not be successful.
[eval]
- Mark Scheme /
Question Answer Marks AO Element Notes Guidance
9 Do you think offering financial 6 This is a general question
help, such as grants, is the best so there are no marks for
way for a government to support application.
business start-ups? Justify your
For evaluation to be
answer.
awarded justification will
Award up to 2 marks for usually follow on from
identification of relevant points. relevant analysis of
points.
Award up to 2 marks for relevant
development of points.
Award 2 marks for a justified
decision as to whether offering
financial help, such as grants, is the
best way for a government to
support business start-ups.
Points might include:
Financial support/grants:
• Needs funds to buy assets [k]
without which it cannot
operate [an]
• Start-up business is likely to
have access to fewer sources
of finance [k]
Other options might include:
• Information / support / advice
/ mentors [k] as a new
entrepreneur may lack
experience (of running a
business) [an] so helps them
make better decisions / fewer
mistakes [an]
- Mark Scheme /
Question Answer Marks AO Element Notes Guidance
• Interest free / low cost loans
[k] which will reduce cash
outflows [an]
• Lower taxes [k] so lower costs
[an]
• Free/low cost training
schemes [k]
• Low rent areas [k]
Other appropriate answers should
also be credited.
Justification might include:
A start-up business needs to have
enough money to pay creditors [k]
as without it could lead to cash flow
problems [an]. Another way is to
provide a mentor [k] as a new
entrepreneur may not have
experience of running a business
[an]. I think financial help is better
due to the limited sources of finance
available and banks may be less
willing to take the risk of lending
money to a start-up business [eval]
and without this there is no business
[eval].
- Mark Scheme /
Question Answer Marks AO Element Notes Guidance
10 Identify two possible reasons why 2 Only award the first two
an owner might want their responses given.
business to remain small.
Award 1 mark per reason (max
2).
Points might include:
• Access/availability/lack of
capital (to expand)
• Personal preference / owners
choice
• Size of the market
• Type of industry / need to
maintain close employee /
customers relationships
Other appropriate responses should
also be credited.
- Mark Scheme /
Question Answer Marks AO Element Notes Guidance
11 Identify two ways of measuring 2 Only award the first two
the size of a business. responses given.
Award 1 mark per way [max 2].
Points might include
• (Value of) capital employed
• Market share
• Value of output / value of sales /
revenue
• Number of employees
• Value of business
• Number of customers / volumes
of output / number of services
Other appropriate responses should
also be credited.
- Mark Scheme /
Question Answer Marks AO Element Notes Guidance
12 Do you think a takeover of a 6 This is a general question
competitor is the best way for a so there are no marks for
large business to grow? Justify application.
your answer.
Candidates can discuss
Award up to two marks for other ways a business can
identification of relevant points. grow but evaluation must
focus on the question set.
Award up to two marks for relevant
development of points.
For both evaluation
Award up to two marks for justified
marks judgement must
decision as to whether the takeover
clearly relate to a large
of a competitor is the best way for
business.
a large business to grow.
Do not award mirror
Points might include:
answers.
• Possible economies of scale [k]
leading to lower average costs [an]
• Reduced / less competition /
increase market share [k] so able to
increase prices / revenue [an]
• Access to new skills / expertise
[k] • (Bad reputation as) may need
to make some workers redundant /
negative impact on employee
motivation / job insecurity [k]
lowering productivity [an]
• High cost [k] which the business
might not have / be able to afford
[an]
• Possible clash of management
styles / different objectives [k]
- Mark Scheme /
Question Answer Marks AO Element Notes Guidance
• Diseconomies of scale e.g.
communication problems [k]
leading to higher average costs [an]
Other ways to grow can also be
discussed such as:
• Expand product range [k] which
can help better control / manage
speed of change [an]
• Merger [k]
• Joint venture [k]
Other appropriate responses should
also be credited.
[Total: 38]
