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Business Studies · May / June 2020 · Paper 21 · Question 2

0450

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  • 2(a)[8]

    Explain one advantage and one disadvantage to Simon of using crowd-funding as a source of finance for FJ. Award 1 mark for each relevant advantage/disadvantage (maximum of two): Relevant advantages might include:

    May have no initial fees to be paid to the crowd-funding platform
    Allows public reaction to the new business venture to be tested
    Can be a fast way to raise substantial sums of money
    May be used when other more ‘traditional’ sources are not available Relevant disadvantages might include:
    Crowd-funding platforms may reject Simon’s proposal if it is not well thought through
    If total amount required is not raised, then the finance promised will have to be repaid
    Interest from the public will need to be generated to increase the chance of successfully raising the amount required
    May allow competitors to steal the idea and reach the market first Award a maximum of 3 additional marks for each explanation of the advantage and disadvantage of using crowd-funding. – one of which must be applied to this context. For example: Crowd-funding will allow large amounts of capital to be raised (1)

    so Simon can start producing a large output of fruit drinks quickly (app). This will allow Simon to enter the new market before competitors can copy his drinks (1)

    and he will not have to pay back the money, unlike a bank loan. (1)

    8

  • 2(b)[12]

    Consider the following three methods of market research Simon used. Which do you think is the best method to use when deciding which product to produce? Justify your answer.

    Online questionnaire
    Accessing government population data
    Focus group Level Description
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