Business Studies · Oct / Nov 2020 · Paper 12 · Question 4

0450

As printed in the paper

The question as text

Gino owns a fast-food restaurant selling fried chicken and potato fries. He employs 5 full-time chefs and 12 part-time workers to serve the food. Communication is important and Gino has regular 4 meetings with his part-time employees to keep them informed about any changes in the menu. It took 3 years before Gino’s business was able to break-even. He aims to achieve a Return on Capital Employed (ROCE) of 10%. Gino is always looking for ways to increase the number of customers. Inflation may be a problem for Gino’s business.

Read automatically from the paper; the printed page above is exact.

Show the answer and mark scheme

4(a)[2]
Define ‘break-even’. Award 2 marks for a full definition. Award 1 mark for a partial definition. When total costs is the same as total revenue [2]
Total revenue (TR) = Total cost (TC) [2]
The level of output at which Total revenue = Total Cost [2]
Fixed costs/contribution per unit [2]
Partial definition e.g. no profit or loss [1]
or revenue covers costs [1];
revenue equals total cost [1];
total revenue equals costs [1];
point where start making profit [1]
2 Notes
4(b)[2]
Define ‘Return on Capital Employed’. Award 2 marks for a full definition. Award 1 mark for a partial definition. Profit as a percentage of capital employed [2]
Correct formula: (Profit/Capital employed) *100 [2]
Profit made on each dollar/pound invested in the business [2]
Partial definition e.g. Money made on investment/capital [1]
(It is a profitability ratio which) shows how effectively a business uses it capital [1]
2 Do not award answers which simply reorder the words as this does not define the term.
4(c)[4]
Outline two problems inflation might cause Gino’s business. Award 1 mark for each relevant problem. Award 1 mark for each relevant reference to this business. Points might include:
Fewer customers/lower demand/lower sales/less revenue [k] at the restaurant [app]
Supplier prices may increase [k] for its chicken/fries [app]
Employees might demand higher wages [k] from its 17 employees [app]
May have to increase its prices [k]
Businesses unlikely to want to/will not expand [k] Other appropriate responses should also be credited. 4 Note: To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made. The following words are likely to be appropriate for this question:
Fast-food or examples such as fried chicken, potato fries, food
Restaurant
17 or 5 (full-time) or 12 (part-time) or chefs
menu Other appropriate examples in context can still be credited. Notes
4(d)[6]
Explain two ways Gino could increase the number of customers. Award 1 mark for identification of each relevant way (max 2). Award 1 mark for each relevant reference made to this business (max 2). Award 1 mark for each relevant explanation (max 2). Points might include:
Advertise or examples such as promote on social media [k] to inform/ raise awareness/attract [an] about his restaurant [app]
Promotional pricing/discounts/lower prices [k] to compensate for the effect of inflation [app] as people might be willing to buy as more affordable [an]
Loyalty schemes [k] as this can encourage customers to return again and again [an]
Introduce new products [k] other than chicken/fries [app] to target different/new market segments [an]
Offer better customer service/better quality [k] to improve brand image/ reputation [an]
Open additional outlet/increase size of existing place/extend opening hours/offer home delivery [k] as would be able to cater for more people at same time [an]
Free samples [k] so people can try the food, and if liked, might buy [an]
Sponsorship [k]
Competition [k] Other appropriate responses should also be credited. 6 Note: To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made. The following words are likely to be appropriate for this question:
Fast-food or examples such as fried chicken, potato fries
Restaurant
17 or 5 (full-time) or 12 (part-time) or chefs
Menu Other appropriate examples in context can still be credited. Notes
4(e)[6]
Do you think having regular meetings is a better way for a business to communicate with part-time employees than using text messages? Justify your answer. Award up to 2 marks for identification of relevant issues. Award up to 2 marks for relevant development of points. Award 2 marks for justified decision as to whether having regular meetings is the best way for a business to communicate with part-time employees rather than using text messages. Points might include: Meetings:
Allow two-way communication/immediate feedback/allows ideas to be discussed [k] so can explain if instructions/information is not understood (straightaway) [an]
Information can be given out quickly/more detailed [k]
Message can be reinforced by being able to see the speaker/body language of attendees [k]
May take time/be difficult to arrange [k] as part-time employees do not work all the time [an]
Will take people away from work [k] leading to lower output/ lower efficiency/missed sales [an] Text messages:
No guarantee read/may not have a phone [k] leading to mistakes/wasting resources [an]
Have a hard copy/record [k] which can be referred to later [an]
Can send at any time [k] allowing people to read it when it is convenient for them to do so [an] Other appropriate responses should also be credited. 6 This is a general question so there are no marks for application. Advantages of one method can be presented as disadvantages of the other method but do not award the same point twice as mirror answers are not accepted. For evaluation to be awarded justification will usually follow on from relevant analysis of points. To access the evaluation marks candidates must refer to part-time workers. Notes Justification might include: Meetings allow two-way communication [k] which can help speed up decision-making [an]. A text message is good because it can be sent and received at any time [k] ensuring that all part-time staff receive the same message at the same time [an] but people may not be able to read/respond to it immediately. So while a meeting can be difficult to arrange it is the best option for part-time employees as slow decision making could result in missed opportunities which might result in fewer sales [eval] which can more than offset the cost of the time spent in arranging the meeting. [eval]

Practise this paper →

Make a free account to save your answers and see your weak topics and ask the AI why a wrong answer is wrong.