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Business Studies · Oct / Nov 2020 · Paper 21 · Question 2

0450

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  • 2(a)[8]

    Explain four requirements for the new manager that Gemma should include in the job specification below. Job specification for the shop manager Job title: Shop manager Location: New shop Details of job: Manage the shop and the employees Award 1 mark for each relevant requirement (maximum of four): Relevant requirements might include:

    Experience - of selling jewellery
    Qualification/product knowledge - in retail management/gems
    Skills - e.g. Leadership skills – make sure new employees are well motived/communication skills – ensuring excellent customer service/ financial skills – make decision about which items of inventory to buy
    Trained – to operate the shop and supervise new employees
    Physical fitness – need to be on their feet all day in the shop
    Personal characteristics – friendly and welcoming to customers buying rings/easily approachable by customers when entering the new shop/able to speak the same language as local people in the area where the new shop is located Award a maximum of 1 additional mark for each explanation which must be applied to this context. For example: Experience (1)

    of working in a jewellery shop so that they will know what to do. (app) Application could include: operating the shop, making decisions about which items of inventory to buy, ensuring excellent customer service, ensuring new employees are motivated.

  • 2(b)[12]

    Consider the advantages and disadvantages of the three towns for the new shop shown in Appendix 3. Recommend which town Gemma should choose for the location of the new shop. Justify your answer. Level Description Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of two or more locations. Well-justified recommendation. Candidates discussing the three locations in detail, in context and with well-justified recommendation, including why the alternative locations were rejected, should be rewarded with the top marks in the band. 9–12 Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of at least one location. Judgement with some justification/some evaluation of choice made. Candidates discussing two or more locations in detail and applying it to the case should be rewarded with the top marks in the band. 5–8 Limited application of knowledge and understanding of relevant business concepts. Limited ability to discuss the locations with little/no explanation. Simple judgement with limited justification/limited evaluation of choice made. Candidates outlining the three locations in context should be rewarded with the top marks in the band. 1–4 No creditable response. Relevant points might include: Town A

    Comparison of the figures – e.g. highest rent of the three towns/shortest lease of the three towns (L1)
    Total costs are $130 000 (not including the franchise payments) (L1)
    Payment of 20% of gross profit to the franchisor is $80 000 per year (L1)
    The franchise fee of $50 000 is a smaller proportion of the estimated gross profit than for town B and C (L2)
    Gross profit is highest and minus expenses profit = $140 000 (L2)
    Highest total expenses of $260 000 (L2) Town B
    The wages and salaries are $10 000 lower than town A (L1)
    Estimated gross profit is $100 000 more than town C (L1)
    Total costs are $110 000 (not including the franchise payments) (L1)
    Profit = $80 000 (L2)
    Total expenses = $220 000 (L2) Town C
    Heating and lighting is the cheapest of the three towns (L1)
    Total costs are $83 000 (not including the franchise payments) (L1)
    Longer lease contract of 15 years increases risk to the business if the second shop is not successful (L2)
    Profit = $27 000 (L2)
    Lowest total expenses of $173 000 (L2) Recommendation Justification might include:
    If Gemma wants the highest profit then Town A is the one to choose although she will only have the lease for 5 years and then may need to move. But she will make nearly twice as much profit as Town B and over 5 times as much as Town C.
    Town B might be the better one to choose if Gemma wants to gain a longer lease and is willing to reduce the profit made to ensure the location for twice as long as Town A. She will gain more gross profit than Town C so that will make a greater contribution to paying the annual franchise fee of $50 000.
    If Gemma wants to secure a shop for the longest time then Town C is the best. However, the gross profit is the lowest at $200 000 but the expenses are also a lot lower than the other two options.
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