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Business Studies · May / June 2022 · Paper 21 · Question 1

0450

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  • 1(a)[8]

    Explain four reasons why governments might support business start- ups. Award 1 mark for each relevant reason (maximum of four). Award a maximum of 1 additional mark for each explanation of the reason. There are no application marks available for this question. Relevant reasons might include:

    To reduce unemployment – new businesses create jobs and therefore help to reduce unemployment in the country / fewer welfare benefits to pay
    To increase competition – new businesses will provide more choice for consumers and therefore will provide more competition for existing businesses / may keep prices lower and quality higher
    To provide/have a wider variety of goods and services available – so there will be a wider choice for consumers
    To increase output / improve standard of living – new businesses will produce more goods and services in the economy/increase in GDP
    To benefit society – new start-ups may support social enterprises and therefore provide benefits other than just creating jobs
    They may grow into larger businesses in the future – successful larger businesses started small, so it is worth supporting businesses to get started
    Earns taxation – the business will pay tax if profitable and this will be a source of revenue for the government which they can then use for providing public services.
    To motivate/encourage entrepreneurs – government support may reduce the risk of failure For example: To reduce unemployment (1)

    – as new start-up businesses often need to hire employees and these people may have been unemployed (1).

  • 1(b)[12]

    Consider the benefits to Yasin of the two sections of his business plan shown in Appendix 1. Which section do you think helped him most when starting up his business? Justify your answer. Level Description Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of both sections. Well-justified conclusion. Candidates discussing both sections in detail, in context and with a well-justified conclusion including why the alternative section was 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 section. Judgement with some justification / some evaluation of choice made. Candidates discussing at least one section 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 sections with little/no explanation. Simple judgement with limited justification / limited evaluation of choice made. Candidates outlining both sections in context should be rewarded with the top marks in the band. 1–4 No Creditable Response Relevant points might include: Market research

    Able to identify the market for eating bread as being targeted at all age groups
    Market research shows that starting to produce cakes is likely to be successful as 70% of respondents want to buy cakes
    Use of local ingredients could be emphasised in advertising if MB changes production techniques and suppliers Resources
    To be able to calculate how much start-up capital is needed by Yasin to buy the bakery equipment
    It is a starting point for Yasin to make the necessary purchases to get the bakery started
    helps him to more effectively plan for the opening of the bakery
    Helpful to identify the costs for Yasin to set up the bakery – to see if he needs a bank loan Conclusion Justification might include:
    Market research is the most important as this shows that the bakery has the demand for it to be successful. Without a demand for bread the business will fail. However, a lack of experience may mean the list is not accurate or complete and Yasin may need a lot more capital than he thinks.
    Resources is the most important as this helped Yasin to plan what items of equipment are required for the bakery and how much all these items will cost. This is important for Yasin to work out how much start-up capital is required and make sure he has sufficient finance to get started successfully or arrange to raise additional finance if necessary. However, the sample was small and therefore the results may not be accurate so Yasin may make bad decisions when starting the bakery.
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