Business Studies · Oct / Nov 2022 · Paper 11 · Question 2

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DNG provides electricity to 16 million customers. It is a limited company which means DNG’s shareholders benefit from limited liability. DNG is planning to stop using coal to produce its electricity. 2 Pressure groups had an influence on this decision. The Managing Director knows there will be an opportunity cost to making this change. She is considering the best way to communicate this important information to DNG’s 6500 employees.

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2(a)[2]
Define ‘opportunity cost’. Award 2 marks for a full definition. Award 1 mark for a partial definition. The next best alternative foregone / given up [2]
OR The benefit that could have been gained from an alternative use of the same resource [2]
OR A benefit, profit, or value that a firm gives up in order to achieve something else [2]
Partial definition e.g. what you must give up / forgo [1]
2(b)[2]
Identify two limitations of using the number of employees to 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. 2 Only award the first two responses given. Notes
2(c)[4]
Outline how having limited liability might benefit DNG’s shareholders. Award up to 2 marks for relevant points (max 2). Award up to 2 marks for each relevant reference to this business (max 2).
Shareholders risk is limited to the amount invested [k] in this electricity business [app]
Protects personal assets [k] in case the business decision to contribute to sustainable development does not work [app]
Encourages (potential/existing) shareholders to invest [k] Other appropriate responses should also be credited. Shareholders risk is limited (to the amount invested) [k] in the electricity company [app] protecting their personal assets [k] in case the decision to stop using coal does not work [app] 4 Note 1: Candidates can outline one benefit in detail or outline two separate benefits. Note 2: Answers must refer to the owners / shareholders and not the business itself. 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:
Electricity
(Stop using) coal
16 million (customers)
6500 (employees)
Pressure groups
Opportunity cost Other appropriate examples in context can still be credited. Notes
2(d)[6]
Explain two ways a pressure group might influence DNG’s decisions. 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:
Create (negative) publicity / publish information / write to newspaper [k] about the impact of using coal [app] damaging its reputation [an]
Organise customer boycotts [k] of its 16 million customers [app] leading to fewer sales / less revenue [an]
Demonstrations / protests [k] about electricity production [app] which could reduce investment in the business [an]
Petition / send letters to government [k] against this limited company [app]
Lobbying [k]
Take legal action [k] Other appropriate responses should also be credited. 6 Note: Can award responses which refer to strikes as TU may use to influence pay or working conditions. 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:
Electricity
Coal
16 million (customers)
6500 (employees)
Opportunity cost
Limited company / shareholders Other appropriate examples in context can still be credited. Notes
2(e)[6]
Explain two methods of internal communication a large business could use to share important information with its employees. Justify which method should be used. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award 2 marks for justified decision as to which of the two methods discussed is the best method of communication for a large business to use to convey important information to its employees. Points might include:
Meeting / briefing / video conference [k] workers receive the message at the same time [an] but workers will not be working so output may fall [an]
Email [k] message can be sent to multiple people at the same time [an] but people may not be able to access the internet [an]
Phones [k] allows for immediate feedback [an]
Text / SMS [k] contains only very limited information [an]
Posters / noticeboards [k]
Announcements [k]
Internal newspapers [k]
Social media such as Whatsapp [k]
Letter [k] Other appropriate responses should also be credited. Justification might include: Email [k] would allow the business to send the same message to multiple people [an]. A meeting [k] will allow employees to ask questions to confirm their understanding of the important information [an]. Email is better as it may not be possible to get all employees in a large business together at the same time [eval]. Whereas with an email all employees receive information which they can refer back to later. [eval] 6 This is a general question so there are no marks for application. Some points could be awarded for different options, but do not award the same point twice. For evaluation to be awarded justification will usually follow on from relevant analysis of points. Note: Do not award types of communication such as written, verbal, electronic. Notes

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