Business Studies · Oct / Nov 2022 · Paper 11 · Question 3

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CPK operates 5 sports clubs. Each club offers a range of activities including gym and yoga classes. CPK uses job enrichment to keep its 60 employees well-motivated. Having the right marketing mix 3 is important to CPK’s success. The Finance Director is analysing CPK’s financial statements. An extract is shown in Table 3.1. He wants to know how an increase in taxation might affect CPK’s business. Table 3.1 Extract from CPK’s financial statements 2021 2020 1.3 1.6 Current ratio 10% 12% Profit margin $2m $2m Non-current assets

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3(a)[2]
Define ‘non-current assets’. Award 2 marks for a full definition. Award 1 mark for a partial definition. Resources owned by a business which will be used for a period longer than one year [2]
OR Items owned by a business for more than one year [2]
Partial definition e.g. items owned by the business [1]
Items in the business for more than one year [1]
2 Do not award Assets owned for one year as this is TV. Do not award examples.
3(b)[2]
State two elements of the marketing mix. Award 1 mark per element. Two from:
Price, product, place, and promotion 2 Only award the first two responses given.
3(c)[4]
Outline two ways CPK might be affected by an increase in taxation. Award 1 mark for each relevant way. Award 1 mark for each relevant reference to this business. Points might include:
Less profit [k] to help improve the sports clubs [app]
Decreased demand [k] at the 5 locations [app]
May have to increase prices [k] affecting its marketing mix [app]
Can increase expenses / cost of buying materials [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:
Sports club or examples such as activities / gym / yoga class
5 (locations)
60 (employees)
Marketing mix
10% / 12% Other appropriate examples in context can still be credited. Notes
3(d)[6]
Explain one possible effect on CPK of the change in each of the following ratios as shown in Table 3.1: Award 1 mark for identification of each relevant effect (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: Current ratio: Decreased / fallen / worsened / deteriorated [k] or [app] Analysis could be awarded for:
May need to reduce creditors / trade payables [k] to avoid cashflow problems [an] in the sports clubs [app]
May need to improve cash by selling more products or sell unwanted non-current assets
May have problems paying its short-term liabilities / less liquidity / less cash available
May make it harder to obtain finance
Suppliers may be less willing to provide goods (on credit) Profit margin: Decreased / fallen / worsened / deteriorated [k] or [app] Analysis could be awarded for:
May need to increase prices [k] to improve profit margin [an] in the 5 clubs [app]
Need to look for ways to increase added value
May look for ways to lower variable costs / expenses Other appropriate responses should also be credited. 6 Award decrease/fallen as [k] OR [app] but not both. Do not award reasons for change as knowledge or analysis as this does not answer the question. 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 all responses on this question:
2% / 12% or 10%
0.3 / 1.6 / 1.3
Sports club or examples such as gym / yoga class
5 (clubs) Other appropriate examples in context can still be credited. Notes
3(e)[6]
Do you think job enrichment is a better way for a business to motivate its employees than profit sharing? Justify your answer. 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 whether job enrichment is a better way for a business to motivate its employees than profit sharing. Points might include: Job enrichment:
Business able to make most / full use of employee’s skills [k] which can help increase labour flexibility [an]
Training may be needed [k] which can increase expenses [an]
Workers gain more job satisfaction/ feel recognised/valued [k]
Not all workers are able / want to do more complex work [k] leading to mistakes/ waste [an]
Not easy to add extra tasks to some jobs [k]
Time consuming to redesign tasks [k]
May create conflict between employees (as may not be possible to offer opportunities to all) [k] Profit sharing:
Money is a major motivator for many employees [k]
Can help build team spirit / sense of belonging / common goal [k]
Not everyone is motivated by money [k]
If business makes low/ no profit, then there is little/ nothing to share [k] which could decrease motivation [an] Other appropriate responses should also be credited 6 Notes Justification might include: Job enrichment can help the business make the most use of employee’s skills [k] increasing productivity [an]. A business making no profit, has nothing to share [k] which could decrease rather than increase motivation [an]. I think job enrichment is better as making the job more interesting is more likely to motivate employees every day. [eval]. Profit-sharing is at the end of the year, and therefore is likely to have less impact on daily effort. [eval] Notes

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