Business Studies · Oct / Nov 2023 · Paper 12 · Question 4

0450

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TFN is a travel business which sells holidays. It has 37 shops and 1000 employees. Last year TFN’s profit increased to $46 million. The Managing Director knows that good customer service 4 has helped maintain customer loyalty. He said: ‘TFN’s managers use ideas from Herzberg’s two-factor theory to help motivate employees. All employees are provided with off-the-job training and each manager has a wide span of control.’

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4(a)[2]
Identify two advantages to a business of maintaining customer loyalty. Award 1 mark per advantage (max 2). Points might include:
Maintain/increase sales / repeat customers / customers return / not go to competitors (to buy the product)
Improve reputation/brand image
Current customers recommend / tell others about the products / less marketing/advertising needed / lower cost of marketing
Remain competitive
Easier to introduce new products
Easier to gain feedback/learn about trends
May be able to increase prices/become price inelastic Other appropriate responses should be credited. 2 Only award the first two responses given.
4(b)[2]
Identify two hygiene factors from Herzberg’s two-factor theory. Award 1 mark per hygiene factor (max 2). Two from:
Working conditions/safe environment
Salary/wages/pay
(Job) security
Relationships with other workers
Relationships with supervisor Other appropriate responses should be credited. 2 Only award first two responses given. Notes
4(c)[4]
Outline two reasons why profit might be important to TFN. Award 1 mark for each relevant reason (max 2). Award 1 mark for each relevant reference to this business (max 2). Points might include:
Source of finance / reinvest in the business / finance the purchase of non-current assets / pay back debts/loans [k] for its 37 shops [app]
Measure of success of business [k] as shown by profit of $46 million/increase in profit [app]
Reward for risk-taking [k] of this travel business [app]
Provides a return to shareholders / helps attract investors / pay dividends [k]
Support loan applications [k] Other appropriate responses should be credited. 4 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:
Travel business
Sells holidays
(37) shops/stores
1000 employees
$46 million/increase in profit Other appropriate examples should be credited. Notes
4(d)[6]
Explain one advantage and one disadvantage to TFN of its managers having a wide span of control. Award 1 mark for identification of each relevant advantage/ disadvantage (max 2). Award 1 mark for each relevant reference to this business (max 2). Award 1 mark for each relevant explanation (max 2). Points might include: Advantage:
Fewer supervisors/managers needed [k] helping reduce labour costs/expenses [an] so may help increase its profit of $46 million [app]
Faster communication [k] leading to quicker/better decision-making [an] in its 37 shops [app]
Encourages delegation [k] which can increase motivation [an] of its 1000 employees [app] Disadvantage:
Less control [k] so less work done/lower productivity [an] at the travel business [app]
Workers might not have skills to cope with extra responsibility [k] leading to mistakes [an]
Effective communication may be difficult/communication problems [k] as large number of subordinates/ employees to inform/ask [an]
Managers might not have the necessary skills (to manage so many people) [k] Other appropriate responses should be credited. 6 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:
Travel business
Sells holidays
(37) shops/stores
1000 employees
$46 million (profit)/increase in profit
(Good) customer service
Maintain customer loyalty
Herzberg’s two-factor theory
Training Other appropriate examples should be credited. Some points can be presented as [k] or [an] but only award once. Notes
4(e)[6]
Do you think off-the-job training is the best method of training for a service sector business to use? Justify your answer. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award up to 2 marks for justified decision as to whether off-the-job training is the best method of training for a service sector business to use. Points might include: Off-the-job:
Allows for mistakes to be made when learning [k] lower risk of damaging reputation [an]
Up to date/new skills can be gained [k]
Skills might not be available in the business [k] so benefit from new techniques/ideas [an]
Use specialists/expert trainers [k] is expensive/ increases costs [an]
Travel costs [k] increasing cash outflows [an] Other options include: On-the-job training [k]
Employees can carry on working [an] so some work is done [an]
Control what is taught/employees learn exact way business wants things done [an] so workers only learn skills needed [an]
Cheaper (than off-the-job) [an] reducing (training) costs [an]
Reinforce errors/bad habits of trainer [an] reducing sales/damaging reputation [an]
Trainer is less productive when training others [an] 6 This is a general question so there are no marks for application. Some points can be awarded as knowledge or analysis but do not award the same point twice. The advantage of one method can be written as a disadvantage of another method but only award once. Notes Induction training [k]
Only suitable for new employees [an]
Help learn culture [an] Other appropriate responses should be credited. Justification might include: Off-the-job training allows employees to make mistakes when learning [k] so less likely to waste resources when working [an]. Another method is on- the-job training [k] which is cheaper [an]. Off-the-job training is better especially for a service sector business because fewer mistakes can help protect the business reputation [eval] leading to extra customers helping cover the additional costs of the training [eval].

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