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Business Studies · May / June 2024 · Paper 12 · Question 1

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Nicky wants to be a successful entrepreneur. She plans to start up a travel business specialising in walking holidays. Nicky will be operating in a niche market. She is preparing a business plan to 1 help with her decision-making. Nicky has been told government support is available for business start-ups. She knows building customer relationships will be important.

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  • 1(a)[2]

    Identify two reasons why a government might support business start-ups. Award 1 mark per reason (max 2). Points might include:

    Create jobs/reduce unemployment
    Increase/contribute to output/GDP
    Gain more taxes/revenue (for the country)
    Bring ideas for/provide goods/services/ innovation
    Increase competition/increase choice/motivate other businesses to start up
    To benefit society Other appropriate responses should be credited. 2 Only award the first two responses given.

  • 1(b)[2]

    Identify two ways a business can build customer relationships. Award 1 mark per reason (max 2). Points might include:

    Offer good quality services/products
    Provide special offers or discounts to regular customers/loyalty schemes
    Market research/find out what customers want/ask for feedback
    Communicate with customers e.g. send newsletters
    Respond to complaints/offer refunds
    Provide extra services such as credit/delivery/after sales service
    Build brand image Other appropriate responses should be credited. 2 Only award the first two responses given. Notes

  • 1(c)[4]

    Outline one benefit and one limitation to Nicky’s business of operating in a niche market. Award 1 mark for each relevant benefit/limitation (max 2). Award 1 mark for each relevant reference to this business (max 2). Points might include: Benefits:

    Less/low competition [k] for her start-up business [app]
    Needs of customers can be focused on/help to target customers [k] for her holidays [app]
    Builds up specialist skills/knowledge [k] which can help build customer relationships [app]
    Can often charge a higher price [k] influencing decision- making [app] Limitations:
    Lack of economies of scale [k] which can affect business plan [app]
    Limited sales/revenue/customers/target market is small [k] for this entrepreneur [app]
    Does not spread risks/relying on one product [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:
    Entrepreneur
    Start-up/new business
    Building customer relationships
    (Walking) holidays/tickets
    Travel business/tourism
    Business plan
    Decision-making
    Government support Other appropriate examples can be credited. Notes

  • 1(d)[6]

    Explain one way each of the following sections in the business plan might be helpful to Nicky. Award 1 mark for identification of each relevant way (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: Business objectives:

    Can act as a goal/target/sense of direction [k] for the travel business [app] which she can use to measure/monitor progress/to provide motivation [an]
    Improved decision-making/planning [k] so fewer errors/chance of failure/increase efficiency/save cost/saves time/increase sales [an] of the new business [app]
    Act as a measure of success [k] so able to check progress [an] to know whether she is a successful entrepreneur [app] Data about the market:
    Show size of market/can spot trends/gaps [k] so know level of demand [an] in this niche market [app]
    Show whether/where there is sufficient demand [k] which will affect sales/revenue/location [an] for her walking holidays [app]
    Information about her target market [k] so decide how to promote the business [an] which can help build customer relationships [app]
    Information about competitors/level of competition [k] so help decide on a suitable method of pricing [an]
    Help set prices/make marketing decisions [k] increasing sales [an] 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:
    Entrepreneur
    Start-up/new business
    (Walking) holidays/tickets
    Travel business/tourism
    Niche market
    Government support
    Building customer relationships Other appropriate examples can be credited. K can be awarded for identifying what the section shows or how it can be used. Notes

  • 1(e)[6]

    Explain two characteristics of a successful entrepreneur. Which characteristic is likely to be the most important? 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 a justified decision as to which characteristic is likely to be the most important. Points might include:

    Creative [k] have (new/unique) ideas / make a business stand out from its competitors [an] therefore help gain sales [an]
    Risk-taker [k] as investment may be lost [an]
    Perseverance/determination/resilience/self-motivated [k] as will need to be prepared to keep going when faced with problems [an]
    Effective communicator [k] as may need to convince its suppliers/banks/customers to provide goods/lend/buy products [an]
    Good decision-maker/manager [k] as changes in market may require action [an]
    Hard-working [k] as must be ready to do everything themselves [an]
    Independent [k] as be able to work without any help [an]
    Optimistic [k] so always think they will succeed [an]
    Self-confident [k] so convince people/banks to invest [an]
    Innovative [k] able to put ideas into practice in new/different ways [an]
    (Multi-)skilled [k] may not need to recruit employees for specific roles [an] Other appropriate responses should be credited. 6 This is a general question so there are no marks for application. [k] can only be awarded for identifying characteristics. [an] is awarded for explaining the characteristic or explaining why it is important. To access [eval], must discuss two valid characteristics. The second [eval] mark must be awarded for a comparison between two valid characteristics. Notes Justification might include: Creative [k] as ideas can make a business stand out from competitors [an]. A risk-taker [k] as investment may be lost [an]. A risk-taker is likely to be most important because if they do not take risks, they may miss out on the opportunity to make sales [eval] and therefore may never know whether the new idea could be successful or not [eval]. Notes
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