Business Studies · May / June 2025 · Paper 11 · Question 1

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Brendan wants to be a successful entrepreneur. He plans to start up a flower shop using government support. Brendanls brother has offered to form a business partnership with him. Brendan knows it 1 is important for a new business to use a suitable pricing method. He has already identified ways the business can increase added value. Brendan wants to know how an economic boom might affect his business.

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1(a)[2]
Define ‘business partnership’. Award 2 marks for a full definition. Award 1 mark for a partial definition.
Two (or more) people agree to (jointly) own the business [2]
A business formed by two (or more) people who will usually share responsibility for the day to day running of the business [2]
An unincorporated business that has more than one owner [2]
Partial definition e.g.
business run by two or more people [1]
2 For two marks need the idea of owned/formed and it involves at least two people.
1(b)[2]
Identify two ways a government can support business start-ups. Award 1 mark for each way (max 2). Points might include:
Grants/subsidies
(Low interest) loans
Low-cost/rent-free premises
Provide training
Tax relief/lower tax/tax holiday
Advice/help with research
Help promote/advertise the business
Provide mentors Other appropriate responses should be credited. 2 Only award the first two responses given.
1(c)[4]
Outline two ways an economic boom might affect Brendan’s business. Award 1 mark for each relevant way (max 2). Award 1 mark for each relevant reference to this business (max 2). Points might include:
High level of demand/sales/revenue [k] for flowers [app]
May be difficult to find employees [k] for the shop [app]
He can increase his prices [k] which will increase added value [app]
Higher costs / wages might increase [k] so may need more government support [app]
High business confidence [k] for this entrepreneur [app]
Increased competition [k]
Harder to access materials [k]
Harder to find a location [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:
(Successful) entrepreneur
Start-up/new business
Flower(s) or examples
Shop
Government support
Increase added value
(Business) partnership
Pricing method Other appropriate examples can be credited.
1(d)[6]
Explain two ways Brendan could increase added value for his business. 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:
Set high prices [k] which widens the gap between the cost and price [an] for the flowers [app]
Lower (input) costs [k] by buying cheaper materials [an] for this new business [app]
Branding/marketing/packaging [k] to give the idea of higher quality [an]
Unique design/products [k] making it more desirable than similar products [an] which could influence its pricing method [app]
Improve convenience [k] so products are immediately available [an] in the shop [app]
(Improve) quality/service [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:
Start-up/new business
Flower(s) or examples
Shop
Government support
Brother
(Business) partnership
Pricing method
(Successful) entrepreneur Other appropriate examples can be credited. Analysis can be awarded for:
explaining the reason why price or costs may be higher/lower
how the way increases the added value. Some points can be awarded as [k] or [an] but only award once. Do not award the same point of analysis twice.
1(e)[6]
Explain two pricing methods a new business might use. Which is likely to be the best method 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 a justified decision as to which is the best pricing method for a new business to use. Points might include:
Cost-plus [k] by adding a percentage onto the costs of production [an] it is easy to calculate [an]
Penetration pricing [k] setting a lower price than competitors [an] could attract customers [an]
Competitive pricing [k] setting a price similar/just below competitors [an] which may not cover costs [an]
Price skimming [k] allows the business to recover development costs quicker [an] may lead to low sales [an]
Promotional pricing [k] Other appropriate responses should be credited. Justification might include: Cost-plus pricing [k] is easy to calculate [an]. Price skimming [k] allows the business to recover development costs quickly [an]. Cost-plus pricing is the best method as the business will make profit on each item sold [eval] whereas with price skimming they may not attract customers to their new business [eval]. 6 This is a general question so there are no marks for application. Candidates must name the method to access the knowledge marks. Analysis can be awarded for explaining the method or advantages/disadvantages Some points can be awarded as advantages or disadvantages of different methods but only award the same point once. To access evaluation must discuss two relevant methods. Accept but do not expect:
Dynamic pricing [k]
Psychological pricing [k]

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