Business Studies · Oct / Nov 2025 · Paper 12 · Question 3

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Miguel plans to start up a gym (sports club). It will offer a range of fitness classes including yoga. The business will be a partnership with his sister. Miguel thinks the size of the business will remain 3 small. Secondary market research will be used to help make decisions including which pricing method to use. Miguel knows it is important for a new business to select a suitable location.

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3(a)[2]
Define ‘partnership’. Award 2 marks for a full definition. Award 1 mark for a partial definition.
Two (or more) people agree to jointly own a business (together) [2]
A business formed by two or more people [2]
Partial definition e.g.
A business run/operated/managed/controlled/lead by two (or more) people [1]
2 For two marks need the idea of owned/formed and it involves at least two people.
3(b)[2]
Identify two ways to measure the size of a business. Award 1 mark per way (max 2). Points might include:
(Number of) employees / size of workforce / (amount of) labour
Value of sales/revenue
Number/amount of customers / volume of output / number of sales
Value of output
(Value of) capital employed Other appropriate responses should be credited. 2 Only award the first two responses given. Do not award:
Profit
Capital on its own
3(c)[4]
Outline two pricing methods Miguel could use. Award 1 mark for each relevant method (max 2). Award 1 mark for each relevant reference to this business (max 2). Points might include:
Cost-plus pricing [k] to cover the costs of the gym [app]
Penetration pricing [k] as it is a new business [app]
Competitive / competition pricing [k] based on the location [app]
(Price) skimming [k] for some of the classes [app]
Promotional pricing [k] based on its market research results [app] 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:
Gym / sports club / club
Fitness / classes / yoga or related words e.g. instructors
(Business) partnership / sister
(Remain) small
New/start-up business
Secondary/market research
(Suitable) location Other appropriate examples can be credited.
3(d)[6]
Explain one advantage and one disadvantage to Miguel of using secondary market research. 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: Advantages:
Low cost/free [k] which is important for a new business [app] so has funds for other activities [an]
Readily available [k] so saves time / has time to focus on other issues [an] such as deciding a pricing method [app]
More/wide(r) range of information [k] about classes/yoga [app] which could help increase demand/sales [an] Disadvantages:
Out-of-date information [k] for the gym [app] leading to wrong decisions being taken [an]
Data is available for all businesses [k] so may not help create competitive advantage [an] so may not help the partnership [app]
May not be relevant/specific to business needs [k] for this small business [app] which could result in customer needs not being met reducing customer loyalty [an]
May not be reliable [k] as not up to date [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:
Gym / sports club / club
Fitness / classes / yoga or related words e.g. instructors
(Business) partnership / sister
(Remain) small
Method of pricing
(Suitable) location
New/start-up business Other appropriate examples can be credited. Some points can be [k] or [an] but only award once e.g. lower cost, saves time.
3(e)[6]
Do you think access to employees is the most important factor for a new business to consider when deciding on a suitable location? 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 whether access to employees is the most important factor for a new business to consider when deciding on a suitable location. Points might include: Access to employees:
Availability/number of employees [k] as if high employment may be difficult to find enough employees / if many available could pay lower wages [an] helping to lower costs [an]
Distance/proximity from workers/workplace [k] as if far may increase transport costs / if many close it may be easier to recruit [an]
May need skilled/trained workers [k] to provide a good level of service/high(er) output / may not be suitable workers nearby [an]
Level of wages/salary (in local area) [k] if high wages need to be paid it could increase costs [an] Other factors might include:
Access to customers/demand / proximity to market [k] to increase sales [an] AND/OR revenue [an]
Availability of suitable premises/rent [k] as high rent will increase fixed costs [an]
Number of competitors [k] may lead to high/low footfall [an]
Distance to/from suppliers/transport links [k] which could increase transport costs [an]
Access to raw materials [k]
Legal controls [k]
Government grants [k]
Local infrastructure e.g. internet/water/electricity [k]
Personal preference [k] 6 This is a general question so there are no marks for application. Evaluation can only be awarded if candidates discuss access to employees. For evaluation to be awarded justification will usually follow on from relevant analysis of points. Some points could be [k] or [an] but only award once. Some [an] could be used for different points but only award once. Answers must be from the business viewpoint, not the employee. Guidance Other appropriate responses should be credited. Justification might include: Availability of employees as if high employment may be difficult to find enough employees [k] reducing level of output [an]. Another factor is government grants [k] which could help pay the start-up costs [an]. The grant is likely to be the most important factor for a new business because without enough finance, there may be no business [eval] and there would be no need to worry about recruiting employees [eval].

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