Business Studies · May / June 2026 · Paper 12 · Question 2

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Amina is an entrepreneur. She plans to start up a business selling pens and paper and has collected some market research data. Amina has decided to sell her products using ecommerce. She is considering different methods of advertising to use for her pens and paper. Amina wants to know why some businesses remain small. 2

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2(a)[2]
Define ‘entrepreneur’. Award 2 marks for a full definition. Award 1 mark for a partial definition.
The person who (organises, operates and) takes the risk to start a new business [2]
An individual who takes the financial risk of starting (and managing) a new business [2]
A person who combines factors of production to start a business [2]
Partial definition e.g.
A person/individual who starts/sets up a business [1]. 2 First mark for the idea of starts/forms/ creates/opens/makes/new business. Second mark for the idea of taking risk OR understand involves combining factors of production OR named example of enterprise skill e.g. use initiative [+1]. Do not award:
Manage/run/operate the business
Definitions of a sole trader e.g. owns a business on own
2(b)[2]
Define ‘ecommerce’. Award 2 marks for a full definition. Award 1 mark for a partial definition.
The use of the internet (and other technologies used by businesses) to (market and) sell goods/services to customers [2]
The online buying/selling of goods/services using computer systems linked to the internet/apps on mobile phones [2]
Partial definition e.g.
Using the internet/online/websites [1]
Uses/builds websites to display products to customers [1]
Digital market [1]
2 First mark is for the idea of internet/online/ website/social media. Second mark is for recognising it involves trade/selling/buying (+1 only). Notes:
Access to customers is [tv] for second mark. Must refer to sales/ selling/buying. Do not award:
Use of technology on own
Uses technology to sell
2(c)[4]
Outline two ways Amina could use the results from her market research. Award 1 mark for identification of each relevant way (max 2). Award 1 mark for each relevant reference to this business (max 2). Points might include:
Help identify customer needs/preferences/trends / find gap in market / help decide what to make/sell [k] for pens/paper [app]
Help decide level of (current) demand / (current) market size / whether niche/mass market / help decide amount to sell/buy/make [k] for this new/start-up business [app]
Help to segment the market or e.g. age/gender / identify target market [k] for this entrepreneur [app]
Decide price / what price to set [k] when using ecommerce [app]
Decide on method of promotion [k] as is considering different methods of advertising [app]
Find out about competition [k]
Help decide/confirm place/where to sell / location [k]
Help produce/include in the business plan [k]
Help predict changes in trends in consumer’s tastes/fashion/future market size [k]
Reduces risks / products launched with more confidence [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
Pens/paper or related words e.g. stationery
Ecommerce
Advertising Other appropriate examples can be credited. Notes:
Advertising can be [k] or [app] but only award once. Do not award:
Website/online as alt to ecommerce as [app]
Examples of methods of pricing, advertising, sales promotion.
2(d)[6]
Explain two methods of advertising Amina could use for her products. Award 1 mark for identification of each relevant method (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:
Website/online/internet/’pop ups’ [k] especially as planning to use ecommerce [app] as can give lots of/detailed information about the products [an]
(Specialist) magazines [k] as allows this entrepreneur [app] to target specific customers [an]
Social media/TikTok/Facebook/Snapchat/Instagram/YouTube [k] so may help reach many people / low cost / quick to update [an] for her new business [app]
Leaflets/flyers/brochures [k] as can refer to / keep for reference [an] about the pens [app]
Posters [k] as can include pictures/colour/images [an]
Billboards [k] as people can see it as they pass by [an]
Radio [k] as can include sounds/jingles / able to target geographical areas [an]
Newspapers (national/local) [k]
Television [k]
Direct mail (through letterbox) [k]
Side of (shopping) bags/vehicles [k]
Email [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:
Pens/paper
Entrepreneur
Start-up/new business
Ecommerce
Market research (data/results) Other appropriate examples can be credited. Notes:
Can credit the same analysis for different points, but only award once e.g. low cost/cheap/cost effective, can reach many people, use of images/colour.
Analysis can focus on explaining how the method works or a specific advantage of using it. Do not award:
Increase sales/raise awareness/attract attention/remind/inform as [an]
Informative / persuasive advertising
Methods of sales promotion e.g. Sponsorship / celebrity endorsements / Word-of-mouth
2(e)[6]
Explain two reasons why a business might remain small. Which reason 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 justified decision about which reason is likely to be the most important. Points might include:
Owner’s choice/objectives [k] as owner does not want the responsibility/stress for managing a large(r) business OR owner wants control over business (decisions) OR want to avoid increased financial risk [an] AND/OR so may achieve a better work life balance [an]
Limited access/availability of finance / low profit / liquidity/limited/low working capital [k] so cannot afford/not have enough funds to expand /reinvest [an]
Market size/ amount of customers / level of demand / operate in a niche market [k] limiting potential revenue [an]
High competition / a few large businesses may control market [k] so difficult for a small business to compete / customers may be brand loyal to competitors [an] AND/OR lower sales / lower market share [an]
Wants to maintain close relationship with its customers/ provide a personal service / type of industry/product/service offered [k] allowing them to build customer loyalty [an]
Remain flexible / able to respond quickly to changes in consumer tastes [k] to help maintain consumer loyalty [an]
Lack of knowledge/skills /experience / limited access to/lack of suitable labour / lack of suitable employees [k] 6 This is a generic question so there are no marks for application. To access evaluation must refer to two valid reasons. Notes:
Low profit is [k] point only.
Some points can be [k] or [an] but only award once e.g. owner does not want the extra responsibility/owner wants to keep control, lower market share.
The same analysis could be awarded for different reasons, but only award once. Do not award:
Poor/no business plan/no planning
Lack of market research
Set the wrong price
Maintain quality
Poor reputation
Wrong location/not busy Guidance
Limited access to/lack of suitable land/lack of space [k] so not able to meet customer demand [an]
Limited access to/lack of suitable resources/raw materials [k] Other appropriate responses should be credited. Justification might include: It might be the owner’s objective [k] as may want a better work-life balance [an]. It could be a lack of finance [k] so cannot afford to expand [an]. Finance is likely to be the most important reason as without finance, the business cannot grow even if the owner wanted to [eval]. Whereas someone can be recruited to manage the business if the owner wanted time to do other things [eval].

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