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Business Studies · Oct / Nov 2016 · Paper 22 · Question 3

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  • 3(a)[8]

    Ghaziz and Jasmin plan to expand their business. Identify and explain one economy of scale and one diseconomy of scale for the business as it expands. [8]

    Knowledge [2 × 1] – award one mark for each economy/diseconomy stated Analysis [2 × 1] – award one mark for a relevant explanation for each economy/diseconomy Application [2 × 2] – award two application marks for each economy/diseconomy Award one mark for each relevant economy/diseconomy (maximum of two), such as: Economy of scale

    Purchasing/bulk buying – discount on cost of materials/equipment
    Technical – use better equipment
    Financial – cheaper interest on bank loans
    Marketing – advertising costs per customer is less
    Managerial – employ specialist managers/more skilled
    Risk bearing – produces a variety of services so if demand for one service falls it is counter balanced by increase in demand of the other services Diseconomy of scale
    poor communication – more levels of hierarchy to pass through so distorted message/errors in instructions
    lower morale/motivation – more employees and feel less important
    harder to control/coordinate departments – may have too many employees in one area relative to another area so less efficient Award a maximum of three additional marks for each explanation of the economy/diseconomy – 2 of which must be applied to this context. Indicative response: Bulk buying (k) so as the business grows it can bulk buy its cleaning materials for a cheaper price (ap). Bulk buying will lead to reduced costs per unit (an) and this increase the profits of the partners (ap). Possible application marks: gardening services;

    house cleaning services;

    cleaning liquids/equipment;

    gardening materials/equipment;

    already advertising in newspapers;

    50 part-time workers;

    2 office workers;

    elderly people/parents;

    old people;

    adult children;

    country X;

    financial information from Appendix 1;

    information from the graph in Appendix 3. There may be other examples in context which have not been included here.

  • 3(b)[12]

    GJ is introducing a new service. Jasmin wants to recruit a manager. Consider the advantages and disadvantages of internal and external recruitment. Recommend which recruitment method Jasmin should use. Justify your answer. [12]

    Relevant points might include: Advantages Disadvantages Internal

    saves time and money
    can be motivating
    person is already known
    may be jealousy
    may need training – increases costs External
    new ideas
    already skilled/trained to correct level reduces costs
    person does not know the organisation and how it works
    person not known Knowledge/Analysis/Evaluation – award up to 10 marks using the levels-based mark scheme below. Knowledge/Analysis/ Evaluation Level 3 At least 2 × Level 2 + 9–10 marks for well justified recommendation as to the whether internal or external recruitment is the best method to choose and why not the other method. 7–8 marks for some limited judgement shown in recommendation as to the whether internal or external recruitment is the best method to choose. Level 2 4–6 marks Detailed discussion of advantages and/or disadvantages of internal and/or external recruitment. Level 1 1–3 marks Outline of advantages and/or disadvantages of internal and external recruitment. Level 1 – 1 mark for each L1 statement (max of 3 marks) e.g. New ideas. Level 2 – 1 × L2 explanation can gain 4 marks and a further mark can be awarded for each additional L2 explanation (max 6 marks). e.g. New ideas can be used from managers who have worked for other businesses and therefore will be experienced in other ways of working. This should make GJ more efficient and improve the productivity of the cleaning staff. (4 marks for L2 answer + 1 application mark for mentioning cleaning staff). Level 3 – For L3 to be awarded there needs to be at least two L2 marks awarded and then a recommendation which justifies which is the best method to choose. Award up to 2 additional marks for relevant application. Possible application marks: gardening services;

    house cleaning services;

    country X;

    50 part- time workers;

    2 office workers;

    honest, reliable and hard-working employees;

    elderly people;

    old people;

    adult children;

    financial information from Appendix 1;

    information from the graph in Appendix 3. There may be other examples in context which have not been included here.

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