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UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS

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GCE Advanced Subsidiary and Advanced Level

MARK SCHEME for the June 2005 question paper

9707 BUSINESS STUDIES

9707/01 Paper 1 (Short Answer/Essay), maximum raw mark 40

These mark schemes are published as an aid to teachers and students, to indicate the requirements of the
examination. They show the basis on which Examiners were initially instructed to award marks. They do not
indicate the details of the discussions that took place at an Examiners’ meeting before marking began. Any
substantial changes to the mark scheme that arose from these discussions will be recorded in the published
Report on the Examination.

All Examiners are instructed that alternative correct answers and unexpected approaches in candidates’
scripts must be given marks that fairly reflect the relevant knowledge and skills demonstrated.

Mark schemes must be read in conjunction with the question papers and the Report on the Examination.

• CIE will not enter into discussion or correspondence in connection with these mark schemes.

CIE is publishing the mark schemes for the June 2005 question papers for most IGCSE and GCE Advanced
Level and Advanced Subsidiary Level syllabuses and some Ordinary Level syllabuses.
Grade thresholds for Syllabus 9707 (Business Studies) in the June 2005 examination.

maximum minimum mark required for grade:

mark
A B E
available
Component 1 40 31 27 17

The thresholds (minimum marks) for Grades C and D are normally set by dividing the mark range
between the B and the E thresholds into three. For example, if the difference between the B and
the E threshold is 24 marks, the C threshold is set 8 marks below the B threshold and the D
threshold is set another 8 marks down. If dividing the interval by three results in a fraction of a
mark, then the threshold is normally rounded down.
June 2005

GCE AS AND A LEVEL

MARK SCHEME

MAXIMUM MARK: 40

SYLLABUS/COMPONENT: 9707/01

BUSINESS STUDIES
Paper 1 (Short Answer/Essay)
 Page 1 Mark Scheme Syllabus Paper
BUSINESS STUDIES – JUNE 2005 9707 1

Question 1

(a) Number of subordinates reporting to a manager

Partial explanation of term. [1]

Full explanation of term. [2]

(b) Greater delegation required so more responsibility for subordinates and less central
control. Often results from delayering. Greater job satisfaction for high flyers but can lead
to frustration if not well managed and supported.

Some understanding but benefits not explained. [1]

Substantially full but incomplete explanation of benefits. [2]
Full explanation of why and in what circumstances workers might prefer. [3]

Question 2

(a) The ability of a business to find cash for short term financial needs, the extent to which
firms can pay their short term debts.

Partial definition [1]

Full definition of the term. [2]

(b) Reducing stocks or debtors, increasing creditors (all dependent on commercial feasibility).
Selling assets, leasing, sale and leaseback, obtaining loans etc.

One relevant way stated but not described. [1]

Brief description given of way stated. [2]
Full explanation of way stated. [3]

Question 3

Likely to be high volume, flow line production. Benefit from cutting waste at all levels. JIT stock
control key, allied to right first time, TQM, lean people management, time-based management etc.

Limited understanding of lean production or definition. [1]

Good understanding of some aspects of lean management. [2-3]
Generally full appreciation of benefits of technique. [4-5]

Question 4

(a) Costs which change in total in proportion to output in the short run, e.g. raw materials,
direct labour, variable overheads.

Partial definition/relevant example. [1]

Substantially full definition. [2]

(b) Some costs are semi-variable, e.g. electricity, maintenance, and rise with output but not in
proportion. Labour may be fixed in the short run.

Superficial knowledge only shown/or relevant example. [1]

Partial explanation given. [2]
Substantially full explanation of reasons for the difficulty. [3]

© University of Cambridge International Examinations 2005

 Page 2 Mark Scheme Syllabus Paper
BUSINESS STUDIES – JUNE 2005 9707 1

Question 5

(a) Start-ups have survival as first objective, which might recur in tough times or under
takeover threat. Expansion might be goal, with turnover, market share, size the key,
by diversification, or at other times focusing on key capabilities. Profit maximisation
comes later, especially if a company has gone public, but growth may still be short
term objective at times.

Knowledge and Application Analysis and Evaluation

Level Two: Outlines objectives in
context of growth. 3-4 marks
Level One: Just gives different Level One: Explains how growth
objectives without relating to growth. changes objectives. 1-4 marks
1-2 marks

(b) Answers should examine the need to plan for growth to avoid HRM problems. If firms
just react to short-term change they are likely to be less efficient and successful,
leading to staff shortage, stress, demotivation and loss of staff. Planning recruitment
or promotion, training, reward systems etc. will avoid problems by anticipating them
and save expense. Depends if firms see employees as key resource or expendable.
If not, “them and us” attitude may prevail.

Knowledge and Application Analysis and Evaluation

Level Two: Relates importance in Level Two: Evaluates the importance of
context of growth, recognising need to HR planning to a growing business.
plan ahead to avoid problems. 3-4 marks 5-8 marks
Level One: Outlines HR planning issues Level One: Analyses HR planning
but not in context of growth. 1-2 marks factors in the context of growth and
change. 1-4 marks

Question 6

Answers should range from issues such as political and social constraints, legislation and
factors arising from macro-economic policy. Political: could consider market systems in
different countries with the balance of public and private sector and the level of taxation.
Social issues include ethical issues. Legislation includes factors such as location
management, consumer, employee and employer protection. Economic factors include
inflation control, interest rate and currency management. All should be related to how they
impinge on businesses’ ability to manage their affairs and make profit.

Knowledge and Application Analysis and Evaluation

Level Two: Examines how, in what Level Two: Evaluation of the impact of
situations and to what extent government intervention. 9-12 marks
government may intervene. 5-8 marks
Level One: Simply states ways in which Level One: Analyses ways in which
governments intervene in markets, e.g. firms are affected by government
legislation, economic policy etc.1-4 marks economic policy, e.g. effect on demand
of tax, interest rates etc., or effect on
costs of legislation such as employment
or consumer protection. 1-8 marks

© University of Cambridge International Examinations 2005

 Page 3 Mark Scheme Syllabus Paper
BUSINESS STUDIES – JUNE 2005 9707 1

Question 7

(a) It will look at consumer characteristics which enable it to target marketing and focus
advertising, pricing, distribution etc., rather than viewing markets as a whole. Likely
segments might be age, income, occupation, region or any other characteristics
which differentiate consumers.

Knowledge and Application Analysis and Evaluation

Level Two: Applies understanding to
soft drinks market. 3-4 marks
Level One: Some understanding of Level One: Analysis of the way in which
segmentation. 1-2 marks different segments might occur
(illustrative examples). 1-4 marks

(b) Answers should distinguish between primary and secondary research. Secondary
should come first and involve using published data abut competition, market size etc.
More import is likely to be primary research in the target market, using questionnaires,
interviews, consumer panels, blind tasting. Getting the taste right is the key aim, but
packaging, price and promotion need to be tested too. Much will depend on the
budget available.

Knowledge and Application Analysis and Evaluation

Level Two: Considers factors Level Two: Evaluates the effectiveness
appropriate to a soft drinks of different types of MR in the context of
manufacturer. 3-4 marks a drinks manufacturer, taking into
account its objectives, size, finance
available etc. 5-8 marks
Level One: Shows some knowledge of Level One: Analyses primary and/or
market research methods. 1-2 marks secondary research. 1-4 marks

© University of Cambridge International Examinations 2005

 Page 4 Mark Scheme Syllabus Paper
BUSINESS STUDIES – JUNE 2005 9707 1

Indicative Guidelines

To be used with the Mark Scheme for Essay marking

Marks

1-4 If the answer is largely irrelevant, but contains a few valid points.

5-7 If the answer possesses relevant material but is simple in expression and its grasp of the
issues involved.

8-9 If the answer seems to be the minimum acceptable for ‘A’ Level work i.e. it covers the
basic textbook material (1) that seems to have been mastered by many of the candidates
and (2) that is presented in a routine, unimaginative and sometimes unnecessarily
long-winded fashion; it also shows no awareness of the more subtle issues raised by the
question.

10-11 If the answer seems a basic pass with a little to spare (a few examples, facts etc.) and
with an attempt at analysis.

12-13 If the answer strikes you as undoubtedly a pass, with something to spare (one or two
passages with some insight displayed, some well worked examples, better than usual
organisation and presentation of reasonable material).

14-16 If the answer is undoubtedly above average, eliciting the instinctive reaction ‘good’ i.e. it is
beginning to stand out above the routine answer in terms of knowledge and understanding
of facts and ideas; or it begins to display a genuine attempt to answer the question rather
than regurgitate learned material, yet at the same time is clearly capable of improvement
at this level.

17-19 If the answer is clearly very good, with clarity and economy of expression, use of good
material to answer the question (the precise wording of which should be in no doubt from
the reading of the answer alone!), sensible and often original exemplification – in other
words showing a true insight.

20 If the answer immediately strikes you as ranking among the very best you have read at
this level, and fulfils the criterion that (in your judgement) it is not capable of improvement
by a student of 18 years, who will have to conceive and write the answer in an
examination room in 30 minutes.

© University of Cambridge International Examinations 2005