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UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
GCE Advanced Level

MARK SCHEME for the June 2005 question paper

9707 BUSINESS STUDIES

9707/03 Paper 3 (Case Study), maximum raw mark 100

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 3 100 62 57 38

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 A LEVEL

MARK SCHEME

MAXIMUM MARK: 100

SYLLABUS/COMPONENT: 9707/03

BUSINESS STUDIES
Paper 3 (Case Study)
 Page 2 Mark Scheme Syllabus Paper
GCE A LEVEL – JUNE 2005 9707 3

1 Evaluate how communications between management and staff might be made more
effective within Wotton College. [14]

Knowledge Application Analysis Evaluation

Level 2 2 marks 2 marks 4-3 marks 6-4 marks
Two or more Points made are Good use of Good judgement
points made well applied to theory to answer shown
showing good case question
understanding
Level 1 1 mark 1 mark 2-1 marks 3-2 marks
One or two Some attempt to Some use of Some
points made apply points theory to answer judgement
showing some made to case question shown
understanding

Answers could include:

• Definition of effective communication

• Methods to improve communication with – meetings, groups, newsletter, IT etc.
• Analysis of how these could improve effective communication

BUT:

May be time consuming; cost of IT access for all staff; communication overload if IT widely
used; staff not used to 2-way communication

Evaluation could include:

Paula may not want to make any method work particularly effectively if she wants to retain
information/power. Better communication may need a change of culture/leadership style

2 (a) Assuming Paula makes the changes outlined in Option 1 calculate for 2006:

(i) The revenue from student fees assuming the PED estimate is accurate. [4]

Need to use PED data of –1.2 : Price to rise by 10% therefore student numbers
down by 12% (1)

$2200 (1) X 264 (1) STUDENTS = $580 800 (1) Total 4 (If just $580 800 award 4)

(Award no marks if just a simple 10% adjustment to student numbers or revenue)

(ii) Teachers salary costs. [1]

$400 000 less 5% = $380 000

(iii) Material costs. [1]

$120 000 less 10% = $108 000

(iv) Net profit. [2]

$580 800 less $578 000 (1) = $2800 (1) (allow OFR)

© University of Cambridge International Examinations 2005

 Page 3 Mark Scheme Syllabus Paper
GCE A LEVEL – JUNE 2005 9707 3

(b) Analyse the benefits to Wotton college of introducing budgets managed by Heads
of Department. [10]

Knowledge Application Analysis

Level 2 2 marks 3-2 marks 5-3 marks
Good understanding Good application to Good use of theory to
shown case answer question
Level 1 1 mark 1 mark 2-1 marks
Some understanding Some application to Some use of theory to
shown case answer question

Answers could include:

• Definition of budgets
• Motivate staff and HoDs – there seem to be problems for this business in this area
• Allow better cost control – problem for this business at present
• Give targets – could improve examination results if budgets are tied in with
performance

3 Discuss the possible advantages and disadvantages to Wotton College of taking over
Midvale school. [16]

Knowledge Application Analysis Evaluation

Level 2 3 marks 3 marks 4-3 marks 6-4 marks
Good Good Good use of Judgement
understanding application to theory to shown in
of issues shown case analyse both considering both
sides advantages and
disadvantages

Level 1 2-1 marks 2-1 marks 2-1 marks 3-1 marks

Some Some Some attempt to Good judgement
understanding application to use theory to of one side and
shown case answer question weak evaluation
of other or some
evaluation of
both sides

Answers could include:

Definition: Horizontal integration.

Advantages:

• Scope for economies of scale – give examples

• Could close one site and raise capital – new site has better buildings
• Reduces competition – scope to raise prices
• Synergy – two organisations coming together may generate more ideas and mutual
benefits

© University of Cambridge International Examinations 2005

 Page 4 Mark Scheme Syllabus Paper
GCE A LEVEL – JUNE 2005 9707 3

Disadvantages:

• Diseconomies of scale - communication already poor

• Problems if operating on both sites
• Human problems e.g. which staff to make redundant. Will Wotton staff have authority
over others?
• Cost of purchase and cost of rationalisation/reorganisation. Will this be greater than
economies?
• Loss of control with new partner?

Possible discussion/evaluation: Could depend on how the merger is handled and whether
staff are involved/consulted or not. Balance of arguments of advantages compared to
disadvantages. Short term/long term effects.

4 (a) Refer to Appendix B. Draw a network diagram of this project showing all earliest
start times and latest finish times. [8]

8 Marks – no errors and full notation

7-6 Marks – good attempt to draw with up to 2 errors in drawing or notation (OFR)
5-3 Marks – sound attempt with several errors
2-1 Marks – some attempt made

(b) Identify the critical path and state the minimum project duration. [2]

ABDGH (1) = 89 days (1) Allow OFR based on own network diagram

© University of Cambridge International Examinations 2005

 Page 5 Mark Scheme Syllabus Paper
GCE A LEVEL – JUNE 2005 9707 3

(c) Analyse the usefulness of this technique for managing the building project. [6]

Knowledge Application Analysis

Level 2 2 marks 2 marks 2 marks
Good understanding Good application to Good use of theory to
shown case explain answer
Level 1 1 mark 1 mark 1 mark
Some understanding Some application to Some use of theory to
shown case explain answer

Answers could include:

• Allows allocation of resources between activities

• Identifies critical path and activities – need to keep this project to schedule to meet start
of new term
• Puts activities in order
• Allows corrective action to be taken if hold up in an activity e.g. bricklayers strike
• Indicates simultaneous activities – reduces total time
• Limitations of usefulness also accepted

5 Assume that the new building is constructed. Evaluate a marketing plan that Paula
could introduce to attract new students to Wotton College. [16]

Knowledge Application Analysis Evaluation

Level 2 3 marks 3 marks 4-3 marks 6-4 marks
Good Good Good use of Good judgement
understanding application of theory to shown in text
of marketing points to case analyse points and conclusions
plan shown made
Level 1 2-1 marks 2-1 marks 2-1 marks 3-1 marks
Some Some Some use of Some
understanding application to theory to judgement
shown case analyse points shown
made

Limit of Level 1 Knowledge and Evaluation if no clear understanding of marketing plan (as
opposed to a simple ‘mix’ answer).

Answers could include:

• Explanation of marketing plan – detailed report containing marketing objectives, budget,

strategy
• ‘Product’ seems to be essential (i.e. the buildings, facilities, results etc.)
• Price – conflicting pressures here. Removing competitor might give scope for increases
but more overseas schools setting up
• Promotion – seems to be inadequate give the high AED
• Place – is it well located to deal with expansion of this market sector?
• Plan needs to be evaluated i.e. likely chances of success or factors that might limit its
success. Are the school’s marketing objectives clear and is budget sufficient?

© University of Cambridge International Examinations 2005

 Page 6 Mark Scheme Syllabus Paper
GCE A LEVEL – JUNE 2005 9707 3

6 Assume Paula decides to buy Midvale school. Evaluate how Paula might deal with the
Human Resource Management problems that are likely to occur. [20]

Knowledge Application Analysis Evaluation

Level 3 10-7 marks
Good judgement
shown in text
and conclusions
Level 2 3 marks 3 marks 4-3 marks 6-3 marks
Good Good Good use of Some
understanding application of theory to explain judgement
shown points to case points made shown in text
and/or
conclusions
Level 1 2-1 marks 2-1 marks 2-1 marks 2-1 marks
Some Some Some use of Limited
understanding application to theory made judgement
shown case shown

Answers could include:

• Problems of labour turnover, staff redundancies, motivation, workforce planning,

recruitment, appraisal etc. Not all of these have to be identified
• Why these are problems to this business and need to be addressed
• Possible suggestions: Workforce plan essential. New approaches to motivation seem
essential e.g. job enrichment
• Communication improvements
• Effective recruitment of new deputy and new staff essential
• Bonus payments based on results/appraisal?

Evaluation might include: Need to balance costs of HR proposals against the benefits of
‘solving’ the problems; HRM unlikely to be really successful unless Paula adopts a more
Theory Y attitude to these problems. Justification of most important points.

7 To what extent should a business such as Wotton College take the interests of
stakeholders into account when making decisions?

Use grid as above.

Answers could include:

• Explain what stakeholders are and who they are for this business:
Staff, students, parents, community, suppliers, competitors etc.
• Evidence that Paula is not considering stakeholder interests:
Increase in fees, merging with Midvale and reducing competition, squeeze on suppliers,
staff dissatisfaction, community’s fear over factory building
• Impact on public image and reputation – and eventually on long term profits?
• On the other hand, the business is in the private sector and aiming to make (short term?)
profits so should it be concerned with stakeholders interests?

Evaluation might include: Short term profits might be increased by focusing just on the
interests of shareholders BUT these decisions could damage image/reputation of business
and lead to stakeholder opposition and this might reduce profits in the LONG TERM.
Assesses conflicts between objectives of stakeholders.

© University of Cambridge International Examinations 2005