Cambridge IGCSE™: Business Studies 0450/22

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Cambridge IGCSE™

BUSINESS STUDIES 0450/22


Paper 2 Case Study May/June 2024
MARK SCHEME
Maximum Mark: 80

Published

This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the
examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the
details of the discussions that took place at an Examiners’ meeting before marking began, which would have
considered the acceptability of alternative answers.

Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for
Teachers.

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the May/June 2024 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 18 printed pages.

© Cambridge University Press & Assessment 2024 [Turn over


0450/22 Cambridge IGCSE – Mark Scheme May/June 2024
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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers.
They should be applied alongside the specific content of the mark scheme or generic level
descriptions for a question. Each question paper and mark scheme will also comply with these
marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

 the specific content of the mark scheme or the generic level descriptors for the question
 the specific skills defined in the mark scheme or in the generic level descriptors for the question
 the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

 marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit
is given for valid answers which go beyond the scope of the syllabus and mark scheme,
referring to your Team Leader as appropriate
 marks are awarded when candidates clearly demonstrate what they know and can do
 marks are not deducted for errors
 marks are not deducted for omissions
 answers should only be judged on the quality of spelling, punctuation and grammar when these
features are specifically assessed by the question as indicated by the mark scheme. The
meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed
instructions or in the application of generic level descriptors.

GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question
(however; the use of the full mark range may be limited according to the quality of the candidate
responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should
not be awarded with grade thresholds or grade descriptors in mind.

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Social Science-Specific Marking Principles


(for point-based marking)

1 Components using point-based marking:


 Point marking is often used to reward knowledge, understanding and application of skills.
We give credit where the candidate’s answer shows relevant knowledge, understanding
and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly
convey the same meaning (unless the mark scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they
are correct
c DO credit answers where candidates give more than one correct answer in one
prompt/numbered/scaffolded space where extended writing is required rather than list-type
answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required.
(Check for evidence it is understood and not used wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all
possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already
credited unless the language itself is being tested. This applies equally to ‘mirror
statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of
syllabus terms must allow for clear and unambiguous separation from other syllabus terms
with which they may be confused (e.g. Corrasion/Corrosion)

2 Presentation of mark scheme:


 Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
 Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
 Content in the answer column in brackets is for examiner information/context to clarify the
marking but is not required to earn the mark (except Accounting syllabuses where they
indicate negative numbers).

3 Calculation questions:
 The mark scheme will show the steps in the most likely correct method(s), the mark for
each step, the correct answer(s) and the mark for each answer
 If working/explanation is considered essential for full credit, this will be indicated in the
question paper and in the mark scheme. In all other instances, the correct answer to a
calculation should be given full credit, even if no supporting working is shown.
 Where the candidate uses a valid method which is not covered by the mark scheme,
award equivalent marks for reaching equivalent stages.
 Where an answer makes use of a candidate’s own incorrect figure from previous working,
the ‘own figure rule’ applies: full marks will be given if a correct and complete method is
used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

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4 Annotation:
 For point marking, ticks can be used to indicate correct answers and crosses can be used
to indicate wrong answers. There is no direct relationship between ticks and marks. Ticks
have no defined meaning for levels of response marking.
 For levels of response marking, the level awarded should be annotated on the script.
 Other annotations will be used by examiners as agreed during standardisation, and the
meaning will be understood by all examiners who marked that paper.

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0450/7115/0086 Business Studies – Paper 2 Annotations

Annotation Description Use

Tick Tick Indicates a point which is relevant and rewardable (used in


part (a) questions).

Cross Cross Indicates a point which is inaccurate/irrelevant and not


rewardable.

BOD Benefit of doubt Used when the benefit of the doubt is given in order to
reward a response.

TV Too vague Used when parts of the answer are considered to be too
vague.

REP Repetition Indicates where content has been repeated.

NAQ Not answered Used when the answer or parts of the answer are not
question answering the question asked.

APP Application Indicates appropriate reference to the information in the


context.

OFR Own figure rule If a mistake is made in a calculation, and the incorrect
figure that results from the mistake is used for subsequent
calculations.

SEEN Noted but no credit Indicates that content has been recognised but not
given rewarded.

L1 Level 1 Used in part (b) questions to indicate where a response


includes limited knowledge and understanding.

L2 Level 2 Used in part (b) questions to indicate where a response


has a more detailed discussion and contains some
evidence of justification.

L3 Level 3 Used in part (b) questions to indicate where a response


includes a well-justified recommendation.

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Question Answer Marks

1(a) Explain two reasons why setting business objectives is important to JJ. 8

Award 1 mark for each reason (max 2).

Award a maximum of 3 additional marks for each explanation of the reason why
setting business objectives is important – one of which must be applied to
this context.

Relevant reasons might include:


 A clear target/aim/purpose/goal to work towards – guides the business in
the right direction – avoids loss of focus
 Decision-making will be focused on the objectives – meaning better
decisions are taken – the business may be more efficient
 Helps motivate employees – objectives will help focus the employees and
management to increase efficiency – making it more likely to be achieved
 Comparison of performance – so business managers can compare how
each department has performed against their objectives - to see whether
or not it has been successful
 Allows measurement of success – can judge performance or progress
 Helps the business to produce a plan or strategy for the business to
achieve these objectives

For example: To give a clear target for employees and managers to work
towards (1) so they all know what is expected of them (1) when producing
different items of jewellery (app). Therefore, this means the target is more likely
to be achieved (1).

Application could include: jewellery; set up 25 years ago; public limited


company; objective to increase profit every year; to expand the business; sold
directly to customers in other countries; 30% sold using ecommerce; 70% sold
in jewellery shops; raw materials purchased locally; 60 full-time employees; 25
part-time employees; bracelets; rings; earrings.

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Question Answer Marks

1(b) Using Appendix 1 and other information, consider the two new products 12
JJ could produce. Which product should JJ choose? Justify your
answer using break-even calculations.

 Product A
 Product B

Level Description Marks

3 Sound application of knowledge and understanding of 9–12


relevant business concepts using appropriate
terminology.

Detailed discussion of both products.

Well-justified recommendation.

Candidates discussing both products in detail, in


context and with a well-justified recommendation,
including why the alternative product was rejected,
should be rewarded with the top marks in the band.

2 Sound application of knowledge and understanding of 5–8


relevant business concepts using appropriate
terminology.

Detailed discussion of at least one product.

Judgement with some justification/some evaluation of


choice made.

Candidates discussing at least one product in detail and


applying it to the case should be rewarded with the top
marks in the band.

1 Limited application of knowledge and understanding of 1–4


relevant business concepts.

Limited ability to discuss the products with little/no


explanation.

Simple judgement with limited justification/limited


evaluation of choice made.

Candidates outlining both products in context should be


rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

1(b) Relevant points might include:

Product A  The price is much lower than for Product B,


leading to more sales of bracelets needed to
break-even
 Forecast sales are higher at 2500 per week
than Product B which may make it easier to
meet demand if it is high
 The break-even output is 2000 units per week
– which is much higher than Product B – may
be more difficult to achieve
 The margin of safety is much higher at 500
than Product B making it a safer product to
produce assuming all output is sold
 The variable cost is lower by $15 than for each
ring

Product B  The price of rings is much higher than


bracelets by $70
 Break-even is 625 rings per week
 The margin of safety is 125 per week if forecast
sales are accurate – which is much lower than
for Product A at 500 per week – increasing risk
of not covering costs if sales are lower than
forecast
 The profit is much lower for Product B if all
forecast sales are made – at $10 000 rather
than $12 500 for Product A
 Forecast sales each week is much lower at 750
rings, 1750 fewer items to produce each week
 May be easier to promote and sell fewer items
each week making it easier to achieve
maximum sales

Recommendation  JJ should choose to produce Product A,


bracelets, as the margin of safety is higher
than for Product B and may be less risk of not
breaking-even if not all the forecast sales are
made each week. Rings are more expensive to
produce and if not sold then the variable cost
of each ring is $40 so more will have been
spent on variable cost per product than
producing bracelets at $25 each.
 JJ should choose to make Product B, rings, as
the break-even output is much lower at 625
than the 2000 needed for bracelets and
therefore may be easier to achieve.

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Question Answer Marks

2(a) Explain two benefits and two limitations for JJ of employing part-time 8
workers in its factory.

Award 1 mark for each relevant benefit/limitation (max 4).

Award a maximum of 1 additional mark for each explanation of the


benefit/limitation in context.

Relevant benefits might include:


 The employees are more flexible in the hours they work – than the 60 full-
time workers
 Ask/more likely for the part-time workers to increase their hours – during
busy times to meet demand for bracelets
 Can/more likely increase operating hours in the factory when demand
increases – as the 25 part-time workers may be willing to work extra
hours
 Part-time employees often do not need to take time off for appointments,
such as to visit the doctor – less likely to cause disruption to the
manufacture of rings
 May be able to attract skilled employees who want to work reduced hours
 May reduce business costs if pay lower wages than wage rates for full-
time workers
 It may be easier to make part-time workers redundant

Relevant limitations might include:


 If the employee sees the job as temporary, then they may be less
committed to the business - produce less jewellery
 Takes longer to recruit two part-time employees than one full-time
employee – so less time to focus on selling in other countries
 There may be an increase in induction and training costs – which may
make it difficult to increase profit each year
 More difficult to communicate with part-time employees
 If the job is temporary then less likely to provide training for them

For example: If the employee sees the job as temporary, then they may be
less committed to the business (1) and produce fewer items of jewellery (app).

Application could include: jewellery; set up 25 years ago; public limited


company; objective to increase profit every year; to expand the business; sold
directly to customers in other countries; 30% sold using ecommerce; 70% sold
in jewellery shops; raw materials purchased locally; 60 full-time employees; 25
part-time employees; bracelets; rings; earrings.

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Question Answer Marks

2(b) Consider the advantages and disadvantages of the following three ways 12
JJ could promote its new product in country X. Which way should JJ
use? Justify your answer.

 Advertising in fashion magazines


 Handing out leaflets in Main City
 Point-of-sale displays in shops

Level Description Mark

3 Sound application of knowledge and understanding of 9–12


relevant business concepts using appropriate
terminology.

Detailed discussion of at least two ways.

Well-justified recommendation.

Candidates discussing all three ways in detail, in context


and with a well-justified recommendation, including why
the alternative ways were rejected, should be rewarded
with the top marks in the band.

2 Sound application of knowledge and understanding of 5–8


relevant business concepts using appropriate
terminology.

Detailed discussion of at least one way.

Judgement with some justification/some evaluation of


choice made.

Candidates discussing at least two ways in detail and


applying them to the case should be rewarded with the
top marks in the band.

1 Limited application of knowledge and understanding of 1–4


relevant business concepts.

Limited ability to discuss the ways with little/no


explanation.

Simple judgement with limited justification/limited


evaluation of choice made.

Candidates outlining all three ways in context should be


rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

2(b) Relevant points might include:

Advantages Disadvantages

Advertising in  Read by target  Can be expensive to


fashion market – more likely advertise in a fashion
magazines to be seen by magazine –
potential customers increases costs for
– possibly increasing JJ – possibly
sales lowering profit if
 Can be shown in advertising is not
colour with effective at
photographs/images increasing revenue
– may make the  Often only published
jewellery look more once a month or
attractive - more once a week –
appealing to therefore may not be
customers seen as often by
potential customers
 Only seen by people
who read the fashion
magazines, and
these may not be the
target market for JJ’s
new jewellery
product

Handing out  A cheap method of  May not be looked at


leaflets in Main advertising – keeps – so waste of money
City down marketing – not effective
costs advertising of either
 Given out in the bracelets or rings
street in Main City so  May be seen as junk
may be handed out so thrown away –
to many people – annoying to potential
reaches a wide customers and may
range of potential deter them from
customers who may buying JJ’s products
want to buy
jewellery
 Leaflets can be kept
for future reference,
especially if discount
coupon included

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Question Answer Marks

2(b)
Advantages Disadvantages

Point-of-sale  Seen by potential  May not be noticed


displays in shops customers when they so may not be
enter the jewellery effective
shop – may attract  Cost of displays and
more customers to incentives to retailers
buy JJ’s jewellery to put the point-of-
 Makes JJ’s rings sale displays of the
and bracelets stand new jewellery in
out from competitors’ their shops
products  Difficult to make a
jewellery item stand
out to potential
customers as the
jewellery items are
small and can easily
be missed

Recommendation Justification could include:


 JJ should choose to advertise in fashion
magazines because these are purchased by
potential customers who are more likely to see
the adverts and therefore be more likely to buy
JJ’s new jewellery product. Leaflets may not
even be looked at and thrown away and point-of-
sale displays are only seen if potential customers
go into that retailer’s shop in the first place,
therefore limiting the number of potential
customers seeing the display.
 JJ should choose to hand out leaflets in Main City
because these will reach a wide range of people
shopping in the city and will be more likely to
attract people who have not previously been
customers of JJ’s products, making them more
likely to purchase JJ’s new jewellery.
 JJ should choose to provide point-of-sale displays
in jewellery shops as they will be seen by
customers entering the shop and these will be
people who are already interested in buying
jewellery so may be the most effective promotion
to use so may generate the most sales.

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Question Answer Marks

3(a) Explain four reasons why profit is important to a business. 8

Award 1 mark for each relevant reason (max 4).

Award a maximum of 1 additional mark for each explanation.

There are no application marks available for this question.

Relevant reasons might include:


 It is the reward to the entrepreneur/owners/shareholders – and is the reward
for them using their skills and qualities in the business
 It is a source of finance – to purchase non-current assets/for investment in
long-term assets/development of new products
 May attract investors – if the business is expanding and raising capital by
selling additional shares
 It is an indicator or measure of success - the higher the profit the more
successful the business is likely to be
 Can indicate if a product should be withdrawn if it is not making a profit
 To measure the performance of managers

For example: If the business makes a good profit, then it may attract investors
(1) to help it raise capital by selling additional shares (1).

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Question Answer Marks

3(b) Consider the opportunities and threats of ecommerce for JJ. Which is 12
likely to have the most effect on JJ? Justify your answer.

Level Description Marks

3 Sound application of knowledge and understanding of 9–12


relevant business concepts using appropriate terminology.

Detailed discussion of the opportunities and threats.

Well-justified conclusion.

Candidates discussing the opportunities and threats in


detail, in context and with a well-justified conclusion,
including why the opportunities or threats had the least
effect, should be rewarded with the top marks in the
band.

2 Sound application of knowledge and understanding of 5–8


relevant business concepts using appropriate terminology.

Detailed discussion of the opportunities or threats.

Judgement with some justification/some evaluation of


choice made.

Candidates discussing the opportunities or threats in detail


and applying them to the case should be rewarded with
the top marks in the band.

1 Limited application of knowledge and understanding of 1–4


relevant business concepts.

Limited ability to discuss the opportunities or threats


with little/no explanation.

Simple judgement with limited justification/limited


evaluation of choice made.

Candidates outlining the opportunities and threats in


context should be rewarded with the top marks in the
band.

0 No Creditable Response 0

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Question Answer Marks

3(b) Relevant points might include:


Opportunities  Websites can be used to promote JJ’s jewellery –
reaches potential customers from other
countries – cheaper than many other forms of
promotion
 Orders can be taken directly by JJ over the internet
– this means that intermediaries such as jewellery
shops are not required – JJ’s profit margins are
therefore not shared
 Customers may be encouraged to purchase more
additional items of jewellery when buying one
item – easier to link through to other products that
make a matching set
 It is easier for JJ to order raw materials – quicker
and cheaper than other communication methods
such as phone calls
 Easier to change prices, if necessary, rather than
having to reprint brochures – makes it cheaper to
do this

Threats  High levels of competition from many other


jewellery manufacturers which may also have
websites – makes it harder to be the business that
people choose to buy from
 Website maintenance costs and costs of updating
the site - will increase expenses and total costs
 Cannot try on the jewellery, such as rings – to
check if it fits and if it meets customers’
expectations – may be less likely to make a
purchase if cannot see the products
 Delivery and return costs may be high
 The risk of hacking and losing customer
data/increased security costs to keep the website
safe from data being corrupted

Conclusion Justification might include:


 Ecommerce will provide more opportunities than
threats as 30% of JJ’s target customers are
from countries outside of country X and having
a website is a low-cost way to promote and sell
their jewellery. There are many competitors but as
long as JJ can keep attracting customers using the
internet then this will mean the threats from
increased competition may not be a concern.
 Ecommerce will provide more threats than
opportunities as many competitors will also have
websites and sell their jewellery online. There is no
guarantee that people searching for items of
jewellery such as bracelets will find JJ’s website
and consumers could easily find a competitor’s
website instead and not be aware of JJ at all.

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Question Answer Marks

4(a) Using Appendix 2 and other information, explain two ways JJ may be 8
affected by the forecast increase in unemployment in country X.

Award 1 mark for each way (max 2).

Award a maximum of 3 additional marks for each explanation of the way JJ


may be affected by the forecast increase in unemployment – one of which
must be applied to this context.

Relevant ways might include:

 Makes it easier for JJ to recruit new employees – larger pool of


unemployed people to choose from – may be more skilled people
available for work
 May make it easier to resist demand for higher wages from employees –
rising level of unemployment means more competition amongst workers
for jobs - so willing to accept lower wages
 May lead to lower demand for JJ's products – consumer spending is lower
– as many people have lost their jobs so incomes are lower
 Lower priced products produced by JJ may see an increase in demand – as
consumers have less income available to spend on luxury high priced
items
 JJ may be less willing to invest – as future sales may not increase for some
time – making it more difficult to gain a return on investment
 Lower sales in country X so JJ may try harder to export its products -
spreads risk

For example: May make it easier for JJ to recruit new employees (1) as there
is a larger pool of unemployed people to choose from (1) and many of these
workers may be skilled people available for work (1) with experience of how to
manufacture jewellery (app).

Application could include: jewellery; set up 25 years ago; public limited


company; objective to increase profit every year; to expand the business; sold
directly to customers in other countries; 30% sold using ecommerce; 70% sold
in jewellery shops; raw materials purchased locally; 60 full-time employees; 25
part-time employees; bracelets; rings; earrings; increase from 3% to 6%.

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Question Answer Marks

4(b) Using Appendix 3 and other information, consider the following two 12
environmental issues when JJ manufactures its products. Which issue
should JJ choose to solve first? Justify your answer.

 Using coal for fuel in its factory


 Buying from suppliers that damage the environment

Level Description Marks

3 Sound application of knowledge and 9–12


understanding of relevant business concepts
using appropriate terminology.

Detailed discussion of the two issues.

Well-justified conclusion.

Candidates discussing the two issues in detail,


in context and with a well-justified conclusion
including why the alternative issue was rejected
should be rewarded with the top marks in the
band.

2 Sound application of knowledge and 5–8


understanding of relevant business concepts
using appropriate terminology.

Detailed discussion of at least one issue.

Judgement with some justification/some


evaluation of choice made.

Candidates discussing at least one issue in


detail and applying it to the case should be
rewarded with the top marks in the band.

1 Limited application of knowledge and 1–4


understanding of relevant business concepts.

Limited ability to discuss the problems with


little/no explanation.

Simple judgement with limited justification/limited


evaluation of choice made.

Candidates outlining the two issues in context


should be rewarded with the top marks in the
band.

0 No creditable response 0

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Question Answer Marks

4(b) Relevant points might include:


Using coal  Using coal causes global warming giving JJ a bad
for fuel in its reputation - bad publicity from pressure groups
factory  Price of coal is increasing which continually
increases cost of power for the factory – if JJ
continues to use coal it will raise the costs of
manufacturing jewellery
 Could choose to reduce use of coal so JJ could
benefit from the 25% government grant to invest in
solar power for the factory – this would reduce the
environmental impact of JJ’s factory which other
manufacturers may not be doing so improving JJ’s
image - reducing the pressure from environmental
pressure groups
 As all jewellery manufacturers use the same
process and have the same increases in the price of
coal – may be no change in JJ’s competitiveness

Buying from  JJ may be negatively affected by its association if


suppliers consumers become aware of where JJ buys its raw
that damage materials - JJ’s suppliers are causing environmental
the damage to the areas around their mines
environment  Some consumers are only interested in the price of
JJ’s products and may not care about the suppliers
– so may have no effect on JJ’s sales/revenue
 Pressure groups may try to make JJ change its
suppliers – may lead to increased raw material
costs as located further away – raising
prices/reducing profit margins
 JJ could encourage its suppliers to change their
mining operations to more environmentally friendly
methods helps JJ’s reputation – but may lead to
increased costs

Conclusion Justification might include:


 The issue of using coal should be the first to solve
because coal prices are increasing so costs will
continue to rise if JJ does not change to solar power.
The 25% grant from the government will help. The
initial investment can be repaid over a long time
period and costs reduced throughout this time.
Customers may not be aware of the environmental
damage caused by the suppliers JJ uses and so
there may be no effect on sales or revenue and
there is no rush to reduce this problem.
 The issue of buying from local suppliers that
damage the environment should be solved first as
the damage to JJ's reputation may be difficult to
recover from and the business may lose many loyal
customers of its jewellery, leading to lower
revenue/profit.

© Cambridge University Press & Assessment 2024 Page 18 of 18

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