Introduction
The main aim of this booklet is to exemplify standards for those teaching Cambridge IGCSE Business Studies (0450) Paper 2, and to show how different levels of candidates’ performance relate to the subject’s curriculum and assessment objectives. There is a separate booklet for Paper 1.
In this booklet candidate responses have been chosen to exemplify a range of answers. Each response is accompanied by a brief commentary explaining the strengths and weaknesses of the answers.
For ease of reference the following format for each component has been adopted:
Each question is followed by an extract of the mark scheme used by examiners. This, in turn, is followed by examples of marked candidate responses, each with an examiner comment on performance. Comments are given to indicate where and why marks were awarded, and how additional marks could have been obtained. In this way, it is possible to understand what candidates have done to gain their marks and what they still have to do to improve them.
This document illustrates the standard of candidate work for those parts of the assessment which help teachers assess what is required to achieve certain grades beyond what should be clear from the mark scheme. Some question types where the answer is clear from the mark scheme, such as short answers and multiple choice, have therefore been omitted.
Assessment at a glance
All candidates take two components, Paper 1 and Paper 2.
Paper 2
Question 1 (a)
Mark scheme
Example candidate response – high
Examiner comment – high
The question requires the candidate to list two ways a business plan helped the business in the context to be successful. This candidate has listed two relevant ways and then goes on to explain how these ways have helped the business, such as ‘might make more investors (bank) willing to lend them money’ and ‘employees understand what the company seeks to achieve and work to fulfil those goals.’ Both explanations are clearly in the context of the business as they refer to the nature of the product produced and recognise that sales are seasonal, which has consequences for jobs in this business, as well as understanding that they need to maintain high quality in the production process.
Marks awarded for Knowledge and Analysis: 4/4
Marks awarded for Application: 4/4
Total marks awarded: 8 out of 8
Example candidate response – middle
Examiner comment – middle
Two clear ways of a business plan helping to make a business successful are identified and explained. However, for the candidate to raise their marks still further the answer would need to be in the context of an ice-cream manufacturer. This answer is generic and could apply to any type of business. The answer could have referred to, for example, the business only being five years old and a partnership, that it manufactures high quality ice-cream and purchases high quality ingredients, a new flavour is being developed and a bank loan is needed.
Marks awarded for Knowledge and Analysis: 4/4
Marks awarded for Application: 0/4
Total marks awarded: 4 out of 8
Example candidate response – low
Examiner comment – low
The first answer is not clearly identified under the heading Way 1, however it does then go on to identify that a business plan helps a business to limit its spending and follow its objectives to help it survive. Therefore two marks for one way and an explanation of how that way helps to make the business successful can be awarded. The second answer is really a repeat of the first and needed to be different to gain further credit. If the second way had been a separate point and the answer had been in the context of the ice-cream business then further credit could have been awarded.
Marks awarded for Knowledge and Analysis: 2/4
Marks awarded for Application: 0/4
Total marks awarded: 2 out of 8
Question 1 (b)
Mark scheme
Example candidate response – high
Examiner comment – high
The question requires candidates to consider the benefits of employing either full-time or part-time workers and then recommending whether or not to employ both types of workers. This answer has explained advantages of both full-time and part-time workers well, which gained all of the Level 2 marks available. The answer was well applied throughout by referring to the sale of ice-cream and the seasonal nature of production. The recommendation is justified in suggesting that both types of workers should be employed and summarising the reasons why this decision was made. To gain full marks the recommendation would have required a further point to justify the decision.
Marks awarded for Knowledge, Analysis and Evaluation: 9/10
Marks awarded for Application: 2/2
Total marks awarded: 11 out of 12
Example candidate response – middle
Examiner comment – middle
The advantages for both types of workers are listed but not explained which leaves this part of the answer in the Level 1 band. Explanation of why these are advantages to this business would have raised the marks to the Level 2 band. The recommendation could only be awarded Level 2 and not Level 3 because the earlier parts of the answer did not contain analysis of the advantages. The advantages of full-time workers and the conclusion are applied to this context by referring to ice-cream production and the seasonal nature of production. To gain higher marks the advantages needed to be explained and then the recommendation could have contained justification from the earlier analysis and gained Level 3.
Marks awarded for Knowledge, Analysis and Evaluation: 4/10
Marks awarded for Application: 2/2
Total marks awarded: 6 out of 12
Example candidate response – low
Examiner comment – low
The candidate lists advantages for each type of worker such as they are familiar with the work and can handle situations well, they can train other workers, and bring new ways of working to this business. These are Level 1 statements. To raise this answer to Level 2 the candidate would have needed to explain why these are advantages to this business such as being able to train workers will save FF the costs of training thus reducing expenses and increasing profit for the partners. The recommendation is vague and just states ‘having a mixture of both’ and this is not justified. Just making a recommendation is not sufficient to gain credit; it only gains credit when it is justified.
Marks awarded for Knowledge, Analysis and Evaluation: 3/10
Marks awarded for Application: 0/2
Total marks awarded: 3 out of 12
Question 2 (a)
Mark scheme
Example candidate response – high
Examiner comment – high
This question requires the candidate to list two benefits to the business of targeting a niche market rather than the mass market. This candidate has listed two relevant benefits and then goes on to explain how these benefits have helped the business, for example ‘made the marketing more effective’ and ‘understand customer needs and wants’. Both benefits are in the context of this ice-cream manufacturer which is targeting high income consumers and by doing so they can better meet customer wants, hence increasing sales. The answer could have been raised to full marks if the first benefit had focussed the explanation on marketing to high income customers and therefore made it more applied to this target market.
Marks awarded for Knowledge and Analysis: 4/4
Marks awarded for Application: 3/4
Total marks awarded: 7 out of 8
Example candidate response – middle
Examiner comment – middle
Two benefits of targeting a niche market are identified and explained – ‘meet specific customer needs and identify a gap in the market’. However, this answer is generic and could apply to any business. For the candidate to raise their marks still further the answer would need to be clearly in the context of an ice-cream manufacturer. The answer could have referred to for example, the business being a relatively new business and still a small partnership, it purchases high quality ingredients and sells its ice-cream at high prices and a new flavour is being developed.
Marks awarded for Knowledge and Analysis: 4/4
Marks awarded for Application: 0/4
Total mark awarded: 4 out of 8
Example candidate response – low
Examiner comment – low
The benefits are not clearly identified under the headings Benefit 1 and Benefit 2, however the answer does then go on to identify that a business has a higher chance of finding the right customers and more likely to have higher sales. Therefore two marks for each benefit can be awarded but the explanation of the benefits is too brief and vague to gain further credit. The answer is generic and if it had been in the context of the ice- cream business then further credit could have been given for application.
Marks awarded for Knowledge and Analysis: 2/4
Marks awarded for Application: 0/4
Total marks awarded: 2 out of 8
Question 2 (b)
Mark scheme
Example candidate response – high
Examiner comment – high
This question requires candidates to compare three different methods of promotion that this business could use for its new flavour of ice-cream, then select one method as the most suitable and justify this chosen method with why the alternatives were rejected. This candidate gives advantages and disadvantages for all three methods and gains Level 2 for each method. The question mentions the new flavour of ice-cream and so this cannot be credited with application marks in the discussion of the answer. The second method does identify that the ice-cream is expensive and is targeted at a specific market and so application can be credited for this part of the answer. Reference, such as to tasting the ice-cream, needing to increase sales as they had fallen the last year or competition from the multinational food company could have gained further application marks. Level 3 was awarded in the recommendation for a justified selection of a method and a brief comment on why the alternatives were rejected. To raise the marks to full marks the answer would need to be more applied and the recommendation would need to have more explanation of why the alternative methods were less suitable than the chosen method.
Marks awarded for Knowledge, Analysis and Evaluation: 8/10
Marks awarded for Application: 1/2
Total marks awarded: 9 out of 12
Example candidate response – middle
Examiner comment – middle
The candidate gives advantages for each of the methods of promotion and the third method is explained in sufficient detail to just gain Level 2. However, to gain Level 2 for the other methods the candidate could also consider the disadvantages of each of these methods. The recommendation does make a justified selection and so gains additional credit at Level 2. For the marks to be raised further the answer should have included disadvantages of each method as this helps when weighing up which is the better method to choose.
Application was present in that the candidate recognised that this was a food product and that taste was important for customers. Further application would have also raised the marks higher.
Marks awarded for Knowledge, Analysis and Evaluation: 5/10
Marks awarded for Application: 1/2
Total marks awarded: 6 out of 12
Example candidate response – low
Examiner comment – low
The candidate lists several points for each of the methods and so gains all three of the Level 1 marks available. For the answer to move to Level 2 the points need to be developed and explained. Without Level 2 then Level 3 cannot be awarded. A generic answer will not gain application marks and if the answer had been in the context of this business then further marks could have been gained.
Marks awarded for Knowledge, Analysis and Evaluation: 3/10
Marks awarded for Application: 0/2
Total marks awarded: 3 out of 12
Question 3 (a)
Mark scheme
Example candidate response – high
Examiner comment – high
This question requires candidates to consider the information provided in Appendix 2 and then explain which points will be beneficial for the business if it changes to the new supplier and which points may have disadvantages. This candidate has identified the advantage of reducing costs and then explained it in context.
The disadvantage of possibly reduced quality of ingredients has also been explained in context in that the product is sold to high income customers and if quality is not maintained then these customers may buy their ice-cream from a competitor. A well explained and well applied answer.
Marks awarded for Knowledge and Analysis: 4/4
Marks awarded for Application: 4/4
Total marks awarded: 8 out of 8
Example candidate response – middle
Examiner comment – middle
The candidate outlines the advantage of free delivery once a week and explains that this means costs are saved. The answer would have been better to explain that lower delivery costs would increase profit rather than revenue would be higher. The context does not state that the business has shops and so improving shops is not seen as application. The disadvantage of possibly lower quality ingredients leading to losing customers who expect high quality ice-cream meant that both the disadvantage and the explanation could be credited, and as it was in context then an application mark could also be awarded. Further explanation of the advantage and disadvantage in context of this business would have raised these marks still further.
Marks awarded for Knowledge and Analysis: 4/4
Marks awarded for Application: 1/4
Total marks awarded: 5 out of 8
Example candidate response – low
Examiner comment – low
This candidate identified from Appendix 2 that although the prices are low the quality is still assured. The answer would have benefited from this being made clearer by saying the ingredients are quality assured as well as saying they are good quality. The advantage of lower costs as a result of the lower ingredient prices was identified, as was the disadvantage of the unknown reliability of the new supplier. Further explanation and further application to this business would have raised the marks for this answer.
Marks awarded for Knowledge and Analysis: 3/4
Marks awarded for Application: 0/4
Total marks awarded: 3 out of 8
Question 3 (b)
Mark scheme
Example candidate response – high
Examiner comment – high
This question required candidates to compare the two options for a new flavour of ice-cream and, after calculating the profitability and/or break-even outputs, deciding which will be the better flavour to start producing. This candidate correctly calculates the break-even output for both flavours and also the net profit and net profit margin. The cost to revenue calculation was not credited but gross profit margin would have been credited if it had been in the answer. The answer was also clearly in the context of the two new flavours being considered and so all of the Level 2 marks and the application marks available were achieved. Level 3 required a selection and justification of the best flavour to start producing. The candidate makes a decision to choose coconut flavour because the profit margin is higher but then does identify that the break-even output is at a higher level. The candidate ignores the fact that the profit earned is higher for strawberry flavour even though they have calculated this figure. For full marks at Level 3 the candidate could have made further comments on the figures calculated in weighing up and making a decision as to which flavour to produce. A decision at the end of the weighing up of the results of the calculations might have encouraged the candidate to make an overall decision firmly justified using the all the figures.
Marks awarded for Knowledge, Analysis and Evaluation: 8/10
Marks awarded for Application: 2/2
Total marks awarded: 10 out of 12
Example candidate response – middle
Examiner comment – middle
This candidate makes use of the figures in Appendix 3 but only carries out one calculation, that of working out the profit for strawberry ice-cream which earns one Level 2 mark. Therefore, the discussion and recommendation is limited. The consideration is clearly in the context of the two flavours of ice-cream and so application marks were achieved. To raise the marks still further the candidate could have made more use of the financial information provided to come to a justified recommendation using the results of the calculations.
Marks awarded for Knowledge, Analysis and Evaluation: 4/10
Marks awarded for Application: 2/2
Total marks awarded: 6 out of 12
Example candidate response – low
Examiner comment – low
This candidate makes very limited use of the figures in Appendix 3 and does not carry out any calculations of profit or the break-even output. Therefore, the discussion and recommendation is limited to Level 1 credit as the statements are comparisons of the figures provided in Appendix 3 but no calculations are attempted.
Application marks could have been achieved if the discussion had been in the context of the two new flavours of ice-cream. To raise the marks still further the candidate could have made more use of the financial information provided to come to a justified recommendation.
Marks awarded for Knowledge, Analysis and Evaluation: 3/10
Marks awarded for Application: 0/2
Total marks awarded: 3 out of 12
Question 4 (a)
Mark scheme
Example candidate response – high
Examiner comment – high
This question required candidates to identify two ways that an increase in interest rates might affect the business in the context. The candidate clearly identifies that bank loans will become more expensive which raises costs and increases the risks to the partnership if the new flavour of ice-cream does not raise sales sufficiently. This is a well applied and well explained effect. The second way is not identified under Way 2 but is explained further down the answer. The decrease in sales is the way the business is affected and this is as a result of increased savings. The marks could have been raised to full marks if the explanation of the second way had been more applied to this ice-cream business.
Marks awarded for Knowledge and Analysis: 4/4
Marks awarded for Application: 3/4
Total marks awarded: 7 out of 8
Example candidate response – middle
Examiner comment – middle
The candidate gives two ways the business will be affected by the increase in interest rates, they are that it might reduce borrowing from the bank and it might save profit rather than reinvest it in the business. Both of these ways are explained but to raise the marks to full marks the answer should have been in the context of this business. This could be achieved by making clearer reference to the development of a new flavour of ice- cream by using a bank loan or the expensive nature of the product experiencing falling sales due to less income available to spend on luxuries after the increased cost of bank repayments for customers.
Marks awarded for Knowledge and Analysis: 4/4
Marks awarded for Application: 0/4
Total marks awarded: 4 out of 8
Example candidate response – low
Examiner comment – low
The candidate identifies two ways a business might be affected by higher interest rates, for example higher costs (although the answer never actually says which costs are higher) and less likely to take out more loans.
The explanation of the second way is really a repetition of the earlier point and would need to actually explain the point to gain further credit. The answer is generic and could apply to any business. To raise the marks the answer would need to be applied to the ice-cream business in the context and include further explanation of how these two ways would affect the business.
Marks awarded for Knowledge and Analysis: 2/4
Marks awarded for Application: 0/4
Total marks awarded: 2 out of 8
Question 4 (b)
Mark scheme
Example candidate response – high
Examiner comment – high
This question requires candidates to consider whether or not the overall effects of a multinational opening up in competition with the business in the context will be beneficial. The candidate explains the advantages and disadvantages of this in some detail and in context: the candidate has recognised that there will be new roads built but wages will increase due to the influence of the multinational and that the two businesses sell ice- cream targeted at different market segments. The answer gains Level 2 credit and both application marks.
The recommendation briefly weighs up the benefits of possibly lower costs against lower sales and then makes a decision that the business will be worse off after the multinational opens in country X. To gain full marks the candidate could have explained in more detail why the overall effect might be worse for the business.
Marks awarded for Knowledge, Analysis and Evaluation: 8/10
Marks awarded for Application: 2/2
Total marks awarded: 10 out of 12
Example candidate response – middle
Examiner comment – middle
The advantage is explained in the context of this business as it recognises that there will be increased economic growth as a result of the multinational and that the business targets high income customers leading to increased sales for the business. Therefore, Level 2 is awarded as well as an application mark for the advantage. The disadvantage is in context as it recognises that wages will increase due to the multinational.
The disadvantages are a series of statements and if they had been developed, such as higher wages would have increased the costs to the business leading to lower profit or higher prices, which might reduce sales, then Level 2 could have been awarded for the disadvantages. There is only one Level 2 awarded for the consideration of the advantages and disadvantages, therefore Level 3 cannot be awarded for the recommendation as insufficient analysis has been included before the recommendation is made. However, a further Level 2 is awarded for a justified conclusion in context.
Marks awarded for Knowledge, Analysis and Evaluation: 5/10
Marks awarded for Application: 2/2
Total marks awarded: 7 out of 12
Example candidate response – low
Examiner comment – low
The advantage outlined is not clear as to why this would benefit the business and improve sales. The disadvantages of increased competition and shortage of labour are stated and gain Level 1 credit.
There is some application to this context as the answer recognises that the prices of the multinational’s products are lower than those of FF, because FF produces a higher quality product. A conclusion should weigh up the earlier points to make the final judgement and this requires that the earlier points are explained and not just listed for this to be carried out effectively. For higher marks this answer should include an explanation of the points as to why they are advantages and disadvantages, apply more of the points to this business in the context and include a final evaluation that weighs up the earlier advantages and disadvantages before coming to a recommendation.
Marks awarded for Knowledge, Analysis and Evaluation: 3/10
Marks awarded for Application: 1/2
Total marks awarded: 4 out of 12
